<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
20549
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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): June 18, 1998
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TEXAS INSTRUMENTS INCORPORATED
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(Exact name of Registrant as specified in its charter)
Delaware 1-3761
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(State of Incorporation) (Commission File No.)
75-0289970
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(I.R.S. Employer Identification No.)
8505 Forest Lane,
P. O. Box 660199, Dallas, Texas 75266-0199
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(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code (972) 995-3773
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<PAGE> 2
ITEM 2. Acquisition or Disposition of Assets.
Texas Instruments Incorporated (the "Company") and Micron Technology, Inc.,
("Micron") have entered into an Acquisition Agreement (the "Agreement"), dated
as of June 18, 1998, pursuant to which the Company has agreed to sell, and
Micron has agreed to purchase, the assets of the Company's semiconductor memory
business. The Company's memory business includes substantially all of the
Company's memory assets as well as the Company's shares in its two DRAM
manufacturing joint ventures. The consideration to be paid to the Company in
connection with the sale is 28.9 million shares of common stock of Micron and
assumption by Micron of $192 million of government-sponsored debt associated
with the Company's Italian memory operations and certain other liabilities of
the Company's memory business.
The foregoing description of the Agreement is qualified in its entirety by
reference to the Agreement, a copy of which is attached as Exhibit 2.1 hereto
and is incorporated by reference herein. The press release announcing the
transaction is attached as Exhibit 99.1 hereto and is incorporated by reference
herein.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits
Exhibit 2.1 Acquisition Agreement dated as of June 18, 1998 between Texas
Instruments Incorporated and Micron Technology, Inc. (exhibit C
omitted).
Exhibit 99.1 Press release issued by Micron Technology, Inc. and Texas
Instruments Incorporated on June 18, 1998.
<PAGE> 3
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 hereunto duly authorized.
TEXAS INSTRUMENTS INCORPORATED
By: /s/ O. WAYNE COON
------------------------------------
O. Wayne Coon
Vice President and
Assistant Secretary
Date: July 1, 1998
<PAGE> 4
Exhibit Index
<TABLE>
<CAPTION>
Designation of
Exhibit in Paper (P)
this Report Description of Exhibit or Electronic (E)
- -------------- ---------------------- -----------------
<S> <C> <C>
2.1 Acquisition Agreement E
dated as of June 18, 1998
between Texas Instruments
Incorporated and Micron
Technology, Incorporated
(exhibits A, B and J included;
other exhibits and schedules
omitted).
99.1 Press Release issued by E
Micron Technology, Incorporated
and Texas Instruments
Incorporated on June 18, 1998.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
ACQUISITION AGREEMENT
DATED JUNE 18, 1998
BETWEEN
MICRON TECHNOLOGY, INC.
AND
TEXAS INSTRUMENTS INCORPORATED
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 "Access Rights" . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 "Acquired Assets" . . . . . . . . . . . . . . . . . . . . . . 1
1.3 "Acquired Assets Tax Returns" . . . . . . . . . . . . . . . . 1
1.4 "Acquired Fab Sites" . . . . . . . . . . . . . . . . . . . . . 1
1.5 "Acquired Facilities" . . . . . . . . . . . . . . . . . . . . 1
1.6 "Acquired Intellectual Property" . . . . . . . . . . . . . . . 2
1.7 "Adjusted Balance Sheet" . . . . . . . . . . . . . . . . . . . 2
1.8 "Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 "Agents" . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 "Assumed Liabilities" . . . . . . . . . . . . . . . . . . . . 2
1.11 "Business" . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 "Business Day" . . . . . . . . . . . . . . . . . . . . . . . . 2
1.13 "Buyer" . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.14 "Buyer COBRA Election" . . . . . . . . . . . . . . . . . . . . 2
1.15 "Buyer Common Stock" . . . . . . . . . . . . . . . . . . . . . 2
1.16 "Buyer Disclosure Letter" . . . . . . . . . . . . . . . . . . 2
1.17 "Buyer Indemnified Claims" . . . . . . . . . . . . . . . . . . 2
1.18 "Buyer Material Adverse Effect" . . . . . . . . . . . . . . . 2
1.19 "Buyer Maximum Amount" . . . . . . . . . . . . . . . . . . . . 3
1.20 "Buyer Operating Group" . . . . . . . . . . . . . . . . . . . 3
1.21 "Buyer SEC Documents" . . . . . . . . . . . . . . . . . . . . 3
1.22 "Buyer Transferred Business Employees" . . . . . . . . . . . . 3
1.23 "Buyer's Taxes" . . . . . . . . . . . . . . . . . . . . . . . 3
1.24 "Cash Payment" . . . . . . . . . . . . . . . . . . . . . . . . 3
1.25 "Claim" . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.26 "Closing" . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.27 "Closing Balance Sheet" . . . . . . . . . . . . . . . . . . . 3
1.28 "Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . 3
1.29 "Closing Statement" . . . . . . . . . . . . . . . . . . . . . 3
1.30 "Closing Time" . . . . . . . . . . . . . . . . . . . . . . . . 3
1.31 "COBRA" . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.32 "Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.33 "Contamination" . . . . . . . . . . . . . . . . . . . . . . . 3
1.34 "Contract" . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.35 "Convertible Notes" . . . . . . . . . . . . . . . . . . . . . 4
1.36 "Copyrights" . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.37 "Cross-License Agreement" . . . . . . . . . . . . . . . . . . 4
1.38 "Debt Valuation" . . . . . . . . . . . . . . . . . . . . . . . 4
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1.39 "Designated Employees" . . . . . . . . . . . . . . . . . . . . 4
1.40 "Destroyed Asset" . . . . . . . . . . . . . . . . . . . . . . 4
1.41 "Disposal Facility" . . . . . . . . . . . . . . . . . . . . . 4
1.42 "Domestic Employees" . . . . . . . . . . . . . . . . . . . . . 4
1.43 "DRAM" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.44 "EDB" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.45 "Effective Time" . . . . . . . . . . . . . . . . . . . . . . . 4
1.46 "Employee Benefit Plan" . . . . . . . . . . . . . . . . . . . 4
1.47 "Employment Act" . . . . . . . . . . . . . . . . . . . . . . . 5
1.48 "Environmental Reports" . . . . . . . . . . . . . . . . . . . 5
1.49 "Environmental Requirements" . . . . . . . . . . . . . . . . . 5
1.50 "EPROM" . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.51 "ERISA" . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.52 "ERISA Affiliate" . . . . . . . . . . . . . . . . . . . . . . 5
1.53 "Excess" . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.54 "Exchange Act" . . . . . . . . . . . . . . . . . . . . . . . . 5
1.55 "Excluded Assets" . . . . . . . . . . . . . . . . . . . . . . 5
1.56 "Excluded Contracts" . . . . . . . . . . . . . . . . . . . . . 5
1.57 "Excluded Employees" . . . . . . . . . . . . . . . . . . . . . 6
1.58 "Excluded Liabilities" . . . . . . . . . . . . . . . . . . . . 6
1.59 "Facility Indemnitees" . . . . . . . . . . . . . . . . . . . . 6
1.60 "Financial Statements" . . . . . . . . . . . . . . . . . . . . 6
1.61 "FMLA" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.62 "Foreign Benefit Plans" . . . . . . . . . . . . . . . . . . . 6
1.63 "Foreign Employees" . . . . . . . . . . . . . . . . . . . . . 6
1.64 "Former Facilities" . . . . . . . . . . . . . . . . . . . . . 6
1.65 "GAAP" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.66 "Gore Software" . . . . . . . . . . . . . . . . . . . . . . . 6
1.67 "Governmental Agency" . . . . . . . . . . . . . . . . . . . . 6
1.68 "Governmental Approval" . . . . . . . . . . . . . . . . . . . 6
1.69 "Hazardous Material" . . . . . . . . . . . . . . . . . . . . . 6
1.70 "Hazardous Material Activities" . . . . . . . . . . . . . . . 7
1.71 "HIPAA" . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.72 "HSR Act" . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.73 "Indemnified Buyer Group" . . . . . . . . . . . . . . . . . . 7
1.74 "Indemnified Claims" . . . . . . . . . . . . . . . . . . . . . 7
1.75 "Indemnified Seller Group" . . . . . . . . . . . . . . . . . . 7
1.76 "Indenture" . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.77 "Independent Accounting Firm" . . . . . . . . . . . . . . . . 7
</TABLE>
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1.78 "Intellectual Property" . . . . . . . . . . . . . . . . . . . 7
1.79 "Issue Price" . . . . . . . . . . . . . . . . . . . . . . . . 8
1.80 "Italian and Singapore Transferred Business Employees" . . . . 8
1.81 "Italian Newco" . . . . . . . . . . . . . . . . . . . . . . . 8
1.82 "Italian Operating Company" . . . . . . . . . . . . . . . . . 8
1.83 "Joint Venture Assets" . . . . . . . . . . . . . . . . . . . . 8
1.84 "Joint Venture Facilities" . . . . . . . . . . . . . . . . . . 8
1.85 "Joint Ventures" . . . . . . . . . . . . . . . . . . . . . . . 8
1.86 "JV Agreements" . . . . . . . . . . . . . . . . . . . . . . . 8
1.87 "JV Amendments" . . . . . . . . . . . . . . . . . . . . . . . 8
1.88 "JV Audited Financial Statements" . . . . . . . . . . . . . . 8
1.89 "JV Financial Statements" . . . . . . . . . . . . . . . . . . 8
1.90 "JV Interests" . . . . . . . . . . . . . . . . . . . . . . . . 8
1.91 "JV Interim Financial Statements" . . . . . . . . . . . . . . 8
1.92 "JV Material Adverse Effect" . . . . . . . . . . . . . . . . . 8
1.93 "JV Permits and Approvals" . . . . . . . . . . . . . . . . . . 9
1.94 "JV Transfer Agreements" . . . . . . . . . . . . . . . . . . . 9
1.95 "KTI" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.96 "KTI Agreements" . . . . . . . . . . . . . . . . . . . . . . . 9
1.97 "KTI Amendments" . . . . . . . . . . . . . . . . . . . . . . . 9
1.98 "KTI Shareholders' Agreement" . . . . . . . . . . . . . . . . 9
1.99 "Law" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.100 "Leased Facilities" . . . . . . . . . . . . . . . . . . . . . 9
1.101 "Liability" . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.102 "Licensed IP" . . . . . . . . . . . . . . . . . . . . . . . . 9
1.103 "Liens" . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.104 "Loss" or "Losses" . . . . . . . . . . . . . . . . . . . . . . 10
1.105 "March Balance Sheet" . . . . . . . . . . . . . . . . . . . . 10
1.106 "Maskworks" . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.107 "Material Adverse Effect" . . . . . . . . . . . . . . . . . . 10
1.108 "Maximum Amount" . . . . . . . . . . . . . . . . . . . . . . . 10
1.109 "Memory Products" . . . . . . . . . . . . . . . . . . . . . . 10
1.110 "Newco Shares" . . . . . . . . . . . . . . . . . . . . . . . . 10
1.111 "Non-Assignable Contract" . . . . . . . . . . . . . . . . . . 10
1.112 "Notes" . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.113 "Notice of Objection" . . . . . . . . . . . . . . . . . . . . 10
1.114 "Operating Group" . . . . . . . . . . . . . . . . . . . . . . 11
1.115 "Owned Facilities" . . . . . . . . . . . . . . . . . . . . . . 11
1.116 "Patents" . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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1.117 "Permits and/or Approvals" . . . . . . . . . . . . . . . . . . 11
1.118 "Permitted Liens" . . . . . . . . . . . . . . . . . . . . . . 11
1.119 "Person" . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.120 "Pre-Closing Period" . . . . . . . . . . . . . . . . . . . . . 12
1.121 "Pre-Closing Seller Operations" . . . . . . . . . . . . . . . 12
1.122 "Preliminary Balance Sheet" . . . . . . . . . . . . . . . . . 12
1.123 "Price Allocation" . . . . . . . . . . . . . . . . . . . . . . 12
1.124 "Proceeding" . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.125 "Registered Intellectual Property" . . . . . . . . . . . . . . 12
1.126 "Related Agreements" . . . . . . . . . . . . . . . . . . . . . 12
1.127 "Remedial Activities" . . . . . . . . . . . . . . . . . . . . 12
1.128 "Reorganization" . . . . . . . . . . . . . . . . . . . . . . . 12
1.129 "Reorganization Agreements" . . . . . . . . . . . . . . . . . 12
1.130 "Required Utilities" . . . . . . . . . . . . . . . . . . . . . 12
1.131 "Requisite Regulatory Approvals" . . . . . . . . . . . . . . . 12
1.132 "Retained Environmental Liabilities" . . . . . . . . . . . . . 13
1.133 "Right and/or Claim" . . . . . . . . . . . . . . . . . . . . . 14
1.134 "SEC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.135 "Securities" . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.136 "Securities Act" . . . . . . . . . . . . . . . . . . . . . . . 14
1.137 "Securities Rights and Restrictions Agreement" . . . . . . . . 14
1.138 "Seller" . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.139 "Seller Disclosure Letter" . . . . . . . . . . . . . . . . . . 14
1.140 "Seller Group" . . . . . . . . . . . . . . . . . . . . . . . . 15
1.141 "Seller Indemnified Claims" . . . . . . . . . . . . . . . . . 15
1.142 "Seller Note Purchasing Subsidiary" . . . . . . . . . . . . . 15
1.143 "Seller's Taxes" . . . . . . . . . . . . . . . . . . . . . . . 15
1.144 "Seller's Year 2000 Plan" . . . . . . . . . . . . . . . . . . 15
1.145 "Shortfall" . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.146 "Shutdown Costs" . . . . . . . . . . . . . . . . . . . . . . . 15
1.147 "Singapore Newco" . . . . . . . . . . . . . . . . . . . . . . 15
1.148 "Singapore Operating Company" . . . . . . . . . . . . . . . . 15
1.149 "Straddle Period" . . . . . . . . . . . . . . . . . . . . . . 15
1.150 "Subordinated Notes" . . . . . . . . . . . . . . . . . . . . . 15
1.151 "Subsidiary" . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.152 "Successor" . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.153 "Supplemental Indenture" . . . . . . . . . . . . . . . . . . . 15
1.154 "Sustaining Costs" . . . . . . . . . . . . . . . . . . . . . . 16
1.155 "Target Amount" . . . . . . . . . . . . . . . . . . . . . . . 16
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1.156 "Target Closing Date" . . . . . . . . . . . . . . . . . . . . 16
1.157 "Tax" or "Taxes" . . . . . . . . . . . . . . . . . . . . . . . 16
1.158 "Tax Parameters" . . . . . . . . . . . . . . . . . . . . . . . 16
1.159 "Tax Proceedings" . . . . . . . . . . . . . . . . . . . . . . 16
1.160 "Tax Return" . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.161 "TECH" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.162 "TECH Agreements" . . . . . . . . . . . . . . . . . . . . . . 16
1.163 "TECH Amendments" . . . . . . . . . . . . . . . . . . . . . . 16
1.164 "TECH Shareholders' Agreement" . . . . . . . . . . . . . . . . 16
1.165 "Territory" . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.166 "Texas Transferred Business Employees" . . . . . . . . . . . . 17
1.167 "Threshold Amount" . . . . . . . . . . . . . . . . . . . . . . 17
1.168 "Trade Secrets" . . . . . . . . . . . . . . . . . . . . . . . 17
1.169 "Trademarks" . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.170 "Transfer Tax or Taxes" . . . . . . . . . . . . . . . . . . . 17
1.171 "Transferred Acquired Assets" . . . . . . . . . . . . . . . . 17
1.172 "Transferred Assumed Liabilities" . . . . . . . . . . . . . . 17
1.173 "Transferred Business Employees" . . . . . . . . . . . . . . . 17
1.174 "Transferred Contract" . . . . . . . . . . . . . . . . . . . . 17
1.175 "Transferred Contract Schedule" . . . . . . . . . . . . . . . 17
1.176 "Transition Agreement" . . . . . . . . . . . . . . . . . . . . 17
1.177 "Transition Plan Year" . . . . . . . . . . . . . . . . . . . . 17
1.178 "Transition Services" . . . . . . . . . . . . . . . . . . . . 17
1.179 "Transition Services Agreement" . . . . . . . . . . . . . . . 17
1.180 "Twinstar" . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.181 "Twinstar Facility" . . . . . . . . . . . . . . . . . . . . . 18
1.182 "Warn Act" . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.183 "Working Capital" . . . . . . . . . . . . . . . . . . . . . . 18
1.184 "Working Capital Reduction" . . . . . . . . . . . . . . . . . 18
1.185 "Working Capital Requirement" . . . . . . . . . . . . . . . . 18
ARTICLE II THE ACQUISITION . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.1 Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . 18
2.2 Assumption of Liabilities . . . . . . . . . . . . . . . . . . 18
ARTICLE III THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.1 Time and Place of Closing . . . . . . . . . . . . . . . . . . 18
3.2 Closing Date Deliveries of Seller . . . . . . . . . . . . . . 19
3.3 Closing Date Deliveries of Buyer . . . . . . . . . . . . . . . 20
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3.4 Purchase and Sale of Notes . . . . . . . . . . . . . . . . . . 20
3.5 Subsequent Documentation . . . . . . . . . . . . . . . . . . . 22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . 22
4.1 Representations and Warranties Relating to the Seller Group . 22
4.2 Representations and Warranties Relating to the Joint
Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.3 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . 48
5.1 Organization and Qualification . . . . . . . . . . . . . . . . 48
5.2 Corporate Authority . . . . . . . . . . . . . . . . . . . . . 48
5.3 No Violations . . . . . . . . . . . . . . . . . . . . . . . . 49
5.4 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . 49
5.5 Valid Issuance of Buyer Common Stock . . . . . . . . . . . . . 49
5.6 Valid Authorization of Notes . . . . . . . . . . . . . . . . . 49
5.7 SEC Filings; Financial Statements . . . . . . . . . . . . . . 50
5.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.9 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE VI ADDITIONAL AGREEMENTS OF THE PARTIES . . . . . . . . . . . . . . 50
6.1 The Reorganization . . . . . . . . . . . . . . . . . . . . . . 50
6.2 Actions of the Seller Group and Conduct of Business Prior to
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.3 Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . 53
6.4 Working Capital Requirement . . . . . . . . . . . . . . . . . 54
6.5 Investment Incentives . . . . . . . . . . . . . . . . . . . . 56
6.6 Italian Operations . . . . . . . . . . . . . . . . . . . . . . 56
6.7 Transition Services . . . . . . . . . . . . . . . . . . . . . 56
6.8 Working Capital . . . . . . . . . . . . . . . . . . . . . . . 57
6.9 Financial Statements . . . . . . . . . . . . . . . . . . . . . 57
6.10 Seller Disclosure Letter . . . . . . . . . . . . . . . . . . . 57
6.11 Buyer Disclosure Letter . . . . . . . . . . . . . . . . . . . 57
6.12 JV Amendments . . . . . . . . . . . . . . . . . . . . . . . . 58
6.13 Acquired Facilities . . . . . . . . . . . . . . . . . . . . . 58
6.14 Certain Rights. . . . . . . . . . . . . . . . . . . . . . . . 58
6.15 Licenses of Intellectual Property . . . . . . . . . . . . . . 59
6.16 Certain Software . . . . . . . . . . . . . . . . . . . . . . . 59
6.17 Access to Information . . . . . . . . . . . . . . . . . . . . 60
6.18 Tax Parameters; Price Allocation . . . . . . . . . . . . . . . 61
6.19 Notices of Certain Events . . . . . . . . . . . . . . . . . . 61
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6.20 Bulk Sales Waiver . . . . . . . . . . . . . . . . . . . . . . 61
6.21 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
6.22 Transfer Taxes; Transfer and Recording Fees . . . . . . . . . 62
6.23 Shutdown Costs . . . . . . . . . . . . . . . . . . . . . . . . 62
6.24 Securities Act Compliance; Restrictions on Sale . . . . . . . 63
6.25 Covenant Not to Compete . . . . . . . . . . . . . . . . . . . 63
6.26 Collection of Accounts . . . . . . . . . . . . . . . . . . . . 64
6.27 Public Disclosure . . . . . . . . . . . . . . . . . . . . . . 64
6.28 Assistance with Audit . . . . . . . . . . . . . . . . . . . . 64
6.29 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 65
6.30 Maintenance of Trade Secrets . . . . . . . . . . . . . . . . . 65
6.31 Assignment of Contracts . . . . . . . . . . . . . . . . . . . 65
ARTICLE VII TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.1 Tax Representations . . . . . . . . . . . . . . . . . . . . . 67
7.2 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.3 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.4 Refunds and Credits . . . . . . . . . . . . . . . . . . . . . 70
7.5 Termination of Tax Sharing Agreements . . . . . . . . . . . . 71
7.6 Tax Elections . . . . . . . . . . . . . . . . . . . . . . . . 71
7.7 Conduct of Audits and Other Procedural Matters . . . . . . . . 71
7.8 Assistance and Cooperation . . . . . . . . . . . . . . . . . . 72
7.9 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE VIII EMPLOYEE MATTERS . . . . . . . . . . . . . . . . . . . . . . . 73
8.1 Transfer of Employment . . . . . . . . . . . . . . . . . . . . 73
8.2 Coverage Under Employee Benefit Plans . . . . . . . . . . . . 75
8.3 General Matters . . . . . . . . . . . . . . . . . . . . . . . 76
8.4 Employee Tax Withholding and Reporting . . . . . . . . . . . . 77
8.5 Other Employment Matters . . . . . . . . . . . . . . . . . . . 77
ARTICLE IX CONDITIONS PRECEDENT TO CLOSING . . . . . . . . . . . . . . . . . 78
9.1 Conditions Precedent to Obligations of Buyer and Seller . . . 78
9.2 Conditions Precedent to Obligations of Buyer . . . . . . . . . 79
9.3 Conditions Precedent to Obligations of Seller . . . . . . . . 80
ARTICLE X SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION . . . . . . . . . . . 81
10.1 Survival of Representations; Effect of Breach . . . . . . . . 81
10.2 Seller's Agreement to Indemnify . . . . . . . . . . . . . . . 81
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10.3 Tax Indemnity . . . . . . . . . . . . . . . . . . . . . . . . 82
10.4 Buyer's Agreement to Indemnify . . . . . . . . . . . . . . . . 82
10.5 Notice of Claims; Contest of Claims . . . . . . . . . . . . . 83
10.6 Treatment of Indemnities . . . . . . . . . . . . . . . . . . . 83
10.7 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . 84
10.8 Indemnity Payments . . . . . . . . . . . . . . . . . . . . . . 84
10.9 Seller's Duty to Complete Remedial Activities . . . . . . . . 84
10.10 Seller's Duty With Respect to Intellectual Property . . . . . 86
10.11 Waivers and Survival . . . . . . . . . . . . . . . . . . . . . 86
ARTICLE XI TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
11.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . 87
11.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . 88
11.3 Further Provisions . . . . . . . . . . . . . . . . . . . . . . 88
ARTICLE XII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 88
12.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 88
12.2 Specific Performance . . . . . . . . . . . . . . . . . . . . . 88
12.3 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 88
12.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 89
12.5 No Third Party Beneficiary . . . . . . . . . . . . . . . . . . 89
12.6 Entire Agreement; Amendments . . . . . . . . . . . . . . . . . 89
12.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 89
12.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 89
12.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
12.10 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . 90
12.11 Table of Contents; Headings; Schedules . . . . . . . . . . . . 91
12.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 91
12.13 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . 91
</TABLE>
EXHIBITS:
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Description of Acquired Assets and Excluded Assets . . . . . . . . . . . . . A
Description of Assumed Liabilities and Excluded Liabilities . . . . . . . . . B
Cross-License Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . C
March Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D
Form of Securities Rights and Restrictions Agreement . . . . . . . . . . . . E
Form of Subordinated Notes . . . . . . . . . . . . . . . . . . . . . . . . . F
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Form of Supplemental Indenture . . . . . . . . . . . . . . . . . . . . . . . G
Price Allocation/Tax Parameters . . . . . . . . . . . . . . . . . . . . . . . H
Form of Transition Services Agreement . . . . . . . . . . . . . . . . . . . . I
List of Certain Excluded Liabilities . . . . . . . . . . . . . . . . . . . . J
</TABLE>
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ACQUISITION AGREEMENT
This ACQUISITION AGREEMENT, dated June 18, 1998 (this "Agreement"), is
between Micron Technology, Inc., a Delaware corporation ("Buyer"), and Texas
Instruments Incorporated, a Delaware corporation ("Seller"). All capitalized
terms used herein have the meanings ascribed to such terms in Article I hereof
or as otherwise defined herein.
RECITALS
A. Seller engages, through its Subsidiaries and through the Joint
Ventures, in research and development, manufacture, assembly, sales and
distribution of devices capable of storing data or information, including DRAMs
and EPROMs, and certain other activities related thereto;
B. Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, all of the assets of said Business upon the terms and subject to
the conditions set forth in this Agreement; and
C. It is intended that, contemporaneously with the closing of the
transactions contemplated hereby, (i) each of the parties to the Joint Ventures
shall enter into binding written agreements providing for Buyer to replace
Seller in its relationships with each of the Joint Ventures, (ii) a wholly
owned subsidiary of Seller shall purchase certain Subordinated Notes and
certain Convertible Notes and (iii) Buyer and Seller shall enter into the
Cross-License Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
1.1 "Access Rights" has the meaning set forth in Section 6.17 hereof.
1.2 "Acquired Assets" has the meaning set forth in Exhibit A hereto.
1.3 "Acquired Assets Tax Returns" has the meaning set forth in
Section 7.3 hereof.
1.4 "Acquired Fab Sites" has the meaning set forth in Exhibit A
hereto.
1.5 "Acquired Facilities" means the Owned Facilities and the Leased
Facilities as specified in Section 1.5 of the Seller Disclosure Letter.
<PAGE> 12
1.6 "Acquired Intellectual Property" means the Intellectual Property,
other than Patents issued or Patent applications filed before the Closing Date,
owned by any member of the Seller Group and primarily related to or primarily
used in the Business. Acquired Intellectual Property shall include
Intellectual Property, other than Patents issued or Patent applications filed
prior to the Closing Date, in any invention or work created, conceived or
authored by an employee of the Business.
1.7 "Adjusted Balance Sheet" has the meaning set forth in Section 6.4
hereof.
1.8 "Affiliate" means, with respect to a specified Person, a Person
that directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with such Person, provided that in no
event shall any member of the Seller Group be deemed to be an Affiliate of
Buyer.
1.9 "Agents" means, with respect to the referenced principal, any
past or present officer, director, employee, representative, shareholder, or
contractor of the referenced principal, or any other Person for whom such
principal is legally responsible.
1.10 "Assumed Liabilities" has the meaning set forth in Exhibit B
hereto.
1.11 "Business" means the business of the Seller Group relating to the
manufacture, assembly, sales and distribution of MOS memory devices capable of
storing data or information (including DRAM, Flash and EPROM devices) including
all products and aspects of such business under current research and
development.
1.12 "Business Day" means a day other than a Saturday, Sunday or other
day on which the New York Stock Exchange does not conduct regular trading.
1.13 "Buyer" has the meaning set forth in the Preamble hereof.
1.14 "Buyer COBRA Election" has the meaning set forth in Section 8.2
hereof.
1.15 "Buyer Common Stock" means the common stock, par value $0.10 per
share, of Buyer.
1.16 "Buyer Disclosure Letter" means Buyer's disclosure schedule to be
delivered to Seller pursuant to Section 6.11 of this Agreement.
1.17 "Buyer Indemnified Claims" has the meaning set forth in Section
10.2 hereof.
1.18 "Buyer Material Adverse Effect" means a material adverse effect
on the business, operations, results of operations, financial condition or
assets (including intangible assets) of Buyer's business, taken as a whole.
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1.19 "Buyer Maximum Amount" has the meaning set forth in Section 10.4
hereof.
1.20 "Buyer Operating Group" means Buyer, Singapore Newco (after
giving effect to the acquisition of all of the outstanding capital stock
thereof by Buyer or a Subsidiary of Buyer), Italian Newco (after giving effect
to the acquisition of all of the outstanding capital stock thereof by Buyer or
a Subsidiary of Buyer) and any Subsidiary designated by Buyer to purchase
assets in accordance with the terms of this Agreement.
1.21 "Buyer SEC Documents" has the meaning set forth in Section 5.7
hereof.
1.22 "Buyer Transferred Business Employees" has the meaning set forth
in Section 8.2 hereof.
1.23 "Buyer's Taxes" has the meaning set forth in Section 7.2 hereof.
1.24 "Cash Payment" has the meaning set forth in Section 3.4 hereof.
1.25 "Claim" means any Proceeding or any other demand, citation,
summons, complaint, order or investigation by any Governmental Agency or other
Person.
1.26 "Closing" means the consummation of the transactions contemplated
hereby.
1.27 "Closing Balance Sheet" has the meaning set forth in Section 6.4
hereof.
1.28 "Closing Date" means the date on which the Closing occurs.
1.29 "Closing Statement" has the meaning set forth in Section 6.13
hereof.
1.30 "Closing Time" has the meaning set forth in Section 3.1 hereof.
1.31 "COBRA" means Title X of the Consolidated Omnibus Reconciliation
Act of 1985, as amended.
1.32 "Code" means the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder, as the same may be in effect
from time to time.
1.33 "Contamination" means any Hazardous Material which is present in
the soil, groundwater, surface water, air, or building materials of a property
in a concentration that (i) exceeds the concentrations allowed by applicable
Environmental Requirements, and/or (ii) results in any requirement for Remedial
Activities or which is stored as of the Closing Date in any Acquired Facility
in violation of any Environmental Requirement applicable thereto as of the
Closing Date.
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1.34 "Contract" means any agreement, joint venture agreement,
partnership agreement, assignment, lease, sublease, license, sublicense,
settlement agreement, consent decree, stipulation, promissory note, evidence of
indebtedness, loan agreement, indenture, security agreement, loan document,
insurance policy, or other contract or commitment (whether written or oral),
including any amendments, supplements or other modifications thereto.
1.35 "Convertible Notes" means the 6-1/2% Convertible Subordinated
Notes due 2005 of Buyer issued or to be issued pursuant to the Indenture, as
supplemented by the Supplemental Indenture, such notes to be limited to an
aggregate principal amount of $740,000,000.
1.36 "Copyrights" has the meaning set forth in Section 1.78 hereof.
1.37 "Cross-License Agreement" means the patent cross-license
agreement between Seller and Buyer, in the form of Exhibit C hereto.
1.38 "Debt Valuation" has the meaning set forth in Section 3.4 hereof.
1.39 "Designated Employees" has the meaning set forth in Section 8.1
hereof.
1.40 "Destroyed Asset" has the meaning set forth in Section 6.14
hereof.
1.41 "Disposal Facility" means any transporter, hauler, recycler,
incinerator, or any storage, handling, or disposal operator or facility to
which Hazardous Material waste (which is generated in the course of the Pre-
Closing Seller Operations, generated prior to the Closing Date at any Acquired
Facility or Joint Venture Facility, or generated at any time by the Seller
Group, or Joint Venture, or their respective Agents or Affiliates) has been or
is directly or indirectly delivered, transported, stored, disposed of, or
otherwise transferred.
1.42 "Domestic Employees" means all employees of members of the Seller
Group or any of their Affiliates who are engaged primarily in the Business and
who are based in the United States of America.
1.43 "DRAM" means a dynamic random access memory device for the
storage of digital information.
1.44 "EDB" means the Singapore Economic Development Board, a statutory
body established under the Economic Development Board Act of the Republic of
Singapore.
1.45 "Effective Time" has the meaning set forth in Exhibit B hereto.
1.46 "Employee Benefit Plan" means any employee benefit plan as
defined in Section 3(3) of ERISA, and any other plan (or practices or
procedures having the effect of a plan), arrangement, contract (other than a
collective bargaining agreement), program or policy benefiting employees,
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including, without limitation, any such plan, arrangement, contract, program or
policy with respect to deferred compensation, retention, fringe benefit, stock
appreciation right, "phantom" stock, bonus or other incentive compensation,
insurance, profit sharing, disability, thrift, stock purchase, day care,
healthcare, medical, dental, vision, legal services, qualified, nonqualified
and incentive stock option plan, supplemental or excess benefit plan, employee
discount, or severance.
1.47 "Employment Act" has the meaning set forth in Section 8.1 hereof.
1.48 "Environmental Reports" means those reports provided to Buyer
pursuant to subsection 4.1(o) hereof.
1.49 "Environmental Requirements" means any and all applicable Permits
and/or Approvals, statutes, rules, ordinances, regulations, common laws,
orders, injunctions, decrees, judgments, stipulations, orders, treaties,
protocols or rulings of any Governmental Agency, and/or, to the extent legally
binding upon the Acquired Assets, the Buyer Operating Group, the Business,
and/or the Acquired Facilities, any and all consent decrees, settlement
agreements, Contracts, covenants running with land, and equitable servitudes
which regulate or prohibit any Hazardous Material or Hazardous Material
Activity or are otherwise intended to protect human health, reproduction,
worker safety, the environment, or natural resources.
1.50 "EPROM" means an erasable, programmable, read-only memory device
that allows stored information to be erased.
1.51 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended (including, without limitation, any successor code), and the
rules and regulations promulgated thereunder, as the same may be in effect from
time to time.
1.52 "ERISA Affiliate" of any entity means any other entity which,
together with such entity, would be treated as a single employer under Section
414 of the Code.
1.53 "Excess" has the meaning set forth in Section 6.4 hereof.
1.54 "Exchange Act" means the Securities Exchange Act of 1934, as
amended (including, without limitation, any successor act), and the rules and
regulations promulgated thereunder, as the same may be in effect from time to
time.
1.55 "Excluded Assets" has the meaning set forth in Exhibit A hereto.
1.56 "Excluded Contracts" means the Contracts of a type described
under clauses (S) through (V) of Section 4.1(f)(i), unless otherwise agreed by
Buyer. In addition, "Excluded Contracts" shall mean all Contracts of any
member of the Seller Group primarily related or primarily used in the Business
as conducted in India, Japan or any of the sites set forth in clause 12 of the
definition of Excluded Assets set forth in Exhibit A hereto.
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1.57 "Excluded Employees" means Domestic Employees and Foreign
Employees located at, or whose employment primarily relates to, any of the
locations or operations identified under clause 12(d) of the definition of
Excluded Assets on Exhibit A hereto and certain administrative and marketing
personnel located in Singapore as agreed by Buyer and Seller.
1.58 "Excluded Liabilities" has the meaning set forth in Exhibit B
hereto.
1.59 "Facility Indemnitees" has the meaning set forth in Section 10.9
hereof.
1.60 "Financial Statements" has the meaning set forth in Section
4.1(i) hereof.
1.61 "FMLA" means the Family and Medical Leave Act of 1993, as amended
(including, without limitation, any successor act), and the rules and
regulations promulgated thereunder, as the same may be in effect from time to
time.
1.62 "Foreign Benefit Plans" means all Employee Benefit Plans which
cover Foreign Employees.
1.63 "Foreign Employees" means all employees of members of the Seller
Group or any of their Affiliates who are engaged primarily in the Business and
who reside or are domiciled in a country other than the United States of
America; provided, however, that "Foreign Employees" shall not include any of
Seller's employees in India or Japan.
1.64 "Former Facilities" means any real property (other than the
Acquired Facilities) that is or has been owned, leased, or otherwise used on or
before the Closing Date for the conduct of the Pre-Closing Seller Operations or
which was owned or leased on or before the Closing Date by any member of the
Seller Group or the Joint Ventures.
1.65 "GAAP" means U.S. generally accepted accounting principles.
1.66 "Gore Software" has the meaning set forth in Section 6.16 hereof.
1.67 "Governmental Agency" means any court, administrative agency,
commission, law making body or other governmental authority or instrumentality
of the government of the United States, or any state, municipality, county or
town thereof, or of any foreign jurisdiction, or any agency, bureau, ministry,
law making body, commission or instrumentality thereof, including the employees
or agents thereof.
1.68 "Governmental Approval" means an approval, order or authorization
of, or filing or registration with, or consent of or notification to any
Governmental Agency.
1.69 "Hazardous Material" means any material, substance or waste to
the extent designated by any applicable Governmental Agency to be radioactive,
toxic, hazardous or otherwise a danger
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<PAGE> 17
to health, reproduction or the environment or that is regulated or prohibited
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, the Occupational Safety and Health Act, the Resource Conservation and
Recovery Act of 1976, the Federal Insecticide, Fungicide and Rodenticide Act,
the Federal Water Pollution Control Act, Nuclear Waste Policy Act of 1982, the
Safe Drinking Water Act, the Clean Air Act, or the Toxic Substances Control
Act, including, without limitation, petroleum, crude oil fractions, asbestos-
containing materials, radon gas and radioactive materials.
1.70 "Hazardous Material Activities" means any and all Remedial
Activities and any and all transportation, transfer, recycling, storage, use,
handling, treatment, manufacture, investigation, removal, remediation, emission
to air, discharge to soil, surface water and/or ground water, release, exposure
of others to, sale, or distribution of any Hazardous Material, any
Contamination, or any product or waste containing a Hazardous Material.
1.71 "HIPAA" has the meaning set forth in Section 8.2 hereof.
1.72 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (including, without limitation, any successor act), and the
rules and regulations promulgated thereunder, as the same may be in effect from
time to time.
1.73 "Indemnified Buyer Group" has the meaning set forth in Section
10.2 hereof.
1.74 "Indemnified Claims" has the meaning set forth in Section 10.4
hereof.
1.75 "Indemnified Seller Group" has the meaning set forth in Section
10.4 hereof.
1.76 "Indenture" means that certain Indenture, dated as of June 15,
1997, by Buyer to Norwest Bank Minnesota, National Association, as trustee
thereunder, with respect to certain subordinated debt securities of Buyer.
1.77 "Independent Accounting Firm" has the meaning set forth in
Section 6.4 hereof.
1.78 "Intellectual Property" means any or all of the following and all
rights in, arising out of, or associated therewith: (i) all United States and
foreign patents and utility models and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and continuations-
in-part thereof, and re-examinations and equivalent or similar rights anywhere
in the world in inventions and discoveries ("Patents"); (ii) all inventions
(whether patentable or not), invention disclosures, improvements, trade
secrets, proprietary information, know how, technology, technical data and
customer lists, and all documentation embodying or evidencing any of the
foregoing except to the extent any of the foregoing is embodied within an
issued Patent ("Trade Secrets"); (iii) all copyrights, copyright registrations
and applications therefor and all other rights corresponding thereto throughout
the world ("Copyrights"); (iv) all mask works, mask work registrations and
applications therefor, and any equivalent or similar rights in semiconductor
masks,
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layouts, architectures or topology ("Maskworks"); (v) all industrial designs
and any registrations and applications therefor throughout the world; (vi) all
trade names, logos, common law trademarks and service marks, trademark and
service mark registrations and applications therefor and all goodwill
associated therewith throughout the world ("Trademarks"); (vii) all databases
and data collections and all rights therein throughout the world; (viii) all
computer software including all source code, object code, firmware, development
tools, files, records and data, all media on which any of the foregoing is
recorded; (ix) all World Wide Web addresses, Uniform Resource Locators, and
domain names; and (x) any similar, corresponding or equivalent rights to any of
the foregoing anywhere in the world.
1.79 "Issue Price" has the meaning set forth in Section 3.4 hereof.
1.80 "Italian and Singapore Transferred Business Employees" has the
meaning set forth in Section 8.2 hereof.
1.81 "Italian Newco" has the meaning set forth in Section 6.1 hereof.
1.82 "Italian Operating Company" means Texas Instruments Italia S.p.A.
1.83 "Joint Venture Assets" for each Joint Venture means the Joint
Venture Facilities and all of the other tangible assets shown on the balance
sheet for such Joint Venture.
1.84 "Joint Venture Facilities" means the facilities owned or leased
by any of the Joint Ventures.
1.85 "Joint Ventures" means TECH and KTI.
1.86 "JV Agreements" means the KTI Agreements and TECH Agreements.
1.87 "JV Amendments" means the TECH Amendments and the KTI Amendments.
1.88 "JV Audited Financial Statements" has the meaning set forth in
Section 4.2(h) hereof.
1.89 "JV Financial Statements" has the meaning set forth in Section
4.2(h) hereof.
1.90 "JV Interests" means the entire ownership interest held by
Seller, its Subsidiaries or any of their Affiliates in the Joint Ventures.
1.91 "JV Interim Financial Statements" has the meaning set forth in
Section 4.2(h) hereof.
1.92 "JV Material Adverse Effect" means (i) a material adverse effect
on the financial condition, business, operations (but not including results of
operations), or the ability to manufacture and supply Memory Products of either
KTI or TECH, or both, as the context requires, as
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manufactured and supplied to Seller on the date hereof, in all cases on a
standalone basis with respect to each entity, or (ii) a material adverse effect
on the ability of either Joint Venture to perform its obligations under any of
the JV Agreements or the JV Amendments.
1.93 "JV Permits and Approvals" has the meaning set forth in Section
4.2(l) hereof.
1.94 "JV Transfer Agreements" has the meaning set forth in Section 4.2
hereof.
1.95 "KTI" means KTI Semiconductor, a corporation organized under the
laws of Japan.
1.96 "KTI Agreements" means the KTI Shareholders' Agreement together
with all of the agreements entered into by any of the parties thereto (or any
of their respective Affiliates) in connection with KTI (including related
supply agreements), as amended through the date hereof.
1.97 "KTI Amendments" means the amendments to the KTI Agreements to be
executed at or prior to the Closing in accordance with Section 6.12 hereof, as
contemplated by the agreement dated April 21, 1998 among Seller, Buyer and Kobe
Steel Limited.
1.98 "KTI Shareholders' Agreement" means the Shareholders' Agreement,
dated March 19, 1990, between Seller and Kobe Steel, Ltd., as amended.
1.99 "Law" means all laws, statutes, ordinances, regulations, and
other pronouncements having the effect of law of the United States of America,
Italy, the Republic of Singapore, Japan, India or any other country or
territory, or domestic or foreign state, province, commonwealth, city, country,
municipality, territory, protectorate, possession, court, tribunal, agency,
government, department, commission, arbitrator, board, bureau, or
instrumentality thereof.
1.100 "Leased Facilities" means the facilities used in the Business as
currently conducted to be leased pursuant to this Agreement and/or the
Transition Services Agreement by a member of the Buyer Operating Group on or
after the Closing, including the parking privileges and other appurtenances of
every kind thereto and all security and other prepayments and deposits arising
thereunder or in connection therewith.
1.101 "Liability" means all debts, liabilities, Losses, Claims,
damages, costs, expenses and obligations of every kind, whether fixed or
contingent, mature or unmatured, or liquidated or unliquidated, including,
without limitation, those arising under any Law and those arising under any
contract, commitment or undertaking.
1.102 "Licensed IP" has the meaning set forth in Section 6.15 hereof.
1.103 "Liens" means any mortgage, pledge, security, interest,
encumbrance, lien (statutory or other), conditional sale agreement or other
adverse claim of any kind.
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1.104 "Loss" or "Losses" means any and all deficiencies, judgments,
settlements, demands, claims, actions or causes of action, assessments,
liabilities, losses, damages (other than consequential damages), interest,
fines, penalties, costs and expenses, including, without limitation, reasonable
legal, accounting and other costs and expenses incurred in connection with
investigating, defending, settling or satisfying any and all demands, claims,
actions, causes of action, suits, proceedings, assessments, judgments or
appeals.
1.105 "March Balance Sheet" means the unaudited balance sheet as at
March 31, 1998 with respect to the Business on a combined basis (including the
JV Interests as an equity investment) delivered by Seller to Buyer prior to the
date hereof and attached as Exhibit D hereto.
1.106 "Maskworks" has the meaning set forth in Section 1.78 hereof.
1.107 "Material Adverse Effect" means a material adverse effect on the
business, operations, results of operations, financial condition, all assets
(including intangible assets) of the Business, taken as a whole, or liabilities
of the Business, taken as a whole, or on Buyer's ability to own, use or operate
the Acquired Assets, taken as a whole, or the Business in substantially the
same manner as the Seller Group owned, used or operated the Acquired Assets and
the Business on the date hereof, or on the ability of the Joint Ventures to
manufacture and supply Memory Products to Buyer in the same manner and in the
same quantity as manufactured and supplied on the date hereof.
1.108 "Maximum Amount" has the meaning set forth in Section 10.2
hereof.
1.109 "Memory Products" means any standalone DRAM, EPROM or flash EPROM
semiconductor product whether in discrete IC form or modular form, such as a
SIMM; provided, however, that Memory Products shall not include DRAM, EPROM or
flash EPROM products which Seller is contractually obligated, as of June 10,
1998, to purchase from Texas Instruments-Acer Incorporated or any successor
company thereto in accordance with the Transition Agreement (the "Transition
Agreement"), dated March 3, 1998, by and among Seller, Acer Incorporated, a
corporation organized under the laws of the Republic of China and Texas
Instruments-Acer Incorporated, a corporation organized under the laws of the
Republic of China and Seller, as amended by the amendments to such Transition
Agreement, dated June 10, 1998.
1.110 "Newco Shares"means all issued and outstanding capital stock of
Italian Newco and Singapore Newco.
1.111 "Non-Assignable Contract" has the meaning set forth in Section
6.31(b) hereof.
1.112 "Notes" has the meaning set forth in Section 3.4 hereof.
1.113 "Notice of Objection" has the meaning set forth in Section 6.4
hereof.
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1.114 "Operating Group" means Singapore Operating Company, Italian
Operating Company and Twinstar.
1.115 "Owned Facilities" means the facilities identified in Section
4.1(n) of the Seller Disclosure Letter, including (i) the improvements and
structures located thereon, (ii) all easements, and appurtenances in favor of
or benefitting said property or any portion thereof, and (iii) for purposes of
Section 2.1 only, the owner's right, title and interest in (A) all furniture,
fixtures, fittings apparatus, equipment, machinery, fire safety, data
transmission, security, electrical, water, sewer, gas and other utility
systems, leases, and other items of tangible and personal property located on,
attached to, used in connection with, required for the operation of, or arising
as a consequence of the ownership, operation, maintenance, management of said
land and improvements, (B) any deposits, prepayments, intangible personal
property, guaranties, warranties, and contracts now or hereafter arising in
connection with ownership, use or operation of such property, to the extent
designated by Buyer, in its sole discretion, as included in the Acquired
Assets, and (C) any lease rights (including, without limitation, the lessor's
interest in and to all tenant leases, subleases and tenancies, including all
amendments, modifications, agreements, records, substantive correspondence, and
other documents affecting in any way a right to occupy any portion of said land
and improvements and the lessor's interest in all security deposits and prepaid
rent, if any, under said leases, and any and all guaranties of said leases).
1.116 "Patents" has the meaning set forth in Section 1.78 hereof.
1.117 "Permits and/or Approvals" means certificates, exemptions,
orders, permits, licenses, clearances, authorizations, consents and approvals
required by or from any Governmental Agency (including Governmental Approvals)
or other Person which is required for the conduct of the designated activity.
1.118 "Permitted Liens" means, with respect to the Owned Facilities,
Liens for Taxes not yet due and payable or being contested in good faith for
which reserves have been taken on the Closing Balance Sheet, those Liens
specifically enumerated in Section 1.118 of the Seller Disclosure Letter, and
any Liens created by Buyer at or prior to the Closing, and for all other
Acquired Assets, (i) Liens specifically enumerated in Section 1.118 of the
Seller Disclosure Letter relating to the assets of Singapore Newco and Italian
Newco, (ii) Liens of landlords, carriers, warehousemen, mechanics, and
materialmen arising by operation of law in the ordinary course of business for
sums not yet due and payable, (iii) encumbrances and exceptions to title set
forth in Section 1.118 of the Seller Disclosure Letter, (iv) Liens on the date
hereof intended by Buyer and Seller to be released at or prior to the Closing;
provided, however, that all such Liens are actually released at or prior to the
Closing, (v) any Liens created by Buyer at or prior to the Closing and (vi)
other Liens or imperfections to title which do not materially impair the use of
such property for the conduct of the Business.
1.119 "Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or Governmental Agency.
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1.120 "Pre-Closing Period" has the meaning set forth in Section 7.2
hereof.
1.121 "Pre-Closing Seller Operations" means activities of every type
conducted in the course of or in connection with the Business on or prior to
the Closing Date, wherever the same shall have been conducted, including, but
not limited to, the product development, manufacturing, assembly, research,
shipping, product marketing and sales, leasing and Hazardous Material
Activities of the Business.
1.122 "Preliminary Balance Sheet" has the meaning set forth in Section
6.4 hereof.
1.123 "Price Allocation" has the meaning set forth in Section 6.18
hereof.
1.124 "Proceeding" means any suit, action, arbitration, mediation,
administrative, or other proceeding before any Governmental Agency.
1.125 "Registered Intellectual Property" means all United States,
international and foreign: (i) registered Trademarks, service marks or trade
names, applications to register Trademarks, service marks or trade names,
intent-to-use applications, or other registrations or applications related to
Trademarks, service marks or trade names; (ii) registered Copyrights and
applications for Copyright registration; (iii) any mask work registrations and
applications to register mask works; (iv) Uniform Resource Locators, World Wide
Web site addresses and domain names; and (v) any other Intellectual Property
that is the subject of an application, certificate, filing, registration or
other document issued by, filed with, or recorded by, any state, government or
other public legal authority, other than Patents and applications for Patents.
1.126 "Related Agreements" means the JV Amendments, the Securities
Rights and Restrictions Agreement, the Transition Services Agreement (including
all of the agreements to be delivered pursuant thereto) and the Cross-License
Agreement.
1.127 "Remedial Activities" means any sampling, testing, investigation,
feasibility study, health assessment, risk assessment, construction activity,
installation, encapsulation, removal, excavation, treatment, discharge,
disposal, removal, transportation, monitoring and remediation thereto of
Contamination or any Hazardous Material from, in or on any real property, or
the soil, groundwater, surface water, ambient air, indoor air, or building
materials thereof.
1.128 "Reorganization" has the meaning set forth in Section 6.1 hereof.
1.129 "Reorganization Agreements" has the meaning set forth in Section
4.1 hereof.
1.130 "Required Utilities" has the meaning set forth in Section 4.1
hereof.
1.131 "Requisite Regulatory Approvals" has the meaning set forth in
Section 9.1 hereof.
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1.132 "Retained Environmental Liabilities" means all Losses, Claims,
Liens and Liabilities to the extent arising out of any of the following:
(a) Contamination (i) present at any Acquired Facility or
Joint Venture Facility on or before the Closing Date, (ii) present at any
Former Facility (other than Contamination resulting from the Hazardous Material
Activities of Buyer and its Subsidiaries when they were Buyer's Subsidiaries at
the Former Facility), (iii) resulting from any condition or circumstance
existing prior to the Closing Date at, on, or about any Acquired Facility or
Joint Venture Facility which permits a release, emission or discharge of
Hazardous Materials into the environment after the Closing Date and which
constitutes, as of the Closing Date, a violation of any applicable
Environmental Requirements, or (iv) present at any time on any property as a
consequence of the migration, by any means and at any time, of any of the
aforesaid Contamination;
(b) any Hazardous Material Activity conducted in the course of
the Pre-Closing Seller Operations, any Hazardous Material Activity (other than
a Hazardous Material Activity conducted by Buyer or its Subsidiaries, when they
were Buyer's Subsidiaries at a Disposal Facility or a Former Facility)
conducted at any Acquired Facility or Joint Venture Facility, Disposal Facility
(to the extent of any Seller Group member's liability therefor as of the
Closing Date) or Former Facility at any time prior to the Closing Date, or any
Hazardous Material Activity conducted by any member of the Seller Group or
their respective Agents or Affiliates on or about any Acquired Facility or
Joint Venture Facility, Disposal Facility or Former Facility;
(c) the exposure of any Person (including without limitation
any employee of a Seller Group member, any Joint Venture or their Affiliates,
Agents or contractors) (1) to any Contamination described in subsection (a),
above, or (e) below at any time, (2) to any Hazardous Material released after
the Closing Date that results from a condition or circumstance (i) which exists
on or before the Closing Date, at, on, under or about the Acquired Facilities,
or (ii) which arises in connection with Pre-Closing Seller Operations, and
(iii) which in either case constitutes a violation as of the Closing Date of
applicable Environmental Requirements, (3) to a Hazardous Material in the
course of any Hazardous Material Activity described in subsection (b) above;
without regard (in any of the foregoing cases) to whether any effect of the
exposure has been manifested as of the Closing Date;
(d) the violation of any Environmental Requirement applicable
to, or the absence or violation of any Permits and/or Approval required for,
(i) the conduct of the Pre-Closing Seller Operations, (ii) the ownership,
leasing, use or occupancy of any Acquired Facility for the conduct of the
Pre-Closing Seller Operations, or (iii) any Hazardous Material Activity
described in subsection (b), above;
(e) the presence of any Contamination or Hazardous Material
at, on, under, about, or migrating from or to any Disposal Facility, to the
extent such Contamination or Hazardous Material results from (i) Pre-Closing
Seller Operations, (ii) any Contamination described in subsection (a) above,
(iii) any Hazardous Material Activity described in subsection (b) above, or
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(iv) which is otherwise the legal responsibility of any member of the Seller
Group as of the Closing Date; and/or
(f) any condition or facts described or disclosed by the
Environmental Reports identified in Section 1.132 of the Seller Disclosure
Letter, or made available by a Seller Group member to the Buyer or its
Affiliates prior to the Closing Date.
(g) Notwithstanding the foregoing, for the purpose of
determining the amount of any Buyer Indemnified Claim under Section 10.2 of
this Agreement (i) with respect to a Joint Venture Retained Environmental
Liability of TECH, only that portion of such Claim or Loss as a holder of a
thirty percent (30%) equity owner of TECH would incur by reason of its equity
ownership interest will be included hereunder as a Buyer Indemnified Claim
under this Agreement and (ii) with respect to a Joint Venture Retained
Environmental Liability of KTI, only that portion of such Claim or Loss as a
holder of a twenty-five percent (25%) equity owner of KTI would incur by reason
of its equity ownership interest will be included hereunder as a Buyer
Indemnified Claim. For the purpose of the foregoing "Joint Venture Retained
Environmental Liabilities" shall mean those Retained Environmental Liabilities
described above, which arise out of (i) a Joint Venture Facility of the
applicable Joint Venture, (ii) Contamination or an exposure at or from a Joint
Venture Facility of the applicable Joint Venture, (iii) a Disposal Facility or
a Former Facility of the applicable Joint Venture and/or (iv) the Hazardous
Materials Activities of the applicable Joint Venture.
1.133 "Right and/or Claim" means all of the Seller Group's warranties,
deposits, rights of recovery, rights of set-off, Tax and other credits, and
other similar rights against third parties relating to the Acquired Assets.
1.134 "SEC" means the United States Securities and Exchange Commission.
1.135 "Securities" means the Buyer Common Stock, Convertible Notes and
Subordinated Notes.
1.136 "Securities Act" means the Securities Act of 1933, as amended
(including, without limitation, any successor act), and the rules and
regulations promulgated thereunder, as the same may be in effect from time to
time.
1.137 "Securities Rights and Restrictions Agreement" means the
agreement to be entered into between Seller and Buyer at the Closing
substantially in the form of Exhibit E hereto.
1.138 "Seller" has the meaning set forth in the Preamble hereof.
1.139 "Seller Disclosure Letter" means Seller's disclosure schedule to
be delivered to Buyer pursuant to Section 6.10 of this Agreement.
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1.140 "Seller Group" means Seller and the Operating Group and, upon
their formation, Singapore Newco and Italian Newco.
1.141 "Seller Indemnified Claims" has the meaning set forth in Section
10.4 hereof.
1.142 "Seller Note Purchasing Subsidiary" has the meaning set forth in
Section 6.1 hereof.
1.143 "Seller's Taxes" has the meaning set forth in Section 7.2 hereof.
1.144 "Seller's Year 2000 Plan" has the meaning set forth in Section
4.1(p)(xi) hereof.
1.145 "Shortfall" has the meaning set forth in Section 6.4 hereof.
1.146 "Shutdown Costs" means any and all costs other than Sustaining
Costs, incurred in connection with the discontinuance of operations at the
Twinstar Facility, including, without limitation, costs incurred in connection
with the termination or modification of any Contracts, the return or other
disposition of any materials, supplies, inventory or waste, the termination of
any employees, the return or revocation of any tax abatements or other tax
privileges, or the payment of fees for professional services.
1.147 "Singapore Newco" has the meaning set forth in Section 6.1
hereof.
1.148 "Singapore Operating Company" means Texas Instrument Singapore
(Pte.) Limited.
1.149 "Straddle Period" has the meaning set forth in Section 7.2
hereof.
1.150 "Subordinated Notes" means the 6-1/2% Subordinated Notes due 2005
of Buyer in substantially the form of Exhibit F, delivered or to be delivered
to Seller Note Purchasing Subsidiary at Closing pursuant to Section 3.4(a),
such notes to be limited to an aggregate principal amount of $210,000,000.
1.151 "Subsidiary" of a Person means any corporation or other entity of
which the securities or other ownership interests having ordinary voting power
to elect a majority of the board of directors or other Persons performing
similar functions are owned directly or indirectly by such Person.
