<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d) of
_____ the Securities Exchange Act of 1934
_____ For Quarter Period Ended April 2, 1995
______________________________________
or
Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from __________ to ___________
Commission File No. 0-8866
MICROSEMI CORPORATION
_____________________
(Exact name of registrant as specified in its charter)
Delaware 95-2110371
________ __________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2830 South Fairview Street, Santa Ana, California 92704
_______________________________________________________
(Address of principal executive offices) (Zip Code)
(714) 979-8220
______________
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 month
period (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
_____ _____
The number of shares outstanding of the issuer's Common Stock, $.20
par value, on April 20, 1995 was 7,643,521.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The financial information for the thirteen and twenty-six
weeks ended April 2, 1995 of Microsemi Corporation (the
"Company") and the comparative financial information for the prior
year, together with the Balance Sheet as of October 2, 1994 are
attached hereto and incorporated herein by this reference.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations Capital Resources and Liquidity
Introduction
____________
Microsemi Corporation is a multinational supplier of high
reliability power semiconductors, surface mount and custom diode
assemblies for the electronics, computer, telecommunications,
defense/aerospace and medical markets. The company's semiconductor
products include diodes, transistors and silicon controlled
rectifiers(SCR's) which can be used in virtually all electrical and
electronic circuits. Typical functions include solid state
switching, signal processing, voltage and power regulation, circuit
protection and absorption of electrical surges and transient
voltage spikes. Technologies for these devices range from the very
mature mesa rectifier diodes still used in all power supply
applications to the newly designed micro-miniature transient
absorbers which are mounted within the cables used to connect
computer and telecommunications equipment.
Capital resources and liquidity
_______________________________
The Company's operations in the first half of fiscal year 1995
were funded with internally generated funds and borrowings
under the Company's line of credit. Under the current line of
credit, the Company can borrow up to $15,000,000, based upon
percentages of accounts receivable and inventory balances at
certain of the Company s operations. As of April 2, 1995,
$9,834,000 was borrowed under this credit facility. A $10,000,000
equipment financing loan was obtained in October 1989; however, in
March 1994, the Company refinanced the balance of $1,948,000 then
owing on this loan with a new term loan by utilizing funds
available under its present line of credit. This portion of the
line of credit requires monthly payments of $100,000 plus interest
at a rate of prime plus three percent. At April 2, 1995, the
Company had $2,998,000 in cash and cash equivalents.
A letter of credit for the Microsemi Santa Ana Industrial
Development Bond is carried by a bank in the amount of
$5,557,000. This letter of credit guarantees the repayment of a
$5,350,000 Industrial Development Bond which was originally issued
in April 1985 through the City of Santa Ana for the purchase of the
Company's Corporate Headquarters and for the construction of
improvements and new facilities at the Santa Ana plant. The Bond
was remarketed, effective February 1, 1995, reducing the existing
interest rate from 9.25% to 6.75% per annum and extending the
maturity date to February 1, 2005.
The Company believes that it can meet its current operating
cash requirements and debt service with internally generated
funds together with its available borrowing capacity.
The Company's revenues continue to be partially dependent on
military and aerospace programs. Recent reductions in defense
spending had and may continue to have a negative impact on the
Company s operations. Furthermore, there have been Department
of Defense (DOD) announcements of major changes in defense
procurement policy, which included official notification, on August
22, 1994, of Department of Defense acquisitions reform to utilize
best commercial practices instead of mandatory use of military
standard parts. In the past two years, military related business
has declined from approximately 60% to 40% of total revenues. This
has been more than offset by increases in shipments of commercial,
industrial, medical and space related products. In addition, the
Company continues to develop commercial applications for its
products to offset this decrease. Although the final impact of
these most recent changes in Department of Defense procurement
practices is not known, management believes that, either through
associated cost reductions or increases in shipments of non
Department of Defense products, it will not have a significant
impact on total future revenues, operations or cash flows.
The average collection period on accounts receivable was 55
days for the current six months compared to 57 days for the
same period of the last fiscal year. Sales and accounts receivable
of the business that was sold in fiscal year 1994 have been
excluded from this calculation.
The average days sales of products in inventories decreased to
166 days for the first six months of fiscal year 1995 compared
to 203 for the corresponding period of fiscal year 1994. This
primarily resulted from a lower inventory base due to the writeoffs
of military related inventories in the fourth quarter of fiscal
year 1994. Cost of sales and inventories of the business that was
sold in fiscal year 1994 have been excluded from this calculation.
Order backlog at April 2, 1995 increased to $52,100,000 from
$47,800,000 in the prior year. Order backlog at April 3,
1994 included $1,000,000 from the business that was sold in fiscal
year 1994.
The Company has no other significant capital commitments.
Certain operations of the Company utilize chemicals considered
as hazardous substances. The Company believes that it
complies with the procedures required for usage and disposition of
the substances; however, improper disposal thereof could have
an adverse effect upon the Company's future liquidity or results of
operations.
<PAGE>
RESULTS OF OPERATIONS FOR THE THIRTEEN WEEKS ENDED APRIL 2, 1995
COMPARED TO THE THIRTEEN WEEKS ENDED APRIL 3, 1994.
Net sales for the second quarter of fiscal year 1995 increased
to $32,441,000, or 6%, from $30,705,000 for the second
quarter of fiscal year 1994. The increase of $1,736,000 was due to
an increase of $2,636,000 from the continuing businesses as the
Company continues to shift more emphasis to the commercial
applications of the Company s products, partially offset by the
elimination of sales of approximately $900,000 from the subsidiary
that was sold in fiscal year 1994.
Gross profit increased $280,000. This resulted from an
increase of $117,000 from the continuing businesses due to higher
sales and from the elimination of $163,000 of gross losses from the
business sold in fiscal year 1994.
Operating expense for the first quarter of fiscal year 1995
decreased $474,000, compared to the corresponding period of
the prior year. The decrease was primarily due to the elimination
of operating expenses of the subsidiary that was sold in fiscal
1994.
The effective tax rates of 38% and 40% in the second quarters
of fiscal years 1995 and 1994, respectively, are the combined
result of taxes computed on foreign and domestic income.
RESULTS OF OPERATIONS FOR THE TWENTY-SIX WEEKS ENDED APRIL 2, 1995
COMPARED TO THE TWENTY-SIX WEEKS ENDED APRIL 3, 1994.
Net sales for the first half of fiscal year 1995 increased to
$60,098,000, or 4%, from $57,634,000 for the same period of
fiscal year 1994. The increase of $2,464,000 was due to $4,279,000
from the continuing businesses, partially offset by the elimination
of sales of $1,815,000 from the business that was sold in fiscal
1994.
Gross profit increased $492,000. This resulted from the
elimination of gross losses of $283,000 from the subsidiary that
was sold in fiscal 1994 and from an increase of $209,000 due to
higher sales from the continuing businesses.
Operating expense for the first six months of fiscal year 1995
decreased $805,000 compared to the corresponding period
of the prior year. The decrease was primarily due to the
elimination of expenses of the subsidiary that was sold in fiscal
1994.
The effective tax rates of 38% and 39% in the first six months
of fiscal years 1995 and 1994, respectively, are the combined
results of taxes computed on foreign and domestic income.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Inapplicable.
Item 2. Changes in Securities
Inapplicable.
Item 3. Defaults Upon Senior Securities
Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders
(a) An election of the Board of Directors was held at
the
annual meeting of Stockholders on February 8, 1995.
(b) Names and personal information about the nominees to
the Board of Directors were included in the Proxy
Statement dated January 24, 1995.
(c) 6,501,875 votes were received for each of the
nominees
to the Board of Directors as follows:
For Withheld
Philip Frey, Jr. 6,480,086 21,789
Jiri Sandera 6,481,580 20,295
Joseph M. Scheer 6,480,180 21,695
Brad Davidson 6,481,680 20,195
Robert B. Phinizy 6,480,180 21,695
Martin H. Jurick 6,479,680 22,195
(d) Inapplicable.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.74 Agreement of Sale and License between Raytheon
Company and Microsemi Corporation
10.75 Bill of Sale and Purchase Agreement between
Telcom Universal Inc. and Microsemi Corporation
10.76 Supplement to financing documents (Indenture of
Trust and Loan Agreement) relating to Industrial
Development Authority of the City of Santa Ana,
1985 Industrial Development Revenue Bonds
Microsemi Corporation Project) dated as of
January 15, 1995.
27 Financial data schedule.
(b) Reports on Form 8-K:
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
MICROSEMI CORPORATION
By:
___________________________
David R. Sonksen
Vice President - Finance
and Chief Financial Officer
DATED: May 9, 1995
<PAGE>
MICROSEMI CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
PART 1, ITEM 1
April 2, 1995
F-1
<PAGE>
MICROSEMI CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
(amounts in 000's)
[CAPTION] April 2, 1995 October 2, 1994
------------- ---------------
[S] [C] [C]
ASSETS
Current assets
Cash and equivalents $ 2,998 $ 3,994
Accounts receivable less allowance
for doubtful accounts, $2,025 at
April 2, 1995 and $2,173 at
October 2, 1994 18,593 17,772
Inventories 41,971 40,058
Deferred income taxes 4,076 4,076
Other current assets 1,292 1,197
------- -------
Total current assets 68,930 67,097
------- -------
Property and equipment, at cost 52,171 50,776
Less: Accumulated depreciation (28,272) (26,559)
------- -------
23,899 24,217
------- -------
Deferred income taxes 1,725 1,725
Other assets 6,390 7,110
------- -------
$ 100,944 $ 100,149
======= =======
[S] [C] [C]
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable to banks and others $ 8,894 $ 9,584
Current maturities of long-term debt 4,255 3,578
Accounts payable and accrued
liabilities 15,879 16,879
Income taxes payable 2,335 1,212
Deferred income taxes 716 716
------- -------
Total current liabilities 32,079 31,969
------- -------
Deferred income taxes 1,568 1,568
------- -------
Long-term debt 48,840 50,568
------- -------
Other long-term liabilities 1,250 1,256
------- -------
Stockholders' equity
Common stock, $.20 par value;
authorized 20,000 shares; issued
7,630 shares at April 2, 1995 and
7,595 shares at October 2, 1994 1,526 1,519
Paid-in capital 14,450 14,397
Retained earnings (accumulated deficit) 1,231 (1,128)
------- -------
Total stockholders' equity 17,207 14,788
------- -------
$ 100,944 $ 100,149
======= =======
[FN]
See accompanying Notes to Unaudited Consolidated Financial
Statements.
