EXHIBIT 2.2
AGREEMENT AND PLAN OF RECAPITALIZATION AND MERGER
By and Among
MOTOROLA, INC.,
SCG HOLDING CORPORATION,
SEMICONDUCTOR COMPONENTS INDUSTRIES, LLC,
TPG SEMICONDUCTOR HOLDINGS CORP.
and
TPG Semiconductor ACQUISITION Corp.
Made as of
May 11, 1999
TABLE OF CONTENTS
PAGE
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.1 Previously Defined Terms................................................4
1.2 General Definitions.....................................................4
1.3 Interpretation.........................................................23
ARTICLE II
THE REORGANIZATION
2.1 Reorganization Agreement...............................................23
ARTICLE III
THE RECAPITALIZATION, MERGER AND REDEMPTION
3.1 The Merger..............................................................24
3.2 Effective Time..........................................................24
3.3 Effect of the Merger....................................................24
3.4 Certificate of Incorporation; By-Laws...................................25
3.5 Directors and Officers..................................................25
3.6 Conversion of Company Stock.............................................25
3.7 The Redemption..........................................................26
3.8 Sales and Transfer Taxes................................................29
ARTICLE IV
RELATED TRANSACTIONS
4.1 Related Transactions....................................................31
4.2 Transaction Structure...................................................32
ARTICLE V
THE CLOSING
5.1 Closing and Closing Date................................................33
5.2 Closing Deliveries......................................................34
TABLE OF CONTENTS
(continued)
PAGE
ARTICLE VI
PRE-CLOSING DELIVERIES AND FILINGS
6.1 Company Deliveries......................................................38
6.2 TPG Acquisition Delivery................................................39
6.3 H-S-R Filing............................................................39
6.4 Other Filings...........................................................40
ARTICLE VII
PRE-CLOSING COVENANTS AND AGREEMENTS
7.1 Pre-Closing Covenants...................................................40
7.2 Press Releases..........................................................45
7.3 Exclusivity.............................................................45
7.4 Satisfaction of Conditions..............................................45
7.5 Replacement of Guarantees, Etc..........................................46
7.6 Financing...............................................................48
7.7 Permits.................................................................49
7.8 Access to Information...................................................49
7.9 Final Determination of Assets, Liabilities..............................49
7.10 Refinance or Renegotiation of Joint Venture Indebtedness................50
7.11 Leshan JV...............................................................51
7.12 Company/SCI Ground Lease................................................51
7.13 Company Notes...........................................................52
ARTICLE VIII
WARRANTIES AND REPRESENTATIONS OF MOTOROLA
8.1 Due Incorporation.......................................................53
8.2 Qualification...........................................................54
8.3 Investments.............................................................54
8.4 Capitalization..........................................................54
8.5 Due Authorization.......................................................57
8.6 No Conflicts............................................................58
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TABLE OF CONTENTS
(continued)
PAGE
8.7 Good Title and Lease....................................................59
8.8 Compliance; Permits.....................................................60
8.9 Financial Statements....................................................61
8.10 Absence of Certain Changes or Events....................................61
8.11 No Undisclosed Liabilities..............................................62
8.12 Absence of Litigation...................................................62
8.13 Restrictions on Business Activities.....................................63
8.14 Real Property...........................................................63
8.15 Tangible Assets.........................................................65
8.16 Taxes...................................................................65
8.17 Environmental Matters...................................................69
8.18 Year 2000...............................................................70
8.19 Product Liability and Recalls...........................................71
8.20 Related Party Transactions..............................................71
8.21 Necessary Assets and Rights.............................................72
8.22 Contracts, Agreements and Instruments Generally.........................72
8.23 Reorganization Agreement................................................74
8.24 Orders, Commitments and Returns.........................................74
8.25 Accounts Receivable; Inventory..........................................74
8.26 Major Suppliers.........................................................75
8.27 Absence of Certain Practices............................................75
8.28 Disclaimers of Motorola.................................................76
ARTICLE IX
WARRANTIES AND REPRESENTATION OF TPG ACQUISITION AND TPG
HOLDING
9.1 TPG Holding - Duly Organized............................................76
9.2 TPG Acquisition - Duly Organized........................................77
9.3 TPG Acquisition - Capital Stock.........................................77
9.4 Required Corporate Action...............................................77
9.5 Binding Agreement.......................................................77
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TABLE OF CONTENTS
(continued)
PAGE
9.6 No Conflicts............................................................77
9.7 Financing...............................................................79
9.8 Inspections; Limitation of Warranties...................................79
9.9 Consents................................................................80
9.10 Litigation..............................................................81
ARTICLE X
TAX MATTERS
10.1 Tax Indemnification.....................................................81
10.2 Apportionment of Taxes..................................................82
10.3 Tax Returns.............................................................84
10.4 Survival................................................................85
10.5 Exclusive Remedy........................................................85
10.6 Contests................................................................85
10.7 Characterization as Price Adjustment....................................87
10.8 Prior Tax Sharing Agreements............................................88
10.9 Section 338(h)(10) Election.............................................88
10.10 Cooperation on Tax Matters..............................................89
ARTICLE XI
INDEMNIFICATION
11.1 Survival Periods........................................................90
11.2 Indemnification By Motorola.............................................90
11.3 Indemnification by the Company..........................................92
11.4 Certain Indemnities.....................................................93
11.5 General Indemnification Procedures......................................93
11.6 Certain Environmental Indemnification Procedures........................97
11.7 Allocation of Shared Remediation Costs..................................99
11.8 Net Recovery...........................................................101
11.9 Certain Limitations....................................................101
11.10 Availability of Remedies...............................................102
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TABLE OF CONTENTS
(continued)
PAGE
ARTICLE XII
CONDITIONS OF CLOSING APPLICABLE TO TPG ACQUISITION AND
TPG HOLDING
12.1 No Termination.........................................................103
12.2 Bring-Down of Warranties...............................................103
12.3 No Proceedings.........................................................104
12.4 Reorganization Agreement...............................................104
12.5 Stockholders Agreement.................................................104
12.6 Required Consents and Approvals........................................104
12.7 Adequate Financing.....................................................104
12.8 Accounting Treatment...................................................105
12.9 Necessary Proceedings..................................................105
12.10 Expiration of H-S-R Waiting Period.....................................105
12.11 Delivery of Financial Statements.......................................105
12.12 Information Technology Conversion......................................105
12.13 Pension Plan Funding...................................................106
12.14 Joint Venture Financing................................................106
12.15 Inventory..............................................................106
12.16 Title Insurance........................................................106
12.17 Delivery of Financial Information......................................107
ARTICLE XIII
CONDITIONS TO CLOSING APPLICABLE TO MOTOROLA
13.1 No Termination.........................................................107
13.2 Bring Down of Warranties...............................................107
13.3 No Proceedings.........................................................107
13.4 Reorganization Agreement...............................................108
13.5 Stockholders Agreement.................................................108
13.6 Payment of Company Notes...............................................108
13.7 Necessary Proceedings..................................................108
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(continued)
PAGE
13.8 Expiration of H-S-R Waiting Period.....................................109
13.9 Solvency Opinion.......................................................109
ARTICLE XIV
TERMINATION
14.1 Termination Events.....................................................109
14.2 Termination Fee........................................................112
ARTICLE XV
POST-CLOSING MATTERS
15.1 Further Assurances.....................................................113
ARTICLE XVI
MISCELLANEOUS
16.1 Expenses...............................................................113
16.2 Financial Advisors' Fees...............................................114
16.3 Survival of Warranties.................................................115
16.4 Entire Agreement.......................................................115
16.5 Counterparts...........................................................116
16.6 Savings Clause.........................................................116
16.7 Successors and Assigns.................................................116
16.8 No Third-Party Beneficiary; No Recourse................................117
16.9 Captions...............................................................117
16.10 Governing Law and Consent to Jurisdiction..............................117
16.11 Notices................................................................118
16.12 U.S. Dollars...........................................................119
16.13 Amendment; Waiver......................................................119
16.14 Specific Performance...................................................119
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EXHIBITS
--------
Exhibit Description Section Reference
------- ----------- -----------------
A Form of Amended and Restated 1.2
Intellectual Property Agreement
B-1 Semiconductor Products 1.2
B-2 Purchased Assets-Equipment 1.2
C Form of Company/SCI LLC ▇▇▇▇ of Sale 1.2
D Form of Quit-Claim Deed, ▇▇▇▇ of Sale and 1.2
Severance Agreement of Buildings and Fixtures
Only and Not of Land
E Existing Motorola Non-U.S. Entities 1.2
F Motorola Transferors 1.2
G SCG Post-Closing Entities 1.2
H Terms of SCI LLC Junior Notes 1.2
I Significant Properties 1.2
J Terms of Surviving Corporation Preferred Stock 1.2
K Cody Restructuring 1.2
L Certificate of Incorporation of the Surviving 3.4(a)
Corporation
M By-Laws of the Surviving Corporation 3.4(b)
N TPG Financing Commitments 6.2
O Joint Venture Credit Facilities 7.10
P Leshan JV Term Sheet 7.11
Q Tax Methodology 10.9
R Terms of Stockholders Agreement 12.5
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AGREEMENT AND PLAN OF RECAPITALIZATION AND MERGER
This Agreement and Plan of Recapitalization and Merger (this
"AGREEMENT") made as of 11th day of May, 1999 by and among Motorola, Inc., a
Delaware corporation ("MOTOROLA"), SCG Holding Corporation, a Delaware
corporation and a wholly-owned subsidiary of Motorola, formerly known as
"Motorola Energy Systems, Inc." (the "COMPANY"), Semiconductor Components
Industries, LLC, a Delaware limited liability company ("SCI LLC"), the sole
member of which is the Company, TPG Semiconductor Holdings Corp., a Delaware
corporation ("TPG HOLDING"), and TPG Semiconductor Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of TPG Holding ("TPG ACQUISITION").
