UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 11, 1997
NATIONAL SEMICONDUCTOR CORPORATION
-----------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 1-6453 95-2095071
-------- ------ ----------
(State of incorporation) (Commission (I.R.S. Employer
File Number) Identification No.)
2900 Semiconductor Drive, P.O. Box 58090
Santa Clara, California 95052-8090
-----------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (408) 721-5000
(Page 1)
NATIONAL SEMICONDUCTOR CORPORATION
INDEX
Page No.
--------
Item 2. Acquisition or Disposition of Assets 3
Item 7. Financial Statements and Exhibits 3-10
Signature 11
(Page 2)
Item 2. Acquisition or Disposition of Assets
- ---------------------------------------------
On March 11, 1997, National Semiconductor Corporation completed the
disposition of its Fairchild Semiconductor business ("Fairchild"), which
consists of a broad portfolio of logic, discrete and non-volatile memory
semiconductor devices aimed at high-volume markets. The disposition was
completed in a recapitalization transaction with Sterling, LLC, a
Citicorp Venture Capital, Ltd. portfolio investment in related
businesses, and Fairchild's management. The recapitalization was valued
at $550 million. In addition to retaining a 15 percent equity interest
in Fairchild for which the Company paid $12.9 million, the Company
received cash of $401 million, a promissory note of $77 million and
certain liabilities were assumed by Fairchild. The Fairchild assets
disposed of consisted primarily of land, building and equipment, as well
as net working capital.
The Company expects to record a gain on the disposition in the fourth
quarter of fiscal 1997 after determining final divestiture costs and
transition liabilities.
The information which is set forth in the Registrant's News Release
dated March 11, 1997 is incorporated herein by reference and further
describes the transaction.
Item 7. Financial Statements and Exhibits
- ------------------------------------------
(b) Pro forma financial information.
The following unaudited pro forma condensed consolidated financial
statements present pro forma financial information for National
Semiconductor Corporation and its subsidiaries (the "Company") giving
effect to the March 11, 1997 disposition of its Fairchild business. The
unaudited pro forma condensed consolidated balance sheet as of November
24, 1996 is presented as if the transaction had occurred as of that
date. The unaudited pro forma condensed consolidated statements of
operations for the six months ended November 24, 1996 and for the year
ended May 26, 1996 are presented as if the disposition transaction had
occurred at the beginning of the earliest period presented.
The pro forma condensed consolidated financial statements should be read
in conjunction with the unaudited condensed consolidated financial
statements and notes thereto included in the Company's Quarterly Report
on Form 10-Q for the quarterly period ended November 24, 1996 and the
audited consolidated financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended May 26,
1996. The pro forma information may not necessarily be indicative of
what the Company's results of operations or financial position would
have been had the transaction been in effect as of and for the periods
presented, nor is such information necessarily indicative of the
Company's results of operations or financial position for any future
period or date.
(Page 3)
NATIONAL SEMICONDUCTOR CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
November 24, 1996
----------------------------------------------
Business Other
to be Pro forma
Historical disposed Adjustments Pro forma
(A)
---------- -------- ----------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 396.7 $ 388.1 $ - $ 784.8
Short-term marketable
investments 45.2 - - 45.2
Receivables, net 304.3 (10.2) 18.5 (G) 312.6
Inventories 261.9 (73.2) 7.0 (B) 195.7
Deferred tax assets 140.4 17.2 (32.1) 125.5
Other current assets 65.5 (8.6) - 56.9
-------- -------- -------- --------
Total current assets 1,214.0 313.3 (6.6) 1,520.7
Property, plant and
equipment, net 1,243.2 (315.0) 158.0 (B) 1,086.2
Long-term marketable
investments 7.0 - - 7.0
Other assets 87.4 (1) 63.5 - 150.9
-------- -------- -------- --------
Total assets $2,551.6 $ 61.8 $ 151.4 $2,764.8
======== ======== ======== ========
LIABILITIES and SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings
and current portion
of long-term debt $ 30.8 $ - $ - $ 30.8
Accounts payable 207.4 (22.4) 12.8 (D) 197.8
Accrued expenses 295.5 (28.0) (2) 3.3 (B,D) 270.8
Income taxes 162.6 40.3 10.3 (B) 213.2
-------- -------- -------- --------
Total current liabilities 696.3 (10.1) 26.4 712.6
Long-term debt 382.8 - - 382.8
Deferred income taxes 11.1 - - 11.1
Other non-current liabilities 39.6 - - 39.6
-------- -------- -------- --------
Total liabilities 1,129.8 (10.1) 26.4 1,146.1
-------- -------- -------- --------
(Page 4)
NATIONAL SEMICONDUCTOR CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
(continued)
November 24, 1996
----------------------------------------------
Business Other
to be Pro forma
Historical disposed Adjustments Pro forma
(A)
---------- -------- ----------- ---------
Commitments and contingencies
Shareholders' equity:
Common stock $ 69.8 $ - $ - $ 69.8
Additional paid-in capital 952.9 - - 952.9
Retained earnings 399.1 71.9 (3) 125.0(B,D,G) 596.0
-------- -------- --------- --------
Total shareholders' equity 1,421.8 71.9 125.0 1,618.7
-------- -------- --------- --------
Total liabilities and
shareholders' equity $2,551.6 $ 61.8 $ 151.4 $2,764.8
======== ======== ========= ========
- --------------------
The following detail has been provided to clarify pro forma adjustments
that have been combined for certain financial statement categories (in
millions):
(1) Other assets:
Disposal of other assets of Fairchild $ (1.5) (A)
Recording of the note and equity investment
at net realizable value 65.0 (A)
------
$ 63.5
(2) Accrued expenses:
Release of restructure reserve $ 4.8 (B)
Liabilities remaining with National (8.1) (D)
------
$ (3.3)
(3) Retained earnings:
Release of restructure reserve, net of tax $127.4 (B)
Liability remaining with National (20.9) (D)
Distributor reserves assumed by Fairchild 18.5 (G)
------
$125.0
See accompanying Notes to Pro forma Condensed Consolidated Financial
Statements
(Page 5)
NATIONAL SEMICONDUCTOR CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in millions, except per share amounts)
Six months ended November 24, 1996
----------------------------------------------
Business Other
to be Pro forma
Historical disposed Adjustments Pro forma
(A)
---------- -------- ----------- ---------
Net sales $1,227.6 $ (286.6) $ - $ 941.0
Operating costs and expenses:
Cost of sales 824.6 (220.7) (4) (6.0)(B,E) 597.9
Research and development 186.4 (8.5) 3.2 (F) 181.1
Selling, general and
administrative 200.4 (42.1) 27.9 (F) 186.2
Restructuring of operations 256.3 (5.3) (162.8)(B) 88.2
-------- -------- -------- --------
Total operating costs
and expenses 1,467.7 (276.6) (137.7) 1,053.4
-------- -------- -------- --------
Operating loss (240.1) (10.0) 137.7 (112.4)
Interest income, net (c) 2.3 - 4.5 (C) 6.8
Other income, net .3 .1 (.1)(F) .3
-------- -------- -------- --------
Loss before
income taxes (237.5) (9.9) 142.1 (105.3)
Income tax benefit (59.4) - 33.1 (H) (26.3)
-------- -------- -------- --------
Net loss $ (178.1)$ (9.9) $ 109.0 $ (79.0)
======== ======== ======== ========
Earnings per share:
Primary $ (1.29) $ (0.57)
Fully diluted $ (1.29) $ (0.57)
Weighted average shares:
Primary 138.4 138.4
Fully diluted 138.4 138.4
- --------------------
The following detail has been provided to clarify pro forma adjustments
that have been combined for certain financial statement categories (in
millions):
(4) Cost of Sales:
Release of inventory reserve $ (7.0) (B)
Purchase of Fairchild goods and services
under the manufacturing agreement 1.0 (E)
--------
$ (6.0)
See accompanying Notes to Pro forma Condensed Consolidated Financial
Statements
(Page 6)
NATIONAL SEMICONDUCTOR CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in millions, except per share amounts)
Fiscal Year ended May 26, 1996
----------------------------------------------
Business Other
to be Pro forma
Historical disposed Adjustments Pro forma
(A)
---------- -------- ----------- ---------
Net sales $2,623.1 $ (687.8) $ - $1,935.3
Operating costs and expenses:
Cost of sales 1,560.9 (472.7) 9.0(E) 1,097.2
Research and development 361.3 (30.3) 18.5(F) 349.5
Selling, general and
administrative 486.8 (114.0) 76.3(F) 449.1
-------- -------- -------- --------
Total operating costs
and expenses 2,409.0 (617.0) 103.8 1,895.8
-------- -------- -------- --------
Operating income 214.1 (70.8) (103.8) 39.5
Interest income, net 13.3 - 9.0 (C) 22.3
Other income, net 19.8 (1.5) 2.0 (F) 20.3
-------- -------- -------- --------
Income before
income taxes 247.2 (72.3) (92.8) 82.1
Income tax provision 61.8 - (41.3)(H) 20.5
-------- -------- -------- --------
Net income $ 185.4 $ (72.3) $ (51.5) $ 61.6
======== ======== ======== ========
Earnings per share:
Primary $ 1.36 $ 0.42
Fully diluted $ 1.34 $ 0.42
Weighted average shares:
Primary 132.5 132.5
Fully diluted 138.6 132.5
Income used in primary
earnings per common share
calculation(reflecting
preferred dividends,
if applicable) $ 179.8 $ 56.0
Income used in fully
diluted earnings per share
(reflecting adjustment for
interest on convertible
notes when dilutive) $ 185.4 $ 56.0
See accompanying Notes to Pro forma Condensed Consolidated Financial
Statements
(Page 7)
National Semiconductor Corporation
Notes to Pro Forma Condensed Consolidated Financial Statements
(A) Reflects the disposition of the Company's Fairchild business for a
total valuation of $550.0 million, which included cash of $401.0
million, a promissory note of $77.0 million and the assumption of
certain liabilities. In connection with this transaction, the Company
also retained 15 percent equity interest in the Fairchild company, for
which it paid $12.9 million. The pro forma adjustment to the condensed
consolidated balance sheet as of November 24, 1996 includes the effect
of the receipt of cash, recording of the note and equity investment at
net realizable value and assignment of certain liabilities as agreed
upon. Included in retained earnings is the resulting estimated gain to
be recognized on the disposition transaction net of applicable income
taxes as if the disposition transaction occurred on November 24, 1996.