F-2
<PAGE>
MICROSEMI CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
(amounts in 000's, except earnings per share)
[CAPTION] 13 Weeks Ended 13 Weeks Ended
April 2, 1995 April 3, 1994
-------------- -------------
[S] [C] [C]
Net sales $ 32,441 $ 30,705
Cost of sales 24,327 22,871
------ ------
Gross profit 8,114 7,834
------ ------
Operating expenses
Selling 1,983 1,938
General and administrative 2,639 3,115
Amortization of goodwill and
other intangible assets 44 87
------ ------
Total operating expenses 4,666 5,140
------ ------
Income from operations 3,448 2,694
------ ------
Other income (expense)
Interest expense (1,342) (1,368)
Interest income - 38
Other 68 (52)
------ ------
Total other expense (1,274) (1,382)
------ ------
Earnings before income taxes 2,174 1,312
Provision for income taxes 826 522
------ ------
Net earnings $ 1,348 $ 790
====== ======
Earnings per share
- Primary $ 0.17 $ 0.10
====== ======
- Fully diluted $ 0.15 $ 0.09
====== ======
Common and common equivalent
shares outstanding
- Primary 7,993 7,936
- Fully diluted 11,573 9,009
[FN]
See accompanying Notes to Unaudited Consolidated Financial
Statements.
F-3
<PAGE>
MICROSEMI CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
(amounts in 000's, except earnings per share)
[CAPTION] 26 Weeks Ended 26 Weeks Ended
April 2, 1995 April 3, 1994
-------------- --------------
[S] [C] [C]
Net sales $ 60,098 $ 57,634
Cost of sales 44,980 43,008
------ ------
Gross profit 15,118 14,626
------ ------
Operating expenses
Selling 3,878 3,727
General and administrative 4,957 5,853
Amortization of goodwill and
other intangible assets 93 153
------ ------
Total operating expenses 8,928 9,733
------ ------
Income from operations 6,190 4,893
------ ------
Other income (expense)
Interest expense (2,509) (2,664)
Interest income 15 38
Other 112 (100)
------ ------
Total other expense (2,382) (2,726)
------ ------
Earnings before income taxes 3,808 2,167
Provision for income taxes 1,447 846
------ ------
Net earnings $ 2,361 $ 1,321
====== ======
Earnings per share
- Primary $ 0.30 $ 0.17
====== ======
- Fully Diluted $ 0.26 $ 0.15
====== ======
Common and common equivalent
shares outstanding
- Primary 7,989 7,941
- Fully diluted 11,573 9,009
[FN]
See accompanying Notes to Unaudited Consolidated Financial
Statements.
F-4
<PAGE>
MICROSEMI CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Statements of
Retained Earnings (Accumulated Deficit)
(amounts in 000's)
[CAPTION] 26 Weeks Ended 26 Weeks Ended
April 2, 1995 April 3, 1994
-------------- --------------
[S] [C] [C]
Retained earnings (accumulated
deficit) at beginning of period $ (1,128) $ 1,007
Net earnings 2,361 1,321
Translation loss from foreign
currency (2) (4)
------ ------
Retained earnings at end of period $ 1,231 $ 2,324
====== ======
[FN]
See accompanying Notes to Unaudited Consolidated Financial
Statements.
F-5
<PAGE>
MICROSEMI CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
Unaudited
(amounts in 000's)
[CAPTION] 26 Weeks Ended 26 Weeks Ended
April 2, 1995 April 3, 1994
-------------- --------------
[S] [C] [C]
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 2,361 $ 1,321
Adjustments to reconcile net
earnings to net cash provided
from (used for) operating
activities:
Depreciation and amortization 1,800 2,129
(Increase) decrease in allowance
for doubtful accounts (148) 131
Changes in assets and liabilities:
Accounts receivable (673) (745)
Inventories (1,913) (2,461)
Other current assets (95) 236
Other assets 631 325
Accounts payable and accrued
liabilities (1,000) (577)
Income taxes payable 1,123 (230)
------ ------
Net cash provided from operating
activities 2,086 129
------ ------
CASH FLOWS FROM INVESTING ACTIVITY:
Additions to property and equipment (1,395) (1,171)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in notes
payable to bank and others (690) 1,999
Reduction of long-term debt (1,051) (1,185)
Reduction of other long-term
liabilities (6) -
Exercise of employee stock options 60 45
------ ------
Net cash provided from (used for)
financing activities (1,687) 859
------ ------
Net decrease in cash and cash equivalents (996) (183)
Cash and cash equivalents at beginning
of period 3,994 2,080
------ ------
Cash and cash equivalents at end
of period $ 2,998 $ 1,897
====== ======
[FN]
See accompanying Notes to Unaudited Consolidated Financial
Statements.
F-6
<PAGE>
MICROSEMI CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
April 2, 1995
1. PRESENTATION OF FINANCIAL INFORMATION
The financial information furnished herein is unaudited, but, in
the opinion of the management of Microsemi Corporation, includes
all adjustments (all of which are normal, recurring adjustments)
necessary for a fair presentation of the results of operations for
the periods indicated. The results of operations for the first
twenty-six weeks of the current fiscal year are not necessarily
indicative of the results to be expected for the full year.
The accompanying unaudited consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and,
therefore, do not include all information and footnotes necessary
for a fair presentation of financial position, results of
operations and cash flows in conformity with generally accepted
accounting principles. The financial statements and notes should,
therefore, be read in conjunction with the financial statements and
notes thereto in the Annual Report for the fiscal year ended
October 2, 1994.
2. INVENTORIES
For interim reporting purposes, cost of goods sold and inventories
are estimated based upon the use of the gross profit
method applied to each product line.
Inventories used in the computation of cost of goods sold were:
April 2, October 2,
1995 1994
-------- ----------
(amounts in 000's)
Raw materials $ 9,219 $ 9,306
Work in progress 21,074 18,678
Finished goods 11,678 12,074
------ ------
$ 41,971 $ 40,058
====== ======
3. LONG-TERM DEBT
Long-term debt consisted of:
April 2, October 2,
1995 1994
-------- ----------
(amounts in 000's)
Industrial Development Bond-bearing
interest at 7.875% due May 2000;
secured by first deed of trust $ 3,075 $ 3,075
Industrial Development Bond-bearing
interest at 6.75% due February 2005;
secured by first deed of trust 5,350 5,700
Convertible Subordinated Debentures
-bearing interest at 5.875% due 2012 33,281 33,281
Convertible Subordinated Debentures
-bearing interest at 10% due 1999 2,000 2,000
Notes payable-bearing interest at
ranges of 5%-13% due between
August 1995 and July 2002 9,389 10,090
------ ------
53,095 54,146
Less current portion (4,255) (3,578)
------ ------
$ 48,840 $ 50,568
====== ======
4. EARNINGS PER SHARE
Earnings per share for the primary basis have been computed based
upon the weighted average number of common and common equivalent
shares outstanding during the respective periods. Earnings per
share for the fully diluted basis have been computed, when the
result is dilutive, based upon the assumption that the convertible
subordinated debentures had been converted to common stock at the
date of issuance, with a corresponding increase in net income to
reflect a reduction in related interest expense, net of applicable
taxes.
5. STATEMENT OF CASH FLOWS
For purposes of the Consolidated Statements of Cash Flows, the
Company considers all short-term, highly liquid investments with
maturities of three months or less at the date of acquisition to be
cash equivalents.
Supplementary information 26 weeks ended 26 weeks ended
April 2, 1995 April 3, 1994
Cash paid during the period for: (amounts in 000's)
Interest $ 3,262 $ 2,497
Income taxes $ 144 $ 1,112
6. DISPOSITIONS
On June 8, 1994, the Company completed a transaction with
Technology Marketing Incorporated (TMI) to dispose of substantially
all of the assets of Omni Technology Corporation (Omni), a wholly
owned subsidiary of the Company. The Company received $200,000
cash, a $300,000 term note receivable, $2,000,000 in 4% redeemable
preferred stock and warrants to purchase up to 250,000 shares of
TMI s common stock at $1.00 per share. The preferred stock is
subject to mandatory redemption over a period of between 10 to 20
years based upon the achievement of certain performance
objectives by TMI. The note receivable, preferred stock and
warrants are recorded at net realizable values.
AGREEMENT OF SALE AND LICENSE
This Agreement of Sale and License ("Agreement") is
entered into as of December 9, 1994, by and between Raytheon
Company, a Delaware corporation, through its Semiconductor Division
("Raytheon SemiconductoC'), whose principal offices are located at
350 Ellis Street in Mountain View, California 94043, and Microsemi
Corporation ("MICROSEMI"), whose principal offices are
located at 2830 South Fairview Street, Santa Ana, California 92704.
RECITALS
WITNESSETH:
WHEREAS, Raytheon Semiconductor has decided to exit the
transistor product business and to sell its transistor product line
to a company or companies interested in remaining in the source
supply business for transistor products;
WHEREAS, MICROSEMI wishes to continue in the transistor
product business and to become and remain a transistor product
source;
WHEREAS, Raytheon Semiconductor in the course of its sale
wishes to fulfill purchase orders previously submitted to Raytheon
Semiconductor by its customers ('Customer Order Backlog"), and
to refer such customers to MICROSEMI for future transistor
products,
NOW, THEREFORE, in consideration of the foregoing and of
the mutual promises contained herein, the parties hereto do hereby
mutually agree as follows:
AGREEMENT
Assets to be Sold.
1.1 Raytheon Semiconductor will sell to MICROSEMI the
following assets related to its transistor product business:
1.1.1 Transistor manufacturing equipment as listed on
Exhibits A and B attached hereto and incorporated herein by
reference. The Exhibit A equipment will be delivered FOB Raytheon
Semiconductor's Mountain View facility whose address is set forth
above ("the Delivery Point") beginning on the Closing Date
(specified in paragraph 3.3 hereinbelow). The Exhibit B equipment
will be delivered at the Delivery Point (after Raytheon
Semiconductor has fulfilled its Customer Order Backlog) on or
before March 31, 1995 as to the assembly equipment; on or before
May 31, 1995 as to the test equipment; and on or before June 30,
1995 as to the remaining equipment.