RECITALS
WHEREAS,
A. Motorola owns all of the issued and outstanding capital stock of
the Company;
B. The Company has authorized capital stock consisting of 1,000 shares
of common stock, without par value ("COMPANY STOCK"), of which 100 shares are
outstanding as of the date hereof;
C. The Company owns all of the membership interests of SCI LLC;
D. TPG Acquisition has authorized capital stock consisting of 1,000
shares of common stock, par value $0.01 per share ("TPG ACQUISITION STOCK"), all
of which are outstanding as of the date hereof;
E. TPG Holding owns all of the issued and outstanding capital stock of
TPG Acquisition;
F. At the Closing, the Company shall consummate the Company/SCI Asset
Transfer pursuant to which the Company shall receive SCI LLC Junior Notes in the
aggregate principal amount of $91.0 million;
1
G. At the Closing, SCI LLC and certain SCG Parties will enter into
that certain senior secured loan agreement (the "SENIOR SECURED LOAN AGREEMENT")
by and between SCI LLC and a group of lenders led by the Chase Manhattan Bank
(together, the "SENIOR SECURED LENDER") providing for a senior secured term loan
to SCI LLC of $800.0 million (the "SENIOR SECURED LOAN");
H. Prior to the Closing, SCI LLC will enter into a senior subordinated
notes subscription agreement (the "SUBORDINATED NOTES SUBSCRIPTION AGREEMENT")
among SCI LLC and Chase Securities Inc. (the "PLACEMENT AGENT") providing for
the purchase of $400.0 million in senior subordinated notes by the Placement
Agent to be privately placed pursuant to Rule 144A under the Securities Act (the
"SUBORDINATED NOTES");
I. At the option of TPG Acquisition, in lieu of the placement of the
Subordinated Notes, at the Closing SCI LLC will enter into a bridge loan
agreement (the "BRIDGE FINANCING AGREEMENT") among SCI LLC and a group of
lenders led by The Chase Manhattan Bank (together, the "BRIDGE LENDERS") for an
aggregate amount of $400.0 million (the "BRIDGE LOAN").
J. SCI LLC shall use a portion of the proceeds received from the
Financing to purchase Company Notes or to lend or to contribute amounts
(directly or indirectly) to subsidiaries for the purpose of purchasing or paying
the Company Notes in full, and the remainder of such proceeds shall be
distributed to the Company and/or used to pay transaction costs;
K. At the Closing, TPG Holding will purchase from Motorola 30 shares
of Company Stock for aggregate consideration of $307.5 million;
L. Motorola and TPG Holding shall cause TPG Acquisition to merge with
and into the Company (the "MERGER") pursuant to which:
2
(i) the separate existence of TPG Acquisition shall cease;
(ii) the Company shall continue as the Surviving
Corporation;
(iii) each share of the Company Stock shall be converted
into 3,000 shares of Surviving Corporation Stock (after
which (a) TPG Holding shall hold 90,000 shares of
Surviving Corporation Stock and (b) Motorola shall hold
210,000 shares of shares of Surviving Stock); and
(iv) the TPG Acquisition Stock shall be converted into
Surviving Corporation Preferred Stock having an
original liquidation preference of $150 million; and
M. Motorola shall cause the Surviving Corporation to redeem (the
"REDEMPTION") from Motorola 200,000 shares of Surviving Corporation Stock (after
which Motorola shall hold 10,000 shares of Surviving Corporation Stock ) in
exchange for:
(i) the SCI LLC Junior Notes in the principal amount of
$91.0 million;
(ii) Surviving Corporation Preferred Stock having an
original liquidation preference of $59.0 million; and
(iii) the Redemption Cash Consideration (directly or
indirectly through payment and/or purchase of the
Company Notes);
N. It is the intent of the parties that the sum of the Stock Purchase
Price and the Redemption Cash Consideration (before giving effect to the
adjustments set forth in SECTION 3.7) shall be $1.4325 billion; and
O. It is intended that the transactions contemplated hereby be
recorded as a recapitalization of the Company for financial reporting purposes.
3
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, Motorola, the Company, SCI LLC, TPG Holding
and TPG Acquisition covenant and agree as follows:
Article I
DEFINITIONS
1.1 PREVIOUSLY DEFINED TERMS. Each term defined in the first paragraph
and Recitals shall have the meaning set forth above whenever used herein, unless
otherwise expressly provided herein or unless the context hereof clearly
requires otherwise.
1.2 GENERAL DEFINITIONS. The following terms shall have the meanings
set forth below unless otherwise expressly provided or unless the context
clearly requires otherwise:
"ADSP" has the meaning ascribed to such term in SECTION 10.9.
"AFFILIATE" of a Person means any Person controlling, controlled by,
or under common control with, such Person. For purposes of this definition,
"CONTROL" means the power to direct the management and policies of a Person,
whether through the ownership of voting securities, by agreement or otherwise.
"AMENDED AND RESTATED IP AGREEMENT" means the Amended and Restated
Intellectual Property Agreement to be entered into as of the Closing Date by and
between Motorola and SCI LLC, the form of which is attached hereto as EXHIBIT A.
"ASSUMED LIABILITIES" has the meaning ascribed to such term in the
Reorganization Agreement.
"BALANCE SHEET" has the meaning ascribed to such term in SECTION
6.1(A).
"BALANCE SHEET DATE" has the meaning ascribed to such term in SECTION
6.1(A).
4
"BRIDGE FINANCING AGREEMENT" has the meaning ascribed to such term in
paragraph I of the Recitals.
"BRIDGE LENDERS" has the meaning ascribed to such term in paragraph I
of the Recitals.
"BRIDGE LOAN" has the meaning ascribed to such term in paragraph I of
the Recitals.
"BUSINESS" means the business and operations of the Semiconductor
Components Group of Motorola including, without limitation, the design,
development, manufacture, marketing and sale of the semiconductor products set
forth on EXHIBIT B-1, it being understood, however, that the Business shall
include (1) with respect to all patents, trademarks, know how, software, mask
works, copyrights or other intellectual property, only those rights and
obligations of the Company under the Amended and Restated IP Agreement; (2) the
Purchased Assets, including without limitation the assets and properties set
forth on EXHIBIT B-2, as such may be amended prior to Closing; and (3) all
rights and obligations of the Company under the Collateral Agreements; PROVIDED,
HOWEVER, that the term "Business" shall not include the Excluded Assets (except
to the extent Excluded Assets may be used to provide benefits to the Company
under a Collateral Agreement). Notwithstanding anything herein to the contrary,
the term "Business" shall not include the business and operations of the Joint
Ventures.
"BUSINESS ACT" means the General Corporation Law of the State of
Delaware.
"BUSINESS DAY" means any day (other than a Saturday or Sunday) on
which banks generally are open in New York for the conduct of substantially all
of their activities.
"CAPITAL EXPENDITURE CERTIFICATE" shall have the meaning ascribed
hereto in SECTION 3.7.