The actual gain on disposition when recorded in the fourth quarter of
fiscal 1997 will differ based on the actual carrying value of the net
assets as of March 11, 1997 and determination of final divestiture
costs. The estimated gain to be recognized on the disposition
transaction has been excluded from the pro forma condensed consolidated
statement of operations for the year ended May 26, 1996.
(B) In June 1996, the Company announced the formation of the Fairchild
organization in connection with a reorganization which included the
Company's active pursuit of a sale or partial financing of all or a
portion of the Fairchild businesses and related assets. In connection
with the reorganization, the Company recorded a restructuring charge of
$256.3 million for the write down of Fairchild assets to estimated fair
value, costs associated with staffing reductions and other exit costs
necessary to reduce the Company's infrastructure in both Fairchild and
the remaining National core business areas. The adjustments to the
carrying value of the Fairchild assets were determined based on
estimated fair value of the individual businesses of Fairchild on the
expected date of disposal. Such adjustments were primarily related to
the logic and memory product lines of the Fairchild business. There
were no adjustments recorded to the carrying value of discrete product
line assets. Since the final transaction resulted in the disposition of
the combined Fairchild businesses, the Company realized an overall net
gain from the transaction. As a result, the Company will release $162.8
million of the restructure charge primarily related to the write down of
Fairchild assets. In addition, the Company will also release $7.0
million of a $15.0 million one-time charge taken to write down Fairchild
inventory to net realizable value in connection with the reorganization.
The pro forma adjustment to the condensed consolidated balance sheet as
of November 24, 1996 includes the effect of the release of these
reserves and included in retained earnings is the related combined
credit of $169.8 million net of $42.4 million taxes of which $10.3
million is current income taxes payable and $32.1 million is deferred
taxes. The pro forma adjustment to the condensed consolidated statement
of operations for the six months ended November 24, 1996 includes the
effect of the related credits arising from the release of these
reserves.
(Page 8)
(C) The pro forma adjustment to the condensed consolidated statements
of operations for the year ended May 26, 1996 and the six month ended
November 24, 1996 includes the effect of interest income that the
Company would have earned on the promissory note given by Fairchild in
connection with the disposition transaction. The note bears interest at
an annual rate of 11.74 percent.
(D) Under the terms of the asset purchase agreement entered into as
part of the transaction, certain liabilities of Fairchild existing at
the close of the transaction will remain liabilities of the Company.
The pro forma adjustment to the condensed consolidated balance sheet as
of May 26, 1996 reflects the effect of recording those liabilities as
liabilities of the Company.
(E) In connection with the Fairchild transaction, Fairchild and the
Company have entered into a manufacturing agreement under which the
Company will purchase at least $330 million of goods and services from
Fairchild during the first 39 months after the transaction.
Historically, these services provided by Fairchild have been provided at
cost. The pro forma adjustment to the condensed consolidated statements
of operations for the year ended May 26, 1996 and the six months ended
November 24, 1996 reflects the effect of the Company's commitment to
purchase goods and services based on the wafer prices provided for in
the manufacturing agreement applied to the historical unit volume and
compared to actual costs.
(F) Historically, the Company has allocated certain expenses for
research and development, selling and marketing and headquarter
functions from central corporate cost centers. The pro forma adjustment
reflects the removal of these allocated expenses from the Fairchild
business and the add back to National.
(G) Under the terms of the asset purchase agreement, the revenue
reserves related to Fairchild products will be assumed by Fairchild.
The pro forma adjustment to the condensed consolidated balance sheet as
of May 26, 1996 reflects the elimination of these reserves.
(H) The pro forma adjustment to income taxes in the condensed
consolidated balance sheet as of November 24, 1996 and the condensed
consolidated statements of operations for the year ended May 26, 1996
and the six months ended November 24, 1996 is based on the Company's
actual effective tax rate of 25 percent for all periods presented.
(Page 9)
(c). Exhibits
Designation
of Exhibit Description of Exhibit
----------- ----------------------
2.1 Agreement and Plan of Recapitalization between
Sterling Holding Company, LLC and National
Semiconductor Corporation.
99 Contents of News Release dated March 11, 1997.
(Page 10)
SIGNATURE
- ---------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
NATIONAL SEMICONDUCTOR CORPORATION
Date: March 26, 1997
/s/ Richard D. Crowley, Jr.
----------------------------------
Richard D. Crowley, Jr.
Vice President and Controller
Signing on behalf of the registrant
and as principal accounting officer
(Page 11)
Exhibit 2.1
AGREEMENT AND PLAN OF RECAPITALIZATION
between
STERLING HOLDING COMPANY, LLC
and
NATIONAL SEMICONDUCTOR CORPORATION
Dated January 24, 1997
TABLE OF CONTENTS
ARTICLE I DEFINITIONS...........................................1
ARTICLE II RECAPITALIZATION......................................5
2.1. Formation of Fairchild Companies......................5
2.2. Transactions at Closing...............................5
2.3. The Closing...........................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF NSC.................7
3.1. Organization..........................................7
3.2. Corporate Power and Authority; Effect of Agreement....7
3.3. Consents..............................................8
3.4. Litigation............................................8
3.5. Brokers...............................................8
3.6. Purchase for Investment...............................8
3.7. Asset Purchase Agreement Representations..............8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF INVESTOR.............9
4.1. Organization..........................................9
4.2. Power and Authority; Effect of Agreement..............9
4.3. Consents..............................................9
4.4. Litigation...........................................10
4.5. Brokers..............................................10
4.6. Purchase for Investment..............................10
4.7. Financing............................................10
4.8. Ownership of Investor................................10
4.9. Inspections..........................................10
4.10. Asset Agreement......................................11
ARTICLE V COVENANTS OF NSC.....................................11
5.1. Fulfillment of Agreements............................11
5.2. Access, Information and Documents....................11
5.3. Consents.............................................12
5.4. Conduct of Business..................................12
5.5. Capitalization; Liabilities..........................13
5.6. Competing Financings.................................14
ARTICLE VI COVENANTS OF INVESTOR................................14
6.1. Fulfillment of Agreements............................14
6.2. Consents.............................................14
6.3. Financing............................................14
ARTICLE VII CONDITIONS TO INVESTOR'S OBLIGATIONS.................14
7.1. Bringdown of Representations and Warranties..........15
7.2. Performance and Compliance...........................15
7.3. Opinion of Counsel...................................15
7.4. Satisfactory Instruments.............................15
7.5. Required Consents....................................15
7.6. Litigation...........................................16
7.7. Ancillary Agreements.................................16
7.8. Absence of Changes...................................16
7.9. Timely Satisfaction of Conditions....................16
ARTICLE VIII CONDITIONS TO NSC'S OBLIGATIONS.....................17
8.1. Bringdown of Representations and Warranties..........17
8.2. Performance and Compliance...........................17
8.3. Opinion of Counsel...................................17
8.4. Satisfactory Instruments.............................17
8.5. Required Consents....................................17
8.6. Litigation...........................................18
8.7. Ancillary Agreements.................................18
ARTICLE IX..CERTAIN ADDITIONAL COVENANTS.........................18
9.1. Termination..........................................18
9.2. Costs, Expenses and Taxes............................19
9.3. Hart-Scott-Rodino Antitrust Improvements Act of 1976.19
9.4. No Setoff............................................19
ARTICLE X INDEMNIFICATION......................................19
10.1. Indemnification By NSC...............................19
10.2. Indemnification by Investor..........................20
10.3. General Indemnification Procedures...................20
ARTICLE XI MISCELLANEOUS........................................22
11.1. Nature and Survival of Representations...............22
11.2. Notices..............................................22
11.3. Entire Agreement.....................................23
11.4. Assignment; Binding Effect; Severability.............23
11.5. Governing Law........................................24
11.6. Execution in Counterparts............................24
11.7. Public Announcement..................................24
11.8. No Third Party Beneficiaries.........................24
11.9. Headings.............................................24
11.10.Further Assurances...................................24
11.11.Amendment and Waiver.................................25
EXHIBITS
1-A NSC Note
1-B Purchase Price Note
2.1-A Fairchild Charter
2.1-B Fairchild Parent Charter
2.2-A Asset Agreement
2.2-C-1 Technology Licensing and Transfer Agreement
2.2-C-2 Transition Services Agreement
2.2-C-3 Fairchild Foundry Services Agreement
2.2-C-4 Revenue Side Letter
2.2-C-5 Fairchild Assembly Services Agreement
2.2-C-6 National Foundry Services Agreement
2.2-C-7 National Assembly Services Agreement
2.2-C-8 Mil/Aero Wafer Services Agreement
2.2-C-9 Shared Facilities Agreement (for South Portland Site)
2.2-C-10 Shared Services Agreement (for South Portland Site)
2.2-C-11 Shared Services and Occupancy Agreement (for Santa Clara Site)
2.2-D Shareholders Agreement
4.7A Commitment from Credit Suisse First Boston, Bankers Trust New
York Corporation and CIBC Wood Gundy Securities Corp.