1.1.2 Finished goods not needed for Raytheon
Semiconductor's Customer Order Backlog, as set forth on Exhibit C
attached hereto and incorporated herein by reference, to begin
delivery at the Delivery Point on the Closing Date.
1.1.3 Piece part inventory not needed for Raytheon
Semiconductor's Customer Order Backlog, as set forth on Exhibit D
attached hereto and incorporated herein by reference.
1. 1.4 Work in Process not needed for Raytheon
Semiconductor's Customer Order Backlog, as set forth in Exhibit E
attached hereto and incorporated herein by reference.
1.1.5 Mask sets for Raytheon Semiconductor's transistor
products, as set forth on Exhibit F attached hereto. The rights to
use such mask sets and/or to replicate them are the subject of
licenses granted by Raytheon Semiconductor to MICROSEMI set forth
in Section 2 hereinbelow.
1.1.6 The matters described in paragraphs 1.1.2, 1.1.3,
1.1.4 and 1.1.5 will begin delivery to MICROSEMI at the Delivery
Point on the Closing Date.
1.1.7 The amounts of finished goods or other goods
indicated on Exhibits C through E hereto are estimates or
approximations only. Divergences from the stated quantities, but
within plus or minus ten percent (10%) of the amounts shown on
Exhibits C through E, shall be within the parameters
of this Agreement. Variances greater than plus or minus ten
percent (10%) of the stated quantity will require an appropriate
adjustment in the purchase price at the Closing Date, either in
favor of MICROSEMI or in favor of Raytheon, as the case may be.
MICROSEMI has the right to inspect prior to signing this Agreement,
as set forth in paragraph 13 hereinbelow.
1.1.8 The assets to be sold by Raytheon Semiconductor to
MICROSEMI do not include any Customer Order Backlog existing at the
Closing Date. New transistor orders submitted to Raytheon
after the Closing Date and before the completion of the terms of
this Agreement, relating to the goods indicated on Exhibits C
through E, will be refered to MICROSEMI.
1.1.9 The transistor part types and related intellectual
property as set forth on the 'Exclusions" list attached hereto as
Exhibit G and made a part of this Agreement by reference are
explicitly excluded from the assets to be sold. MICROSEMI shall
not be precluded from supplying product, which compete with those
of Raytheon Semiconductor to any division of Raytheon Company who
may choose to do business with any MICROSEMI company.
2. Licenses to be Granted.
2.1 Intellectual Property to be Licensed.
2.1.1 In addition to selling the above-described assets
to MICROSEMI, Raytheon Semiconductor will, and hereby does, license
certain of its transistor-related intellectual property
to MICROSEMI.
2.1.2 The intellectual property described on Exhibit H
attached hereto is licensed on a perpetual, worldwide exclusive
basis, to the extent that Raytheon Semiconductor has the right to
do so.
2.1.3 The implementation of such licenses will be
accomplished by the delivery by Raytheon Semiconductor to MICROSEMI
beginning on the Closing Date at the Delivery Point, of drawings,
diagrams, and technical specifications related to the licensed
products, as well as processes and mask sets for manufacture of the
licensed products.
2.1.5 The licenses herein granted give MICROSEMI the
right to make, use, sell and distribute the transistor products
described on Exhibits H attached hereto, and to use and replicate
the mask sets associated therewith. MICROSEMI is not granted, and
does not have, the authority to transfer the licenses herein
granted, or to sublicense any part of said licenses to any other
company. Except in the event of sale or transfer by MICROSEMI of
the business in connection with a merger or other form of business
combination, except with written consent of Raytheon Semiconductor
which shall not be unreasonably withheld and is subject to the
terms and conditions of this Agreement.
2.1.6 Said licenses are granted "as is" and without
warranty of any kind whatsoever. Raytheon Semiconductor does not
represent, and hereby expressly disclaims, that its intellectual
property produces marketable products. Raytheon Semiconductor does
not undertake any obligation to debug such intellectual property,
or to provide any upgrades, enhancements, or derivatives thereof,
if any.
Payment of Purchase Price.
3.1 The Purchase Price to be paid to Raytheon
Semiconductor by MICROSEMI is seven hundred thousand dollars
($700,000) by cashier's check drawn on a California bank or by wire
transfer into Raytheon Semiconductor's bank account, verified as to
receipt.
3.2 The Purchase Price covers lien-free title to the
assets to be Sold (Section 1) and the Licenses to be Granted
(Section 2).
3.3 The Purchase Price is to be paid in accordance
with the following schedule:
$ 70,000. non-refundable deposit received on or before December 16,
1994; $530,000. due on or before the Closing Date of January 6,
1995; and $1 00,000. due on the delivery of the residual equipment
and inventory in accordance with this Agreement.
3.4 MICROSEMI must take delivery of all matters
specified to be delivered beginning on the Closing Date.
4. Limitation of Warranties.
4.1 Raytheon Semiconductor hereby warrants that it holds
the unencumbered, lien-free title and right to transfer all
property to be sold and licensed pursuant to this Agreement.
4.2 All of Raytheon's right, title and interest to the
assets to be sold will be transferred to MICROSEMI, except that
transfer of the finished goods with Raytheon's trademark and/or
logo already affixed hereon by Raytheon Semiconductor does not
grant any right or license to use such trademark or logo to
MICROSEMI. MICROSEMI is hereby granted the sole and limited
authority to sell the finished goods described on Exhibit C hereto
as previously marked by Raytheon Semiconductor.
4.3 Raytheon Semiconductor assumes the warranties, as
limited in Raytheon's standard terms and conditions of sale, for
product sold by Raytheon Semiconductor. MICROSEMI assumes the
warranties, pursuant to MICROSEMI's terms and conditions, if any,
for product sold by MICROSEMI.
4.4 The intellectual property described herein will be
licensed exclusively to MICROSEMI to the extent that Raytheon
Semiconductor has the right to do so.
4.5 All assets will be sold "as is" and "where is"
without any warranty whatsoever either express or implied. The
licenses will be granted as is" and without warranty, as more
specifically set forth in Section 2 hereinabove.
4.6 THE WARRANTIES EXPRESSED IN THIS SECTION ARE IN LIEU
OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO WARRANTIES OF MERCHANTABILIT'Y OR FITNESS FOR A
PARTICULAR PURPOSE, ALL OF WHICH ARE EXPRESSLY EXCLUDED.
5. Transfer of Customers.
5.1 As set forth below, as part of this Agreement,
Raytheon Semiconductor will transfer its transistor customer list
(except as stated in the exclusions listed in Exhibit G) to
MICROSEMI.
Raytheon Semiconductor agrees not to compete with MICROSEMI in the
transistor product business to the extent of the products and
intellectual property which are hereby sold to MICROSEMI for a
period of five (5) years after the Closing Date.
5.2 Raytheon Semiconductor will make reasonable visits
to customers with MICROSEMI to introduce MICROSEMI to them as a
transistor product source.
5.3 Raytheon Semiconductor will cooperate with MICROSEMI
to prepare a written announcement, acceptable in form to Raytheon
Semiconductor of MICROSEMI's status as the licensee of Raytheon
Semiconductor's transistor technology.
5.4 For the period of one (1) year after the Closing
Date, Raytheon Semiconductor will refer to MICROSEMI all inquiries
regarding purchase of transistor products from existing and
potential customers, with the exceptions noted in paragraph 5.1
hereinabove.
5.5 As regards to MICROSEMI's completing the
manufacture of Raytheon Semiconductor's transistor die, work in
process, and piece part inventory hereby sold to MICROSEMI,
MICROSEMI will prepare and maintain records for the traceability of
such matters from the hands of Raytheon Semiconductor into the
hands of MICROSEMI's customers, and such records shall be kept by
MICROSEMI for a period of five (5) years after the Closing Date.
MICROSEMI will notify Raytheon Semiconductor of any MICROSEMI
customer complaint traceable to the matters hereby sold and/or
licensed within ten (10) business days after MICROSEMI first learns
of such complaint, pursuant to section 7 hereinbelow. Such notice
does not in any way modify the limitation of warranties set forth
in section 4, above.
6. Assignment or Transfer of this Agreement.
Neither party shall assign or otherwise transfer any
rights or obligations arising under this Agreement without the
prior written approval of the other party, which will not be
unreasonably withheld.
7. Notification.
All notices given hereunder shall be in writing and sent
to the addresses stated below:
To Raytheon: Raytheon Semiconductor 350 Ellis Street P. 0. Box 7016
Mountain View, CA 94039-7016 Fax (415) 966-7742 Attn.: Rod Libby,
Manager, Quality & Reliability Engineering
To MICROSEMI: Microsemi Corporation 2830 South Fairview Street
Santa Ana, CA. 92704 Fax (714) 966-5256 Attn.: Philip Frey,
Chairman
8. Arbitration.
Any dispute or controversy arising out of, or under, or in
connection with, or in relation to, this Agreement, or the
subject-matter covered herein, which cannot be settled between the
parties, shall be determined by arbitration in San Jose, California
pursuant to the then existing rules of the American Arbitration
Association. Any award rendered therein shall be be det subject to
section 9 hereinbelow, and shail be final and binding upon each and
all of the parties, and their successors in interest, and a
judgment thereon may be entered in any court of competent
jurisdiction. The arbitrator may award the reasonable costs of
such proceedings and reasonable attorneys' fees to the prevailing
party.
9. Exclusion of Certain Damages.
In no event shall either party be liable for
consequential, incidental or special (including multiple or
punitive) damages arising out of this Agreement or the matters sold
or licensed pursuant hereto.
10. Taxes and Other Char-ges.
Prices do not include any applicable present or future
packing charges, warehouse charges, handling, shipping or insurance
charges, inspection fees, consular fees, import or export duties,
brokerage fees, taxes and levies (including but not limited to,
value added, property, sales, use, privilege, excise or similar
taxes), whether imposed by the United States or any other state,
local, or foreign government entity. Such taxes or charges when
applicable shall be paid by MICROSEMI. Obtaining any necessary
permits, licenses or certifications for the import or export of
products, equipment or technical data as described in this
Agreement shall be the responsibility of MICROSEMI.