5
"CAPITAL EXPENDITURE DEFICIT" means the excess (but not less than $0),
if any, of (a) the product of $300,474 and the number of days elapsed between
(and inclusive of) January 1, 1999 and the Closing Date over (b) the amount of
cash actually expended to fund or in respect of capital maintenance and capital
expenditures of or with respect to the Business for the period commencing on
January 1, 1999 and ending on the Closing Date.
"CAPITAL EXPENDITURE SURPLUS" means the excess (but not less than $0),
if any, of (a) the lesser of (1) the amount of cash actually expended to fund or
in respect of capital maintenance and capital expenditures of or with respect to
the Business for the period commencing on January 1, 1999 and ending on the
Closing Date, and (2) $109,673,000 over (b) the product of $300,474 and the
number of days elapsed between (and inclusive of) January 1, 1999 and the
Closing Date.
"CERTIFICATE OF MERGER" has the meaning ascribed to such term in
SECTION 3.2.
"CLAIM NOTICE" has the meaning ascribed to such term in SECTION
11.5(A).
"CLAIM RESPONSE" has the meaning ascribed to such term in SECTION
11.5(A).
"CLOSED CODY PROGRAM" has the meaning ascribed to such term in SECTION
3.7(E)(I).
"CLOSING" has the meaning ascribed to such term in SECTION 5.1.
"CLOSING DATE" has the meaning ascribed to such term in SECTION 5.1.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CODY CERTIFICATE" shall have the meaning ascribed thereto in SECTION
3.7.
"CODY RESTRUCTURING" means the restructuring adopted by Motorola more
particularly described in EXHIBIT K.
6
"COLLATERAL AGREEMENTS" means the Amended and Restated IP Agreement,
Transition Services Agreement, Employee Matters Agreement, Equipment Pass Down
Agreement, SCG Foundry Agreement, SCG Assembly Agreement, Motorola Foundry
Agreement, Motorola Assembly Agreement, Company/SCI Quit-Claim Deed, ▇▇▇▇ of
Sale and Severance Agreement of Buildings and Fixtures Only and Not of Land,
Existing Ground Lease, SCG Master Lease Agreement, Motorola Facilities Lease
Agreement and Equipment Lease and Repurchase Agreement.
"COMPANY" has the meaning ascribed to such term in the introductory
paragraph of this Agreement.
"COMPANY NOTES" means the Canada Note, China Note, Company China Note,
Company Malaysia Note, Czech Note, Finland Note, France Note, Germany Note, Hong
Kong Note, India Note, Israel Note, Italy Note, Japan Note, Korea Note, MESB
Note, Mexico Note, MMSB Note, Motorola Switzerland Branch Note, Singapore Note,
Spain Note, Sweden Note, Switzerland Note, Taiwan Note, Thailand Note and the
U.K. Note, as applicable, and as such terms are defined in the Reorganization
Agreement and such other similar notes as may be issued in respect of
transactions contemplated by the Reorganization Agreement and SECTIONS 4.2 and
7.13 hereof.
"COMPANY NOTES AMOUNT" has the meaning ascribed to such term in
SECTION 3.6(F).
"COMPANY PERMITS" has the meaning ascribed to such term in SECTION
8.8(B).
"COMPANY STOCK" has the meaning ascribed to such term in Recital B
hereof.
"COMPANY/SCI ASSET TRANSFER" shall mean (i) the transfer by the
company to SCI LLC of certain personal property identified in Attachment A to
the Company/SCI ▇▇▇▇ of Sale in
7
accordance with the terms of the Company/SCI ▇▇▇▇ of Sale, (ii) the transfer of
certain buildings in accordance with the terms of that certain Company/SCI
Quit-Claim Deed, ▇▇▇▇ of Sale and Severance Agreement of Buildings and Fixtures
Only and Not of Land and (iii) the transfer of rights to certain real property
to be effective in accordance with SECTION 7.12.
"COMPANY/SCI ▇▇▇▇ OF SALE" shall mean that certain ▇▇▇▇ of Sale in the
form attached hereto as EXHIBIT C attached hereto to be entered into on the
Closing Date by and between the Company and SCI LLC.
"COMPANY/SCI GROUND LEASE" shall mean that certain Ground Lease in the
form to be agreed upon prior to Closing Date by Motorola and SCI LLC in
accordance with SECTION 7.12 and to be entered into as of the Closing Date by
and among SCI LLC and Motorola.
"COMPANY/SCI QUIT-CLAIM DEED, ▇▇▇▇ OF SALE AND SEVERANCE AGREEMENT OF
BUILDINGS AND FIXTURES ONLY AND NOT OF LAND" shall mean that certain Quit-Claim
Deed, ▇▇▇▇ of Sale and Severance Agreement of Buildings and Fixtures Only and
Not of Land in the form of EXHIBIT D attached hereto to be entered into on the
Closing Date by and between the Company and SCI LLC.
"CONTEST" has the meaning ascribed to such term in SECTION 10.6.
"CONTRACTS" has the meaning ascribed to such term in SECTION 8.22.
"CUSTOMER CONTRACTS" has the meaning ascribed to such term in SECTION
8.22(A).
"DAMAGES" means any and all losses (including losses calculated as a
multiple of a recurring cash flow or income statement impact, to the extent
applicable), liabilities, damages, penalties, obligations, awards, fines,
deficiencies, interest, claims, costs and expenses whatsoever (including
reasonable attorneys', accountants' and environmental consultants' fees and
disbursements) resulting from, arising out of or incident to (x) any matter for
which
8
indemnification is provided under this Agreement, or (y) the enforcement by an
indemnified party of its rights to indemnification under this Agreement;
PROVIDED, HOWEVER, that Damages shall not include consequential or incidental
damages (other than consequential or incidental damages that are awarded to
third parties under matters covered by the foregoing clause (x) above).
"DEDUCTIBLE AMOUNT" has the meaning ascribed to such term in SECTION
11.2(B).
"DEFENSE NOTICE" has the meaning ascribed to such term in SECTION
11.5(D).
"DISCLOSURE LETTER" has the meaning ascribed to such term in SECTION
6.1(D).
"DOJ" means the United States Department of Justice.
"EFFECTIVE TIME" has the meaning ascribed to such term in SECTION 3.2.
"EMPLOYEE MATTERS AGREEMENT" means that certain Employee Matters
Agreement dated as of the date hereof by and among Motorola, the Company and SCI
LLC.
"ENVIRONMENTAL LAWS" means applicable federal, state, local or
non-U.S. laws or any statute, ordinance, regulation, binding agreement with a
Governmental Authority, Company Permit, or order, as the foregoing are enacted,
amended, issued, interpreted, or entered into and in effect on the Closing Date,
relating to pollution or protection of the environment, natural resources or
human health, including laws relating to the Releases of Hazardous Substances.
"ENVIRONMENTAL LIABILITIES" means all obligations and liabilities,
whether direct or indirect, known or unknown, and in each case imposed by, under
or pursuant to Environmental Laws (including, but not limited to, all such
obligations and liabilities related to Remediations, and all fines, penalties,
deficiencies, interest, awards, fees, capital costs, disbursements and expenses
of counsel, experts, contractors, personnel and consultants) based on, arising
out of or otherwise in respect of: (i) the Business; (ii) conditions existing on
or under the Real Property or
9
property or facilities formerly owned or operated by the Business; (iii) the
Release of, or exposure to, Hazardous Substances; and (iv) compliance with any
and all requirements of Environmental Laws by the Business; PROVIDED, HOWEVER,
that the term "Environmental Liabilities" as used in this Agreement shall not
include any liabilities or obligations of any Joint Venture, whether direct or
indirect, known or unknown, imposed by, under or pursuant to any Environmental
Law (including, but not limited to, any such obligations or liabilities related
to Remediations, or any fines, penalties, deficiencies, interest, awards, fees,
capital costs, disbursements or expenses of counsel, experts, contractors,
personnel or consultants).
"EQUIPMENT LEASE AND REPURCHASE AGREEMENT" means the Equipment Lease
and Repurchase Agreement to be entered into prior to the Closing Date pursuant
to Sections 1.2 and 6.3 of the Interim Manufacturing/Transition Agreement.
"EQUIPMENT PASS DOWN AGREEMENT" means the Equipment Pass Down
Agreement to be entered into prior to the Closing Date pursuant to Sections 1.2
and 6.3 of the Interim Manufacturing/Transition Agreement.