4.7B Commitment from Bankers Trust Company, Credit Suisse First
Boston and Canadian Imperial Bank of Commerce
4.7C Commitment from Citicorp Venture Capital Ltd.
7.3 Opinion of Counsel for NSC
8.3 Opinion of Counsel for Investor
DISCLOSURE SCHEDULES
A Closing Actions Outline
1 Purchase Price Adjustments
3.3 NSC's Consents
3.4 Litigation
7.5 Required Consents
AGREEMENT AND PLAN OF RECAPITALIZATION
This Agreement and Plan of Recapitalization (the "Agreement") is
made this 24th day of January, 1997, between STERLING HOLDING COMPANY,
LLC, a Delaware limited liability company ("Investor"), and NATIONAL
SEMICONDUCTOR CORPORATION, a Delaware corporation ("NSC").
Background
A. NSC is engaged as one of its businesses in the business of
manufacturing and distributing the Business Products (as hereinafter
defined) through its Fairchild Division.
B. The Board of Directors of NSC deems it advisable and in the
best interest of NSC, the Business (as hereinafter defined) and the
stockholders of NSC, to adopt a plan of recapitalization of the Business
pursuant to which (i) NSC will transfer the Purchased Assets and Assumed
Liabilities of the Business to Fairchild Semiconductor Corporation, a
Delaware corporation to be formed by NSC for such purpose ("Fairchild"),
and Fairchild will accept the Purchased Assets and assume the Assumed
Liabilities, (ii) NSC will transfer all of the outstanding common stock
of Fairchild to FSC Semiconductor Corporation, a Delaware corporation to
be formed by NSC for such purpose ("Fairchild Parent"), and (iii)
Investor will purchase certain securities of Fairchild Parent, all
on the terms and conditions set forth herein.
C. In connection with the recapitalization of the Business, NSC
will enter into the Operating Agreements (as hereinafter defined) with
Fairchild and NSC and Fairchild will enter into an agreement regarding
certain actions relating to implementation of the transactions
contemplated hereby in accordance with the outline attached as Schedule
A.
D. It is intended that the transactions contemplated hereby be
recorded as a recapitalization for financial reporting purposes.
Terms
In consideration of the mutual representations, warranties,
covenants and agreements, and upon the terms and subject to the
conditions hereinafter set forth, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
For the purposes of this Agreement, the following words and phrases
shall have the following meanings:
"Affiliate" of a Person means any Person controlling,
controlled by, or under common control with, such Person. For purposes
of this definition, "control" means the power to direct the management
and policies of a Person, whether through the ownership of voting
securities, by agreement or otherwise.
"Agreement" shall have the meaning set forth in the
Introduction.
"Asset Agreement" shall have the meaning set forth in Section
2.2(a).
"Assumed Liabilities" shall have the meaning set forth in the
Asset Agreement.
"Best Efforts" is defined to require that the obligated party
make a diligent, reasonable and good faith effort to accomplish the
applicable objective. Such obligation, however, does not require any
significant expenditure of funds or the incurrence of any significant
liability on the part of the obligated party, nor the incurrence of any
expense or liability which is unreasonable in light of the related
objective, nor does it require that the obligated party act in a manner
which would otherwise be contrary to prudent business judgment or normal
commercial practices in order to accomplish the objective. The fact
that the objective is not actually accomplished is no indication that
the obligated party did not in fact utilize its Best Efforts in
attempting to accomplish the objective.
"Business" means NSC's Logic, Memory and Discrete Power and
Signal Technologies Business Units as historically conducted and
accounted for (including Flash Memory, but excluding Public Networks,
Programmable Products and Mil Logic Products).
"Business Day" means a day which is not a Saturday, a Sunday
or a statutory or civic holiday in the State of New York or any other
day on which the principal offices of either Investor or NSC 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.
"Business Products" shall have the meaning set forth in the
Asset Agreement.
"Cash Payment" means a cash amount equal to the principal
amount of the Purchase Price Note including interest accrued and unpaid
thereon, if any.
"Claim Notice" shall have the meaning set forth in Section
10.3.
"Claim Response" shall have the meaning set forth in Section
10.3.
"Closing" shall have the meaning set forth in Section 2.3.
"Closing Date" shall have the meaning set forth in Section
2.3.
"Commitment Letters" shall have the meaning set forth in
Section 4.7.
"Confidentiality Agreement" means the letter from NSC to CVC
regarding confidentiality dated August 23, 1996 and the letter from BA
Partners to CVC regarding confidentiality dated September 4, 1996.
"CVC" means Citicorp Venture Capital Ltd., a New York
corporation.
"Damages" means any and all losses, liabilities, damages,
penalties, obligations, awards, fines, deficiencies, interest, claims
(including third party claims, whether or not meritorious), costs and
expenses whatsoever (including reasonable attorneys', accountants' and
environmental consultants' fees and disbursements) resulting from,
arising out of or incident to (i) any matter for which indemnification
is provided under this Agreement, or (ii) the enforcement by an
indemnified party of its rights to indemnification under this Agreement;
provided, however, that Damages shall not include consequential or
incidental damages (other than consequential or incidental damages that
are awarded to third parties under matters covered by the foregoing
clauses (i) or (ii)).
"Defense Notice" shall have the meaning set forth in Section
10.3.
"Department" shall have the meaning set forth in Section 9.3.
"Excluded Liabilities" shall have the meaning set forth in
the Asset Agreement.
"Fairchild" shall have the meaning set forth in the
Background.
"Fairchild Charter" shall have the meaning set forth in
Section 2.1(a).
"Fairchild Companies" shall mean Fairchild and Fairchild
Parent.
"Fairchild Common Stock" means the Common Stock, par value
$.01 per share, of Fairchild.
"Fairchild Parent" shall have the meaning set forth in the
Background.
"Fairchild Parent Charter" shall have the meaning set forth
in Section 2.1(b).
"Financing" means the financing required to effect the
transactions contemplated by this Agreement (including, without
limitation, the repayment of the Purchase Price Note) and to pay related
fees and expenses on terms and conditions reasonably satisfactory to
Investor.
"First Boston Commitment Letter" shall have the meaning set
forth in Section 5.6.
"FSC Class A Common Stock" means the Class A Common Stock,
par value $.01 per share, of Fairchild Parent.
"FSC Class B Common Stock" means the Class B Common Stock,
par value $.01 per share, of Fairchild Parent.
"FSC Preferred Stock" means the 12% Series A Cumulative
Compounding Preferred Stock, par value $.01 per share, of Fairchild
Parent.
"FSC Securities" means the FSC Class A Common Stock, FSC
Class B Common Stock and FSC Preferred Stock.
"FTC" shall have the meaning set forth in Section 9.3.
"HSR Act" shall have the meaning set forth in Section 5.3.
"Indemnitee" shall have the meaning set forth in Section
10.3.
"Indemnitor" shall have the meaning set forth in Section
10.3.
"Investor" shall have the meaning set forth in the
Introduction.
"Management Investors" means the members of management of the
Business designated by Investor pursuant to Section 2.2 to acquire a
portion of the FSC Securities to be acquired by Investor pursuant to
this Agreement.
"Market Disruption Event" shall have the meaning set forth in
Section 7.8.
"Material Adverse Effect" shall have the meaning set forth in
the Asset Agreement.
"NSC" shall have the meaning set forth in the Introduction.
"NSC Note" means a promissory note in the principal amount of
$77 million issued by Fairchild Parent to NSC, the principal terms of
which are set forth on Exhibit 1-A.
"Operating Agreements" means the Technology Licensing and
Transfer Agreement, Transition Services Agreement, Fairchild Foundry
Services Agreement, Revenue Side Letter, Fairchild Assembly Services
Agreement, National Foundry Services Agreement, National Assembly
Services Agreement, Mil/Aero Wafer Services Agreement, Shared Facilities
Agreement (for South Portland Site), Shared Services Agreement (for
South Portland Site), and Shared Services and Occupancy Agreement
substantially in the forms of Exhibits 2.2-C-1, 2.2-C-2, 2.2-C-3, 2.2-C-
4, 2.2-C-5, 2.2-C-6, 2.2-C-7, 2.2-C-8, 2.2-C-9, 2.2-C-10 and 2.2-C-11
respectively.