11. This Agreement shall be governed by the laws of the State
of California, U.S.A.
12. This is the entire Agreement between the parties relative
to the sale and/or license of the matters described on the exhibits
hereto, and it supersedes any prior or contemporaneous written or
oral agreements thereon and may not be amended or modified except
by subsequent agreement in writing by duly authorized officers or
representatives of the parties.
This Agreement may be executed in duplicate originals or in faxed
copies, each of which will constitute an original.
13. Acknowledgment of Inspection.
By signing this agreement, MICROSEMI acknowledges that it
has been given the opportunity to inspect the assets to be sold and
the intellectual property to be licensed by Raytheon Semiconductor
under this Agreement.
RAYTHEON SEMICONDUCTOR
By:
Title:
Date:
MICROSEMI CORPORATION
By:
Title:
Date:
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-01-1995
<PERIOD-START> OCT-03-1994
<PERIOD-END> APR-02-1995
<CASH> 2998
<SECURITIES> 0
<RECEIVABLES> 20618
<ALLOWANCES> 2025
<INVENTORY> 40971
<CURRENT-ASSETS> 68930
<PP&E> 52171
<DEPRECIATION> 28272
<TOTAL-ASSETS> 100944
<CURRENT-LIABILITIES> 32079
<BONDS> 35281
<COMMON> 1526
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 100944
<SALES> 60098
<TOTAL-REVENUES> 60098
<CGS> 44980
<TOTAL-COSTS> 44980
<OTHER-EXPENSES> 8928
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2509
<INCOME-PRETAX> 3808
<INCOME-TAX> 1447
<INCOME-CONTINUING> 2361
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2361
<EPS-PRIMARY> .30
<EPS-DILUTED> .26
</TABLE>
BILL OF SALE AND PURCHASE AGREEMENT
TelCom Universal Inc, a Delaware corporation ("Seller"), for
the good and valuable consideration, including the cash purchase price of
Three Hundred Fifty Thousand Dollars ($350,000), the receipt of Thirty-Five
Thousand ($35,000) of which is hereby acknowledged, does hereby sell,
assign, bargain, convey and transfer to Microsemi Corp., Watertown, Ma.,
a Massachusetts Corporation ("Buyer"), the following assets (the "Assets")
of Seller's HI-Nil Semiconductor business (the "Business") located at its
1300 Terra Bella Avenue, Mountain View, California and 10 Sam Chuk Street,
San Po Kong, Kowloon, Hong Kong (the "Facilities"):
(a) Inventory. All inventory, including work in progress and finished
products as listed on Schedule I hereto; provided, however, that if the
actual die and finished goods shipped to Buyer are less than 95% of the
inventory count provided on Schedule 1, Seller shall refund to Buyer $0.20
per die and $1.50 per finished unit, on a total aggregate basis. If the
total count of transferred inventory is higher, there will be no additional
charge to Buyer.
(b) Process Documentation. All prints and masks, software and tooling
used exclusively in the manufacture of all product lines of the Business and
located at the Facilities on the date hereof (the "Process Documentation").
Schedule 2,attached hereto, lists all process specs to be transferred to the
Seller.
Schedule 3, attached hereto, lists the product data sheets to be transferred.
Schedule 4, attached hereto, lists the assembly subcontractor and part number.
(c) Customer Lists. Such customer lists and mailing lists used
exclusively by the Business on the date hereof, which lists have already
been provided to Buyer.
(d) Books and Records. Included in item (b).
(e) Equipment. The Fairchild 4000 Tester located at Buyer's facility
in Hong Kong will be transferred to Buyer as put of this agreement. This
tester and fixtures will be transported from Seller's facility by the Buyer
and is offered "as is".
(f) Technical Assistance. Seller to . provide Buyer some technical
assistance in the form of engineering visits and support to learn wafer
technology. This support to be provided on a "best efforts" basis by Seller
due to the fact that many of the personnel who worked on this product line
are no longer employed by the Seller.
(g) Buyer may test product at Seller's Hong Kong Facility for a
minimum of sixty (60) days from the signing of this Agreement. All
manufacturing costs incurred will be the responsibility of the Buyer.
Seller does not convey, transfer, assign or bargain to Buyer and Buyer
does not purchase, acquire or accept from Seller any asset other than the
Assets. Without limitation the following assets are specifically excluded
from this transaction: (i) Seller's proprietary or confidential business or
technical information, records and policies which relate generally to Seller
or TelCom Semiconductor and TelCom Universal, Inc. and are not used primarily
in the Business, such as accounting procedures instructions, organization
manuals and strategic plans; (11) any TelCom Semiconductor and TelCom
Universal, Inc. or Seller marks, including any and all trademarks, trade
names, service marks, slogans, logos and other like property related to or
including the names TelCom Semiconductor and TelCom Universal, Inc., the
marks TelCom Semiconductor and TelCom Universal, Inc., or any derivatives
thereof, the TelCom logo or any derivatives thereof, and any and all
trademarks, trade names, service marks, slogans logos, and the like used by
any company affiliated with TelCom Semiconductor and TelCom Universal, Inc.;
and (iii) equipment (whether for production, testing or otherwise) other than
the Equipment.
Seller hereby represents and warrants to Buyer that the Assets
are conveyed hereby free and clear of all liens and encumbrances and that
it has the corporate power and authority to enter into the transactions
contemplated hereby.
Buyer hereby represents and warrants to Seller that it has the
corporate power and authority to enter into the transactions contemplated
hereby.
Except as otherwise expressly provided in this Bill of Sale and Purchase
Agreement, Seller makes no representations or warranties whatsoever to Buyer,
express or implied, concerning the Assets or the Business, including, without
limitation, any representation or warranty as to value, quality, quantity,
condition, merchantability, suitability, design or use, salability,
obsolescence, working order, validity or enforceability, and BUYER
SPECIFICALLY ACKNOWLEDGES THAT NO WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE ARE MADE OR SHOULD BE IMPLIED HEREIN. THE ASSETS
ARE SOLD "AS-IS, WHERE-IS." Buyer acknowledges that it has had an opportunity
to inspect the Assets.
Buyer shall be responsible for returns of and liability (including
products liability) with respect to Inventory or products which are shipped
on and after the date of closing by Buyer. Buyer shall have no
responsibility or liability with respect to products shipped prior to the
date of closing or after the date of closing if such product is shipped by
Seller. Buyer agrees to indemnify, defend and hold Seller harmless from and
against all costs and expenses (including, without limitation, reasonable
attorneys' fees), damages and losses resulting from the use or shipment of
the Inventory of products by Buyer.. Buyer also agrees to pay any sales or
use taxes with respect to the sale of the Assets.
Seller agrees to indemnify, defend and hold Buyer harmless from and
against all costs and expenses (including, without limitation, reasonable
attorneys' fees), damages and losses resulting from the use or shipment of
products which were shipped prior to the date of closing or later by the
Seller.
Buyer agrees that it shall not ship Inventory which bears a TelCom name
or stamp unless such shipment is accompanied by a letter which contains the
following language: "These products are being sold by Microsemi Corp. Neither
TelCom Semiconductor and TelCom Universal, Inc. nor any of its affiliates
warrant or are responsible for these products."
This Bill of Sale and Purchase Agreement shall be governed by the
internal laws of the State of California, without reference to choice of laws
provisions of California or any other jurisdiction. If any litigation is
commenced between the parties hereto concerning any provision hereof or the
rights and duties of any person or entity hereunder, solely as between the
parties hereto or their successors the party or parties prevailing in such
proceeding will be entitled to the reasonable attorneys' fees and expense of
counsel and court costs incurred by reason of such litigation. This Bill of
Sale and Purchase Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same instrument. This Bill of Sale and Purchase Agreement shall be
binding on and inure to the benefit of the respective successors and assigns
of the parties hereto.
IN WITNESS WHEREOF, Seller and Buyer have caused this Bill of Sale and
Purchase Agreement to be duly executed on this 2nd day of January, 1995.
TelCom Semiconductor and TelCom Universal, Inc.
By: /s/ Phillip Drayer
Its: President
Microsemi Corporation
By: /s/ Philip Frey, Jr.
Its: President
SUPPLEMENT TO FINANCING DOCUMENTS (INDENTURE OF TRUST AND LOAN
AGREEMENT) RELATING TO INDUSTRIAL DEVELOPMENT AUTHORITY OF THE CITY
OF SANTA ANA, 1985 INDUSTRIAL DEVELOPMENT REVENUE BONDS (MICROSEMI
CORPORATION PROJECT) DATED AS OF JANUARY 15, 1995
This Supplement to Financing Documents (the "1995 Amendment")
relating to the Industrial Development Authority of the City of
Santa Ana (the "Issuer") issue of bonds entitled 1985 Industrial
Development Revenue Bonds (Microsemi Corporation Project), (the
"Bonds") is entered into by and among the Issuer, First Interstate
Bank of California, as trustee (the "Trustee") and Microsemi
Corporation (the "Borrower").
RECITALS
1. The Issuer has previously issued the Bonds to provide
financing for the manufacturing project of the Borrower pursuant to
an indenture of trust (the "Indenture") dated as of February 1,
1985, by and between the Issuer and the Trustee as amended by a
certain Supplemental Indenture No. 1, dated as of January 1, 1992.
2. The proceeds of the Bonds were loaned to the Borrower to
provide financing for a manufacturing project located within the
City of Santa Ana pursuant to that certain loan agreement (the
"Loan Agreement") dated as of February 1, 1985, by and between the
Issuer and the Borrower.
3. The Bonds are subject to remarketing pursuant to the
Indenture on February 1, 1995, (the "Reset Date") and, pursuant to
the Indenture and Loan Agreement, Stone & Youngberg (the
"Remarketing Agent") has been appointed Remarketing Agent in
connection therewith.
4. The parties hereto wish to amend (or consent to the
amendment, as applicable) of the Indenture and the Loan Agreement
to facilitate the remarketing of the Bonds on the Reset Date on
terms which are consistent with the requirements of the
Reimbursement Agreement (as defined in the Indenture) and efficient
for the Borrower, to the extent set forth in this 1995 Amendment.