"EVALUATION MATERIALS" has the meaning ascribed to such term in
SECTION 8.28.
"EXCLUDED ASSETS" has the meaning ascribed to such term in the
Reorganization Agreement.
"EXISTING GROUND LEASE" means that certain Ground Lease entered into
as of April 30, 1999 by and between Motorola and the Company in connection with
the Reorganization.
"EXISTING GROUND LEASE OPEN ISSUES" means the following issues in the
Existing Ground Lease that have not been negotiated by Motorola and TPG Holding:
(i) in Article 10 relating to any assignments or subleases, the tenant's ability
to sublease, (ii) in Section 10.02(a)
10
relating to any assignment of the Existing Ground Lease, the percentage
threshold that triggers the tenant's or assignee's obligation to pay the
landlord's additional costs in its cleanup operations, (iii) in Article 21
relating to permitted uses, the issue of expanding the excluded uses based on a
future change in environmental law or impact to landlord's clean-up operations,
(iv) in Section 22.02 relating to termination rights of the landlord, the
landlord's right to advocate termination of the Existing Ground Lease to any
bankruptcy court regarding a bankruptcy of the tenant, (v) in Sections 8.03 and
9.03 relating to casualty and condemnation, the allocation of costs if insurance
proceeds are not enough for demolition of the buildings or if a condemnation
award is not enough for restoration of the buildings and (vi) in Section
10.02(a)(i) relating to any assignment, the issue of the tenant's net worth at
closing and adjusting such figure to deal with any inflation over 99 years and
the reduction of the landlord's cleanup costs over 99 years.
"EXISTING MOTOROLA NON-U.S. ENTITIES" means the entities listed on
EXHIBIT E, but shall not include the Joint Ventures.
"EXISTING SCG ENTITIES" means Motorola, the Company and the Existing
Motorola Non-U.S. Entities.
"FINANCIAL INFORMATION" means (i) historical audited and unaudited
financial statements (including selected financial data) and pro forma financial
statements that comply with either (a) the requirements of Regulation S-X under
the rules and regulation of the SEC for financial statements that would be
required to be included in a registration statement on Form S-1 in connection
with an offering of debt securities by the Company and SCI LLC or (b) such
requirements except as the staff of the SEC may permit by waiver of such
requirements (in either case (a) or (b), together with customary reports of the
Company's independent public accountants); and (ii) financial information that
complies with (x) the requirements of Item 303
11
of Regulation S-K under the rules
and regulations of the SEC that would be required in a registration statement on
Form S-1 in connection with an offering of debt securities by the Company and
SCI LLC or (y) such requirements except as the staff of the SEC may permit by
waiver of such requirements.
"FINANCIAL STATEMENTS" has the meaning ascribed to such term in
SECTION 6.1(A).
"FINANCING" has the meaning ascribed to such term in SECTION 9.7.
"FOREIGN ENTITIES" means subsidiaries of the Company that are
organized outside of the United States and are 100% owned, directly or
indirectly, by the Company as of the Closing, and the Company's direct or
indirect interests in joint ventures (including the Joint Ventures and the
Amicus Realty Corporation).
"FTC" means the United States Federal Trade Commission.
"GOVERNMENTAL AUTHORITY" means the government of Canada, China, the
Czech Republic, France, Germany, India, Israel, Italy, Japan, the Republic of
Korea, Malaysia, Mexico, the Netherlands, the Philippines, Singapore, Slovakia,
Spain, Sweden, Switzerland, Taiwan, the United Kingdom, the United States, or
any other country or any state, province, municipality or other political
subdivision of any of the foregoing, or any court, tribunal, agency, department,
board or commission (including regulatory and administrative bodies) of any of
the foregoing.
"HAZARDOUS SUBSTANCES" means any pollutants, contaminants, hazardous
or toxic substances or wastes, friable asbestos, petroleum or any fraction or
derivative thereof, radioactive materials or any other element, compound,
mixture, solution or substance that is classified or regulated under any
Environmental Law.
"H-S-R ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
12
"INDEBTEDNESS" of any Person means each and every obligation of such
Person which is either (i) an obligation for borrowed money; (ii) an obligation
evidenced by notes, bonds, debentures or similar instruments; (iii) an
obligation for the deferred purchase price of goods or services (other than
trade payables or similar accruals incurred in the ordinary course of business
consistent with past practice); (iv) an obligation under capital leases; (v) an
obligation pursuant to a lease-purchase or conditional sale; (vi) an obligation
in the nature of guarantees of any of the obligations described in clauses (i)
through (v) above of any Person, keepwell agreements or similar obligations; or
(vii) payment obligations in connection with self-insurance, performance bonds,
9surety bonds, customs bonds, letters of credit issued in support of ongoing
operating expenses or similar obligations incurred in the ordinary course of
business consistent with past practice.
"INDEMNITEE" has the meaning ascribed to such term in SECTION 11.5(A).
"INDEMNITOR" has the meaning ascribed to such term in SECTION 11.5(A).
"INITIAL TRANSFER CLOSING DATE" has the meaning ascribed to such term
in the Reorganization Agreement.
"INTERIM MANUFACTURING/TRANSITION AGREEMENT" shall mean that certain
Interim Manufacturing/Transition Agreement entered into as of the date hereof by
and between Motorola and TPG Holding pursuant to which it is contemplated that
the Transition Services Agreement, Equipment Pass Down Agreement, SCG Foundry
Agreement, SCG Assembly Agreement, Motorola Foundry Agreement, Motorola Assembly
Agreement, SCG Master Lease Agreement, Motorola Facilities Lease Agreement and
Equipment Lease and Repurchase Agreement will be entered into on the Closing
Date.
"IRS" means the United States Internal Revenue Service.
13
"JOINT VENTURES" means the SMP Joint Venture, the Leshan JV, SEI,
Terosil and Tesla.
"LIABILITY" and "LIABILITIES" mean any and all Indebtedness,
obligations and other liabilities of a Person (whether absolute, accrued,
contingent, fixed or otherwise, or whether due or to become due).
"LESHAN JV" means Leshan Phoenix Semiconductor Company Ltd., a company
organized under the laws of the People's Republic of China.
"LIEN" means any lien (statutory or other), mortgage, charge,
hypothec, pledge, security interest, prior assignment, option, warrant, lease,
sublease, right to possession, encumbrance, claim, easement, reservation, right
or restriction which affects, by way of a conflicting ownership interest or
otherwise, the right, title or interest in or to any particular property.
"MADSP" has the meaning ascribed to such term in SECTION 10.9.
"MATERIAL ADVERSE EFFECT" means any effect (or series of related
effects) which has, or is reasonably likely to have, a material adverse effect
on or in the assets, financial condition, business, properties, or results of
operations of the Business and the Joint Ventures, taken as a whole.
"MATERIAL CONTRACTS" has the meaning ascribed to such term in SECTION
8.22.
"MAXIMUM AMOUNT" has the meaning ascribed to such term in SECTION
11.2(B).
"MERGER" has the meaning ascribed to such term in Paragraph L to the
Recitals.
"MOTOROLA" has the meaning ascribed to such term in the introductory
paragraph of this Agreement.
14
"MOTOROLA ASSEMBLY AGREEMENT" means the Motorola Assembly Agreement to
be entered into prior to the Closing Date pursuant to Sections 1.2 and 6.3 of
the Interim Manufacturing/Transition Agreement.
"MOTOROLA BONDS" has the meaning ascribed to such term in SECTION
7.5(A).
"MOTOROLA FACILITIES LEASE" means the Motorola Facilities Lease
Agreement to be entered into prior to the Closing Date between SCI LLC and
Motorola pursuant to Sections 1.2 and 6.3 of the Interim
Manufacturing/Transition Agreement.
"MOTOROLA FOUNDRY AGREEMENT" means the Motorola Foundry Agreement to
be entered into prior to the Closing Date pursuant to Sections 1.2 and 6.3 of
the Interim Manufacturing/Transition Agreement.
"MOTOROLA PARTIES" has the meaning ascribed to such term in SECTION
7.5(a).
"MOTOROLA SUBSIDIARY" means the Company, any Existing Motorola
Non-U.S. Entities and any SCG Post-Closing Entity.
"MOTOROLA TERMINATION FEE" has the meaning ascribed to such term in
SECTION 14.2(B).
"MOTOROLA TRANSFERORS" means the entities listed on EXHIBIT F.