1.152 "Successor" has the meaning set forth in Section 6.15 hereof.
1.153 "Supplemental Indenture" means that certain second supplemental
indenture to the Indenture to be executed by Buyer and Trustee thereunder at or
prior to the Closing, providing for the creation of the Convertible Notes,
which supplemental indenture shall be in substantially the form of Exhibit G
hereto.
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1.154 "Sustaining Costs" means costs incurred in connection with the
Twinstar Facility and personnel employed thereat during the period following
the discontinuance of operations at Twinstar to the Closing Date, including,
without limitation, costs for materials, repair and maintenance, salary, wages
and benefits of retained employees, depreciation, taxes, insurance and
utilities and other outside services.
1.155 "Target Amount" has the meaning set forth in Section 6.4 hereof.
1.156 "Target Closing Date" has the meaning set forth in Section 6.4
hereof.
1.157 "Tax" or "Taxes" means any and all taxes, imposts, licenses,
fees, charges, levies, imposts, rates, penalties, assessments, or other
charges, including, without limitation, any sales, use, transfer, income, gross
receipts, registration, franchise, excise, real and personal property, ad
valorem, custom, documentary, stamp, duty, payroll, employment, unemployment
insurance, social security, recording, environmental, net worth, capital,
withholding, backup withholding, value-added, unitary, recapture, clawback, and
any similar tax, assessment, impost, fee or governmental charge and including
all interest, penalties, or additions thereto imposed or asserted directly or
indirectly by any Governmental Agency, whether or not disputed, and shall
include any liability arising as a result of being (or ceasing to be) a member
of any affiliated, consolidated, combined or unitary group or being included
(or ceasing to be included) in any Tax Return relating thereto.
1.158 "Tax Parameters" has the meaning set forth Section 6.18 hereof.
1.159 "Tax Proceedings" has the meaning set forth in Section 7.7
hereof.
1.160 "Tax Return" means any return, declaration, report, claim for
refund, or information statement relating to Taxes including any schedule
attached thereto and any amendment thereto.
1.161 "TECH" means TECH Semiconductor Singapore Pte. Ltd., a company
organized under the laws of the Republic of Singapore.
1.162 "TECH Agreements" means the TECH Shareholders' Agreement together
with all of the agreements entered into by any of the parties thereto (or any
of their respective Affiliates) in connection with TECH (including related
supply agreements), as amended through the date hereof.
1.163 "TECH Amendments" means the amendments to the TECH Agreements to
be executed at or prior to the Closing as contemplated by Section 6.12 hereof.
1.164 "TECH Shareholders' Agreement" means the Shareholders' Agreement
dated April 11, 1991 among Seller, EDB, Hewlett-Packard Company and Canon Inc.,
as amended.
1.165 "Territory" has the meaning set forth in Section 6.25 hereof.
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1.166 "Texas Transferred Business Employees" has the meaning set forth
in Section 8.2 hereof.
1.167 "Threshold Amount" has the meaning set forth in Section 10.2
hereof.
1.168 "Trade Secrets" has the meaning set forth in Section 1.78 hereof.
1.169 "Trademarks" has the meaning set forth in Section 1.78 hereof.
1.170 "Transfer Tax or Taxes" means any and all Taxes, whenever
arising, attributable to the transactions or events contemplated by this
Agreement and the Related Agreements, including, without limitation, the
transactions and events described in Articles II, III and VI hereof.
1.171 "Transferred Acquired Assets" means all Acquired Assets
(including capital stock) other than the Acquired Assets transferred to Italian
Newco and Singapore Newco in accordance with Section 6.1 hereof.
1.172 "Transferred Assumed Liabilities" means all Assumed Liabilities
other than the Assumed Liabilities assumed by Italian Newco or Singapore Newco
in accordance with Section 6.1 hereof.
1.173 "Transferred Business Employees" means those employees who are
employed by Buyer, Italian Newco or Singapore Newco on and after the Closing
Date pursuant to acceptance of the offers of employment made under Section
8.1(a), (b) and (c) of this Agreement.
1.174 "Transferred Contract" has the meaning set forth in Section 6.31
hereof.
1.175 "Transferred Contract Schedule" has the meaning set forth in
Section 6.31 hereof.
1.176 "Transition Agreement" has the meaning set forth in Section 1.109
hereof.
1.177 "Transition Plan Year" has the meaning set forth in Section 8.5
hereof.
1.178 "Transition Services" has the meaning set forth in Section 6.7
hereof.
1.179 "Transition Services Agreement" means the transition services
agreement (including the agreements referred to therein) to be entered into
between Buyer and Seller at the Closing in accordance with Section 6.7 hereof.
1.180 "Twinstar" means Texas Instruments Richardson, LLC, a limited
liability company organized under the laws of the state of Delaware, a
successor in interest to all of the assets and liabilities of the former joint
venture between Seller and Hitachi known as "Twinstar".
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1.181 "Twinstar Facility" means Seller's fabrication facility with
respect to the Business located in Richardson, Texas.
1.182 "Warn Act" has the meaning set forth in Section 8.5 hereof.
1.183 "Working Capital" means, with respect to the Business, (i)
current assets which are included in the Acquired Assets, less (ii) the sum of
all of the current liabilities and noncurrent liabilities which are included
within the Assumed Liabilities other than up to 345,296 million Italian Lire
principal amount of indebtedness for borrowed money directly related to
Seller's assets in Italy constituting Acquired Assets.
1.184 "Working Capital Reduction" has the meaning set forth in Section
6.4 hereof.
1.185 "Working Capital Requirement" has the meaning set forth in
Section 6.4 hereof.
ARTICLE II
THE ACQUISITION
2.1 Transfer of Assets. Upon the terms and subject to the conditions
set forth in this Agreement, at the Closing, Seller shall, and, after giving
effect to the Reorganization, shall cause each member of the Operating Group
to, sell, assign, transfer, convey and deliver to Buyer, or its designees, and
Buyer, or such designees, shall purchase and accept from Seller and each member
of the Operating Group all right, title and interest in the Transferred
Acquired Assets, wherever located, free and clear of all Liens other than
Permitted Liens.
2.2 Assumption of Liabilities. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, Buyer, or its
designees, shall assume the Transferred Assumed Liabilities. Buyer does not
assume, and shall have no obligation or responsibility for, any Liabilities of
any member of the Seller Group, whether arising before or after the Closing,
except as otherwise expressly provided in this Agreement. From and after the
Closing, Buyer shall be responsible for, and Buyer hereby agrees to pay,
perform and discharge the Transferred Assumed Liabilities, other than the
Excluded Liabilities.
ARTICLE III
THE CLOSING
3.1 Time and Place of Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Article XI, and subject to the satisfaction or waiver of the
conditions set forth in Article IX, the Closing shall take place at
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11:59 p.m., California time (the "Closing Time"), on the third Business Day
after satisfaction or waiver of the conditions set forth in Article IX, at the
offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, located
at 650 Page Mill Road, Palo Alto, California 94304-1050, or at such other
place and time as may be mutually agreed to by the parties hereto. The sale,
assignment, transfer, conveyance and delivery of the Transferred Acquired
Assets to, and the assumption of the Transferred Assumed Liabilities by, Buyer,
or its designees, each as herein provided, shall be effected at the Closing
Time.
3.2 Closing Date Deliveries of Seller. At the Closing, Seller shall,
and shall cause each member of the Seller Group as may be appropriate to,
deliver to Buyer or its designee the following:
(a) the Transferred Acquired Assets;
(b) Certificates representing all of the capital stock of
Singapore Newco together with a duly executed stock power assigning at the
Closing ownership thereof to Buyer, or a designee of Buyer;
(c) Certificates representing all of the capital stock of
Italian Newco together with a duly executed stock power assigning at the
Closing ownership thereof to Buyer, or a designee of Buyer;
(d) Certificates representing all of Seller's capital stock in
each of TECH and KTI together with a duly executed stock powers assigning at
the Closing ownership thereof to Buyer, or a designee of Buyer;
(e) duly executed Related Agreements;
(f) such executed deeds, bills of sale, assignments or other
instruments of transfer and assignment, and releases as are reasonably
necessary to consummate the sale and transfer of the Transferred Acquired
Assets contemplated by this Agreement, all in form and substance reasonably
satisfactory to Buyer and its counsel;
(g) the copy of resolutions of the board of directors of
Seller and each member of the Seller Group (and, in the case of Singapore
Operating Company, a copy of resolutions of a general meeting of the
shareholders thereof) authorizing the execution, delivery and performance of
this Agreement, the Related Agreements and each other agreement, document or
certificate to which it is a party and is required to be delivered pursuant
hereto or in connection herewith and authorizing the consummation of the
transactions contemplated hereby and thereby by Seller and each member of the
Seller Group and a certificate of the secretary of Seller, dated the Closing
Date, to the effect that such resolutions were duly adopted and are in full
force and effect;
(h) a certificate, dated the Closing Date, from an executive
officer of Seller to the effect that Seller has fulfilled the conditions set
forth in Section 9.2 hereof;
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(i) to the extent held by or under the control of Seller or
any member of the Operating Group all of the books and records of the Seller
Group included in the Acquired Assets;
(j) an affidavit, duly executed by Seller, attesting that
Seller is not a "foreign person" within the meaning of Code Section 1445(e)(3)
and is not subject to withholding under any state or U.S. Tax law, in form
reasonably acceptable to Buyer; and
(k) the Closing Statement in form and substance satisfactory
to Buyer.
3.3 Closing Date Deliveries of Buyer. At the Closing, Buyer shall,
and shall cause each of its designees as may be appropriate to, deliver to
Seller the following:
(a) 28,933,092 fully paid and nonassessable unregistered
shares of Buyer Common Stock less the number of shares, if any, delivered by
Buyer pursuant to Section 3.4(a) hereof;
(b) Convertible Notes in an aggregate principal amount of $740
million less the aggregate principal amount of Convertible Notes delivered by
Buyer pursuant to Section 3.4(a) hereof;
(c) duly executed Related Agreements;
(d) such executed assignment and assumption instruments as are
reasonably necessary to consummate the assumption of the Assumed Liabilities
contemplated by this Agreement, all in form and substance reasonably
satisfactory to Seller and its counsel;
(e) the copy of resolutions of the board of directors of
Buyer, or its designees as may be appropriate, authorizing the execution,
delivery and performance of this Agreement, and each other agreement, document
or certificate to which it is a party and is required to be delivered pursuant
hereto or in connection herewith and authorizing the consummation of the
transactions contemplated hereby and thereby by Buyer and a certificate of the
secretary of Buyer, dated the Closing Date, to the effect that such resolutions
were duly adopted and are in full force and effect; and
(f) a certificate dated the Closing Date, from an executive
officer of Buyer to the effect that Buyer has fulfilled the conditions set
forth in Section 9.3 hereof.
3.4 Purchase and Sale of Notes. At the Closing, in addition to the
deliveries set forth in Section 3.2 and Section 3.3 hereof:
(a) Buyer shall deliver to Seller Note Purchasing Subsidiary
(i) $210 million aggregate principal amount of Subordinated Notes, and (ii)
Convertible Notes in an aggregate principal amount (not to exceed $740 million)
such that the fair market value (as of the Closing
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Date) of the Subordinated Notes and the Convertible Notes (collectively the
"Notes") delivered pursuant to this Section 3.4(a) equals U.S. $750 million.
If the fair market value of all the Subordinated Notes and all the Convertible
Notes is less than U.S. $750 million, Buyer shall also deliver to Seller Note
Purchasing Subsidiary an appropriate number of shares (determined in accordance
with Exhibit H) of fully paid and nonassessable unregistered shares of Buyer
Common Stock, such that the aggregate fair market value of the consideration
delivered pursuant to this Section 3.4(a) equals U.S. $750 million.
Notwithstanding anything to the contrary contained herein, in no event shall
Buyer be obligated or otherwise committed to issue to Seller, or any other
Person, in connection with the transactions contemplated hereby, more than
28,933,092 shares of Buyer Common Stock.
(b) Seller shall cause Seller Note Purchasing Subsidiary to
deliver to Buyer U.S. $750 million of immediately available funds by wire
transfer to an account designated to Seller Note Purchasing Subsidiary by Buyer
in writing not later than two Business Days prior to the Closing Date (the
"Cash Payment"). The Notes shall be treated as debt instruments and the
portion thereof delivered to Seller Note Purchasing Subsidiary shall be treated
as having an aggregate issue price for purposes of Code Section 1273 (and the
regulations promulgated thereunder) equal to the Cash Payment less any portion
of such Cash Payment attributable to Buyer Common Stock delivered pursuant to
the last sentence of Section 3.4(a); the issue price per $1,000 of principal
amount Notes (the "Issue Price") shall be equal to the product of $1,000 and a
fraction whose numerator is $750 million and whose denominator is the aggregate
stated principal amount of the Notes delivered to Seller Note Purchasing
Subsidiary pursuant to Section 3.4(a) hereof. This fraction shall be
appropriately adjusted in the event Buyer Common Stock is delivered to Seller
Note Purchasing Subsidiary pursuant to the last sentence of Section 3.4(a).
The issue price of the portion of the Convertible Notes not delivered to the
Seller Note Purchasing Subsidiary shall also be the Issue Price.
(c) For purposes of Section 3.4 (a), the fair market value of
the Notes (and thus the amount of Convertible Notes to be purchased by Seller
Note Purchasing Subsidiary) shall be determined in good faith by Buyer and
based upon the advice of its financial advisors and reasonably agreed to by
Seller (the "Debt Valuation"). Each party hereto shall (and shall cause its
respective Affiliates to) adopt and abide by the provisions of this Section 3.4
at their own expense, including without limitation the Debt Valuation and Issue
Price (as determined herein) for purposes of all Tax Returns filed by them and
shall not take any position inconsistent therewith in connection with any
examination of any Tax Return, any refund claim, any judicial litigation
proceeding but only if doing otherwise in such judicial litigation proceeding
would materially prejudice the other party, or otherwise until there has been a
final "determination" (within the meaning of Code Section 1313(a)) or any other
event which finally and conclusively establishes the value of the Notes. In
the event that the position being taken in accordance with this Section 3.4 is
being challenged by any Taxing authority, the party receiving notice of the
dispute shall promptly notify the other parties hereto of such dispute and the
parties hereto shall consult with each other concerning resolution of the
dispute.
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(d) For thirty-one (31) days after the Closing Date, Seller
and Seller Note Purchasing Subsidiary will not sell, dispose, enter into a
forward contract, put option or otherwise reduce their risk of loss with
respect to the Notes.
3.5 Subsequent Documentation. Seller shall, at any time and from
time to time after the Closing Date, upon the request of Buyer, do, execute,
acknowledge and deliver, or cause to be done, executed, acknowledged and
delivered, all such further deeds, assignments, transfers and other instruments
of transfer and conveyance as may be required for the assigning, recording,
transferring, granting and conveying to Buyer or its successors and assigns, or
for aiding and assisting in collecting and reducing to possession, any or all
of the Acquired Assets.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as disclosed in the Seller Disclosure Letter (which shall make
specific reference to only that particular representation and warranty as to
which each disclosure included therein relates and, to the extent any
disclosure included therein relates to more than one representation or
warranty, such disclosure letter shall include a specific cross-reference to
the other representations or warranties to which such disclosure relates),
Seller represents and warrants to the Buyer as set forth below:
4.1 Representations and Warranties Relating to the Seller Group.
(a) Organization and Qualification. Each member of the Seller
Group is a corporation or limited liability company duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own,
operate and lease the Acquired Assets and to conduct the Business as it is now
being conducted. Within 30 days after the date hereof, true, correct and
complete copies of the Certificate of Incorporation (or similar documents) and
By-laws (or similar documents) of each member of the Seller Group, each with
all amendments thereto, have been delivered to Buyer. Each member of the
Seller Group is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the Acquired Assets or the nature of its activities makes such qualification or
license necessary, except where the failure to be so qualified or licensed
would not, individually or in the aggregate, have a Material Adverse Effect. A
complete list of all such jurisdictions pertaining to the Operating Group is
set forth in Section 4.1(a) of the Seller Disclosure Letter.
(b) Corporate Authority.
(i) Each member of the Seller Group has all requisite
corporate power and authority to enter into, execute and deliver this
Agreement, the JV Transfer Agreements and the
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Related Agreements, to perform its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Related Agreements by each member of the
Seller Group, the performance by each member of the Seller Group of its
obligations under this Agreement and the Related Agreements, and the
consummation of the transactions contemplated hereby and thereby have been (in
the case of Seller and will be, prior to the Closing in the case of the Seller
Group (other than Seller)) duly and validly authorized by all necessary
corporate action on the part of each member of the Seller Group and (assuming
due execution and delivery by the Buyer of this Agreement and the Related
Agreements) this Agreement constitutes, and the Related Agreements when
executed and delivered will constitute, legal, valid and binding obligations of
each member of the Seller Group enforceable against such member in accordance
with their terms. No approval by the stockholders of Seller is required with
respect to the execution and delivery by any member of the Seller Group of this
Agreement and the Related Agreements, and the performance by each member of the
Seller Group of their respective obligations hereunder and thereunder.
(ii) Seller has, and at the Closing each member of the
Seller Group that is to be a party to any of the agreements delivered in
connection with the Reorganization (the "Reorganization Agreements") will have
full corporate power and authority to enter into, execute and deliver each
Reorganization Agreement to which such Seller Group member shall be a party, to
perform such Seller Group member's obligations thereunder and to consummate the
transactions contemplated thereby. The execution and delivery of each
Reorganization Agreement, the performance of such Seller Group member's
obligations thereunder, and the consummation of the transactions contemplated
thereby, have been or with respect to Italian Newco and Singapore Newco, will
be at the Closing Time, duly and validly authorized by all necessary corporate
action of such Seller Group member. Each such Seller Group member on or prior
to the Closing Date will have duly executed and delivered each such
Reorganization Agreement to which such Seller Group member shall be a party.
Each Reorganization Agreement when so executed and delivered will constitute
the legal, valid and binding obligation of each such Seller Group member party
thereto, enforceable against each such Seller Group member in accordance with
its respective terms, subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium and similar Laws affecting
creditors' rights, and, with respect to the remedy of specific performance,
equitable doctrines applicable thereto.
(c) Capitalization. Upon the issuance of capital stock by
Italian Newco to Italian Operating Company and Singapore Newco to Singapore
Operating Company upon the completion of the Reorganization, and immediately
prior to the Closing (i) all of the capital stock of Italian Newco will be
validly issued, fully paid and nonassessable free and clear of all liens and
(ii) Seller, directly or indirectly, will own beneficially all of the
outstanding capital stock and equity interests of Italian Newco and Singapore
Newco as evidenced by the Newco Shares. Upon the Closing, Italian Newco and
Singapore Newco will not have any Subsidiaries. At the Closing Time (i) there
will be no preemptive or similar rights with respect to the securities of
Italian Newco or Singapore Newco, (ii) there will be no subscriptions, options,
warrants, conversion or other rights, agreements, commitments, arrangements or
understandings of any kind obligating any member of the Seller
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Group or any other Person, contingently or otherwise, to issue or sell, or
cause to be issued or sold, any shares of capital stock of any class of Italian
Newco or Singapore Newco, or any securities convertible into or exchangeable
for any such shares, and (iii) there will be no outstanding contractual or
other rights or obligations to or of any member of the Seller Group or any
other Person to repurchase, redeem or otherwise acquire any outstanding shares
of Italian Newco or Singapore Newco.
(d) No Violations. The execution and delivery of this
Agreement, the Related Agreements and the Reorganization Agreements by each
member of the Seller Group party thereto, the performance by any member of the
Seller Group of its obligations under this Agreement, the Related Agreements or
any of the Reorganization Agreements and the consummation of the transactions
contemplated hereby or thereby, do not and will not conflict with, contravene,
result in a violation or breach of or default under (with or without the giving
of notice or the lapse of time or both), create in any other Person a right of
claim of termination, amendment, or require modification, acceleration or
cancellation of, or result in the creation of any Lien (or any obligation to
create any Lien) upon any of the properties or assets of any member of the
Seller Group under (i) any provision of any of the organizational documents of
any member of the Seller Group, (ii) any Law applicable to any member of the
Seller Group or any of their respective properties or assets assuming the
consents, approvals, authorizations or permits and filings or notifications set
forth in Sections 4.1(g) and 4.1(h) of the Seller Disclosure Letter are duly
and timely obtained or made, (iii) except as to which requisite waivers or
consents have been obtained, and except for the consents and approvals required
under the agreements and instruments listed in Section 4.1(g) of the Seller
Disclosure Letter, any Contract, to which any member of the Seller Group is a
party or by which any of their respective properties or assets may be bound;
other than any of the foregoing under clauses (ii) and (iii) which would not
(A) result in a Liability of $100,000 in any one case or $500,000 in the
aggregate, or (B) individually or in the aggregate have a Material Adverse
Effect or (C) individually or in the aggregate, have a material adverse effect
on the ability of any member of the Seller Group to perform its obligations
under this Agreement, the Related Agreements or the Reorganization Agreements.
Except as set forth in Section 4.1(d) of the Seller Disclosure Letter, neither
the execution and delivery of this Agreement, the Related Agreements or the
Reorganization Agreements by any member of the Seller Group, nor the
consummation of the transactions contemplated hereby or thereby, will result in
the Loss to the Buyer of any material benefit enjoyed by any member of the
Seller Group in connection with the Business or the Acquired Assets.
(e) Sufficiency of Acquired Assets; Title and Transfer.
(i) Section 4.1(e) of the Seller Disclosure Letter sets
forth (a) a true, correct and complete list of the Acquired Assets (in each
case other than assets with a value of $10,000 or less singularly), (b) the
member of the Seller Group which owns such asset and (c) the member of the
Seller Group which shall hold such asset immediately prior to the Closing.
Except as set forth in Section 4.1(e) of the Seller Disclosure Letter, the
Acquired Assets, together with the Cross-License Agreement, the rights to be
granted under licenses pursuant to this Agreement, the Transferred Contracts
and the properties and services to be provided to the Buyer Operating Group
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under the Transition Services Agreement, constitute all of the rights,
services, properties and assets (real, personal and mixed, tangible and
intangible) that are used in or necessary to conduct the Business as currently
conducted. Except as set forth in Section 4.1(e) of the Seller Disclosure
Letter, (i) each member of the Seller Group has good and valid title or a valid
leasehold interest in all of the Acquired Assets indicated as held by such
member therein, and none of the Acquired Assets is subject to any Lien of any
kind as of such date, except for Permitted Liens, and (ii) each member of the
Seller Group will have good and valid title or a valid leasehold interest in
all of the Acquired Assets indicated as to be held by such member in Section
4.1(e) of the Seller Disclosure Letter immediately prior to the Closing, and
none of the Acquired Assets will be subject to any Lien of any kind at such
time except for Permitted Liens.
(ii) After giving effect to the Reorganization, each of
Italian Newco and Singapore Newco shall have only those specific liabilities
and obligations that constitute Assumed Liabilities.
(iii) At the time of the Closing, Italian Operating
Company and Seller will have the right, power and authority to sell, transfer
and assign the Newco Shares pursuant to this Agreement. The delivery of the
Newco Shares to Buyer or its designee against payment therefore as contemplated
by Section 6.1 will transfer to Buyer or its designee good and valid title to,
and beneficial ownership of, all of the Newco Shares. The sale of the Newco
Shares will not give rise to any preemptive rights or rights of first refusal.
(iv) In addition to the valid conveyance of the Newco
Shares as described in Section 4.1(e)(ii) and the valid conveyance of the JV
Interests as described in Section 4.2(e), upon the Closing, Seller will convey,
assign, transfer and deliver to the Buyer or its designees good and valid title
to all other Acquired Assets, free and clear of all Liens, except for Permitted
Liens.
(f) Contracts.
(i) Section 4.1(f) of the Seller Disclosure Letter sets
forth a true, correct and complete list of all Contracts primarily relating to
or primarily used in the Business of the following types (and includes with
respect to each such Contract the names of the parties, the date of the
Contract, and all amendments, supplements or modifications thereto):
(A) Employment agreements and any offers of
employment providing for annual payment in excess of $200,000 per year;
(B) Consulting agreements which provide for
annual payments in excess of $100,000 per year;
(C) Royalty agreements, other than those
relating to Patent licenses, which provide for annual payments in excess of
$50,000 per year;
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(D) Agreements or commitments for capital
expenditures or the acquisition by purchase or lease of fixed assets (i)
involving payments in excess of $100,000 each in any one-year period or (ii) in
the case of operating leases and capital leases, involving payments in excess
of $100,000 each in any one-year period;
(E) (i) Agreements for the purchase, sale, lease
or other transfer of any real or personal property, products, materials,
supplies or services involving payments of in excess of $500,000 in any one-
year period, and (ii) supply and/or sourcing contracts if the obligee
thereunder is among the top twenty (20) suppliers (in terms of accounts payable
of the Business on a consolidated basis) of the Business in the last fiscal
year;
(F) Joint venture, joint development or
partnership agreements with any other Person with respect to the Business,
including without limitation the KTI Agreements and TECH Agreements;
(G) Noncompetition agreements;
(H) Agreements relating to research and
development concerning the Business by any member of the Seller Group for
others or by others for any member of the Seller Group;
(I) Contracts relating to debt, bank financing
and similar arrangements (including guarantees) of (i) a member of the
Operating Group, or (ii) any other member of the Seller Group directly related
to the Business (including either Joint Venture);
(J) Any foreign currency exchange or forward
purchase agreements of (i) a member of the Operating Group, or (ii) any other
member of the Seller Group directly related to the Business (including either
Joint Venture);
(K) Volume purchase and master purchase
agreements related to the Business in excess of $500,000 in any twelve-month
period;
(L) Maintenance agreements primarily related to
the Business in excess of $200,000 in any twelve-month period;
(M) Agreements providing primarily for
indemnification obligations by any member of the Seller Group with respect to
the sale of products of or otherwise related to the Business;
(N) Agreements providing for indemnification or
guaranty obligations of the Seller Group with respect to Hazardous Material
Activities or Remedial Activities in connection with the Business other than in
the ordinary course of business having a potential cost in excess of $100,000
for one site or $500,000 in the aggregate for all sites;
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(O) Agreements that by their terms do not
terminate prior to one (1) year after the date of this Agreement;
(P) Requirements contracts relating to
obligations to purchase all or substantially all of any product as well as to
supply all or substantially all of any product;
(Q) All non-disclosure agreements relating to
the Business including Memory Products and/or processes or other technology
used in the manufacture of Memory Products including, without limitation, non-
disclosure agreements relating to the operations of the Business at any
location;
(R) Leases or subleases having a total unpaid
rental obligation exceeding $100,000 individually or $500,000 in the aggregate
(not otherwise listed in the foregoing), mortgages, or other Liens securing
monetary obligations in excess of $200,000 encumbering the Seller Group's
interests in the Acquired Facilities (other than Liens encumbering only the
right, title, and interest of any Person other than a Seller Group member in a
Leased Facility), the assets of the Operating Group, Singapore Newco, Italian
Newco or the Acquired Assets;
(S) Plans or contracts governed by Title IV of
ERISA or Section 412 of the Code;
(T) Contracts with Hitachi or Mitsubishi or the
respective Affiliates of either or otherwise entered into in connection with
Seller's relationship with such Persons;
(U) Contracts with respect to or related to
Texas Instruments-Acer Incorporated or any successor thereto;
(V) Contracts relating to subsidies received or
entitlements to subsidies in Italy or Singapore; and
(W) Any material Contract primarily related to
or primarily used in the Business not listed with respect to (A) through (V)
above.
Nothing herein shall require to be listed in Section 4.1(f) of the
Seller Disclosure Letter any Contract that has terminated by its terms before,
or is otherwise no longer in effect on, the date hereof. References to time
periods in this Section 4.1(f)(i) shall be only to such periods commencing on
or after January 1, 1997.
(ii) Except as set forth in Section 4.1(f) of the Seller
Disclosure Letter, each member of the Seller Group has in all respects
performed, or is now performing, the obligations of, and no member of the
Seller Group is in default in any respect (or would by the lapse of time or the
giving of notice or both be in default in any respect) in respect of, any
Contract listed in
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Section 4.1(f) of the Seller Disclosure Letter, except for such matters as
would not result in a Liability of $50,000 in any one case or $250,000 in the
aggregate, or individually or in the aggregate would have a Material Adverse
Effect. Each such Contract is in full force and effect and is a valid and
enforceable obligation against the members of the Seller Group (to the extent
they are a party thereto), and against the other party thereto in accordance
with its terms (subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium and similar Laws affecting
creditors' rights, and, with respect to the remedy of specific performance,
equitable doctrines applicable thereto). Except as set forth in such Section
4.1(f) of the Seller Disclosure Letter, to the knowledge of Seller, no other
party to such Contracts is in default in any material respect (or would by the
lapse of time or the giving of notice or both be in default in any material
respect thereunder) or has breached in any material respect any terms or
provisions thereof. No third party has raised any material claim, dispute or
controversy with respect to any of the Contracts relating to the Business other
than has been listed in Section 4.1(f) of the Seller Disclosure Letter, nor has
any member of the Seller Group received written notice or warning of alleged
nonperformance, delay in delivery or other noncompliance by any member of the
Seller Group with respect to its obligations under any such Contracts.
(iii) Except to the extent as specifically described in
Section 4.1(f) of the Seller Disclosure Letter, no member of the Seller Group
is a party to, nor is bound by any Contract or other agreement primarily used
in or primarily related to the Business and not previously listed above which
either separately or in the aggregate has, or would reasonably be expected to
have in the future, a Material Adverse Effect.
(iv) True, correct and complete copies of all of the
Contracts listed in the Seller Disclosure Letter shall be delivered to Buyer or
its counsel prior to or concurrently with delivery of the Seller Disclosure
Letter to Buyer pursuant to Section 6.10 hereof (but in no event later than
thirty (30) days after the date of this Agreement).
(g) Consents and Approvals of Governmental Agencies. Except
as set forth in Section 4.1(g) of the Seller Disclosure Letter, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Agency is required by or with respect to any member of
the Seller Group in connection with the execution, delivery and performance of
this Agreement, the Related Agreements or the Reorganization Agreements or the
consummation by each such member of the transactions contemplated hereby and
thereby, except for (i) compliance with the HSR Act and the European Union
rules and regulations, (ii) compliance with applicable state securities laws,
(iii) such filings as may be required to be made by Seller with the SEC and any
exchange on which any of its securities are listed and (iv) any such
requirements, noncompliance with which would not (A) result in any Liability of
$25,000 in one case or $100,000 in the aggregate, (B) individually or in the
aggregate, have a Material Adverse Effect or materially impair the ability of
Buyer to carry on the Business as currently conducted or (C) individually or in
the aggregate, have a Material Adverse Effect on the ability of any member of
the Seller Group to perform its obligations under this Agreement, the Related
Agreements or the Reorganization Agreements.
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(h) Other Consents. Except as set forth in Section 4.1(h) of
the Seller Disclosure Letter, no consent, waiver or approval of, or notice to,
any third party is required or necessary to be obtained by any member of the
Seller Group in connection with the execution and delivery of this Agreement,
the Related Agreements or the Reorganization Agreements, and the performance of
their obligations hereunder and thereunder, except for any such consents,
waivers, approvals or notices which if not obtained or made would not (A)
result in any Liability of $100,000 in one case or $500,000 in the aggregate,
(B) individually or in the aggregate, have a Material Adverse Effect or
materially impair the ability of Buyer to carry on the Business as currently
conducted or (C) individually or in the aggregate, have a Material Adverse
Effect on the ability of any member of the Seller Group to perform its
obligations under this Agreement, the Related Agreements or the Reorganization
Agreements.
(i) Financial Statements. Section 4.1(i) of the Seller
Disclosure Letter contains a true, correct and complete copy of the March
Balance Sheet. The March Balance Sheet fairly presents the financial condition
of the Business on a combined basis (including Seller's JV Interests as an
equity investment) as of the date thereof and was prepared in accordance with
GAAP (except for the absence of notes thereto) and in accordance with the books
and records of the relevant entities. When delivered in accordance with the
terms hereof, the audited balance sheets as at December 31, 1996 and as at
December 31, 1997, together with the related audited statements of income and
cash flow for the twelve-month periods ended December 31, 1996 and December 31,
1997 (the "Financial Statements") will fairly present the financial condition
of the Business on a combined basis (including Seller's JV Interests as an
equity investment) as of the dates thereof, and each of the statements of
operations and cash flow will fairly present the results of operations and cash
flows for the periods therein referred to, all as prepared in accordance with
GAAP consistently applied throughout the periods involved and, in the case of
the balance sheets, consistent with the GAAP principles used to prepare the
March Balance Sheet.
(j) Absence of Undisclosed Liabilities. There are no
Liabilities relating to the Business (other than Excluded Liabilities), except
(i) Liabilities that are fully accrued or reserved against in the March Balance
Sheet, (ii) Liabilities incurred since the date of the March Balance Sheet in
the ordinary course of business and consistent with past practices, (iii)
Liabilities that were not incurred in the ordinary course of business and
consistent with past practices that do not exceed $100,000 in any single case
or $500,000 in the aggregate, (iv) Liabilities disclosed in Section 4.1(j) of
the Seller Disclosure Letter, and (v) Liabilities under Contracts disclosed in
the Seller Disclosure Letter or under Contracts not required to be disclosed
therein.
(k) Absence of Certain Changes. Except as set forth in
Section 4.1(k) of the Seller Disclosure Letter, since the date of the March
Balance Sheet, no member of the Seller Group, with respect to the Business,
has:
(i) Suffered any change or changes which, individually
or in the aggregate, have had or may reasonably be expected to have a Material
Adverse Effect other than as a result of changes in the Memory Products
industry or the economy generally;
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(ii) Except for Liabilities incurred in the ordinary
course of business and consistent with past practice, borrowed or agreed to
borrow any funds or incurred, assumed or become subject to, whether directly or
by way of guarantee or otherwise, any Liability;
(iii) To the knowledge of Seller, no member of the Seller
Group has become subject to any newly enacted or adopted Law which may
reasonably be expected to have a Material Adverse Effect;
(iv) Permitted or allowed any of its property or assets
(real, personal or mixed, tangible or intangible) to be subjected to any Liens,
except for Permitted Liens;
(v) Written up the value of any inventory, any notes or
accounts receivable or any other assets, except for write-ups in the ordinary
course of business and consistent with past practices;
(vi) Waived any claims or rights of substantial value,
or sold, transferred, or otherwise disposed of any of its properties or assets
(real, personal or mixed, tangible or intangible), except in the ordinary
course of business and consistent with past practices;
(vii) Licensed, sold, transferred, pledged, modified,
disclosed, disposed of or permitted to lapse any right to the use of any
Acquired Intellectual Property, except in the ordinary course of business and
consistent with past practices;
(viii) Granted any general increase in the compensation of
officers or employees (including any such increase pursuant to any bonus,
pension, profit-sharing or other plan or commitment), except in the ordinary
course of business and except for any bonuses to be paid by Seller and
consistent with past practices;
(ix) Made any change in any method of accounting or
accounting practice or any change in depreciation or amortization policies or
rates theretofore adopted;
(x) Paid, lent or advanced any amount to, or sold,
transferred or leased any properties or assets (real, personal or mixed,
tangible, or intangible) to, or entered into any agreement or arrangement with,
any officer or director or Affiliate of any other member of the Seller Group,
except for directors' fees and employment compensation to officers;
(xi) Sold, leased or otherwise disposed of any of its
assets, except in the ordinary course of business and consistent with past
practices;
(xii) Entered into any other transaction, contract,
commitment or arrangement other than in the ordinary course of business and
consistent with past practices;
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(xiii) Agreed, whether in writing or otherwise, to
undertake any Remedial Activity or to take any action described in this Section
4.1(k).
(l) Litigation. Section 4.1(l) of the Seller Disclosure
Letter lists all Claims pending, or to the knowledge of Seller, threatened
against any of the Seller Group members with respect to the Business except for
such Claims which individually or in the aggregate have not had or would not
reasonably be expected to have a Material Adverse Effect. No member of the
Seller Group is in default under, or in violation of, any judgment, order,
writ, injunction or decree of any Governmental Agency relating to the Business,
except for those defaults or violations, which in the aggregate would not have,
or reasonably be expected to have, a Material Adverse Effect.
(m) Compliance with Laws; Permits.
(i) Except as set forth in Section 4.1(m) of the Seller
Disclosure Letter, the Business is being conducted in compliance with all
applicable Laws and no member of the Seller Group has received any notification
that any member of the Seller Group, with respect to the Business, is in
violation of any Laws, except where any such noncompliance or violations would
not (A) result in a Liability of $100,000 in any one case or $500,000 in the
aggregate, (B) individually or in the aggregate, have a Material Adverse
Effect, or (C) individually or in the aggregate, have a Material Adverse Effect
on the ability of any member of the Seller Group to perform its obligations
under this Agreement, the Related Agreements or the Reorganization Agreements.
(ii) Section 4.1(m) of the Seller Disclosure Letter sets
forth a true and complete list of all Permits and/or Approvals required to
conduct the Business as presently conducted, other than such Permits and/or
Approvals the failure to obtain which would not (A) result in a Liability of
$100,000 in any one case or $500,000 in the aggregate, (B) individually or in
the aggregate, have a Material Adverse Effect or materially impair the ability
of Buyer to carry on the Business as currently conducted, or (C) individually
or in the aggregate, have a Material Adverse Effect on the ability of any
member of the Seller Group to perform its obligations under this Agreement, the
Related Agreements or the Reorganization Agreements. All such Permits and/or
Approvals are being complied with in all material respects and will not be
terminated or revoked as a result of the transactions contemplated by this
Agreement, the Related Agreements or the Reorganization Agreements.
(iii) Except as set forth in Section 4.1(m) of the Seller
Disclosure Letter, there are no judgments, orders, injunctions, decrees,
stipulations, awards (whether rendered by a Governmental Agency or by
arbitration) or private settlement agreements involving any member of the
Seller Group and relating to the Business, other than any of the foregoing
which have not and will not (A) result in a Liability to the Business of
$50,000 in any one case or $100,000 in the aggregate, (B) individually or in
the aggregate, have a Material Adverse Effect or materially impair the ability
of Buyer to carry on the Business as currently conducted, or (C) individually
or in the aggregate, have a Material Adverse Effect on the ability of any
member of the Seller Group to perform its obligations under this Agreement, the
Related Agreements or the Reorganization
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Agreements. All of the foregoing which are final and nonappealable are being
complied with in all material respects.
(iv) No member of the Seller Group or any director,
officer, employee or agent of any of them acting on their behalf, or any other
person acting on their behalf has, directly or indirectly, within the past
three (3) years given or agreed to give any gift or similar benefit to any
customer, supplier, competitor or governmental employee or official which would
subject the Business to any Liability or Loss under any Law in any civil,
criminal or governmental litigation.
(n) Real Property and Facilities.
(i) The Acquired Facilities are all of the real
property and improvements required for the Business as presently conducted and
no facilities have been used for the conduct of the Pre-Closing Seller
Operations other than the Acquired Facilities and the Former Facilities of the
Seller Group.
(ii) The leases for the Leased Facilities are or, as of
the Closing, will be in full force and effect for the benefit of the member of
the Buyer Operating Group (indicated in Section 4.1(n) of the Seller Disclosure
Letter), as lessee and there are no material defaults attributable to the
lessee or to the landlord thereunder.
(iii) To the knowledge of Seller, no fact, circumstance
or event which, with the passage of time, the giving of notice, or both, would
constitute, as of the Closing, any material default under any lease for the
Leased Facilities. There are no existing subleases of any Leased Facility,
other than as specified in Section 4.1(n) of the Seller Disclosure Letter.
(iv) Each member of the Seller Group is the sole legal
and equitable owner of the Owned Facilities indicated as owned by such member
in Section 4.1(n) of the Seller Disclosure Letter and, as of the Closing, will
be and such member has the full right to convey fee simple absolute title to
the same.
(v) No member of the Seller Group has granted any
option or right of first refusal or first opportunity to any party to acquire,
lease or occupy an Acquired Facility, nor any portion thereof or interest
therein.
(vi) Except for Permitted Liens, the Acquired Facilities
and the other Acquired Assets are not subject to any Liens (other than a Lien
encumbering only the right, title and interest of any Person other than a
Seller Group member in and to a Leased Facility).
(vii) All water, sewer, plumbing, gas, electric,
telephone, communications, heating, ventilating, air condition, security, fire
safety, drainage, waste treatment, water treatment, and other utility
facilities required by applicable Law, any Contract or otherwise for the
conduct in all material respects of the Business as presently conducted
("Required Utilities") have been, and at
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the Closing Date, will be, in all material respects, (A) legally installed to
and available for use in the Acquired Facilities, and (B) connected to the
Acquired Facilities and other Acquired Assets in accordance with all applicable
Laws, Contracts, Permits and/or Approvals.
(viii) The tangible Acquired Assets are now, and at the
time of Closing will be, free of any material physical or mechanical defects,
and will be in good operating condition and repair in all material respects, in
compliance in all material respects with the Laws, Contracts, Environmental
Requirements, Permits and/or Approvals binding thereon, reasonably maintained
consistent in all material respects with standards generally followed by
similar businesses and building owners and users, and adequate for the purposes
for which they are currently being used for the Business.
(ix) No condemnation, zoning, land-use or Tax
imposition, or other Proceeding has been instituted with respect to any
tangible Acquired Asset or tangible Italian Newco Assets or Singapore Newco
Assets and to the knowledge of Seller, no such Proceeding is planned or
threatened which could in any of the foregoing cases: (A) result in a Loss,
Liability, Claim or Proceeding in excess of $50,000 in any one case or $250,000
in the aggregate, (B) individually or in the aggregate, have a Material Adverse
Effect or materially impair the ability of Buyer to carry on the Business as
currently conducted, or (C) individually or in the aggregate, have a Material
Adverse Effect on the ability of any member of the Seller Group to perform its
obligations under this Agreement, the Related Agreements or the Reorganization
Agreements.
(x) At the time of Closing, there will be no
obligations to any contractors, subcontractors or material suppliers with
respect to any alterations or improvements of the Acquired Facilities which
have not been fully paid and performed, and the Seller Group shall cause to be
discharged all mechanics' and materialmen's Liens arising from any labor or
materials furnished for alterations or improvements of the Acquired Facilities
prior to the time of Closing.
(o) Environmental Matters.
(i) Except as would not reasonably be expected (A) to
result in aggregate Claims or Losses in excess of $250,000 or (B) to have a
Material Adverse Effect: (1) no Contamination is or has been present on, in,
under or about any Acquired Facility, (2) to Seller's knowledge, no
Contamination is present on, in, or about any Disposal Facility of the Seller
Group (other than Contamination resulting from Hazardous Material Activities of
Buyer or its Subsidiaries when they were Buyer's Subsidiaries at such Disposal
Facility), (3) no Contamination described in clauses (1) or (2) hereof has
migrated, or is reasonably likely to migrate to or from such Acquired Facility
or, to Seller's knowledge, such Disposal Facility, (4) on or before the last
date that the Seller Group member owned, leased or occupied a Former Facility
or that the Former Facility was used for Pre-Closing Seller Operations, no
Contamination (other than Contamination resulting from Hazardous Material
Activities of Buyer or its Subsidiaries when they were Buyer's Subsidiaries at
such Former Facility) was present on, in, under or about said Former Facility,
and (5) no
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Contamination described in clause (4) hereof has migrated, or is reasonably
likely to migrate, to or from any such Former Facility.
(ii) No underground storage tank, surface impoundment,
landfill or waste disposal site is present on the Acquired Facilities, except
to the extent such underground storage tank, surface impoundment, landfill or
waste disposal site does not (A) result in an aggregate Claims or Losses in
excess of $250,000 or (B) have a Material Adverse Effect or materially impair
the ability of Buyer to carry on the Business.
(iii) All Hazardous Material Activities associated with
the Pre-Closing Seller Operations or conducted at the Acquired Facilities prior
to the Closing Date have complied in all material respects with applicable
Environmental Requirements applicable thereto at the time the Hazardous
Material Activity was conducted (except for noncompliance which is remedied in
all material respects prior to the Closing Date or which, in the aggregate
cannot reasonably be expected (A) to result in an aggregate Claims or Losses in
excess of $250,000 or (B) to have a Material Adverse Effect or materially
impair the ability of the Buyer to carry on the Business) and such Hazardous
Material Activities have not resulted in the exposure of any employee of the
Seller Group or of other Person to a Hazardous Material in a manner which has
or will cause an adverse health effect to said employee or Person, except to
the extent that such exposures do not (A) result in aggregate Claims or Losses
in excess of $250,000 or (B) have a Material Adverse Effect or materially
impair the ability of Buyer to carry on the Business.
(iv) To the knowledge of Seller, the Permits and/or
Approvals described in Section 4.1(m) of the Seller Disclosure Letter are all
of the Permits and/or Approvals required for the conduct in all material
respects of the Hazardous Material Activities associated with the Business as
presently conducted. All such Permits and/or Approvals are, or at the Closing
will be held by the Buyer Operating Group, in full force and effect, and the
Seller Group has complied with all covenants and conditions thereof in all
material respects and has made all disclosures and reports required pursuant to
such Permits and/or Approvals or other applicable Environmental Requirements,
except for noncompliance that has been fully remedied or that would not have a
Material Adverse Effect or materially impair the ability of the Buyer to carry
on the Business. To the knowledge of Seller, no fact or circumstance exists
which could reasonably be expected to cause any such Permit and/or Approval to
be revoked or rendered nonrenewable by Buyer or would require, as a condition
to the continuation or renewal of such Permit and/or Approval, capital
improvements or repairs at the Acquired Facilities costing in the aggregate in
excess of $100,000, over the amount, if any, of the reserves shown on the
Closing Balance Sheet.
(v) The Seller Group members, the Acquired Assets, and
the Business are not, and as of the Closing the Buyer Operating Group members
will not be, subject to any voluntary or involuntary Claims or Losses or any
pending or, to the knowledge of Seller, threatened, Liabilities respecting (A)
any Retained Environmental Liability, (B) any Remedial Activity, (C) the
conduct of any Hazardous Material Activities associated with the Pre-Closing
Seller Operations, or (D) any Environmental Requirement applicable to the
Seller Group members, the Acquired Assets, or the
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Business (except to the extent that any such Environmental Requirement,
obligations or Claim does not (x) result in aggregate Liabilities in excess of
$250,000 or (y) have a Material Adverse Effect or materially impair the ability
of the Buyer to carry on the Business; and to the knowledge of Seller, there
are no other facts, circumstances, events or incidents involving the Hazardous
Material Activities associated with the Pre-Closing Seller Operations which
could give rise to any such Liabilities.
(vi) To the knowledge of Seller, no asbestos-containing
materials are present on the Acquired Facilities, other than the asbestos-
containing material which is on or part of the Acquired Facilities and is not
friable, complies with applicable Environmental Requirements applicable thereto
as of the date hereof and will comply with the Environmental Requirements
applicable thereto as of the Closing Date and is in good repair according to
the current standards and practices governing such material except to the
extent the same will not result in a Material Adverse Effect.
(vii) To the knowledge of Seller, other than Hazardous
Materials which are reasonably necessary for the conduct of the Business and
are properly stored in the Acquired Facilities in accordance with applicable
Environmental Requirements applicable thereto as of the date hereof or will be
stored in the Acquired Facilities on the Closing Date in accordance with the
Environmental Requirements applicable thereto as of the Closing Date, no
Hazardous Material is, or at the Closing Date will be, stored or kept at any
Acquired Facility in connection with the Business except to the extent the same
will not result in a Material Adverse Effect.
(viii) Seller will have made, and shall have caused the
Seller Group to have made, available to Buyer for review within ten (10) days
of the date of this Agreement, all material records, environmental audits,
assessments and reports, correspondence with Governmental Agencies and other
documents pertaining to the Hazardous Material Activities associated with the
Business as currently conducted, any Retained Environmental Liabilities,
Contamination at any Acquired Facility, Disposal Facility or, to the extent
associated with the Pre-Closing Seller Operations, any Former Facility, or
Disposal Facility, which were conducted at the request of, or which are
otherwise available to, any Seller Group member.
(p) Intellectual Property.
(i) Section 4.1(p) of the Seller Disclosure
Letter sets forth, respectively for each member of the Seller Group, all of
such member's Registered Intellectual Property constituting Acquired
Intellectual Property, and shall disclose any proceedings or actions known to
any of the members of the Seller Group before any Governmental Authority
(including the PTO or equivalent authority anywhere in the world) related to
such Registered Intellectual Property. To the knowledge of each member of the
Seller Group, such item of the Registered Intellectual Property is valid, all
necessary registration, maintenance and renewal fees in connection with such
Registered Intellectual Property have been paid, and all necessary documents
and certificates in connection with such Registered Intellectual Property have
been filed with the relevant Copyright, Trademark or
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other authorities in the United States or foreign jurisdictions, as the case
may be, for the purposes of maintaining such Registered Intellectual Property.
(ii) Except as set forth in Section 4.1(p) of the
Seller Disclosure Letter, the members of the Seller Group individually or
collectively are the exclusive owners of all the Acquired Intellectual
Property.
(iii) Except as set forth in Section 4.1(p) of the
Seller Disclosure Letter: (A) each item of Acquired Intellectual Property,
including all Registered Intellectual Property which is listed in Section
4.1(p) of the Seller Disclosure Letter, is free and clear of any Liens (other
than Permitted Liens); and (B) there are no agreements between any Person and
any member of the Seller Group encumbering or restricting the transfer or sale
of the Acquired Intellectual Property to Buyer in the manner contemplated by
this Agreement.
(iv) Except as set forth in Section 4.1(p) of the
Seller Disclosure Letter, no Acquired Intellectual Property is subject to any
Proceeding or other outstanding decree, order, judgment, agreement or
stipulation that restricts in any manner the transfer thereof by any member of
the Seller Group, at the Closing, or that affects the validity, use or
enforceability of the Acquired Intellectual Property.
(v) Except as set forth in Section 4.1(p) of the
Seller Disclosure Letter, none of the members of the Seller Group has
transferred ownership of, or granted any license or right to use, or authorized
the retention of any rights to use, any material Intellectual Property that is
Acquired Intellectual Property, to any other Person and no member of the Seller
Group has transferred or licensed any of its Intellectual Property primarily
used in the Business prior to the Closing in contemplation of this transaction.
(vi) Except as set forth in Section 4.1(p) of the
Seller Disclosure Letter, the use and exploitation of the Acquired Assets,
including the operation of the Business, by Buyer following the Closing will
not infringe any Patent or other Intellectual Property of any member of the
Seller Group or any Affiliate of such member.
(vii) Except as set forth in Section 4.1(p) of the
Seller Disclosure Letter: (A) to the knowledge of each member of the Seller
Group, the operation of the Business does not (i) infringe or misappropriate
the Intellectual Property (excluding Patents) of any Person, (ii) violate the
rights of any Person, or (iii) constitute unfair competition or trade practices
under the laws of any jurisdiction; and (B) none of the members of the Seller
Group has received from any Person written assertion or notice claiming that
the operation of the Business or the use or sale of any Acquired Assets,
infringes or misappropriates the Intellectual Property of any Person or
constitutes unfair competition or trade practices under the Laws of any
jurisdiction (and no member of the Seller Group is aware of any basis for any
such assertion to be made).
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(viii) Except as set forth in Section 4.1(p) of the
Seller Disclosure Letter, there are no Contracts between any member of the
Seller Group and any other Person with respect to Intellectual Property related
to the Business under which there is, to the knowledge of any member of the
Seller Group, any dispute or any threatened dispute regarding the scope of such
agreement, or performance under such agreement, including with respect to any
payments to be made or received by any member of the Seller Group thereunder.
(ix) Section 4.1(p) of the Seller Disclosure
Letter includes all material Contracts, licenses and agreements related to the
Business, to which any member of the Seller Group is a party with respect to
any Intellectual Property of any Person other than the Seller Group. Except as
disclosed on Section 4.1(p) of the Seller Disclosure Letter, no Person other
than the Seller Group has ownership rights to improvements made by any member
of the Seller Group in Intellectual Property which has been licensed to such
member.
(x) Except as disclosed in Section 4.1(p) of the
Seller Disclosure Letter, to the knowledge of each member of the Seller Group,
no Person is infringing or misappropriating any of the Acquired Intellectual
Property. Each member of the Seller Group has taken such reasonable steps as
are required to protect such member's rights in confidential information and
Trade Secrets constituting the Acquired Intellectual Property.
(xi) Section 4.1(p) of the Seller Disclosure
Letter sets forth a true and correct description of Seller's Year 2000 plan
("Sellers Year 2000 Plan"). Seller and each member of the Seller Group has, as
of the date hereof, taken all reasonable steps, and made every reasonable
effort, to substantially comply with, implement, carry out and effectuate all
of the requirements, steps, measures and procedures, and meet all the
guidelines and deadlines, as set forth in such plan. Seller has no knowledge
of any event, occurrence, condition or reason that would prevent, or interfere
with, the implementation of the plan substantially in accordance with the
guidelines and deadlines set forth in such plan. Within five (5) Business Days
of the date hereof, Seller shall deliver to Buyer a true, correct and complete
copy of Seller's Year 2000 Plan.
(xii) Section 4.1(p) of the Seller Disclosure
Letter lists all actions that must be taken within sixty (60) days of the
Closing Date, including the payment of any registration, maintenance or renewal
fees or the filing of any documents, applications or certificates for the
purposes of maintaining, perfecting or preserving or renewing any of the
Acquired Intellectual Property.
(xiii) Section 4.1(p) of the Seller Disclosure
Letter lists all Trademarks and service marks, domestic or foreign, whether
registered or unregistered, used or intended to be used by any member of the
Seller Group in connection with the Business, excepting those registrations or
applications for the marks or trade names that include "TI" and/or "Texas
Instruments."
(xiv) There are no marks or tradenames used in the
Business for which registration has not been sought.
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(xv) The rights granted by Seller to Buyer with respect
to the Gore Software pursuant to Section 6.16 hereof constitute all of the
rights in the Gore Software Seller is permitted to grant and Seller is not
permitted to license the source code for the Gore Software to third parties.
(q) Employment Matters.
(i) The Seller Group has provided Buyer with true,
correct and complete particulars of the material terms of engagement of all
Domestic Employees and Foreign Employees.
(ii) Except as set forth in Section 4.1(q) of the Seller
Disclosure Letter, there is no Contract of employment between any member of the
Seller Group and any foreign employee or expatriate employee which is not
terminable or is only terminable by payment of compensation exceeding $25,000
in any one case and $100,000 in the aggregate.
(iii) Except as set forth in Section 4.1(q) of the Seller
Disclosure Letter, no member of the Seller Group nor any of their Affiliates is
a party to any agreement or arrangement with or commitment to, or has received
within three (3) years prior to the date hereof any request for recognition or
bargaining rights from, any employee or trade union or employee association
with respect to any of their employees.
(iv) There is no dispute between any member of the
Seller Group or any of their Affiliates and a number or class of any of the
Seller Group member employees in any case which would have a Material Adverse
Effect or materially impair the ability of the Buyer to carry on the Business,
and are no payments of compensation due but unpaid by any member of the Seller
Group other than accrued in the ordinary course of business as reflected on the
Closing Balance Sheet.
(v) All Foreign Benefit Plans are listed by country in
Section 4.1(q) of the Seller Disclosure Letter. Each Foreign Benefit Plan has
been established and maintained in substantial compliance with its terms and
with the requirements of the Laws (including any special provisions related to
qualification if the Foreign Benefit Plan was intended to be so qualified) of
any applicable jurisdiction except as would not result in a Material Adverse
Effect or materially impair the ability of the Buyer to carry on the Business
as currently conducted. Except as disclosed in Section 4.1(q) of the Seller
Disclosure Letter, all amounts set aside (whether or not in trust or a similar
instrument), reserved, or accrued with respect to each Foreign Benefit Plan
equals or exceeds the present value of all accrued benefits (vested and
nonvested, including special early retirement, post-shutdown or plan
termination benefits as if they were accrued, and death benefits unless
otherwise covered by insurance both before and after the expected retirement
ages of the participants), determined using actuarial assumptions most recently
used for purposes of funding or accruing Liabilities in respect of such plans
(adjusted to take into account the contingent events referred to in the
parenthetical above), or if no such assumptions exist, using the assumptions
most recently used for funding the most similar plan (adjusted as described
above), of participants and beneficiaries in such plans as of the Closing Date.
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(vi) No member of the Seller Group nor any ERISA
Affiliate of any member thereof has or will have on or before the Closing Date
(A) engaged in, or is a successor or parent corporation to an entity that has
engaged in, a transaction described in Section 4069 of ERISA, or (B) incurred,
or reasonably expects to incur prior to the Closing Date, any material
Liability under, or has any Liens attached to the Acquired Assets by reason of
liability under, Title IV of ERISA arising in connection with the termination
or pending termination of, or a complete or partial withdrawal from, any plan
covered or previously covered by Title IV of ERISA that could become a
Liability of Buyer or any of its ERISA Affiliates or encumber the Acquired
Assets after the Closing Date.