"Person" means and includes any individual, corporation,
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.
"Purchase Price Note" means a demand promissory note in the
principal amount of $472.8 million (subject to the adjustments set forth
on Schedule 1) from Fairchild to NSC in the form of Exhibit 1-B.
"Purchased Assets" shall have the meaning set forth in the
Asset Agreement.
"Response Period" shall have the meaning set forth in Section
10.3.
"Shareholders Agreement" shall have the meaning set forth in
Section 2.2(d).
"Transaction Agreements" means this Agreement, the Operating
Agreements and the Asset Agreement.
"Voluntary Participation" shall have the meaning set forth in
Section 10.3.
ARTICLE II
RECAPITALIZATION
2.1. Formation of Fairchild Companies. Prior to the Closing, NSC
shall have taken the following actions:
(a) caused the certificate of incorporation of Fairchild to
be filed substantially in the form attached hereto as Exhibit 2.1-A (the
"Fairchild Charter") with the Secretary of State of the State of
Delaware as required by the Delaware General Corporation Law under the
name "Fairchild Semiconductor Corporation"; and
(b) caused the certificate of incorporation of Fairchild
Parent to be filed substantially in the form attached hereto as Exhibit
2.1-B (the "Fairchild Parent Charter") with the Secretary of State of
the State of Delaware as required by the Delaware General Corporation
Law under the name "FSC Semiconductor Corporation".
2.2. Transactions at Closing. The following transactions, which
together shall constitute the recapitalization, shall be consummated at
the Closing on the Closing Date in the following order and each
transaction shall be conditioned upon the occurrence of the other
transactions:
(a) NSC and Fairchild shall enter into an Asset Purchase
Agreement substantially in the form attached hereto as Exhibit 2.2-A
(the "Asset Agreement"), and NSC shall transfer the Purchased Assets
(other than the Non-Assignable Assets) and the Assumed Liabilities to
Fairchild, and Fairchild shall accept the Purchased Assets (other than
the Non-Assignable Assets) and assume the Assumed Liabilities, pursuant
to such Asset Purchase Agreement in exchange for the Purchase Price Note
and 100 shares of Fairchild Common Stock;
(b) NSC shall transfer all of the outstanding shares of
Fairchild Common Stock and cash in the amount of $12,837,000 to
Fairchild Parent for 1,095,000 shares of FSC Class A Common Stock,
1,245,000 shares of FSC Class B Common Stock and 11,667 shares of FSC
Preferred Stock and the NSC Note;
(c) NSC shall enter into the Operating Agreements with
Fairchild substantially in the forms attached hereto as Exhibits 2.2-C-1
through -11,
(d) NSC, Investor, Management Investors and Fairchild
Parent shall enter into a Securities Purchase and Holders Agreement (the
"Shareholders Agreement") in the form attached hereto as Exhibit 2.2-D;
(e) NSC shall cause Fairchild Parent to sell, and Investor
shall purchase, 6,205,000 shares of FSC Class A Common Stock at a
purchase price of $0.50 per share, 7,055,000 shares of FSC Class B
Common Stock at a purchase price of $0.50 per share, and 58,333 shares
of FSC Preferred Stock at a purchase price of $1,000 per share, less the
FSC Securities actually purchased by Management Investors pursuant to
Section 2.2(f);
(f) NSC shall cause Fairchild Parent to sell to Management
Investors such of the FSC Securities as would otherwise be purchased by
Investor pursuant to Section 2.2(e) in such amounts and to such
Management Investors as shall have been designated by Investor to
Fairchild Parent in writing prior to Closing at the purchase prices set
forth in Section 2.2(e);
(g) Fairchild Parent shall contribute the cash proceeds
from the sale of FSC Securities to the capital of Fairchild;
(h) Fairchild shall obtain the proceeds of the Financing;
and
(i) Fairchild shall repay the Purchase Price Note in cash.
The parties acknowledge that it is their intention that the
foregoing transactions all occur at the Closing on the Closing Date.
2.3. The Closing. (a) The closing of the transactions
contemplated hereby (the "Closing") shall take place at the offices of
Dechert Price & Rhoads, 30 Rockefeller Plaza, New York, New York
commencing at 9:00 a.m., local time, on a date mutually agreed upon by
the parties as soon as reasonably practicable following satisfaction of
the conditions set forth in Articles VII and VIII hereof, or at such
other time and place as the parties may mutually agree (the "Closing
Date"). The effective time of the transactions contemplated hereby
shall be deemed to be the opening of business on the Closing Date.
(b) At the Closing,
(i) Fairchild and NSC shall make the closing
deliveries required by the Asset Agreement;
(ii) Fairchild Parent shall deliver to NSC against
payment therefor certificates representing the FSC Class A Common Stock,
FSC Class B Common Stock, FSC Preferred Stock and NSC Note being
purchased by NSC pursuant to Section 2.2(b), and NSC shall deliver to
Fairchild Parent certificates representing all of the outstanding shares
of Fairchild Common Stock accompanied by duly executed stock transfer
powers;
(iii) Fairchild shall deliver to NSC the Cash Payment
by wire transfer of immediately available funds to an account designated
by NSC to Investor in writing at least three business days prior to
Closing; and
(iv) Fairchild Parent shall deliver to Investor and
the Management Investors against payment therefor, certificates
representing the FSC Class A Common Stock, FSC Class B Common Stock and
FSC Preferred Stock being purchased by Investor and the Management
Investors pursuant to Sections 2.2(e) and 2.2(f), respectively.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NSC
NSC represents and warrants to Investor as follows:
3.1. Organization. NSC is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware,
and has all requisite corporate power and corporate authority to
execute, deliver, and perform the Transaction Agreements and to
consummate the transactions contemplated hereby and thereby.
3.2. Corporate Power and Authority; Effect of Agreement. The
execution, delivery and performance by NSC of the Transaction Agreements
and the consummation by NSC of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on
the part of NSC. The Transaction Agreements have been duly and validly
executed and delivered by NSC and constitute the valid and binding
obligations of NSC, enforceable against NSC in accordance with their
respective terms. The execution, delivery, and performance by NSC of
the Transaction Agreements and the consummation by NSC of the
transactions contemplated hereby and thereby will not, with or without
the giving of notice or the lapse of time, or both, (i) violate any
provision of law, rule, or regulation to which NSC is subject, (ii)
violate any order, judgment, or decree applicable to NSC or (iii)
violate any provision of the charter or the by-laws of NSC; except, in
the case of (i) or (ii), for violations that in the aggregate would not
(x) materially hinder or impair the consummation of the transactions
contemplated hereby or thereby or (y) materially interfere with the
ability of Fairchild to conduct the Business after the Closing in
substantially the same manner in which the Business was conducted prior
to the Closing.
3.3. Consents. Except as set forth in Schedule 3.3, no consent,
approval, or authorization of, or exemption by, or filing with, any
governmental authority is required to be obtained or made by NSC in
connection with the execution, delivery and performance by NSC of the
Transaction Agreements or the taking by NSC of any other action
contemplated hereby or thereby, except for any of the foregoing that in
the aggregate would not (i) materially hinder or impair the consummation
of the transactions contemplated hereby or thereby or (ii) materially
interfere with the ability of Fairchild to conduct the Business after
the Closing in substantially the same manner in which the Business was
conducted prior to the Closing.
3.4. Litigation. Except as set forth on Schedule 3.4, there are
no actions, suits, investigations, or proceedings pending or, to the
knowledge of NSC, threatened (i) against NSC or any of its Affiliates
which if adversely determined would (x) materially hinder or impair the
ability of NSC to perform its obligations under the Transaction
Agreements or (y) have a Material Adverse Effect, or (ii) that seek to
enjoin or obtain damages (which damages would reasonably be expected to
have a material adverse change in or effect upon the business, financial
condition or results of operations of the Business taken as a whole) in
respect of the consummation of the transactions contemplated hereby or
thereby. Neither NSC nor any of its Affiliates is subject to any
outstanding orders, rulings, judgments, or decrees that would (i)
materially hinder or impair the ability of NSC to perform its
obligations under the Transaction Agreements or (ii) have a Material
Adverse Effect.
3.5. Brokers. NSC has not made any agreement or taken any other
action which might cause anyone to become entitled to a broker's or
investment banker's fee or commission, which is payable by Investor,
Fairchild Parent or Fairchild, or which could create a lien on any of
the Purchased Assets, as a result of the transactions contemplated
hereunder.
3.6. Purchase for Investment. NSC is purchasing the FSC
Securities and the NSC Note pursuant to this Agreement for investment
and not with a view to any public resale or other distribution thereof,
except in compliance with applicable securities laws.
3.7. Asset Purchase Agreement Representations. The
representations and warranties set forth in the Asset Agreement (as
modified by the schedules thereto) in the form attached hereto are true
and correct as of the date hereof with the same force and effect as
though such representations and warranties have been made on, as of and
with reference to the date hereof, except those representations and
warranties that address matters only as of a particular date which shall
be true and correct as of that date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF INVESTOR
Investor hereby represents and warrants to NSC as follows:
4.1. Organization. Investor is a limited liability company duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its organization, and has all requisite limited
liability company power and limited liability company authority to carry
on its business as it is now being conducted, to execute, deliver, and
perform this Agreement and to consummate the transactions contemplated
hereby.