"MOTOROLA'S KNOWLEDGE" means the actual knowledge of the individuals
identified in the Disclosure Letter, in each case after reasonable
investigation.
"NON-ASSUMED TAX LIABILITIES" means those liabilities for taxes for
which Motorola is required to indemnify any of the Tax Indemnitees pursuant to
SECTION 3.8 and ARTICLE X of this Agreement.
"NON-DISCLOSURE AGREEMENT" has the meaning ascribed to such term in
SECTION 16.4.
15
"PERMITTED LIENS" means (i) the Liens set forth in the Disclosure
Letter and (ii) imperfections in title not material in extent or amount and
which, individually or in the aggregate, do not materially interfere with the
conduct of the Business in general or at any Principal Location or with the use
of the Purchased Assets at a Principal Location and do not materially affect the
value of the Business or the Purchased Assets (including the Joint Ventures).
"PERSON" means and includes any individual, corporation, limited
liability company, partnership, firm, association, joint venture, joint stock
company, trust or other entity, or any government or regulatory administrative
or political subdivision or agency, department or instrumentality thereof.
"PLACEMENT AGENT" has the meaning ascribed to such term in paragraph H
of the Recitals.
"PRE-CLOSING ENVIRONMENTAL LIABILITIES" means all Environmental
Liabilities arising under Environmental Laws and which arise from or relate to
either: (i) the release of Hazardous Substances into the environment prior to
the Closing Date; or (ii) the conduct of any Motorola Transferor or the
operation of the Business prior to the Closing Date.
"PRINCIPAL LOCATIONS" means the United States, Mexico, Philippines,
Malaysia (exclusive of the SMP Joint Venture), Japan and France.
"PROPOSAL" has the meaning ascribed to such term in SECTION 7.3.
"PROPRIETARY INFORMATION" has the meaning ascribed to such term in
SECTION 15.1.
"PURCHASE PRICE ALLOCATION" has the meaning ascribed to such term in
SECTION 10.9.
16
"PURCHASED ASSETS" has the meaning ascribed to such term in the
Reorganization Agreement.
"REAL PROPERTY" has the meaning ascribed to such term in SECTION 8.14.
"REASONABLE EFFORTS" means the obligated party is required to make a
diligent, reasonable and good faith effort to accomplish the applicable
objective. Such obligation, however, does not require any expenditure of funds
or the incurrence of any liability on the part of the obligated party, nor the
incurrence of any expenditure or liability, in either case which is unreasonable
in light of the related objective, nor does it require that the obligated party
act in a manner which would otherwise be contrary to prudent business judgment
in light of the objective attempted to be achieved. The fact that the objective
is not actually accomplished is not dispositive evidence that the obligated
party did not in fact utilize its Reasonable Efforts in attempting to accomplish
the objective.
"REDEMPTION" has the meaning ascribed to such term in Paragraph M of
the Recitals.
"REDEMPTION CASH CONSIDERATION" has the meaning ascribed to such term
in SECTION 3.7(B).
"REDEMPTION CASH PAYMENT" has the meaning ascribed to such term in
SECTION 3.7(b).
"RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, dumping, discharge, dispersal, leaching, escaping,
emanation or migration in, into or onto the environment of any kind whatsoever,
including without limitation the movement of any Hazardous Substance through or
in the environment.
17
"REMAINING ▇▇▇▇ ▇▇▇▇ EXPENDITURE AMOUNT" means the aggregate amount of
cash expenditures that must be expended in order to complete the Cody
Restructuring as of the Closing Date as determined in accordance with the
procedure set forth on EXHIBIT K (it being understood that the parties hereto
have agreed that the amount of cash expenditures that must be expended in order
to complete the Cody Restructuring as of April 30, 1999 is $42.4 million, and
the Remaining ▇▇▇▇ ▇▇▇▇ Expenditure Amount will not exceed such amount).
"REMEDIATION" means any investigation, assessment, testing,
monitoring, containment, removal, remediation, response, cleanup or abatement of
any release or threatened release necessary to comply with any Environmental
Law.
"REMEDIATION STANDARDS" means the least stringent standards for
performing a Remediation that are required under applicable Environmental Law
(including but not limited to health and safety requirements applicable to the
Remediation at the time the Remediation was conducted) or, if more stringent
standards are actually required by the applicable Governmental Authority, such
standards.
"REORGANIZATION AGREEMENT" means the Reorganization Agreement of even
date herewith between Motorola and the Company, as amended or modified after the
date hereof in accordance with the terms thereof.
"REQUIRED CONSENTS AND APPROVALS" has the meaning ascribed to such
term in SECTION 5.2(A)(VII).
"RESPONSE PERIOD" has the meaning ascribed to such term in SECTION
11.5(A).
"RETAINED LIABILITIES" has the meaning ascribed to such term in the
Reorganization Agreement, with each item referenced in such definition being
determined as of the Closing instead of the date of assumption pursuant to the
Reorganization Agreement.
18
"SCG ASSEMBLY AGREEMENT" means the SCG Assembly Agreement to be entered
into prior to the Closing Date pursuant to Sections 1.2 and 6.3 of the Interim
Manufacturing/Transition Agreement.
"SCG FOUNDRY AGREEMENT" means the SCG Foundry Agreement to be entered
into prior to the Closing Date pursuant to Sections 1.2 and 6.3 of the Interim
Manufacturing/Transition Agreement.
"SCG MASTER LEASE" means the SCG Master Lease Agreement to be entered
into prior to the Closing Date between SCI LLC and Motorola pursuant to Sections
1.2 and 6.3 of the Interim Manufacturing/Transition Agreement.
"SCG PARTY" means the Company and the SCG Post-Closing Entities,
individually or collectively, as the context requires.
"SCG POST-CLOSING ENTITY" means the entities listed on EXHIBIT G
hereto, but shall not include the Joint Ventures.
"SCI LLC JUNIOR NOTES" shall mean those certain 10% Junior Subordinated
Notes due 2011 to be issued by SCI LLC on the Closing Date to the Company in
connection with the consummation of the Company/SCI Asset Transfer, it being
understood that the SCI LLC Junior Notes shall contain those terms set forth on
EXHIBIT H attached hereto and such other terms as shall be agreed to by Motorola
and TPG Holding prior to the Closing Date.
"SEC" means the United States Securities and Exchange Commission.
"SEI" means Slovakia Electronics Industries, a.s., a company organized
under the laws of Slovakia.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and any
rules and regulations thereunder, as promulgated from time to time.
19
"SENIOR SECURED LENDER" has the meaning ascribed to such term in
paragraph G of the Recitals.
"SENIOR SECURED LOAN" has the meaning ascribed to such term in
paragraph G of the Recitals.
"SENIOR SECURED LOAN AGREEMENT" has the meaning ascribed to such term
in paragraph G of the Recitals.
"SIGNIFICANT PROPERTY" means the properties listed on EXHIBIT I hereto.
"SMP JOINT VENTURE" means Semiconductor Miniature Products (M)
Sendirian Berhad, a company organized under the laws of Malaysia.
"STOCK PURCHASE PRICE" has the meaning ascribed to such term in
SECTION 4.1(b).
"STOCKHOLDERS AGREEMENT" has the meaning ascribed to such term in
SECTION 12.5.
"STRADDLE PERIOD" means any Tax period beginning before and ending
after the Closing Date.
"SUBORDINATED NOTES" has the meaning ascribed to such term in paragraph
H of the Recitals.
"SUBORDINATED NOTES SUBSCRIPTION AGREEMENT" has the meaning ascribed to
such term in paragraph H of the Recitals.
"SUBSIDIARY" means any Person with respect to which a specified Person
(or a subsidiary thereof) owns a majority of the common stock (or similar voting
securities) or has the power to vote or direct the voting of sufficient
securities to elect a majority of the directors or individuals exercising
similar functions.
"SURVIVING CORPORATION" has the meaning ascribed to such term in
SECTION 3.1.
20
"SURVIVING CORPORATION PREFERRED STOCK" shall mean the 12% Cumulative
Preferred Stock, par value $0.01 per share, of the Surviving Corporation, to be
issued by the Surviving Corporation at the Closing Date, the terms of which are
set forth on EXHIBIT J attached hereto together with such rights, preferences,
designations, qualifications, limitations and restrictions to be contained in a
certificate of designation to be agreed upon between Motorola and TPG Holding
prior to the Closing Date.
"SURVIVING CORPORATION STOCK" shall mean the common stock, par value
$0.01 per share, of the Surviving Corporation.