5. The Trustee has confirmed to the Issuer and the Bondholder
that the requisite consent of the Bond Owner (as defined in the
Indenture) and the Bank (as defined in the Indenture) to these
amendments has been obtained, and Standard & Poor's Ratings Group
has issued its rating to be applicable to the Bonds from and after
the Reset Date.
<PAGE>
AGREEMENT
1. Amendments to Indenture. The Issuer and the Trustee hereby
agree that the Indenture shall be and is hereby amended as set
forth in this section, and the Borrower hereby consents to such
amendments.
(a) The following changes to the definitions set forth in
Section 1.01 of the Indenture are made:
(i) The following definitions are hereby amended and
restated in their entirety to read as follows:
"Act of Bankruptcy" means the filing of a petition in
bankruptcy (or other commencement of a bankruptcy or similar
proceeding) by or against the Borrower, the Issuer or any guarantor
of the Borrower under any applicable bankruptcy, insolvency or
similar law as now or hereafter in effect.
"Alternate Letter of Credit" means a letter of credit
(other than the original Letter of Credit or any Substitute Letter
of Credit), or, with the written consent of the Issuer, a committed
line of credit, bond purchase agreement, surety bond, bond
insurance policy or other instrument, or any combination thereof,
issued pursuant to Section 4.02(e) of the Loan Agreement in
anticipation of the expiration or replacement of the Letter of
Credit, issued by a financial institution, under the terms of which
the Trustee is authorized to draw an amount to pay when due,
whether at maturity or prior thereto upon redemption or
acceleration, the principal of and interest and premium (other than
principal or premium upon optional redemption) on the Bonds, except
to the extent that Eligible Funds shall be on deposit in the Bond
Fund and available to make any such payment.
"Eligible Funds" means moneys: (a) deposited by the
Borrower with the Trustee and so designated by the Borrower, which
moneys shall have been held by the Trustee in a segregated account
of the Bond Fund for such purposes (the "Eligible Funds Account")
for at least 123-days prior to the date notice of redemption is
given in connection with a redemption of Bonds, provided that no
Act of Bankruptcy shall have occurred during such 123-day period
after such moneys were deposited with the Trustee in the Eligible
Funds Account (the Trustee shall be entitled to rely on a
certificate of the Borrower to the effect that no Act of Bankruptcy
has occurred as evidence that no Act of Bankruptcy has occurred),
or (b) derived from proceeds of the Bonds held by the Trustee in a
segregated account from the date of issuance of the Bonds, or (c)
which constitute proceeds of refunding bonds or moneys from any
other source, including amounts provided by the Borrower, or any
guarantor of the Borrower, so long as the Trustee receives an
opinion from Bond Counsel, or nationally recognized bankruptcy
counsel acceptable to S&P's, prior to the giving of notice of
redemption of any Bonds to the effect that such moneys are not
recapturable as a preferential payment by any trustee in bankruptcy
under the United States Bankruptcy Code in the event of an Act of
Bankruptcy, or (d) the investment of any of the moneys above once
they constitute Eligible Funds, or (e) which constitute any
combination of the foregoing.
"1986 Code" means the Internal Revenue Code of 1986 as in
effect on February 1, 1995 or (except as otherwise referenced
herein) as it may be amended to apply to obligations issued on
February 1, 1995, together with applicable proposed, temporary and
final regulations promulgated, and applicable official public
guidance published, under the 1986 Code.
"Permitted Investments" means any of the following which
at the time of investment are legal investments under the laws of
the State for the moneys proposed to be invested therein:
(a) Federal Securities;
(b) interest-bearing demand or time deposits
(including certificates of deposit) in federal or State chartered
savings and loan associations or in national or State banks
(including the Trustee) either (a) the obligations of which or the
obligations of the holding company of which are rated at least as
high as the then existing rating on the Bonds by Moody's (if the
Bonds are then rated by Moody's) and by S&P's (if the Bonds are
then rated by S&P's), or (b) which have deposits insured by the
Federal Deposit Insurance Corporation or in federal savings and
loan associations or State chartered savings and loan associations
which have deposits insured by the Federal Savings and Loan
Insurance Corporation, provided, however, that the portion of such
certificates of deposit in excess of the amount insured by the
Federal Deposit Insurance Corporation or the Federal Savings and
Loan Insurance Corporation, if any, shall be secured at all times
in the manner provided by law by collateral security having a
market value not less than the amount of such excess, consisting of
Federal Securities;
(c) obligations issued by any corporation organized
and operating within the United States of America having assets in
excess of $500,000,000, which obligations are rated at least as
high as the then existing rating on the Bonds by Moody's (if the
Bonds are then rated by Moody's) and by S&P's (if the Bonds are
then rated by S&P's);
(d) money market funds which are rated at least as
high as the then existing rating on the Bonds by Moody's (if the
Bonds are then rated by Moody's) and by S&P's (if the Bonds are
then rated by S&P's) including funds for which First Interstate
Bancorp, its affiliates or subsidiaries provide investment advisory
or other management services, if so rated;
(e) bills of exchange or time drafts drawn on and
accepted by a commercial bank, otherwise known as bankers
acceptances, which are eligible for purchase by the Federal Reserve
System and the obligations of which commercial bank or the
obligations of the holding company of which are rated at least as
high as the then existing rating on the Bonds by Moody's (if the
Bonds are then rated by Moody's) and by S&P's (if the Bonds are
then rated by S&P's); and "S&P's" means Standard & Poor's Ratings
Group, or its successors.
(ii) the following definitions are added to Section 1.01,
to be inserted in alphabetical order:
"Depository" or "DTC" means The Depository Trust
Company, New York, New York, a limited purpose trust company
organized under the laws of the State of New York in its capacity
as securities depository for the Bonds.
"Letter of Representations" means the letter of the
Issuer and the Trustee delivered to and accepted by the Depository
on or prior to issuance of the Bonds as book-entry bonds setting
forth the basis on which the Depository serves as depository for
such book-entry bonds, as originally executed or as it may be
supplemented or revised or replaced by a letter from the Issuer and
the Trustee delivered to and accepted by the Depository in
substantially the form attached hereto as Exhibit B.
"Nominee" means the nominee of the Depository, which
may be the Depository, as determined from time to time pursuant to
Section 2.09 hereof.
"Participants" means those broker-dealers, banks and
other financial institutions from time to time for which the
Depository holds book-entry bonds as securities depository.
(iii) the definition of the term "Rating Category" or
"Rating Categories" is hereby deleted in its entirety.
(b) The last sentence of the first paragraph of
Section 2.02 of the Indenture is hereby amended in full to read as
follows:
"The Bonds shall be dated February 1, 1985 and
shall mature on the dates and bear interest from and after the
Reset Date at the rates per annum as set forth below:
Maturity Amount Interest Rate
February 1, 1998 $1,050,000 6.00%
February 1, 1999 100,000 6.15%
February 1, 2000 100,000 6.30%
February 1, 2001 100,000 6.40%
February 1, 2002 100,000 6.50%
February 1, 2003 100,000 6.60%
February 1, 2004 100,000 6.70%
February 1, 2005 3,700,000 6.90%
(c) There is hereby amended into the Indenture a
new Section 2.09, to read in full as follows:
Section 2.09. Book-Entry System.
(a) Election of Book-Entry System. On or prior to
the remarketing of the Bonds on the Reset Date, the Issuer may
provide that such Bonds shall be initially issued as book-entry
Bonds. If the Issuer shall elect to deliver any Bonds in
book-entry form, then the Issuer shall cause the delivery of a
separate single fully registered bond (which may be typewritten)
for each maturity date of such Bonds in an authorized denomination
corresponding to that total principal amount of the Bonds
designated to mature on such date. Upon initial issuance, the
ownership of each such Bond shall be registered in the Bond
Registration Books in the name of the Nominee, as nominee of the
Depository and ownership of the Bonds, or any portion thereof, may
not thereafter be transferred except as provided in Section
2.09(e).
With respect to book-entry Bonds, the Issuer
and the Trustee shall have no responsibility or obligation to any
Participant or to any person on behalf of which such a Participant
holds an interest in such book-entry Bonds. Without limiting the
immediately preceding sentence, the Issuer and the Trustee shall
have no responsibility or obligation with respect to (i) the
accuracy of the records of the Depository, the Nominee, or any
Participant with respect to any ownership interest in book-entry
Bonds, (ii) the delivery to any Participant or any other person,
other than an Owner as shown in the Bond Registration Books, of any
notice with respect to book-entry Bonds, including any notice of
redemption, (iii) the selection by the Depository and its
Participants of the beneficial interests in book-entry Bonds to be
redeemed in the event the Issuer redeems the Bonds in part, or (iv)
the payment by the Depository or any Participant or any other
person, of any amount of principal of, premium, if any, or interest
on book-entry Bonds. The Issuer and the Trustee may treat and
consider the person in whose name each book-entry Bond is
registered in the Bond Registration Books as the absolute Owner of
such book-entry Bond for the purpose of payment of principal of,
premium and interest on such Bond, for the purpose of giving
notices of redemption and other matters with respect to such Bond,
for the purpose of registering transfers with respect to such Bond,
and for all other purposes whatsoever. The Trustee shall pay all
principal of, premium, if any, and interest on the Bonds only to or
upon the order of the respective Owner, as shown in the Bond
Registration Books, or his respective attorney duly authorized in
writing, and all such payments shall be valid and effective to
fully satisfy and discharge the Issuer's obligations with respect
to payment of principal of, premium, if any, and interest on the
Bonds to the extent of the sum or sums so paid. No person other
than an Owner, as shown in the Bond Registration Books, shall
receive a Bond evidencing the obligation to make payments of
principal of, premium, if any, and interest on the Bonds. Upon
delivery by the Depository to the Owner and the Trustee, of written
notice to the effect that the Depository has determined to
substitute a new nominee in place of the Nominee, and subject to
the provisions of Section 2.02 hereof with respect to record dates,
the word Nominee in this Indenture shall refer to such nominee of
the Depository.