4.2. Power and Authority; Effect of Agreement. The execution,
delivery and performance by Investor of this Agreement and the
consummation by Investor of the transactions contemplated hereby have
been duly authorized by all necessary limited liability company action
on the part of Investor. This Agreement has been duly and validly
executed and delivered by Investor and constitutes the valid and binding
obligation of Investor, enforceable against Investor in accordance with
its terms. The execution, delivery, and performance by Investor of this
Agreement and the consummation by Investor of the transactions
contemplated hereby will not, with or without the giving of notice or
the lapse of time, or both, (i) violate any provision of law, rule, or
regulation to which Investor or any of its Affiliates is subject,
(ii) violate any order, judgment, or decree applicable to Investor or
any of its Affiliates or (iii) violate any provision of the organization
documents of Investor or any of its Affiliates; except, in the case of
(i) and (ii), for violations that in the aggregate would not (x)
materially hinder or impair the consummation of the transactions
contemplated hereby or (y) materially interfere with the ability of
Fairchild to conduct the Business after the Closing in substantially the
same manner in which the Business was conducted prior to the Closing.
4.3. Consents. Except as set forth in Schedule 4.3, no consent,
approval, or authorization of, or exemption by, or filing with, any
governmental authority is required to be obtained or made by Investor in
connection with the execution, delivery and performance by Investor of
this Agreement or the taking by Investor of any other action
contemplated hereby, except for any of the foregoing that in the
aggregate would not (i) materially hinder or impair the consummation of
the transactions contemplated hereby or thereby or (ii) materially
interfere with the ability of Fairchild to conduct the Business after
the Closing in substantially the same manner in which the Business was
conducted prior to the Closing. No statute, rule or regulation, or
order of any court or administrative agency prohibits Investor from
consummating the transactions contemplated hereby.
4.4. Litigation. There are no actions, suits, investigations, or
proceedings pending or, to the knowledge of Investor, threatened
(i) against Investor or any of its Affiliates which if adversely
determined would (x) materially hinder or impair the ability of Investor
to perform its obligations under this Agreement or (y) materially
decrease the value of the Purchased Assets as a whole, or (ii) that seek
to enjoin or obtain damages (which damages could reasonably be expected
to have a material adverse change in or effect upon the business,
financial condition or results of operations of Investor taken as a
whole) in respect of the consummation of the transactions contemplated
hereby. Neither Investor nor any of its Affiliates is subject to any
outstanding orders, rulings, judgments, or decrees that would have a
material adverse effect on the ability of Investor to perform its
obligations under this Agreement.
4.5. Brokers. Investor has not made any agreement or taken any
other action which might cause anyone to become entitled to a broker's
or investment banker's fee or commission as a result of the transactions
contemplated hereunder.
4.6. Purchase for Investment. Investor is purchasing the FSC
Securities being purchased by it pursuant to Section 2.2(e) for
investment and not with a view to any public resale or other
distribution thereof, except in compliance with applicable securities
laws.
4.7. Financing. Investor or CVC has received and delivered to
NSC (a) a commitment from Credit Suisse First Boston, Bankers Trust New
York Corporation and CIBC Wood Gundy Securities Corp. attached as
Exhibit 4.7A, (b) a commitment from Bankers Trust Company, Credit Suisse
First Boston and Canadian Imperial Bank of Commerce attached as Exhibit
4.7B and (c) a commitment from CVC attached as Exhibit 4.7C
(collectively, the "Commitment Letters"). The Commitment Letters are
sufficient to provide the Financing, have been duly accepted by Investor
and are in full force and effect. All fees required to be paid by
Investor or CVC on or prior to the date hereof in respect of the
Commitment Letters have been paid by Investor or CVC.
4.8. Ownership of Investor. 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 Investor.
4.9. Inspections. Investor is an informed and sophisticated
participant in the transactions contemplated by this Agreement and has
undertaken such investigation, and has been provided with and has
evaluated certain documents and information in connection with the
execution, delivery and performance of this Agreement. Investor
acknowledges that it is engaging in the transactions contemplated hereby
without any representation or warranty, express or implied, by NSC or
any of its Affiliates, except as expressly set forth in the Transaction
Agreements. In furtherance of the foregoing, and not in limitation
thereof, Investor acknowledges that, except as expressly set forth in
the Transaction Agreements, no representation or warranty, express or
implied, of NSC or any of its advisors, including, without limitation,
Deutsche Morgan Grenfell, BA Partners, NSC's lawyers (other than the
opinions of such lawyers delivered in connection with this Agreement),
KPMG Peat Marwick (except in connection with financial statements
prepared by such accountants accompanied by an opinion of such
accountants thereon) or any of their respective Affiliates or
representatives, with respect to the Business (including, without
limitation, the Evaluation Materials (as defined in the Asset
Agreement), the Confidential Offering Memoranda (as provided to Investor
pursuant to the Confidentiality Agreement), any other information
provided to Investor pursuant to the Confidentiality Agreement and any
financial projection or forecast delivered to Investor with respect to
the revenues or profitability which may arise from the Business either
before or after the Closing Date) shall form the basis of any claim
against NSC or any of its advisors, or any of their respective
Affiliates or representatives. With respect to any financial
projections or forecasts delivered on behalf of NSC to Investor,
Investor acknowledges that there are uncertainties inherent in
attempting to make such projections and forecasts and that it is
familiar with such uncertainties.
4.10. Asset Agreement. Investor acknowledges that Fairchild will
have ongoing obligations under the Asset Agreement and the Operating
Agreements.
ARTICLE V
COVENANTS OF NSC
NSC hereby covenants and agrees with Investor as follows:
5.1. Fulfillment of Agreements. NSC shall use its Best Efforts to
cause all of the conditions to the obligations of Investor under Article
VII of this Agreement to be satisfied on or prior to Closing. NSC shall
promptly notify Investor of any event or fact coming to NSC's attention
prior to Closing which causes any of its representations, warranties,
covenants or agreements contained in any Transaction Agreement that are
qualified by materiality limitations with respect to the Business as a
whole to be inaccurate and those that are not qualified by materiality
limitations with respect to the business as a whole to be inaccurate in
any material respect with respect to the Business as a whole. From and
after the date hereof and pending the Closing, NSC shall promptly notify
Investor of the occurrence of any condition or development (exclusive of
general economic or industry factors affecting business in general)
coming to NSC's attention of a nature that is materially adverse to the
business, financial condition or results of operations of the Business.
NSC shall, and shall cause Fairchild Parent and Fairchild to, cooperate
with Investor (at Investor's expense and assuming adequate
indemnification (including control person liability on any securities
placements)) with respect to the Financing and take all actions and do
all things reasonably necessary, proper or advisable to assist Investor
in securing the Financing.
5.2. Access, Information and Documents. From and after the date
hereof and pending the Closing, upon reasonable notice, NSC will give to
Investor and to Investor's counsel, accountants and other
representatives and financing sources full access during normal business
hours to all of the properties, books, tax returns, contracts,
commitments, records, officers, personnel and accountants relating to
the Business and will furnish to Investor all such documents and copies
of documents (certified to be true copies if requested) and all
information with respect to the affairs of the Business as Investor may
reasonably request; provided, that no such access shall unreasonably
interfere with NSC's operation of its business, including, without
limitation, the Business; and provided further, that all information
received by Investor or any of Investor's counsel, accountants and other
representatives and financing sources from NSC and NSC's counsel,
accountants and other representatives shall be subject to the provisions
of the Confidentiality Agreement.
5.3. Consents. NSC will use its Best Efforts, and will cooperate
with Investor, to secure all consents, approvals, authorizations,
exemptions and waivers from third parties (including any required
pursuant to the Hart-Scott-Rodino Antitrust Improvements act of 1976, as
amended (the "HSR Act")), set forth on Schedule 3.3 or otherwise
required in order to enable NSC to effect the transactions contemplated
hereby.
5.4. Conduct of Business. From and after the date hereof and
pending Closing, and unless Investor shall otherwise consent or agree in
writing, NSC covenants and agrees that:
(a) Ordinary Course. The Business will be conducted only
in the ordinary course and consistent with past practice, including
billing, shipping and collection practices, inventory transactions and
payment of accounts payable.
(b) Preservation of Business. NSC will use its Best
Efforts to preserve the business organization of the Business intact in
all material respects, to keep available in all material respects to the
Business the services of the present officers and employees of the
Business, and to preserve in all material respects for the Business the
good will of the material suppliers, material customers and others
having material business relations with the Business.