"TAX CLAIM" has the meaning ascribed to such term in SECTION 10.4.
"TAX INDEMNITEE" has the meaning ascribed to such term SECTION 3.8.
"TAX RETURN" means a report, return or other information (including any
amendments) required to be supplied to a governmental entity with respect to
Taxes.
"TAXES" means all taxes, however denominated, including any interest,
additions to tax or penalties that may become payable in respect thereof,
imposed by any federal, state, local or non-U.S. government or any agency or
political subdivision of any such government, which taxes shall include, without
limiting the generality of the foregoing, all income taxes (including, but not
limited to, U.S. federal income taxes and state income Taxes), payroll and
employee withholding taxes, unemployment insurance, social security, severance,
sales and use taxes, excise taxes, customs, environmental, license, franchise
taxes, gross receipts taxes, occupation taxes, real and personal property taxes,
capital taxes, stamp taxes, transfer taxes, ad valorem taxes, withholding taxes,
workers' compensation, estimated, alternative or add-on minimum taxes, and other
obligations of the same or of a similar nature.
21
"TEROSIL" means Terosil a.s., a company organized under the laws of the
Czech Republic.
"TESLA" means Tesla Sezam a.s., a company organized under the laws of
the Czech Republic.
"TPG ACQUISITION" has the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"TPG ACQUISITION STOCK" has the meaning ascribed to such term in
Paragraph D of the Recitals.
"TPG FINANCING COMMITMENTS" has the meaning ascribed to such term in
SECTION 6.2.
"TPG HOLDING" has the meaning ascribed to such term in the introductory
paragraph of this Agreement.
"TPG STOCK PURCHASE" has the meaning ascribed to such term in
SECTION 4.1.
"TPG TEAM" means ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
"TPG TERMINATION FEE" has the meaning ascribed to such term in
SECTION 14.2(a).
"TRANSFER TAXES" has the meaning ascribed to such term in SECTION 3.8.
"TRANSITION SERVICES AGREEMENT" shall mean that certain Transition
Services Agreement which is to be entered into on the Closing Date, the form of
which is attached as Exhibit B to the Interim Manufacturing/Transition
Agreement, and pursuant to such Transition Services Agreement, IT Services,
Human Resource Services, Supply Management Services, Logistics Services and
Finance Services shall be provided in accordance with the term sheets specified
for such services attached thereto.
22
"U.S. OPERATIONS" has the meaning ascribed to such term in SECTION 2.1.
"VOLUNTARY PARTICIPATION" has the meaning ascribed to such term in
SECTION 11.5(f).
"WORKING CAPITAL AMOUNT" shall mean $136,500,000.
"YEAR 2000 PLAN" has the meaning ascribed to such term in SECTION 8.18.
1.3 INTERPRETATION. Unless the context otherwise requires, (a) words
of any gender shall be deemed to include each other gender, (b) words using the
singular or plural number shall also include the plural or singular number,
respectively, and (c) references to "hereof", "herein", "hereby" and similar
terms shall refer to this entire Agreement.
Article II
THE REORGANIZATION
2.1 REORGANIZATION AGREEMENT. Motorola has heretofore operated the
business of its Semiconductor Components Group through (a) certain operations,
assets, and properties located in the United States (the "U.S. OPERATIONS"), (b)
the Existing Motorola Non-U.S. Entities and (c) the Joint Ventures. Prior to the
execution of this Agreement, Motorola and the Company have entered into the
Reorganization Agreement pursuant to which (i) Motorola has transferred and
conveyed certain portions of the U.S. Operations and the shares or other
interests of Motorola in certain of the Joint Ventures to the Company or
Subsidiaries of the Company; (ii) the remainder of the U.S. Operations and the
interests of Motorola in certain Joint Ventures will be transferred to the
Company (or Subsidiaries of the Company) and (iii) the Existing Motorola
Non-U.S. Entities are being reorganized as set forth in the Reorganization
Agreement. Upon consummation of all of the transactions contemplated under the
23
Reorganization Agreement, the business of Motorola's Semiconductor Components
Group shall be owned and conducted by the Company, the SCG Post-Closing Entities
and the Joint Ventures.
ARTICLE III
THE RECAPITALIZATION, MERGER AND REDEMPTION
3.1 THE MERGER. At the Effective Time, and subject to and upon the
terms and conditions of this Agreement, TPG Acquisition shall be merged with and
into the Company, the separate corporate existence of TPG Acquisition shall
cease, and the Company shall continue as the Surviving Corporation. The Company,
as the surviving corporation after the Merger, is hereinafter sometimes referred
to as the "SURVIVING CORPORATION."
3.2 EFFECTIVE TIME. As promptly as practicable after the satisfaction
or waiver of the conditions set forth in ARTICLES XII and XIII, the parties
shall cause the Merger to be consummated by the filing of a Certificate of
Merger as contemplated by the Business Act (the "CERTIFICATE OF MERGER"),
together with any required related certificates, with the Secretary of State of
the State of Delaware in such form as required by, and executed in accordance
with, the relevant provisions of the Business Act (the time of such filing being
the "EFFECTIVE TIME").
3.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of the Business Act. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, all of the property,
rights, privileges, powers and franchises of the Company and TPG Acquisition
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of the Company and TPG Acquisition shall become the debts, liabilities and
duties of the Surviving Corporation.
24
3.4 CERTIFICATE OF INCORPORATION; BY-LAWS.
(a) At the Effective Time, the Certificate of Incorporation of the
Company shall be amended and restated in their entirety to read substantially as
set forth in EXHIBIT L.
(b) At the Effective Time, the By-Laws of the Company shall be
amended and restated in their entirety to read substantially as set forth in
EXHIBIT M.
3.5 DIRECTORS AND OFFICERS. At the Effective Time, the directors of
the Company shall be individuals designated by TPG Holding, each to hold office
in accordance with the Certificate of Incorporation and By-Laws of the Surviving
Corporation, and the officers of the Company shall be individuals designated by
TPG Holding, in each case until their respective successors are duly elected or
appointed and qualified.
3.6 CONVERSION OF COMPANY STOCK.
(a) Each share of the Company Stock shall be converted into 3,000
shares of Surviving Corporation Stock (after which (a) TPG Holding shall hold
90,000 shares of Surviving Corporation Stock and (b) Motorola shall hold 210,000
shares of Surviving Corporation Stock).
(b) All shares of Company Stock that are held by the Company as
treasury stock or that are held by any other Person other than Motorola and TPG
Holding shall be cancelled and retired and cease to exist at the Effective Time.
(c) Certificates representing Surviving Corporation Stock issued at
the Closing shall bear a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER STATE
SECURITIES LAWS.
25
THESE SECURITIES MAY NOT BE RESOLD OR TRANSFERRED UNLESS
REGISTERED OR EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS. IN
ADDITION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE TERMS OF A STOCKHOLDERS' AGREEMENT DATED AS
OF _____________, 1999 AND MAY NOT BE VOTED, SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH SUCH AGREEMENT.
(d) The TPG Acquisition Stock shall be converted into Surviving
Corporation Preferred Stock having an original liquidation preference of $150.0
million.
(e) At the Effective Time, SCI LLC shall (at the option of TPG
Holding) purchase or fund, through capital contributions or intercompany loans,
directly or indirectly to the Subsidiaries of SCI LLC that are obligators
thereunder, the amount in U.S. dollars required (i) to pay in full, (ii) to
repurchase in full or (iii) to repurchase in part and to pay the remaining
amount in full, the Company Notes at the Effective Time (such amount, the
"COMPANY NOTES AMOUNT"). The Company Notes Amount shall be used by SCI LLC or
such Subsidiaries concurrently with such funding to pay in full, repurchase in
full or repurchase in part and pay the remaining amount in full from the holders
thereof (at TPG Holding's option) each of the Company Notes.
3.7 THE REDEMPTION. (a) At the Closing, Motorola shall cause the
Surviving Corporation to effect the Redemption, pursuant to which the Surviving
Corporation shall redeem from Motorola 200,000 shares of Surviving Corporation
Stock (after which Motorola shall hold 10,000 shares of Surviving Corporation
Stock) in exchange for:
(i) the SCI LLC Junior Notes in the principal amount of $91.0
million:
26
(ii) Surviving Corporation Preferred Stock having an original
liquidation preference of $59.0 million; and
(iii) the Redemption Cash Consideration (directly or indirectly
through payment and/or purchase of the Company Notes).