(vii) Except as set forth in Section 4.1(q) of the Seller
Disclosure Letter, no member of the Seller Group nor any of their Affiliates
has any current or projected Liability in respect of post-employment or post-
retirement health, medical, and life insurance or other employee welfare
benefits.
(viii) All contributions, payments or Liabilities accrued
under each Foreign Benefit Plan, determined in accordance with prior funding
and accrual practices, as adjusted to include proportional accruals for the
period ending on the Closing Date, will be discharged and paid or remitted or
accrued, in any case consistent with prior practice, (A) on or prior to the
Closing Date, or (B) in the case of a funded Foreign Benefit Plan in respect of
which payments are required to be made to an insurance company, trust or
support fund or other independent entity, within such time as the Seller Group
normally makes such payments but in any event within thirty (30) days after the
Closing. Except as disclosed in writing to Buyer prior to the date hereof,
there has been no amendment by the Seller Group, or any Affiliate thereof, to
any written interpretation of or announcement (whether or not written) by the
Seller Group or any of its Affiliates relating to, or change in employee
participation or coverage under any Foreign Benefit Plan that would increase
materially the expense of maintaining such Foreign Benefit Plan above the level
of the expense incurred in respect thereof for the fiscal year ended prior to
the date hereof.
(r) Customers. Section 4.1(r) of the Seller Disclosure
Letter sets forth a true and complete list of the largest twenty (20) customers
with respect to the Business for each of the fiscal year ended December 31,
1997 and the three-month period ended March 31, 1998 determined on the basis of
revenues recorded during each such periods. Except as set forth in Section
4.1(r) of the Seller Disclosure Letter, to the knowledge of each member of the
Seller Group, none of such customers has terminated or indicated its intent to
terminate or materially reduce the amount of its business with respect to the
Business.
(s) Orders, Commitments and Returns. All accepted and
unfulfilled orders for the sale of products entered into for the account of the
Business and all outstanding Contracts or commitments for the purchase of
supplies and materials were made in the ordinary course of business. The
Closing Balance Sheet will include provisions for any and all product returns,
volume discounts, repricings and rebates based on volume purchases required
under GAAP consistently applied with the March Balance Sheet.
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(t) Defects in Products; Warranties. Except as set forth in
Section 4.1(t) of the Seller Disclosure Letter, there are no defects in the
design or manufacture of the products heretofore or currently being distributed
or sold in the conduct of the Business, which would have a material adverse
effect on the performance and quality of such products. There are no express
warranties, or implied warranties arising from course of conduct between
parties, outstanding with respect to the products of the Business except as set
forth in Section 4.1(t) of the Seller Disclosure Letter. The Closing Balance
Sheet shall include reserves in the aggregate for any and all returns or
allowances for defective products and warranty claims as required under GAAP
consistently applied with the March Balance Sheet.
(u) Purchase for Investment. Seller is purchasing the shares
of Buyer Common Stock, the Subordinated Notes and the Convertible Notes
pursuant to the terms of this Agreement solely for its own account for the
purpose of investment and not with a view to, or for sale in connection with,
any distribution thereof.
4.2 Representations and Warranties Relating to the Joint Ventures.
(a) Organization and Qualification. Each Joint Venture is an
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation and has all requisite corporate power and
authority to own, operate and lease the properties and assets it now owns,
operates and leases and to conduct its business as it is now being conducted.
True, correct and complete copies of the organizational documents of each Joint
Venture, each with all amendments thereto, have been delivered to Buyer. Each
Joint Venture is duly qualified or licensed to do business, and is in good
standing, in each jurisdiction where the character of its assets or the nature
of its activities makes such qualification or license necessary, except where
the failure to be so qualified or licensed would not, individually or in the
aggregate, have a JV Material Adverse Effect.
(b) Authority. Each Joint Venture shall have all requisite
power and authority to enter into, execute and deliver such agreements which
are required to effect valid transfers of Seller's interests in the Joint
Venture to the Buyer at the Closing (the "JV Transfer Agreements") as
contemplated by this Agreement and the Related Agreements, to perform its
obligations thereunder, and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of such agreements by each Joint
Venture, the performance by each Joint Venture of its obligations under such
agreements and the consummation of the transactions contemplated thereby shall
have been duly and validly authorized by all necessary corporate action on the
part of each Joint Venture and (assuming due execution and delivery by the
Buyer of such agreements as required) such agreements, when executed and
delivered, will constitute legal, valid and binding obligations of each Joint
Venture enforceable against such Joint Venture in accordance with their terms,
subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and similar Laws affecting creditors'
rights, and, with respect to the remedy of specific performance, equitable
doctrines applicable thereto.
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(c) No Violations. The execution and delivery of this
Agreement and the Related Agreements, the performance by each Joint Venture of
its obligations under such agreements and the consummation of the transactions
contemplated thereby, will not conflict with, contravene, result in a violation
or breach of or default under (with or without the giving of notice or the
lapse of time or both), create in any other Person a right of claim of
termination, amendment, or require modification, acceleration or cancellation
of, or result in the creation of any Lien (or any obligation to create any
Lien) upon any of the properties or assets of the Joint Ventures under (i) any
provision of any of the organizational documents of each Joint Venture, (ii)
any Law applicable to the Joint Ventures or any of their respective properties
or assets assuming the consents, approvals, authorizations or permits and
filings or notifications set forth in Section 4.2(g) of the Seller Disclosure
Letter are duly and timely obtained or made, (iii) except as to which requisite
waivers or consents have been obtained and except for the consents and
approvals required under the agreements and instruments listed in Section
4.2(f) of the Seller Disclosure Letter, any Contract, to which a Joint Venture
is a party or by which any of their respective properties or assets may be
bound; other than any of the foregoing under clauses (ii) and (iii) which would
not result in a JV Material Adverse Effect. Except as set forth in Section
4.2(c) of the Seller Disclosure Letter, neither the execution and delivery of
any JV Transfer Agreement by the Joint Ventures, nor the consummation of the
transactions contemplated hereby or thereby, will result in the loss to Buyer
of any material benefit enjoyed by any member of the Seller Group or the Joint
Ventures in connection with the Business or the Acquired Assets.
(d) Capitalization. Section 4.2(d) of the Seller Disclosure
Letter contains a true, correct and complete description of the equity or other
ownership interests of each Joint Venture. All of such equity or other
ownership interests are owned beneficially and of record by such Persons set
forth in Section 4.1(d) of the Seller Disclosure Letter. Section 4.2(d) of the
Seller Disclosure Letter also lists for each Joint Venture all subscriptions,
options, warrants, conversion or other rights, agreements, commitments,
arrangements or understandings of any kind, outstanding obligating either Joint
Venture, contingently or otherwise, to issue or sell, or cause to be issued or
sold, any equity or other ownership interests. Immediately prior to the
Closing, except as set forth in Section 4.2(d) of the Seller Disclosure Letter,
(i) there will be no preemptive or similar rights with respect to the JV
Interests, (ii) there will be no subscriptions, options, warrants, conversion
or other rights, agreements, commitments, arrangements or understandings of any
kind obligating either Joint Venture, contingently or otherwise, to issue or
sell, or cause to be issued or sold, any equity or other ownership interest in
either Joint Venture, and (iii) there will be no outstanding contractual or
other rights or obligations to or of either Joint Venture to repurchase, redeem
or otherwise acquire any equity or other ownership interest in either Joint
Venture. Section 4.2(d) of the Seller Disclosure Letter contains a true,
correct and complete description of all capital contributions, loans and other
investments, including indirect investments such as guarantees, letters of
credit and other credit support arrangements, for each of the equity holders of
each of the Joint Ventures for the past two years.
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(e) Sufficiency of Assets; Title of Transfer.
(i) The assets currently held by each Joint Venture
constitute, and the assets of each Joint Venture as of the Closing Date will
constitute, all of the properties and assets (real, personal and mixed,
tangible and intangible) used in or necessary to conduct the business of each
Joint Venture as currently conducted, except as otherwise described in Section
4.2(e) of the Seller Disclosure Letter.
(ii) At the time of the Closing, Seller will have the
right, power and authority to sell, transfer and assign the JV Interests
pursuant to this Agreement. The transfer of the JV Interests to the Buyer
against payment therefore as contemplated by Section 3.2 will transfer to Buyer
good and valid title to, and beneficial ownership of, the JV Interests, free
and clear of all Liens and, upon execution and delivery of the JV Amendments as
contemplated by Section 9.1(c), Buyer shall be entitled to the rights under
each of the JV Agreements, after giving effect to the JV Amendments, and such
agreements as so amended shall be valid, binding and enforceable in accordance
with their terms subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium and similar Laws affecting
creditors' rights and, with respect to the remedy of specific performance,
equitable doctrines applicable thereto. The sale of the JV Interests will not
give rise to any preemptive rights or rights of first refusal and will not
violate any Laws.
(f) Contracts. Section 4.2(f) of the Seller Disclosure Letter
sets forth a true, correct and complete list of the following Contracts of each
Joint Venture, other than such Contracts disclosed under clause (F) of Section
4.1(f)(i) (including with respect to each such Contract, the names of the
parties, the date of the Contract and all amendments, supplements and
modifications thereto):
(i) Agreements or commitments for capital expenditures
or the acquisition by lease or purchase of fixed assets for payment in excess
of $1 million in any one case.
(ii) (A) Agreements for the purchase, sale, lease or
other transfer of any products, materials, supplies or services involving
payment of in excess of $1 million, and (B) supply and/or sourcing contracts,
for payments (in the case of (A) or (B)) in any one case in excess of $1
million.
(iii) Joint venture or partnership agreements with any
other entity.
(iv) Any agreement between either Joint Venture and its
equity owners or their Affiliates relating to such Joint Venture.
(v) Non-competition or similar agreements which prevent
either Joint Venture from competing with a Person.
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(vi) Contracts relating to any material debt, letter of
credit, bank financing or similar arrangements (including guarantees).
(vii) Volume purchase and master agreements which require
payment in excess of $1 million in any one case.
(viii) Agreements primarily for indemnification
obligations with respect to the sale of products of either Joint Venture other
than in the ordinary course of business.
(ix) Any other Contract to which either Joint Venture is
a party which is material to the financial condition, operations (but not
including results of operations), or the ability to manufacture and supply
Memory Products of either KTI or TECH on a standalone basis, or both.
(x) Leases, subleases, mortgages or other Liens
affecting the Joint Venture Facilities or its assets having an unpaid rental
obligation exceeding $500,000 individually or $1,000,000 in the aggregate.
All such Contracts are in full force and effect, have not been amended or
modified (except as specified in Section 4.2(f) of the Seller Disclosure
Letter) and each Joint Venture has performed all the obligations imposed upon
such Joint Venture under such Contracts and is not in default or breach of any
term thereunder other than such defaults or breaches which in the aggregate
would not reasonably be expected to have a JV Material Adverse Effect. No
termination rights in respect of any of such Contracts have been exercised by
either Joint Venture or other parties thereto. To the knowledge of Seller,
none of the other parties to any of such Contracts is in default or breach of
any terms thereunder, nor is Seller aware of any event which, with the passage
of time, the giving of notice or both, would constitute a default or breach of
any term of any such Contract by any such other party, other than such defaults
or breaches which, in the aggregate, would not result in a JV Material Adverse
Effect.
(g) Consents and Approvals. Except as set forth in Section
4.2(g) of the Seller Disclosure Letter, no consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Agency is required by or with respect to any member of the Seller Group or
either Joint Venture in connection with the execution and delivery of the JV
Amendments, except for (i) compliance with the HSR Act and similar laws of
foreign jurisdictions, (ii) such filings as may be required to be made by
Seller with the SEC and any exchange on which any of its securities are listed
and (iii) any such requirements noncompliance with which would not result in a
JV Material Adverse Effect. Except as set forth in Section 4.2(g) of the
Seller Disclosure Letter, no consent, waiver or approval of, or notice to, any
third party is required or necessary to be obtained by any member of the Seller
Group or either Joint Venture in connection with the execution and delivery of
the JV Amendments, except for any such consents, waivers, approvals or notices
which if not obtained or made would not reasonably be expected to result in a
JV Material Adverse Effect.
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(h) Financial Statements. Section 4.2(h) of the Seller
Disclosure Letter contains true, correct and complete copies of (i) with
respect to TECH, the audited balance sheet as of December 31, 1997 and the
related audited statements of income and cash flows for the twelve-month
periods ended December 31, 1996 and December 31, 1997, all examined and
accompanied by the unqualified report of TECH's auditors and (ii) with respect
to KTI, the audited balance sheet as of March 31, 1998 and the related audited
statements of income and cash flows for the twelve-month periods ended March
31, 1997 and March 31, 1998, all audited in accordance with local statutory
requirements and accompanied by the unqualified report of KTI's auditors (the
"JV Audited Financial Statements") and (B) the unaudited balance sheet as of
March 31, 1998 and the related unaudited statements of income and cash flow for
the three-month period then ended for TECH (the "JV Interim Financial
Statements" and together with the JV Audited Financial Statements, the "JV
Financial Statements"). To Seller's knowledge, all of the JV Financial
Statements are in accordance with the books and records of the relevant
entities. Each of the balance sheets included in the JV Financial Statements
(including any related notes) fairly presents the financial condition of TECH
and KTI, respectively, as of the respective dates thereof, and each of the
statements of operations and cash flow (including related notes) fairly
presents the results of operations and cash flows for the periods therein
referred to in accordance with local statutory requirements.
(i) Absence of Undisclosed Liabilities. Except as set forth
in Section 4.2(i) of the Seller Disclosure Letter, there are no Liabilities
relating to either Joint Venture not included in the JV Interim Financial
Statements except such Liabilities which individually or in the aggregate would
not reasonably be expected to have a JV Material Adverse Effect.
(j) Absence of Certain Changes. Except as set forth in
Section 4.2(j) of the Seller Disclosure Letter, since March 31, 1998, neither
Joint Venture has experienced any changes which have resulted or could
reasonably be expected to result in a JV Material Adverse Effect.
(k) Litigation. Section 4.2(k) of the Seller Disclosure
Letter lists all Claims pending or, to the knowledge of the Seller Group,
threatened against either Joint Venture with respect to its business, except
for such Claims which individually or in the aggregate have not had or could
not reasonably be expected to have a JV Material Adverse Effect. Neither Joint
Venture is in default under, or in violation of, any judgment, order, writ,
injunction or decree of any Governmental Agency relating thereto, except for
those defaults or violations, which in the aggregate would not have, or
reasonably be expected to have, a JV Material Adverse Effect.
(l) Compliance with Laws; Permits.
(i) Except as set forth in Section 4.2(l) of the Seller
Disclosure Letter, the business of each Joint Venture is being conducted in
compliance with all applicable Laws and no member of the Seller Group has
received any notification that either Joint Venture is in violation of any
Laws, except where any such noncompliance or violations would in the aggregate
not reasonably be expected to have a JV Material Adverse Effect.
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(ii) Each Joint Venture currently has, and at the
Closing will have, all Permits and/or Approvals (the "JV Permits and
Approvals") required to conduct the business of each Joint Venture as presently
conducted, other than such JV Permits and Approvals the failure to obtain which
would not in the aggregate reasonably be expected to result in a JV Material
Adverse Effect. All JV Permits and Approvals are being complied with in all
material respects and will not be terminated or revoked as a result of the
transactions contemplated by this Agreement.
(iii) Except as set forth in Section 4.2(l) of the Seller
Disclosure Letter, there are no judgments, orders, injunctions, decrees,
stipulations, awards (whether rendered by a Governmental Agency or by
arbitration) or private settlement agreements involving either Joint Venture,
other than any of the foregoing which have not and would not in the aggregate
result in a JV Material Adverse Effect. All of the foregoing which are final
and nonappealable are being complied with in all material respects.
(m) Real Property and Facilities.
(i) No real property is or has been owned, leased or
used by the Joint Ventures in the course of their Pre-Closing Seller
Operations, other than the Joint Venture Facilities and the Former Facilities
of the Joint Ventures.
(ii) Except as set forth in Section 4.2(m) of the Seller
Disclosure Letter, the Joint Ventures hold the good and fee simple title to, or
a valid leasehold interest in, the Joint Venture Facilities and the other Joint
Venture Assets, free of any Liens, other than the Permitted Liens.
(iii) The Joint Venture Assets are now, and will be at
the time of the Closing, free of physical or mechanical defects, in good
operating condition and repair (ordinary wear and tear accepted), structurally
sound, in compliance with applicable Laws, contractual obligations,
Environmental Requirements, and Permits and/or Approvals applicable thereto,
have been reasonably maintained consistent with standards generally followed by
similar business and building owners and users, and are adequate for the
purposes for which they are being used by the Joint Ventures, except for any of
the foregoing that is not reasonably likely to have a JV Material Adverse
Effect.
(iv) No condemnation, zoning, land use or Tax
imposition, or other Proceeding has been instituted with respect to any Joint
Venture Assets which could have a JV Material Adverse Effect and, to the
knowledge of Seller, no such Proceeding is planned or threatened.
(n) Environmental Matters.
(i) Except as would not reasonably be expected to
result, in the aggregate, in a JV Material Adverse Effect, (1) no Contamination
is present or has been present at, in, on or
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under any of the Joint Venture Facilities, (2) to Seller's knowledge, no
Contamination is present on, in, or about any Disposal Facility utilized by the
Joint Ventures (other than Contamination resulting from Hazardous Material
Activities of Buyer or its Subsidiaries when they were Buyer's Subsidiaries at
such Disposal Facility), (3) no Contamination described in clauses (1) or (2)
has migrated, or is reasonably likely to, migrate to or from such Joint Venture
Facility or, to Seller's knowledge, such Disposal Facility (4) on or before the
last date that a Joint Venture owned, leased or occupied a Former Facility or
that the Former Facility was used for any Joint Venture operations, no
Contamination (other than Contamination resulting from Hazardous Material
Activities of Buyer or its Subsidiaries when they were Buyer's Subsidiaries at
such Former Facility) was present on, in, under or about said Former Facility,
and (5) no Contamination described in clause (4) hereof has migrated, or is
reasonably likely to migrate, to or from any such Former Facility.
(ii) All Hazardous Material Activities conducted by the
Joint Ventures prior to the Closing Date have complied in all material respects
with the Environmental Requirements, applicable to such activities at the time
they were conducted, and such Hazardous Material Activities have not resulted
in the exposure of any employee of either of the Joint Ventures or other Person
to a Hazardous Material in a manner which has or will cause an adverse health
effect to said employee or Person, except to the extent that any noncompliance
or exposure resulting from the Hazardous Material Activities of each Joint
Venture cannot reasonably be expected to result, in the aggregate, in a JV
Material Adverse Effect.
(iii) All Permits and/or Approvals required for the
conduct of the Hazardous Material Activities associated with the Business
performed by each Joint Venture prior to the Closing are held by the Joint
Ventures and are in full force and effect. The Joint Ventures have complied
with all covenants and conditions thereof in all material respects, except as
any noncompliance or failure to obtain such Permits and/or Approvals would not,
in the aggregate, result in a JV Material Adverse Effect. With respect to such
Permits and/or Approvals, no fact or circumstance exists which could cause any
such Permit and/or Approval to be revoked or rendered non-renewable or would
require, as a condition to the continuation or renewal of such Permit and/or
Approval, or any capital improvements or repairs, except to the extent such
revocations, failures to renew or required capital improvements or repairs
would not, in the aggregate, result in a JV Material Adverse Effect.
(iv) Except as would not, in the aggregate, result in a
JV Material Adverse Effect, neither of the Joint Ventures nor their operations
are subject to any voluntary or involuntary obligations or any pending or
threatened Claims or Losses respecting (i) any Remedial Activity (whether at
any Joint Venture Facility or any Former Facility or Disposal Facility of the
Joint Ventures), (ii) the conduct of any Hazardous Material Activities
associated with the operations of either Joint Venture, or (iii) any
Environmental Requirement applicable to the operations of either Joint Venture;
and, to the knowledge of each member of the Seller Group, there are no other
facts, circumstances, events or incidents involving the Hazardous Material
Activities associated with the Joint Ventures or their operations which could
give rise to any such obligation or Claims or Losses.
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(v) Except as would not result, in the aggregate, in a
JV Material Adverse Effect, no asbestos-containing materials are present on any
facility presently owned, leased, used or occupied by either of the Joint
Ventures, other than any asbestos-containing material which is not friable,
complies as of the Effective Date with Environmental Requirements applicable
thereto as of the Effective Date, and will comply as of the Closing Date with
all Environmental Requirements applicable thereto as of the Closing Date, and
is in good repair according to the current standards and practices governing
such material.
(vi) Except as would not result, in the aggregate, in a
JV Material Adverse Effect, other than Hazardous Materials which are reasonably
necessary for the conduct of the operations of either Joint Venture and are
properly stored in the Joint Venture Facilities in accordance with the
Environmental Requirements applicable thereto as of the Effective Date or will
be stored on the Closing Date in accordance with the Environmental Requirements
applicable thereto as of the Closing Date, no Hazardous Material is or at the
Closing Date will be stored or kept at any Joint Venture Facility.
(o) Intellectual Property. Except as set forth in Section
4.2(o) of the Seller Disclosure Letter, neither Joint Venture has received
written notice that the operations or products of any Joint Venture infringes
or misappropriates the Intellectual Property of any Person.
(p) Transactions Among Members of the Seller Group and Joint
Ventures. Section 4.2(p) of the Seller Disclosure Letter describes all
transactions between any member of the Seller Group and either Joint Venture,
or between the Joint Ventures, during the two (2) year period prior to the date
of this Agreement, or any currently proposed transaction or interaction between
such parties, which involved or is expected to involve an amount in excess of
$500,000 (including all credit arrangements and guarantees and other financing
arrangements).
(q) Existing Financial Arrangements; No Defaults. Section
4.2(q) of the Seller Disclosure Letter sets forth a true, correct and complete
list of all debt, bank financing agreements and other financing agreements and
arrangements used by or with respect to the Joint Ventures as of the date of
this Agreement. Except as set forth in Section 4.2(q) of the Seller Disclosure
Letter, neither Joint Venture is in breach or default (with or without the
giving of notice or the lapse of time or both) with respect to any such
agreement or arrangement.
4.3 Knowledge. With respect to those representations qualified by
"knowledge of Seller," Seller shall be deemed to be aware of all matters of
which an executive officer of any member of the Seller Group is aware.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as disclosed in the Buyer Disclosure Letter (which shall make
specific reference to only that particular representation and warranty as to
which each disclosure included therein relates and, to the extent any
disclosure therein relates to more than one representation or warranty, such
disclosure letter shall include a specific cross-reference to the other
representations or warranties to which such disclosure relates), Buyer
represents and warrants to Seller as set forth below:
5.1 Organization and Qualification. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, operate and lease the properties and assets it now owns,
operates and leases and to conduct its business as it is now being conducted.
True, correct and complete copies of the Certificate of Incorporation (or
similar documents) and By-laws (or similar documents) of the Buyer, each with
all amendments thereto, have been delivered to Seller. The Buyer is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its assets or the nature
of its activities makes such qualification or license necessary, except where
the failure to be so qualified or licensed would not, individually or in the
aggregate, have a Buyer Material Adverse Effect.
5.2 Corporate Authority. Buyer has all requisite corporate power and
authority to enter into, execute and deliver this Agreement and the Related
Agreements, to perform its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Related Agreements by Buyer and any Buyer
designee (as applicable), the performance by Buyer and any Buyer designee (as
applicable) of its obligations under this Agreement and the Related Agreements,
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action on the part
of the Buyer and any Buyer designee (as applicable) (assuming due execution and
delivery by each member of the Seller Group of this Agreement and the Related
Agreements) and this Agreement and the Related Agreements constitute legal,
valid and binding obligations of the Buyer (or any Buyer designee) enforceable
against the Buyer (or such designee) in accordance with their terms (subject,
as to the enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium and similar Laws affecting creditors' rights, and, with
respect to the remedy of specific performance, equitable doctrines applicable
thereto). No approval by the stockholders of Buyer is required with respect to
the execution and delivery by Buyer of this Agreement and the Related
Agreements, and performance by Buyer of its obligations hereunder or thereunder
including the issuance and delivery of the Common Stock, the Convertible Notes
and the Subordinated Notes. Based on Seller's representations and warranties
in Section 4.1(u) hereof, no registration statement is required to be filed by
Buyer pursuant to the Securities Act in connection with the issuance and
delivery to Seller of the Common Stock, the Convertible Notes and the
Subordinated Notes (except as provided in the Securities Rights and
Restrictions Agreement).
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5.3 No Violations. The execution and delivery of this Agreement and
the Related Agreements by Buyer, the performance by Buyer of its obligations
under this Agreement and the Related Agreements and the consummation of the
transactions contemplated hereby or thereby (including the issuance of the
Common Stock, the Convertible Notes and the Subordinated Notes), do not and
will not conflict with, contravene, result in a violation or breach of or
default under (with or without the giving of notice or the lapse of time or
both), create in any other Person a right or claim of termination, amendment,
or require modification, acceleration or cancellation of, or result in the
creation of any Lien (or any obligation to create any Lien) upon any of the
properties or assets of Buyer under (i) any provision of any of the
organizational documents of Buyer, (ii) any Law applicable to Buyer or any of
its properties or assets assuming the consents, approvals, authorizations or
permits and filings or notifications set forth in Sections 5.6 and 5.7 of the
Buyer Disclosure Letter are duly and timely obtained or made, (iii) the
Indenture (as supplemented) and (iv) Buyer's bank and other financing
agreements or any other of its material agreements, other than any of the
foregoing under clause (ii) which would not (A) result in a Liability of
$100,000 in any one case or $500,000 in the aggregate, or (B) individually or
in the aggregate, have a Buyer Material Adverse Effect.
5.4 Capitalization. Section 5.4 of the Buyer Disclosure Letter
contains a true, correct and complete description of the shares of stock or
other equity or ownership interests that are authorized, issued and
outstanding, of Buyer. All of such outstanding shares of stock or other equity
or ownership interests are duly authorized, validly issued, fully-paid and
nonassessable, and are owned beneficially and of record by such Persons to be
set forth in Section 5.4 of the Buyer Disclosure Letter, free and clear of any
Liens. Section 5.4 of the Buyer Disclosure Letter also lists all
subscriptions, options, warrants, conversion or other rights, agreements,
commitments, arrangements or understandings of any kind outstanding obligating
Buyer, contingently or otherwise, to issue or sell, or cause to be issued or
sold, any shares of capital stock.
5.5 Valid Issuance of Buyer Common Stock. Upon issuance and delivery
of Buyer Common Stock to Seller at the Closing pursuant to this Agreement
against payment of the consideration therefore contemplated hereby, the Buyer
Common Stock will be validly issued, fully paid and nonassessable free and
clear of all Liens other than (a) Liens set forth in the Securities Rights and
Restrictions Agreement and (b) any Liens which may be created by Seller. The
delivery of the Buyer Common Stock at the Closing will transfer to Seller good,
absolute and valid title to, and beneficial ownership of, the Buyer Common
Stock, other than Liens described in (a) and (b) of the preceding sentence.
The issuance and sale of the Buyer Common Stock pursuant hereto will not give
rise to any preemptive rights or rights of first refusal and will not violate
any Law.
5.6 Valid Authorization of Notes. The Convertible Notes and
Subordinated Notes have been duly and validly authorized, and, when executed
and authenticated and delivered and acquired by Seller in accordance with the
terms of this Agreement, will be valid and binding obligations of Buyer
enforceable in accordance with their terms, and the shares issued upon
conversion of the Convertible Notes shall be validly issued, fully paid and
nonassessable free and clear of all Liens.
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5.7 SEC Filings; Financial Statements. Buyer has furnished or made
available to Seller true, correct and complete copies of its Annual Report on
Form 10-K for the years ended August 29, 1996 and August 28, 1997, and each
report (including any amendments thereto) filed under the Exchange Act by the
Buyer with the SEC since August 29, 1996 (the "Buyer SEC Documents"). All
Buyer SEC Documents complied as to form with the requirements of the Exchange
Act. None of the Buyer SEC Documents as of the dates they were respectively
filed with the SEC contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading, except to the extent corrected by a subsequently
filed Buyer SEC Document filed prior to the date hereof. Each of the balance
sheets (including any related notes) for the fiscal year or periods ending on
August 29, 1996 and thereafter included in the Buyer SEC Documents fairly
presents the financial condition of the Buyer and its Subsidiaries as of its
date and each of the statements of income and changes in financial position
(including any related notes) for the fiscal year or periods ending on August
29, 1996 or thereafter included in the Buyer SEC Documents fairly presents the
results of operations or changes in cash flows, as the case may be, of the
Buyer and its Subsidiaries for the respective periods set forth therein, in
accordance with, in the case of audited financial statements, GAAP consistently
applied except as otherwise disclosed therein, or, in the case of unaudited
financial statements, GAAP consistently applied, except as otherwise disclosed
therein or as otherwise permitted by the instructions to Form 10-Q of the SEC.
All of the foregoing financial statements are in accordance with the books and
records of the Buyer and its Subsidiaries.
5.8 Litigation. Section 5.8 of the Buyer Disclosure Letter lists all
Claims pending or, to the knowledge of Buyer, threatened with respect to the
transactions contemplated hereby except for such Claims which individually or
in the aggregate have not or could not reasonably be expected to have a Buyer
Material Adverse Effect. Neither Buyer nor its Subsidiaries are in default
under, or in violation of, any judgment, order, writ, injunction or decree of
any Governmental Agency with respect to the transactions contemplated hereby,
except for those defaults or violations which in the aggregate would not have,
or reasonably be expected to have, a Buyer Material Adverse Effect.
5.9 Knowledge. With respect to those representations qualified by
"knowledge of Buyer," Buyer shall be deemed to be aware of all matters of which
an executive officer of Buyer is aware.
ARTICLE VI
ADDITIONAL AGREEMENTS OF THE PARTIES
6.1 The Reorganization. Subject to the terms and conditions of this
Agreement, prior to the Closing Date, Seller will cause the following
transactions (collectively, the "Reorganization"), to be consummated as
follows:
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(a) Seller shall form prior to the Closing a new direct wholly
owned company under the laws of the Republic of Singapore (of a type selected
by Buyer, which is not described in U.S. Treasury Regulation Section 301.7701-
2(b)(8) and for which a "check-the-box" election to be treated as other than a
corporation has not been made (except where such an election has been made in
accordance with instructions from Buyer pursuant to Section 7.6)) ("Singapore
Newco"). Upon the formation of Singapore Newco, Seller shall cause (i)
Singapore Operating Company to assign, transfer, convey and deliver to
Singapore Newco, and Singapore Newco to accept from Singapore Operating
Company, all right, title and interest in all of Singapore Operating Company's
assets constituting Acquired Assets and Singapore Newco will allot and issue to
Seller all of the capital stock of Singapore Newco (other than the initial two
subscriber shares already held by Seller) and (ii) Singapore Newco to assume
only those liabilities of Singapore Operating Company constituting Assumed
Liabilities.
(b) Subject to Section 6.6, prior to the Closing, Seller shall
cause, through a "contribution-in-kind" transaction pursuant to Sections 2254,
2255, 2342 and 2343 of the Italian Civil Code, (i) Italian Operating Company to
assign, transfer, convey and deliver to a newly formed company under the laws
of Italy (which is not described in U.S. Treasury Regulation Section
301.7701-2(b)(8) and for which a "check-the-box" election to be treated as
other than a corporation has not been made (except where such an election has
been made in accordance with instructions from Buyer pursuant to Section 7.6))
("Italian Newco"), and Italian Newco to accept from Italian Operating Company,
all right, title and interest in all of Italian Operating Company's assets
constituting Acquired Assets in exchange for all of the capital stock of
Italian Newco, and (ii) Italian Newco to assume only those liabilities of
Italian Operating Company constituting Assumed Liabilities. Within forty-five
(45) days from the date hereof, Seller shall cause Italian Operating Company
and Italian Newco to execute a contribution-in-kind agreement (including
appropriate schedules of assets to be assigned to, and specific liabilities
(including Contract liabilities) to be assumed by, Italian Newco) with terms
and conditions reasonably satisfactory to Buyer.
(c) Except as set forth in subparagraphs (a) and (b) above,
Singapore Newco and Italian Newco shall not, and Seller shall cause them not
to, incur, directly or indirectly through any other Person, any obligations or
liabilities of any kind whatsoever or enter into any arrangements with any
Person without the prior written consent of Buyer.
(d) Seller will organize a new wholly owned Delaware
corporation or designate one of its existing Subsidiaries ("Seller Note
Purchasing Subsidiary") to serve as the Seller Note Purchasing Subsidiary. The
Seller Note Purchasing Subsidiary will not hold any Acquired Assets. Upon the
formation or designation of Seller Note Purchasing Subsidiary, Seller shall
transfer to Seller Note Purchasing Subsidiary, and Seller shall cause Seller
Note Purchasing Subsidiary to accept from Seller an amount equal to the Cash
Payment.
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6.2 Actions of the Seller Group and Conduct of Business Prior to
Closing Date.
(a) Seller shall, and shall cause the Seller Group to, use
commercially reasonable efforts to perform and satisfy all conditions to
Closing to be performed or satisfied by the Seller Group under this Agreement
as soon as possible, but in no event later than the Closing Date.
(b) Except as expressly provided in this Agreement (including
in connection with the Reorganization) from the date hereof and continuing
through the Closing Date, Seller shall, and shall cause each member of the
Seller Group to, conduct the Business in the ordinary course consistent with
past practice and use commercially reasonable efforts to preserve intact its
business organizations and relationships with third parties with respect to the
Business, to preserve the Acquired Assets intact, to comply with all
governmental and regulatory requirements applicable to the Business or Acquired
Assets and, except as provided in Article VIII hereof, to keep available the
services of the present officers and employees of the Seller Group. Without
the prior written consent of Buyer, between the date hereof and the Closing
Date, Seller shall not, and shall cause the Seller Group not to, make any
material change in the conduct of the Business or the Acquired Assets or enter
into any transaction other than in the ordinary course of business consistent
with past practice, except as permitted or required in accordance with the
terms herein. Prior to the Closing, Seller shall, and shall cause the Seller
Group to, confer with Buyer on a regular basis and, subject to applicable laws
relating to the exchange of information, report on significant operational
matters and material decisions affecting the Business, and, in good faith,
consult with Buyer concerning transitional planning for operation of the
Business after the Closing.
(c) Without limiting the generality of the foregoing, Seller
shall not, and shall cause the Seller Group not to, with respect to the
Business, without the express prior written consent of Buyer, or except as
otherwise contemplated hereby, (i) grant any salary increase to any employee
other than normal merit and cost of living increases or grant any severance or
termination pay to any director, officer or employee, (ii) enter into any new,
or amend or alter any existing, bonus, incentive compensation, profit sharing,
retirement, pension, group insurance, death benefit or other fringe benefit
plan, trust agreement or arrangement adopted by it with respect to its
employees, or any employment or consulting agreement, other than as required by
law, (iii) terminate any existing employee benefit plan, (iv) establish, adopt,
enter into or amend any collective bargaining agreement, (v) change its
accounting and Tax policies or procedures in any material respect, (vi) make
any compensation or benefits payments to any employees of the Seller Group
other than as contemplated by compensation or benefits plans or agreements
existing as of the date of this Agreement, (vii) sell, lease, license or
otherwise dispose of any material assets or property except (A) pursuant to
existing contracts or commitments or (B) in the ordinary course of business
consistent with past practices, (viii) revalue any of the assets included in
the Acquired Assets, including, without limitation, writing off any accounts
receivable other than in the ordinary course of business, (ix) except in the
ordinary course of business, make any Tax election with respect to the Acquired
Assets, settle or compromise any matter relating to Taxes, amend any Tax Return
or make a claim for a Tax refund, (x) fail to maintain in full force and effect
the material regulatory consents and authorizations necessary or required to
conduct the Business, (xi) pay, discharge or satisfy any claim or liabilities
relating to the
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Acquired Assets, other than in the ordinary course of business and consistent
with past practice, (xii) alter, amend or settle any dispute under any Contract
of the Seller Group relating to the Business or Acquired Assets, except in the
ordinary course of business, (xiii) fail to defend or initiate any material
matter, or proceed with any material matter, before any Governmental Agency,
that is necessary and commercially reasonable to protect Acquired Assets, (xiv)
fail to maintain Acquired Assets in customary repair, order and condition in
all material respects, (xv) fail to comply in all material respects with all
legal and regulatory requirements and all contractual obligations applicable to
the Business and Acquired Assets, (xvi) terminate, replace, amend or otherwise
modify any of the Transferred Contracts or waive any of the obligations of the
parties to such agreements or any of the Seller Group's rights under any of
such agreements, or (xvii) agree to commit to do any of the foregoing.
(d) Without the consent of Buyer, Seller shall not, and shall
cause the Seller Group not to, take or omit to take any action with the
intention to cause any of their representations and warranties hereunder to be
inaccurate in any material respect at, or as of any time prior to, the Closing.
6.3 Regulatory Matters.
(a) The parties hereto shall cooperate with each other and use
all commercially reasonable efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all Permits and/or Approvals which are
necessary or advisable to consummate the transactions contemplated by this
Agreement. Each of Seller and Buyer shall have the right to review in advance,
and to the extent practicable each will consult the other on, in each case
subject to applicable Laws relating to the exchange of information, all the
information relating to Seller and Buyer, as the case may be, and any of their
respective Subsidiaries, which appears in any filing made with, or written
materials submitted to, any third party or any Governmental Agency in
connection with the transactions contemplated by this Agreement; provided,
however, that nothing contained herein shall be deemed to provide either party
with a right to review any information provided by the other party to any
Governmental Agency on a confidential basis in connection with the transactions
contemplated hereby. In exercising the foregoing right, each of the parties
hereto shall act reasonably and as promptly as practicable. The parties hereto
agree that they will consult with each other with respect to the obtaining of
all Permits and/or Approvals necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
appraised of the status of matters relating to completion of the transactions
contemplated herein.
(b) Each of Seller and Buyer shall, upon request, furnish the
other with all information concerning itself, its Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with any statement, filing, notice or application
made by or on behalf of Seller, Buyer or any of their respective Subsidiaries
to any Governmental Agency in connection with the transactions contemplated by
this Agreement.
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6.4 Working Capital Requirement.
(a) Within forty-five (45) days following the Closing Date,
Seller shall cause to be prepared and delivered to Buyer an unaudited balance
sheet of the Business as of the Closing Date (the "Preliminary Balance Sheet").
The Preliminary Balance Sheet will be prepared in accordance with GAAP
consistently applied and consistent with GAAP principles used to prepare the
March Balance Sheet. In the event Working Capital at the Closing Date as
reflected on the Preliminary Balance Sheet is less than the Target Amount, then
Seller shall pay to Buyer an amount equal to the aggregate of the shortfall.
In the event Working Capital at the Closing Date as reflected on the
Preliminary Balance Sheet is in excess of the Target Amount, then Buyer shall
pay to Seller an amount equal to the excess. All amounts payable (the "Working
Capital Requirement") under this subsection 6.4(a) shall be paid in cash within
five (5) days after the preparation of the Preliminary Balance Sheet by wire
transfer of immediately available funds to an account designated in writing by
the recipient. For purposes of this Agreement, "Target Amount" means U.S. $150
million; provided, however, that if the Closing has not occurred by September
30, 1998 (the "Target Closing Date"), the U.S. $150 million amount shall be
decreased (the "Working Capital Reduction") by U.S. $5 million at the end of
each fourteen-day period commencing on the Business Day immediately following
the Target Closing Date; provided, further, that, notwithstanding the
immediately preceding proviso, the Working Capital Reduction shall not take
effect in the event the Closing has not occurred by reason of the failure to
comply with any material covenant or agreement in this Agreement by Seller
which has not been cured within ten (10) days following receipt by Seller of
notice of such breach or failure to comply.
(b) Within 120 days following the Closing Date, Buyer shall
cause to be prepared and delivered to Seller an audited balance sheet of the
Business as of the Closing Date (the "Adjusted Balance Sheet"). The Adjusted
Balance Sheet will be prepared in accordance with GAAP consistently applied and
consistent with the GAAP principles used to prepare the March Balance Sheet.
Working Capital as of the Closing Date shall be derived from the Adjusted
Balance Sheet. Following delivery by Buyer to Seller of the Adjusted Balance
Sheet, Buyer shall give to Seller, and any independent auditors retained by
Seller, reasonable access during Buyer's business hours to those books and
records of the Business in the possession of Buyer and any personnel which
relate to the preparation of the Adjusted Balance Sheet and to the workpapers
of Buyer and its independent auditors for purposes of resolving any disputes
concerning the Adjusted Balance Sheet and the calculation of Working Capital.
(c) Seller shall have thirty (30) days following delivery of
the Adjusted Balance Sheet during which to notify Buyer in writing (the "Notice
of Objection") of any good faith objections to the calculation of Working
Capital or the Adjusted Balance Sheet as it affects such calculation, setting
forth a reasonably specific and detailed description of its objections and the
dollar amount of each objection. If Seller objects to the Adjusted Balance
Sheet, or Buyer's calculation of Working Capital as reflected thereon, Buyer
and Seller shall attempt to resolve any such objections within fifteen (15)
days of the receipt by Buyer of the Notice of Objection.
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(d) If Buyer and Seller are unable to resolve any such dispute
within the fifteen (15) day period referred to in Section 6.4(c) above, Buyer
and Seller shall each submit the name of another "big six" independent
accounting firm which does not at the time provide, and has not in the prior
two years provided, services to either Buyer or Seller or any Affiliate of
Buyer or Seller, and the firm shall be selected by lot from these two firms.
Each of the parties to this Agreement shall, and shall cause their respective
Affiliates and representatives to, provide full cooperation to such independent
accounting firm (the "Independent Accounting Firm"). The Independent
Accounting Firm shall (x) act in its capacity as an expert and not as an
arbitrator, (y) review only those matters as to which there is a dispute
between the parties and (z) be instructed to reach its conclusions regarding
any such dispute within thirty (30) days after its appointment and provide a
written explanation of its decision. In the event that Seller and Buyer submit
any dispute to arbitration, each such party may submit a "position paper" to
the Independent Accounting Firm setting forth the position of such party with
respect to such dispute, to be considered by such Independent Accounting Firm
as it deems fit. The determination of the Independent Accounting Firm shall be
final and binding on the parties and shall be deemed a final arbitration award
that is enforceable pursuant to all terms of the Federal Arbitration Act, 9
U.S.C. Sec. 1 et seq. Any expenses relating to the engagement of the
Independent Accounting Firm shall be shared equally by Seller and Buyer.
(e) If Seller does not deliver the Notice of Objection in
accordance with Section 6.4(c) above (i.e., within a thirty day period), the
Adjusted Balance Sheet (together with Buyer's calculation of Working Capital
reflected thereon), shall be deemed to have been accepted by all of the parties
to this Agreement and shall become the "Closing Balance Sheet." In the event
that Seller delivers a Notice of Objection in accordance with the provisions
above and Buyer and Seller are able to resolve such dispute by mutual
agreement, the Adjusted Balance Sheet, together with Buyer's calculation of
Working Capital reflected thereon, to the extent modified by mutual agreement
of such parties, shall be deemed to have been accepted by all of the parties to
this Agreement and shall become the "Closing Balance Sheet." In the event that
Seller delivers a Notice of Objection in accordance with the provisions above
and Buyer and Seller are unable to resolve such dispute by mutual agreement,
the determination of the Independent Accounting Firm shall be final and binding
on the parties and the Adjusted Balance Sheet, together with Buyer's
calculation of Working Capital reflected thereon, to the extent modified by the
Independent Accounting Firm, shall be deemed to have been accepted by all of
the parties to this Agreement and shall become the "Closing Balance Sheet." The
calculations of Working Capital reflected on any such Closing Balance Sheet
shall be conclusive and binding on all of the parties to this Agreement and no
further adjustments shall be made thereto.
(f) In the event that Working Capital as reflected on the
Closing Balance Sheet is less than the Target Amount when added to the Working
Capital Requirement actually paid, then Seller shall pay to Buyer in cash
within five (5) days after determination of the Closing Balance Sheet an amount
equal to the aggregate of the shortfall (the "Shortfall") together with
interest thereon at the rate of 6% from the Closing Date until the date of
payment of the Shortfall, and if not made within five (5) days after
determination of the Closing Balance Sheet, taking into account all Notice of
Objection and dispute resolution periods set forth in this Section 6.4, the
Shortfall shall bear
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interest from the Closing Date until the date of payment of the Shortfall at
the rate of 15% per annum. In the event that Working Capital as reflected on
the Closing Balance Sheet is greater than the Target Amount when added to the
Working Capital Requirement actually paid, then Buyer shall pay to Seller in
cash within five (5) days after determination of the Closing Balance Sheet an
amount equal to the aggregate of the excess (the "Excess") together with
interest thereon at the rate of 6% from the Closing Date until the date of
payment of the Excess, and if not made within five (5) days after determination
of the Closing Balance Sheet, taking into account all Notice of Objection and
dispute resolution periods set forth in this Section 6.4, the Excess shall bear
interest from the Closing Date until the date of payment of the Excess at the
rate of 15% per annum. Any and all amounts payable in accordance with this
Section 6.4(f) shall be made by wire transfer of immediately available funds to
an account designated in writing by either Seller or Buyer, as the case may be.
6.5 Investment Incentives. Seller shall use all commercially
reasonable efforts to assist Buyer in obtaining and maintaining incentives from
the EDB, including without limitation requesting TECH to assist Buyer in
negotiating with the EDB investment incentives for the benefit of Singapore
Newco after giving effect to the Reorganization and the other transactions
contemplated in this Agreement.
6.6 Italian Operations. Seller and Buyer agree to negotiate in good
faith and to use all commercially reasonable efforts to agree, within forty-
five (45) days after the date hereof, (i) on mutually acceptable terms and
conditions to apply to the transfer at the Closing of those Acquired Assets and
Assumed Liabilities associated with Seller's Italian operations to be
transferred by Seller to Buyer pursuant to the terms of this Agreement and (ii)
on an appropriate amendment or supplement to this Agreement adequately
reflecting such terms and conditions, including appropriate amendments to the
conditions precedent to the Closing.
6.7 Transition Services. Seller and Buyer shall negotiate in good
faith the Transition Services Agreement in substantially the form attached
hereto as Exhibit I as may be reasonably modified by the mutual agreement of
the parties, pursuant to which Seller shall provide Buyer, on a transitional
basis following the Closing Date, with all services historically provided to
the Business (hereinafter, the "Transition Services") reasonably necessary to
support the continued operation of the Business (including the operations of
Italian Operating Company and Singapore Operating Company) and pursuant to
which, from the Closing Date until the first anniversary thereof, Buyer will
(i) request that KTI continue to manufacture and supply to Buyer for resale to
Seller SDRAM or DRAM products for military and aerospace applications in
substantially the same aggregate volumes as are currently supplied and, to the
extent such products are so available from KTI to Buyer, Buyer shall use
commercially reasonable efforts to supply such products to Seller in
substantially the same aggregate volumes as are currently supplied; provided,
however, that Buyer shall not be liable for the failure to supply such products
to Seller in the event of KTI's failure to manufacture and supply such products
to Buyer for resale to Seller, and (ii) use commercially reasonable efforts to
continue to provide testing services for such products at the Singapore
assembly/test facility in substantially the same manner as currently provided,
in each case, at prices to be mutually agreed upon.
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6.8 Working Capital. Seller shall, and shall cause the Seller Group
to, use commercially reasonable efforts to manage the Working Capital of the
Business in the ordinary course consistent with past practice.
6.9 Financial Statements. As soon as practicable following the date
hereof and prior to the Closing, Seller shall deliver to Buyer with respect to
the Business on a combined basis (including Seller's JV Interests as an equity
investment) audited balance sheets as of December 31, 1996 and as of December
31, 1997, together with the related audited statements of income and cash flow
for the twelve-month periods ended December 31, 1996 and December 31, 1997, the
unaudited statement of income and cash flow for the three-month period ended
March 31, 1998, and the unaudited balance sheet as of June 30, 1998 and the
related unaudited statement of income and cash flow for the six-month period
then ended. All such financial statements shall be prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby
(except, in the case of the unaudited financial statements, for the absence of
notes thereto) and in the case of the balance sheets, consistent with the GAAP
principles used to prepare the March Balance Sheet. Seller shall make
available to Buyer, and Buyer's auditors, Seller's work papers and backup
materials used in preparation of all such financial statements.
6.10 Seller Disclosure Letter. As soon as practicable and in no event
later than the date thirty (30) days after the date hereof, Seller shall
deliver to Buyer the Seller Disclosure Letter which shall include all of
Seller's disclosure schedules contemplated by this Agreement. The Seller
Disclosure Letter shall make specific reference to only that particular Section
(or, with respect to representations and warranties, that particular
subsection) as to which each disclosure schedule included therein relates and,
to the extent any disclosure schedule included therein relates to more than one
Section (or more than one representation and warranty), then such disclosure
schedule shall include a specific cross-reference to the other Sections (or
other representations and warranties) to which such disclosure schedule
relates. Buyer shall have fifteen (15) days from the date of its receipt of
the Seller Disclosure Letter in which to object to any of Seller's disclosure
included in such Seller Disclosure Letter, which objection shall be made by
sending to Seller a written notice (a "Disclosure Objection").
6.11 Buyer Disclosure Letter. As soon as practicable and in no event
later than the date thirty (30) days after the date hereof, Buyer shall deliver
to Seller the Buyer Disclosure Letter which shall include all of Buyer's
disclosure schedules contemplated by this Agreement. The Buyer Disclosure
Letter shall make specific reference to only that particular Section (or, with
respect to representations and warranties, that particular subsection) as to
which each disclosure schedule included therein relates and, to the extent any
disclosure schedule included therein relates to more than one Section (or more
than one representation or warranty), then such disclosure schedule shall
include a specific cross-reference to the other Sections (or other
representations and warranties) to which such disclosure schedule relates.
Seller shall have fifteen (15) days from the date of its receipt of the Buyer
Disclosure Letter in which to object to any of Buyer's disclosure included in
such Buyer Disclosure Letter, which objection shall be made by sending to
Seller a written Disclosure Objection notice.
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6.12 JV Amendments. Seller and Buyer agree to negotiate in good faith
and to use all commercially reasonable efforts to agree within forty-five (45)
days after the date hereof, on mutually acceptable terms and conditions of the
JV Amendments as well as amendments to all debt, credit or financing Contracts
to which any of the Joint Ventures is a party or to which any Seller or any of
its Affiliates is a party which Contract is for the benefit of the Joint
Venture.
6.13 Acquired Facilities. The following expenses of the Acquired
Facilities, which shall be reflected in a closing statement (the "Closing
Statement") shall be apportioned between Seller and Buyer at the Closing in
accordance with the following:
(a) Seller shall pay the full amount of any real estate Taxes,
bonds, assessments or other governmental levies against the Acquired
Facilities, which are not Permitted Liens, on or before the Closing Date.
(b) Except as expressly provided to the contrary in this
Agreement, rent, insurance premiums, amounts payable under the Transferred
Contracts, operating expenses, utility consumption fees and any other recurring
occupancy charges applicable to the Acquired Facilities under the Transferred
Contracts shall be prorated as of the Closing Date. In this regard, Seller
shall cause all the utility meters to be read on the Closing Date, and will be
responsible for the cost of all utilities used prior to the Closing Date.
(c) Except as herein expressly provided to the contrary,
Seller shall pay for all costs customarily associated with the conveyance of
the Acquired Facilities to Buyer in accordance with this Agreement (including,
without limitation, all Transfer Taxes, recording or registration fees and the
like customarily paid by sellers of real property in the jurisdiction in which
the Acquired Facilities are located); provided, however, that the cost of any
title insurance policy and title opinions shall be paid by Buyer.
(d) Real estate escrow fees and all other customary real
estate conveyancing expenses associated with the conveyance of the Acquired
Facilities shall be paid fifty percent (50%) by Buyer and fifty percent (50%)
by Seller.
(e) If any of the aforesaid prorations cannot be calculated
accurately on the Closing Date, then they shall be estimated at the Closing
Date and adjusted to the actual allocation as soon after the Closing Date as
feasible. Either party owing the other party a sum of money based on such
subsequent adjustment shall promptly pay said sum to the other party, together
with interest thereon at the rate of fifteen percent (15%) per annum from the
Closing Date to the date of payment if payment is not made within ten (10) days
after delivery of a bill therefor.
6.14 Certain Rights. Buyer shall have the option, upon delivery of a
written notice to Seller on or prior to the Closing, to require Seller, to the
extent permitted, to transfer to Buyer, without further consideration from
Buyer to Seller and without costs to Seller or effect on Seller's
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own license not related to the Business, Seller's rights and benefits under the
agreement between Seller and Rambus Inc. and thereupon, such license shall be
deemed an Acquired Asset hereunder.
6.15 Licenses of Intellectual Property.
(a) Seller hereby grants to Buyer (and any successor to Buyer
or to any division or line of business of Buyer (the "Successor")) a worldwide,
perpetual, non-exclusive, fully paid, royalty free license under all
Intellectual Property (other than Patents and Acquired Intellectual Property)
(the "Licensed IP") of any member of the Seller Group owned or licensable by
any such member to operate the Business substantially in the manner such
Business was operated by the Seller Group and to make, have made, use, sell,
offer for sale and import any products. The Licensed IP may not be sublicensed
or transferred by Buyer (or its Successors), except in connection with the
licensing or transfer by Buyer (or its Successors), of substantial other
Intellectual Property and under substantially the same terms and conditions as
such other Intellectual Property of Buyer (or its Successors), is licensed or
transferred; provided, however, that such sublicense or transfer may not grant
to the sublicensee or transferee broader rights than that granted to Buyer
hereunder. In addition, Buyer or its Successors shall not transfer or
sublicense any Trade Secrets constituting Licensed IP except pursuant to a non-
disclosure agreement at least as protective of such Trade Secrets as it is of
Buyer's (or its Successor's), own Trade Secrets.
(b) Subject to, and without in any way limiting the provisions
of the non-compete provision set forth in Section 6.25 hereof, Buyer hereby
grants to Seller a worldwide, perpetual, non-exclusive, fully paid, royalty
free license under the Acquired Intellectual Property, to, make, have made,
use, sell, offer for sale and import any products. The Acquired Intellectual
Property licensed to Seller in accordance with the foregoing may not be
sublicensed or transferred by Seller except in connection with the licensing or
transfer by Seller of substantial other Intellectual Property of Seller and
under substantially the same terms and condition as such other Intellectual
Property of Seller is licensed or transferred; provided, however, that such
sublicense or transfer may not grant to the sublicensee or transferee broader
rights than granted to Seller hereunder. In addition, Seller shall not
transfer or sublicense any Trade Secrets constituting Transferred Intellectual
Property except pursuant to a non-disclosure agreement at least as protective
of such Trade Secrets as it is of Seller's own Trade Secrets and otherwise in
accordance with Section 6.31 hereof.
6.16 Certain Software.
(a) Without limiting Section 6.15, in order to effect the
transactions contemplated by this Agreement and to permit Buyer to operate the
Business substantially in the manner such Business was operated by the Seller,
Seller agrees to and hereby grants to Buyer a worldwide, perpetual,
nonexclusive, fully paid up royalty free license to use, distribute, copy and
make and own derivative works from the source code and documentation for all
software owned or licensable by any member of the Seller Group, and not part of
the Acquired Assets, and currently being used in the Business. Seller shall
use commercially reasonable efforts to cause Gore to grant to Buyer a license
to the source code and documentation for the "Gore Software," including without
limitations
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the "Works" and "WorkCell" programs and all tools and documentation relating
thereto (the "Gore Software"), the license for which shall be paid by Buyer,
with terms satisfactory to Buyer. To the extent Seller is permitted to do so
without cost to Seller, Seller shall, at no charge by Seller to Buyer, for a
period of two years provide Buyer with all upgrades, enhancements and fixes to
the Gore Software made by or for Seller to the extent related to the Business.
(b) To permit Seller to continue its own operations
substantially in the manner they were performed prior to the Closing Date,
Buyer agrees to and hereby grants to Seller a worldwide, perpetual,
nonexclusive, royalty free license to use, distribute, copy and make derivative
works from the source code and documentation for all software transferred as
Acquired Assets as described in Exhibit A and currently used in Seller
operations, and to the extent the right to grant such license was acquired by
Buyer from Seller.
(c) All costs, if any, payable by Seller to third parties with
respect to third party software licenses to be transferred or subject to
sublicense for the benefit of Buyer pursuant to this Agreement or any Related
Agreement shall be paid by Buyer; provided, however, that Buyer may elect to
forego such transfer or sublicense, in which event Buyer shall not be obligated
to pay such costs with respect thereto.