(c) Material Transactions. NSC will not, and will cause
its Affiliates not to:
(i) enter into any contract or commitment relating
to the Business the performance of which may extend beyond the Closing,
except those made in the ordinary course of business the terms of which
are consistent with past practice or those the obligations of NSC under
which do not exceed $100,000;
(ii) enter into any employment or consulting contract
or arrangement with any Person relating to the Business which is not
terminable at will, without penalty or continuing obligation, subject to
the requirements and restrictions of applicable labor and employment
laws and regulations, other than consulting and employment agreements
entered into in the ordinary course of business consistent with past
practice;
(iii) sell, transfer, lease or otherwise dispose of
any assets which would constitute Purchased Assets if the Closing were
to occur on the date of such disposition, other than in the ordinary
course of business and consistent with past practice;
(iv) incur, create, assume or suffer to exist any
mortgage, pledge, lien, restriction, encumbrance, tenancy, encroachment,
covenant, condition, right-of-way, easement, claim, security interest,
charge or other matter affecting title on any Purchased Assets, except
for (A) the incurrence, creation, assumption or sufferance to exist of
any of the foregoing that does not result in any obligations of NSC or
its Affiliates in excess of $100,000, (B) the incurrence, creation,
assumption or sufferance to exist of any mechanics' liens and purchase
money interests that may arise on the acquisition of supplies, materials
or equipment or (C) Assumed Liabilities (provided that to the extent any
Assumed Liability is incurred, created or assumed after the date hereof,
such Assumed Liability was incurred, created or assumed in the ordinary
course of business consistent with past practice);
(v) increase or otherwise change the compensation
payable or to become payable to any officer, employee or agent of the
Business, except in the ordinary course of business consistent with past
practice;
(vi) waive any substantial right of the Business,
other than for consideration in the ordinary course of business
consistent with past practice;
(vii) take any action or omit to take any action which
will result in a violation of any applicable law or cause a breach of
any agreements, contracts or commitments by the Business, in each case,
which, individually or in the aggregate, is material to the Business as
a whole; or
(viii) enter into any agreement to do any of the
foregoing.
5.5. Capitalization; Liabilities. Immediately prior to the
Closing (except as set forth in Section 2.2): (i) the authorized capital
stock of Fairchild Parent shall consist solely of (a) 70,000 shares of
FSC Preferred Stock, (b) 30,000,000 shares of FSC Class A Stock and
(c) 30,000,000 shares, of FSC Class B Stock; (ii) the FSC Securities
issued pursuant to Article II of this Agreement shall be the only issued
and outstanding shares of capital stock of Fairchild Parent issued or
outstanding immediately prior to the Closing; (iii) the authorized
capital stock of Fairchild shall consist solely of 1,000 shares of
Fairchild Common Stock; (iv) all of the issued and outstanding shares of
capital stock of Fairchild shall be held beneficially and of record by
Fairchild Parent, free and clear of any lien, security interest,
restriction, encumbrance or claim; (v) there shall be no outstanding
options, warrants, rights, agreements, calls, commitments or demands of
any character relating to the capital stock of Fairchild Parent or
Fairchild or securities convertible into or exchangeable for any of such
capital stock; (vi) Fairchild Parent shall not have any liabilities or
obligations other than pursuant to the NSC Note and Delaware franchise
taxes incident to its organization; and (vii) Fairchild shall not have
any liabilities or obligations other than the Assumed Liabilities,
pursuant to the Asset Agreement and the Operating Agreements and
Delaware franchise taxes incident to its organization.
5.6. Competing Financings. From the date hereof through the
Closing Date, NSC shall not engage in any competing issues of debt
securities or commercial bank facilities as described in and during the
period set forth in the Senior Subordinated Notes/Commitment Letter
included in the Commitment Letters (the "First Boston Commitment
Letter").
ARTICLE VI
COVENANTS OF INVESTOR
6.1. Fulfillment of Agreements. Investor shall use its Best
Efforts to cause all of the conditions to the obligations of NSC under
Article VIII of this Agreement to be satisfied on or prior to the
Closing and shall cooperate with NSC in obtaining the Title Policies (as
defined in the Asset Agreement) and Surveys (as defined in the Asset
Agreement). Investor shall promptly notify NSC in writing of any event
or fact which represents or is likely to cause a breach of any of its
representations, warranties, covenants or agreements contained herein.
6.2. Consents. Investor will use its Best Efforts, and will
cooperate with NSC, to secure all consents, approvals, authorizations,
exemptions, and waivers from third parties (including any required
pursuant to the HSR Act) as set forth on Schedule 3.3 or otherwise
required in order to enable Investor to effect the transactions
contemplated hereby.
6.3. Financing. In the event that a condition set forth in
Section 7.1 through 7.9 or Article VIII has not been satisfied or waived
prior to the date on which CVC's right to deliver a purchase request
under the First Boston Commitment Letter is terminated and as a result
the Fairchild Companies shall not have obtained the proceeds of the
Financing, Investor shall use its reasonable efforts to obtain the
Financing.
ARTICLE VII
CONDITIONS TO INVESTOR'S OBLIGATIONS
The obligation of Investor to consummate the transactions
contemplated hereby at the Closing shall be subject to the satisfaction
(or waiver) at or prior to the Closing of all of the following
conditions:
7.1. Bringdown of Representations and Warranties. The
representations and warranties of NSC contained in the Transaction
Agreements that are qualified by materiality limitations with respect to
the Business as a whole shall be true and correct and those that are not
qualified by materiality limitations with respect to the Business as a
whole shall be true and correct in all material respects with respect to
the Business as a whole, in each case as of the time of Closing with the
same force and effect as though such representations and warranties had
been made on, as of and with reference to such time, except those
representations and warranties that address matters only as of a
particular date which, if qualified by materiality limitations with
respect to the Business as a whole, shall be true and correct and, if
not qualified by materiality limitations with respect to the Business as
a whole, shall be true and correct in all material respects with respect
to the Business as a whole, as of that date and Investor shall have
received a certificate to such effect signed by an executive officer of
NSC.
7.2. Performance and Compliance. NSC shall have performed in all
material respects all of the covenants and complied in all material
respects with all of the provisions required by the Transaction
Agreements to be performed or complied with by it on or before the
Closing and Investor shall have received a certificate to such effect,
signed by an executive officer of NSC.
7.3. Opinion of Counsel. Investor shall have received from
Wachtell, Lipton, Rosen & Katz, counsel for NSC, and John M. Clark, III,
General Counsel of NSC, opinions dated the date of the Closing
collectively substantially to the effect set forth in Exhibit 7.3. In
rendering such opinions, such counsel may rely on matters involving the
application of laws other than the laws of the State of New York, the
General Corporation Law of the State of Delaware or laws of the United
States upon the opinion of other counsel of good standing who are
satisfactory to the counsel relying thereon, provided that NSC shall
furnish a copy of any such opinions to Investor and the counsel relying
thereon shall state that such other opinion is satisfactory in scope and
form.
7.4. Satisfactory Instruments. All instruments and documents
reasonably required on NSC's part to effectuate and consummate the
transactions contemplated hereby shall be delivered to Investor and
shall be in form and substance reasonably satisfactory to Investor and
its counsel in all material respects.
7.5. Required Consents. All consents and approvals of third
parties to the transactions contemplated hereby (including the consents
and approvals which are (a) set forth on Schedule 7.5, (b) material to
the Business or (c) necessary for Fairchild to conduct the Business
after the Closing in substantially the same manner in which the Business was
conducted prior to the Closing) shall have been obtained (except for
such consents and approvals (other than those set forth on Schedule 7.5) that
if not obtained would not in the aggregate have a material adverse
effect on the Business as a whole), and all waiting periods specified by
law the passing of which are necessary for the consummation of such
transactions (including without limitation the waiting period under the
HSR Act, if applicable) shall have passed or been terminated.
7.6. Litigation. No statute, rule or regulation, or order of any
court or administrative agency, shall be in effect which restrains or
prohibits the transactions contemplated hereby or which would limit or
adversely affect Investor's ability to acquire the FSC Securities to be
acquired by it pursuant to this Agreement, Fairchild Parent's ownership
or control of Fairchild or Fairchild's ownership or control of the
Purchased Assets (other than the Non-Assignable Assets) or the Business
and there shall not have been threatened by any Governmental Authority,
nor shall there be pending by any Person, any action or proceeding by or
before any court or governmental agency or other regulatory or
administrative agency or commission, challenging any of the transactions
contemplated by the Transaction Agreements or seeking monetary relief
(which monetary relief would reasonably be expected to have a material
adverse change in or effect upon the business, financial condition or
results of operations of the Business taken as a whole) by reason of the
consummation of such transactions.
7.7. Ancillary Agreements. The Asset Agreement and the Operating
Agreements shall have been duly authorized, executed and delivered by
the respective parties thereto and shall be in full force and effect.
NSC and Fairchild Parent shall have executed and delivered the
Shareholders Agreement.
7.8. Absence of Changes. There shall not have occurred or been
threatened (i) since May 26, 1996, any material adverse change (or
series of changes constituting a material adverse change) in the
operations, properties, financial condition or reasonable prospects of
the Business taken as a whole, or (ii) since the date of this Agreement,
any "Market Disruption Event." As used herein, "Market Disruption
Event" shall mean (a) any suspension or limitation of trading in
securities generally on the New York Stock Exchange (not including any
suspension or limitation of trading in any particular security as a
result of computerized trading limits), or any setting of minimum prices
for trading on such exchange; (b) any banking moratorium declared by
U.S. Federal or New York authorities; (c) any outbreak or escalation of
major hostilities in which the Unites States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency; or (d) any other material adverse
change in bank or capital market conditions that has had a material
adverse effect on the syndication of bank credit facilities or the
consummation of high yield offerings.