(b) For the purposes of this Agreement, (i) "REDEMPTION CASH PAYMENT"
shall mean the Redemption Cash Consideration MINUS the Company Notes Amount, and
(ii) "REDEMPTION CASH CONSIDERATION" shall mean $1,125,000,000 PLUS the Capital
Expenditure Surplus, if any, minus the sum of (A) the Working Capital Amount,
(B) the Remaining ▇▇▇▇ ▇▇▇▇ Expenditure Amount and (C) the Capital Expenditure
Deficit, if any.
(c) The parties hereto agree that, on a date which is no earlier than
the third Business Day prior to the Closing Date, Motorola shall deliver to TPG
Acquisition (i) an officer's certificate (the "CODY CERTIFICATE") under which an
officer shall certify as to the Remaining ▇▇▇▇ ▇▇▇▇ Expenditure Amount, if any,
as of the Closing Date and (ii) an officer's certificate (the "CAPITAL
EXPENDITURE CERTIFICATE") under which such officer shall certify as to the
Capital Expenditure Surplus or the Capital Expenditure Deficit, if any, as of
the Closing Date. The amounts set forth on the Cody Certificate which are
certified by such officer executing such certificate as the Remaining ▇▇▇▇ ▇▇▇▇
Expenditure Amount shall be determined in accordance with the processes set
forth in EXHIBIT K. With respect to the Capital Expenditure Certificate, the
amount of cash actually expended to fund or in respect of capital maintenance
and capital expenditures of or with respect to the Business for the period
commencing on January 1, 1999 and ending on the Closing Date shall be determined
based on the capital expenditure account maintained for the Semiconductor
Components Group of Motorola's Semiconductor Products ▇▇▇▇▇▇.
▇▇
(▇) The amounts set forth on the Cody Certificate and the Capital
Expenditure Certificate as the Remaining ▇▇▇▇ ▇▇▇▇ Expenditure Amount and the
Capital Expenditure Deficit or Capital Expenditure Surplus, as applicable, shall
be subject to adjustment pursuant to the procedures set forth in SECTION 3.7(e)
(it being understood that EXHIBIT K hereto and clause (a) of the definition of
Capital Expenditure Deficit and clause (b) of the definition of the Capital
Expenditure Surplus are not subject to adjustment or dispute).
(e) In the event that TPG Holding disputes the Remaining ▇▇▇▇ ▇▇▇▇
Expenditure Amount or the Capital Expenditure Deficit or Capital Expenditure
Surplus, as applicable, as set forth in the Cody Certificate and the Capital
Expenditure Certificate, respectively, (it being understood that under no
circumstances shall EXHIBIT K hereto, clause (a) of the definition of Capital
Expenditure Deficit and clause (b) of the definition of the Capital Expenditure
Surplus be the subject of any dispute), TPG Holding shall, no later than 30 days
after the Closing Date, describe to Motorola in reasonable written detail the
basis for such dispute, and TPG Holding and Motorola shall promptly negotiate in
good faith to resolve such dispute. If TPG Holding fails to deliver such a
notice of dispute within such 30-day period, TPG Holding shall be deemed to have
accepted as final such Cody Certificate or Capital Expenditure Certificate, as
applicable, delivered by Motorola and Motorola's determination of the Remaining
▇▇▇▇ ▇▇▇▇ Expenditure Amount, the Capital Expenditure Deficit or Capital
Expenditure Surplus, as applicable, as set forth therein. If TPG Holding
delivers to Motorola a notice of dispute and if such dispute is not resolved
within 30 days after TPG Holding shall have notified Motorola of its basis for
such dispute, then the specific matters in dispute shall be submitted to a
nationally recognized independent accounting firm (other than KPMG LLP or
28
PricewaterhouseCoopers LLP) mutually acceptable to Motorola and TPG Holding.
Such firm shall resolve such dispute on the basis of the following principles:
(i) With respect to any disputes relating to Remaining ▇▇▇▇
▇▇▇▇ Expenditure Amount, TPG Holding shall only be permitted to dispute the
numerical calculation of those Cody programs which are not Closed Cody Programs
(ii) With respect to any dispute regarding the Capital
Expenditure Deficit or the Capital Expenditure Surplus, TPG Holding shall be
permitted to dispute the determination of the amounts set forth in clause (b) of
the definition of Capital Expenditure Deficit and clause (a) of the definition
of the Capital Expenditure Surplus, as applicable, based on a review of the
capital expenditure account established for the Semiconductor Components Group
of Motorola's Semiconductor Products Sector.
Such accounting firm shall be requested to provide its resolution of
the matters in dispute within 30 days of the submission thereof to such firm,
and the determination of such accounting firm in respect of each of the matters
in dispute shall be conclusive and binding on TPG Holding and Motorola save for
manifest error. The determination of such firm, whose fees and expenses shall be
borne equally by the party which does not prevail in the dispute, shall be final
and determinative. Payment of the amount of any adjustment to the Redemption
Cash Consideration as a result of this SECTION 3.7(d) shall be made by wire
transfer of immediately available funds to the prevailing party within two
Business Days of the final determination thereof.
3.8 SALES AND TRANSFER TAXES. Motorola shall be responsible for and
pay, and shall indemnify and hold TPG, the Company, SCI LLC and the Foreign
Entities (each, a "TAX INDEMNITEE") harmless from the first $10.0 million of all
real property, personal property or other
29
transfer Taxes, or any sales, stamp, purchase, use, value-added, excise or
similar Taxes imposed by any Governmental Authority under the laws of the United
States or any foreign country, or any state or political subdivision thereof, on
Motorola or any of its Affiliates or any Tax Indemnitee in connection with the
transfers contemplated by the Reorganization Agreement (all such Taxes,
"TRANSFER TAXES"), it being understood that any franchise, income or capital
gains tax or any similar tax shall not be treated as a Transfer Tax and shall be
subject to indemnification pursuant to ARTICLE X. In the event that the
aggregate amount of Transfer Taxes exceeds $10.0 million, such Transfer Taxes
that will not give rise to a credit or remittance shall be allocated to Motorola
(but not exceeding $10.0 million) before any Transfer Taxes that will give rise
to a credit or remittance (e.g., value added taxes) are allocated to Motorola.
Motorola shall be entitled to any refunds or credits (including any interest
paid or credited with respect thereto) in respect of any liability for any such
Transfer Taxes allocated to Motorola pursuant to this SECTION 3.8, but any such
refund or credit shall reduce the amount of Transfer Taxes deemed paid by
Motorola for purposes of applying the $10.0 million cap. The Company shall be
responsible for and pay (or cause an SCG Post-Closing Entity to pay), and shall
indemnify and hold Motorola harmless from, any Transfer Taxes in excess of
$10.0 million. The Company shall be entitled to any refunds or credits
(including any interest paid or credited with respect thereto) in respect of any
liability for such Transfer Taxes allocated to the Company pursuant to this
SECTION 3.8. Each party shall cause any refunds or credits which it or one of
its Affiliates receives and to which the other party is entitled under this
SECTION 3.8 to be paid to the entitled party in immediately available funds
promptly after receipt (or within ten days after the application of the amount
of the credit or refund against any other liability of the party not so
entitled).
30
ARTICLE IV
RELATED TRANSACTIONS
4.1 RELATED TRANSACTIONS. Upon the terms and subject to the
conditions of this Agreement, the Company, the SCG Post-Closing Entities and
other parties referred to herein shall, also at the Closing, enter into the
following transactions and take the following actions immediately prior to the
Merger:
(a) the Company and SCI LLC shall consummate the Company/SCI
Asset Transfer pursuant to which the Company shall receive SCI LLC Junior Notes
in the aggregate principal amount of $91.0 million;
(b) TPG Holding shall purchase from Motorola 30 shares of the
issued and outstanding Company Stock (the "TPG STOCK PURCHASE") for a purchase
price of $307.5 million (the "STOCK PURCHASE PRICE");
(c) SCI LLC and certain SCG Parties shall enter into the Senior
Secured Loan Agreement and in consideration thereof, the Senior Lenders shall
pay to SCI LLC by wire transfer in immediately available funds to an account
designated by SCI LLC prior to the Closing, the net proceeds from the Senior
Secured Loan;
(d) pursuant to the terms of the Subordinated Notes
Subscription Agreement, SCI LLC shall issue the Subordinated Notes in an
aggregate principal amount of $400.0 million which shall be privately placed by
the Placement Agent pursuant to Rule 144A of the Securities Act, and in
consideration thereof, the Placement Agent shall pay to SCI LLC, by wire
transfer in immediately available federal funds to an account designated by SCI
LLC prior to the Closing, the net proceeds from the sale of the Subordinated
Notes;
31
(e) upon receipt of written instructions from TPG Holding, SCI
LLC, in lieu of the placement of the Subordinated Notes, shall enter into the
Bridge Financing Agreement, and the Bridge Lenders shall pay to SCI LLC, by wire
transfer in immediately available funds to an account designated by SCI LLC
prior to the Closing, the net proceeds from the Bridge Loan;
(f) SCI LLC shall, and the Company shall cause SCI LLC to,
distribute to the Company the Redemption Cash Payment; and
(g) SCI LLC shall cause each of the Company Notes to be prepaid
or, to the extent any such Company Note is not prepaid, shall purchase such
Company Note or cause an SCG Post-Closing Entity to purchase such Company Note.