(b) Delivery of Letter of Representations. In
order to qualify the book-entry Bonds for the Depository's
book-entry system, the Issuer and the Trustee shall execute and
deliver to the Depository a Letter of Representations. The
execution and delivery of a Letter of Representations shall not in
any way impose upon the Issuer or the Trustee any obligation
whatsoever with respect to persons having interests in such
book-entry Bonds other than the Owners, as shown on the Bond
Registration Books. By executing a Letter of Representations, the
Trustee shall agree to take all action necessary at all times so
that the Issuer will be in compliance with all representations of
the Issuer in such Letter of Representations. In addition to the
execution and delivery of a Letter of Representations, the Issuer
and the Trustee shall take such other actions, not inconsistent
with this Indenture, as are reasonably necessary to qualify
book-entry Bonds for the Depository's book-entry program.
(c) Selection of Depository. In the event (i) the
Depository determines not to continue to act as securities
depository for book-entry Bonds, or (ii) the Issuer determines
that continuation of the book-entry system is not in the best
interest of the beneficial owners of the Bonds or the Issuer, then
the Issuer will discontinue the book-entry system with the
Depository. If the Issuer determines to replace the Depository
with another qualified securities depository, the Issuer shall
prepare or direct the preparation of a new single, separate, fully
registered Bond for each of the maturity dates of such book-entry
Bonds, registered in the name of such successor or substitute
qualified securities depository or its Nominee as provided in
subsection (e) hereof. If the Issuer fails to identify another
qualified securities depository to replace the Depository, then the
Bonds shall no longer be restricted to being registered in such
Bond register in the name of the Nominee, but shall be registered
in whatever name or names the Owners transferring or exchanging
such Bonds shall designate, in accordance with the provisions of
Sections 2.03 and 2.04 hereof.
(d) Payments To Depository. Notwithstanding any
other provision of this Indenture to the contrary, so long as all
Outstanding Bonds are held in book-entry and registered in the name
of the Nominee, all payments of principal of, redemption premium,
if any, and interest on such Bond and all notices with respect to
such Bond shall be made and given, respectively, to the Nominees,
as provided in the Letter of Representations or as otherwise
instructed by the Depository and agreed to by the Trustee
notwithstanding any inconsistent provisions herein.
(e) Transfer of Bonds to Substitute Depository.
(i) The Bonds shall be initially issued as
provided in Section 2.01 hereof. Registered ownership of such
Bonds, or any portions thereof, may not thereafter be transferred
except:
(A) to any successor of DTC or its
nominee, or of any substitute depository designated pursuant to
clause (B) of subsection (i) of this Section 2.09(e) ("Substitute
Depository"); provided that any successor of DTC or Substitute
Depository shall be qualified under any applicable laws to provide
the service proposed to be provided by it;
(B) to any Substitute Depository, upon
(1) the resignation of DTC or its successor (or any Substitute
Depository or its successor) from its functions as depository, or
(2) a determination by the Issuer that DTC (or its successor) is no
longer able to carry out its functions as depository; provided that
any such Substitute Depository shall be qualified under any
applicable laws to provide the services proposed to be provided by
it; or
(C) to any person as provided below, upon
(1) the resignation of DTC or its successor (or any Substitute
Depository or its successor) from its functions as depository, or
(2) a determination by the Issuer that DTC or its successor (or
Substitute Depository or its successor) is no longer able to carry
out its functions as depository or to discontinue the book entry
system.
(ii) In the case of any transfer pursuant to
clause (A) or clause (B) of subsection (i) of this Section 2.09(e),
upon receipt of all Outstanding Bonds by the Trustee, together with
a written request of the Issuer to the Trustee designating the
Substitute Depository, a single new Bond, which the Issuer shall
prepare or cause to be prepared, shall be issued for each maturity
of Bonds then Outstanding, registered in the name of such successor
or such Substitute Depository or their Nominees, as the case may
be, all as specified in such written request of the Issuer. In the
case of any transfer pursuant to clause (C) of subsection (i) of
this Section 2.09(e), upon receipt of all Outstanding Bonds by the
Trustee, together with a written request of the Issuer to the
Trustee, new Bonds, which the Issuer shall prepare or cause to be
prepared, shall be issued in such denominations and registered in
the names of such persons as are requested in such written request
of the Issuer, subject to the limitations of Section 2.01 hereof,
provided that the Trustee shall not be required to deliver such new
Bonds within a period of less than sixty (60) days from the date of
receipt of such written request from the Issuer.
(iii) In the case of a partial redemption or an
advance refunding of any Bonds evidencing a portion of the
principal maturing in a particular year, DTC or its successor (or
any Substitute Depository or its successor) shall make an
appropriate notation on such Bonds indicating the date and amounts
of such reduction in principal, in form acceptable to the Trustee,
all in accordance with the Letter of Representations. The Trustee
shall not be liable for such Depository's failure to make such
notations or errors in making such notations.
(iv) The Issuer and the Trustee shall be
entitled to treat the person in whose name any Bond is registered
as the Owner thereof for all purposes of this Indenture and any
applicable laws, notwithstanding any notice to the contrary
received by the Trustee or the Issuer; and the Issuer and the
Trustee shall not have responsibility for transmitting payments to,
communicating with, notifying, or otherwise dealing with any
beneficial owners of the Bonds. Neither the Issuer nor the Trustee
shall have any responsibility or obligation, legal or otherwise, to
any such beneficial owners or to any other party, including DTC or
its successor (or Substitute Depository or its successor), except
to the Owner of any Bonds, and the Trustee may rely conclusively on
its records as to the identity of the Owners of the Bonds.
(d) Section 4.01 of the Indenture is hereby amended as
follows:
(1) The optional redemption schedule applicable to the
Bonds after the Reset Date set forth in subsection (a) of Section
4.01 is hereby amended and restated in full as follows:
"After the Reset Date Redemption Price
February 1, 2003 to January 31, 2004 101%
February 1, 2004 and thereafter 100%
(2) Section 4.01(c) of the Indenture is hereby amended
and restated in full to read as follows:
(c) The Bonds are also subject to optional redemption by the
Issuer on any Payment Date from excess moneys in the Construction
Fund transferred to the Bond Fund and elected to be used for such
purpose pursuant to Section 3.03 hereof, in whole, or in part by
lot, without premium to the extent such moneys constitute Eligible
Funds."
(e) Section 4.02 of the Indenture is hereby amended as
follows:
(1) Section 4.02(b)(i) of the Indenture is hereby
amended and restated to read in full as follows:
(i) The Substitute Letter of Credit shall be an
irrevocable letter of credit substantially identical in form and
substance to the Letter of Credit and shall be reasonably
acceptable to the Trustee and delivery of such letter of credit
shall be accompanied by written evidence from S&P's (if the Bonds
are rated by S&P's) that such substitution will not cause the
rating on the Bonds to be lower than the rating assigned to the
Bonds; moreover, if the rating assigned to the Bonds following the
delivery of the Substitute Letter of Credit will be lower than
S&P's A+ (or Moody's equivalent), so long as any Defined Asset Fund
sponsored by Merrill Lynch, Pierce, Fenner & Smith Incorporated
owns any Bonds the prior written consent of the Trustee for such
Fund shall also be required, which consent shall not unreasonably
be withheld."
(2) The mandatory sinking fund redemption schedule set
forth in Section 4.02(c) is amended to reflect an additional
Sinking Fund Payment applicable to the Bonds maturing February 1,
2005 of $350,000 payable February 1, 1995. Notwithstanding
anything to the contrary in the Indenture, the
Remarketing Agent shall not remarket a principal amount of
Outstanding Bonds equal to the February 1,1995 Sinking Fund
Payment, and such principal amount of Bonds shall be promptly
cancelled by the Trustee upon the Trustee's payment (or deemed
payment) of the redemption price of such Bonds from the proceeds of
a drawing on the Letter of Credit, without regard to the notice or
other requirements of the Indenture for such sinking fund
redemption.
(3) The last sentence of Section 4.02(d) is hereby
amended and restated in full to read as follows:
"Such redemption shall be made on the Reset Rate
or expiration date, whichever is earlier."
(f) The last paragraph of Section 5.01 of the Indenture is
hereby amended and restated in full to read as follows:
"The Issuer hereby approves the form and terms of the
Letter of Credit as finally executed by the Bank and hereby
authorizes and directs the Trustee to exercise its rights
thereunder. The Trustee shall draw under the Letter of Credit in
accordance with its terms, subject to the terms hereof and of the
Agreement, at such times and in such amounts as is sufficient to
receive moneys thereunder on each interest Payment Date and
redemption date to make timely payments of the principal of and
interest on the Bonds in accordance with the terms hereof, and to
pay the premium payable hereunder (exclusive of any principal or
premium payable under Section 4.01(a) hereunder) with the proceeds
of a draw on the Letter of Credit. All amounts drawn on the Letter
of Credit shall be deposited in the Letter of Credit Fund by the
Trustee promptly upon the receipt thereof. The Trustee may accept
any Alternate Letter of Credit provided in accordance with the
terms hereof and of the Loan Agreement and, upon such acceptance,
shall return the replaced Letter of Credit to the Bank. The
Trustee shall make interest drawings monthly on the Letter of
Credit in an amount equal to the interest coming due on the Bonds
on the next succeeding Payment Date at such time as will cause
payment to be received on the applicable Payment Date."
(g) The last paragraph of Section 5.03 of the Indenture is
hereby amended and restated in full to read as follows:
"Notwithstanding anything stated in Section 5.02 hereof,
or stated elsewhere in this Indenture, the Trustee shall only apply
proceeds of a drawing on the Letter of Credit deposited in the
Letter of Credit Fund and moneys in the Bond Fund to the payment of
principal of and interest and premium, if any, on the Bonds in the
following order of priority: (1) amounts derived from a drawing on
the Letter of Credit, or (2) Eligible Funds."
(h) The first paragraph of Section 5.04 of the Indenture is
hereby amended and restated in full to read as follows:
"Section 5.04. Investments of Moneys in Special Funds.