6.17 Access to Information.
(a) Upon reasonable notice and subject to applicable laws
relating to the exchange of information, Seller shall, and shall cause the
Seller Group to, afford to the officers, employees, accountants, counsel,
consultants and other representatives of Buyer, reasonable access, during
normal business hours during the period prior to the Closing Date, to all
Acquired Assets, including Acquired Facilities, books, contracts, commitments,
records, officers, employees, accountants, counsel and other representatives of
any member of the Seller Group and, during such period, it shall make available
to Buyer all information concerning the Business, the Joint Ventures, the
Acquired Assets, or Proceedings, or Claims or Losses relating thereto, as Buyer
may reasonably request ("Access Rights"). With respect to the Joint Ventures,
Seller shall request that the Joint Ventures provide Access Rights to Buyer;
provided, however, that Seller shall not be liable for the failure of any of
the Joint Ventures to afford Buyer such Access Rights. Such Access Rights
shall include, without limitation, the performance by Buyer, at Buyer's
expense, of any inspections, testings, investigations, and groundwater and soil
sampling or other review of the physical condition of the Acquired Facilities
as may be deemed necessary by Buyer. During the period of such access, Buyer
and its consultants or other representatives shall not unreasonably interfere
with the ongoing operation of the Business. Upon request of Buyer, Seller
shall also use commercially reasonable efforts to request that the Joint
Ventures grant Access Rights to Buyer.
(b) Buyer shall take reasonable steps to avoid and minimize
any disruption of the Acquired Facilities through the exercise of its Access
Rights. Buyer shall indemnify and hold Seller harmless from and against any
and all loss, cost, claim or expense arising out of the exercise of its Access
Rights at the Acquired Facilities. In the event Buyer performs an
environmental or
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endangered species site assessment as part of the inspection of the Acquired
Facilities, Seller shall be afforded at least two (2) Business Days' prior
notice of, and the right to be present and/or collect split samples during any
activity on the Acquired Facilities in connection with such assessment.
Promptly after Buyer's receipt thereof, Buyer agrees to furnish Seller with a
copy of any analytical results and shall permit Seller to comment upon the
consultant's report prior to finalization and shall provide Seller with any
final report.
(c) No investigation by Buyer or its representatives shall
affect the representations, warranties, covenants or agreements of Seller set
forth in this Agreement.
6.18 Tax Parameters; Price Allocation. The valuation and allocation
of the purchase price and other consideration exchanged in connection with the
transactions described herein shall be as mutually agreed by Buyer and Seller
in accordance with the applicable provisions of Section 1060 of the Code in
accordance with the provisions in Exhibit H (such valuation and allocation
being referred to herein as the "Price Allocation"). The Price Allocation
shall also apply for purposes of the asset transfers to Singapore Newco and
Italian Newco. Exhibit H also sets forth certain parameters with respect to
the transactions contemplated hereby (the "Tax Parameters"). Buyer and Seller
agree to negotiate in good faith in order to determine the Price Allocation as
soon as practicable. If Buyer and Seller are unable to agree on the Price
Allocation, the dispute shall be resolved in accordance with the procedures set
forth in Section 6.4(d) hereof and the provisions of this Section 6.18. Each
party (and their respective Affiliates) hereto shall at its own expense adopt
and abide by such Price Allocation and Tax Parameters for purposes of all Tax
Returns filed by them and shall not take any position inconsistent therewith in
connection with any examination of any Tax Return, any refund claim, or any
judicial litigation proceeding but only if doing otherwise in such judicial
litigation proceeding would materially prejudice the other party, or otherwise
until there has been a final "determination" (within the meaning of Code
Section 1313(a)) or any other event which finally and conclusively establishes
the amount of any liability for Taxes. In the event that the Price Allocation
is disputed by any Taxing authority, the party receiving notice of the dispute
shall promptly notify the other parties hereto of such dispute and the parties
hereto shall consult with each other concerning resolution of the dispute.
6.19 Notices of Certain Events. Seller shall promptly notify Buyer of
(i) any notice or other communication from any Person alleging that the consent
of such Person is or may be required in connection with the transactions
contemplated by this Agreement, (ii) any notice or other communication from any
Governmental Agency in connection with the transactions contemplated by this
Agreement, and (iii) any Claims commenced or, to the knowledge of Seller,
threatened against, relating to or involving or otherwise affecting the
Business or the Acquired Assets that, if pending on the date of this Agreement,
would have been required to have been disclosed pursuant to Section 4.1(l) or
that relate to the consummation of the transactions contemplated by this
Agreement.
6.20 Bulk Sales Waiver. Buyer and Seller hereby waive compliance with
any applicable bulk sale laws in connection with the transactions contemplated
by this Agreement; provided,
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however, that Seller shall indemnify and hold Buyer and its Affiliates harmless
from and against any Losses arising out of noncompliance with any such laws.
6.21 Expenses. Each party hereto agrees to bear its own expenses,
including any applicable broker's or finder's fee, in connection with the
negotiation and preparation of this Agreement and the Related Agreements and
its performance hereunder and thereunder, except as otherwise expressly
provided herein, or in any of the Related Agreements.
6.22 Transfer Taxes; Transfer and Recording Fees.
(a) Seller shall be solely responsible for and shall pay (or
cause to be paid) on or before the due date any and all Transfer Taxes. Buyer
shall cooperate with Seller in connection with any Tax Returns related to
Seller's payment of such Taxes, and in executing customary documents in order
to attempt to establish exemptions from Texas sales Tax and other transaction
Taxes.
(b) Payment of all costs, expenses and fees arising or
incurred in connection with any claim for or contest of Transfer Taxes shall be
borne by Seller. Upon receipt by Buyer of a refund of all or part of any claim
for which a party has made payment under this Section 6.22 and with respect to
which Buyer has received a payment from Seller, or Seller has received from
Buyer, Buyer shall pay to Seller, or Seller shall pay to Buyer, the amount of
the refund.
(c) Buyer shall be entitled to pay, or cause to be paid, any
Transfer Tax and seek reimbursement from Seller, plus interest, to the extent a
failure to pay would result in a Lien on the Acquired Assets or otherwise
adversely affect the Business.
6.23 Shutdown Costs. In connection with Seller's suspension of
operations at the Twinstar Facility subsequent to the date hereof and prior to
the Closing, Seller shall use all commercially reasonable efforts to terminate
such operations in a "recoverable to current operating condition," and will
consult with Buyer to achieve that goal and to limit the Shutdown Costs
associated therewith to those that are reasonably necessary. In performing
such activities, Seller shall comply with all applicable Environmental
Requirements, Contracts, Laws, Permits and/or Approvals applicable to such
activities. Subsequent to such suspension of operations and prior to the
Closing, Seller shall use all commercially reasonable efforts to preserve the
value of the Twinstar Facilities. Buyer shall reimburse Seller at the Closing
for 50% of the Shutdown Costs actually incurred by Seller; provided, however,
that Seller delivers to Buyer at least two (2) Business Days prior to Closing a
statement in reasonable detail summarizing the nature and amount of such
Shutdown Costs. Notwithstanding anything to the contrary contained herein,
Buyer shall not be obligated to reimburse Seller for any Shutdown Costs unless
the Closing has occurred.
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6.24 Securities Act Compliance; Restrictions on Sale. Seller
understands and acknowledges that the Securities issuable at the Closing, shall
be issued pursuant to an exemption under the Securities Act from the
registration requirements of Section 5 of the Securities Act, and at the time
of such issuance will not have been registered under the Securities Act or
other applicable state securities laws. The availability of such exemption is
conditioned, in part, upon the representation of Seller, that the Securities
will not be sold or otherwise distributed except as expressly provided herein.
6.25 Covenant Not to Compete.
(a) Seller covenants and agrees that for a period of three (3)
years following the Closing Date, neither Seller nor any Affiliates of Seller
(excluding any employee or pension fund or other similar Person acting in a
fiduciary capacity) shall, directly or indirectly, as principal, partner,
agent, employee, consultant, stockholder, or otherwise, anywhere in the world
(the "Territory"), engage, directly or indirectly, in the manufacture or sale
of Memory Products. Seller also covenants and agrees that for a period of five
(5) years following the Closing Date, neither Seller nor any Affiliate of
Seller (excluding any employee or pension fund or other similar Person acting
in a fiduciary capacity) shall, directly or indirectly, as a principal,
partner, agent, employee, consultant, stockholder, or otherwise, anywhere in
the Territory, engage, directly or indirectly, in the manufacture or sales of
Memory Products through a foundry or exercise any "have made" rights granted in
the Cross-License Agreement for the manufacture or sale of Memory Products;
provided, however, that Seller may fulfill its contractual obligations
effective as of the date hereof in accordance with the terms of the Transition
Agreement, as amended to the date hereof.
(b) Buyer and Seller acknowledge and agree that compliance
with the covenant contained in this Section 6.25 is necessary to protect Buyer
and its Subsidiaries and that a breach of such covenant would result in
irreparable and continuing damage for which there would be no adequate remedy
at law. Seller agrees that in the event of any breach of said covenant, Buyer
shall be entitled to injunctive relief and to such other and further relief as
is proper under the circumstances. Seller agrees that this restriction on
competition shall be deemed to be a series of separate covenants not-to-compete
for each year within the three-year and five-year periods of non-competition
and separate covenants not-to-compete for each state within the United States
and each country in the world. If any court of competent jurisdiction shall
determine the foregoing covenant to be unenforceable with respect to the term
thereof or the scope of the subject matter or geography covered thereby, then
such covenant shall nonetheless be enforceable by such court against such other
party or upon such shorter term or within such lesser scope as may be
determined by the court to be reasonable and enforceable.
(c) In the event that Seller shall be in violation of the
aforementioned restrictive covenants, then the time limitation thereof shall be
extended for a period of time during which such breach or breaches shall occur.
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(d) Seller covenants on behalf of itself and each member of
the Seller Group not to use, or to sell, assign or otherwise extend the
benefits to any Person from any Non-Assignable Contract in a manner which is
competitive with the Business as owned and operated by Buyer.
Notwithstanding the foregoing: (i) Seller or its Affiliates may acquire
a controlling interest in, or a majority of the assets of, any Person having
not more than 5% of its sales (based on its latest annual audited financial
statements) attributable to the manufacture or sale of Memory Products;
provided, however, that Seller shall, and shall cause its Affiliates, to use
commercially reasonable efforts to promptly divest itself of or shutdown that
portion of the operations of such Person engaged in the manufacture or sale of
Memory Products; (ii) Seller or its Affiliates may acquire up to 2% of the
outstanding capital stock or other ownership interest in any Person engaged
principally in the manufacture or sale of Memory Products having a class of
equity securities listed on any national or international securities exchange;
and (iii) Seller or its Affiliates may engage in the assembly, packaging and/or
sale of Memory Products for sale to customers solely for use in military and
aerospace applications.
6.26 Collection of Accounts. Seller agrees that, after the Closing,
it will promptly transfer to or deliver to Buyer any cash or other property
received directly or indirectly by Seller in respect of any accounts receivable
of the Business, constituting Acquired Assets, including any amounts receivable
as interest.
6.27 Public Disclosure. No party hereto shall issue any public
statement or communication regarding this Agreement, the subject matter of this
Agreement or the transactions contemplated hereby, except for such disclosures
as are required to comply with applicable law or the rules of any national
securities exchange, without the prior written approval of the other parties.
If any such disclosure is required by law or the rules of any national
securities exchange, the disclosing party agrees to give the nondisclosing
party prior notice and an opportunity to comment on the proposed disclosure.
6.28 Assistance with Audit. Following the Closing, each party will
provide the other party and their independent public accountants access to (and
use commercially reasonable efforts to cause their independent public
accountants to provide the other party and their independent public accountants
access to) such books, records, workpapers and data as may be reasonably
requested by such other party to allow such other party and their independent
public accountants to conduct an audit or review of the Business for such
periods as such other party may require for their preparation of the
Preliminary Balance Sheet, the Adjusted Balance Sheet and the Closing Balance
Sheet, as applicable, as well as for their financial reporting purposes,
including that required in connection with any registration statement or report
to be filed by Buyer with the SEC or other Governmental Agency. The parties
mutually agree to reasonably assist each other and their independent
accountants in conducting any such audit or review. The parties mutually agree
to use their commercially reasonable efforts to cause their independent public
accountants to provide each other with any such consents of their independent
public accountants necessary for such party to satisfy such requirements with
the SEC under applicable accounting rules. On and after the Closing Date,
Buyer
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will afford to Seller and its agents reasonable access to the books of account,
financial and other reports, information, employees and auditors to the extent
the same primarily relate to periods prior to the Closing and which are
necessary for Seller in connection with any tax audit, investigation, inquiry
by a Governmental Agency (including with respect to government subsidies),
dispute, litigation or other similar matter relating to the Acquired Assets or
the Assumed Liabilities. On and after the Closing Date, Seller will afford to
Buyer and its agents reasonable access to the books of account, financial and
other reports, information, employees and auditors to the extent the same
primarily relate to periods prior to the Closing and which are necessary for
Buyer in connection with any tax audit, investigation, inquiry by a
Governmental Agency (including with respect to government subsidies), dispute,
litigation or other similar matter relating to the Acquired Assets or the
Assumed Liabilities.
6.29 Use of Proceeds. Buyer shall use the U.S. $750 million received
from Seller at the Closing for general corporate purposes, including working
capital and capital expenditures (but excluding financing the purchase price of
any acquisitions or use in the business of Micron Electronics, Inc.).
6.30 Maintenance of Trade Secrets. Seller shall neither use nor
disclose to any Person, and shall otherwise maintain the confidentiality of,
all materials, information and things embodying or constituting Trade Secrets
that are Acquired Intellectual Property and Seller shall neither take, nor fail
to take, any action that would adversely affect Buyer's rights in, or the value
of, any of the Trade Secrets constituting Acquired Intellectual Property.
6.31 Assignment of Contracts.
(a) For purposes of this Agreement, including Sections 2.1 and
2.2 hereof, "Transferred Contracts" shall mean each Contract to which Seller,
any of its Subsidiaries or any of their Affiliates is a party primarily related
to or primarily used in the Business (i) that was entered into in the ordinary
course of business consistent with past practices and not of a type required to
be listed in the Seller Disclosure Letter pursuant to Section 4.1 or 4.2
hereof, or (ii) listed on Schedule 6.31 to this Agreement to be prepared by
Buyer and delivered to Seller in accordance with this Section 6.31(a) (the
"Transferred Contract Schedule"). The Transferred Contract Schedule shall be
prepared by Buyer and delivered to Seller on or prior to the 45th day after the
date of this Agreement and upon delivery of the final version of such schedule,
such schedule shall become a part of this Agreement as if attached hereto as of
the date hereof. In the event that the Transferred Contract Schedule includes
less than substantially all of the Contracts listed in the Seller Disclosure
Letter, other than Excluded Contracts, Seller may terminate this Agreement in
accordance with Section 11.1(g) hereof any time during the five day period
immediately following receipt of the final Transferred Contract Schedule.
(b) Notwithstanding anything to the contrary in this Agreement
or any Related Agreement, this Agreement shall not constitute an agreement to
assign any Contract which is to be an Acquired Asset or any benefit arising
thereunder or resulting therefrom, if an attempted
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assignment thereof, without the consent of a party thereto other than any
member of the Seller Group, would constitute a breach or other contravention
thereof or in any way adversely affect the rights of Buyer, or its designees,
thereunder (a "Non-Assignable Contract"). Seller shall, and shall cause each
member of the Seller Group to, use prior to the Closing all commercially
reasonable efforts to obtain the consent of the other Persons for the
assignment thereof to Buyer or its designees. If such consent is not obtained
prior to the Closing, or if an attempted assignment thereof would be
ineffective or would adversely affect the rights thereunder so that Buyer would
not receive substantially all such rights, (x) Seller shall, and shall cause
each member of the Seller Group to, continue to use all commercially reasonable
efforts to obtain the consent of the other Persons for the assignment thereof
to Buyer or its designees, and (y) Seller and Buyer shall cooperate in a
mutually agreeable arrangement under which Buyer would obtain the benefits and
assume the obligations thereunder in accordance with this Agreement, including
subcontracting, sub-licensing or sub-leasing to Buyer, or under which Seller
would enforce for the benefit of Buyer, with Buyer assuming Seller's
obligations, any and all rights of Seller against a third party thereto.
Seller shall promptly pay to Buyer when received all monies received by Seller
in respect of such Non-Assignable Contracts or any benefit arising thereunder,
except to the extent the same represents an Excluded Asset. To the extent the
benefits therefrom and obligations thereunder have been provided by alternative
arrangements as provided above, any such Non-Assignable Contract shall be
deemed an Acquired Asset, provided that Buyer shall not be responsible for any
Liabilities (i) arising out of a claim of breach of such Non-Assignable
Contract due to the establishment of the alternative arrangements, or (ii)
arising out of such Non-Assignable Contract as a result of Seller's action
without Buyer's approval in a manner inconsistent with the alternative
arrangements.
(c) In furtherance, and not in limitation of the foregoing
subsection (a), in the event that Seller is unable to obtain any required
consent to the transfer at Closing to the Buyer of any Non-Assignable Contract
and Seller and Buyer have failed to agree on alternate arrangements to an
assignment reasonably satisfactory to Buyer, then (i) Seller shall remain a
party to and shall continue to be bound by such Non-Assignable Contract, (ii)
Buyer shall pay, perform and discharge fully all of the obligations of Seller
thereunder from and after the Closing Date, upon the terms and subject to the
conditions of such Non-Assignable Contract, (iii) Seller shall, without further
consideration therefor, pay, assign and remit to Buyer promptly all monies,
rights and other consideration received in respect of such Non- Assignable
Contract on and after the Closing Date, and (iv) Seller shall, without further
consideration therefor, exercise and exploit its rights and options under such
Non-Assignable Contract in the manner and only to the extent directed by Buyer.
If and when any consent shall be obtained following the Closing Date with
respect to the transfer by Seller to Buyer of any such Non- Assignable Contract
or such Non-Assignable Contract shall otherwise become assignable following the
Closing Date, Seller shall promptly assign all of its rights and obligations
thereunder to Buyer, without further consideration therefor, and Buyer shall,
without further consideration therefor, assume such rights and obligations, to
the fullest extent permitted. The existence of the provisions of this Section
6.31 shall not reduce or otherwise adversely affect any party's ability to
enforce any of its rights under this Agreement.
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ARTICLE VII
TAX MATTERS
7.1 Tax Representations. Seller represents and warrants to the Buyer
as set forth below:
(a) Italian Newco, Singapore Newco, the Joint Ventures, each
member of the Operating Group and Seller (to the extent it relates to the
Business or the Acquired Assets) has (i) timely filed within the time period
for filing or any extension granted with respect thereto all applicable United
States, Italian, Singaporean, and other foreign, national, federal, state,
subnational, provincial, municipal, county and local and other Tax Returns
which are required to be filed prior to the Closing Date relating to or
pertaining to any and all Taxes attributable to, levied or imposed upon, or
incurred in connection with the Acquired Assets or the Business and all such
Tax Returns are true, complete, and correct in all material respects and (ii)
paid all of the Taxes due and payable prior to the Closing.
(b) With respect to the Acquired Assets or the Business but
excluding the effect of any check-the-box election requested by Buyer pursuant
to Section 7.6, (i) there are not pending or threatened any audits,
examinations, assessments, asserted deficiencies or written claims for Taxes,
(ii) there are (and immediately after the Closing there will be) no Liens,
other than Permitted Liens, (iii) there is no reasonable basis for the
assertion of any claims relating or attributable to Seller's Taxes which would,
if adversely determined, result in a Lien on the Acquired Assets or otherwise
adversely affect the Business, (iv) none of the Acquired Assets include
entities that are, were, or will be (on or prior to the Closing Date) included
in a consolidated, combined or unitary Tax Return, and (v) none of the Acquired
Assets is required to be treated as being owned in whole or in part by another
Person for Tax or other purposes.
(c) No affirmative agreement, consent, or election for
federal, foreign, state, local, or subnational Tax purposes, or "Pioneer
Status" purposes which would adversely affect or be binding on Buyer, Singapore
Newco, Italian Newco, the Joint Ventures, or any owner or operator of the
Acquired Assets or the Business after the Closing has been filed or entered
into.
(d) With respect to each of Singapore Newco, Italian Newco and
the Joint Ventures: (i) it is not a foreign sales corporation within the
meaning of Code Section 922, (ii) it is not a domestic international sales
corporation within the meaning of Code Section 992, (iii) it has not
participated in a boycott under Code Section 999 and (iv) during Seller's
holding period of the stock of such corporation, neither (x) 75% or more of the
gross income of such corporation is passive income (within the meaning of Code
Section 1296(b)), nor (y) the average percentage of assets (by value) held by
such corporation which produced passive income or which are held for the
production of passive income is at least 50%.
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(e) No Tax deficiencies, assessments or audit adjustments have
been proposed, assessed or asserted against Italian Newco, Singapore Newco, or
any member of the Seller Group (other than Seller with respect to Taxes not
related to the Business or the Acquired Assets).
(f) Neither Italian Newco, Singapore Newco nor any member of
the Seller Group (other than Seller with respect to Taxes not related to the
Business or the Acquired Assets) is delinquent in the payment of Taxes.
(g) There are no Liens for Taxes upon any of the Acquired
Assets (other than for Taxes not yet due).
(h) Except as set forth in Section 7.1(h) of Seller's
Disclosure Letter, Italian Newco, Singapore Newco, the Joint Ventures, each
member of the Operating Group and Seller (other than Seller with respect to
Taxes not related to the Business or the Acquired Assets) have not requested
any extension of time within which to file any Tax Returns in respect of any
taxable period which have not since been filed and no request for waivers of
the time to assess any Taxes are pending or outstanding.
(i) Each member of the Seller Group has complied (and until
the Closing, will comply) in all respects with all applicable laws, rules and
regulations relating to the payment and withholding of Taxes (including,
without limitation, withholding of Taxes pursuant to Sections 1441 and 1442 of
the Code or similar provisions under any foreign Laws) and have, within the
time and in the manner prescribed by Law, withheld from employee wages and paid
over to the proper governmental authorities all employment, FICA, FUTA and
other Taxes and similar amounts required to be so withheld and paid over under
all applicable laws.
(j) There are no Tax sharing, Tax indemnity or similar
agreements with respect to the Business or to which Italian Newco or Singapore
Newco are a party.
(k) Except with respect to the shares of Italian Newco,
Singapore Newco, TECH and KTI, none of the Acquired Assets consists of equity
interest in an entity.
(l) No check-the-box election has been made with respect to
any entity included in the Acquired Assets except as requested by Buyer
pursuant to Section 7.6.
(m) Except as set forth in Section 7.1(m) of the Seller
Disclosure Letter, no power of attorney for Taxes has been granted with respect
to the Business or the Acquired Assets.
(n) Seller Note Purchasing Subsidiary is not described in U.S.
Treasury Regulation Section 1.1273-2(e).
(o) Except as set forth in Section 7.1(o) of the Seller
Disclosure Letter, none of the Acquired Assets other than the stock of
Singapore Newco and Italian Newco (and the Acquired
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Assets transferred to such entities pursuant to the Reorganization) are located
outside of the United States and none of the Acquired Assets are owned by a
Person other than Seller. Section 7.1(o) of the Seller Disclosure Letter sets
forth a full and complete description of each Acquired Asset located outside of
the United States and/or owned by a Person other than Seller and identifies the
owner and location of each such Acquired Asset. Seller shall cooperate with
Buyer in structuring and implementing the tax-efficient acquisition of any
Acquired Assets located outside of the United States and/or owned by a Person
other than Seller, Italian Newco, or Singapore Newco.
7.2 Indemnity.
(a) Seller shall indemnify, defend and hold harmless, the
Indemnified Buyer Group from and against and in respect of and shall be
responsible for and shall pay or cause to be paid when due (i) any and all
Taxes whensoever arising with respect to or relating to the Acquired Assets or
the Business that are attributable to any taxable period ending on or prior to
the Closing Date and, in the case of a taxable period that includes, but does
not end on the Closing Date, the portion of such taxable period that ends on
the Closing Date, (ii) any and all Taxes of Seller, the Operating Group or
Subsidiaries or Affiliates thereof (other than Italian Newco and Singapore
Newco), whensoever arising, regardless of the period to which such Taxes
relate, (iii) all Taxes arising out of Treasury Regulation Section 1.1502-6 or
any comparable provision of foreign, state, local or subnational Law, (iv) any
and all Taxes arising out of or constituting a breach of any representation,
warranty, or covenant contained in this Article VII or in Section 3.4, 6.1,
6.18, 6.22 or 10.6, or (v) any clawback, disallowance, withdrawal, penalty or
similar reduction or recapture of any Tax incentive or other Governmental
benefit which was authorized, provided or awarded by any Governmental Agency
prior to the Closing. (The foregoing items (i) through (v) shall collectively
be referred to herein as "Seller's Taxes"). Seller's Taxes shall include, with
respect to any taxable period commencing before the Closing Date and ending
after the Closing Date (a "Straddle Period"), all Taxes relating to the
Acquired Assets or the Business attributable to the portion of the Straddle
Period prior to and including the Closing Date (the "Pre-Closing Period"). For
any Texas ad valorem taxes the Straddle Period shall be the calendar year which
includes the Closing Date. For purposes of such Straddle Periods, the portion
of any Tax that is attributable to the Pre-Closing Period shall be (i) in the
case of a Tax that is not based on net income, gross income, sales, premiums or
gross receipts, the total amount of such Tax for the period in question
multiplied by a fraction, the numerator of which is the number of days in the
Pre-Closing Period, and the denominator of which is the total number of days in
such Straddle Period, and (ii) in the case of a Tax that is based on any of net
income, gross income, sales, premiums or gross receipts, the Tax that would be
due with respect to the Pre-Closing Period if such Pre-Closing Period were a
separate taxable period, except that exemptions, allowances, deductions or
credits, exclusive of the amount by which they are increased as a result of the
transactions contemplated hereby, and which are calculated on an annual basis
(such as the deduction for depreciation or capital allowances) shall be
apportioned on a per diem basis. Nothing herein shall be construed to exclude
Transfer Taxes from the meaning of Seller's Taxes. Notwithstanding anything in
this Agreement to the contrary, Seller's Taxes and Transfer Taxes shall
constitute an Excluded Liability.
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(b) Buyer shall indemnify and hold harmless Seller and its
affiliates and shall be responsible for and shall timely pay or cause to be
paid any and all Taxes (other than Seller's Taxes, Transfer Taxes, Excluded
Liabilities, or any other Liability Seller is responsible for or with respect
to which Seller has agreed to indemnify Buyer Operating Group in accordance
with this Agreement) with respect to the Acquired Assets or the Business, that
are attributable to any taxable period commencing after the Closing Date and,
in the case of a taxable period that includes, but does not end on, the Closing
Date, the portion of such taxable period that begins on the day after the
Closing Date ("Buyer's Taxes"). Notwithstanding anything in this Agreement to
the contrary, Buyer's Taxes shall constitute an Assumed Liability.
(c) If Buyer or any Affiliate files any Tax Return which
includes payment of Seller's Taxes, Seller shall promptly reimburse Buyer for
such Seller's Taxes when such Tax Return is filed. If Seller files any Tax
Return which includes payments of Buyer's Taxes, Buyer shall promptly reimburse
Seller for such Buyer's Taxes when such Tax Return is filed. Seller shall
timely provide to Buyer all information and documents within the possession of
Seller (or their auditors, advisors or Affiliates) and signatures and consents
necessary for Buyer to properly prepare and file the Tax Returns described in
the second preceding sentence or in connection with the determination of any
Tax liability or any audit, examination or proceeding. Buyer shall timely
provide to Seller all information and documents within its possession or the
possession of its auditors, advisors or affiliates and signatures and consents
necessary for Seller properly to prepare and file the Tax Returns described in
the second preceding sentence or in connection with the determination of any
Tax liability or any audit, examination or proceeding. Each party hereto shall
reasonably cooperate with the other (at their own expense) party to obtain
other information or documents necessary or appropriate to prepare and file Tax
Returns or elections or necessary or appropriate in connection with the
determination of any Tax liability or any audit, examination or proceeding.
7.3 Tax Returns.
(a) Seller shall prepare and file (or cause to be prepared and
filed) on a timely basis all Tax Returns with respect to the Business and
Acquired Assets ("Acquired Assets Tax Returns") for all taxable periods ending
on or before the Closing Date and shall pay directly when due or promptly
reimburse Buyer as provided hereunder, and shall indemnify and hold Buyer
harmless against any and all Seller's Taxes. Such Tax Returns shall be
prepared in a manner consistent with past practice and the provisions of
Section 6.18 hereof. In the event of a conflict, the provision of Section 6.18
shall control.
(b) Buyer shall prepare and file (or cause to be prepared and
filed) on a timely basis all Acquired Assets Tax Returns for periods ending
after the Closing Date and shall pay when due, and shall indemnify and hold
Seller harmless against any and all Buyer's Taxes.
7.4 Refunds and Credits. All refunds or credits of Seller's Taxes
(other than refunds or credits of Taxes shown on the Closing Balance Sheet)
shall be for the account of Seller. All refunds or credits of Buyer's Taxes
and Taxes shown on the Closing Balance Sheet shall be for the account
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of Buyer. Following the Closing, Buyer shall cause any such refunds or credits
due Seller pursuant to this section to be promptly forwarded to Seller after
receipt or realization thereof by Buyer, and Seller shall promptly forward (or
cause to be forwarded) to Buyer any refunds or credits due to Buyer pursuant to
this section after receipt or realization thereof by Seller.
7.5 Termination of Tax Sharing Agreements. Seller hereby agrees and
covenants that there are and will be no obligations relating to the Acquired
Assets pursuant to any Tax sharing agreement or any similar arrangement in
effect at any time before or on the Closing Date, and any further obligations
that might otherwise have existed thereunder shall be extinguished as of the
Closing Date.
7.6 Tax Elections. Seller shall make and/or cooperate (at its own
expense) in making such "check-the-box" and any corresponding state or local
Tax election as Buyer shall request. Without in any way limiting the
foregoing, Buyer hereby agrees to make and Seller shall cooperate in the making
of an election under Code Section 338(a) and (g) for Italian Newco and
Singapore Newco.
7.7 Conduct of Audits and Other Procedural Matters.
(a) Each party shall, at its own expense, control any audit or
examination by any Taxing authority, and have the right to initiate any claim
for refund or amended return, and contest, resolve and defend against any
assessment, notice of deficiency or other adjustment or proposed adjustment of
Taxes ("Tax Proceedings") for any taxable period for which that party is
obligated to file Acquired Assets Tax Returns.
(b) Each party shall promptly forward to the other in
accordance with Section 12.9 all written notifications and other written
communications from any Taxing authority received by such party or its
affiliates relating to any liability for Taxes for any taxable period for which
such other party or any of its affiliates is charged with payment or
indemnification responsibility under this Agreement and each indemnifying party
shall promptly notify, and consult with, each indemnified party as to any
action it proposes to take with respect to any liability for Taxes for which it
is required to indemnify another party or which may affect the Taxes of another
party and shall not enter into any closing agreement or final settlement with
any Taxing authority with respect to any such liability without the written
consent of the indemnified or affected parties, which consent shall not be
unreasonably withheld.
(c) In the case of any Proceedings relating to any Straddle
Period, Buyer shall control such Tax Proceedings and shall consult in good
faith with Seller as to the conduct of such Tax Proceedings. Seller shall
reimburse Buyer for such portion of the costs, including legal costs, of
conducting such Tax Proceedings as is represented by the portion of the Tax
with respect to such Straddle Period for which Seller is liable pursuant to
this Agreement; provided, however, that Seller may instead elect to pay or
cause to be paid to Buyer the allocable amount of the applicable Taxes that
constitute Seller's Taxes (which amount shall not be less than the portion
allocable to Seller
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hereunder of the Tax as asserted by the applicable Taxing authority) including
any interest, penalties, or additions thereto asserted in such proceeding.
Each party shall, at the expense of the requesting party, execute or cause to
be executed any powers of attorney or other documents reasonably requested by
such requesting party to enable it to take any and all actions such party
reasonably requests with respect to any Tax Proceedings which the requesting
party controls.
(d) The failure by a party to provide timely notice under this
subsection shall not relieve the other party from its obligations under this
Section 7.7 with respect to the subject matter of any notification not timely
forwarded, unless and to the extent that the other party can demonstrate with
clear and convincing evidence that the other party has suffered an economic
detriment because of such failure to provide notification in a timely fashion.
7.8 Assistance and Cooperation. Each of Seller and Buyer (and their
respective Affiliates) shall at their own expense:
(a) assist the other party in preparing any Tax Returns which
such other party is responsible for preparing and filing in accordance with
this Article VII;
(b) cooperate fully in preparing for any audits of, or
disputes with Taxing authorities regarding, any Tax Returns relating to the
Acquired Assets;
(c) make available to the other and to any Taxing authority as
reasonably requested all information, records, and documents relating to Taxes
concerning the Acquired Assets;
(d) make available to the other and to any Taxing authority as
reasonably requested employees and independent auditors to provide explanations
and additional information relating to Taxes concerning the Acquired Assets;
(e) provide timely notice to the other in writing of any
pending or threatened Tax audits, assessments or Tax Proceedings with respect
to the Acquired Assets for taxable periods for which the other may have a
liability under this Article VII;
(f) furnish the other with copies of all correspondence
received from any Taxing authority in connection with any Tax audit or Tax
Proceedings with respect to any taxable period for which the other may have a
liability under this Article VII; and
(g) retain any books and records that could reasonably be
expected to be necessary or useful in connection with Buyer's or Seller's
preparation, as the case may be, of any Tax Return, or for any audit,
examination, or Proceeding relating to Taxes. Such books and records shall be
retained until the expiration of one (1) year after the applicable statute of
limitations (including extensions thereof); provided, however, that in the
event of an audit, examination, investigation or Proceeding has been instituted
prior to the expiration of the applicable statute of limitations (or in
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the event of any claim under this Agreement), the books and records shall be
retained until there is a final determination thereof (and the time for any
appeal has expired).
7.9 Survival. Notwithstanding anything in this Agreement to the
contrary, the provisions of this Article VII shall survive for the full period
of all statutes of limitations (giving effect to any waiver, mitigation or
extension thereof).
ARTICLE VIII
EMPLOYEE MATTERS
8.1 Transfer of Employment.
(a) As of the Closing Date, Italian Operating Company shall
transfer to Italian Newco the employment of all Italian Operating Company
employees employed in the Business as of the Closing Date who have neither
tendered nor received notice of their termination of employment with Italian
Operating Company as of such date, on terms substantially comparable in the
aggregate to their terms of employment as of the Closing Date. Notwithstanding
the foregoing sentence, Italian Operating Company employees employed in the
Business who are on maternity, disability or other employer-approved leave of
absence as of the Closing Date shall only have their employment transferred as
of the date, if any, upon which they return to work at Buyer's facility. From
the Closing Date until the earlier to occur of (x) completion of the Italian
government's final audit relating to the 1989 Program Contract, or (y) eighteen
(18) months after the Closing Date, Buyer shall cause employment levels in
Italian Newco to remain substantially equivalent to the level of employment as
of the Closing Date; provided, however, that Italian Newco shall be entitled to
terminate Italian Newco employees for good reason and shall be allowed to
reduce employment levels through Italian Newco employee attrition; provided,
further, that in all events Buyer shall cause Italian Newco to maintain levels
of employment consistent with the minimum requirements under the 1989 Program
Contract (i.e. 1,270 employees) during such period. Except with respect to the
preceding sentence, Buyer and, after the Closing Date, Italian Newco, shall not
be required to undertake any liability or obligation or to pay any additional
consideration in order to obtain Italian Governmental Approval of the
transactions contemplated by this Agreement.
(b) On the Closing Date, Singapore Operating Company shall
transfer to Singapore Newco the employment of all Singapore Operating Company
employees employed in the Business as of the Closing Date who have neither
tendered nor received notice of their termination of employment with Singapore
Operating Company as of such date, on terms substantially comparable in the
aggregate to their terms of employment as of the Closing Date. Notwithstanding
the foregoing sentence, Singapore Operating Company employees employed in the
Business who are on maternity, disability or other employer-approved leave of
absence as of the Closing Date shall only have their employment transferred as
of the date, if any, upon which they return to work at Buyer's facility.
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Notwithstanding this Section 8.1(b), the transfer of the
employment of the employees of Singapore Operating Company who are "employees"
as defined in the Employment Act of the Republic of Singapore (the "Employment
Act") shall be governed by Section 18A of the Employment Act. Buyer shall
cause Singapore Newco and Seller shall cause Singapore Operating Company to
each comply with their respective obligations under Section 18A.
(c) Commencing not later than thirty (30) days prior to the
Closing Date, Buyer shall, subject to the exceptions set forth in Section
8.1(e) hereof, make written offers of employment to substantially all the
Domestic Employees and Foreign Employees (other than Excluded Employees, those
employees referenced in Sections 8.1(a) and (b) above and employees terminated
pursuant to the suspension of operations at Twinstar as contemplated by Section
6.23) who have neither tendered nor received notice of their termination of
employment with Seller as of such date, and may make offers of employment (i)
for up to forty (40) employees employed in Seller's test equipment group, at
Buyer's discretion (which test equipment group employees shall be mutually
agreed upon in good faith by Seller and Buyer) and (ii) to Seller's employees
located at, or whose employment primarily relates to, Seller's Memory
Technology Center, in each case on terms substantially comparable in the
aggregate to the terms on which Buyer employs its employees similarly situated
as of the date of the offer; provided, however, that such offers shall
automatically terminate if not accepted in writing by the offerees prior to the
Closing Date. Notwithstanding the foregoing sentence, any such employees who
are on maternity, disability, FMLA or other employer-approved leave of absence
as of the Closing Date shall only commence employment with Buyer upon the date,
if any, upon which they return to work. Seller agrees to use commercially
reasonable efforts to assist Buyer with the delivery of such written offers of
employment.
(d) Notwithstanding any other provision of this Agreement,
Buyer will not be required to make an offer of employment, and Buyer shall not
cause Italian Newco or Singapore Newco to make offers of employment, to any
employee employed in the Business whom Buyer and Seller mutually agree in
writing prior to the Closing Date will be retained or relocated by Seller.
(e) Notwithstanding any other provision of this Agreement,
Buyer will not be required to make an offer of employment to any employee
pursuant to Section 8.1(c) hereof, up to a maximum of 200 employees Buyer would
otherwise be required to make an offer to pursuant to Section 8.1(c) hereof,
whom it designates in writing to Seller not more than seventy-five (75) days
following the execution of this Agreement (the "Designated Employees").
Moreover, to the extent that Buyer, in its discretion, offers employment to
fewer than forty (40) employees employed in Seller's test equipment group
pursuant to Section 8.1(c) hereof, the 200 employee limit in the preceding
sentence shall be reduced. For example, if Buyer, in its discretion, offers
employment to only thirty (30) employees in Seller's test equipment group
pursuant to Section 8.1(c) hereof, the 200 employee limit in the first sentence
of this Section 8.1(e) shall be reduced to 190 employees. Buyer agrees to
reimburse Seller for fifty percent of the termination costs pursuant to any
written termination or severance plan approved by Seller, in place and
communicated to employees generally, prior to June 1, 1998 and not put in place
in anticipation of the transactions contemplated
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hereby, arising from the termination of Designated Employees (other than
Twinstar employees) who are terminated by Seller pursuant to Section 8.1 (e) of
this Agreement.
(f) Notwithstanding anything to the contrary contained herein,
Buyer will not be required to make an offer of employment to any terminated
Twinstar employee. Buyer's failure to offer employment pursuant to the
preceding sentence shall not count against the 200 employee limit specified in
Section 8.1(e) above. Buyer agrees to reimburse Seller, in accordance with
Section 6.23 hereof, for fifty percent of the Shutdown Costs.
(g) Seller shall use commercially reasonable efforts to assist
Buyer, Italian Newco or Singapore Newco, as appropriate, in hiring all
employees offered employment by Buyer, or transferring employment to Italian
Newco or Singapore Newco pursuant to this Section 8.1.
(h) Prior to the Closing Date, designated employees of Buyer
shall be permitted, on a commercially reasonable basis, subject to prior
written notice to Seller, to meet with any Domestic Employee or Foreign
Employee (other than employees of Italian Operating Company or Singapore
Operating Company) for purposes of selecting the Domestic Employees or Foreign
Employees to whom Buyer will not make an offer of employment pursuant to
Section 8.1(e).
(i) Notwithstanding any other provisions of this Agreement,
Buyer shall not be required to employ any Domestic Employee or Foreign Employee
to whom an offer of employment was made by Buyer pursuant to Section 8.1(c) and
accepted by such Domestic Employee or Foreign Employee on the Closing Date when
such employment would violate the terms of such employee's visa or immigration
law. In such event, Buyer agrees to employ such employee at such time, if any,
as such visa or immigration law restriction no longer applies.
8.2 Coverage Under Employee Benefit Plans.
(a) On the Closing Date, and thereafter while employed by
Italian Newco or Singapore Newco, each Transferred Business Employee employed
by Italian Newco or Singapore Newco ("Italian and Singapore Transferred
Business Employees") shall continue to be covered by the Employee Benefit Plans
under which they were covered immediately prior to the Closing Date that were
established, maintained and sponsored solely at the Italian and Singapore
Operating Company levels to the extent permitted by law and contract. On and
after the Closing Date, Italian and Singapore Transferred Business Employees
shall not be covered by Seller's Employee Benefit Plans, including, without
limitation, Seller's profit-sharing plan. Seller agrees to use commercially
reasonable efforts to cause Italian Operating Company and Singapore Operating
Company to transfer the Employee Benefit Plans immediately prior to the Closing
Date to Italian Newco and Singapore Newco, as appropriate, under which Italian
and Singapore Transferred Business Employees were covered (other than Seller's
Employee Benefit Plans).
(b) On the Closing Date, and thereafter while employed by the
Buyer, each Transferred Business Employee (who is a Domestic Employee and who
is not an Italian and
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Singapore Transferred Business Employees) ("Buyer Transferred Business
Employees") shall cease to be covered under Seller's Employee Benefit Plans and
instead shall become covered under Buyer's Employee Benefit Plans; provided,
however, that with respect to Transferred Business Employees located in Texas
("Texas Transferred Business Employees"), Buyer may elect in writing to Seller,
but not less than thirty (30) days prior to the Closing Date (the "Buyer COBRA
Election"), not to cover such employees under Buyer's group health and dental
plans and instead require Seller to offer COBRA continuation coverage to the
Texas Transferred Business Employees, with Buyer subsidizing the employees'
cost of COBRA coverage of the Texas Transferred Business Employees who elect to
receive COBRA coverage in the same dollar amount as Buyer subsidizes the
premium payments of Buyer's similarly situated U.S. employees under Buyer's
group health and dental plans. In the event Buyer elects to use the Buyer
COBRA Election, Buyer agrees to cover such Texas Transferred Business Employees
as are still employed by Buyer under Buyer's group health and dental plans no
later than January 1, 2000. Seller agrees to use commercially reasonable
efforts to assist Buyer in the transition of Buyer Transferred Business
Employees to coverage under Buyer's Employee Benefit Plans including, at
Buyer's request, allowing Buyer to hold, on a commercially reasonable basis,
Employee Benefit Plan open enrollment meetings with potential Transferred
Business Employees at least thirty (30) days prior to the Target Closing Date
on Seller's premises.
(c) At Buyer's written request prior to the Closing Date,
Seller agrees to cause Texins' Association to extend membership privileges to
Texas Transferred Business Employees for such period of time (up to a maximum
of one (1) year following the Closing Date or until Texins' Association ceases
to offer recreation facilities to Seller's employees, whichever is earlier) as
is specified in writing by Buyer; provided, however, that Seller shall not
subsidize the Texins' Association membership costs of Texas Transferred
Business Employees on and after the Closing Date.
(d) Seller shall provide or cause to be provided to
Transferred Business Employees all notices required to be provided under the
Law, including, without limitation, the Health Insurance Portability and
Accountability Act of 1996 ("HIPAA") in connection with the termination of
U.S.-based Transferred Business Employees' coverage under Seller's Employee
Benefit Plans.
8.3 General Matters.
(a) Buyer, Italian Newco and Singapore Newco, as appropriate,
shall credit each Transferred Business Employee with all service with Seller
and its Affiliates prior to the Closing Date and with all amounts paid to each
such Transferred Business Employee prior to the Closing Date to the extent that
service or pay is relevant under any Employee Benefit Plan of Buyer, Italian
Newco or Singapore Newco for purposes of determining eligibility to
participate, vesting and benefit accrual. Buyer shall also provide Transferred
Business Employees with credit under Buyer's Employee Benefit Plans for
deductible and co-payment amounts made by Transferred Business Employees under
Seller's Employee Benefit Plans prior to the Closing Date in the plan years in
which the Closing Date occurs. Seller agrees to provide deductible and
co-payment information with
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respect to the Transferred Business Employees as soon as is practicable
following the Closing Date to effectuate such crediting of deductibles and
co-payment amounts. Seller agrees to provide Buyer with service commencement
date and prior compensation information with respect to each potential
Transferred Business Employee as soon as practicable after the date upon which
this Agreement is executed.
(b) Commencing with the date upon which this Agreement is
executed, Seller and Buyer agree to cooperate fully with respect to the
employment-related actions which are necessary or reasonably desirable to
accomplish the transactions contemplated pursuant to this Agreement, including
the provision of records and information as each may reasonably request
(including job titles, short and long-term disability coverage, life insurance
coverage, operator certification and workers' compensation records and
information) and the making of all appropriate filings under the Law.
8.4 Employee Tax Withholding and Reporting. With respect to
Transferred Business Employees who are required to be furnished a Form W-2 for
the calendar year in which the Closing Date occurs, Buyer and Seller agree to
follow the "standard procedure" set forth in Revenue Procedure 96-60 with
respect to discharging their respective income and employment tax withholding
and reporting obligations with respect to such employees.
8.5 Other Employment Matters.
(a) Prior to the Closing Date, or as promptly as practicable
thereafter, Seller or a Subsidiary of Seller, as appropriate, shall pay to the
Transferred Business Employees all salary, overtime, bonuses, severance and
commissions and other remuneration earned, accrued and payable for all periods
up to the Closing Date; provided, however, that paid time off accruals shall
not be paid out by Seller or Twinstar (but only with the written consent of
Twinstar Business Employees) at the Closing Date, but instead shall be credited
to each Transferred Business Employee by Buyer.
(b) Seller or its Subsidiaries, as appropriate, shall comply
with all notice and other provisions of applicable Laws, including (without
limitation) the Worker Adjustment and Retraining Notification Act (the "Warn
Act") and COBRA. Seller shall retain all liability for salary, bonuses,
commissions and benefits due Domestic Employees and Foreign Employees and
related Taxes of the Seller Group for periods after the date of such notice of
termination as well as for any obligations under the Warn Act and for providing
continuation coverage under COBRA or any applicable similar Laws.
(c) Seller agrees to permit Transferred Business Employees who
are participants in Seller's (or Twinstar's) cafeteria (Code Section 125) plan
immediately prior to the Closing Date to continue participation in such plans
through the end of the plan year in which the Closing Date occurs (the
"Transition Plan Year"). Such participation shall include the right of such
Transferred Business Employees to receive reimbursements pursuant to the
medical expense reimbursement component of Seller's cafeteria plan for all
qualifying expenses incurred in the Transition Plan Year,
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including after the Closing Date, up to the annual election amount made by each
such participant with respect to the Transition Plan Year. Such Transferred
Business Employees shall not be required to make any additional salary or wage
deferrals or other payments to Seller's cafeteria plan other than regularly
scheduled salary or wage deferrals made while on Seller's payroll.
(d) Seller, Italian Operating Company and Singapore Operating
Company agree, that with respect to any Transferred Business Employee whom had
commenced attending an educational course prior to the Closing Date that would
have been eligible for coverage pursuant to the education expense reimbursement
plans of Seller, Italian Operating Company or Singapore Operating Company,
Seller shall continue to cover such Transferred Business Employees under such
plans and provide benefits thereunder with respect to such courses pursuant to
the terms and conditions of such plans as if such employees had remained
employed by Seller, Italian Operating Company or Singapore Operating Company,
as appropriate.
ARTICLE IX
CONDITIONS PRECEDENT TO CLOSING
9.1 Conditions Precedent to Obligations of Buyer and Seller. The
respective obligation of each party hereto to effect the Closing shall be
subject to the satisfaction on or prior to the Closing Date of the following
conditions:
(a) Regulatory Approvals. All material approvals of all
Governmental Agencies (including compliance with the requirements under the HSR
Act and the European Union authorities) required to consummate the transactions
contemplated hereby (including, without limitation, the transfer to Buyer, or
its designees, of the Acquired Assets and the assumption by Buyer, or its
designees, of the Assumed Liabilities) shall have been obtained and shall
remain in full force and effect and all statutory waiting periods in respect
thereof shall have expired (all such approvals and the expiration of all such
waiting periods being referred to herein as the "Requisite Regulatory
Approvals").
(b) No Injunction or Restraints; Illegality. No order,
injunction or decree issued by any Governmental Agency of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby (including, without
limitation, the transfer to Buyer, or its designees, of the Acquired Assets and
the assumption by Buyer, or its designees, of the Assumed Liabilities) shall be
in effect. No Law shall have been enacted, entered, promulgated or enforced by
any Governmental Agency which prohibits, restricts or makes illegal
consummation of the transactions contemplated hereby (including, without
limitation, the transfer to Buyer, or its designees, of the Acquired Assets and
the assumption by Buyer, or its designees, of the Assumed Liabilities).
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(c) Certain Consents; Amendments. The amendments,
modifications, consents and agreements (including without limitation the JV
Amendments) in form and substance mutually satisfactory to Buyer and Seller
substantially in accordance with the terms agreed to pursuant to Section 6.12
hereof shall have been entered into or obtained and shall be in full force and
effect.
9.2 Conditions Precedent to Obligations of Buyer. The obligation of
Buyer to effect the Closing is also subject to the satisfaction or waiver by
Buyer on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties; Covenants.
(i) The representations and warranties of Seller set
forth in this Agreement shall be true and correct in all respects as of the
date hereof and as of the Closing Date as if made at and as of such date
(without regard to qualification as to materiality) with only such exceptions
as would not in the aggregate have or reasonably be expected to have a Material
Adverse Effect (disregarding for these purposes, any such exceptions resulting
from a change in the Memory Products industry generally or in the economy
generally).
(ii) Seller shall have performed and complied with in
all material respects with all obligations and covenants required by this
Agreement to be performed or complied with by Seller prior to or at the
Closing.
(b) JV Amendments. Buyer shall have received duly executed
copies of each of the JV Amendments all of which shall be in full force and
effect.
(c) Transition Services Agreement. The Transition Services
Agreement shall have been duly executed and delivered by Seller and shall be in
full force and effect.
(d) Securities Rights and Restrictions Agreement. The
Securities Rights and Restrictions Agreement shall have been duly executed and
delivered by Seller and shall be in full force and effect.
(e) Cross-License Agreement. The Cross-License Agreement
shall have been duly executed and delivered by Seller and shall be in full
force and effect.
(f) Third Party Consents. The consent, approval or waiver of
each Person (other than the Requisite Regulatory Approvals) whose consent or
approval shall be required in order to consummate the transactions contemplated
hereby shall have been obtained, except where the failure to obtain any such
consent, approval or waiver, individually or in the aggregate, would not have a
Material Adverse Effect.
(g) Financing. Buyer shall have obtained $400 million of
financing from third parties on terms and conditions satisfactory to Buyer in
its sole discretion; provided, however, that
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this condition shall be deemed to have been fulfilled on the date fifteen (15)
days after receipt by Buyer of the audited financial statements and March 31,
1998 unaudited financial statements required to be delivered by Seller to Buyer
pursuant to Section 6.9 hereof.
(h) Lien Release. Buyer shall have received duly executed
copies of all agreements, instruments, certificates and other documents
necessary or appropriate, in the opinion of counsel to Buyer, to release any
and all material Liens (except Permitted Liens) against the Acquired Assets.
(i) Material Adverse Change. No material adverse change shall
have occurred in the Business since the date hereof (other than a material
adverse change in the Memory Products industry or in the economy generally).
(j) Reorganization. The Reorganization shall have occurred in
accordance with the provisions of Sections 6.1 and 6.6 hereof.
(k) Delivery Obligations. Seller shall have fulfilled all of
its delivery obligations set forth in Section 3.2 hereof.
9.3 Conditions Precedent to Obligations of Seller. The obligation of
Seller to effect the Closing is also subject to the satisfaction or waiver by
Seller on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties; Covenants.
(i) The representations and warranties of Buyer set
forth in this Agreement shall be true and correct in all respects as of the
date hereof and as of the Closing Date as if made as of such date (without
regard to qualification as to materiality) with only such exceptions as would
not in the aggregate have or reasonably be expected to have a Material Adverse
Effect (disregarding for these purposes, any such exceptions resulting from a
change in the Memory Products industry generally or in the economy generally).
(ii) Buyer shall have performed and complied with in all
material respects with all obligations and covenants required by this Agreement
to be performed or complied with by Buyer prior to the Closing.
(b) JV Amendments. Seller shall have received duly executed
copies of each of the JV Amendments all of which shall be in full force and
effect.
(c) Transition Services Agreement. The Transition Services
Agreement shall have been duly executed and delivered by Buyer and shall be in
full force and effect.
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(d) Securities Rights and Restrictions Agreement. The
Securities Rights and Restrictions Agreement shall have been duly executed and
delivered by Buyer and shall be in full force and effect.
(e) Cross-License Agreement. The Cross-License Agreement
shall have been duly executed and delivered by Buyer and shall be in full force
and effect.
(f) Delivery Obligations. Buyer shall have fulfilled all of
its delivery obligations set forth in Section 3.3 hereof.
ARTICLE X
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
10.1 Survival of Representations; Effect of Breach. The
representations and warranties made by the parties to this Agreement shall
survive the execution and delivery hereof for a period commencing on the date
hereof and ending on the second anniversary of the Closing Date; provided,
however, that (i) the representations and warranties of Seller in Article VII
(Tax Matters) shall survive until the expiration of the applicable statute of
limitations, and (ii) the representations and warranties of Seller set forth in
Section 4.1(o) and 4.2(n) shall survive the execution and delivery hereof
indefinitely. The covenants and agreements in this Agreement shall survive
except to the extent they are specifically limited by their terms.
10.2 Seller's Agreement to Indemnify.
(a) Subject to the terms and conditions of this Article X,
Seller agrees to indemnify, defend and hold harmless, each member of the Buyer
Operating Group, and the officers, directors, employees and agents, and
successors and assigns of each of them (collectively, the "Indemnified Buyer
Group"), from and against, for, and in respect of any and all Claims and Losses
asserted against, arising out of, relating to, imposed upon or incurred by any
member of the Indemnified Buyer Group, directly or indirectly, by reason of or
resulting from (i) any inaccuracy in or breach by Seller of its representations
or warranties contained in Section 4.1(e) of this Agreement, (ii) any
inaccuracy in or breach by Seller of its other representations or warranties
contained in this Agreement, (iii) any breach by Seller of its obligations,
covenants or agreements under this Agreement, (iv) Seller's failure to comply
with any applicable bulk sales laws, (v) any Excluded Liabilities, (vi) the
failure of Seller to obtain consents, Permits and/or Approvals required to
transfer Contracts, Permits and/or Approvals and similar items in each case
constituting the Acquired Assets to Buyer or (vii) any allegation that the
conduct, practices or products made, used or sold, by the Business at any time
prior to the Closing misappropriates or infringes any Intellectual Property of
any Person (collectively "Buyer Indemnified Claims").
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(b) Notwithstanding anything to the contrary in Section
10.2(a) above but subject to Section 10.2(c) below, (i) Seller shall not be
liable for Buyer Indemnified Claims arising under subsection 10.2(a)(ii), (iv),
(vi) and (vii) unless (A) the amount of such claim either individually, or
together with any related claims, equals or exceeds $25,000 and (B) the
aggregate of all Buyer Indemnified Claims exceeds U.S. $5 million (the
"Threshold Amount"); provided, however, that when such claims equal or exceed
the Threshold Amount, Seller shall be liable for, and provide indemnification
with respect to, the full amount of all such claims, and (ii) Seller shall not
be liable for Buyer Indemnified Claims arising under Section 10.2(a)(ii), (iv),
(v), (vi) and (vii) exceeding in the aggregate U.S. $636 million (the "Maximum
Amount").
(c) Notwithstanding anything to the contrary contained in
Sections 10.2(a) and (b) above, (i) in no event shall Buyer Indemnified Claims
(A) arising under Sections 10.2(a)(i), (B) 10.2(a)(iii) to the extent that any
such breach relates to a breach of an agreement to make any payment or
reimbursement in accordance with the terms of the Agreement, or (C) otherwise
arising out of, relating to, imposed upon, or incurred by reason of or
resulting from the Excluded Liabilities set forth in Exhibit J attached hereto
be subject to the Maximum Amount or taken into account in determining the
amount of Losses subject to the Maximum Amount, and (ii) in no event shall
Buyer Indemnified Claims arising under Section 10.2(a)(i) be subject to the
provisions of Section 10.2(b).
10.3 Tax Indemnity. Notwithstanding anything to the contrary in this
Article X, Seller's obligation to indemnify Buyer with respect to the Tax
matters covered by Article VII shall not be limited by this Article X.
10.4 Buyer's Agreement to Indemnify.
(a) Subject to the terms and conditions of this Article X,
Buyer agrees to indemnify, defend and hold harmless, Seller and each member of
the Operating Group, and the officers, directors, employees and agents, and
successors and assigns of each of them (collectively, the "Indemnified Seller
Group"), from and against, for, and in respect of any and all Claims and Losses
asserted against, arising out of, relating to, imposed upon or incurred by any
member of the Indemnified Seller Group, directly or indirectly, by reason of or
resulting from (i) any Assumed Liabilities or (ii) any inaccuracy in or a
breach by Buyer of any of its representations, warranties, covenants or
agreements contained in this Agreement (collectively "Seller Indemnified
Claims" and, together with Buyer Indemnified Claims.