7.9. Timely Satisfaction of Conditions. This Section 7.9 shall
only apply if a condition set forth in Sections 7.1 through 7.8 or
Article VIII has not been satisfied or waived prior to the date on which
CVC's right to deliver a purchase request under the First Boston
Commitment Letter is terminated and as a result Investor shall not have
obtained the proceeds of the Financing. In such event, the obligation
of Investor to consummate the transactions contemplated by this Agreement
shall be subject to the further condition that the Fairchild Companies
shall have obtained the proceeds of the Financing.
ARTICLE VIII
CONDITIONS TO NSC'S OBLIGATIONS
The obligation of NSC to consummate the transactions contemplated
hereby at the Closing shall be subject to the satisfaction (or waiver)
at or prior to the Closing of all of the following conditions:
8.1. Bringdown of Representations and Warranties. The
representations and warranties of Investor contained in this Agreement
that are qualified by materiality limitations shall be true and correct
and those that are not qualified by materiality limitations shall be
true and correct in all material respects, in each case as of the time
of Closing with the same force and effect as though such representations
and warranties had been made on, as of and with reference to such time,
except those representations and warranties that address matters only as
of a particular date which, if qualified by materiality limitations,
shall be true and correct and, if not qualified by materiality
limitations, shall be true and correct in all material respects, as of
that date, and NSC shall have received a certificate to such effect
signed by an executive officer of Investor.
8.2. Performance and Compliance. Investor shall have
performed in all material respects all of the covenants and complied in
all material respects with all of the provisions required by this
Agreement to be performed or complied with by it on or before the
Closing and NSC shall have received a certificate to such effect, signed
by an executive officer of Investor.
8.3. Opinion of Counsel. NSC shall have received from
Dechert Price & Rhoads, counsel for Investor, an opinion dated the date
of the Closing substantially to the effect set forth in Exhibit 8.3.
8.4. Satisfactory Instruments. All instruments and
documents reasonably required on Investor's part to effectuate and
consummate the transactions contemplated hereby shall be delivered to
NSC and shall be in form and substance reasonably satisfactory to NSC
and its counsel in all material respects.
8.5. Required Consents. All consents and approvals of third
parties to the transactions contemplated hereby (including the consents
and approvals which are (a) set forth on Schedule 7.5, (b) material to
the Business or (c) necessary for Fairchild to conduct the Business
after the Closing in substantially the same manner in which the Business
was conducted prior to Closing) shall have been obtained (except for
such consents (other than those set forth on Schedule 7.5) that if not
obtained would not in the aggregate have a material adverse effect on
the Business as a whole), and all waiting periods specified by law the
passing of which are necessary for the consummation of such transactions
(including without limitation the waiting period under the HSR Act, if
applicable) shall have passed or been terminated.
8.6. Litigation. No statute, rule or regulation, or order
of any court or administrative agency shall be in effect which restrains
or prohibits the transactions contemplated hereby, and there shall not
have been threatened by any Governmental Authority, nor shall there be
pending by any Person, any action or proceeding by or before any court
or governmental agency or other regulatory or administrative agency or
commission, challenging any of the transactions contemplated by the
Transaction Agreements or seeking monetary relief (which monetary relief
would reasonably be expected to have a material adverse change in or
effect upon the business, financial condition or results of operations
of Investor taken as a whole) by reason of the consummation of such
transactions.
8.7. Ancillary Agreements. Investor and Management
Investors shall have executed and delivered the Shareholders Agreement.
ARTICLE IX
CERTAIN ADDITIONAL COVENANTS
9.1. Termination.
(a) When Agreement May Be Terminated. This Agreement may
be terminated at any time prior to Closing:
(i) by mutual consent of Investor and NSC;
(ii) by Investor if there has been a material breach
by NSC of any of its representations, warranties or covenants under the
Transaction Agreements which breach is not curable, or, if curable, is
not cured within thirty days of written notice thereof;
(iii) by NSC if there has been a material breach by
Investor of any of its representations, warranties or covenants under
this Agreement which breach is not curable, or, if curable, is not cured
within thirty days of written notice thereof; or
(iv) by either party if the Closing shall not have
occurred prior to October 31, 1997.
(b) Effect of Termination. In the event of termination of
this Agreement by either Investor or NSC, as provided above, this
Agreement shall forthwith terminate and there shall be no liability on
the part of either Investor or NSC or any of their respective officers
or directors, except for liabilities arising from a breach of this
Agreement prior to such termination; provided, however, that under no
circumstances shall such liabilities include any consequential or
incidental damages; provided, further, that the obligations of the
parties set forth in Section 9.2 hereof shall survive such termination.
9.2. Costs, Expenses and Taxes. Each party to this Agreement will
bear all the fees, costs and expenses which are incurred by it in
connection with the transactions contemplated hereby; provided, however,
that the filing fees for the HSR Act and any similar foreign clearances
or approvals shall be paid equally by NSC and Investor; and provided,
further, that if the Closing occurs, all fees and expenses of Investor
shall be borne by Fairchild.
9.3. Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Promptly after the date hereof, Investor and NSC will file the required
notifications, if any, with the Federal Trade Commission ("FTC") and the
Antitrust Division of the Department of Justice ("Department") pursuant
to and in compliance with the HSR Act and filings required to obtain any
necessary foreign approvals. The parties hereto shall not intentionally
or negligently delay submission of information requested by FTC and
Department under the HSR Act and shall use their respective Best Efforts
promptly to supply, or cause to be supplied, such information and shall
use their Best Efforts to obtain early termination of the applicable
waiting period.
9.4. No Setoff. A purported failure of performance by a party
under a Transaction Agreement, the Shareholders Agreement or the NSC
Note shall not reduce the rights of, or result in a claim of set-off
against, such party under any other Transaction Agreement, the
Shareholders Agreement or the NSC Note. The rights and obligations of
the parties to each of the foregoing agreements shall be deemed to be,
and shall be construed as, independent of the rights and obligations of
each such party to each of the other such agreements.
ARTICLE X
INDEMNIFICATION
10.1. Indemnification By NSC. NSC hereby agrees to indemnify and
hold harmless Investor and the Fairchild Companies from and against any
Damages arising out of or resulting from (i) the breach or inaccuracy of
any representation or warranty made by NSC in this Agreement, other than
the representation of NSC in Section 3.7; or (ii) the breach by NSC of
any covenant contained in this Agreement. Notwithstanding anything to
the contrary contained herein, if as of the Closing, Investor has actual
knowledge of the breach by NSC, or the inaccuracy, of any representation
or warranty made by NSC in this Agreement, and NSC does not have such
actual knowledge, then (A) Investor shall not be entitled to
indemnification from NSC with respect to such breach or inaccuracy and
(B) the Closing shall be deemed to be a waiver by Investor of any claim
for Damages with respect to such breach or inaccuracy and no other
remedy, set-off or indemnity shall be applicable.
10.2. Indemnification by Investor. Investor hereby agrees to
indemnify and hold harmless NSC from and against any Damages arising out
of or resulting from (i) the breach or inaccuracy of any representation
or warranty made by Investor in this Agreement; or (ii) the breach by
Investor of any covenant contained in this Agreement. Notwithstanding
anything to the contrary contained herein, if as of the Closing, NSC has
actual knowledge of the breach by Investor, or the inaccuracy, of any
representation or warranty made by Investor in this Agreement, and
Investor does not have such actual knowledge, then (A) NSC shall not be
entitled to indemnification from Investor with respect to such breach or
inaccuracy and (B) the Closing shall be deemed to be a waiver by NSC of
any claim for Damages with respect to such breach or inaccuracy and no
other remedy, set-off or indemnity shall be applicable.
10.3. General Indemnification Procedures.
(a) In the event that any party incurs or suffers any
Damages with respect to which indemnification may be sought by such
party pursuant to this Article X, 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
"Indemnitor"). The Claim 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 Indemnitor of any liability for
indemnification under this Article X, except to the extent that the
Indemnitor 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 Indemnitor at such time as the amount
of the claim is reasonably ascertainable. Each Indemnitor 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 Indemnitor. Any
Claim Response shall specify whether or not the Indemnitor given the
Claim Response disputes the claim described in the Claim Notice. If any
Indemnitor fails to give a Claim Response within the Response Period,
such Indemnitor shall be deemed not to dispute the claim described in
the related Claim Notice, in whole or in part. If any Indemnitor 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 Indemnitor. If any
Indemnitor shall be obligated to indemnify an Indemnitee hereunder, such
Indemnitor 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 Indemnitor and the Indemnitee
shall seek to resolve such dispute through negotiations and, if such
dispute is not resolved within 20 days, the Indemnitee may pursue
whatever legal remedies may be available for the recovery of the Damages
claimed from any Indemnitor. If any Indemnitor 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 Damages that have not been liquidated
as of the date of the Claim Notice, the date on which all or any part of
such Damages shall have become liquidated and determined, then the
Indemnitor 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 Indemnitor on
request all information and documentation reasonably necessary to
support and verify any Damages that the Indemnitee believes give rise to the
claim for indemnification hereunder and shall give the Indemnitor
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 Indemnitor 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 Indemnitor 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 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 Indemnitor 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 Indemnitor 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 Indemnitor (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 X shall represent indemnifiable
Damages 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
Indemnitor 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; and (b) the
Indemnitor shall have expressly agreed in writing that, as between the
Indemnitor and the Indemnitee, the Indemnitor shall be solely obligated
to satisfy and discharge such third party claim. Damages payable
hereunder shall be appropriately adjusted to reflect the receipt of
insurance proceeds, tax benefits and detriments and proceeds received
with respect to condemnation, expropriation or eminent domain
proceedings.