Subject to the limitations contained in Sections 5.05 and 5.06
hereof, any moneys in any of the funds to be established by the
Trustee pursuant to Sections 3.03, 4.02(c), 5.02 and 5.03 shall be
invested upon the written request of the Borrower by the Trustee,
if and to the extent then permitted by law, in any of the
following, provided that the Trustee shall not be required to make
any investment inconsistent with its fiduciary duties or any
provisions of this Indenture: (a) Federal Securities, or (b)
Permitted Investments; provided that (1) amounts drawn on the
Letter of Credit may be invested and reinvested by the Trustee,
only in Federal Securities maturing not more than thirty (30) days
after the date on which they are acquired, and (2) amounts in the
Bond Fund shall not be invested in any instruments bearing a credit
rating by Moody's if the Bonds are then rated by Moody's, and
S&P's, if the Bonds are then rated by S&P's, which is lower than
the rating(s) assigned to the Bonds. All such investments shall
mature not later, nor, to the extent reasonably practicable,
earlier, than the date such moneys or investment proceeds are
required for application hereunder. If the written investment
request of the Borrower is not timely received by the Trustee,
Trustee shall invest in those investments defined in clause (d) of
the definition of Permitted Investments."
(i) Section 5.06 of the Indenture is hereby amended by
adding a new subsection (f) and (g) at the end thereof, to read as
follows:
(f) Rebate Requirement. The Authority shall take and
shall cause the Borrower and Bank to take any and all actions
necessary to assure compliance with Section 148(f) of the 1986
Code, relating to the rebate of excess investment earnings, if any,
to the federal government to the extent that such section is
applicable to the Bonds.
(g) No Arbitrage. The Authority shall not take, or
permit or suffer to be taken by the Trustee, the Borrower, the Bank
or otherwise, any action with respect to the proceeds of the Bonds
which, if such action had been reasonably expected to have been
taken, or had been deliberately and intentionally taken, on the
Reset Date would have caused the Bonds to be "arbitrage bonds"
within the meaning of Section 148 of the 1986 Code."
(j) The following sentence is added at the end of the
penultimate paragraph of Section 7.01 of the Indenture:
"Following the date of such acceleration and
payment on the Bonds, further interest shall cease to accrue on the
Bonds."
(k) Section 8.08(d) of the Indenture is hereby amended
and restated in full to read as follows:
"Any resignation or removal of the Trustee and
appointment of a successor trustee pursuant to any of the
provisions of this Section 8.08 shall become effective only upon
acceptance of appointment by the successor trustee as provided in
Section 8.09, upon transfer of the Letter of Credit to the
successor trustee, and upon the consent of the Borrower which shall
not be unreasonably withheld."
(l) In addition to all other notices required to be
given under the Indenture, the Trustee shall provide S&P's with
written notice of any Event of Default under the Indenture, of any
amendment or supplement to the Indenture for which Bond Owner
consent is required, or of any substitution or replacement of an
existing Letter of Credit with an Alternate Letter of Credit
or Substitute Letter of Credit in accordance with the terms of the
Indenture.
(m) The form of Bond to be effective from and after
the Reset Date hereby is amended in full from that set forth in the
Recitals to the form as set forth in Exhibit A attached hereto and
incorporated herein by reference, to be effective from and after
the Reset Date.
(n) Anything to the contrary in the Indenture
notwithstanding, all action and proceedings of the Trustee, the
Issuer, the Remarketing Agent and the Borrower in connection with
the remarketing of the Bonds on the Reset Date are hereby ratified,
confirmed and approved and shall be deemed undertaken in compliance
with the Indenture in all respects, and that certain extended
Letter of Credit of the Bank dated as of February 1, 1995 and held
by the Trustee is hereby confirmed and shall be treated as an
Alternate Letter of Credit for all purposes of the Indenture.
2. The Issuer and the Borrower hereby agree that the Loan
Agreement shall be and is hereby amended as set forth in this
Section, and the Trustee hereby consents to such amendment.
(a) Section 4.02(a) of the Loan Agreement is hereby
amended in full to read as follows:
"(a) Repayment Installments. In consideration of
the loan and advance made to the Borrower hereunder (and pursuant
to the procedures established in the Indenture), the Borrower
agrees that it will pay to the Issuer installments of principal and
interest on the Loan (and premium under certain circumstances as
provided in the Indenture) in the amounts and at the times as
follows: (i) on the first day of each month commencing May 1, 1985
an amount equal to the interest coming due on the Bonds on such
interest Payment Date, provided that the installment of interest
payable on May 1, 1985 shall equal $150,312.50; (ii) commencing
February 1, 1986, and annually thereafter to and including February
1, 1995, an amount equal to the sinking fund payment due on each of
such sinking fund payment dates pursuant to the Indenture; and
(iii) the principal due on the Bonds on such dates as provided
in the Indenture, with all unpaid principal to be due and payable
February 1, 2005."
(b) Section 4.02(e) of the Loan Agreement is hereby
amended and restated to read in full as follows:
"(e) Alternate Letter of Credit. The Borrower
may, at its election, at any time at least forty-five (45) days
prior to the date of expiration of any Letter of Credit, provide
for the delivery to the Trustee of either (1) an extension of the
original Letter of Credit, or (2) an Alternate Letter of Credit.
Borrower may replace any Letter of Credit with an Alternate
Letter of Credit at any time; provided that, so long as any Defined
Asset Fund sponsored by Merrill Lynch, Pierce, Fenner & Smith
Incorporated owns any Bonds, if such replacement will cause the
rating on the Bonds to be lower than S&P's A+ (or Moody's
equivalent), the prior written consent of the trustee for such Fund
shall be required to the replacement of any Letter of Credit prior
to its stated expiration date, which consent shall not unreasonably
be withheld. Notwithstanding anything herein to the contrary such
extension or replacement of the original Letter of Credit or such
Alternate Letter of Credit (i) shall not expire prior to April 15,
1995 if delivered prior thereto, (ii) shall have a term of at least
three (3) years, (iii) shall permit the Trustee to draw thereunder
to pay when due the principal and interest and premium on the Bonds
(other than principal and premium upon optional redemption), and
(iv) shall be accompanied by written evidence from S&P's, if the
Bonds are then rated by S&P's, and Moody's, if the Bonds are
then rated by Moody's, to the effect that such substitution or
replacement will not cause the then existing rating on the Bonds to
be reduced or withdrawn."
(c) Anything to the contrary in the Loan Agreement
notwithstanding, all action and proceedings of the Trustee and the
Issuer and the Borrower in connection with the remarketing of the
Bonds on the Reset Date are hereby ratified, confirmed and approved
and shall be deemed undertaken in compliance with the Loan
Agreement in all respects, and that certain extended Letter of
Credit of the Bank dated as of February 1, 1995 and held by the
Trustee is hereby confirmed and shall be treated as an Alternate
Letter of Credit for all purposes of the Loan Agreement.
3. It is the intent of the parties that these amendments
shall cause all requirements of the Indenture and Loan Agreement
applicable to the remarketing of the Bonds and the replacement of
the original Letter of Credit with that certain Letter of Credit of
the Bank dated February 1, 1995 to be met or waived; provided,
however, nothing herein shall be deemed to waive or alter any
provision of any of the Financing Documents necessary to preserve
and maintain or relating to the ongoing excludibility from gross
income of interest on the Bonds for purposes of federal income
taxation.
4. This 1995 Amendment shall be effective on or after
February 1, 1995 upon its execution by the parties hereto and
confirmation of the consent of the Bond Owners (obtained in
accordance with the requirements of the Indenture) and the Bank,
together with evidence of Standard & Poor's Rating Group review of
this 1995 Amendment and receipt of a rating on the Bonds equal
to or better than "A+".
INDUSTRIAL DEVELOPMENT AUTHORITY OF
THE CITY OF SANTA ANA
By: /s/ David N. Ream
Its: Executive Director
ATTEST
/s/ Janice C. Guy
Secretary
FIRST INTERSTATE BANK OF CALIFORNIA,
as Trustee
By: /s/ Teresa Fructuoso
Its: Authorized Officer
MICROSEMI CORPORATION
By: /s/ David R. Sonksen
Its: President
We hereby consent to the 1995 Amendment to Financing Documents
attached hereto.
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ Leslie Reuter
Its: Authorized Officer
STONE & YOUNGBERG, Remarketing Agent
and Purchaser of Bonds pursuant to
Remarketing Agreement
By: /s/ Warren E. Miller
Its: Authorized Officer
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED, Defined Asset Funds, as
sole Bondholder of Remarketed Bonds
By: /s/ James J. King, Jr.
Its: Authorized Signatory
CHASE MANHATTAN BANK, on behalf of
TUTTLE & CO., Sole Bondholder
By: /s/ Michael Ross
Its: Authorized Signatory
<PAGE>
EXHIBIT A
FORM OF BOND
No. R- $
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE CITY OF SANTA ANA
1985 INDUSTRIAL DEVELOPMENT REVENUE BOND
(MICROSEMI CORPORATION PROJECT)
MATURITY DATE DATED DATE INTEREST RATE CUSIP NO.
February 1, 1985
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE
OF CALIFORNIA OR THE CITY OF SANTA ANA IS PLEDGED TO THE PAYMENT OF
THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON ANY BOND, NOR IS
THE STATE OR SUCH CITY IN ANY MANNER OBLIGATED TO MAKE ANY
APPROPRIATION FOR PAYMENT.
The INDUSTRIAL DEVELOPMENT AUTHORITY OF THE CITY OF SANTA ANA
(the "Issuer"), a public, corporate instrumentality of the State of
California, for value received, hereby promises to pay (but only
out of Revenues as hereinafter provided) to CEDE & CO. or
registered assigns, on the maturity date set forth above, the
principal sum set forth above in lawful money of the United States
of America; and to pay interest thereon in like money from the
interest payment date next preceding the date of registration of
this Bond (unless this Bond is registered following the close of
business on the 15th day of the month preceding an interest payment
date and on or before such interest payment date, in which event it
shall bear interest from such interest payment date, or unless this
Bond is registered prior to February 15, 1995, in which event it
shall bear interest from February 1, 1995) at the rate per annum
set forth above, calculated on the basis of a 360-day year of
twelve thirty-day months, payable on March 1, 1995, and thereafter
on the first day of each month until the payment of such principal
sum in accordance with the terms hereof. The final payment hereof
is payable upon surrender at the principal corporate trust office
of First Interstate Bank of California, as trustee (the "Trustee"),
in Los Angeles, California, or at the office of any paying agent,
and the interest hereon and payment of principal hereof (other than
the final payment) is payable by check or draft (or at the request
of any Bond owner of at least $100,000 of Bonds by wire transfer of
immediately available funds as set forth in the Indenture) to the
person whose name appears on the bond registration books of the
Trustee as the registered owner hereof as of the close of business
on the fifteenth day before each interest payment date, whether or
not such day is a business day.