(b) Notwithstanding anything to the contrary in Section
10.4(a) but subject to Section 10.4(c) below, (i) Buyer shall not be liable for
Seller Indemnified Claims arising under subsection 10.4(a)(ii) unless (A) the
amount of such claim either individually, or together with any related claims,
equals or exceeds $25,000 and (B) the aggregate of all Seller Indemnified
Claims exceeds the Threshold Amount; provided, however, that when such claims
equal or exceed the Threshold Amount, Buyer shall be liable for, and provide
indemnification with respect to, the full amount of all such claims and (ii)
Buyer shall not be liable for Seller Indemnified Claims arising under Section
10.4(a) (ii) exceeding in the aggregate U.S. $75 million.
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(c) Notwithstanding anything to the contrary in Section
10.4(a) and (b) above, in no event shall Seller Indemnified Claims arising
under Section 10.4(a)(i) be subject to the provision of Section 10.4(b).
10.5 Notice of Claims; Contest of Claims. If any indemnified party
has paid or properly accrued or reasonably anticipates that it will have to pay
or accrue an Indemnified Claim, such indemnified party shall so notify the
indemnifying party; provided, however, that its failure to do so shall not
relieve the indemnified party's obligations except to the extent of any
material prejudice caused thereby. The notice shall describe such an
Indemnified Claim, the amount thereof, if known, and the method of computation
thereof, all with reasonable particularity and shall contain a reference to the
provisions of this Agreement in respect of which such an Indemnified Claim
shall have been incurred, and, in the case of an action or suit by a third
party, shall include a copy of all documents received by the indemnified party
in connection therewith and any other information known to the indemnified
party with respect to such action or suit or the basis therefor. Such notice
shall be given promptly after the indemnified party becomes aware of each such
an Indemnified Claim, action or suit. The indemnifying party shall, within
thirty (30) days after receipt of such notice of an Indemnified Claim (i) pay
or cause to be paid to the indemnified party the amount of an Indemnified Claim
specified in such notice which the indemnifying party does not contest, or (ii)
notify the indemnified party if it wishes to contest the existence or amount of
part or all of such an Indemnified Claim stating with particularity the basis
upon which it contests the existence or amount thereof. The indemnifying party
shall, within thirty (30) days after receipt of each notice with respect to an
action or suit demanding indemnification of a suit by a third party, undertake
to defend such action. If the indemnifying party fails to so undertake the
defense in a reasonable manner, the indemnified party shall have the right to
defend, contest, settle or compromise such action or suit, and the indemnifying
party shall, upon request from such indemnified party, promptly pay to such
indemnified party in accordance with the other terms of this Article X, the
amount of any Loss resulting from its liability to the third party claimant.
In any action or suit by a third party limited to a claim for money damages,
the indemnifying party shall have the right to undertake, conduct and control,
through counsel (reasonably acceptable to the indemnified party) and at the
sole expense of such indemnifying party, the conduct and settlement of such
action or suit, and such indemnified party shall cooperate with such
indemnifying party in connection therewith; provided, however, that, the
indemnifying party may not, in the defense or prosecution of any such action or
suit, except with the prior written consent of the indemnified party, consent
to the entry of any judgment or enter into any settlement (i) which does not
include as an unconditional term thereof the giving to such indemnified party
by the third party of a full and final release from all liability in respect of
such action or suit or (ii) which shall limit, restrict or otherwise affect the
indemnified party to carry on or conduct its business (then or in the future),
or require any payment to be made by the indemnified party, or limit, restrict,
or otherwise adversely affect the manner in which the indemnified party carries
on or conducts its businesses (then or in the future).
10.6 Treatment of Indemnities. Any indemnity payments made pursuant
to this Agreement shall be treated for income tax purposes as an adjustment of
the purchase price to the extent permitted by Law. If applicable, the amount
an indemnifying party shall pay to the indemnified party
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with respect to an obligation for indemnification under this Article X shall be
an amount which equals the amount of such obligation of the indemnifying party,
after giving effect to any and all Taxes imposed on the indemnified party on
the receipt or accrual of such indemnification as a result of a Taxing
authority not treating such amount as an adjustment to the purchase price.
10.7 Risk of Loss. Risk of loss with regard to any of the Acquired
Assets shall be on Seller until the Closing. Risk of loss of the Excluded
Assets shall remain with Seller.
10.8 Indemnity Payments. All indemnity payments under this Agreement
shall be payable in United States dollars. If any Indemnified Claims are
incurred in a currency other than United States dollars, then the United States
dollar amount thereof shall be calculated as follows: if any Indemnified Claims
are incurred as a result of an event occurring on a determinable date, the
amount of Indemnified Claims shall be deemed to be the amount of United States
dollars required to purchase the amount of such other currency on the date of
such event (or, if such date is not a Business Day, the next succeeding
Business Day) from Bank of America in San Francisco, and (z) in the case of any
other Indemnified Claims, an amount equal to the amount of United States
dollars that would have been necessary for the indemnified party to purchase
the foreign currency necessary to pay such Indemnified Claims as they were
incurred.
10.9 Seller's Duty to Complete Remedial Activities.
(a) Subject to Section 10.9(d), Seller acknowledges that its
obligation to provide indemnification pursuant to Section 10.2 may result in a
duty to promptly and diligently undertake and perform, upon demand by certain
members of the Indemnified Buyer Group, any Remedial Activities covered by the
indemnification obligation and required by applicable Environmental
Requirements and good business practices customarily adhered to by major U.S.
corporations doing business in the countries in which the Acquired Facilities
are located, and that such Remedial Activities may appropriately include
Remedial Activities to prevent Contamination and other potential property
damage and bodily injury, which may be caused thereby, migration to date,
future releases, leaks, spills and emission and/or as well as Remedial
Activities to remove, remediate, and eliminate existing Contamination giving
rise to Seller's indemnification obligations and other harmful Hazardous
Material conditions giving rise to Seller's indemnification obligations. In
this regard, Seller specifically agrees to promptly, following written demand,
commence and thereafter diligently complete all such Remedial Activities giving
rise to Seller's indemnification obligations within a reasonable time, and in
any event, within the time permitted by applicable Environmental Requirements.
Seller acknowledges that monetary damages are not adequate to compensate the
Indemnified Buyer Group for Seller's failure to promptly undertake and complete
such Remedial Activities giving rise to Seller's indemnification obligations
and, accordingly, Seller acknowledges and agrees that its obligation to perform
such Remedial Activities may be specifically enforced by a suit brought in the
State of Delaware for all Remedial Activities required of Seller hereunder,
without regard to the location (whether within or without the U.S.) where the
Remedial Activities must actually be performed.
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(b) Subject to Section 10.9(d), without limiting other rights
and remedies hereunder, the Indemnified Buyer Group, and each of them, who is
an owner or occupant of an Acquired Facility at which Remedial Activities which
Seller is required by this Agreement to perform will be performed (the
"Facility Indemnitees"), at their election, may elect to either: (i) perform
(or cause their designee to perform) such Remedial Activities with funds
provided by Seller, or (ii) require that Seller, at their sole cost, perform
such Remedial Activities. If a Facility Indemnitee elects to so perform the
Remedial Activities (or to cause a designee to perform the Remedial Activities)
as permitted above, then within forty-five (45) days following delivery of
written demand to Seller, Seller shall pay to such the Facility Indemnitee the
costs and expenses reasonably incurred by the Facility Indemnitee with respect
to such Remedial Activities, with interest thereon (if not paid within such
time) at the rate of fifteen percent (15%) per annum from the date of the
expenditure until paid, if such sums are not paid within forty-five (45) days
following submission to Seller of the demand and reasonable documentation of
the amount owing. In no event, however, shall the principal sums payable by
Seller to the Facility Indemnitee pursuant to this subparagraph exceed the sums
that reasonably would have been incurred by Seller had Seller been the party
performing such Remedial Activities. In either event, upon demand, Seller
shall make such applications, take such actions and execute such documents as
may be required to make a member of Seller the "generator," responsible for any
Hazardous Material waste created by the performance of such Remedial Activity.
(c) Subject to Section 10.9(d), Seller shall promptly and
diligently undertake and complete Remedial Activity required to be performed by
Seller under this Agreement in a good and workmanlike manner and in compliance
with this Agreement and all applicable Environmental Requirements and other
Laws. All such Remedial Activities shall be performed only after obtaining the
Facility Indemnitees' prior written approval (which shall not be unreasonably
withheld or delayed) of all material matters relating to said activity,
including, without limitation, (i) the identity of all environmental
consultants, contractors and other Persons performing the work, (ii) the plans
and specifications for the work, (iii) the time and manner for the performance
of the work, (iv) the precautions to be undertaken to protect the site where
the work will be performed, and the other activities being conducted thereon,
from damage or unreasonable interference, (v) the existence of appropriate
warranties, bonds and insurance with respect to the work and the contractors
performing the work, (vi) the source of payment for the work, (vii) the choice
of any treatment system, pre-treatment system or other major installations and
technologies that will be utilized, and (viii) the cleanup goals and other
major condition that must be met before such work is deemed complete. During
the conduct of a Remedial Activity, Seller shall give the Buyer and any
Facility Indemnitees at least three (3) days prior written notice of all
material meetings and conferences between Seller and/or its Agents on the one
hand and any Governmental Agency or any third party claimant for such work, on
the other hand, and shall permit the Buyer and the Facility Indemnitee(s) (or
their respective designee(s)) to participate in all such meetings and
conferences. No Seller Group member, or anyone under their control shall
deliver any report, sampling results, remedial investigation, feasibility
study, recommendations, correspondence (other than purely ministerial
correspondence) or other documents or proposals concerning an Acquired Facility
to any such Governmental Agency or third party with respect to Remedial
Activity required by this Agreement,
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without the consent of Buyer and any relevant Facility Indemnitees, which
consent shall not be unreasonably withheld or delayed and the Seller Group
shall promptly give Buyer and such Facility Indemnitee(s) copies of all plans,
specifications, contracts, reports, warranties, and other writings prepared in
connection with any Remedial Activity required of the Seller Group by this
Agreement.
(d) Notwithstanding anything contained in this Section 10.9 to
the contrary, the foregoing provisions regarding the performance and completion
of certain Remedial Activities shall apply only to Remedial Activities to be
conducted at Acquired Facilities designated in Section 1.5 of the Seller
Disclosure Letter as "primary facilities" and shall not apply to the other
Acquired Facilities; provided, however, that such limitation of the rights and
obligations of the parties pursuant to this sentence shall not modify the
parties' rights and obligations with respect to Buyer Indemnified Claims or
Seller Indemnified Claims under any other provision of this Agreement.
10.10 Seller's Duty With Respect to Intellectual Property. If, at any
time prior to the third anniversary of the Closing any Person brings or
threatens to bring, any claim or action against Buyer or any of its Affiliates
or any successor to Buyer or any of its Affiliates, alleging that the conduct
of, or any product made or sold by, the Business infringes or misappropriates
the Intellectual Property of such Person and such conduct or product is
substantially the same as the conduct or products, as the case may be, of the
Business prior to the Closing, then regardless of whether such claim would be
subject to any indemnity under this Article X, Seller shall, at Seller's
expense, cooperate in a reasonable manner with, and assist, Buyer or any of its
Affiliates in the defense of such claim or action, including by making
available to Buyer or any of its Affiliates (any documents, materials or
information relevant to Buyer's) or any of its Affiliates' defense of such
action, claim or potential claim; provided, however, that Seller shall not have
any obligation to provide information covered by attorney-client privilege.
10.11 Waivers and Survival. It is expressly acknowledged by each
member of the Seller Group and Buyer that the obligations of the parties under
Sections 10.2 and 10.4 are independent of all other promises made by the
parties in this Agreement or otherwise and are intended to allocate risk of
loss with respect to the matters covered by such provisions solely to the
indemnitors therein identified, without regard to the conduct of any person or
any other fact or circumstance. Therefore the parties further agree that the
acts and omissions of any indemnitee identified in Section 10.2 or 10.4 or any
other Person (whether active, passive, negligent, wrongful, in violation of
this Agreement or any other agreement) shall not impair the right of the
indemnitees benefitted by said Sections to enforce the obligations of the
indemnitors thereunder. The obligations and rights of said indemnitees are in
addition to, independent from, and severable from the rights and obligations of
the parties under this Agreement and shall survive, notwithstanding the
termination, expiration or breach of this Agreement, any Related Agreement, or
any other Contract between any of the parties hereto and notwithstanding any
other act or omission of any Person, whether or not such acts are in violation
of the express provisions of this Agreement. The provisions of this Article X
shall survive the Closing and any subsequent sale, transfer, assignment, or
hypothecation of any Acquired Asset, Newco Asset, Joint Venture Asset or any
interest in an indemnitee to any Person.
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ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated at any time prior
to the Closing as provided below:
(a) Buyer and Seller may terminate this Agreement by mutual
written consent at any time prior to Closing;
(b) This Agreement may be terminated by Buyer any time within
the five-day period beginning forty-five (45) days after the date hereof by
giving written notice to Seller during such period, if Buyer shall not have
obtained, investigated and approved in its sole discretion such reports and
information concerning the Joint Ventures, including the Intellectual Property,
accounting, financial, environmental, employee and legal affairs of the
business of the Joint Ventures;
(c) This Agreement may be terminated by (i) either Buyer, if
there has been a material breach of any representation, warranty, covenant or
agreement on the part of Seller, which has not been cured within thirty (30)
days following receipt by Seller of notice of such breach, or Seller if there
has been a material breach of any representation, warranty, covenant or
agreement on the part of Buyer, which breach has not been cured within thirty
(30) days following receipt by Buyer of notice of such breach, or (ii) either
Buyer or Seller, if any permanent injunction or other order of a court or other
competent authority preventing the consummation of the transactions
contemplated by this Agreement shall have become final and nonappealable;
(d) Buyer or Seller may terminate this Agreement if the
Closing shall not have occurred on or before November 30, 1998; provided that
the right to terminate this Agreement under this Section 11.1(d) shall not be
available to (x) Buyer, if such party has breached any of its representations,
warranties or covenants hereunder in any material respect and such breach has
been the cause of or resulted in the failure of the Closing to occur on or
before such date or (y) Seller, if such party has breached any of its
representations, warranties or covenants hereunder in any material respect and
such breach has been the cause of or resulted in the failure of the Closing to
occur on or before such date;
(e) This Agreement may be terminated by (i) Buyer within
twenty (20) days after the later of the date on which Buyer receives the Seller
Disclosure Letter and 30 days from the date hereof by delivery to Seller of
written Disclosure Objection notice, or (ii) Seller within twenty (20) days
after the later of the date on which Seller receives the Buyer Disclosure
Letter and thirty (30) days from the date hereof by delivery to Buyer of
written Disclosure Objection notice;
(f) Buyer or Seller may terminate this Agreement anytime
within the five-day period beginning forty-five (45) days after the date hereof
by giving written notice to the other party
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during such five-day period if the parties hereto have not agreed (i) on the
terms and conditions of the JV Amendments and related matters contemplated by
Section 6.12 hereof, or (ii) on the terms and conditions of the agreements and
related matters with respect to Italian Operating Company as contemplated by
Section 6.6 hereof; or
(g) Seller may terminate the Agreement any time during the
five day period commencing with delivery by Buyer to Seller of the final
Transferred Contract Schedule by giving written notice to Buyer, in the event
such schedule lists less than substantially all the Contracts disclosed in the
Seller Disclosure Letter (other than Excluded Contracts).
11.2 Effect of Termination. In the event of the termination of this
Agreement by either Buyer or Seller as provided in Section 11.1, this Agreement
shall forthwith become void and there shall be no Liability or obligation on
the part of any party hereto or any of its respective Affiliates, officers,
directors or shareholders except to the extent that such termination results
from any intentional or knowing breach by a party hereto of any of its
representations or warranties, or of any of its covenants or agreements, in
each case, as set forth in this Agreement.
11.3 Further Provisions. Termination by either party in accordance
with any provision of Section 11.1 shall be effective immediately upon the
giving of notice thereof.
ARTICLE XII
MISCELLANEOUS
12.1 Further Assurances. From time to time hereafter, Buyer and
Seller shall execute and deliver such other instruments of transfer and
assumption and take such further action, including providing access to
necessary books and records as the other may reasonably request to carry out
the transfer of the Acquired Assets and as otherwise may be reasonably required
in connection with effecting or carrying out the provisions of this Agreement.
12.2 Specific Performance. Each of the parties hereto acknowledges
and agrees that the other party hereto would be irreparably damaged in the
event any of the provisions of this Agreement were not performed in all
material respects in accordance with their specific terms or were otherwise
breached. Accordingly, each of the parties hereto agrees that they each shall
be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provision hereof in any action instituted in any foreign or domestic
court having subject matter jurisdiction, to the extent permitted by applicable
law.
12.3 No Waiver. Except as expressly provided in this Agreement,
nothing contained in this Agreement shall cause the failure of either party to
insist upon strict compliance with any covenant, obligation, condition or
agreement contained herein to operate as a waiver of, or estoppel with
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respect to, any such or any other covenant, obligations, condition or agreement
by the party entitled to the benefit thereto.
12.4 Severability. If any provisions hereby shall be held invalid or
unenforceable by any court of competent jurisdiction or as a result of future
legislative action, such holding or action shall be strictly construed and,
subject to applicable Law, shall not affect the validity or effect of any other
provisions hereof.
12.5 No Third Party Beneficiary. Nothing herein, expressed or
implied, is intended to or shall be construed to confer upon or give to any
Person other than the parties hereto and their successors or permitted assigns
any rights or remedies under or by reason of this Agreement.
12.6 Entire Agreement; Amendments. This Agreement and the Related
Agreements are intended as a complete statement of the entire agreement and
understanding between the parties with respect to the subject matter hereof and
thereof and supersede all prior statements, representations, discussions,
agreements, draft agreements and undertakings, whether written or oral, express
or implied, of any and every nature with respect thereto. This Agreement may
only be amended by written agreement of the parties hereto.
12.7 Assignment. No party may assign any of its rights or delegate
any of its duties under this Agreement without the consent of the other party
or parties hereto, provided that Buyer may assign some or all of its rights
hereunder to one or more wholly owned Subsidiaries of Buyer without being
required to obtain any such consent.
12.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO
PRINCIPLES GOVERNING CONFLICTS OF LAW.
12.9 Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be delivered
personally (including by courier) or given by facsimile transmission to the
parties at the following addresses (or to such other address as a party may
have specified by notice given to the other pursuant to this provision) and
shall be deemed given when so received:
(i) if to Buyer, to:
Micron Technology, Inc.
8000 South Federal Way
Boise, Idaho 83716-9632
Telephone: (208) 368-4517
Facsimile: (208) 368-4540
Attention: Roderic W. Lewis, Esq.
General Counsel
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with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Telephone: (650) 493-9300
Facsimile: (650) 493-6811
Attention: John A. Fore, Esq.
(ii) if to Seller, to:
Texas Instruments Incorporated
8505 Forest Lane
MS 8658
Dallas, Texas 75243
Telephone: (972) 480-5050
Facsimile: (972) 480-5061
Attention: Richard J. Agnich, Esq.
General Counsel
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telephone: (212) 450-4277
Facsimile: (212) 450-4800
Attention: Paul R. Kingsley, Esq.
All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 5 p.m. in the
place of receipt and such day is a Business Day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to
have been received until the next succeeding Business Day in the place of
receipt.
12.10 Fees and Expenses. Except as otherwise set forth herein or in
any of the Related Agreements, all costs and expenses, including all fees and
expenses of attorneys, investment bankers, lenders, financial advisors and
accountants, in connection with the negotiations, preparation, execution and
delivery of this Agreement, the Related Agreements and the consummation of the
transactions contemplated hereby and thereby, and any governmental or
regulatory filings, including any
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required filings under the HSR Act or with respect to the European Union, shall
be paid by the party incurring such costs and expenses.
12.11 Table of Contents; Headings; Schedules. The table of contents
and section headings of this Agreement are for reference purposes only and are
to be given no effect in the construction or interpretation of this Agreement.
All references herein to Articles, Sections, Schedules and Exhibits, unless
otherwise identified, are to Articles and Sections of, and Schedules and
Exhibits to, this Agreement.
12.12 Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other party hereto.
12.13 Publicity. So long as this Agreement is in effect, Buyer and
Seller shall promptly advise, consult and cooperate with the other prior to
issuing, or permitting any of its Subsidiaries, directors, officers, employees
or Agents to issue, any press release or other statement to the press or any
third party with respect to this Agreement, or the transactions contemplated
hereby.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date first above written.
MICRON TECHNOLOGY, INC.
By: /s/ STEVEN R. APPLETON
---------------------------------
Name:
Title:
TEXAS INSTRUMENTS INCORPORATED
By: /s/ THOMAS J. ENGIBOUS
---------------------------------
Name:
Title:
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EXHIBIT A
DESCRIPTION OF ACQUIRED ASSETS AND EXCLUDED ASSETS
ACQUIRED ASSETS:
The term "Acquired Assets" means all assets, properties and rights of
Seller, its Subsidiaries or any of their Affiliates primarily related to or
primarily used in the Business (excluding the Excluded Assets), including the
following:
1. All of the capital stock of Italian Newco;
2. All of the capital stock of Singapore Newco;
3. All of the assets of Twinstar;
4. All Owned Facilities;
5. All tangible personal property assets (i) relating to
research and development, marketing, and administrative
functions of the Business located in: Dallas, Texas;
Houston, Texas; Italy; Singapore and (ii) primarily used
by employees of the Business and employed by Buyer after
giving effect to the transactions contemplated hereby;
6. All of the capital stock in TECH and KTI owned by Seller
or any Affiliate of Seller;
7. All rights of Seller, its Subsidiaries or any of their
Affiliates under the JV Agreements;
8. All rights under all Transferred Contracts;
9. Wherever located, all inventory to the extent primarily
relating to or primarily used in the Business (including
any finished goods related to Texas Instruments-Acer
Incorporated);
10. All accounts receivable to the extent primarily related to
the Business (which shall not include accounts receivable
that cannot be identified primarily related to the
Business);
11. All Acquired Intellectual Property including all tangible
embodiments of such Acquired Intellectual Property;
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12. All assets identified on the CARS list included in Section
4.1 (e) to the Seller Disclosure Letter;
13. All software and computer programs owned by the Seller
primarily related to or primarily used in the Business;
and
14. Any other assets specified by Buyer and agreed to by
Seller in writing.
For purposes of this Agreement, Acquired Assets shall also include all
assets, properties and rights of Seller, its Subsidiaries or any of their
Affiliates with respect to the operations and business of Italian Operating
Company and Singapore Operating Company, and each of their Subsidiaries,
primarily related to or primarily used in the Business (excluding Excluded
Assets), including those assets of the nature set forth in 1 to 14 above.
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EXCLUDED ASSETS:
The term "Excluded Assets" means the following:
1. Cash or cash equivalents;
2. Patents and Patent applications issued or filed prior to
Closing;
3. Rights of Seller under Patent license agreements with
third parties;
4. Insurance policies and claims thereunder;
5. The Transition Agreement;
6. Co-development and technology transfer agreements with
Hitachi and Mitsubishi;
7. Rights of Seller under the agreement, dated March 3, 1998,
by and among Seller, Acer Incorporated and Texas
Instruments-Acer Incorporated, as amended;
8. Any land, building and/or facilities other than all of the
land, buildings and facilities located at, or primarily
used in connection with operations at, Avezzano, Twinstar
and Singapore A/T sites (collectively, "Acquired Fab
Sites");
9. Any mainframe, network or server equipment, other than
network or server equipment (i) used exclusively in the
Business (ii) located at any of the Acquired Fab Sites or
(iii) located at any building, facility or office
primarily relating to or primarily used in the Business;
10. Rights under the TI Undertaking, dated November 15, 1995,
between Seller, TECH and Citicorp Investment Bank
(Singapore) Limited with respect to the return of money
placed in escrow by Seller pursuant thereto;
11. Any intercompany receivables, payables, loans or other
accounts, to the extent the same are Excluded
Liabilities;
12. (a) All equipment (except for tangible personal
property such as personal computers and
workstations primarily used by employees of the
Business hired by Buyer as contemplated hereby)
located at any of the following locations:
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Kilby Building (KFAB) (Design &
R&D/Productization/
wafer fab)
Stafford II (Houston) (QRA/Failure Analysis
Laboratory)
Executive Center I, II, III (Administration)
(b) All equipment located at the Floyd Road South site
except for Test Technology Center (TTC) inventory,
testers and equipment used exclusively in memory
tester development and manufacturing, and tangible
personal property such as personal computers and
workstations primarily used by employees of the
Business hired by Buyer as contemplated hereby.
(c) All equipment located at any of the following
locations except for tangible personal property
such as personal computers and workstations
primarily used by employees of the Business hired
by Buyer of the Business as contemplated hereby:
Forest Lane (Design & R&D/Production/
Administration)
East Building/DP1 (Design & R&D/Productization/
wafer fab/Failure Analysis lab)
DMOS 6 (Design & R&D/Productization/
wafer fab)
Stafford I (Sales/Marketing/
Administration)
Hiji, Japan (Assembly/Test)
(d) All assets located at any of the following
locations:
Bangalore, India Design center
Miho, Japan Wafer fab and design engineering test
Shibaura, Tokyo, Japan Marketing, PDE,
administration
Hsinchu, Taiwan Product and Design Engineering
Lubbock (LMOS) 6" wafer fab (EPROM and Flash
production)
Security Building Calibration Laboratory
Local sales offices
Midland-Odessa military memory operation
All tangible personal property associated with personnel
not hired by Buyer, other than any property located at any
of the Acquired Fab Sites, provided that tangible personal
property associated with certain administrative and
marketing personnel located in Singapore that are not to
be hired by Buyer as agreed by Buyer and Seller shall be
considered Excluded Assets.
Notwithstanding anything herein to the contrary, none of
the assets listed on the MMP CARS ledger as of 3/31/98
(other than as provided in clause 12(d)
A-4
<PAGE> 107
above), as of the date hereof or as of the Closing Date,
shall be Excluded Assets. In addition, for purposes of
the definition of Excluded Assets, references to "located
at" shall mean located at the referred to facility as of
the date hereof.
13. Tax assets that (i) would be properly classified as a
current asset if required to be included in the Closing
Balance Sheet), (ii) constitute VAT related receivables,
or (iii) constitute a refund or credit of Seller's Taxes.
14. Any other assets specified by Buyer and agreed to by
Seller.
A-5
<PAGE> 108
EXHIBIT B
DESCRIPTION OF ASSUMED LIABILITIES AND EXCLUDED LIABILITIES
ASSUMED LIABILITIES:
"Assumed Liabilities" means the following, and only the following,
specific Liabilities of the Seller Group, other than Excluded Liabilities:
1. Liabilities (other than Tax Liabilities) existing
immediately prior to the Closing (the "Effective Time") to
the extent reflected as a Liability on the Closing Balance
Sheet or reserved for in an identified reserve on such
Closing Balance Sheet, but only to the extent of the
obligation to make payment of any item so reflected or
reserved for;
2. All outstanding principal and accrued and unpaid interest
on the existing indebtedness relating directly to the
Avezzano facility as of the Closing Date but in no event
in excess of 345,296 million Italian Lire principal amount
and the related guarantees of such indebtedness;
3. All Liabilities (other than Excluded Liabilities) solely
with regard to conditions or events occurring after the
Effective Time arising under or pursuant to Transferred
Contracts;
4. All accrued paid time off for Transferred Business
Employees pursuant to Section 8.5(a) of this Agreement;
and
5. Any other Liability specified by Buyer and agreed to by
Seller in writing.
For purposes of this Agreement, Assumed Liabilities shall also include
the specific Liabilities of Italian Operating Company and Singapore Operating
Company of the type described in clause 1 through 5 above.
B-1
<PAGE> 109
EXCLUDED LIABILITIES:
"Excluded Liabilities" means all liabilities, other than Assumed
Liabilities, including the following liabilities of Seller, the Seller Group,
Subsidiaries, any Affiliates thereof, or otherwise related to the Business or
the Acquired Asset (except non-Tax Liabilities to the extent reflected as a
liability on the Closing Balance Sheet or reserved for in an identified reserve
on the Closing Balance Sheet):
1. Any Liabilities under and pursuant to any agreement on account of
monies owed or owing on or prior to the Effective Time or
liabilities accruing thereunder prior to the Effective Time;
2. All Liabilities with respect to Contracts which are not
Transferred Contracts;
3. Transfer Taxes;
4. Seller's Taxes;
5. Any Liability or obligation arising out of or in any way relating
to or resulting from any product sold on or prior to the
Effective Time (including any liability for product returns or
for claims made for injury to person, damage to property or other
damage, whether made in product liability, tort, breach of
warranty or otherwise);
6. Any Liability with respect to any claim asserted after the
Effective Time where the conduct giving rise to such claim first
occurred prior to the Effective Time;
7. Any Liability with respect to any suits, actions, claims or
proceedings pending against Seller, its Subsidiaries or any of
its Affiliates to the extent any such suits, actions, claims or
proceedings exist on or prior to the Effective Time or relate to
events, circumstances, conduct or transactions occurring or
existing at or prior to the Effective Time except to the extent
expressly included as an Assumed Liability;
8. Any Liability to a third party for infringement or other
violation under Intellectual Property or other proprietary
rights, including, but not limited to, claims arising out of the
manufacture, use, offer for sale, import or sale of goods,
devices or apparatus, the performance of any process or services,
or the copying, modifying, distributing, performing or displaying
of any work or mask work, to the extent such claims relate to
events, circumstances, conduct or transactions occurring or
existing at or prior to the Effective Time;
9. Any Liabilities, incurred by any member of the Seller Group in
connection with performing its obligations under this Agreement
or in consummating the transactions
B-2
<PAGE> 110
contemplated hereby except to the extent Buyer has expressly
agreed to pay a third party or reimburse Seller on this
Agreement;
10. Any Liabilities for any breach or failure to perform any
covenants and agreements contained in, or made pursuant to, this
Agreement, or, on or prior to the Effective Time, any other
Contract, whether or not assumed hereunder, including any breach
arising from assignment of Contracts hereunder without consent of
third parties;
11. Liabilities for any violation of or failure to comply with any
Law, to the extent such violations or failures relate to events,
circumstances, conduct or transactions occurring or existing at
or prior to the Effective Time;
12. All Retained Environmental Liabilities;
13. The Transition Agreement;
14. All Liabilities under Title IV of ERISA or Section 412 of the
Code or any plan or contract governed thereby; and
15. Any other Liability specified by Buyer and agreed to by Seller.
B-3
<PAGE> 111
EXHIBIT D
March Balance Sheet
<TABLE>
<CAPTION>
March 31, 1998
--------------
($M)
----
<S> <C> <C>
1) Accounts receivables (Net) 244.4
2) Inventory (Net) 146.9
Prepaid Assets 2.7
Total Current Assets 394.0
3) Net Fixed Assets 621.6
Investment in JVs (Net) 44.3
Other Assets 8.8
Total Assets 1068.7
Liabilities
Accounts Payable 109.6
4) Accrued Income Taxes 0
Accrued Profit Sharing 6.8
Other Accrued Liabilities 62.1
5) Long Term Debt - Current 15.4
Total Current Liabilities 193.9
5) Long Term Debt 177.0
Deferred Incentive Balance 1.7
4) Accrued Pension/Retirement 17.8
Deferred Credit 25.5
6) Total Liabilities 415.9
</TABLE>
1) Any allocated receivables will either be specifically identified and
included in Acquired Assets or excluded from the Preliminary Balance Sheet
and the Adjusted Balance Sheet.
2) Excludes $5.7M of WIP inventory in Japan related to Miho production
3) Excludes approximately $11M of CIP/PP&E associated with the Test
Technology Center (TTC). These assets identified with MMP can be
transferred as part of the Acquired Assets. Also excluded is PP&E in Miho,
Japan and Bangalore, India.
4) Accrued income taxes and US pension obligations have been excluded and
will be retained by Seller.
5) Total current and non-current long-term debt equivalent at 3/31 to 345,296
million lira.
6) Any other liability balances discharged or retained by TI as of the
Closing will be excluded from the Preliminary Balance Sheet and the
Adjusted Balance Sheet.
<PAGE> 112
EXHIBIT E
SECURITIES RIGHTS AND RESTRICTIONS AGREEMENT
Between
MICRON TECHNOLOGY, INC.
and
TEXAS INSTRUMENTS INCORPORATED
Dated as of [_______], 1998
<PAGE> 113
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 1 - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2 - STANDSTILL AND RELATED COVENANTS . . . . . . . . . . . . . . . . 5
2.1 TI Ownership of Micron Securities . . . . . . . . . . . . . . 5
2.2 Standstill Provisions . . . . . . . . . . . . . . . . . . . . 5
2.3 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Voting Trust . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 Solicitation of Proxies . . . . . . . . . . . . . . . . . . . 6
2.6 Acts in Concert with Others . . . . . . . . . . . . . . . . . 6
2.7 Termination . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3 - RESTRICTIONS ON TRANSFER OF SECURITIES;
COMPLIANCE WITH SECURITIES LAWS . . . . . . . . . . . . . . . 7
3.1 Restrictions on Transfer of Voting Securities of Micron . . . 7
3.2 Restrictions on Transfer of Subordinated Notes . . . . . . . . 8
3.3 Restrictive Legends . . . . . . . . . . . . . . . . . . . . . 8
3.4 Procedures for Certain Transfers . . . . . . . . . . . . . . . 10
3.5 Covenant Regarding Exchange Act Filings . . . . . . . . . . . 10
3.6 Termination . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4 - REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . 11
4.1 Demand Registration . . . . . . . . . . . . . . . . . . . . . 11
4.2 Shelf Registration . . . . . . . . . . . . . . . . . . . . . . 12
4.3 Piggyback Registration . . . . . . . . . . . . . . . . . . . . 13
4.4 Demand and Shelf Registration Procedures, Rights and
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 19
4.7 Issuances by Micron or Other Holders . . . . . . . . . . . . . 20
4.8 Information by TI . . . . . . . . . . . . . . . . . . . . . . 20
4.9 Market Standoff Agreements . . . . . . . . . . . . . . . . . . 20
4.10 Termination . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.2 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
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<PAGE> 114
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
5.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . . 22
5.4 Entire Agreement; Amendment . . . . . . . . . . . . . . . . . 22
5.5 Notices and Dates . . . . . . . . . . . . . . . . . . . . . . 22
5.6 Language Interpretation . . . . . . . . . . . . . . . . . . . 24
5.7 Table of Contents; Titles; Headings . . . . . . . . . . . . . 24
5.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.10 Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
-ii-
<PAGE> 115
SECURITIES RIGHTS AND RESTRICTIONS AGREEMENT
THIS SECURITIES RIGHTS AND RESTRICTIONS AGREEMENT (this "AGREEMENT") is
made as of [_________], 1998, between MICRON TECHNOLOGY, INC., a Delaware
corporation ("MICRON"), and TEXAS INSTRUMENTS INCORPORATED, a Delaware
corporation ("TI").
RECITALS
A. Pursuant to the terms of the Acquisition Agreement dated as of
June [__], 1998 (the "ACQUISITION AGREEMENT"), by and between Micron and TI,
Micron (in part through certain of its subsidiaries) is simultaneously herewith
acquiring from TI (and certain of its subsidiaries) the Acquired Assets (as
defined in the Acquisition Agreement) and assuming from TI (and certain of its
subsidiaries) the Assumed Liabilities (as defined in the Acquisition
Agreement).
B. In connection with the transactions contemplated by the
Acquisition Agreement, Micron has agreed to issue to TI (i) 28,933,092
unregistered shares (the "SHARES") of Micron's Common Stock par value, $0.10
per share (the "COMMON STOCK"), (ii) $740 million aggregate principal amount of
Micron's 6-1/2% Convertible Subordinated Notes due [_______], 2005, convertible
into Common Stock at a purchase price of $60 per share (the "2005 CONVERTIBLE
NOTES") and (iii) $210 million aggregate principal amount of Micron's 6-1/2%
Subordinated Notes due [_______], 2005 (THE "SUBORDINATED NOTES").
C. The Acquisition Agreement provides for the execution and delivery
of this Agreement at the closing of the transactions contemplated thereby.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and conditions herein and in the Acquisition Agreement, the parties
hereto hereby agree as follows:
SECTION 1
DEFINITIONS
1.1 Certain Definitions. As used in this Agreement:
(a) "AFFILIATE" means, with respect to any Person, any Person
directly or indirectly controlling, controlled by, or under common control
with, such other Person. For purposes of this definition, "CONTROL" when used
with respect to any Person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; the terms "CONTROLLING" and "CONTROLLED" have meanings correlative
to the foregoing.
<PAGE> 116
(b) "BENEFICIAL OWNERSHIP" or "BENEFICIAL OWNER" has the
meaning provided in Rule 13d-3 promulgated under the Exchange Act. References
to ownership of Voting Securities hereunder mean beneficial ownership.
(c) "CHANGE IN CONTROL OF MICRON" shall mean a merger,
consolidation or other business combination or the sale of all or substantially
all of the assets of Micron (other than a transaction pursuant to which the
holders of the voting stock of Micron outstanding immediately prior to such
transaction have the entitlement to exercise, directly or indirectly, fifty
percent (50%) or more of the Total Voting Power of the continuing, surviving
entity or transferee immediately after such transaction).
(d) "DEMAND REGISTRATION STATEMENT" has the meaning set forth
in Section 4.1(a).
(e) "DEMAND REQUEST" has the meaning set forth in Section
4.1(a).
(f) "DEMAND/TRANCHE MANAGING UNDERWRITERS" has the meaning set
forth in Section 4.4(c).
(g) "DEMAND/TRANCHE MARKET CUT-BACK" has the meaning set forth
in Section 4.4(d).
(h) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
(i) "GROUP" or "GROUP" shall have the meaning provided in
Section 13(d)(3) of the Exchange Act and the rules and regulations promulgated
thereunder, but shall exclude any institutional underwriter purchasing Voting
Securities of Micron in connection with an underwritten registered offering for
purposes of a distribution of such securities.
(j) "INDEMNIFIED PARTY" has the meaning set forth in Section
4.6(c).
(k) "INDEMNIFYING PARTY" has the meaning set forth in Section
4.6(c).
(l) "MICRON PUBLIC OFFERING LOCK-UP" has the meaning set forth
in Section 4.9(b).
(m) "PERSON" shall mean any person, individual, corporation,
partnership, trust or other nongovernmental entity or any governmental agency,
court, authority or other body (whether foreign, federal, state, local or
otherwise).
(n) "PIGGYBACK MARKET CUT-BACK" has the meaning set forth in
Section 4.3.(c).
(o) "PIGGYBACK REGISTRABLE SECURITIES" has the meaning set
forth in Section 4.3.(a).
(p) "PIGGYBACK REGISTRATION STATEMENT" has the meaning set
forth in Section 4.3(a).
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<PAGE> 117
(q) "PIGGYBACK REQUEST" has the meaning set forth in Section
4.3.(a).
(r) "PIGGYBACK UNDERWRITING AGREEMENT" has the meaning set
forth in Section 4.3.(b).
(s) "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
(t) "REGISTRABLE SECURITIES" means (i) the Shares, (ii) the
2005 Convertible Notes, (iii) any Common Stock issued or issuable upon
conversion of the 2005 Convertible Notes and (iv) any securities issued in
respect of the foregoing as a result of any stock split, stock dividend,
recapitalization, or similar transaction.
(u) "REGISTRATION EXPENSES" has the meaning set forth in
Section 4.5(a).
(v) "RESTRICTED SECURITIES" has the meaning set forth in
Section 3.3(a).
(w) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
(x) "SEC" means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
(y) "SHELF REGISTRABLE SECURITIES" has the meaning set forth
in Section 4.2(a).
(z) "SHELF REGISTRATION STATEMENT" has the meaning set forth
in Section 4.2(a).
(aa) "SHELF REQUEST" has the meaning set forth in Section
4.2(a).
(bb) "SUSPENSION CONDITION" has the meaning set forth in
Section 4.4(f).
(cc) "TI CONFLICT OF INTEREST TRANSACTION" means (i) any
transaction (including the issuance of Micron securities or a transaction of
which the issuance of such securities is a part) between Micron and a
competitor of TI in any of the businesses in which TI is engaged, or has
announced an intention to become engaged or (ii) any other transaction with
respect to which TI has a significant interest that conflicts with the
interests of Micron or the other stockholders of Micron as stockholders. For
purposes of clause (i) of the preceding sentence, the "announced intentions" of
TI at any time may be established by reference to press releases and any
materials filed with the SEC or otherwise disclosed to the public pursuant to
the Securities Act or the Exchange Act. For purposes of clause (ii) of such
sentence, TI shall be deemed to have a substantial interest that conflicts with
the interests of Micron and the other stockholders of Micron as stockholders in
any situation in which TI has a substantial economic interest (direct or
indirect) in the transaction that is greater than and contrary to its economic
interest as a stockholder of Micron.
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<PAGE> 118
(dd) "TI POOLING TRANSACTION LOCK-UP" has the meaning set forth
in Section 4.9(a).
(ee) "TI PUBLIC OFFERING LOCK-UP" has the meaning set forth in
Section 4.9(a).
(ff) "TRANCHE REGISTRABLE SECURITIES" has the meaning set forth
in Section 4.2(b).
(gg) "TRANCHE REQUEST" has the meaning set forth in Section
4.2(b).
(hh) "VOTING SECURITIES" means (i) all securities of Micron,
entitled, in the ordinary course, to vote in the election of directors of
Micron and (ii) for the purposes of this Agreement only, all securities of
Micron convertible into or exchangeable or exercisable for shares of Common
Stock (including the Convertible Notes), the Voting Power of which shall be
deemed equal to the number of shares of Common Stock issuable upon the
conversion, exchange or exercise of such securities. Voting Securities shall
not include stockholder rights or other comparable securities having Voting
Power only upon the happening of a trigger event or comparable contingency and
which can only be transferred together with the Voting Securities to which they
attach. References herein to meetings of holders of Voting Securities shall
include meetings of any class or type thereof (including without limitation
meetings of holders of the Convertible Notes).
(ii) "VOTING POWER" or "TOTAL VOTING POWER" of Micron (or any
other corporation) refer to the votes or total number of votes which at the
time of calculation may be cast in the election of directors of Micron (or such
corporation) at any meeting of stockholders of Micron (or such corporation) if
all securities entitled to vote in the election of directors of Micron (or such
corporation) were present and voted at such meeting; provided that for purposes
of references herein made to any Person's "Voting Power" or percentage
beneficial ownership of "Total Voting Power," any rights (other than rights
referred to in any rights plan of Micron (or any such other corporation) or a
successor to such rights plan so long as such rights can only be transferred
together with the Voting Securities to which they attach) of such Person to
acquire Voting Securities (whether or not the exercise of any such right shall
be conditioned upon the passage of time or any other contingency) shall be
deemed to have been exercised in full.
(jj) "180-DAY LIMITATION" has the meaning set forth in Section
4.4(a).
(kk) "2004 CONVERTIBLE NOTES" means Micron's 7% Convertible
Subordinated Notes due July 1, 2004, and the term "CONVERTIBLE NOTES" means the
2004 Convertible Notes and the 2005 Convertible Notes.
All capitalized terms used and not defined herein shall have the
respective meanings assigned to such terms in the Acquisition Agreement.
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<PAGE> 119
SECTION 2
STANDSTILL AND RELATED COVENANTS
2.1 TI Ownership of Micron Securities. On the date hereof, and
without giving effect to the transactions contemplated by the Acquisition
Agreement, neither TI nor any Affiliate of TI beneficially owns any Voting
Securities of Micron (excluding any officers and directors of TI and any
employee benefit or pension plan of TI).
2.2 Standstill Provisions. TI shall not acquire, directly or
indirectly, and shall not cause or permit any Affiliate of TI (excluding any
officers and directors of TI and any employee benefit or pension plan of TI) to
acquire, directly or indirectly (through market purchases or otherwise), record
or beneficial ownership of any Voting Securities of Micron without the prior
written consent of the Board of Directors of Micron; provided, however, that
the prior written consent of the Board of Directors of Micron shall not be
required for the acquisition of any Voting Securities of Micron pursuant to the
conversion of any of the 2005 Convertible Notes or resulting from a stock
split, stock dividend or similar recapitalization by Micron. Nothing contained
in this Section 2.2 shall adversely affect any right of TI to acquire record or
beneficial ownership of Voting Securities of Micron pursuant to any rights plan
instituted by Micron.
2.3 Voting. Unless the Board of Directors of Micron otherwise
consents in writing in advance, TI shall take such action (and shall cause each
Affiliate of TI that beneficially owns Voting Securities of Micron to take such
action) as may be required so that all Voting Securities of Micron beneficially
owned by TI (or any such Affiliate of TI) from time to time are voted on all
matters to be voted on by holders of Voting Securities of Micron in the same
proportion (for, against and abstain, with lost, damaged or disfigured ballots
counting as abstentions to the extent that they cannot be counted as for or
against under applicable law) as the votes cast by the other holders of Voting
Securities of Micron with respect to such matters; provided, however, that all
Voting Securities of Micron beneficially owned by TI (or any Affiliate of TI)
from time to time may be voted as TI (or any such Affiliate of TI) determines
in its sole discretion on any matter presented to the holders of Voting
Securities of Micron (by any Person other than TI, any Affiliate of TI or an
"ASSOCIATE" of any of them, as such term is defined in Rule 12b-2 under the
Exchange Act), to approve (i) any merger, consolidation or other business
combination involving Micron, (ii) any sale of all or substantially all of the
assets of Micron, (iii) any issuance of equity or equity-linked securities of
Micron requiring stockholder approval pursuant to applicable stock exchange
rules; provided, however, that neither TI nor any Affiliate of TI shall be
entitled to vote on any matter set forth in clauses (i), (ii) or (iii) hereof
that constitutes, involves or is part of, a TI Conflict of Interest
Transaction. TI (or any Affiliate of TI), as the holder of Voting Securities
of Micron, shall use its best efforts to be present, in person or by proxy, at
all meetings of the stockholders of Micron so that all Voting Securities of
Micron beneficially owned by TI (or such Affiliate of TI) from time to time may
be counted for the purposes of determining the presence of a quorum at such
meetings. The foregoing provision shall also apply to the execution by TI of
any written consent in lieu of a meeting of holders of Voting Securities of
Micron or any class thereof.
-5-
<PAGE> 120
2.4 Voting Trust. TI shall not, and shall not cause or permit any
Affiliate of TI to, deposit any Voting Securities of Micron in a voting trust
or, except as otherwise provided herein, subject any Voting Securities of
Micron to any arrangement or agreement with respect to the voting of such
Voting Securities of Micron.
2.5 Solicitation of Proxies. Without the prior written consent of
the Board of Directors of Micron, TI shall not, and shall not cause or permit
any Affiliate of TI to, directly or indirectly (i) initiate, propose or
otherwise solicit Micron stockholders for the approval of one or more
stockholder proposals with respect to Micron or induce or attempt to induce any
other Person to initiate any stockholder proposal, (ii) make, or in any way
participate in, any "SOLICITATION" of "PROXIES" (as such terms are defined or
used in Regulation 14a-1 under the Exchange Act) with respect to any Voting
Securities of Micron, or become a "PARTICIPANT" in any "ELECTION CONTEST" (as
such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act),
with respect to Micron or (iii) call or seek to have called any meeting of the
holders of Voting Securities of Micron.
2.6 Acts in Concert with Others. Except as contemplated herein, TI
shall not, and shall not cause or permit any Affiliate of TI, to participate in
the formation, or encourage the formation, of any Person which owns or seeks to
acquire beneficial ownership of, or otherwise acts in concert in respect of the
voting or disposition of, Voting Securities of Micron. Without limiting the
generality of the foregoing, and except as contemplated herein, TI shall not,
and shall not cause or permit any Affiliate of TI to: (i) join a partnership,
limited partnership, syndicate or other group, or otherwise act in concert with
any third person, for the purpose of acquiring, holding, or disposing of Voting
Securities of Micron; (ii) seek election to or seek to place a representative
on the Board of Directors of Micron; (iii) seek the removal of any member of
the Board of Directors of Micron; (iv) otherwise seek control of the
management, Board of Directors or policies of Micron; (v) solicit, propose,
seek to effect or negotiate with any other Person with respect to any form of
business combination transaction with Micron or any Affiliate thereof, or any
restructuring, recapitalization or similar transaction with respect to Micron
or any Affiliate thereof; (vi) solicit, make or propose or encourage or
negotiate with any other Person with respect to, or announce an intent to make,
any tender offer or exchange offer for any Voting Securities of Micron; (vii)
disclose an intent, purpose, plan or proposal with respect to Micron or any
Voting Securities of Micron inconsistent with the provisions of this Agreement,
including an intent, purpose, plan or proposal that is conditioned on or would
require Micron to waive the benefit of or amend any provision of this
Agreement; or (vii) assist, participate in, facilitate, encourage or solicit
any effort or attempt by any Person to do or seek to do any of the foregoing.
TI shall not, and shall not cause or permit any Affiliate of TI to, encourage
or render advice to or make any recommendation or proposal to any Person to
engage in any of the actions covered by Section 2.5 and this Section 2.6
hereof.
2.7 Termination. The provisions of this Article 2 shall terminate
upon the earlier to occur of: (i) such time as TI (together with all Affiliates
of TI) beneficially owns in the aggregate Voting Securities of Micron
representing less than five percent (5%) of the Total Voting Power of Micron;
or (ii) the closing or other completion of a Change in Control of Micron.
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<PAGE> 121
SECTION 3
RESTRICTIONS ON TRANSFER OF
SECURITIES; COMPLIANCE WITH SECURITIES LAWS
3.1 Restrictions on Transfer of Voting Securities of Micron. Subject
to Section 3.6 hereof, TI shall not, and shall not cause or permit any
Affiliate of TI to, directly or indirectly, offer to sell, contract to sell,
make any short sale of, or otherwise sell, dispose of, loan, gift, pledge or
grant any options or rights with respect to, any Voting Securities of Micron,
now or hereafter acquired, or with respect to which TI (or any Affiliate of TI)
has or hereafter acquires the power of disposition (or enter into any agreement
or understanding with respect to the foregoing), except as set forth below:
(a) to Micron, or any Person or group approved in writing in
advance by the Board of Directors of Micron;
(b) to any wholly-owned subsidiary of TI, so long as such
subsidiary agrees in writing (in form reasonably acceptable to counsel for
Micron) to hold such Voting Securities of Micron subject to all the provisions
of this Agreement, and so agrees to transfer such Voting Securities of Micron
to TI or another wholly-owned subsidiary of TI if it ceases to be a wholly-
owned subsidiary of TI;
(c) pursuant to a firm commitment, underwritten public
offering of Voting Securities of Micron registered under the Securities Act;
provided, however, that such offering is structured to distribute such
securities through an underwriter in accordance with procedures designed to
ensure (as far as is practically possible) that beneficial ownership of the
Voting Securities of Micron with aggregate Voting Power of more than five
percent (5%) of the Total Voting Power of Micron then in effect shall not be
transferred during such underwriting to any single Person or group;
(d) through a sale of Voting Securities of Micron pursuant to
Rule 144 under the Securities Act; provided, however, that any such sale (i)
complies with the manner of sale provisions under paragraph (f) of Rule 144 or
(ii) is of securities with Voting Power aggregating less than five percent (5%)
of the Total Voting Power of Micron and is not made knowingly directly or
indirectly to: (A) any Person or group which has theretofore filed a Schedule
13D with the SEC with respect to any class of "EQUITY SECURITY" (as defined in
Rule 13a11-1 under the Exchange Act) of Micron and which, at the time of such
sale, continues to reflect beneficial ownership in excess of five percent (5%)
of the Total Voting Power of Micron; (B) any Person or group known to TI
(without inquiry or investigation) to beneficially own in excess of five
percent (5%) of any Voting Securities of Micron or to be accumulating stock on
behalf of or acting in concert with any such Person or group or a Person or
group contemplated by clause (A) above; or (C) any Person or group that has
announced or commenced an unsolicited offer for any Voting Securities of Micron
or publicly initiated, proposed or otherwise solicited Micron stockholders for
the approval of one or more stockholder proposals with respect to Micron or
publicly made, or in any way participated in, any "SOLICITATION" of "PROXIES"
(as such terms are defined or used in Regulation 14A under the Exchange Act)
with respect to any Voting Securities of Micron, or become a "PARTICIPANT" in
any "ELECTION CONTEST" (as such terms are used in Rule 14a-11 of Regulation 14A
under the Exchange Act);
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(e) pursuant to any private sale of Voting Securities of
Micron exempt from the registration requirements under the Securities Act,
provided that no such sale may be made (i) to any Person or group which, after
giving effect to such sale, will beneficially own or have the right to acquire
Voting Securities of Micron with aggregate Voting Power of more than five
percent (5%) of the Total Voting Power of Micron unless such Person or group is
an institutional investor that acquires such Voting Securities solely for
investment, in which case the total number of Voting Securities that may be
sold to such Person or group shall be limited so that such Person or group
shall not own or have the right to acquire more than ten percent (10%) of the
Total Voting Power of Micron after giving effect to the proposed sale; and,
provided, further, that any such purchaser (and any transferee of such
purchaser) shall agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Article 3, and it will be
a condition precedent to the effectiveness of any such transfer that TI shall
have delivered to Micron a written agreement of such purchaser to that effect
in form and substance reasonably satisfactory to Micron;
(f) in response to an offer to purchase or exchange for cash
or other consideration any Voting Securities, which in any case is not opposed
by the Board of Directors of Micron within the time such Board is required,
pursuant to regulations under the Exchange Act, to advise the stockholders of
Micron of such Board's position with respect to such offer, or, if no such
regulations are applicable, within ten (10) business days of the commencement
of such offer, or pursuant to a merger, consolidation or other business
combination involving Micron approved by the Board of Directors of Micron; or
(g) subject to Micron's prior consent (which shall not be
unreasonably withheld), pursuant to bona fide pledges of such Restricted
Securities to institutional lenders (provided that the number of such lenders
to which, or for the benefit of which, such pledges may be made, shall not
exceed twenty (20) in the aggregate), to secure a loan, guarantee, letter of
credit facility or other indebtedness or financial support; provided that each
such lender to which, or for the benefit of which, such pledge is made agrees
in writing to hold such Restricted Securities subject to all provisions of this
Agreement, including the limitations on any sale or other disposition of such
Restricted Securities.
3.2 Restrictions on Transfer of Subordinated Notes. Subject to
Section 3.6 hereof, TI shall not, and shall not cause or permit any Affiliate
of TI to, directly or indirectly, offer to sell, contract to sell, make any
short sale of, or otherwise sell, dispose of, loan, gift, pledge or grant any
options or rights with respect to, any of the Subordinated Notes, now or
hereafter acquired, or with respect to which TI (or such Affiliate of TI) has
or hereafter acquires the power of disposition (or enter into any agreement or
understanding with respect to the foregoing), except through a sale of a
minimum of $10,000,000 principal amount of Subordinated Notes (and of any
integral multiple of $1,000,000 in excess thereof) under Rule 144A under the
Securities Act to a "QUALIFIED INSTITUTIONAL BUYER" as defined in such Rule
144A.
3.3 Restrictive Legends.
(a) The certificate or certificates representing the (i) the
Shares, (ii) the 2005 Convertible Notes, (iii) any Common Stock issued or
issuable upon conversion of the 2005 Convertible Notes and (iv) any securities
issued in respect of the foregoing as a result of any stock split, stock
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dividend, recapitalization, or similar transaction initially acquired by TI
from Micron in accordance with the terms of this Agreement (collectively, the
"RESTRICTED SECURITIES") shall be stamped or otherwise imprinted with a legend
substantially in the following form (in addition to any legend required under
applicable state securities laws):
THE SHARES (or, as applicable, CONVERTIBLE NOTES) REPRESENTED BY THIS
CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES (or, as
applicable, CONVERTIBLE NOTES) MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO
THE ISSUER AS TO THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION.
(b) In addition to the legend provided for in Section 3.3(a),
the certificate or certificates representing the Restricted Securities shall be
stamped or otherwise imprinted with a legend substantially in the following
form:
THE SHARES (or, as applicable, CONVERTIBLE NOTES) REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER, INCLUDING ANY SALE,
PLEDGE OR OTHER HYPOTHECATION SET FORTH IN AN AGREEMENT DATED AS OF
[_______], 1998 BETWEEN THE ISSUER AND TEXAS INSTRUMENTS INCORPORATED, A
COPY OF WHICH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST
MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
ISSUER AT THE ISSUER'S PRINCIPAL EXECUTIVE OFFICES.
(c) The certificate or certificates representing the
Subordinated Notes shall be stamped or otherwise imprinted with legends
substantially in the following form:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER THIS NOTE ONLY (A) TO THE ISSUER, OR (B) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO
A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
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INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A.