ARTICLE XI
MISCELLANEOUS
11.1. Nature and Survival of Representations. The
representations, warranties, covenants and agreements of NSC and
Investor contained in this Agreement shall survive the Closing;
provided, however, that the representation of NSC contained in Section
3.7 shall not survive the Closing and the covenants and agreements of
NSC contained in Article V of this Agreement, other than those contained
in Section 5.4(c)(iii) and Section 5.5, shall not survive the Closing.
11.2. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given (i)
three Business Days after mailing if mailed by certified or registered
mail, return receipt requested, (ii) one Business Day after delivery to
Federal Express or other nationally recognized overnight express
carrier, if sent for overnight delivery with fee prepaid, (iii) upon
receipt if sent via facsimile with receipt confirmed, or (iv) upon
receipt if delivered personally, addressed as follows or to such other
address or addresses of which the respective party shall have notified
the other:
If to Investor:
c/o Citicorp Venture Capital Ltd.
399 Park Avenue, 14th Floor
New York, New York 10043
Attention: Richard M. Cashin, Jr.
Fax No.: (212) 888-2940
With a required copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: G. Daniel O'Donnell
Fax No.: (215) 994-2222
If to NSC, to:
National Semiconductor Corporation
2900 Semiconductor Drive
Santa Clara, CA 95052
Attention: General Counsel
Fax No.: (408) 733-0293
With a required copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Barry A. Bryer
Fax No.: (212) 403-2000
11.3. Entire Agreement. The agreement of the parties, which is
composed of this Agreement and the Schedules and Exhibits hereto and the
documents referred to herein, sets forth the entire agreement and
understanding between the parties and supersedes any prior agreement or
understanding, written or oral, relating to the subject matter of this
Agreement.
11.4. Assignment; Binding Effect; Severability. This Agreement
may not be assigned by any party hereto without the written consent of
the other party; provided that Investor may assign its rights but not
its obligations hereunder to Management Investors designated by Investor
as set forth in Section 2.2(f); provided further that Investor and the
Fairchild Companies may assign their rights hereunder as collateral
security to any bona fide financial institution engaged in financing in
the ordinary course providing financing to consummate the transactions
contemplated hereby or any bona fide financial institution engaged in
financing in the ordinary course through whom such financing is
refunded, replaced, or refinanced and any of the foregoing financial
institutions may, in enforcing its rights in connection with such
financing, assign such rights or cause Investor and the Fairchild
Companies to assign their rights in connection with a sale of FSC,
Fairchild or the business in the form then being conducted by Fairchild
substantially as an entirety. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the successors and
permitted assigns of each party hereto. The provisions of this
Agreement are severable, and in the event that any one or more
provisions are deemed illegal or unenforceable the remaining provisions
shall remain in full force and effect unless the deletion of such
provision shall cause this Agreement to become materially adverse to any
party, in which event the parties shall use Best Efforts to arrive at an
accommodation which best preserves for the parties the benefits and
obligations of the offending provision.
11.5. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws (as opposed
to the conflicts of laws provisions) of the State of New York.
11.6. Execution in Counterparts. This Agreement may be executed
in any number of counterparts with the same effect as if the signatures
thereto were upon one instrument.
11.7. Public Announcement. Prior to Closing, neither Investor nor
NSC shall, without the approval of the other party hereto, make any
press release or other public announcement concerning the terms of the
transactions contemplated by this Agreement, except as and to the extent
that any such party shall be so obligated by law, in which case the
party shall use its Best Efforts to advise the other party thereof and
the parties shall use their Best Efforts to cause a mutually agreeable
release or announcement to be issued; provided that the foregoing shall
not preclude communications or disclosures necessary to (a) implement
the provisions of this Agreement (including the Financing) or (b) comply
with accounting, securities laws and Securities and Exchange Commission
disclosure obligations. Investor will provide NSC with a reasonable
opportunity to review and comment on any references to NSC made by
Investor (and shall not include any such references to NSC without the
written consent of NSC, which consent shall not be unreasonably withheld
or delayed) in any written materials that are intended to be filed with
the Securities and Exchange Commission in connection with obtaining the
Financing or intended to be distributed to prospective purchasers
pursuant to an offering made under Rule 144A promulgated under the
Securities Act of 1933 in connection with obtaining the Financing.
11.8. No Third Party Beneficiaries. Nothing in this Agreement,
express or implied, is intended to or shall (i) confer on any person
other than the parties hereto and their respective successors or
permitted assigns any rights (including third party beneficiary rights),
remedies, obligations or liabilities under or by reason of this
Agreement, other than the rights to indemnification from NSC to the
Fairchild Companies pursuant to Article X, or (ii) constitute the
parties hereto as partners or as participants in a joint venture. This
Agreement shall not provide third parties with any remedy, claim,
liability, reimbursement, cause of action or other right in excess of
those existing without reference to the terms of this Agreement, other
than the rights to indemnification from NSC to the Fairchild Companies
pursuant to Article X.
11.9. Headings. The headings preceding the text of the sections
and subsections hereof are inserted solely for convenience of reference,
and shall not constitute a part of this Agreement, nor shall they affect
its meaning, construction or effect.
11.10. 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. Each party will provide such
certificates from appropriate officers thereof confirming compliance by
such party with the terms of this Agreement as may reasonably be
requested by the other party at Closing.
11.11. Amendment and Waiver. The parties may by mutual agreement
amend this Agreement in any respect, and any party, as to such party,
may (a) extend the time for the performance of any of the obligations of
any other party, (b) waive any inaccuracies in representations by any
other party, (c) waive compliance by any other party with any of the
agreements contained herein and performance of any obligations by such
other party, and (d) waive the fulfillment of any condition that is
precedent to the performance by such party of any of its obligations
under this Agreement. To be effective, any such amendment or waiver
must be in writing and be signed by the party against whom enforcement
of the same is sought.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf as of the date first above
written.
NATIONAL SEMICONDUCTOR CORPORATION
By: //s// DONALD MACLEOD
---------------------
Name: Donald Macleod
Title: Executive Vice President & Chief Financial
Officer
STERLING HOLDING COMPANY, LLC
By: CITICORP VENTURE CAPITAL LTD.,
a member
By: //s//PAUL C. SCHORR IV
-----------------------
Name: Paul C. Schorr IV
Title: Vice President
The undersigned hereby represents and warrants that it is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of New York, has all requisite corporate
power and corporate authority to execute, deliver, and perform the
following guarantee and the following guarantee constitutes the valid
and binding obligation of the undersigned, enforceable against the
undersigned in accordance with its terms. The undersigned hereby
unconditionally and irrevocably guarantees the performance by Investor
of its obligations under this Agreement to be performed by Investor on
or prior to Closing.
CITICORP VENTURE CAPITAL LTD.
By: //s// RICHARD M. CASHIN JR.
----------------------------
Name: Richard M. Cashin Jr.
Title: President
Exhibit 99 NEWS RELEASE
For more information:
P.R.: Bill Callahan Financial: Jim Foltz
(408) 721-2871 (408) 721-5693
[email protected] [email protected]
NATIONAL SEMICONDUCTOR ANNOUNCES
COMPLETION OF SALE OF FAIRCHILD BUSINESSES
Santa Clara, CA, March 11, 1997 -- National Semiconductor Corporation
today announced the completion of its previously announced sale of
National's Fairchild businesses, consisting of a broad portfolio of
logic, discrete and non-volatile memory semiconductor devices aimed at
high-volume markets.
Fairchild Semiconductor's management and Sterling, LLC, a Citicorp
Venture Capital, Ltd. portfolio investment in related businesses, led
the $550-million recapitalization of Fairchild Semiconductor. National
Semiconductor Corporation retains a minority equity interest in
Fairchild Semiconductor. The transaction provides for continuing
commercial cooperation between Fairchild and National for a substantial
transition period. National expects to record a gain on the sale after
determining final divestiture costs and transition liabilities.
Brian L. Halla, chairman and CEO of National Semiconductor, said,
"This sale enables each company to concentrate on its core competencies
to maximize their businesses, which operate with very different
strategies and success models.
"National can now focus more closely on delivering highly
integrated systems solutions based on our analog and mixed signal
expertise addressing solutions for the information highway,
communications, consumer and personal systems marketplace."
Kirk P. Pond, chairman and CEO of Fairchild Semiconductor, said,
"This transition to independent status unlocks the inherent value in
Fairchild. As a leading supplier of multimarket products, we are
committed to providing and delivering the best portfolio of logic,
discrete power and signal, and non-volatile memory technologies in the
industry. We can now also move forward and separately grow the Fairchild
business."