This Bond is one of a duly authorized issue of bonds of the
Issuer designated as the "Industrial Development Authority of the
City of Santa Ana, 1985 Industrial Development Revenue Bonds
(Microsemi Corporation Project)" (the "Bonds"), limited in the
original aggregate principal amount to Six Million Five Hundred
Thousand Dollars ($6,500,000), of the designation indicated on the
face hereof, all issued under and equally secured by an Indenture
of Trust (the "Indenture"), dated as of February 1, 1985 between
the Issuer and the Trustee, as amended heretofore or hereafter.
The proceeds of the Bonds will be used to make a loan (the "Loan")
to Microsemi Corporation, a Delaware corporation (the "Borrower"),
evidenced by a Loan Agreement (the "Loan Agreement"), dated as of
February 1, 1985 between the Borrower and the Issuer, which has
been used for the acquisition, construction and equipping of
certain manufacturing facilities by the Borrower located in the
City of Santa Ana, California. The payment of the principal of
(except upon optional redemption) and interest and premium (under
certain circumstances as provided in the Indenture and the Loan
Agreement) on the Bonds will be fully secured by an irrevocable
Letter of Credit (the "Letter of Credit") issued by Bank of
America National Trust and Savings Association (the "Bank"),
pursuant to a Reimbursement Agreement (the "Reimbursement
Agreement"), dated February 1, 1985 between the Borrower and the
Bank, as amended heretofore or hereafter.
Repayment of the Loan will be secured by a First Deed of Trust
dated February 1, 1985, naming the Trustee as beneficiary.
Reference is hereby made to the Indenture and all indentures
supplemental thereto, and to the Loan Agreement, for a description
of the rights under the Indenture of the registered owners
of the Bonds, of the nature and extent of the security, of the
rights, duties and immunities of the Trustee and of the rights and
obligations of the Issuer thereunder, to all of the provisions of
which Indenture and Loan Agreement the owner of this Bond, by
acceptance hereof, assents and agrees.
The Bonds are authorized to be issued pursuant to the
provisions of the California Industrial Development Financing Act,
constituting Title 10 of the Government Code of the State of
California, as now in effect or as hereafter amended (the "Act").
The Bonds are limited obligations of the Issuer and, as and to the
extent set forth in the Indenture, are payable solely from, and
secured by a pledge of and lien on, the Revenues (as such term is
defined in the Indenture).
The Indenture contains provisions permitting the Issuer and
the Trustee, with the consent of the owners of not less than ninety
percent (90%) in aggregate principal amount of the Bonds at the
time outstanding, evidenced as in the Indenture provided, to
execute supplemental indentures adding any provisions to, or
changing in any manner, or eliminating any of the provisions
of the Indenture; provided, however, that changes not to the
prejudice of the Trustee or the owners of the Bonds may be made
without the consent of such owners and that no such Supplemental
Indenture shall (1) extend the fixed maturity of this Bond or
reduce the rate of interest hereon or extend the time of payment of
interest, or reduce the amount of the principal hereof, or
reduce any premium payable on the redemption hereof, without the
consent of the registered owner hereof, or (2) reduce the aforesaid
percentage of owners of Bonds whose consent is required for the
execution of such supplemental indentures, or extend the time of
payment, or reduce the amount of any sinking fund payment or permit
the creation of any lien on the Revenues prior to or on a parity
with the lien of the Indenture, or permit the creation of any
preference of any Bond owner over any other Bond owner or deprive
the owners of the Bonds of the lien created by the Indenture upon
the Revenues, without the consent of the owners of all Bonds then
outstanding.
The Bonds are subject to mandatory redemption prior to their
stated maturity, as a whole, in the event of the occurrence of a
Determination of Taxability, as further provided in the Indenture.
Such redemption shall be made with the proceeds of a draw on the
Letter of Credit and shall be at a redemption price equal to the
principal amount of the Bonds then Outstanding together with
accrued interest thereon to the date fixed for redemption, plus
a premium of three percent (3%) of the principal amount of the
Bonds to be redeemed.
The Bonds are also subject to mandatory redemption prior to
their stated maturity, as a whole, at a redemption price equal to
the principal amount thereof plus accrued interest thereon to the
date fixed for redemption, without premium, if within thirty (30)
days of an Act of Bankruptcy of the Bank the Borrower does not
deliver to the Trustee a Substitute Letter of Credit, as further
provided in the Indenture.
The Bonds are also subject to mandatory redemption prior to
their stated maturity, as a whole, at the principal amount thereof
together with interest thereon to the date fixed for redemption,
without premium, if the Trustee shall not have received, in
accordance with the terms of the Indenture and the Loan Agreement,
an extension of the Letter of Credit or an Alternate Letter of
Credit (as defined in the Indenture) at least forty-five (45) days
prior to the expiration thereof.
The Bonds are subject to redemption prior to their stated
maturity, at the option of the Issuer, upon request by the
Borrower, as a whole, on any Payment Date, but only from Eligible
Funds and under the circumstances set forth in Section 8.02(b) of
the Agreement, at a redemption price equal to the principal amount
of Bonds to be redeemed together with accrued interest thereon to
the date fixed for redemption. In addition, Bonds are subject to
redemption on any interest payment date from excess moneys in the
Construction Fund pursuant to Section 4.01(c) of the Indenture.
The Bonds are also subject to redemption prior to their stated
maturity, at the option of the Issuer, upon request of the
Borrower, as a whole or in part by lot, on any interest payment
date, on and after February 1, 2003, but only from Eligible Funds,
at the following redemption prices (expressed in terms of total
percentages of the principal amount of Bonds to be redeemed),
together, in each case, with interest accrued to the date fixed for
redemption:
Redemption Period Redemption
(Dates Inclusive) Price
February 1, 2003 to January 31, 2004 101%
February 1, 2004 and thereafter 100%
Upon an Event of Default under the Indenture, the Agreement or
the Reimbursement Agreement, the principal of all Bonds may be
declared due and payable upon the conditions, in the manner and
with the effect provided in the Indenture. The Indenture provides
that in certain events such declaration and its consequences may be
rescinded, with the written consent of the Bank.
If the Trustee shall immediately declare the principal of all
Bonds to be due and payable following a default, it is required to
draw on the Letter of Credit for payment of the principal of and
accrued interest on the outstanding Bonds, together with a premium
equal to three percent (3%) of the principal amount of the
outstanding Bonds. The Indenture further provides that the Bonds
will cease to accrue interest as soon as the Trustee has received,
through a draw on the Letter of Credit, sufficient moneys to
immediately pay the principal of, premium, if any, and accrued
interest on all outstanding Bonds.
The Bonds are issuable as registered Bonds only, without
coupons, in denominations of $5,000 or any integral multiple
thereof.
This Bond is transferable by the registered owner hereof, in
person or by his attorney duly authorized in writing, at the
principal corporate trust office of the Trustee in Los Angeles,
California, but only in the manner, subject to the limitations and
upon payment of the charges provided in the Indenture, and upon
surrender and cancellation of this Bond. Upon such transfer a new
fully registered Bond or Bonds, of the same series and maturity
and of authorized denomination or denominations, and for the same
aggregate principal amount, will be issued to the transferee in
exchange herefor.
The Issuer and the Trustee may treat the owner hereof as the
absolute owner hereof for all purposes, and the Issuer and the
Trustee shall not be affected by any notice to the contrary.
It is hereby certified that all of the conditions, things and
acts required to exist, to have happened and to have been performed
precedent to and in the issuance of this Bond do exist, have
happened and have been performed in due time, form and manner as
required by the Constitution and statutes of the State of
California, and that the amount of this Bond, together with all
other indebtedness of the Issuer, does not exceed any limit
prescribed by the Constitution or statutes of the State of
California.
This Bond shall not be entitled to any benefit under the
Indenture, or become valid or obligatory for any purpose, until the
certificate of authentication hereon endorsed shall have been
signed by the Trustee.
IN WITNESS WHEREOF, the Industrial Development Authority of
the City of Santa Ana has caused this Bond to be executed in its
name and on its behalf by the manual or facsimile signatures of its
Executive Director and Secretary and its seal to be reproduced
hereon, all as of February 1, 1985.
INDUSTRIAL DEVELOPMENT AUTHORITY OF
THE CITY OF SANTA ANA
By:
Executive Director
[SEAL]
By:
Secretary
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the fully registered Bonds described in the
within-mentioned Indenture.
Dated: February 1, 1995 FIRST INTERSTATE BANK OF
CALIFORNIA, as Trustee
By:
Authorized Signatory
LEGAL OPINION
I hereby certify that the following is a correct copy of the
signed legal opinion of Jones Hall Hill & White, a Professional Law
Corporation, San Francisco, California, dated as of the date of
delivery of and payment of this Bond the date the Bonds referred to
therein were delivered and paid for.
Secretary of the Industrial Development Authority of the City
of Santa Ana
ASSIGNMENT
For value received the undersigned do(es) hereby sell, assign
and transfer unto (typewrite name, address and federal tax
identification number) the within-registered Bond and hereby
irrevocably constitute(s) and appoint(s)
attorney, to transfer the same on the Bond register
with full power of substitution in the premises.
Dated: _______________________
Signature Guaranteed:
Note: Signature(s) must be guaranteed by an eligible guarantor
institution with membership in an approved signature guarantee
medallion program pursuant to Securities and Exchange Commission
Rule 17A(d)15.
By:
Note: The signature(s) on this assignment must correspond with the
name(s) as written on the face of the within-registered Bond in
every particular, without alteration or enlargement or any change
whatsoever.
EXHIBIT B
FORM OF DTC LETTER OF REPRESENTATIONS