3.4 Procedures for Certain Transfers.
(a) The holder of each certificate representing Restricted
Securities, by acceptance thereof, agrees to comply in all respects with the
provisions of this Article 3.
(b) Prior to any proposed transfer of any Restricted
Securities pursuant to Sections 3.1(a), (b), (e) and (g) hereof, TI shall give
written notice to Micron of TI's intention to effect such transfer. Each such
notice shall describe the manner and circumstances of the proposed transfer in
sufficient detail, and shall be accompanied by either: (i) a written opinion of
legal counsel (including in-house counsel), who shall be reasonably
satisfactory to Micron, addressed to Micron and reasonably satisfactory in form
and substance to Micron's counsel, to the effect that the proposed transfer of
the Restricted Securities may be effected without registration under the
Securities Act; or (ii) a "no action" letter from the SEC and a copy of any
request by TI (together with all supplements or amendments thereto), which
shall have been provided to Micron at or prior to the time of first delivery to
the SEC's staff, to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the SEC that
action be taken with respect thereto, whereupon TI shall be entitled to
transfer such Restricted Securities in accordance with the terms of the notice
delivered by TI to Micron.
(c) In connection with any proposed transfer of Restricted
Securities pursuant to Section 3.1(d) hereof, TI shall comply with all of the
requirements of Rule 144 under the Securities Act and the reasonable
requirements of Micron's transfer agent with respect to sales of Restricted
Securities pursuant to Rule 144.
(d) Each certificate evidencing the Restricted Securities
transferred as herein provided (other than a transfer pursuant to Section
3.1(c)) shall bear the appropriate restrictive legend set forth (or described)
in Section 3.4(a) above, except that such certificate shall not bear such
restrictive legend if: (i) in the opinion of counsel for Micron, such legend is
not required in order to establish compliance with any provisions of the
Securities Act; (ii) the Restricted Securities have been held by the holder for
more than two years, and the holder represents to counsel for Micron that it
has not been an "AFFILIATE" (as such term is defined for purposes of Rule 144)
of Micron during the three-month period prior to the sale and shall not become
an affiliate (as such term is defined for purposes of Rule 144) of Micron
without resubmitting the Restricted Securities for reimposition of the legend;
or (iii) the Restricted Securities have been sold pursuant to Rule 144 and in
compliance with Section 3.1(d). In addition, each certificate evidencing the
Restricted Securities transferred pursuant to this Article 3 (other than
transfers pursuant to Sections 3.1(c) and 3.1(d) hereof) shall bear the legend
set forth in Section 3.3(b) above.
3.5 Covenant Regarding Exchange Act Filings. With a view to making
available to TI the benefits of Rule 144 promulgated under the Securities Act,
and any other rules or regulations of the SEC which may at any time permit TI
to sell any Restricted Securities without registration, until the date of
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termination of this Agreement, Micron agrees to use commercially reasonable
efforts to file with the SEC in a timely manner all reports and other documents
required to be filed under the Exchange Act.
3.6 Termination. The provisions of this Article 3 shall terminate
upon the later to occur of: (i) the tenth anniversary date of this Agreement
and (ii) such time as TI (together with all Affiliates of TI) beneficially owns
in the aggregate Voting Securities of Micron representing less than five
percent (5%) of the Total Voting Power of Micron or upon the closing or other
completion of a Change in Control of Micron.
SECTION 4
REGISTRATION RIGHTS
4.1 Demand Registration.
(a) If at any time after the six month anniversary date of
this Agreement, Micron shall receive from TI a written request (a "DEMAND
REQUEST") that Micron register on Form S-3 under the Securities Act (or if such
form is not available, any registration statement form then available to
Micron) Registrable Securities equal to at least two percent (2%) of the Voting
Securities of Micron outstanding on the date of such Demand Request, then
Micron shall use commercially reasonable efforts to cause the Registrable
Securities specified in such Demand Request (THE "DEMAND REGISTRABLE
SECURITIES") to be registered as soon as reasonably practicable so as to permit
the offering and sale thereof and, in connection therewith, shall prepare and
file with the SEC as soon as practicable after receipt of such Demand Request,
a registration statement (a "DEMAND REGISTRATION STATEMENT") to effect such
registration; provided, however, that each such Demand Request shall: (i)
specify the number of Demand Registrable Securities intended to be offered and
sold by TI pursuant thereto (which number of Demand Registrable Securities
shall not be less than two percent (2%) of the Voting Securities of Micron
outstanding on the date of such Demand Request); (ii) express the present
intention of TI to offer or cause the offering of such Demand Registrable
Securities pursuant to such Demand Registration Statement, (iii) describe the
nature or method of distribution of such Demand Registrable Securities pursuant
to such Demand Registration Statement (including, in particular, whether TI
plans to effect such distribution by means of an underwritten offering); and
(iv) contain the undertaking of TI to provide all such information and
materials and take all such actions as may be required in order to permit
Micron to comply with all applicable requirements of the Securities Act, the
Exchange Act and the rules and regulations of the SEC thereunder, and to obtain
any desired acceleration of the effective date of such Demand Registration
Statement.
(b) The procedures to be followed by Micron and TI, and the
respective rights and obligations of Micron and TI, with respect to the
preparation, filing and effectiveness of Demand Registration Statements and the
distribution of Demand Registrable Securities pursuant to Demand Registration
Statements under this Section 4.1 are set forth in Section 4.4 hereof.
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4.2 Shelf Registration.
(a) If at any time after the six month anniversary date of
this Agreement, Micron shall receive from TI a written request (a "SHELF
REQUEST") that Micron register pursuant to Rule 415(a)(1)(i) under the
Securities Act (or any successor rule with similar effect) a delayed offering
of Registrable Securities, equal to at least five percent (5%) of the Voting
Securities of Micron outstanding on the date of such Shelf Request, then Micron
shall use commercially reasonable efforts to cause the Registrable Securities
specified in such Shelf Request (the "SHELF REGISTRABLE SECURITIES") to be
registered as soon as reasonably practicable so as to permit the sale thereof
and, in connection therewith, shall (i) prepare and file with the SEC as soon
as practicable after receipt of such Shelf Request, a shelf registration
statement on Form S-3 relating to such Shelf Registrable Securities, if such
Form S-3 is available for use by Micron (or any successor form of registration
statement to such Form S-3), to effect such registration (a "SHELF REGISTRATION
STATEMENT"), to enable the distribution of such Shelf Registrable Securities;
provided, however, that each such Shelf Request shall: (i) specify the number
of Shelf Registrable Securities intended to be offered and sold by TI pursuant
thereto (which number of Shelf Registrable Securities shall not be less than
five percent (5%) of the Voting Securities of Micron outstanding on the date of
such Shelf Request); (ii) express the intention of TI to offer or cause the
offering of such Shelf Registrable Securities pursuant to such Shelf
Registration Statement on a delayed basis in the future; (iii) describe the
nature or method of the proposed offer and sale of such Shelf Registrable
Securities pursuant to such Shelf Registration Statement; and (iv) contain the
undertaking of TI to provide all such information and materials and take all
such actions as may be required in order to permit Micron to comply with all
applicable requirements of the Securities Act, the Exchange Act and the rules
and regulations of the SEC thereunder, and to obtain any desired acceleration
of the effective date of such Shelf Registration Statement. TI shall not be
entitled to make more than one Shelf Request during any three hundred sixty-
five (365) day period.
(b) It is expressly agreed by the parties that the sole
purpose of Micron filing and maintaining an effective a Shelf Registration
Statement for the delayed offering of Shelf Registrable Securities by TI is to
make the process of distributing Registrable Securities by TI more convenient
for both parties by reducing or eliminating the need to file a new Demand
Registration Statement each time that TI decides to sell Registrable
Securities. After a Shelf Registration Statement has been declared effective
under the Securities Act by the SEC, then, upon the written request of TI (a
"TRANCHE REQUEST"), Micron shall prepare such amendments to such Shelf
Registration Statement (including post-effective amendments), if any, and such
amendments or supplements to the prospectus relating to the Registrable
Securities to be offered thereunder pursuant to such Tranche Request (the
"TRANCHE REGISTRABLE SECURITIES"), as is necessary to facilitate the
distribution of such Tranche Registrable Securities pursuant to such Tranche
Request; provided, however, that such Tranche Request shall: (i) specify the
number of Tranche Registrable Securities intended to be offered and sold by TI
pursuant thereto (which number of Tranche Registrable Securities shall not be
less than two percent (2%) of the Voting Securities of Micron outstanding on
the date of such Tranche Request); (ii) express the present intention of TI to
offer or cause the offering of such Tranche Registrable Securities pursuant to
the Shelf Registration Statement, (iii) describe the nature or method of
distribution of such Tranche Registrable Securities pursuant to the Shelf
Registration Statement (including, in particular, whether TI plans to effect
such distribution by means of an underwritten offering); and (iv) contain the
undertaking of TI to
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provide all such information and materials and take all such actions as may be
required in order to permit Micron to comply with all applicable requirements
of the Securities Act, the Exchange Act and the rules and regulations of the
SEC thereunder.
(c) The procedures to be followed by Micron and TI, and the
respective rights and obligations of Micron and TI, with respect to the
preparation, filing and effectiveness of Shelf Registration Statements and the
distribution of Tranche Registrable Securities pursuant to Shelf Registration
Statements under this Section 4.2 are set forth in Section 4.4 hereof.
4.3 Piggyback Registration.
(a) If at any time after the six month anniversary date of
this Agreement, Micron shall determine to register any of its equity or equity-
linked securities (other than registration statements relating to (i) employee,
consultant or distributor compensation or incentive arrangements (including
employee benefit plans), (ii) acquisitions or any transaction or transactions
under Rule 145 under the Securities Act (or any successor rule with similar
effect), (iii) distributions by principal stockholders, their Affiliates or
transferees (unless consented to by such principal stockholders, Affiliates or
transferees), or (iv) pursuant to Rule 415 under the Securities Act), then
Micron will promptly give TI written notice thereof and include in such Micron-
initiated, non-shelf, registration statement (a "PIGGYBACK REGISTRATION
STATEMENT"), and in any underwriting involved therein, all Registrable
Securities (the "PIGGYBACK REGISTRABLE SECURITIES") specified in a written
request made by TI (a "PIGGYBACK REQUEST") within five (5) business days after
receipt of such written notice from Micron; provided, however, that nothing in
this Section 4.3(a), or any other provision of this Agreement, shall be
construed to limit the absolute right of Micron, for any reason and in its sole
discretion: (i) to delay, suspend or terminate the filing of any Piggyback
Registration Statement; (ii) to delay the effectiveness of any Piggyback
Registration Statement; (iii) to terminate or reduce the number of Piggyback
Registrable Securities to be distributed pursuant to any Piggyback Registration
Statement (including, without limitation, pursuant to Section 4.3(c) hereof);
or (iv) to withdraw such Piggyback Registration Statement.
(b) If the Piggyback Registration Statement of which Micron
gives notice is for an underwritten offering, Micron shall so advise TI as a
part of the written notice given pursuant to Section 4.3(a). In such event,
the right of TI to registration pursuant to this Section 4.3 shall be
conditioned upon the agreement of TI to participate in such underwriting and in
the inclusion of such Piggyback Registrable Securities in the underwriting to
the extent provided herein. TI shall (together with Micron and any other
holders distributing securities in such Piggyback Registration Statement, if
any) enter into an underwriting agreement (the "PIGGYBACK UNDERWRITING
AGREEMENT") in customary form with the underwriter or underwriters selected for
such underwriting by Micron.
(c) Notwithstanding any other provision of this Agreement, if
the managing underwriters of any underwritten offering pursuant to a Piggyback
Request determine, in their sole discretion that, after including all the
shares to be offered by Micron and all the shares of any other Persons entitled
to registration rights with respect to such Piggyback Registration Statement
(pursuant to other agreements with Micron), marketing factors require a
limitation of the number of Piggyback
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Registrable Securities to be underwritten, the managing underwriters of such
offering may exclude any and all of the Piggyback Registrable Securities (a
"PIGGYBACK MARKET CUT-BACK"). If TI disapproves of the terms of any such
underwriting, it may elect to withdraw therefrom by written notice to Micron
and the managing underwriters. Any Piggyback Registrable Securities excluded
or withdrawn from such underwriting shall be withdrawn from such Piggyback
Registration Statement.
(d) Except to the extent specifically provided in this Section
4.3 hereof, the procedures to be followed by Micron and TI, and the respective
rights and obligations of Micron and TI, with respect to the distribution of
any Piggyback Registrable Securities by TI pursuant to any Piggyback
Registration Statement filed by Micron shall be as set forth in the Piggyback
Underwriting Agreement, or any other agreement or agreements governing the
distribution of such Piggyback Registrable Securities pursuant to such
Piggyback Registration Statement.
4.4 Demand and Shelf Registration Procedures, Rights and Obligations.
The procedures to be followed by Micron and TI, and the respective rights and
obligations of Micron and TI, with respect to the preparation, filing and
effectiveness of Demand Registration Statements and Shelf Registration
Statements, respectively, and the distribution of Demand Registrable Securities
and Tranche Registrable Securities, respectively, pursuant thereto, are as
follows:
(a) TI shall not be entitled to make more than one Demand
Request or Tranche Request during any one hundred eighty (180) day period (the
"180-DAY LIMITATION"); provided, however, that (i) any Demand Request that: (A)
does not result in the corresponding Demand Registration Statement being
declared effective by the SEC; (B) is withdrawn by TI following the imposition
of a stop order by the SEC with respect to the corresponding Demand
Registration Statement; (C) is withdrawn by TI as a result of the exercise by
Micron of its suspension rights pursuant to Sections 4.4(e) or (f) hereof; or
(D) is withdrawn by TI as a result of a Demand/Tranche Market Cut-Back (as
defined in Section 4.4(d) hereof); and (ii) any Tranche Request that: (A) is
withdrawn by TI following the imposition of a stop order by the SEC with
respect to the corresponding Shelf Registration Statement; (B) is withdrawn by
TI as a result of the exercise by Micron of its suspension rights pursuant to
Sections 4.4(e) or (f) hereof; or (C) is withdrawn by TI as a result of a
Demand/Tranche Market Cut-Back, shall not count for the purposes of determining
compliance with the 180-Day Limitation. Any Demand Request or Tranche Request
that is withdrawn by TI for any reason other than as set forth in the previous
sentence shall count for purposes of determining compliance with the 180-Day
Limitation. Piggyback Requests shall not count for purposes of determining
compliance with the 180-Day Limitation regardless of whether a Piggyback
Registration Statement is filed, declared effective or withdrawn or whether any
distribution of Piggyback Registrable Securities is effected, terminated or
cut-back (pursuant to Section 4.3(c) hereof, or otherwise).
(b) Micron shall use commercially reasonable efforts to cause
each Demand Registration Statement and Shelf Registration Statement to be
declared effective promptly and to keep such Demand Registration Statement and
Shelf Registration Statement continuously effective until the earlier to occur
of: (i) the sale or other disposition of the Registrable Securities so
registered; (ii) sixty (60) days after (A) the effective date of any Demand
Registration Statement or (B) the date of the final prospectus used to confirm
sales in connection with any offering of Tranche Registrable Securities; and
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(iii) the termination of TI's registration rights pursuant to Section 4.10
hereof. Micron shall prepare and file with the SEC such amendments and
supplements to each Demand Registration Statement and Shelf Registration
Statement and each prospectus used in connection therewith as may be necessary
to make and to keep such Demand Registration Statement and Shelf Registration
Statement effective and to comply with the provisions of the Securities Act
with respect to the sale or other disposition of all Registrable Securities
proposed to be distributed pursuant to such Demand Registration Statement and
Shelf Registration Statement until the earlier to occur of: (i) the sale or
other disposition of such Registrable Securities so registered; (ii) sixty (60)
days after (A) the effective date of any Demand Registration Statement or (B)
the date of the final prospectus used to confirm sales in connection with any
offering of Tranche Registrable Securities; and (iii) the termination of TI's
registration rights pursuant to Section 4.10 hereof.
(c) In connection with any underwritten offering pursuant to a
Demand Registration Statement or a Shelf Registration Statement, Micron, on the
one hand, and TI, on the other hand, shall each select one investment banking
firm to serve as co-manager of such offering. The co-manager selected by
Micron shall be subject to the prior approval of TI, which approval shall not
be unreasonably withheld, and the co-manager selected by TI shall be subject to
the prior approval of Micron, which approval shall not be unreasonably
withheld. Each of the co-managers so selected by Micron and TI are hereinafter
collectively referred to as the "DEMAND/TRANCHE MANAGING UNDERWRITERS." The
Demand/Tranche Underwriter selected by TI shall be the lead Demand/Tranche
Managing Underwriter, whose responsibilities shall include running the "books"
for any offering. Micron shall, together with TI, enter into an underwriting
agreement with the Demand/Tranche Managing Underwriters, which agreement shall
contain representations, warranties, indemnities and agreements then
customarily included by an issuer in underwriting agreements with respect to
secondary distributions under demand registration statements or shelf
registration statements, as the case may be, and shall stipulate that the
Demand/Tranche Managing Underwriters will receive equal commissions and fees
and other remuneration in connection with the distribution of any Demand
Registrable Securities or Tranche Registrable Securities thereunder.
(d) Notwithstanding any other provision of this Agreement, the
number of Demand Registrable Securities or Tranche Registrable Securities
proposed to be distributed by TI pursuant to any Demand Request or Tranche
Request may be limited by the Demand/Tranche Managing Underwriters if such
Demand/Tranche Managing Underwriters determine that the sale of such Demand
Registrable Securities or Tranche Registrable Securities would significantly
and adversely affect the market price of the Common Stock (a "DEMAND/TRANCHE
MARKET CUT-BACK"). If TI disapproves of the terms of any proposed underwritten
offering under a Demand Registration Statement or a Shelf Registration
Statement (including, without limitation, any reduction in the number of Demand
Registrable Securities or Tranche Registrable Securities, as the case may be,
to be sold by TI thereunder pursuant to this Section 4.4(d)), TI may elect to
withdraw therefrom by written notice to Micron and the Demand/Tranche Managing
Underwriters. Any Demand Registrable Securities excluded or withdrawn from
such underwriting shall also be withdrawn from any applicable Demand
Registration Statement.
(e) Notwithstanding any other provisions of this Agreement, in
the event that Micron receives a Demand Request, Shelf Request or Tranche
Request at a time when Micron (i) shall have
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filed, or has a bona fide intention to file, a registration statement with
respect to a proposed public offering of equity or equity-linked securities or
(ii) has commenced, or has a bona fide intention to commence, a public offering
of equity or equity-linked securities pursuant to an existing effective shelf
or other registration statement, then Micron shall be entitled to suspend, for
a period of up to ninety (90) days after the receipt by Micron of such Demand
Request, Shelf Request or Tranche Request, the filing of any Demand
Registration Statement or Shelf Registration Statement or the implementation of
any Tranche Request.
(f) Notwithstanding any other provision of this Agreement, in
the event that Micron determines that: (i) non-public material information
regarding Micron exists, the immediate disclosure of which would be
significantly disadvantageous to Micron; (ii) the prospectus constituting a
part of any Demand Registration Statement or Shelf Registration Statement
covering the distribution of any Demand Registrable Securities or Tranche
Securities contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; or (iii) an offering of Demand Registrable Securities or Tranche
Registrable Securities would materially interfere with any proposed material
acquisition, disposition or other similar corporate transaction or event
involving Micron (each of the events or conditions referred to in clauses (i),
(ii) and (iii) of this sentence is hereinafter referred to as a "SUSPENSION
CONDITION"), then Micron shall have the right to suspend the filing or
effectiveness of any Demand Registration Statement or Shelf Registration
Statement or to suspend any distribution of Demand Registrable Securities or
Tranche Registrable Securities pursuant to any effective Demand Registration
Statement or Shelf Registration Statement for so long as such Suspension
Condition exists. Micron will as promptly as practicable provide written
notice to TI when a Suspension Condition arises and when it ceases to exist.
Upon receipt of notice from Micron of the existence of any Suspension
Condition, TI shall forthwith discontinue efforts to: (i) file or cause any
Demand Registration Statement or Shelf Registration Statement to be declared
effective by the SEC (in the event that such Demand Registration Statement or
Shelf Registration Statement has not been filed, or has been filed but not
declared effective, at the time TI receives notice that a Suspension Condition
has arisen); or (ii) offer or sell Demand Registrable Securities or Tranche
Registrable Securities (in the event that such Demand Registration Statement or
Shelf Registration Statement has been declared effective at the time TI
receives notice that a Suspension Condition has arisen). In the event that TI
had previously commenced or was about to commence the distribution of Demand
Registrable Securities or Tranche Registrable Securities pursuant to a
prospectus under an effective Demand Registration Statement or Shelf
Registration Statement, then Micron shall, as promptly as practicable after the
Suspension Condition ceases to exist, make available to TI (and to each
underwriter, if any, participating in such distribution) an amendment or
supplement to such prospectus. If so directed by Micron, TI shall deliver to
Micron all copies, other than permanent file copies then in TI's possession, of
the most recent prospectus covering such Demand Registrable Securities or
Tranche Registrable Securities at the time of receipt of such notice.
(g) Notwithstanding any other provision of this Agreement,
Micron shall not be permitted to postpone (i) the filing or effectiveness of
any Demand Registration Statement or Shelf Registration Statement or (ii) the
distribution of any Demand Registrable Securities or Tranche Registrable
Securities pursuant to an effective Demand Registration Statement or an
effective Shelf
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Registration Statement pursuant to Sections 4.4(e), 4.4(f) or 4.9(a) hereof for
an aggregate of more than two hundred seventy-five (275) days in any three
hundred sixty-five (365) day period (including any market standoff periods
applicable to TI pursuant to Section 4.9(a) hereof); provided, however, that in
the event that any TI Pooling Transaction Lock-Up (as defined in Section 4.9(a)
hereof) would expire by its terms on a date that would extend beyond the two
hundred seventy-five (275) day limitation, then Micron shall have the right to
(i) postpone the filing or effectiveness of any Demand Registration Statement
or Shelf Registration Statement or (ii) the distribution of any Demand
Registrable Securities or Tranche Registrable Securities pursuant to an
effective Demand Registration Statement or an effective Shelf Registration
Statement until such time as such TI Pooling Transaction Lock-Up expires.
(h) Micron shall promptly notify TI of any stop order issued
or, to Micron's knowledge, threatened, to be issued by the SEC with respect to
any Demand Registration Statement or Shelf Registration Statement as to which a
Tranche Request is pending, and will use its best efforts to prevent the entry
of such stop order or to remove it if entered at the earliest possible date.
(i) Micron shall furnish to TI (and any underwriters in
connection with any underwritten offering) such number of copies of any
prospectus (including any preliminary prospectus and any amended or
supplemented prospectus), in conformity with the requirements of the Securities
Act, as TI (and such underwriters) shall reasonably request in order to effect
the offering and sale of any Demand Registrable Securities or Tranche
Registrable Securities to be offered and sold, but only while Micron shall be
required under the provisions hereof to cause the Demand Registration Statement
or Shelf Registration Statement pursuant to which such Demand Registrable
Securities or Tranche Registrable Securities are intended to be distributed to
remain current.
(j) Micron shall use commercially reasonable efforts to
register or qualify the Demand Registrable Securities and Tranche Registrable
Securities covered by each Demand Registration Statement and Shelf Registration
Statement, respectively, under the state securities or "blue sky" laws of such
states as TI shall reasonably request, maintain any such registration or
qualification current, until the earlier to occur of: (i) the sale of such
Demand Registrable Securities or Tranche Registrable Securities so registered;
(ii) sixty (60) days after (A) the effective date of any Demand Registration
Statement or (B) the date of the final prospectus used to confirm sales in
connection with such distribution (in the case of an offering of Tranche
Registrable Securities pursuant to a Shelf Registration Statement); and (iii)
the termination of TI's registration rights pursuant to Section 4.10 hereof;
provided, however, that Micron shall not be required to take any action that
would subject it to the general jurisdiction of the courts of any jurisdiction
in which it is not so subject or to qualify as a foreign corporation in any
jurisdiction where Micron is not so qualified.
(k) Micron shall furnish to TI and to each underwriter engaged
in an underwritten offering of Demand Registrable Securities or Tranche
Registrable Securities, a signed counterpart, addressed to TI or such
underwriter, of (i) an opinion or opinions of counsel to Micron (with respect
to Micron and securities law compliance by Micron) and (ii) a comfort letter or
comfort letters from Micron's independent public accountants, each in customary
form and covering such matters of the type customarily covered by opinions or
comfort letters, as the case may be, as TI or the managing underwriters may
reasonably request.
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(l) Micron shall use commercially reasonable efforts to make
appropriate members of its management reasonably available for due diligence
purposes, "road show" presentations and analyst presentations in connection
with any distributions of Demand Registrable Securities or Tranche Registrable
Securities pursuant to a Demand Registration Statement or a Shelf Registration
Statement.
(m) Micron shall use commercially reasonable efforts to cause
all Demand Registrable Securities and Tranche Registrable Securities to be
listed on each securities exchange on which similar securities of Micron are
then listed.
(n) At or prior to the effectiveness of any Demand
Registration Statement or Shelf Registration Statement covering the offering of
the 2005 Convertible Notes, Micron shall qualify the indenture (or any
supplemental indenture) relating to such 2005 Convertible Notes under the Trust
Indenture Act of 1939, as amended.
(o) Micron shall make generally available to its
securityholders, as soon as reasonably practicable, an earnings statement
covering a period of twelve (12) months, beginning three months after the
effective date of any Demand Registration Statement relating to the
distribution of Demand Registrable Securities or the date of any final
prospectus used to confirm sales in connection with any offering of Tranche
Registrable Securities, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act.
(p) Micron shall take all such other actions either reasonably
necessary or desirable to permit the Registrable Securities held by TI to be
registered and disposed of in accordance with the methods of disposition
described herein.
4.5 Expenses.
(a) All of the out-of-pocket costs and expenses incurred by
Micron in connection with any registration pursuant to Sections 4.1 and 4.2
shall (subject to Section 4.7) be borne by TI; provided that TI shall not be
required to reimburse Micron for compensation of Micron's officers and
employees, regular audit expenses, and normal corporate costs incurred in
connection with such registration. The costs and expenses of any such
registration shall include, without limitation, the reasonable fees and
expenses of Micron's counsel and its accountants and all other out-of-pocket
costs and expenses of Micron incident to the preparation, printing and filing
of the registration statement and all amendments and supplements thereto and
the cost of furnishing copies of each preliminary prospectus, each final
prospectus and each amendment or supplement thereto to underwriters, dealers
and other purchasers of the securities so registered, the costs and expenses
incurred in connection with the qualification of such securities so registered
under the securities or "blue sky" laws of various jurisdictions, the fees and
expenses of Micron's transfer agent and all other costs and expenses of
complying with the provisions of this Section 4 with respect to such
registration (collectively, the "REGISTRATION EXPENSES").
(b) Micron shall pay all Registration Expenses incurred by
Micron in connection with any registration statements that are initiated
pursuant to Section 4.3 of this Agreement. TI shall pay all expenses incurred
on its behalf with respect to any registration pursuant to Section 4.3,
including,
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without limitation, any counsel for TI and all underwriting discounts and
selling commissions with respect to the Registrable Securities sold by it
pursuant to such registration statement.
4.6 Indemnification.
(a) In the case of any offering registered pursuant to this
Section 4, Micron hereby indemnifies and agrees to hold harmless TI (and its
officers and directors), any underwriter (as defined in the Securities Act) of
Registrable Securities offered by TI, and each Person, if any, who controls TI
or any such underwriter within the meaning of Section 15 of the Securities Act
against any losses, claims, damages or liabilities, joint or several, to which
any such Persons may be subject, under the Securities Act or otherwise, and to
reimburse any of such Persons for any legal or other expenses reasonably
incurred by them in connection with investigating any claims or defending
against any actions, insofar as such losses, claims, damages or liabilities
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the registration statement under which such
Registrable Securities were registered under the Securities Act pursuant to
this Section 4, the prospectus contained therein (during the period that Micron
is required to keep such prospectus current), or any amendment or supplement
thereto, or the omission or alleged omission to state therein (if so used) a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances in which they were made, not
misleading, except insofar as such losses, claims, damages or liabilities arise
out of or are (i) based upon any such untrue statement or omission or alleged
untrue statement or omission made in reliance upon information furnished to
Micron in writing by TI or any underwriter for TI specifically for use therein,
or (ii) made in any preliminary prospectus, and the prospectus contained in the
registration statement as declared effective or in the form filed by Micron
with the SEC pursuant to Rule 424 under the Securities Act shall have corrected
such statement or omission and a copy of such prospectus shall not have been
sent or otherwise delivered to such Person at or prior to the confirmation of
such sale to such Person.
(b) By requesting registration under this Section 4, TI
agrees, if Registrable Securities held by TI are included in the securities as
to which such registration is being effected, and each underwriter shall agree,
in the same manner and to the same extent as set forth in the preceding
paragraph, to indemnify and to hold harmless Micron and its directors and
officers and each Person, if any, who controls Micron within the meaning of the
Securities Act against any losses, claims, damages or liabilities, joint or
several, to which any of such Persons may be subject under the Securities Act
or otherwise, and to reimburse any of such Persons for any legal or other
expenses incurred in connection with investigating or defending against any
such losses, claims, damages or liabilities, but only to the extent it arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission of a material fact in any registration statement
under which the Registrable Securities were registered under the Securities Act
pursuant to this Section 4, any prospectus contained therein, or any amendment
or supplement thereto, which was based upon and made in conformity with
information furnished to Micron in writing by TI or such underwriter expressly
for use therein.
(c) Each party entitled to indemnification under this Section
4.6 (the "INDEMNIFIED PARTY") shall give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
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be sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at its own expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 4 unless such failure
resulted in actual detriment to the Indemnifying Party. No Indemnifying Party,
(i) in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, which consent shall not be unreasonably
withheld, consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation, or (ii) shall be liable for amounts paid in any
settlement if such settlement is effected without the consent of the
Indemnifying Party, which consent shall not be unreasonably withheld.
4.7 Issuances by Micron or Other Holders. As to each registration or
distribution referred to in Sections 4.1 and 4.2, additional shares of the
Common Stock to be sold for the account of Micron or other holders may be
included therein, provided that the inclusion of such securities in such
registration or distribution may be conditioned or restricted if, in the
opinion of the Demand/Tranche Managing Underwriters, marketing factors require
a limitation of the number of shares to be underwritten. The Registration
Expenses incurred by Micron, TI and any other holders participating in such
registration or distribution shall be borne by Micron, TI and any other holders
participating in such registration or distribution in proportion to the
aggregate number of shares to be sold by Micron, TI and such other holders.
4.8 Information by TI. TI shall furnish to Micron such information
regarding TI in the distribution of Registrable Securities proposed by TI as
Micron may reasonably request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this Article
4.
4.9 Market Standoff Agreements
(a) In connection with the public offering by Micron of any of
its securities, TI agrees that, upon the request of Micron or the underwriters
managing any underwritten offering of Micron's securities, TI shall agree in
writing (the "TI PUBLIC OFFERING LOCK-UP") that neither TI (nor any Affiliate
of TI) will, directly or indirectly, offer to sell, contract to sell, make any
short sale of, or otherwise sell, dispose of, loan, gift, pledge or grant any
options or rights with respect to, any securities of Micron (other than those
included in such registration statement, if any) now or hereafter acquired by
TI (or any Affiliate of TI) or with respect to which TI (or any Affiliate of
TI) has or hereafter acquires the power of disposition without the prior
written consent of Micron and such underwriters for such period of time (not to
exceed fourteen (14) days prior to the date such offering is expected to
commence and ninety (90) days after the date of the final prospectus delivered
to the underwriters for use in confirming sales in such offering) as may be
requested by Micron and the underwriters; provided, however, that neither TI
(nor any Affiliate of TI) shall be bound by such TI Public Offering Lock-Up
more than once during any twelve month period. Furthermore, TI agrees that, at
the request of Micron,
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TI shall agree in writing (the "TI POOLING TRANSACTION LOCK-UP") that neither
TI (nor any Affiliate of TI) shall, directly or indirectly, offer to sell,
contract to sell, make any short sale of, or otherwise sell, dispose of, loan,
pledge or grant any options or rights with respect to, any securities of Micron
now or hereafter acquired directly by TI (or any Affiliate of TI) or with
respect to which TI (or any Affiliate of TI) has or hereafter acquires the
power of disposition without the prior written consent of Micron for such
period of time as shall be necessary for Micron to complete any business
combination transaction in the form of a pooling of interests; provided that
Micron's independent accountants shall have concluded, after reasonable
inquiry, that, at the relevant time with respect to such proposed pooling of
interests transaction, TI is or was an "affiliate" of Micron for purposes of
the accounting rules governing pooling of interests transactions. TI agrees
that Micron may instruct its transfer agent to place stop-transfer notations in
its records to enforce the provisions of the TI Public Offering Lock-Up and the
TI Pooling Transaction Lock-Up contained in this Section 4.9(a).
(b) In connection with any proposed public offering by TI of
any Registrable Securities, Micron agrees that, upon the request of TI or the
underwriters managing any underwritten offering of TI's securities, Micron
shall agree in writing (the "MICRON PUBLIC OFFERING LOCK-UP") that neither
Micron (nor any Affiliate of Micron) will, directly or indirectly, offer to
sell, contract to sell, make any short sale of, or otherwise sell, dispose of,
loan, gift, pledge or grant any options or rights with respect to, any
securities of Micron (other than those included in such registration statement,
if any, or grants of stock options or issuances of Common Stock upon the
exercise of outstanding stock options under Micron's existing employee benefit
plans) now or hereafter acquired by Micron (or any Affiliate of Micron) or with
respect to which Micron (or any Affiliate of Micron) has or hereafter acquires
the power of disposition without the prior written consent of TI and such
underwriters for such period of time (not to exceed fourteen (14) days prior to
the date such offering is expected to commence and ninety (90) days) after the
date of the final prospectus delivered to the underwriters for use in
confirming sales in such offering) as may be requested by TI and the
underwriters; provided, however, that neither Micron (nor any Affiliate of
Micron) shall bound by such Micron Public Offering Lock-Up more than once
during any 180-day period.
4.10 Termination. The provisions of this Article 4 shall terminate
upon the earlier to occur of: (i) five years after the date of the closing of
transactions contemplated by the Acquisition Agreement; and (ii) such time as
TI (and any Affiliates of TI) beneficially own in the aggregate less than
5,000,000 shares of Common Stock (assuming, for purposes of such calculation,
the conversion of all Convertible Notes then held by TI (and any Affiliates of
TI) into Common Stock).
SECTION 5
MISCELLANEOUS
5.1 Termination. This Agreement shall terminate upon the later to
occur of: (i) the tenth anniversary date of this Agreement and (ii) such time
as TI (together with all Affiliates of TI) beneficially owns in the aggregate
Voting Securities of Micron representing less than five percent (5%)
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of the Total Voting Power of Micron or upon the closing or other completion of
a Change in Control of Micron.
5.2 Governing Law. This Agreement shall be governed in all respects
by the laws of the State of New York as applied to contracts entered into
solely between residents of, and to be performed entirely within, such state.
5.3 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns. This Agreement may not be assigned by a party without
the prior written consent of the other party; provided that, without the
consent of Micron, TI may assign this Agreement (and the rights and obligations
hereunder) to any wholly-owned subsidiary in connection with a transfer of
Voting Securities of Micron to such Affiliate of TI pursuant to Section 3.1(b),
and without the consent of TI, Micron may assign all or part of this Agreement
(and the rights and obligations hereunder) to the successor or an assignee of
all or substantially all of Micron's business; provided that, in each case,
such assignee expressly assumes the relevant obligations of this Agreement (by
a written instrument delivered to the other party, in form and substance
reasonably acceptable to it) and, notwithstanding such assignment, the parties
hereto shall each continue to be bound by all of their respective obligations
hereunder. This Agreement is not intended and shall not be construed to create
any rights or remedies in any parties other than TI and Micron and no Person
shall assert any rights as third party beneficiary hereunder.
5.4 Entire Agreement; Amendment. This Agreement contains the entire
understanding and agreement between the parties with regard to the subject
matter hereof and thereof and supersedes all prior agreements and
understandings among the parties relating to the subject matter hereof.
Neither this Agreement nor any term hereof may be amended, waived, discharged
or terminated other than by a written instrument signed by the party against
whom enforcement of any such amendment, waiver, discharge or termination is
sought.
5.5 Notices and Dates.
(a) All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be delivered personally
(including by courier) or given by facsimile transmission to the parties at the
following addresses (or to such other address as a party may have specified by
notice given to the other pursuant to this provision) and shall be deemed given
when so received:
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(i) if to Micron, to:
Micron Technology, Inc.
8000 South Federal Way
Boise, Idaho 83716-9632
Attention: Roderic W. Lewis, Esq.
General Counsel
Telephone: (208) 368-4517
Facsimile: (208) 368-4540
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attention: Larry W. Sonsini, Esq.
John A. Fore, Esq.
Telephone: (650) 493-9300
Facsimile: (650) 493-6811
(ii) if to TI, to:
Texas Instruments Incorporated
7839 Churchill Way - MS
Dallas, Texas 75215
Attention: Richard J. Agnich, Esq.
General Counsel
Telephone: (972) 480-5050
Facsimile: (972) 480-5061
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Paul R. Kingsley, Esq.
Telephone: (212) 450-4277
Facsimile: (212) 450-5515
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All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 5 p.m. in the
place of receipt and such day is a business day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to
have been received until the next succeeding business day in the place of
receipt.
(b) In the event that any date provided for in this Agreement
falls on a Saturday, Sunday or legal holiday, such date shall be deemed
extended to the next business day.
5.6 Language Interpretation. In the interpretation of this
Agreement, unless the context otherwise requires, (a) words importing the
singular shall be deemed to import the plural and vice versa, (b) words
denoting gender shall include all genders, (c) references to persons shall
include corporations or other entities and vice versa, and (d) references to
parties, sections, schedules, paragraphs and exhibits shall mean the parties,
sections, schedules, paragraphs and exhibits of and to this Agreement, unless
otherwise indicated by the context.
5.7 Table of Contents; Titles; Headings. The table of contents and
section headings of this Agreement are for reference purposes only and are to
be given no effect in the construction or interpretation of this Agreement.
All references herein to Articles and Sections, unless otherwise identified,
are to Articles and Sections of this Agreement.
5.8 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become a binding agreement when one or more counterparts have been signed
by each party and delivered to the other party.
5.9 Severability. If any provision of this Agreement or portion
thereof is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
5.10 Injunctive Relief. TI, on the one hand, and Micron, on the
other, acknowledge and agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent
or cure breaches of the provisions of this Agreement and to enforce specific
performance of the terms and provisions hereof in any court of the United
States or any state thereof having jurisdiction, this being in addition to any
other remedy to which they may be entitled at law or equity.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date aforesaid.
MICRON TECHNOLOGY, INC.,
a Delaware corporation
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
TEXAS INSTRUMENTS INCORPORATED,
a Delaware corporation
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
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EXHIBIT F
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THIS NOTE IS SUBJECT TO THE TERMS OF A SECURITIES RIGHTS AND
RESTRICTIONS AGREEMENT, DATED AS OF ___________, 1998, AMONG THE COMPANY
AND CERTAIN OTHER PARTIES INCLUDING THE INITIAL HOLDER OF THIS NOTE.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF ACKNOWLEDGES AND AGREES
THAT IT IS BOUND BY THE TERMS OF SUCH AGREEMENT, INCLUDING, WITHOUT
LIMITATION, A PROVISION THAT IT MAY NOT OFFER, SELL, ASSIGN, TRANSFER,
PLEDGE, ENCUMBER OR OTHERWISE DISPOSE OF THIS NOTE OR ANY PORTION
THEREOF OR INTEREST THEREIN TO ANY PERSON OTHER THAN (A) THE COMPANY, OR
(B) PURSUANT TO A SALE TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A.
NOT LATER THAN 10 DAYS AFTER THE DATE OF ISSUANCE OF THIS NOTE,
INFORMATION REGARDING THE ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE
DISCOUNT, ISSUE DATE AND YIELD TO MATURITY OF THIS NOTE WILL BE MADE
AVAILABLE TO THE HOLDER OF THIS NOTE UPON REQUEST TO THE CHIEF FINANCIAL
OFFICER OF THE COMPANY.
MICRON TECHNOLOGY, INC.
SUBORDINATED PROMISSORY NOTE
Due [Insert 7th Anniversary of Closing Date], 2005
SN-1 Boise, Idaho
$210,000,000 [Time/Date], 1998
FOR VALUE RECEIVED, the undersigned, MICRON TECHNOLOGY, INC., a Delaware
corporation (the "Company"), hereby promises to pay to the order of TEXAS
INSTRUMENTS INCORPORATED, a Delaware corporation (together with its
successors and assigns, "Holder" or "Holders"), the principal sum of Two
Hundred Ten Million Dollars ($210,000,000) on [Insert 7th Anniversary of
Closing Date], 2005, with interest from the date hereof (or the last
interest payment date as to which interest has been paid, if earlier) on
the unpaid balance at a rate of six and one-half percent (6.5%) per
annum. Accrued interest shall be payable semi-
<PAGE> 141
annually in arrears as provided in Section 2.1 hereof. Interest shall be
calculated based on a 365/366-day year and the actual days elapsed. Payments
of both principal and interest are to be made in lawful money of the United
States of America as provided herein.
This Note, together with any other substantially identical (except
as to denomination and name of the holder thereof) subordinated promissory notes
of the Company which may be issued from time to time upon partial transfer
hereof, are in an aggregate principal amount equal to $210,000,000
(collectively, the "Notes"). As used herein, the term "Note" includes this Note
and any Note issued in exchange for this Note or in replacement hereof. Notes
shall only be issued in denominations of $10,000,000 or any integral multiple of
$1,000,000 in excess thereof.
Each Note shall be dated the date of its issuance, shall bear
interest from its date of issuance stated therein (or the last interest payment
date as to which interest had been paid (or the date of issuance of the first
Note to have been issued, if no interest has yet been paid), if earlier). The
Notes shall otherwise be substantially identical, except as to denomination and
name of the Holder thereof. The Notes shall be issued only in fully registered
form and shall each be substantially in the form hereof, appropriately
completed. The Notes may have such letters, numbers or other marks of
identification and such legends or endorsements not included hereon placed
thereon as may be required to comply with any law or with any rules made
pursuant thereto or with the rules of any securities exchange or governmental
agency or as may, consistently herewith, be determined by the Company, as
conclusively evidenced by its execution of such Notes.
The following is a statement of the rights of the Holder of this
Note and the conditions to which this Note is subject, and to which the Holder
hereof, by the acceptance of this Note, agrees:
1. Definitions. The following terms, as used herein, have the
following meanings:
"Bankruptcy Code" means Title 11 of the United States Code.
"Bankruptcy, Insolvency or Liquidation Proceeding" means (i) any
case commenced by or against the Company under any chapter of the Bankruptcy
Code, any other proceeding for the reorganization, recapitalization or
adjustment or marshaling of the assets or liabilities of the Company, any
receivership or assignment for the benefit of creditors relating to the Company
or any similar case or proceeding relative to the Company or its creditors, as
such, in each case whether or not voluntary, (ii) any liquidation, dissolution,
marshaling of assets or liabilities or other winding up of or relating to the
Company, in each case whether or not voluntary and whether or not involving
bankruptcy or insolvency, and (iii) any other proceeding of any type or nature
in which Claims against the Company generally are determined, proven or paid.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday, which is not a day in which banking institutions in Boise, Idaho,
Dallas, Texas or New York, New York are authorized or obligated by law or
executive order to close.
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"Claim" is used as defined in the Bankruptcy Code, whether or
not, in the context in which it appears, a case under the Bankruptcy Code is
pending.
"Convertible Notes" means the 2005 Convertible Notes and the 2004
Convertible Notes.
"Designated Senior Debt" means the Company's obligations under
any particular Senior Debt in which the instrument creating or evidencing the
same or the assumption or guarantee thereof (or related agreements or documents
to which the Company is a party) expressly provides that such Senior Debt shall
be "Designated Senior Debt" for purposes of this Note (provided that such
instrument, agreement or other document may place limitations and conditions on
the right of such Senior Debt to exercise the rights of Designated Senior
Debt).
"Holder" or "Holders" has the meaning given in the second
paragraph hereof.
"Indenture" means that Indenture, dated as of June 15, 1997,
between the Company and Norwest Bank Minnesota, National Association, as
trustee, together with all amendments and supplements thereto.
"Note" and "Notes" have the meanings given in the preamble
hereto.
"Person" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, a limited
liability company, an unincorporated association, a joint venture or other
entity or a governmental authority.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not such claim for post-petition interest is allowed in such proceeding), on,
rent with respect to, and all fees and other amounts payable in connection
with, the following, whether absolute or contingent, secured or unsecured, due
or to become due, outstanding on the date hereof or hereafter created, incurred
or assumed: (a) indebtedness of the Company evidenced by a credit or loan
agreement, note, bond, debenture or other written obligation, including without
limiting the generality of the foregoing the Convertible Notes, (b) all
obligations of the Company for money borrowed, (c) all obligations of the
Company evidenced by a note or similar instrument given in connection with the
acquisition of any businesses, properties or assets of any kind, (d)
obligations of the Company (i) as lessee under leases required to be
capitalized on the balance sheet of the lessee under generally accepted
accounting principles, (ii) as lessee under other leases for facilities,
equipment or related assets, whether or not capitalized, entered into or leased
after the date hereof for financing purposes (as determined by the Company),
(iii) under any lease or related document (including a purchase agreement) that
provides that the Company is contractually obligated to purchase or cause a
third party to purchase the leased property, and (iv)
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under such lease or related document to purchase or to cause a third party to
purchase such leased property, (e) all obligations of the Company under
interest rate and currency swaps, caps, floors, collars, hedge agreements,
forward contracts, or similar agreements or arrangements, (f) all obligations
of the Company with respect to letters of credit, bankers' acceptances or
similar facilities (including reimbursement obligations and standby or
commitment fees with respect to any of the foregoing), (g) all obligations of
the Company issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable arising in the ordinary course
of business), (h) all obligations of the type referred to in clauses (a)
through (g) above of another Person and all dividends of another Person, the
payment of which, in either case, the Company has assumed or guaranteed (or in
effect guaranteed through an agreement to purchase or otherwise (including,
without limitation, "take or pay" and similar arrangements)), or for which the
Company is responsible or liable, directly or indirectly, jointly or severally,
as obligor, guarantor or otherwise, or which is secured by a lien on property
of the Company, and all obligations of the Company with respect thereto, and
(i) renewals, extensions, modifications, replacements, restatements and
refundings of, or any indebtedness or obligation issued in exchange for, any
such indebtedness or obligation described in clauses (a) through (h) of this
paragraph; provided, however, that Senior Debt shall not include the Notes or
any such indebtedness or obligation if the terms of such indebtedness or
obligation (or the terms of the instrument under which, or pursuant to which it
is issued) expressly provide that such indebtedness or obligation is not
superior in right of payment to the Notes.
"Subordinated Claims" means all present and future indebtedness
and obligations of every type and description arising under or in respect of
the Notes or other instrument, agreement, transaction, act or event in respect
thereof and all other Claims in any manner based on, arising from or related to
any such indebtedness or obligation, whether based on a contract or quasi-
contract or founded on a tort or arising by law or otherwise.
"2004 Convertible Notes" means the Company's 7% Convertible
Subordinated Notes due July 1, 2004 issued under the Indenture, as supplemented
by the Supplemental Indenture dated as of June 15, 1997, between the Company
and Norwest Bank Minnesota, National Association, as trustee.
"2005 Convertible Notes" means the Company's 6-1/2% Convertible
Subordinated Notes due _____, 2005 issued under the Indenture, as supplemented
by that certain supplemental indenture dated as of _____, 1998, between the
Company and Norwest Bank Minnesota, National Association, as trustee.
2. Repayments and Payments of Principal and Interest on Notes.
2.1. Interest. Subject to the provisions of Section 6,
interest is payable in arrears in cash on the last business day of each [Insert
day and month of 6-month anniversary of Closing Date] and [Insert day and month
of Closing Date] beginning [6-month anniversary of Closing Date]. Payment of
all amounts due under the Notes shall be made by mail to the registered address
of each Holder, or if such Holder shall elect, by wire transfer to the account
designated by such Holder of
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immediately available funds; provided, however, that for any Holder to receive
its interest or principal payments by wire transfer, the Company must receive
such Holder's written bank wire transfer instructions by the record date (as
defined below) for such payment. The Person in whose name any Note is
registered at the close of business on the third business day prior to any
interest or principal payment date (the "record date") shall be entitled to
receive the interest, if any, payable on such interest payment date
notwithstanding any transfer or exchange of such Note subsequent to the record
date and prior to such interest or principal payment date.
2.2. Optional Prepayments of Notes. Subject to the provisions
of Section 6, the Company may, at its option, prepay all or, from time to time,
part of the principal amount of the Notes, without penalty or premium, together
with interest on the principal amount so prepaid accrued to (but not including)
the date fixed for such prepayment.
2.3. Allocation of Payments and Prepayments. Each payment or
prepayment of principal of less than the entire unpaid principal amount of the
Notes shall be allocated (in units of $1,000) by the Company among the Holders
of the Notes at the time outstanding, in proportion, as nearly as practicable,
to the respective aggregate unpaid principal amount of the Notes (not
theretofore called for prepayment) then held by them, respectively, with
adjustments, to the extent practicable, to equalize for any prior payments or
prepayments not made in such proportion.
2.4. Notice of Prepayment to Holders. Not less than three (3)
nor more than ten (10) days prior to the date fixed for each optional
prepayment, the Company shall give notice thereof to the registered Holders of
the Notes, specifying the date fixed for prepayment and the aggregate principal
amount to be prepaid on such date. Such notice shall also contain instructions
for the delivery of the Notes by the Holders to the Company. Subject to the
provisions of Section 6, such notice shall be irrevocable.
2.5. Legal Holidays. In any case where any interest payment
date or maturity date is not a Business Day, then (notwithstanding any other
provision of the Notes), payment of interest or principal, as applicable, with
respect to the Notes need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the
Interest Payment Date or Maturity Date, as the case may be.
3. Certain Covenants of the Company.
3.1. Existence. The Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
provided that this Section 3.1 shall not apply to a consolidation or merger of
the Company with or into another Person in which the Company is not the
surviving Person or conveyance, transfer or lease of the properties and assets
of the Company substantially as an entirety to another Person provided that the
transferee Person expressly assumes the due and punctual payment of the
principal and interest on all of the Notes and the performance or observance of
every covenant set forth in the Notes on the part of the Company to be
performed or observed.
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3.2. Maintenance of Properties. The Company will cause all
properties used or useful in the conduct of its business to be maintained and
kept in good condition, repair and working order and supplied with all
necessary equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as, and to the extent,
in the judgment of the Company may be necessary so that the business carried on
in connection therewith may be properly and advantageously conducted at all
times; provided, however, that nothing in this Section shall prevent the
Company from discontinuing the operation or maintenance of any of such
properties if such discontinuance is, in the judgment of the Company, desirable
in the conduct of its business and not disadvantageous in any material respect
to the Holders.
3.3. Payment of Taxes and Other Claims. The Company will pay
or discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all taxes, assessments and governmental charges levied or
imposed upon the Company or upon the income, profits or property of the
Company, and (b) all lawful claims for labor, materials and supplies which, if
unpaid, might by law become a lien upon the property of the Company; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim (i) whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings or (ii) if the failure to pay or discharge would not
have a material adverse effect on the assets, business, operations, properties
or condition (financial or otherwise) of the Company and its subsidiaries,
taken as a whole.
3.4. 144A Information. For so long as any Notes remain
outstanding, if the Company is not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company will furnish to Holders of Notes
and to prospective purchasers of such Notes designated by such Holders the
information required to be delivered pursuant to 144A(d)(4) under the
Securities Act to permit compliance with Rule 144A under the Securities Act in
connection with resales of Notes.
4. Events of Default; Acceleration.
4.1. Events of Default. The occurrence of any of the following
events shall constitute an "Event of Default" with respect to the Notes:
(a) the Company defaults in the payment of the
principal of any Note when the same becomes due and payable at maturity or
otherwise (other than a default in the payment of principal resulting from
application of Section 6 hereof); or
(b) the Company defaults in the payment of interest on
any Note (other than a failure to pay interest resulting from application of
Section 6 hereof) for 30 days after the same becomes due and payable; or
(c) the Company defaults in the performance of or
breaches any covenant or warranty of the Company in this Note (other than a
covenant or warranty a default in whose performance or whose breach is
elsewhere in this Section specifically dealt with), and continuance
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of such default or breach for a period of 60 days after there has been given,
by registered or certified mail, to the Company by the Holders of at least 25%
in principal amount of the Notes at that time outstanding a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder;
(d) any event or condition occurs which results in the
acceleration of the maturity of any indebtedness under any bond, debenture,
note or other evidence of indebtedness for money borrowed having an aggregate
principal amount in excess of $50,000,000 or the Company fails to pay any such
indebtedness at the final maturity thereof, and such indebtedness is not
discharged, or such acceleration is not rescinded or annulled, within a period
of 30 days after there has been given, by registered or certified mail, to the
Company by the Holders of at least 25% in principal amount of the Notes at that
time outstanding a written notice specifying such acceleration or failure to
pay and stating that such notice is a "Notice of Default" hereunder; provided,
however, that if any such failure, default or acceleration shall thereafter
cease or be cured, waived, rescinded or annulled, then the Event of Default
hereunder by reason thereof shall be deemed likewise to have been thereupon
cured, notwithstanding any receipt by the Company of a Notice of Default with
respect thereto; or
(e) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (B) a decree or
order adjudging the Company a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator
or other similar official of the Company or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 90 consecutive days; or
(f) the commencement by the Company of a voluntary case
or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any applicable Federal
or State law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or of
any substantial part of its property, or the making by it of an assignment for
the benefit of creditors, or the admission by it in writing of its inability to
pay its debts generally as they become due, or the taking of corporate action
by the Company in furtherance of any such action.
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4.2. Acceleration. In the event an Event of Default has
occurred and is continuing, subject to the provisions of Section 6, the Holder
or Holders of 25% or more in principal amount of the Notes at the time
outstanding at its or their option may, by written notice or notices to the
Company, declare the Notes due and payable, whereupon the same shall forthwith
mature and become due and payable together with interest accrued thereon,
without presentment, demand, protest or notice, all of which are hereby waived;
provided, however, that such acceleration shall be automatic without the
necessity of any such notice in the case of Events of Default under clause (e)
or (f) above.
4.3. Waiver of Past Defaults. The Holders of not less than a
majority in principal amount of the outstanding Notes may on behalf of the
Holders of the Notes waive any past default thereunder and its consequences,
except a default in the payment of principal of or any interest on the Note.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for all purposes;
but no such waiver shall extend to any subsequent or other default or impair
any right consequent thereon.
4.4. Rescission and Annulment. At any time after a declaration
of acceleration with respect to the Notes has been made and before a judgment
or decree for payment of the money due has been obtained, the Holders of a
majority in principal amount of the outstanding Notes, by written notice to the
Company, may rescind and annul such declaration and its consequences if the
Company has paid all overdue interest on all Notes and the principal of any
Notes which has become due otherwise than by such declaration of acceleration
and all Events of Default with respect to the Notes, other than the non-payment
of the principal of Notes which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 4.3.
5. Remedies. Subject to the provisions of Section 6 hereof, upon
the acceleration of the amounts due under the Notes in accordance with Section
4 or if such amounts remain unpaid after the maturity date of the Notes, any
Holder may proceed to protect and enforce any right, power or remedy granted to
it under applicable law. If any Holder of any Note or holder of any other
indebtedness of the Company gives any notice or takes any other action in
respect of a claimed default, the Company will forthwith give written notice
thereof to all Holders of the Notes at the time outstanding describing the
notice or action and the nature of the claimed default. No course of dealing
and no delay on the part of any Holder of any Note in exercising any right,
power or remedy will operate as a waiver thereof or otherwise prejudice such
Holder's rights, powers or remedies. No right, power or remedy conferred
hereby is exclusive of any other right, power or remedy referred to herein or
now or hereafter available at law, in equity, by statute or otherwise.
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6. Subordination of Notes.
6.1. Subordination. The Company hereby agrees and each Holder
by its acceptance of this Note agrees that the Subordinated Claims are and
shall be postponed, subordinated and junior in right of payment to the prior
payment in full of all Senior Debt on the terms and conditions herein set
forth.
6.2. Permitted Payments; Deferral of Payments. So long as
there shall not have occurred and be continuing (i) a default in the payment of
principal, premium, if any, or interest (including a default under any
repurchase or redemption obligation) or other amounts with respect to any
Senior Debt or (ii) any other event of default which has been declared in
writing, or is automatically effective in the case of Bankruptcy, Insolvency or
Liquidation Proceedings, with respect to any Designated Senior Debt (as such
event of default is defined therein or in the instrument under which it is
outstanding) and of which the Holder has received a notice (a "Blockage
Notice") from the holders of such Designated Senior Debt (each of the events
specified in clause (i) or clause (ii), a "Senior Default"), the Company shall
be permitted to make, and each Holder to accept and receive, regularly
scheduled payments of principal and accrued interest under this Note and any
prepayment of principal that the Company has decided to make, as heretofore set
forth. Notwithstanding any provision to the contrary contained in this Note,
the Company shall not make, and no Holder shall demand, accept, receive or
retain, any payment or distribution of any kind or character, whether in cash,
property, securities or otherwise, on account or in respect of any Subordinated
Claim after a Senior Default has occurred or deferral of interest on any
Convertible Notes for a period of time (a "Deferral Period") in accordance with
the terms thereof has occurred. Payments due under the Notes may be resumed
(x) in the case of a deferral of interest, after the end of a Deferral Period
(such payment to resume as set forth in the next paragraph of this Note), and
(y) in the case of defaults referred to in clauses (i) and (ii) above, upon the
earlier of:
(A) the date upon which the default is cured or waived or ceases to
exist, or
(B) in the case of a default referred to in clause (ii) above, the date
which is 179 days after the Blockage Notice is received,
unless this Section 6.2 otherwise prohibits the payment at the time of such
payment (including, without limitation, as a result of a payment default with
respect to the applicable Senior Debt as a consequence of the acceleration of
the maturity thereof or otherwise).
If a Deferral Period shall occur, interest payable on all of the Notes
on regular payment dates occurring during such Deferral Period shall be
deferred and the Company shall be responsible for the payment of, and the
Company shall pay to the Person in whose name this Note is registered at the
close of business on the record date immediately preceding the regular payment
date hereunder next occurring after the termination of the Deferral Period, all
interest then accrued and unpaid together with, to the extent permitted by law,
interest thereon (compounded semi-annually on regular
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payment dates) at the rate specified for the Notes. The foregoing provisions
shall apply during successive Deferral Periods with respect to the 2004
Convertible Notes and the 2005 Convertible Notes. The Company shall provide to
the Holders written notice of the occurrence of any Deferral Period at the time
notice thereof is given to the trustee under the Indenture, provided that any
failure to do so shall not affect the deferral of interest payments which would
occur pursuant to the terms hereof.
6.3. Prior Payment to Senior Debt Upon Acceleration. In the
event that any Notes are declared due and payable before their stated maturity,
then and in such event the Holders of the Senior Debt outstanding at the time
such Notes so become due and payable shall be entitled to receive payment in
full in cash or other payment satisfactory to the Holders of Senior Debt of all
amounts due or to become due on or in respect of all Senior Debt before the
Holders of the Notes are entitled to receive any payment by the Company on
account of any Subordinated Claim. If the payment of Notes is accelerated
because of an Event of Default, the Company shall promptly notify Holders of
Senior Debt of the acceleration.
The provisions of this Section 6.3 shall not apply to any
payment with respect to which Section 6.4 would be applicable.
6.4. Bankruptcy, Insolvency or Liquidation Proceedings. In the
event of any Bankruptcy, Insolvency or Liquidation Proceeding:
(a) Priority of Payment. All Senior Debt shall be paid
in full in cash (but excluding indemnification obligations which are then
contingent and as to which no payment is then due and no claim or demand has
then been made) before any Holder shall be entitled to receive any payment or
distribution of any kind or character, whether in cash, property, securities or
otherwise, in respect of this Note in such Bankruptcy, Insolvency or
Liquidation Proceeding.
(b) Payments and Distributions on Subordinated Claims.
Each holder of Senior Debt shall be entitled to receive any payment or
distribution of any kind or character, whether in cash, property, securities or
otherwise (including, without limitation, any such payment or distribution which
may become payable or deliverable by reason of the payment of any other claim
against the Company being subordinated to the payment of the Subordinated
Claims), that may become payable or deliverable to Holders on account or in
respect of any Subordinated Claim, for application to the payment of all Senior
Debt, until all holders of Senior Debt have received payment in full in cash of
all Senior Debt (but excluding indemnification obligations which are then
contingent and as to which no payment is then due and no claim or demand has
then been made).
(c) Delivery and Application. All such payments and
distributions on account or in respect of Subordinated Claims shall be delivered
by the debtor, trustee, receiver, disbursing agent or other Person making such
payment or distribution in such Bankruptcy, Insolvency or Liquidation Proceeding
directly to the holders of Senior Debt. If such payment or distribution
consists of any property or securities other than cash, (i) such payment or
distribution
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shall not be deemed applied to the payment of Senior Debt at any adjudicated or
imputed value and (ii) such payment or distribution and all other and future
non-cash payments and distributions on account or in respect of Subordinated
Claims shall be delivered to and held by the holders of Senior Debt, until cash
proceeds from such non-cash payments and distributions have been received by
the holders of Senior Debt in an amount sufficient (with any other cash paid or
distributed to them by or on behalf of the Company) to pay, in full and in
cash, all of the Senior Debt (but excluding indemnification obligations which
are then contingent and as to which no payment is then due and no claim or
demand has then been made).
(d) Proof of Claim.
(1) If any Holder fails to file a proof of claim or other
statement or demand in respect of its Subordinated Claims in such Bankruptcy,
Insolvency or Liquidation Proceeding prior to the 30th day preceding any bar
date or other deadline for filing a proof of claim or other such statement or
demand therein, or if any such proof of claim, statement or demand filed by any
Holder prior to such day is in any respect inadequate or insufficient (in the
good faith opinion of any holder of Senior Debt), then each holder of Senior
Debt shall have the right, but not the obligation, to execute and deliver (in
the name of such Holder or in its own name but on behalf of such Holder, as such
holder of Senior Debt may elect) and file in such Bankruptcy, Insolvency or
Liquidation Proceeding any proof of claim, statement or demand which such holder
of Senior Debt may determine to be required or appropriate in respect of such
Subordinated Claim.
(2) To the extent necessary or reasonably appropriate to
permit the holders of Senior Debt to exercise the right granted to them under
this Section 6.4(d), each Holder hereby constitutes and appoints each holder of
Senior Debt as its attorney-in-fact and agent, with full power of substitution
and delegation, to execute, deliver and file any such proof of claim, statement
or demand as herein provided, and the power of attorney granted herein (being
coupled with an interest) is and shall be in all respects irrevocable.
(3) No holder of Senior Debt shall, by executing,
delivering or filing any such proof of claim, statement or demand, become liable
or responsible in any respect for the legality, adequacy or sufficiency thereof.
(4) Each holder of Senior Debt filing any such proof of
claim, statement or demand shall deliver or mail a copy thereof to the Company
at least 10 days prior to filing such proof of claim, statement or demand, but
the failure to deliver or mail such copy shall not in any respect (i) impose any
liability on such holder or upon any other holder of Senior Debt or (ii)
destroy, affect or impair the subordination provided hereby or any right, power
or benefit hereby granted to any holder of Senior Debt. The Company shall,
promptly after its receipt thereof, deliver or mail a copy of such proof of
claim, statement or demand to each Holder.
6.5. Enforcement Rights. No Holder shall have any right to enforce any
Subordinated Claim, institute or attempt to institute any Bankruptcy, Insolvency
or Liquidation
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Proceeding against the Company or otherwise to take any action against the
Company or the Company's property during any periods payments on or
distributions in respect of Subordinated Claims are prohibited under Section
6.2, 6.3 or 6.4 hereof.
6.6. Turnover. If and in each instance that any Holder
receives any payment or distribution of any kind or character, whether in cash,
property, securities or otherwise (including, without limitation, any such
payment or distribution which may become payable or deliverable by reason of
the payment of any other Claim against the Company being subordinated to the
payment of any Subordinated Claim) on account or in respect of any Subordinated
Claim which payment or distribution is prohibited by Section 6.2, 6.3 or 6.4,
at any time when any Senior Debt or any commitment to extend credit which would
constitute Senior Debt is outstanding, or at any time when payment of interest
on any Convertible Notes is deferred as aforesaid, then and in each such event:
(a) Transfer and Delivery. Each Holder shall
forthwith pay over, transfer and deliver such payment or distribution to the
holders of Senior Debt, whether or not any Bankruptcy, Insolvency or Liquidation
Proceeding is then pending, until the holders of Senior Debt have received
payment in full and in cash of all outstanding Senior Debt (but excluding
indemnification obligations which are then contingent and as to which no payment
is then due and no claim or demand has then been made).
(b) Held in Trust. Each Holder hereby agrees to hold in
trust for the holders of Senior Debt, in the identical form received (except for
any necessary endorsement to the holders of Senior Debt) and as trustee of an
express trust, all payments and distributions required to be paid over,
transferred and delivered pursuant to this Section 6.6.
6.7. Subrogation. Subject to the prior payment in full and
cash of any and all Senior Debt (but excluding indemnification obligations
which are then contingent and as to which no payment is then due and no claim
or demand has then been made), each Holder shall be subrogated to the rights of
the holders of such Senior Debt to receive payments and distributions, whether
in cash, property, securities or otherwise, applicable to the Senior Debt until
such Holder's Subordinated Claim is paid in full. For such purposes:
(a) Postponement of Subrogation. No right of
subrogation shall be available to or may be enforced by any Holder, unless and
until the payment in full and in cash of all outstanding Senior Debt (but
excluding indemnification obligations which are then contingent and as to which
no payment is then due and no claim or demand has then been made).
(b) No Representation, Warranty or Responsibility. No
holder of any Senior Debt makes any representation or warranty, or shall
otherwise have any responsibility, as to whether any such right of subrogation
is accorded or available to any Holder or is enforceable by it in any
particular circumstance.
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(c) No Duty; No Exoneration. No holder of any Senior
Debt shall have any duty to any Holder to ensure, perfect, protect, enforce or
maintain any right of subrogation that might otherwise be accorded or available
to or enforceable by such Holder. The subordination provided herein and the
rights of the holders of Senior Debt hereunder shall remain fully enforceable
on the terms set forth herein, regardless of any act, omission or circumstance
(whether or not attributable to any holder of any Senior Debt and whether or
not wrongful) which does or might in any manner or in any respect destroy,
limit, reduce, affect or impair any right of subrogation otherwise accorded or
available to or enforceable by any Holder. Each holder of any Senior Debt
shall remain utterly free to take or fail to take any and all actions in
respect of any Senior Debt or any Person liable therefor or any collateral
security therefor (including, without limitation, each and all of the acts,
omissions and matters described in Section 6.8), without exonerating Holders,
even if any right of subrogation is destroyed, limited, reduced, affected or
impaired thereby.
(d) Disallowed Senior Debt. The subordination provided
herein and the rights of the holders of Senior Debt hereunder shall be fully
enforceable as to all Senior Debt which is not allowed, allowable or
enforceable in any Bankruptcy, Insolvency or Liquidation Proceeding, even if
and even though no right of subrogation is available in respect of such Senior
Debt.
(e) Payment of Senior Debt. For purposes of enforcing
any right of subrogation on the terms set forth in this Section 6.7, no payment
or distribution on account of any Subordinated Claim arising in respect of this
Note applied to the payment of Senior Debt shall, as between the Company and
Holders and to the extent of the payment or distribution so applied, discharge
the liability of the Company for the payment of such Senior Debt and, to this
end, the Company shall remain obligated to pay such Senior Debt in full
notwithstanding any such application.
6.8. Subordination Not Prejudiced, Affected or Impaired. No
right of any present or future holder of any Senior Debt to enforce
subordination as provided in this Note shall at any time in any way be
prejudiced, affected or impaired by any act or failure to act on the part of
the Company or by any act or failure to act on the part of any holder of Senior
Debt or by any breach or default by the Company in the performance or
observance of any promise, covenant or obligation enforceable by any Holder,
regardless of any knowledge thereof that any holder of Senior Debt may have or
otherwise be charged with.
(a) Certain Acts, Omissions and Events. Without in any
way limiting the generality of the foregoing, each holder of any Senior Debt
may at any time and from time to time, without the consent of or notice to
Holder, without incurring any responsibility or liability to any Holder and
without in any manner prejudicing, affecting or impairing the subordination
provided herein or the obligations of Holders to the holders of Senior Debt:
(1) Make loans and advances to the Company or
issue, guaranty or obtain letters of credit for the account of the Company or
otherwise extend credit to the Company,
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<PAGE> 153
in any amount and on any terms, whether pursuant to a commitment or as a
discretionary advance and whether or not any default or event of default or
failure of condition is then continuing;
(2) Change the manner, place or terms of payment or extend
the time of payment of, or renew or alter, compromise, accelerate, extend or
refinance, any Senior Debt or any agreement, guaranty, lien or obligation of the
Company or any other Person in any manner related thereto, or otherwise amend,
supplement or change in any manner any Senior Debt or any such agreement,
guaranty, lien or obligation;
(3) Increase or reduce the amount of any Senior Debt or
the interest accruing thereon;
(4) Release or discharge any Senior Debt or any guaranty
thereof or any agreement or obligation of the Company or any other Person with
respect thereto;
(5) Take or fail to take any collateral security for any
Senior Debt or take or fail to take any action which may be necessary or
appropriate to ensure that any lien upon any property securing any Senior Debt
is duly enforceable or perfected or entitled to priority as against any other
lien or to ensure that any proceeds of any property subject to any lien are
applied to the payment of any Senior Debt;
(6) Release, discharge or permit the lapse of any or all
liens upon any property at any time securing any Senior Debt;
(7) Exercise or enforce, in any manner, order or sequence,
or fail to exercise or enforce, any right or remedy against the Company or any
collateral security or any other Person or property in respect of any Senior
Debt or lien securing any Senior Debt or any right under this Note; or
(8) Sell, exchange, release, foreclose upon or otherwise
deal with any property that may at any time be subject to any lien securing any
Senior Debt.
(b) No Release or Exoneration. No exercise, delay in exercising
or failure to exercise any right arising under this Section 6, no act or
omission of any holder of any Senior Debt in respect of the Company or any other
Person or any collateral security for any Senior Debt or any right arising under
this Section 6, no change, impairment, or suspension of any right or remedy of
any holder of any Senior Debt, and no other act, failure to act, circumstance,
occurrence or event which, but for this provision, would or could act as a
release or exoneration of the obligations of any Holder hereunder shall in any
way affect, decrease, diminish or impair any of the obligations of any Holder
under this Note or give any Holder or any other Person any recourse or defense
against any holder of Senior Debt in respect of any right arising under this
Section 6.
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<PAGE> 154
6.9. Reinstatement. If any payment or distribution at any time
made on account or in respect of any Senior Debt is thereafter rescinded,
recovered, set aside, avoided or required to be returned, then such Senior Debt
and all rights of the holder of such Senior Debt to enforce subordination as
set forth herein shall be automatically and unconditionally reinstated, as
fully as if such payment or distribution had never been made.
7. Amendments and Waivers. Neither this Note nor any term hereof
may be amended or waived orally or in writing, except that any term of the
Notes may be amended and the observance of any term of the Notes may be waived
(either generally or in a particular instance and either retroactively or
prospectively), and such amendment or waiver shall be applicable to all of the
Notes, upon the approval of the Company and the Holders of fifty percent (50%)
or more of the outstanding principal amount of all then outstanding Notes;
provided, however, that any amendment to (i) the outstanding principal amount
of the Notes, (ii) the rate of interest borne by the Notes, (iii) the date of
maturity or interest payment dates of the Notes or (iv) this Section 7 shall
require the approval of the Holder of each Note to which such amendment shall
apply. The Company will not amend any provision of any other Note in a manner
favorable to any Holder thereof unless a similar amendment is made or offered
with respect to all of the Notes. Each Holder of this Note by its acceptance
hereof acknowledges and agrees that the subordination provisions of this
instrument are for the benefit of the holders of the Senior Debt and that,
accordingly, no provision of Section 6 hereof may be amended or otherwise
modified without the prior written consent of each holder of Senior Debt at
such time outstanding.
8. Notices. Any notice or communication to the Company shall be
given in writing and delivered in person or by overnight courier or mailed by
certified or registered mail, return receipt requested, addressed as follows:
Micron Technology, Inc.
8000 South Federal Way
P. O. Box 6
Boise, Idaho 8379-9632
Attention: General Counsel.
Any notice or communication to a Holder shall be given in writing and delivered
by telecopier, in person or by overnight courier or mailed by certified or
registered mail, return receipt requested, addressed to the address of the
Holder in the Note Register on the date of such notice or communication. The
address of Seller, as original Holder, is as follows:
Texas Instruments Incorporated
7839 Churchill Way - MS
Dallas, Texas 75215
Attention: General Counsel
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<PAGE> 155
Any such notice or communication shall be effective (x) when received, if
delivered in person, (y) on the next business day, if delivered by overnight
courier and (z) when received, if delivered by mail.
9. Restrictions on Transfer. This Note has not been registered under
the Securities Act, or the securities laws of any state or other jurisdiction.
Neither this Note nor any interest or participation herein may be reoffered,
sold, assigned, transferred, pledged, encumbered or otherwise disposed of in
the absence of such registration or unless such transaction is exempt from, or
not subject to, registration. Each Holder by its acceptance of this Note
agrees that it shall not offer, sell, assign, transfer, pledge, encumber or
otherwise dispose of this note or any portion thereof or interest therein other
than in a minimum denomination of $10,000,000 principal amount (or any integral
multiple of $1,000,000 in excess thereof) and then only (a) to the Company, or
(b) for so long as the securities are eligible for resale pursuant to Rule
144A, pursuant to a sale to a Person it reasonably believes is a "qualified
institutional buyer" as defined in Rule 144A.
10. Transfer Agent and Registrar; Transfers of Notes.
10.1. Company Own Transfer Agent and Note Registrar. The
Company shall serve as its own agent for the transfer and exchange of Notes and
registrar to keep a register or registers in which, subject to such reasonable
regulations as it may prescribe, the Company will provide for the registration
of Notes and the registration of transfers of Notes (the "Note Register"). The
Note Register will be maintained at the office of the Company set forth in
Section 8 hereof.
10.2. Transfer of Notes. Upon presentation of any Note for
registration of transfer at the office of the Company set forth in Section 8
hereof accompanied by (i) certification by the transferor that such transfer is
in compliance with the terms hereof and (ii) by a written instrument of
transfer in a form approved by the Company executed by the registered Holder,
in person or by such holder's attorney thereunto duly authorized in writing,
and including the name, address and telephone and fax numbers of the transferee
and name of the contact person of the transferee, such Note shall be
transferred on the Note Register, and a new Note of like tenor and bearing the
same legends shall be issued in the name of the transferee and sent to the
transferee at the address and c/o the contact person so indicated. Transfers
and exchanges of Notes shall be subject to such additional restrictions as are
set forth in the legends on the Notes and to such additional reasonable
regulations as may be prescribed by the Company. Successive registrations of
transfers as aforesaid may be made from time to time as desired, and each such
registration shall be noted on the Note Register. No service charge shall be
made for any registration of transfer or exchange of the Notes, but the Company
may require payment of a sum sufficient to cover any stamp or other tax or
governmental charge in connection therewith.
10.3. Registered Holders Treated as Absolute Owners. The
Company may deem and treat the Person in whose name any Note is registered on
the Note Register as the absolute owner of such Note (whether or not such Note
shall be overdue and notwithstanding any notation of ownership or other writing
thereon) for the purpose of receiving payment of or on account of the
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<PAGE> 156
principal of and, subject to the provisions of this Agreement, interest on such
Note and for all other purposes; and neither the Company nor any agent of the
Company shall be affected by any notice to the contrary. All such payments so
made to any such Person, or upon such Person's order, shall be valid, and, to
the extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable on any such Note.
10.4. Loss, Theft, Destruction or Mutilation of Note. Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of a Note, and in the case of loss, theft or
destruction, receipt of indemnity or security reasonably satisfactory to the
Company, and upon reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of such Note, if
mutilated, the Company will deliver a new Note of like tenor and dated as of
such cancellation, in lieu of such Note.
11. Holder Representations. By its acceptance hereof, each Holder
represents and warrants as follows:
11.1. Qualified Institutional Buyer. Such Holder is a
"qualified institutional buyer" as such term is defined in Rule 144A under the
Securities Act. Such Holder has been advised that this Note has not been
registered under the Securities Act, or any state securities laws and,
therefore, cannot be resold unless it is registered under the Securities Act
and applicable state securities laws or unless an exemption from such
registration requirements is available. Such Holder is aware that the Company
is under no obligation to effect any such registration or to file for or comply
with any exemption from registration. Such Holder has not been formed solely
for the purpose of making this investment and is acquiring the Note for its own
account, or for the account of a qualified institutional buyer to whom notice
is given that the transfer is being made in reliance on Rule 144A, for
investment, and not with a view to, or for resale in connection with, the
distribution thereof.
11.2. Access to Information. The initial Holder of this Note
acknowledges that the Company has given such Holder access to the corporate
records and accounts of the Company and to all information in its possession
relating to the Company, has made its officers and representatives available
for interview by such Holder, and has furnished such Holder with all documents
and other information required for such Holder to make an informed decision
with respect to the acquisition of the Note.
12. General. This Note shall be governed by and shall be construed
and enforced in accordance with the laws of the State of New York.
MICRON TECHNOLOGY, INC.
By
--------------------------
Name:
Title:
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<PAGE> 157
EXHIBIT G
================================================================================
Micron Technology, Inc.
and
Norwest Bank Minnesota, National Association
Trustee
Supplemental Trust Indenture
Dated as of June 15, 1997
Supplementing that certain
Indenture
Dated as of June 15, 1997
Authorizing the Issuance and Delivery of
Subordinated Debt Notes
7% Convertible Subordinated Notes due July 1, 2004
================================================================================
<PAGE> 158
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE ONE ISSUANCE OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 101 Issuance of Notes; Principal Amount; Maturity . . . . . 12
Section 102 Interest on the Notes; Payment of Interest . . . . . . 12
ARTICLE TWO CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 14
Section 201 Certain Definitions . . . . . . . . . . . . . . . . . . 14
ARTICLE THREE CERTAIN COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 15
Section 301 Registration and Listing . . . . . . . . . . . . . . . 15
ARTICLE FOUR REDEMPTION OF . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 401 Right of Redemption . . . . . . . . . . . . . . . . . . 16
ARTICLE FIVE CONVERSION OF . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 501 Conversion Privilege and Conversion Rate . . . . . . . 16
Section 502 Adjustment of Conversion Rate . . . . . . . . . . . . . 16
ARTICLE SIX REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF
CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 601 Right to Require Repurchase . . . . . . . . . . . . . . 21
Section 602 Conditions to the Company's Election to Pay the . . . . 22
Section 603 Notices; Method of Exercising Repurchase Right, Etc. . 22
Section 604 Certain Definitions. . . . . . . . . . . . . . . . . . 25
Section 605 Consolidation, Merger, etc . . . . . . . . . . . . . . 26
ARTICLE SEVEN EVENT OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 27
Section 701 Event of Default . . . . . . . . . . . . . . . . . . . 27
ARTICLE EIGHT MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 801 Applicability of Certain Indenture Provisions . . . . . 27
Section 802 Reference to and Effect on the Indenture . . . . . . . 28
Section 803 Waiver of Certain Covenants . . . . . . . . . . . . . . 28
Section 804 Supplemental Indenture May be Executed In
Counterparts . . . . . . . . . . . . . . . . . . . . . 28
Section 805 Effect of Headings . . . . . . . . . . . . . . . . . . 28
</TABLE>
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<PAGE> 159
This Supplemental Trust Indenture, dated as of June 15, 1997 (the
"Supplemental Indenture"), between Micron Technology, Inc., a corporation duly
organized and existing under the laws of the State of Delaware (the "Company"),
and Norwest Bank Minnesota, National Association, a national banking
association organized and existing under the laws of the United States of
America, as Trustee (the "Trustee"), supplementing that certain Indenture,
dated as of June 15, 1997, between the Company and the Trustee (the
"Indenture").
Recitals
A. The Company has duly authorized the execution and delivery of the
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes, or other evidences of indebtedness to be issued in one or
more series as provided for in the Indenture.
B. The Indenture provides that the Securities of each series shall
be in substantially the form set forth in the Indenture, or in such other form
as may be established by or pursuant to a Board Resolution or in one or more
supplemental indentures thereto, in each case with such appropriate insertions,
omissions, substitutions, and other variations as are required or permitted by
the Indenture, and may have such letters, numbers, or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined to be required by the officers executing
such securities, as evidenced by their execution thereof.
C. The Company and the Trustee have agreed that the Company shall
issue and deliver, and the Trustee shall authenticate, Securities denominated
"7% Convertible Subordinated Notes due July 1, 2004" (the "Notes") pursuant to
the terms of this Supplemental Indenture and substantially in the form set
forth below, in each case with such appropriate insertions, omissions,
substitutions, and other variations as are required or permitted by the
Indenture and this Supplemental Indenture, and with such letters, numbers, or
other marks of identification and such legends or endorsements placed thereon
as may be required to comply with the rules of any securities exchange or as
may, consistently herewith, be determined by the officers executing such
Securities, as evidenced by their execution of such Securities.
[Form of Face of Security]
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY
BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A
NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
<PAGE> 160
MICRON TECHNOLOGY, INC.
7% Convertible Subordinated Note due July 1, 2004
No. _________ $_____________
Micron Technology, Inc., a corporation duly organized and existing under
the laws of Delaware (herein called the "Company," which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to ________________, or registered assigns,
the principal sum of ___________________ Dollars on July 1, 2004 and to pay
interest thereon from June 24, 1997 or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, semi-annually on
January 1 and July 1 in each year, commencing January 1, 1998, at the rate of
7% per annum, until the principal hereof is paid or made available for payment.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the December 15 or June 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date, subject to
the right of the Company to defer interest during an Extension Period. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
So long as no Event of Default under the Indenture has occurred and is
continuing, the Company shall have the right at any time during the term of the
Securities to defer interest payments from time to time by extending the
interest payment period for successive periods (each, an "Extension Period")
not exceeding 4 consecutive semi-annual interest payment periods for each such
period; provided, that no Extension Period may extend beyond the Stated
Maturity of the Securities. At the end of each Extension Period, the Company
shall be responsible for the payment of, and the Company shall pay to the
Person in whose name this Security is registered at the close of business on
the Regular Record Date next preceding such payment date all interest then
accrued and unpaid together with interest thereon compounded semi-annually at
the rate specified for the Securities to the extent permitted by applicable
law; provided, that during any Extension Period, the Company shall not, and
shall not allow any of its Subsidiaries to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities (including guarantees of indebtedness for money borrowed) of
the Company that rank pari passu with or junior to the Notes (other than (a)
any
2
<PAGE> 161
dividend, redemption, liquidation, interest, principal or guarantee payment by
the Company where the payment is made by way of securities (including capital
stock) that rank pari passu with or junior to the securities on which such
dividend, redemption, interest, principal or guarantee payment is being made,
(b) purchases of the Company's Common Stock related to the issuance of the
Company's Common Stock under any of the Company's benefit plans for its
directors, officers or employees, (c) as a result of a reclassification of the
Company's capital stock or the exchange or conversion of one series or class of
the Company's capital stock for another series or class of the Company's
capital stock, and (d) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged). Prior to the
termination of any such Extension Period, the Company may further extend such
Extension Period; provided, that such Extension Period together with all
previous and further extensions thereof may not exceed 4 consecutive semi-
annual interest payment periods and may not extend beyond the Stated Maturity
of the Securities. Upon the termination of any Extension Period and the
payment of all amounts then due, the Company may commence a new Extension
Period, subject to the above requirements. No interest during an Extension
Period shall be due and payable except at the end thereof.
The Company shall give written notice to the Trustee of its election to
begin an Extension Period at least one Business Day prior to the earlier of (i)
the Regular Record Date for the Interest Payment Date on the Securities that
would have been payable but for the election to begin such Extension Period or
(ii) if the Securities are listed on the New York Stock Exchange, Inc. ("NYSE")
or other stock exchange or quotation system, the date the Company is required
to give notice to the NYSE or other applicable self-regulatory organization or
to Holders of the Securities of the Regular Record Date or the date such
interest is payable.
Payment of the principal of (and premium, if any) and any interest on
this Security will be made at Corporate Trust Office of the Trustee in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts; provided, however, that
at the option of the Company payment of interest may be made by check mailed to
the address of the Person entitled thereto as such address shall appear in the
Security Register.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
3
<PAGE> 162
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
MICRON TECHNOLOGY, INC.
By:
--------------------------
Title:
Attest:
- ---------------------------------
The Trustee's certificates of authentication shall be in substantially
the following form:
This is one of the Securities of the series designated herein referred
to in the within-mentioned Indenture.
Dated: NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
As Trustee
By:
---------------------------------------
Authorized Officer
FORM OF REVERSE OF SECURITY
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or
more series under an Indenture, dated as of June 15, 1997 (herein called the
"Indenture," which term shall have the meaning assigned to it in such
instrument), between the Company and Norwest Bank Minnesota, National
Association, as Trustee (herein called the "Trustee," which term includes any
successor trustee under the Indenture), and reference is hereby made to the
Indenture and all indentures supplemental thereto for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee, the holders of Senior Debt and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof, limited in aggregate principal amount to $500,000,000.
The Securities will not be subject to redemption prior to July 2, 1999
and will be redeemable on and after such date at the option of the Company, in
whole or in part, upon not less than 20 nor more than 60 days notice to the
Holders, at the Redemption Prices (expressed as percentages of the principal
amount) set forth below; provided, however, that the Securities will not be
redeemable following July 2, 1999 and before July 3, 2001 unless the Closing
Price Per Share of the Company's
4
<PAGE> 163
Common Stock is at least 130% of the Conversion Price for at least 20 Trading
Days within a period of 30 consecutive Trading Days ending within five Trading
Days of the call for redemption.
The Redemption Price (expressed as a percentage of principal amount) is
as follows for the 12-month periods beginning on July 1 of the following years
(beginning on July 2, 1999, and ending on June 30, 2000, in the case of the
first such period):
<TABLE>
<Capt
Year Redemption Price
---- ----------------
<S> <C>
1999 . . . . . . . . . . . . . . . . . . . 105%
2000 . . . . . . . . . . . . . . . . . . . 104%
2001 . . . . . . . . . . . . . . . . . . . 103%
2002 . . . . . . . . . . . . . . . . . . . 102%
2003 . . . . . . . . . . . . . . . . . . . 101%
</TABLE>
and thereafter is equal to 100% of the principal amount, in each case together
with accrued and unpaid interest (including any unpaid interest, compounded
semi-annually, that has accrued during any Extension Period) to, but excluding,
the Redemption Date; provided, however, that interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, of record at the
close of business on the relevant Record Dates referred to on the face hereof,
all as provided in the Indenture.
In the event of redemption of this Security in part only, a new Security
or Securities of this series and of like tenor for the unredeemed portion
hereof will be issued in the name of the Holder hereof upon the cancellation
hereof.
If a Change in Control occurs, the Holder of this Security, at the
Holder's option, shall have the right, in accordance with the provisions of the
Indenture, to require the Company to repurchase this Security (or any portion
of the principal amount hereof that is $1,000 or any integral multiple of
$1,000 in excess thereof, provided that the portion of the principal amount of
this Security to be Outstanding after such repurchase is at least equal to
$1,000) for cash at a Repurchase Price equal to 100% of the principal amount
thereof plus interest accrued to, but excluding, the Repurchase Date (including
any unpaid interest, compounded semi-annually, that has accrued during any
Extension Period). At the option of the Company, the Repurchase Price may be
paid in cash or, subject to the conditions provided in the Indenture, by
delivery of shares of Common Stock having a fair market value equal to the
Repurchase Price. For purposes of this paragraph, the fair market value of
shares of Common Stock shall be determined by the Company and shall be equal to
95% of the average of the Closing Prices Per Share for the five consecutive
Trading Days immediately preceding the second Trading Day prior to the
Repurchase Date. Whenever in this Security there is a reference, in any
context, to the principal of any Security as of any time, such reference shall
be deemed to include reference to the Repurchase Price payable in respect of
such Security to the extent that such Repurchase Price is, was or would be so
payable at such time, and express mention of the Repurchase Price in any
provision of this Security shall not be construed as excluding the Repurchase
Price so payable in those provisions of this Security when such express mention
is not made; provided, however, that, for the purposes of the succeeding
paragraph, such reference shall be
5
<PAGE> 164
deemed to include reference to the Repurchase Price only to the extent the
Repurchase Price is payable in cash.
The indebtedness evidenced by this Security is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment
to the prior payment in full of all Senior Debt of the Company, and this
Security is issued subject to such provisions of the Indenture with respect
thereto. Each Holder of this Security, by accepting the same, (a) agrees to
and shall be bound by such provisions, (b) authorizes and directs the Trustee
on his or her behalf to take such action as may be necessary or appropriate to
effectuate the subordination so provided and (c) appoints the Trustee as his or
her attorney-in-fact for any and all such purposes.
The Indenture contains provisions for defeasance at any time of the
entire indebtedness of this Security or certain restrictive covenants and
Events of Default with respect to this Security, in each case upon compliance
with certain conditions set forth in the Indenture.
Subject to the provisions of the Indenture, the Holder of this Security
is entitled, at its option, at any time on or before July 1, 2004 (except that,
in case this Security or any portion hereof shall be called for redemption or
submitted for repurchase, such right shall terminate with respect to this
Security or portion hereof, as the case may be, so called for redemption or
submitted for repurchase, as the case may be, at the close of business on the
first Business Day next preceding the date fixed for redemption or repurchase,
as the case may be, as provided in the Indenture unless the Company defaults in
making the payment due upon redemption or repurchase, as the case may be), to
convert the principal amount of this Security (or any portion hereof which is
$1,000 or an integral multiple thereof) into fully paid and non-assessable
shares of the Common Stock of the Company, as said shares shall be constituted
at the date of conversion, at the Conversion Rate of 14.8272 shares of Common
Stock for each $1,000 principal amount of Securities, or at the adjusted
Conversion Rate in effect at the date of conversion determined as provided in
the Indenture, upon surrender of this Security, together with the conversion
notice hereon duly executed, to the Corporate Trust Office of the Trustee
accompanied (if so required by the Company) by instruments of transfer, in form
satisfactory to the Company and to the Trustee, duly executed by the Holder or
by its duly authorized attorney in writing. Such surrender (other than during
an Extension Period) shall, if made during any period beginning at the close of
business on a Regular Record Date and ending at the opening of business on the
Interest Payment Date next following such Regular Record Date (unless this
Security or the portion being converted shall have been called for redemption
on a Redemption Date during the period beginning at the close of business on a
Regular Record Date and ending at the opening of business on the first Business
Day after the next succeeding Interest Payment Date, or if such Interest
Payment Date is not a Business Day, the second such Business Day), also be
accompanied by payment in funds acceptable to the Company of an amount equal to
the interest payable on such Interest Payment Date on the principal amount of
this Security then being converted. Subject to the aforesaid requirement for
payment and, in the case of a conversion after the Regular Record Date next
preceding any Interest Payment Date and on or before such Interest Payment
Date, to the right of the Holder of this Security (or any Predecessor Security)
of record at such Regular Record Date to receive an installment of interest
(with certain exceptions provided in the Indenture), no adjustment is to be
made on conversion for interest accrued hereon or for dividends on shares of
Common Stock
6
<PAGE> 165
issued on conversion. If, during any Extension Period, this Security (or
portion hereof) called for redemption is surrendered for conversion, any
accrued and unpaid interest on this Security (or portion hereof) as of the
Interest Payment Date occurring on or immediately preceding the conversion date
for this Security shall be paid in cash to the Holder surrendering such
Security for conversion. The Company is not required to issue fractional
shares upon any such conversion, but shall make adjustment therefor as provided
in the Indenture. The Conversion Rate is subject to adjustment as provided in
the Indenture. In addition, the Indenture provides that in case of certain
consolidations or mergers to which the Company is a party or the sale of
substantially all of the assets of the Company, the Indenture shall be amended,
without the consent of any Holders of Securities, so that this Security, if
then outstanding, will be convertible thereafter, during the period this
Security shall be convertible as specified above, only into the kind and amount
of securities, cash and other property receivable upon the consolidation,
merger or sale by a holder of the number of shares of Common Stock into which
this Security might have been converted immediately prior to such
consolidation, merger or sale (assuming such holder of Common Stock failed to
exercise any rights of election and received per share the kind and amount
received per share by a plurality of non-electing shares). In the event of
conversion of this Security in part only, a new Security or Securities for the
unconverted portion hereof shall be issued in the name of the Holder hereof
upon the cancellation hereof.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of more than 50% in principal amount of the
Securities at the time Outstanding of each series to be affected. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee
or for any other remedy thereunder, unless such Holder shall have previously
given the Trustee written notice of a continuing Event of Default with respect
to the Securities of this series, the Holders of not less than 25% in principal
amount of the Securities of this series at the time Outstanding shall have made
written request to the Trustee to institute proceedings in respect of such
Event of Default as Trustee and offered the Trustee reasonable indemnity, and
the Trustee shall not have received from the Holders of a majority in principal
amount of Securities of this series at the
7
<PAGE> 166
time Outstanding a direction inconsistent with such request, and shall have
failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or its
attorney duly authorized in writing, and thereupon one or more new Securities
of this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate
principal amount of Securities of this series and of like tenor of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for
all purposes, whether or not this Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
8
<PAGE> 167
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face of
this Security, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT -
TEN ENT - as tenants by the entireties -----------
(Cust)
JT TEN - as joint tenants with right of Custodian under Uniform
survivorship and not as tenants --------------
in common (Minor)
Gifts to Minors Act
--------
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
CONVERSION NOTICE
To Micron Technology, Inc.:
The undersigned owner of this Security hereby irrevocably exercises the
option to convert this Security, or portion hereof (which is $1,000 or an
integral multiple thereof) below designated, into shares of Common Stock of the
Company in accordance with the terms of the Indenture referred to in this
Security, and directs that the shares issuable and deliverable upon the
conversion, together with any check in payment for fractional shares and any
Securities representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If this Notice is being delivered (other than during an
Extension Period) on a date after the close of business on a Regular Record
Date and prior to the opening of business on the related Interest Payment Date
(unless this Security or the portion thereof being converted has been called
for redemption on a Redemption Date after the close of business on a Regular
Record Date and prior to the opening of business on the first Business Day
after the next succeeding Interest Payment Date, or if such Interest Payment
Date is not a Business Day, the next such Business Day), this Notice is
accompanied by payment, in funds acceptable to the Company, of an amount equal
to the interest payable on such Interest Payment Date of the principal of this
Security to be converted. If shares are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect hereto. Any amount required to be paid by the undersigned on
account of interest accompanies this Security.
9
<PAGE> 168
Principal Amount to be Converted
(in an integral multiple of $1,000, if less
than all)
$ __________
Dated:
---------------------------- ------------------------------
------------------------------
Signature(s) must be
guaranteed by a qualified
guarantor institution if
shares of Common Stock are to
be delivered, or Securities to
be issued, other than to and
in the name of the registered
owner.
------------------------------
Signature Guaranty
Fill in for registration of shares of Common Stock and Security if to be
issued otherwise than to the registered Holder.
- ----------------------------------- -------------------------------------
(Name) Social Security or Other Taxpayer
Identification Number
- -----------------------------------
(Address)
- -----------------------------------
10
<PAGE> 169
ELECTION OF HOLDER TO REQUIRE REPURCHASE
(1) Pursuant to Section 601 of the Supplemental Indenture, the
undersigned hereby elects to have this Security repurchased by the Company.
(2) The undersigned hereby directs the Trustee or the Company to pay
it or __________________ an amount in cash or, at the Company's election,
Common Stock valued as set forth in the Indenture, equal to 100% of the
principal amount to be repurchased (as set forth below), plus interest accrued
to, but excluding, the Repurchase Date (including any unpaid interest,
compounded semi-annually, that has accrued during any Extension Period), as
provided in the Supplemental Indenture.
Dated:
---------------------------- -------------------------------------
-------------------------------------
Signature(s)
Signature(s) must be guaranteed by an
Eligible Guarantor Institution with
membership in an approved signature
guarantee program pursuant to Rule
17Ad-15 under the Securities Exchange
Act of 1943.
-------------------------------------
Signature Guaranteed
Principal amount to be repurchased
(an integral multiple of $1,000):
------------------------------
Remaining principal amount following such repurchase
(not less than $1,000):
---------------------------------------
NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
11
<PAGE> 170
ARTICLE ONE
ISSUANCE OF NOTES.
Section 101 Issuance of Notes; Principal Amount; Maturity.
(a) On June 24, 1997, the Company shall issue and deliver to the
Trustee, and the Trustee shall authenticate, Notes substantially in the form
set forth above, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by the
Indenture and this Supplemental Indenture, and with such letters, numbers, or
other marks of identification and such legends or endorsements placed thereon
as may be required to comply with the rules of any securities exchange or as
may, consistently herewith, be determined by the officers executing such Notes,
as evidenced by their execution of such Notes.
(b) The Notes shall be issued in the aggregate principal amount of
$435,000,000 (or $500,000,000 if the over-allotment option set forth in Section
3 of the Underwriting Agreement dated June 19, 1997 (as amended from time to
time by the parties thereto) by and between the Company and the Underwriters is
exercised in full) and shall mature on July 1, 2004.
Section 102 Interest on the Notes; Payment of Interest.
(a) The Notes shall bear interest at the rate of 7% per annum from
June 24, 1997.
(b) The interest so payable, and punctually paid or duty provided
for, on any Interest Payment Date shall, as provided in such Indenture, be paid
to the Person in whose name a Note is registered at the close of business on
the Regular Record Date for such interest, which shall be the December 15 or
June 15 (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date, subject to the right of the Company to defer
interest during an Extension Period pursuant to 102(c). Any such interest not
so punctually paid or duly provided for shall forthwith cease to be payable to
the Holder on such Regular Record Date and may either be paid to the Person in
whose name the Note is registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest to be fixed by the Trustee,
notice whereof shall be given to Holders of Notes of this series not less than
10 calendar days prior to such Special Record Date, or be paid at any time in
any other lawful manner not inconsistent with the requirements of any Notes
exchange on which the Notes of this series may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in the
Indenture.
(c) So long as no Event of Default under the Indenture has occurred
and is continuing, the Company shall have the right at any time during the term
of the Notes to defer interest payments from time to time by extending the
interest payment period for successive periods (each, an "Extension Period")
not exceeding 4 consecutive semi-annual interest payment periods for each such
period; provided, that no Extension Period may extend beyond the Stated
Maturity of the Notes. At the end of each Extension Period, the Company shall
be responsible for the payment of, and the Company shall pay to the Person in
whose name this Security is registered at the close of business
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<PAGE> 171
on the Regular Record Date next preceding such payment date all interest then
accrued and unpaid together with interest thereon compounded semi-annually at
the rate specified for the Notes to the extent permitted by applicable law;
provided, that during any Extension Period, the Company shall not, and shall
not allow any of its Subsidiaries to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities (including guarantees of indebtedness for money borrowed) of
the Company that rank pari passu with or junior to the Notes (other than (a)
any dividend, redemption, liquidation, interest, principal or guarantee payment
by the Company where the payment is made by way of securities (including
capital stock) that rank pari passu with or junior to the securities on which
such dividend, redemption, interest, principal or guarantee payment is being
made, (b) purchases of the Company's Common Stock related to the issuance of
the Company's Common Stock under any of the Company's benefit plans for its
directors, officers or employees, (c) as a result of a reclassification of the
Company's capital stock or the exchange or conversion of one series or class of
the Company's capital stock for another series or class of the Company's
capital stock, and (d) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged). Prior to the
termination of any such Extension Period, the Company may further extend such
Extension Period; provided, that such Extension Period together with all
previous and further extensions thereof may not exceed 4 consecutive semi-
annual interest payment periods and may not extend beyond the Stated Maturity
of the Notes. Upon the termination of any Extension Period and the payment of
all amounts then due, the Company may commence a new Extension Period, subject
to the above requirements. No interest during an Extension Period shall be due
and payable except at the end thereof.
The Company shall give written notice to the Trustee of its election to
begin such Extension Period at least one Business Day prior to the earlier of
(i) the Regular Record Date for the Interest Payment Date on the Notes that
would have been payable but for the election to begin such Extension Period or
(ii) if the Notes are listed on the New York Stock Exchange, Inc. ("NYSE") or
other stock exchange or quotation system, the date the Company is required to
give notice to the NYSE or other applicable self-regulatory organization or to
Holders of the Notes of the Regular Record Date or the date such interest is
payable.
(d) Payment of the principal of (and premium, if any) and any
interest on the Notes shall be made at the Corporate Trust Office of the
Trustee in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; provided,
however, that at the option of the Company payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address
appears in the Security Register.
13
<PAGE> 172
ARTICLE TWO CERTAIN DEFINITIONS.
Section 201 Certain Definitions.
The terms defined in this Section 201 (except as herein otherwise
expressly provided or unless the context of this Supplemental Indenture
otherwise requires) for all purposes of this Supplemental Indenture and of any
indenture supplemental hereto have the respective meanings specified in this
Section 201. All other terms used in this Supplemental Indenture that are
defined in the Indenture or the Trust Indenture Act, either directly or by
reference therein (except as herein otherwise expressly provided or unless the
context of this Supplemental Indenture otherwise requires), have the respective
meanings assigned to such terms in the Indenture or the Trust Indenture Act, as
the case may be, as in force at the date of this Supplemental Indenture as
originally executed.
"Change of Control" has the meaning specified in Section 604 of this
Supplemental Indenture.
"Closing Price Per Share" means, with respect to the Common Stock of the
Company, for any day, the reported last sales price regular way per share or,
in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case (i) on the
New York Stock Exchange as reported in The Wall Street Journal (or other
similar newspaper) for New York Stock Exchange Composite Transactions or, if
the Common Stock is not listed or admitted to trading on such Exchange, on the
principal (as determined by the Company's Board of Directors) national
securities exchange on which the Common Stock is listed or admitted to trading
or (ii) if not listed or admitted to trading on any national securities
exchange, on the Nasdaq National Market, or, if the Common Stock is not listed
or admitted to trading on any national securities exchange or quoted on the
Nasdaq National Market, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member firm
selected from time to time by the Company for that purpose. If no such prices
are available, the Closing Price Per Share shall be the fair value of a share
as determined by the Board of Directors of the Company.
"Conversion Price" shall equal $1,000 divided by the Conversion Rate.
"Conversion Rate" has the meaning specified in Section 501 of this
Supplemental Indenture.
"Extension Period" has the meaning specified in Section 102(c) of this
Supplemental Indenture.
"Purchased Shares" has the meaning specified in Section 502(6) of this
Supplemental Indenture.
"Record Date" shall mean any Regular Record Date or any Special Record
Date.
14
<PAGE> 173
"Redemption Date", when used with respect to any Note to be redeemed,
means the date fixed for such redemption by or pursuant to this Supplemental
Indenture.
"Redemption Price", when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to this Supplemental
Indenture.
"Repurchase Date" has the meaning specified in Section 601 of this
Supplemental Indenture.
"Repurchase Price" has the meaning specified in Section 601 of this
Supplemental Indenture.
"Trading Days" means (i) if the Common Stock is listed or admitted for
trading on any national securities exchange, days on which such national
securities exchange is open for business or (ii) if the Common Stock is quoted
on the Nasdaq National Market or any similar system of automated dissemination
of quotations of securities prices, days on which trades may be made on such
system or (iii) if the Common Stock is not listed or admitted to trading on any
national securities exchange or quoted on the Nasdaq National Market or similar
system, days on which the Common Stock is traded regular way in the over-the-
counter market and for which a closing bid and a closing asked price for the
Common Stock are available.
ARTICLE THREE
CERTAIN COVENANTS.
The following covenant shall be applicable to the Company for so long as
any of the Notes are outstanding. Nothing in this paragraph will, however,
affect the Company's obligations under any provision of the Indenture or,
except for Article Three hereof, this Supplemental Indenture.
Section 301 Registration and Listing.
The Company (i) will effect all registrations with, and obtain all
approvals by, all governmental authorities that may be necessary under any
United States Federal or state law (including the Securities Act, the Exchange
Act and state securities and Blue Sky laws) before the shares of Common Stock
issuable upon conversion of Notes may be lawfully issued and delivered, and
thereafter publicly traded, and qualified or listed as contemplated by clause
(ii); and (ii) will list the shares of Common Stock required to be issued and
delivered upon conversion of the Notes prior to such issuance or delivery on
The New York Stock Exchange or such other exchange or automated quotation as
the Common Stock is then listed at such date of conversion.
15
<PAGE> 174
ARTICLE FOUR
REDEMPTION OF NOTES
Section 401 Right of Redemption.
The Notes may be redeemed in accordance with the provisions of the form
of Security set forth herein.
ARTICLE FIVE
CONVERSION OF NOTES
Section 501 Conversion Privilege and Conversion Rate.
Subject to and upon compliance with the provisions of this Article, at
the option of the Holder thereof, any Note may be converted into fully paid and
nonassessable shares (calculated as to each conversion to the nearest 1/100 of
a share) of Common Stock of the Company at the Conversion Rate, determined as
hereinafter provided, in effect at the time of conversion. Such conversion
right shall commence immediately and expire at the close of business on July 1,
2004, subject, in the case of the conversion of any Global Security, to any
applicable book-entry procedures of the Depositary therefor. In case a Note is
called for redemption at the election of the Company or the Holder thereof
exercises his right to require the Company to repurchase the Note, such
conversion right in respect of the Note shall expire at the close of business
on the Business Day next preceding the Redemption Date or the Repurchase Date
(as defined in Article Six), as the case may be, unless the Company defaults in
making the payment due upon redemption or repurchase, as the case may be (in
each case subject as aforesaid to any applicable book entry procedures).
If, during any Extension Period, a Note (or portion thereof) called for
redemption is surrendered for conversion, any accrued and unpaid interest on
such Note (or portion thereof) as of the Interest Payment Date occurring on or
immediately preceding the conversion date for such Note (or portion thereof)
shall be paid in cash to the Holder surrendering such Note for conversion.
The rate at which shares of Common Stock shall be delivered upon
conversion (herein called the "Conversion Rate") shall be initially 14.8272
shares of Common Stock for each $1,000 principal amount of Notes. The
Conversion Rate shall be adjusted in certain instances as provided in this
Article Five.
Section 502 Adjustment of Conversion Rate.
The Conversion Rate shall be subject to adjustment from time to time as
follows:
(1) In case the Company shall pay or make a dividend or other
distribution on Common Stock payable in shares of Common Stock, the Conversion
Rate in effect at the opening of business on the day following the date fixed
for the determination of stockholders entitled to receive such
16
<PAGE> 175
dividend or other distribution shall be increased by dividing such Conversion
Rate by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of shares and
the total number of shares constituting such dividend or other distribution,
such increase to become effective immediately after the opening of business on
the day following the date fixed for such determination. If, after any such
date fixed for determination, any dividend or distribution is not in fact paid,
the Conversion Rate shall be immediately readjusted, effective as of the date
the Board of Directors determines not to pay such dividend or distribution, to
the Conversion Rate that would have been in effect if such determination date
had not been fixed. For the purposes of this paragraph (1), the number of
shares of Common Stock at any time outstanding shall not include shares held in
the treasury of the Company but shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of Common Stock. The
Company will not pay any dividend or make any distribution on shares of Common
Stock held in the treasury of the Company.
(2) In case the Company shall issue rights, options or warrants to
all holders of its Common Stock entitling them to subscribe for or purchase
shares of Common Stock at a price per share less than the current market price
per share (determined as provided in paragraph (8) of this Section 502) of the
Common Stock on the date fixed for the determination of stockholders entitled
to receive such rights, options or warrants (other than any rights, options or
warrants that by their terms will also be issued to any Holder upon conversion
of a Note into shares of Common Stock without any action required by the
Company or any other Person), the Conversion Rate in effect at the opening of
business on the day following the date fixed for such determination shall be
increased by dividing such Conversion Rate by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares of
Common Stock which the aggregate of the offering price of the total number of
shares of Common Stock so offered for subscription or purchase would purchase
at such current market price and the denominator shall be the number of shares
of Common Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, such increase to become effective immediately after
the opening of business on the day following the date fixed for such
determination. If, after any such date fixed for determination, any such
rights, options or warrants are not in fact issued, or are not exercised prior
to the expiration thereof, the Conversion Rate shall be immediately readjusted,
effective as of the date such rights, options or warrants expire, or the date
the Board of Directors determines not to issue such rights, options or
warrants, to the Conversion Rate that would have been in effect if the
unexercised rights, options or warrants had never been granted or such
determination date had not been fixed, as the case may be. For the purposes of
this paragraph (2), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company but
shall include shares issuable in respect of scrip certificates issued in lieu
of fractions of shares of Common Stock. The Company will not issue any rights,
options or warrants in respect of shares of Common Stock held in the treasury
of the Company.
(3) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Rate in effect
at the opening of business on the
17
<PAGE> 176
day following the day upon which such subdivision becomes effective shall be
proportionately increased, and, conversely, in case outstanding shares of
Common Stock shall each be combined into a smaller number of shares of Common
Stock, the Conversion Rate in effect at the opening of business on the day
following the day upon which such combination becomes effective shall be
proportionately reduced, such increase or reduction, as the case may be, to
become effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.
(4) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock evidences of its indebtedness, shares of any
class of capital stock, or other property (including securities, but excluding
(i) any rights, options or warrants referred to in paragraph (2) of this
Section, (ii) any dividend or distribution paid exclusively in cash, (iii) any
dividend or distribution referred to in paragraph (1) of this Section) the
Conversion Rate shall be adjusted so that the same shall equal the rate
determined by dividing the Conversion Rate in effect immediately prior to the
close of business on the date fixed for the determination of stockholders
entitled to receive such distribution by a fraction of which the numerator
shall be the current market price per share (determined as provided in
paragraph (8) of this Section 502) of the Common Stock on the date fixed for
such determination less the then fair market value (as determined by the Board
of Directors, whose determination shall be conclusive and described in a Board
Resolution filed with the Trustee) of the portion of the assets, shares or
evidences of indebtedness so distributed applicable to one share of Common
Stock and the denominator shall be such current market price per share of the
Common Stock, such adjustment to become effective immediately prior to the
opening of business on the day following the date fixed for the determination
of stockholders entitled to receive such distribution. If, after any such date
fixed for determination, any such distribution is not in fact made, the
Conversion Rate shall be immediately readjusted, effective as of the date the
Board of Directors determines not to make such distribution, to the Conversion
Rate that would have been in effect if such determination date had not been
fixed.
(5) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock cash (excluding any cash that is distributed
as part of a distribution referred to in paragraph (4) of this Section) in an
aggregate amount that, combined together with (I) the aggregate amount of any
other cash distributions to all holders of its Common Stock made exclusively in
cash within the 12 months preceding the date of payment of such distribution
and in respect of which no adjustment pursuant to this paragraph (5) has been
made and (II) the aggregate of any cash plus the fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) of consideration payable in respect of any
tender offer by the Company or any of its subsidiaries for all or any portion
of the Common Stock concluded within the 12 months preceding the date of
payment of such distribution and in respect of which no adjustment pursuant to
paragraph (6) of this Section 502 has been made (the "combined cash and tender
amount") exceeds 12.5% of the product of the current market price per share
(determined as provided in paragraph (8) of this Section 502) of the Common
Stock on the date for the determination of holders of shares of Common Stock
entitled to receive such distribution times the number of shares of Common
Stock outstanding on such date (the "aggregate current market price"), then,
and in each such case, immediately after the close of business on such date for
determination,
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the Conversion Rate shall be adjusted so that the same shall equal the rate
determined by dividing the Conversion Rate in effect immediately prior to the
close of business on the date fixed for determination of the stockholders
entitled to receive such distribution by a fraction (i) the numerator of which
shall be equal to the current market price per share (determined as provided in
paragraph (8) of this Section 502) of the Common Stock on the date fixed for
such determination less an amount equal to the quotient of (x) the excess of
such combined cash and tender amount over such aggregate current market price
divided by (y) the number of shares of Common Stock outstanding on such date
for determination and (ii) the denominator of which shall be equal to the
current market price per share (determined as provided in paragraph (8) of this
Section 502) of the Common Stock on such date for determination.
(6) In case a tender offer made by the Company or any Subsidiary for
all or any portion of the Common Stock shall expire and such tender offer (as
amended upon the expiration thereof) shall require the payment to stockholders
(based on the acceptance (up to any maximum specified in the terms of the
tender offer) of Purchased Shares (as defined below)) of an aggregate
consideration having a fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution) that combined together with (I) the aggregate of the cash plus the
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a Board Resolution), as of the expiration
of such tender offer, of consideration payable in respect of any other tender
offer by the Company or any Subsidiary for all or any portion of the Common
Stock expiring within the 12 months preceding the expiration of such tender
offer and in respect of which no adjustment pursuant to this paragraph (6) has
been made and (II) the aggregate amount of any cash distributions to all
holders of the Company's Common Stock within 12 months preceding the expiration
of such tender offer and in respect of which no adjustment pursuant to
paragraph (5) of this Section has been made (the "combined tender and cash
amount") exceeds 12.5% of the product of the current market price per share of
the Common Stock (determined as provided in paragraph (8) of this Section 502)
as of the last time (the "Expiration Time") tenders could have been made
pursuant to such tender offer (as it may be amended) times the number of shares
of Common Stock outstanding (including any tendered shares) as of the
Expiration Time, then, and in each such case, immediately prior to the opening
of business on the day after the date of the Expiration Time, the Conversion
Rate shall be adjusted so that the same shall equal the rate determined by
dividing the Conversion Rate immediately prior to close of business on the date
of the Expiration Time by a fraction (i) the numerator of which shall be equal
to (A) the product of (I) the current market price per share of the Common
Stock (determined as provided in paragraph (8) of this Section 502) on the date
of the Expiration Time multiplied by (II) the number of shares of Common Stock
outstanding (including any tendered shares) on the Expiration Time less (B) the
combined tender and cash amount, and (ii) the denominator of which shall be
equal to the product of (A) the current market price per share of the Common
Stock (determined as provided in paragraph (8) of this Section 502) as of the
Expiration Time multiplied by (B) the number of shares of Common Stock
outstanding (including any tendered shares) as of the Expiration Time less the
number of all shares validly tendered and not withdrawn as of the Expiration
Time (the shares deemed so accepted up to any such maximum, being referred to
as the "Purchased Shares").
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(7) The reclassification of Common Stock into securities including
other than Common Stock (other than any reclassification upon a consolidation
or merger to which Section 1409 of the Indenture applies) shall be deemed to
involve (a) a distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such reclassification shall
be deemed to be "the date fixed for the determination of stockholders entitled
to receive such distribution" and "the date fixed for such determination"
within the meaning of paragraph (4) of this Section), and (b) a subdivision or
combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification into the number of
shares of Common Stock outstanding immediately thereafter (and the effective
date of such reclassification shall be deemed to be "the day upon which such
subdivision becomes effective" or "the day upon which such combination becomes
effective", as the case may be, and "the day upon which such subdivision or
combination becomes effective" within the meaning of paragraph (3) of this
Section 502).
(8) For the purpose of any computation under paragraphs (2), (4), (5)
or (6) of this Section 502, the current market price per share of Common Stock
on any date shall be calculated by the Company and be deemed to be the average
of the daily Closing Prices Per Share for the five consecutive Trading Days
selected by the Company commencing not more than 10 Trading Days before, and
ending not later than, the earlier of the day in question and the day before
the "ex" date with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term "'ex' date", when used
with respect to any issuance or distribution, means the first date on which the
Common Stock trades regular way in the applicable securities market or on the
applicable securities exchange without the right to receive such issuance or
distribution.
(9) No adjustment in the Conversion Rate shall be required unless
such adjustment (plus any adjustments not previously made by reason of this
paragraph (9)) would require an increase or decrease of at least one percent in
such rate; provided, however, that any adjustments which by reason of this
paragraph (9) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Article
shall be made to the nearest cent or to the nearest one-hundredth of a share,
as the case may be.
(10) The Company may make such increases in the Conversion Rate, for
the remaining term of the Notes or any shorter term, in addition to those
required by paragraphs (1), (2), (3), (4), (5) and (6) of this Section 502, as
it considers to be advisable in order to avoid or diminish any income tax to
any holders of shares of Common Stock resulting from any dividend or
distribution of stock or issuance of rights or warrants to purchase or
subscribe for stock or from any event treated as such for income tax purposes.
The Company shall have the power to resolve any ambiguity or correct any error
in this paragraph (10) and its actions in so doing shall, absent manifest
error, be final and conclusive.
(11) Notwithstanding the foregoing provisions of this Section, no
adjustment of the Conversion Rate shall be required to be made (a) upon the
issuance of shares of Common Stock pursuant to any present or future plan for
the reinvestment of dividends or (b) because of a tender or
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exchange offer of the character described in Rule 13e-4(h)(5) under the
Exchange Act or any successor rule thereto.
(12) To the extent permitted by applicable law, the Company from time
to time may increase the Conversion Rate by any amount for any period of time
if the period is at least twenty (20) days, the increase is irrevocable during
such period, and the Board of Directors shall have made a determination that
such increase would be in the best interests of the Company, which
determination shall be conclusive; provided, however, that no such increase
shall be taken into account for purposes of determining whether the Closing
Price Per Share of the Common Stock exceeds the Conversion Price by 105% in
connection with an event which would otherwise be a Change of Control pursuant
to Section 604(4). Whenever the Conversion Rate is increased pursuant to the
preceding sentence, the Company shall give notice of the increase to the
Holders in the manner provided in Section 106 of the Indenture at least fifteen
(15) days prior to the date the increased Conversion Rate takes effect, and
such notice shall state the increased Conversion Rate and the period during
which it will be in effect.
ARTICLE SIX REPURCHASE OF NOTES AT THE OPTION OF THE
HOLDER UPON A CHANGE OF CONTROL.
Section 601 Right to Require Repurchase.
In the event that a Change in Control (as hereinafter defined) shall
occur, then each Holder shall have the right, at the Holder's option, but
subject to the provisions of Section 602, to require the Company to repurchase,
and upon the exercise of such right the Company shall repurchase, all of such
Holder's Notes not theretofore called for redemption, or any portion of the
principal amount thereof that is equal to $1,000 or any integral multiple of
$1,000 in excess thereof (provided that no single Note may be repurchased in
part unless the portion of the principal amount of such Note to be Outstanding
after such repurchase is equal to $1,000 or integral multiples of $1,000 in
excess thereof), on the date (the "Repurchase Date") that is 45 days after the
date of the Company Notice (as defined in Section 603) at a purchase price
equal to 100% of the principal amount of the Notes to be repurchased plus
interest accrued to, but excluding, the Repurchase Date (including any unpaid
interest that has accrued during the Extension Period) (the "Repurchase
Price"); provided, however, that installments of interest on Notes whose Stated
Maturity is on or prior to the Repurchase Date shall be payable to the Holders
of such Notes, or one or more Predecessor Notes, registered as such on the
relevant Record Date according to their terms and the provisions of Section 307
of the Indenture. Such right to require the repurchase of the Notes shall not
continue after a discharge of the Company from its obligations with respect to
the Notes in accordance with Article Four of the Indenture, unless a Change in
Control shall have occurred prior to such discharge. At the option of the
Company, the Repurchase Price may be paid in cash or, subject to the
fulfillment by the Company of the conditions set forth Section 602, by delivery
of shares of Common Stock having a fair market value equal to the Repurchase
Price. Whenever in this Supplemental Indenture or the Indenture (including in
the Form of Note, Section 101 of this Supplemental Indenture, and Sections
501(1) and 508 of the Indenture) there is a reference, in any context, to the
principal of any
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Note as of any time, such reference shall be deemed to include reference to the
Repurchase Price payable in respect of such Note to the extent that such
Repurchase Price is, was or would be so payable at such time, and express
mention of the Repurchase Price in any provision of this Supplemental Indenture
shall not be construed as excluding the Repurchase Price in those provisions of
this Supplemental Indenture or Indenture when such express mention is not made;
provided, however, that for the purposes of Article Fifteen of the Indenture
such reference shall be deemed to include reference to the Repurchase Price only
to the extent the Repurchase Price is payable in cash.
Section 602 Conditions to the Company's Election to Pay the Repurchase Price
in Common Stock.
The Company may elect to pay the Repurchase Price by delivery of shares
of Common Stock pursuant to Section 601 if and only if the following conditions
shall have been satisfied:
(1) The shares of Common Stock deliverable in payment of the
Repurchase Price shall have a fair market value as of the Repurchase Date of
not less than the Repurchase Price. For purposes of Section 601 and this
Section 602, the fair market value of shares of Common Stock shall be
determined by the Company and shall be equal to 95% of the average of the
Closing Prices Per Share for the five consecutive Trading Days immediately
preceding the second Trading Day prior to the Repurchase Date;
(2) The Repurchase Price shall be paid only in cash in the event any
shares of Common Stock to be issued upon repurchase of Notes hereunder (i)
require registration under any federal securities law before such shares may be
freely transferrable without being subject to any transfer restrictions under
the Securities Act upon repurchase and if such registration is not completed or
does not become effective prior to the Repurchase Date, and/or (ii) require
registration with or approval of any governmental authority under any state law
or any other federal law before such shares may be validly issued or delivered
upon repurchase and if such registration is not completed or does not become
effective or such approval is not obtained prior to the Repurchase Date;
(3) Payment of the Repurchase Price may not be made in Common Stock
unless such stock is, or shall have been, approved for listing on the New York
Stock Exchange or quotation on the Nasdaq National Market, in either case,
prior to the Repurchase Date; and
(4) All shares of Common Stock which may be issued upon repurchase of
Notes will be issued out of the Company's authorized but unissued Common Stock
and, will upon issue, be duly and validly issued and fully paid and
non-assessable and free of any preemptive rights.
If all of the conditions set forth in this Section 602 are not satisfied
in accordance with the terms thereof, the Repurchase Price shall be paid by the
Company only in cash.
Section 603 Notices; Method of Exercising Repurchase Right, Etc.
(1) Unless the Company shall have theretofore called for redemption
all of the Outstanding Notes, on or before the 30th day after the occurrence of
a Change in Control, the
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Company or, at the request and expense of the Company on or before the 15th day
after such occurrence, the Trustee, shall give to all Holders of Notes, in the
manner provided in Section 106 of the Indenture, notice (the "Company Notice")
of the occurrence of the Change in Control and of the repurchase right set
forth herein arising as a result thereof. The Company shall also deliver a
copy of such notice of a repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(i) the Repurchase Date,
(ii) the date by which the repurchase right must be
exercised,
(iii) the Repurchase Price, and whether the Repurchase
Price shall be paid by the Company in cash or by
delivery of shares of Common Stock,
(iv) a description of the procedure which a Holder must
follow to exercise a repurchase right, and the
place or places where such Notes, are to be
surrendered for payment of the Repurchase Price and
accrued interest, if any,
(v) that on the Repurchase Date the Repurchase Price,
and accrued interest, if any, will become due and
payable upon each such Note designated by the
Holder to be repurchased, and that interest thereon
shall cease to accrue on and after said date,
(vi) the Conversion Rate then in effect, the date on
which the right to convert the principal amount of
the Notes to be repurchased will terminate and the
place or places where such Notes may be surrendered
for conversion, and
(vii) the place or places that the Note certificate with
the Election of Holder to Require Repurchase as
specified in the form of Note shall be delivered.
No failure of the Company to give the foregoing notices or defect
therein shall limit any Holder's right to exercise a repurchase right or affect
the validity of the proceedings for the repurchase of Notes.
If any of the foregoing provisions or other provisions of this Article
Six are inconsistent with applicable law, such law shall govern.
(2) To exercise a repurchase right, a Holder shall deliver to the
Trustee on or before the 30th day after the date of the Company Notice (i)
written notice of the Holder's exercise of such right, which notice shall set
forth the name of the Holder, the principal amount of the Notes to be
repurchased (and, if any Note is to repurchased in part, the serial number
thereof, the portion of the principal amount thereof to be repurchased and the
name of the Person in which the portion thereof to remain Outstanding after
such repurchase is to be registered) and a statement that an election to
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exercise the repurchase right is being made thereby, and, in the event that the
Repurchase Price shall be paid in shares of Common Stock, the name or names
(with addresses) in which the certificate or certificates for shares of Common
Stock shall be issued, and (ii) the Notes with respect to which the repurchase
right is being exercised. Such written notice shall be irrevocable, except
that the right of the Holder to convert the Notes with respect to which the
repurchase right is being exercised shall continue until the close of business
on the Business Day prior to the Repurchase Date.
(3) In the event a repurchase right shall be exercised in accordance
with the terms hereof, the Company shall pay or cause to be paid to the Trustee
the Repurchase Price in cash or shares of Common Stock, as provided above, for
payment to the Holder on the Repurchase Date or, if shares of Common Stock are
to be paid, as promptly after the Repurchase Date as practicable, together with
accrued and unpaid interest to the Repurchase Date payable with respect to the
Notes as to which the repurchase right has been exercised; provided, however,
that installments of interest that mature on or prior to the Repurchase Date
shall be payable in cash to the Holders of such Notes, or one or more
Predecessor Securities, registered as such at the close of business on the
relevant Regular Record Date.
(4) If any Note (or portion thereof) surrendered for repurchase shall
not be so paid on the Repurchase Date, the principal amount of such Note (or
portion thereof, as the case may be) shall, until paid, bear interest to the
extent permitted by applicable law from the Repurchase Date at the rate of 7%
per annum, and each Note shall remain convertible into Common Stock until the
principal of such Note (or portion thereof, as the case may be) shall have been
paid or duly provided for.
(5) Any Note which is to be repurchased only in part shall be
surrendered to the Trustee (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and make available for delivery to the Holder of
such Note without service charge, a new Note or Notes, containing identical
terms and conditions, each in an authorized denomination in aggregate principal
amount equal to and in exchange for the unrepurchased portion of the principal
of the Note so surrendered.
(6) Any issuance of shares of Common Stock in respect of the
Repurchase Price shall be deemed to have been effected immediately prior to the
close of business on the Repurchase Date and the Person or Persons in whose
name or names any certificate or certificates for shares of Common Stock shall
be issuable upon such repurchase shall be deemed to have become on the
Repurchase Date the holder or holders of record of the shares represented
thereby; provided, however, that any surrender for repurchase on a date when
the stock transfer books of the Company shall be closed shall constitute the
Person or Persons in whose name or names the certificate or certificates for
such shares are to be issued as the record holder or holders thereof for all
purposes at the opening of business on the next succeeding day on which such
stock transfer books are open. No payment or adjustment shall be made for
dividends or distributions on any Common Stock issued upon repurchase of any
Note declared prior to the Repurchase Date.
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(7) No fractions of shares shall be issued upon repurchase of Notes.
If more than one Note shall be repurchased from the same Holder and the
Repurchase Price shall be payable in shares of Common Stock, the number of full
shares which shall be issuable upon such repurchase shall be computed on the
basis of the aggregate principal amount of the Notes so repurchased. Instead
of any fractional share of Common Stock which would otherwise be issuable on
the repurchase of any Note or Notes, the Company will deliver to the applicable
Holder a check for the current market value of such fractional share. The
current market value of a fraction of a share is determined by multiplying the
current market price of a full share by the fraction, and rounding the result
to the nearest cent. For purposes of this Section, the current market price of
a share of Common Stock is the Closing Price Per Share of the Common Stock on
the Trading Day immediately preceding the Repurchase Date.
(8) Any issuance and delivery of certificates for shares of Common
Stock on repurchase of Notes shall be made without charge to the Holder of
Notes being repurchased for such certificates or for any tax or duty in respect
of the issuance or delivery of such certificates or the Notes represented
thereby; provided, however, that the Company shall not be required to pay any
tax or duty which may be payable in respect of (i) income of the Holder or (ii)
any transfer involved in the issuance or delivery of certificates for shares of
Common Stock in a name other than that of the Holder of the Notes being
repurchased, and no such issuance or delivery shall be made unless and until
the Person requesting such issuance or delivery has paid to the Company the
amount of any such tax or duty or has established, to the satisfaction of the
Company, that such tax or duty has been paid.
(9) All Notes delivered for repurchase shall be delivered to the
Trustee to be canceled at the direction of the Trustee, which shall dispose of
the same as provided in Section 309 of the Indenture.
Section 604 Certain Definitions.
For purposes of this Article Six,
(1) the term "beneficial owner" shall be determined in accordance
with Rule 13d-3, as in effect on the date of the original execution of this
Supplemental Indenture, promulgated by the Commission pursuant to the Exchange
Act;
(2) a "Change in Control" shall be deemed to have occurred at the
time, after the original issuance of the Notes, of:
(i) the acquisition by any Person (including any syndicate or
group deemed to be a "person" under Section 13(d)(3) of the Exchange Act) of
beneficial ownership, directly or indirectly, through a purchase, merger or
other acquisition transaction or series of transactions, of shares of capital
stock of the Company entitling such person to exercise 50% or more of the total
voting power of all shares of capital stock of the Company entitled to vote
generally in the elections of directors (any shares of voting stock of which
such person or group is the beneficial owner that are
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not then outstanding being deemed outstanding for purposes of calculating such
percentage), other than any such acquisition by the Company, any Subsidiary of
the Company or any employee benefit plan of the Company existing on the date of
this Supplemental Indenture; or
(ii) any consolidation of the Company with, or merger of the
Company into, any other Person, any merger of another Person into the Company,
or any sale or transfer of all or substantially all of the assets (other than
to a wholly-owned subsidiary of the Company) of the Company to any other Person
(other than (a) any such transaction pursuant to which the holders of 50% or
more of the total voting power of all shares of capital stock of the Company
entitled to vote generally in elections of directors immediately prior to such
transaction have, directly or indirectly, at least 50% or more of the total
voting power of all shares of capital stock of the continuing or surviving
corporation entitled to vote generally in elections of directors of the
continuing or surviving corporation immediately after such transaction and (b)
a merger (x) which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of capital stock of the Company
or (y) which is effected solely to change the jurisdiction of incorporation of
the Company and results in a reclassification, conversion or exchange of
outstanding shares of Common Stock into solely shares of common stock);
provided, however, that a Change in Control shall not be deemed to have
occurred if either (a) the Closing Price Per Share of the Common Stock for any
five Trading Days within the period of 10 consecutive Trading Days ending
immediately after the later of the Change in Control or the public announcement
of the Change in Control (in the case of a Change in Control under clause
604(2)(i) above) or the period of 10 consecutive Trading Days ending
immediately before the Change in Control (in the case of a Change in Control
under clause 604(2)(ii) above) shall equal or exceed 105% of the Conversion
Price of the Notes in effect on each such Trading Day, or (b) all of the
consideration (excluding cash payments for fractional shares and cash payments
made pursuant to dissenters' appraisal rights) in a merger or consolidation
constituting the Change in Control described in clause 604(2)(i) and/or clause
604(2)(ii) above consists of shares of common stock traded on a national
securities exchange or quoted on the Nasdaq National Market (or will be so
traded or quoted immediately following the Change in Control) and as a result
of such transaction or transactions the Notes become convertible solely into
such common stock.
(3) for purposes of Section 604(2)(i), the term "person" shall
include any syndicate or group which would be deemed to be a "person" under
Section 13(d)(3) of the Exchange Act, as in effect on the date of the original
execution of this Supplemental Indenture.
Section 605 Consolidation, Merger, etc.
In the case of any consolidation, conveyance, sale, transfer or lease of
all or substantially all of the assets of the Company to which Section 1409
applies, in which the Common Stock of the Company is changed or exchanged as a
result into the right to receive shares of stock and other securities or
property or assets (including cash) which includes shares of Common Stock of
the Company or common stock of another Person that are, or upon issuance will
be, traded on a United States national securities exchange or approved for
trading on an established automated over-the-
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counter trading market in the United States and such shares constitute at the
time such change or exchange becomes effective in excess of 50% of the
aggregate fair market value of such shares of stock and other securities,
property and assets (including cash) (as determined by the Company, which
determination shall be conclusive and binding), then the Person formed by such
consolidation or resulting from such merger or combination or which acquires
the properties or assets (including cash) of the Company, as the case may be,
shall execute and deliver to the Trustee a supplemental indenture (which shall
comply with the Trust Indenture Act as in force at the date of execution of
such supplemental indenture) modifying the provisions of this Supplemental
Indenture relating to the right of Holders to cause the Company to repurchase
the Notes following a Change in Control, including without limitation the
applicable provisions of this Article Six and the definitions of the Common
Stock and Change in Control, as appropriate, and such other related definitions
set forth herein as determined in good faith by the Company (which
determination shall be conclusive and binding), to make such provisions apply
in the event of a subsequent Change of Control to the common stock and the
issuer thereof if different from the Company and Common Stock of the Company
(in lieu of the Company and the Common Stock of the Company).
ARTICLE SEVEN
EVENT OF DEFAULT
Section 701 Event of Default.
In addition to the Events of Default set forth in Section 501 of the
Indenture, the following will be an Event of Default under the Supplemental
Indenture: any indebtedness under any bond, debenture, note or other evidence
of indebtedness for money borrowed by the Company in a principal amount then
outstanding in excess of $50,000,000 is not paid at final maturity thereof
(either at its stated maturity or upon acceleration thereof), and such
indebtedness is not discharged, or such acceleration is not rescinded or
annulled, within a period of 30 days after there has been given, by registered
or certified mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in principal amount of the Outstanding
Notes a written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder.
ARTICLE EIGHT
MISCELLANEOUS
Section 801 Applicability of Certain Indenture Provisions.
Each of the defeasance and covenant defeasance provisions of Article
Thirteen of the Indenture shall apply to the Notes.
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Section 802 Reference to and Effect on the Indenture.
This Supplemental Indenture shall be construed as supplemental to the
Indenture and all the terms and conditions of this Supplemental Indenture shall
be deemed to be part of the terms and conditions of the Indenture. Except as
set forth herein, the Indenture heretofore executed and delivered is hereby (i)
incorporated by reference in this Supplemental Indenture and (ii) ratified,
approved and confirmed.
Section 803 Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any term,
provision, or condition set forth in Article Three hereof if the Holders of a
majority in principal amount of the outstanding Notes shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such term, provision or condition, but no such waiver shall
extend to or affect such term, provision, or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision, or condition shall remain in full force and effect.
Section 804 Supplemental Indenture May be Executed In Counterparts.
This instrument may be executed in any number of counterparts, each of
which shall be an original; but such counterparts shall together constitute but
one and the same instrument.
Section 805 Effect of Headings.
The Article and Section headings herein are for convenience only and
shall not affect the construction hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed all as of the day and year first above written.
Micron Technology, Inc.
By:
--------------------------
Name:
Title:
Norwest Bank of Minnesota,
National Association, as
Trustee
By:
--------------------------
Name:
Title:
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<PAGE> 188
EXHIBIT H
PRICE ALLOCATION/TAX PARAMETERS:
1. The value of the Buyer Common Stock shall equal the average trading
price on the Closing Date.
2. The Subordinated Notes and the Convertible Notes are indebtedness for
Tax purposes. The Cash Payment is being made in the exchange described
in Section 3.4 with Seller Note Purchasing Subsidiary.
3. The allocation can include an allocation among the assets acquired by
Singapore Newco and Italian Newco pursuant to the Reorganization.
4. The transactions described in this Agreement shall be treated as taxable
transactions. The contribution of assets to Singapore Newco and Italian
Newco pursuant to the Reorganization will be, for U.S. federal and state
Tax purposes, taxable transactions that do not qualify under Section 351
of the Code (or comparable provisions of state law).
5. No portion of the transaction represents consideration being paid to the
Buyer, Italian Newco, or Singapore Newco (including in the form of a
purchase price reduction) for the purpose of assuming liabilities or
undertaking certain activities or obligations. There is no deemed
consideration that is being paid to the Seller Group and repaid to the
Buyer, Italian Newco, or Singapore Newco.
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EXHIBIT I
TRANSITION SERVICES AGREEMENT
By and Between
PERRY
and
DIXIE
THIS TRANSITION SERVICES AGREEMENT (this "Agreement") is made effective
as of the Closing Date by and between Perry, a Delaware corporation ("Seller"
or "Perry") and Dixie, a Delaware corporation ("Buyer").
WITNESSETH
WHEREAS, Seller and Dixie have entered into that certain Acquisition
Agreement dated as of June __, 1998 (the "Acquisition Agreement"), pursuant to
which Seller agreed to sell to Dixie the "Acquired Assets" and Dixie has agreed
to assume from Seller the "Assumed Liabilities" ( all defined terms not defined
herein shall have the meaning set forth in the Acquisition Agreement).
WHEREAS, in consideration of the historical interconnections between the
Acquired Assets and Perry, the parties desire to provide certain support,
services, goods, and facilities to each other in order to promote the efficient
operation of their respective businesses, during the period in which the
functional separation contemplated by the Acquisition Agreement will occur (the
"Transition Services").
WHEREAS, such Transition Services shall be provided for the period
specified in any applicable Supplemental Agreement, as defined below, or, if no
such Supplemental Agreement, then for a period of twelve (12) months (the
"Transition Period");
WHEREAS, Seller has agreed to provide to Buyer, and Buyer desires the
right to purchase from Seller certain Transition Services on the terms and
conditions more particularly set forth herein or as the parties may otherwise
agree in writing;
WHEREAS, Seller desires Buyer to continue to provide, and the Buyer has
agreed to continue to provide to Seller, certain Transition Services currently
provided by the Business to Seller on the terms and conditions more
particularly set forth herein or as the parties may otherwise agree in writing;
NOW, THEREFORE, in consideration of the mutual promises and agreement
herein set forth, Seller and Buyer, intending to be legally bound, hereby agree
as follows:
<PAGE> 190
ARTICLE 1
NATURE OF THE AGREEMENT
1.1 The following are general terms and conditions under which Seller
will provide to Buyer, and Buyer shall provided to Seller, the Transition
Services. The Transition Services will be provided in accordance with these
general terms and conditions and in accordance with the terms and conditions
set forth in the Supplements attached hereto as Supplements _________ through
__ ____ and made a part of this Agreement, and any future Supplemental
Agreement hereto entered into between Seller and Buyer, as such agreements may
be modified, amended or extended.
1.2 The terms of this Agreement and the applicable Supplemental
Agreement shall both apply to the Services being performed. To the extent
general terms contained herein are not contradicted by the terms of the
Supplemental Agreement, the general terms in this Agreement shall govern. In
any case where the terms of this Agreement and the terms of a Supplemental
Agreement are in conflict, the terms of the Supplemental Agreement shall take
precedence. In this regard it is agreed by the parties that the Supplemental
Agreement may provide terms and conditions as to the nature, scope, volume and
type of the Transition Services covered thereby, in which case the terms of the
Supplemental Agreement shall prevail as to such matters.
1.3 In the event of any conflict between any preprinted terms on a
purchase order that may be used between Seller and Buyer relating to the
Services and the terms of this Agreement or any applicable Supplemental
Agreement, the terms of this Agreement or the applicable Supplemental Agreement
shall control and such purchase order shall be deemed binding, only if accepted
in writing by the vendee thereof.
ARTICLE 2
SERVICES
2.1 The Transition Services shall include the Transition Services
anticipated by the "Supplemental Agreements" described below. It is the basic
intent of the parties that Transition Services of like kind, quality and
amount, as performed prior to the date hereof by the Seller Group members for
the Business, as customers, or as presently performed by the Business for the
Seller Group members (other than the Buyer Operating Group members), as
customers, will be made available to the party or parties needing such
Transition Service as necessary to promote a smooth and efficient functional
separation of the Business from the operations of Seller. In addition, the
parties acknowledge that they may in good faith agree to include in the
Supplemental Agreements services beyond (in volume, type and nature) those
historically provided to the Business. When mutually agreed upon in a
Supplemental Agreement, these Transition Services may include those reasonably
necessary to support continued operation of the Business as such Business was
conducted at the time of Closing and those reasonably necessary to provide for
a smooth and orderly transition by Buyer into the operation of the Business as
soon as reasonably practicable during the Transition Period. The Supplemental
Agreements are:
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<PAGE> 191
2.1.1 Facilities Agreements. During the Transition Period,
Seller will provide certain facilities and shared occupancy-related services to
Buyer and Buyer will provide certain facilities and shared occupancy-related
services to Seller, at the sites described on attached Supplement 1(a) upon the
terms and conditions substantially in the form set forth in attached Supplement
1(b) (the "Facilities Agreements"). Seller and Buyer acknowledge that certain
relocations, consolidations, and modifications to certain premises covered by
the Facilities Agreements may be necessary in order to accomplish a functional
separation of the respective operations of Seller and Buyer (the "Facilities
Transition Activities"), and that the terms and conditions for such Facility
Transition Activities will be set forth in the Facility Agreement for such
premises. During the Transition Period, Seller and Buyer agree to use
commercially reasonable efforts to facilitate a functional separation of their
respective operations and complete the Transition Activities as soon as
reasonably practicable. During the Transition Period, Seller and Buyer agree
to cooperate in good faith to facilitate a smooth transition with minimal
disruption to ongoing operations of both parties. If appropriate under the
circumstances, a summary of any such anticipated Facilities Transition
Activities, and the process and schedule therefore, shall be attached hereto as
Supplement 1(c) (the "Facilities Transition Summary").
2.1.2 IT Transition Services Agreement. During the Transition
Period, Seller will provide certain information technology systems and services
support to Buyer, and Buyer will provide certain information technology systems
and services support to Seller upon the terms and conditions set forth in
Supplemental Agreement 2, and "IT Transition Services Agreement."
2.1.3 Finance and Accounting Transition Services Agreement.
During the Transition Period, Seller will provide certain finance and
accounting services support to Buyer, and Buyer will provide certain finance
and accounting services support to Seller upon the terms and conditions set
forth in Supplemental Agreement 3, the "Finance and Accounting Transition
Services Agreement."
2.1.4 EPROM/FLASH Purchase Agreement. Seller shall provide
Buyer with EPROM/FLASH products and related services upon the terms and
conditions set forth in Supplemental Agreement 4, the "EPROM/FLASH Purchase
Agreement."
2.1.5 Design Automation Service Agreement. Seller shall provide
Buyer with design automation services upon the terms and conditions set forth
in Supplemental Agreement 5, the "Design Automation Services Agreement."
2.1.6 Research and Development Services Agreement. Seller shall
provide Buyer with SiTD research and development services upon the terms and
conditions set forth in Supplemental Agreement 6, the "Research and Development
Agreement."
2.1.7 Test Systems Service and Support Agreement. Seller shall
provide Buyer with test systems service and support, [including, without
limitation as appropriate, Laser Scriber and Product Redundancy Analyzing
System services and support] upon the terms and conditions set forth in
Supplemental Agreement 7, the "Test Systems Service and Support Agreement."
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<PAGE> 192
2.1.8 Wire Bonder Equipment Service and Support Agreement.
Seller shall provide Buyer with wire bonder equipment service and support upon
the terms and conditions set forth in Supplemental Agreement 8, the "Wire
Bonder Equipment Service and Support Agreement."
2.1.9 Military Memory Products Purchase Agreement. Buyer shall
provide Seller military memory product and related services support upon the
terms and conditions set forth in Supplemental Agreement 9, the "Military
Memory Products Purchase Agreement."
2.1.10 Quartz Material Purchase Agreement. Buyer shall provide
Seller with quartz material and related services from the facility in Avezzano,
Italy (to be conveyed from Seller to Buyer at Closing), upon the terms and
conditions set forth in Supplemental Agreement 10, the "Quartz Material
Purchase Agreement."
2.1.11 Human Resources Administration Transition Services
Agreement. Seller shall provide Buyer certain human resources administrative
and consulting services and Buyer shall provide certain human resources
administrative and consulting services to Seller upon the terms and conditions
set forth in Supplemental Agreement 11, the "Human Resources Administration
Transition Services Agreement."
2.1.12 Purchasing and Logistics Transition Services Agreement
Seller shall provide certain purchasing, inventory management, shipping,
receiving and other logistics services and support to Buyer, and Buyer shall
provide certain purchasing, inventory management, shipping, receiving and other
logistics services and support to Seller, upon the terms and conditions set
forth in Supplemental Agreement 12 the "Purchasing and Logistics and Transition
Services Agreement."
2.1.xx [Insert such other Transition Services as the Buyer and
Seller shall, after good faith discussions, agree upon in writing prior to the
Closing in order to implement the spirit and intent of this Agreement, which
Transition Services may include, as appropriate, administrative or commercial
support commitments, such as (perhaps) manufacturing equipment installation
assistance.]
2.2 The parties acknowledge and agree that there may be some
services Seller or another Seller Group member (other than the Buyer Operating
Group) provided to the Business, or the Business provided to Seller, that are
not specifically identified in this Agreement, the Supplemental Agreements or
the other agreements referred to herein, of which Buyer or Seller may not be
aware until the time such service is needed (including during the Transition
Period). Accordingly, in addition to the Transition Services described in
Section 2.1, above, the parties further agree that, if "Additional Transition
Services" not contemplated by this Agreement or the Supplemental Agreements
under the provisions of Section 2.1, above, should be required to implement the
spirit and intent of this Agreement, then, such Additional Transition Services
as may be identified and mutually agreed upon in writing by the parties, shall
be provided to the appropriate Buyer, a Buyer Operating Group member, Seller or
a Seller Group member. Buyer and Seller shall document the inclusion in this
Agreement of such Additional Transition Services hereunder by an amendment,
letter agreement, or memorandum signed by duly authorized representatives of
both parties, referencing and incorporating (unless the parties agree otherwise
in such document) this Agreement, as appropriate and agreed upon by the
parties.
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<PAGE> 193
2.3 Except where otherwise specified in any Supplemental Agreement,
the party providing the Services shall retain the right, in its reasonable
discretion to select, change or outsource any equipment, materials, procedures,
or personnel (including vendors, suppliers, or contractors) used in performing
the Services so long as such action does not materially and adversely affect
the costs, quality, kind or amount of the Services being provided including any
required specifications in or pursuant to a Supplemental Agreement are
satisfied. At its option, the party providing the services, without the
consent of the other party, may assign or subcontract any or all of its rights
and/or obligations hereunder to any of its subsidiaries or any entity acquiring
substantially all of the assets of the business unit of the party by whom any
particular service is provided under any of the Supplemental Agreements. As
used herein, "subsidiary" has the meaning set forth in the Acquisition
Agreement. If a party intends to assign or subcontract its rights and
obligations hereunder or under any of the Supplemental Agreements as permitted
by this Section 2.2, such party shall notify the other party within thirty (30)
days prior to such assignment or subcontracting. Further, any permitted
assignee or subcontractor shall be bound by the terms of this Agreement and any
applicable Supplemental Agreement.
2.4 Unless otherwise specifically agreed, the party receiving a
Service hereunder may terminate such Service or a portion thereof at any time
by giving written notice to the other party. The parties shall cooperate to
provide as much advance notice of termination as possible, but not fewer than
thirty (30) days, unless mutually agreed.
ARTICLE 3
COMPENSATION
3.1 Unless otherwise specifically provided in any Supplemental
Agreement, amounts payable for Transition Services shall be charged at the
service provider's cost, it being the intent and agreement of the parties that
the service provider shall not make a profit on charges for Transition
Services, except as otherwise specifically agreed [CHECK WITH TAX: or to the
extent the billing for the Transition Service is made by a service provider
located in one country to a service recipient located in another, in which case
any profit shall be limited to the minimum amount required by applicable Law].
3.2 In the event a service recipient for any reason, or a service
provider in accordance with its rights under a Supplemental Agreement, elects
to terminate a Transition Service, the recipient shall be liable for charges
for such Transition Service performed accruing through the effective date of
termination.
3.3 Where practical (i.e., where Transition Service-related charges
are collected on Seller's financial systems) and unless otherwise provided in
any Supplemental Agreement, Seller will account for all charges to be paid by
Buyer to Seller and any charges to be paid by Seller to Buyer under this
Agreement, any Supplemental Agreement, and any similar service-related
agreements through a consolidated statement of account. As appropriate, such
consolidated statements may be prepared and administered on a country-specific
basis reasonably agreed upon by Buyer and Seller. To facilitate the generation
of these consolidated statements, Buyer shall collect Transition Service-
related charges
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<PAGE> 194
resident on Buyer financial systems and promptly forward such information to
Seller for inclusion in the appropriate consolidated statement of account.
The consolidated statements shall include a summary of charges
and a report detailing each category of charges for the previous billing month.
The consolidated statements of account shall be issued no later than the
fourteenth working day following the month to which the statement of account
applies. Beginning on the Closing Date, Seller will issue the consolidated
statements of account on a monthly basis.
3.4 Statements issued pursuant to 3.3 shall be due and payable within
thirty (30) days from date of invoice, which shall be attached to the
consolidated statement. All charges are in U.S. dollars unless otherwise
stated and agreed by Buyer and Seller, and are net of any applicable taxes and
fees imposed by any Government Agency as a result of either party's use of any
services provided hereunder, which shall be such party's sole obligation to
pay.
ARTICLE 4
COMMUNICATION AND ADMINISTRATION
4.1 Unless otherwise indicated in the relevant Supplemental
Agreement, all notices, approvals, and other communications required or
permitted by this Agreement to be given to Seller or Buyer shall be in writing
and shall be delivered (i) in person or by a reputable courier service that
provides receipt of delivery, (ii) by deposit in the U.S. or relevant country
mail, postage prepaid, by certified or registered mail, return receipt
requested, provided, however, the delivery of payment of routine invoices shall
not be required to be by certified or registered mail; (iii) by an
internationally recognized overnight courier service, or (iv) by facsimile
delivery, confirmed, delivery in accordance with subparagraphs (i) or (iii)
above; in each case addressed to the party concerned at its address or
facsimile number as set forth below (or at such other address as a party may
specify by written notice pursuant to this paragraph to the other party):
If to Perry: Perry
------------------------------------
Dallas, Texas _______ (on-site deliveries), or
P.O. Box _______, Mail Station ____
Dallas, Texas ________ (U.S. mail delivery)
Attention:
Facsimile No.: 972-________
with a copy to: Perry
8505 Forest Lane, M/S 8658
P.O. Box 660199, M/S 8658
Dallas, TX 75266-0199 (U.S. mail delivery)
Attention: General Counsel MS 8658
Telecopy: (972) 480-5061
-6-
<PAGE> 195
Perry
P.O. Box 650311, MS 3995
Dallas, Texas 75265
Attention: Manager, Corporate Development
Telecopy: (972) 917-3804
If to Buyer: Dixie
----------------------
----------------------
----------------------
Attention:
------------------
Facsimile No.:
--------------
with a copy to: Dixie
----------------------
----------------------
----------------------
Attention:
-------------------
Telecopy No.:
----------------
Communications sent by personal delivery, courier service, facsimile
transmission as set forth above shall be effective upon receipt, provided any
required confirmatory delivery is made. Communications sent by mail as set
forth above shall be effective ten (10) days after deposit in the U.S. mail;
twenty (20) days after deposit in non-U.S. mail.
ARTICLE 5
STANDARD OF CARE; DISCLAIMER
5.1 Each party hereby represents to the other and such party
acknowledges that the Transition Services to be performed hereunder and under
each of the Supplemental Agreements shall be performed in a professional and
competent manner.
5.2 EXCEPT AS EXPRESSLY SET FORTH IN A SUPPLEMENTAL AGREEMENT, SELLER
AND BUYER HEREBY DISCLAIM ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT
TO THE TRANSITION SERVICES (OR ANY SERVICES PROVIDED BY THIRD PARTIES WITH WHOM
EITHER PARTY CONTRACTS IN CONNECTION WITH THE PERFORMANCE OF THE TRANSITION
SERVICES) OR GOODS OR PRODUCTS FURNISHED IN CONNECTION THEREWITH. FURTHER,
NEITHER SELLER NOR BUYER REPRESENT AND HEREBY SPECIFICALLY DISCLAIM ANY
WARRANTY THAT GOODS OR SERVICES FURNISHED HEREUNDER WILL BE COMPLIANT WITH OR
COMPREHEND THE YEAR 2000 CENTURY DATE CHANGE. SUCH DISCLAIMER IS NOT INTENDED
TO AFFECT ANY DIRECT CLAIMS EITHER PARTY MAY ASSERT AGAINST ANY THIRD PARTY,
NOR
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<PAGE> 196
PREVENT THE PASS-THROUGH OR ASSIGNMENT OR ANY RIGHTS EITHER PARTY MAY HAVE
AGAINST ANY THIRD PARTY, AND, WITH RESPECT TO YEAR 2000 MATTERS, TO EXPAND OR
DIMINISH ANY OBLIGATIONS OF THE PARTIES SET FORTH IN THE ACQUISITION AGREEMENT.
5.3 The Transition Service provider hereunder (and/or under a
Supplemental Agreements) shall use commercially reasonable efforts to obtain,
for the benefit of the service recipient, the Permits and/or Approvals required
to be obtained for the provision of such Transition Service, but such
Transition Service provider shall not be liable for its inability to provide
such Transition Service to the extent such failure results from the denial of
necessary governmental approvals and consents, if such Transition Service
provider has used all such commercially reasonable efforts to obtain such
approval or consent.
ARTICLE 6
INDEMNIFICATION
6.1 Except to the extent of the negligence or willful misconduct of
Seller or its Agents (as hereinafter defined), Buyer agrees to and shall
defend, indemnify, and hold harmless Seller and its Agents from and against any
and all third party claims, losses, liabilities, damages, fines, penalties,
bodily injury, sickness, disease, death, obligations, costs and expenses
whatsoever (including, without limitation, attorneys' fees, consultants' fees,
experts' fees and court costs for third party claims) to the extent arising out
of (i) the negligence of Buyer or its Agents, including, without limitation,
their negligence in the performance or failure to perform the Transition
Services to be performed by Buyer hereunder, or (ii) a third party claim by
any employee, independent contractor or invitee of Seller related to the
Seller's provision of Transition Services.
6.2 Except to the extent of the negligence or willful misconduct of
Buyer or its Agents, Seller agrees to and shall defend, indemnify, and hold
harmless the Buyer and its Agents from and against any and all third party
claims, losses, liabilities, damages, costs, fines, penalties, bodily injury,
sickness, disease, death, obligations, costs and expenses whatsoever
(including, without limitation, attorneys' fees, consultants' fees, experts'
fees and court costs for third party claims) arising out of the negligence of
Seller or its Agents, including, without limitation, (i) their negligence in
the performance or failure to perform the Transition Services to be performed
by Seller hereunder, or (ii) a third party claim by any employee, independent
contractor or invitee of Buyer related to the Buyer's provision of Transition
Services.
6.3 The amount of any recovery, which a party seeking indemnification
hereunder shall be entitled to receive shall be offset by the amount of
insurance or other third party proceeds, if any, actually received by such
party in respect of such liability.
6.4 EXCEPT AS RESULTING FROM A PARTY'S WILLFUL BREACH OF THIS
AGREEMENT OR A PARTY'S WILLFUL MISCONDUCT, NEITHER PARTY SHALL HAVE ANY
LIABILITY TO THE OTHER UNDER THIS AGREEMENT OR ANY SUPPLEMENTAL AGREEMENT FOR
LOSS OF PRODUCT, LOSS OF PROFIT, LOSS OF USE, OR ANY OTHER INDIRECT,
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGE.
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<PAGE> 197
6.5 The indemnification obligations set forth herein or in any of the
Supplemental Agreements shall survive any termination of this Agreement.
[Prior to the closing, the parties' risk management departments will confer to
determine the appropriate insurance or self-insurance policy to be implemented
by the parties in connection with the Transition Services and the Supplemental
Agreements.]
ARTICLE 7
CONFIDENTIAL INFORMATION AND MATERIAL
7.1 Seller and Buyer shall maintain and treat as confidential and
secret all information and materials which may be disclosed by the other party
in connection with such party's performance of Services hereunder and
identified in writing thereon as being proprietary, confidential or secret (the
"Confidential Information").
7.2 Seller and Buyer shall not disclose the Confidential Information
to any third party, shall restrict disclosure of such information and material
to employees who have a need to know, and shall employ the same standard of
care each uses to protect its own proprietary, confidential or secret
information and material of like importance.
7.3 Notwithstanding the foregoing, a party may disclose Confidential
Information of the other party hereto to the extent that (a) disclosure is
compelled by judicial or administrative process or, in the opinion of the
disclosing party's counsel, by other requirements of law, or (b) such party can
show that such Confidential Information (i) was publicly available prior to the
date of this Agreement or thereafter becomes publicly available without any
violation of this Agreement on the part of such party or its employees, agents,
affiliates, associates or representatives, or (ii) became available to such
party from a person other than the other party hereto that is subject to any
legally binding obligation to keep such Confidential Information confidential.
7.4 The existence of this Agreement and any Supplemental Agreement
and the terms and conditions hereof or thereof shall not be disclosed by any
party without the prior written consent of the other parties (which shall not
be unreasonably withheld), or as may be required by law or as may be necessary
to establish a party's rights hereunder in a court of law or other legal
proceeding.
7.5 The obligations of this Article 7 shall survive the expiration or
termination of this Agreement.
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<PAGE> 198
ARTICLE 8
TERM AND TERMINATION
8.1 This Agreement shall commence as of the Closing Date and shall
remain in effect for the Transition Period.
8.2 This clause shall not be deemed to waive, prejudice or diminish
any rights Buyer or Seller may have at law or in equity against any third
party.
ARTICLE 9
FORCE MAJEURE
9.1 Neither party shall be responsible for any delay or failure in
performance or for any loss, damage, costs, charges and expenses incurred or
suffered by the other party by reason thereof if such delay or failure results
from the occurrence of an event beyond the reasonable control of such party and
without the fault or negligence of such party ("force majeure") including, but
not limited to, acts of God or the public enemy, acts of the Government in
either its sovereign or contractual capacity, fires, floods, epidemics,
quarantine restrictions, strikes, freight embargoes, unusually severe weather,
failure of suppliers, terrorism, or civil strife. If any party to this
Agreement is rendered wholly or partially unable by an event or force majeure
to carry out its obligations under this Agreement, and if that party gives
prompt written notice and full particulars of such event of force majeure to
the other party, the notifying party shall be excused from performance of its
obligations hereunder during the continuance of any inability so caused, but
for no longer period. Both parties shall use all commercially reasonable
efforts to remove or avoid the condition as soon as commercially practicable.
ARTICLE 10
GOVERNING LAW
10.1 This Agreement and the Supplemental Agreements shall not be
governed by the provisions of the 1980 United Nations Convention or Contracts
for the International Sale of Goods, but shall be governed by, construed and
interpreted and the rights of the parties determined in accordance with the
laws of the State of New York without regard to the choice of law principles
thereof.
10.2 Seller and Buyer recognize that application of non-U.S. law to
the Agreement and/or the Supplemental Agreements (collectively, the "Transition
Agreements") could serve to frustrate the intent or expectations of the parties
as expressed therein (the "Intent"). Under such circumstances, the parties
agree to cooperate reasonably to make such changes in this Agreement and the
Supplemental Agreements, and to take such other actions as may be reasonably
necessary, to implement the Intent under any applicable non-U.S. law or in any
non-U.S. jurisdiction.
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<PAGE> 199
ARTICLE 11
ASSIGNMENT
11.1 Except as expressly provided in Section 2.3 hereof, no assignment
of this Agreement or any Supplemental Agreement by any party hereto shall be
permitted without the prior written consent to the other party, which consent
shall not be unreasonably withheld or delayed.
ARTICLE 12
ADDITIONAL DOCUMENTS
12.1 Each party shall promptly execute and deliver or cause to be
executed and delivered such additional documents, including but not limited to
the Supplemental Agreements, as are reasonably required by any other party for
the purpose of implementing this Agreement.
ARTICLE 13
GENERAL PROVISIONS
13.1 This Agreement, the Supplemental Agreements and the other
Agreements referred to herein constitute the entire Agreement between the
parties with respect to the subject matter hereof and supersede all previous
communications, representations, understandings and agreements, either written
or oral, between the parties.
13.2 If any provision of this Agreement or of any Supplemental
Agreement or the application thereof to any party or circumstance shall be held
to be invalid and unenforceable to any extent, the remainder of this Agreement
or such Supplemental Agreement or the application thereof to any other party or
circumstance shall not be affected thereby and each provision shall be valid
and shall be enforced to the highest extent permitted by law.
13.3 The parties hereto shall act in all matters pertaining to this
Agreement and the Supplemental Agreements as independent contractors and
nothing contained herein or in any of the Supplemental Agreements and no action
taken with respect to the provision of the Services shall constitute one party
to be the agent, partner or joint venturer of any other party for any purpose
whatsoever. Either party may delegate its obligations under this Agreement to
any subsidiary of said party.
13.4 This Agreement and any Supplemental Agreement shall be modified
only by an instrument in writing executed by duly authorized representatives of
the parties thereto.
13.5 A waiver of breach, delay or failure to take action with respect
to any previous default or failure by a party to fulfill its obligations under
this Agreement or any Supplemental Agreement shall not be deemed to constitute
a waiver of any other or subsequent default or failure by such party to fulfill
such obligations and shall not constitute or be construed as a continuing
waiver and/or as a waiver of
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<PAGE> 200
other subsequent defaults or breaches of the same or other (similar or
otherwise) obligations or as a waiver of any remedy available.
13.6 Words of any gender used in this Agreement or any Supplemental
Agreement shall be held and construed to include any other gender, and words in
the singular number shall be held to include the plural and vice versa, unless
the context requires otherwise.
13.7 The article headings and section captions of this Agreement or
any Supplemental Agreement are inserted for convenience only, and shall not be
deemed to constitute part thereof or to affect the construction thereof.
13.8 As used herein "Agents" means, with respect to any principal, the
officers, employees, servants, subsidiaries, agents of the principal and/or
other persons for whom the principal is legally responsible. Any other
capitalized term used, but not defined in this Agreement, shall have the
meaning given it in the Acquisition Agreement.
13.9 Nothing herein or in any Supplemental Agreement is intended to
confer on any person other than the Parties hereto or thereto any rights or
remedies under or by reason of this Agreement or any Supplemental Agreement.
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<PAGE> 201
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the Closing Date.
PERRY DIXIE
By: By:
------------------------------ ------------------------------
Name: Name:
---------------------------- ----------------------------
Title: Title:
--------------------------- ---------------------------
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<PAGE> 202
Supplement 1(a)
FACILITIES TRANSITION SUMMARY
[Upon Closing, Buyer and Seller will occupy the following premises as
further described in the applicable Facilities Agreements]:
I. Seller will lease or sublease portions of the following Buyer
facilities (to be conveyed or assigned from Seller to Buyer at Closing):
<TABLE>
<CAPTION>
Approx. Sq.Ftg.
Overlandlord subject to transition
Site Addresses (if applicable) lease/sublease
- ----------------------- -------------------------------- -------------------- --------------------------
<S> <C> <C> <C>
Avezzano Via Antonio Pacinotti 5/7 N/A
Nucleo Industriale
67051 Avezzano (AQ)
Bldg. 2
Singapore Singapore (PTE) LTD. Yes
990 Bendemeer Road
Singapore 1233
</TABLE>
II. Buyer will lease or sublease portions of the following Seller
facilities:
<TABLE>
<CAPTION>
Approx. Sq.Ftg.
Overlandlord subject to transition
Site Addresses (if applicable) lease/sublease
- ----------------------- -------------------------------- -------------------- --------------------------
<S> <C> <C> <C>
Jack Kilby 13570 N. Central Expy. N/A
Center (R&D1) Dallas, Texas 75243
East Bldg. 13353 N. Central Expy. N/A
Dallas, Texas 75243
DMOS 6 13011 Floyd Road N/A
Dallas, Texas 75265
Forest Lane 8505 Forest Lane N/A
Dallas, Texas 75243
Executive Center I 8390 LBJ Frwy. Yes
Dallas, Texas 75243
Executive Center II 8360 LBJ Frwy. Yes
Dallas, Texas 75243
Executive Center III 8330 LBJ Frwy. Yes
Dallas, Texas 75243
</TABLE>
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<PAGE> 203
<TABLE>
<CAPTION>
Approx. Sq.Ftg.
Overlandlord subject to transition
Site Addresses (if applicable) lease/sublease
- ----------------------- -------------------------------- -------------------- --------------------------
<S> <C> <C> <C>
PAC Building ________ Floyd Road South N/A
Dallas, Texas _______________
Stafford (Houston) 12201 Southwest Freeway N/A
Stafford, Texas 77477
Bangalore, India Golf View Homes Yes
Wind Tunnel Road
Murugeshpalayam
Bangalore 560-017
India
Hsinchu, Taiwan 6 Creation 2ns Rd. Yes
Hsinchu Science Based
Industrial Park
Hsinchu, Taiwan, R.O.C.
Miscellaneous: Additional leases/ subleases of Yes
other real property owned or
leased by Seller Group member in
connection with the Business,
which is leased pursuant to the
[Facilities Agreement] for the
term stated therein as agreed
upon by Buyer.
</TABLE>
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<PAGE> 204
EXHIBIT J
LIST OF CERTAIN EXCLUDED LIABILITIES
o Liabilities, Claims and Losses with respect to the Italian 1989 program
contract relating to Italian government subsidies.
o Taxes with respect to Italy to the extent a tax clearance certificate
is not obtained prior to Closing.
o Liabilities, Claims and Losses transferred to Italian Newco or
Singapore Newco to the extent transferred by Seller or any Affiliate of
Seller to such entity in violation of the terms of this Agreement.
<PAGE> 1
EXHIBIT 99.1
News Release
C-98042
Micron Technology to Purchase
Memory Business of Texas Instruments
Boise, Idaho/Dallas, Texas, (June 18, 1998) -- Micron Technology, Inc.,
(NYSE: MU) and Texas Instruments Incorporated (NYSE: TXN) announced today a
definitive agreement for Micron to purchase the assets of TI's semiconductor
memory business for a combination of common stock and assumption of debt
totaling approximately $800 million (at Micron's current stock price). The
transaction includes the purchase of substantially all of TI's memory assets, as
well as TI's shares in its two DRAM manufacturing joint ventures.
This transaction strengthens the strategic roadmap of each company. Micron
expands its leadership in the memory market and its international presence,
while TI solidifies its position as a company focused on digital signal
processing and analog semiconductors.
Under the terms of the agreement, upon closing TI will receive
approximately 28.9 million shares of Micron common stock, $740 million principal
amount of seven-year, 6.5 percent notes convertible into an additional 12
million shares of Micron common stock, and a $210 million principal amount,
seven year, 6.5 percent subordinated note. The market value of these notes is
expected to be substantially less than their face amount. Micron also will
assume approximately $190 million of government-sponsored debt associated with
TI's Italian memory operations.
In addition to TI's memory assets, Micron will receive $750 million in
financing from TI to facilitate the deployment of Micron's technology throughout
the business. Micron and TI have also agreed upon a 10-year royalty-free
semiconductor patent cross-license agreement, to begin January 1, 1999. TI will
retain ownership of its related patents.
TI currently operates three wholly owned manufacturing facilities that are
included in the transaction: a wafer fabrication facility in Avezzano, Italy; a
wafer fabrication facility in Richardson, Texas (formerly known as TwinStar);
and an assembly/test facility in Singapore. Also included in the transaction is
TI's interest in two joint ventures: TECH Semiconductor Singapore, owned by TI,
Hewlett-Packard, Canon, and the Singapore Economic Development Board; and KTI
Semiconductor in Japan owned by TI and Kobe Steel. TI currently owns an
approximate 25 percent interest in each joint venture and has rights to 100
percent of the production of each joint venture. Micron expects to offer
positions to most of the TI memory employees.
"This strategic acquisition will enhance Micron's position as the most
cost-effective memory producer in the world, by leveraging our leading-edge
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technology into existing fabs without significantly increasing R&D,
administrative and operating costs," said Steve Appleton, chairman, CEO and
president of Micron. "The additional global capabilities, including
participation in a unique joint-venture manufacturing strategy, positions Micron
to take advantage of future markets."
Thomas J. Engibous, TI chairman, CEO and president, said: "Several years
ago, TI set a course to become a company focused on its leadership position in
digital signal processing solutions. With this latest transaction, TI truly
becomes a DSP solutions company, and we do so under an innovative agreement that
positions TI to benefit from an upturn in the memory market."
The transaction is subject to several contingencies, including satisfactory
completion of due diligence, completion of appropriate agreements with various
third parties (including relevant government authorities), as well as customary
regulatory approvals (including Hart-Scott-Rodino and European Union antitrust
reviews). The transaction is expected to close in the second half of this year.
In conjunction with the transaction, TI will close its Richardson, Texas,
memory manufacturing operation, with Micron retaining the facility for future
capacity, pending a market upturn.
Separately, TI today announced a worldwide restructuring program. Over the
past several years, TI has transformed itself from a multi-business corporation
to a semiconductor company focused on digital signal processing solutions. In
doing so, TI has divested 12 businesses. As a result of these divestitures, the
pending sale of the memory business and weakness in the current semiconductor
market environment, TI will implement a worldwide restructuring program to more
closely match the size and cost of its support functions with the company's
overall size, and further combine manufacturing resources for more efficient
operations. The plan will include the elimination of approximately 3,500 jobs
around the world over the next few months through voluntary programs, attrition,
outsourcing and layoffs, as well as the closing of several facilities. When
fully implemented, the ongoing pretax savings from the restructuring is expected
to be about $270 million annually, which essentially offsets the fixed and
allocated costs of the memory business that are not absorbed by Micron.
TI expects to take a material charge for the restructuring in the second
quarter of 1998. In connection with the sale of the memory business, TI could
recognize a material loss when the transaction closes, based on the current
price of Micron common stock.
# # #
NOTE TO EDITORS:
Micron Technology, Inc., and its subsidiaries manufacture and market DRAMs,
very fast SRAMs, Flash, other semiconductor components, memory modules, personal
computer systems, and high-performance RFID products. Micron's common stock is
traded on the New York Stock Exchange (NYSE) under the symbol MU. To learn more
about Micron Technology, Inc., visit its Web site at www.micron.com.
<PAGE> 3
Texas Instruments Incorporated is a global semiconductor company and the
world's leading designer and supplier of digital signal processing solutions,
the engines driving the digitization of electronics. Headquartered in Dallas,
Texas, the company's businesses also include materials and controls, educational
and productivity solutions, and digital imaging. The company has manufacturing
or sales operations in more than 25 countries.
Texas Instruments is traded on the New York Stock Exchange under the symbol
TXN. More information is located on the World Wide Web at http://www.ti.com.