4.2 TRANSACTION STRUCTURE. (a) The structure for the transactions
contemplated by the Reorganization Agreement and this Agreement may be modified
as reasonably requested in writing by TPG Holding and as agreed in writing by
Motorola (which agreement shall not be unreasonably withheld); PROVIDED,
HOWEVER, that if Motorola reasonably determines and so informs TPG Holding in
writing that such a modification would (i) adversely alter in any respect the
nature or amount of consideration to be received by Motorola pursuant to the
transactions under the Reorganization Agreement and this Agreement; (ii)
adversely alter the tax consequences to Motorola in connection with the
transactions under the Reorganization Agreement and this Agreement, unless
reimbursed by the Company; (iii) otherwise impose upon Motorola any cost, fee,
expense, liability or other obligation not reimbursed to Motorola by the Company
(including the allocated cost of internal resources); (iv) otherwise adversely
affect the rights or obligations of Motorola arising under the Reorganization
Agreement, the Collateral Agreements or hereunder; (v) result in any action that
would interfere with the activities being
32
performed by Motorola in connection with the cloning, as contemplated by the
Transition Services Agreement, or its own business operations; or (vi) result in
any action that would adversely affect Motorola's ability to perform its
obligations under the Transition Services Agreement (including but not limited
to incremental efforts or expense required by Motorola to meet its obligations
under the Transition Services Agreement), then Motorola shall not be required to
make such modification.
(b) Without limiting the provisions of SECTION 4.2(a), TPG has
requested that the holding company to be formed in the Netherlands ("Dutchco")
also hold the branches in Israel, Spain and Switzerland. The provisons of the
proviso contained in SECTION 4.2(a) shall apply to the determination by Motorola
as to the requested structure modification associated with holding the branches
through Dutchco. In addition, in connection with the use of Dutchco, the parties
hereto agree as follows: (i) any fees, costs and expenses (including the
allocated cost of internal resources) shall be paid by the Company (or
reimbursed by Motorola, as the case may be); and (ii) the Company shall have
full responsibility (cost and execution) for any reporting (year-end or
otherwise) with respect to Dutchco.
ARTICLE V
THE CLOSING
5.1 CLOSING AND CLOSING DATE. Subject to the provisions of
SECTION 14.1, the closing (herein sometimes referred to as the "CLOSING") of the
transactions provided for in this Agreement shall take place at the offices of
Winston & ▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 9:00 a.m.
Chicago time as soon as practicable after the satisfaction or waiver of the
conditions precedent set forth in ARTICLES XII and XIII; or at such other place,
at such other time, or on such other date as Motorola and TPG Acquisition may
mutually agree for the Closing
33
to take place (the date on which the Closing is to take place being herein
sometimes referred to as the "CLOSING DATE"). The Effective Date (as defined in
the Reorganization Agreement) shall be the Closing Date.
5.2 CLOSING DELIVERIES.
(a) At the Closing on the Closing Date, Motorola and the
Company shall deliver to TPG Acquisition and TPG Holding the following:
(i) certificates of compliance or certificates of good
standing of each Motorola Subsidiary, as of the most recent practicable date,
from the appropriate Governmental Authority of the jurisdiction of its
incorporation or organization, if applicable;
(ii) certificates representing all of the capital stock
of each of the SCG Post-Closing Entities, if applicable, PROVIDED, that such
shares may be delivered in the home jurisdiction to the extent required by
applicable law;
(iii) certified copies of resolutions of (A) the Board of
Directors of Motorola and (B) the Board of Directors and stockholders of the
Company, in each case approving the transactions set forth in this Agreement;
(iv) certificates of incumbency for the officers of
Motorola and the Company;
(v) the "bring down" certificates required to be
delivered pursuant to SECTION 12.2;
(vi) a complete set of all documents in connection with
the consummation of the transactions contemplated by the Reorganization
Agreement;
34
(vii) the consents and approvals from the Governmental
Authorities and other Persons which are set forth in the Disclosure Letter
("REQUIRED CONSENTS AND APPROVALS");
(viii) Opinions of independent counsel to Motorola and the
Company reasonably satisfactory in both form and substance to TPG Holding and
TPG Acquisition and their counsel;
(ix) the Cody Certificate;
(x) the Capital Expenditure Certificate;
(xi) a certificate that, as of the Closing Date, Motorola
is not a foreign person, as defined in Treasury Regulations
section 1.1445-2(b)(2)(i), such certification to be in form similar to that
described in section 1.1445-2(b)(2)(iii)(B) of that regulation or otherwise
meeting the requirements of section 1.1445-2(b)(2) of that regulation;
(xii) the resignations of all directors of the Company,
all directors of each SCG Post-Closing Entity and all designees of Motorola to
the boards of directors (or similar governing bodies) of each Joint Venture to
the extent requested by TPG Acquisition;
(xiii) the Amended and Restated IP Agreement executed by
each of Motorola and SCI LLC; and
(xiv) such other instruments, documents and certificates
as TPG Acquisition or its counsel may reasonably request to implement the
transactions contemplated hereby.
(b) At the Closing on the Closing Date, TPG Acquisition and TPG
Holding shall deliver to Motorola (or cause to be delivered) the following:
35
(i) certificates of compliance or certificates of good
standing of TPG Acquisition and TPG Holding as of the most recent practicable
date, from the appropriate Governmental Authority of their jurisdiction of
incorporation;
(ii) certified copies of resolutions of the members,
Board of Directors and stockholders, as applicable, of TPG Acquisition and TPG
Holding approving the transactions set forth in this Agreement;
(iii) certificates of incumbency for the officers of TPG
Acquisition and TPG Holding;
(iv) the opinion of counsel for TPG Acquisition and TPG
Holding reasonably satisfactory in both form and substance to Motorola and the
Company and their counsel;
(v) the "bring down" certificate required to be
delivered pursuant to SECTION 12.2;
(vi) the payment of the Stock Purchase Price by wire
transfer in immediately available funds; and
(vii) such other instruments, documents and certificates
as Motorola or its counsel may reasonably request to implement the transactions
contemplated hereby.
(c) At the Closing on the Closing Date, upon consummation of
the Merger, the following shall occur:
(i) the separate existence of TPG Acquisition shall
cease;
(ii) the Company shall continue as the Surviving
Corporation;
36
(iii) each share of the Company Stock shall be converted
into 3,000 shares of Surviving Corporation Stock (after which (a) TPG Holding
shall hold 90,000 shares of Surviving Corporation Stock and (b) Motorola shall
hold 210,000 shares of Surviving Corporation Stock); and
(iv) the TPG Acquisition Stock shall be converted into
Surviving Corporation Preferred Stock having an original liquidation preference
of $150.0 million.
(d) At the Closing on the Closing Date, upon consummation of
the Redemption, Motorola shall cause the Surviving Corporation to redeem from
Motorola 200,000 shares of Surviving Corporation Stock (after which Motorola
shall hold 10,000 shares of Surviving Corporation Stock) in exchange for:
(i) the SCI LLC Junior Notes in the principal amount of
$91.0 million;
(ii) Surviving Corporation Preferred Stock having an
original liquidation preference of $59.0 million; and
(iii) the Redemption Cash Consideration (directly or
indirectly through payment and/or purchase of the Company Notes).
(e) At the Closing on the Closing Date, upon consummation of
the Merger and the Redemption, SCI LLC shall (as determined by TPG Holding)
fund, through direct or indirect capital contributions or intercompany loans to
the issuer of the Company Notes, or other subsidiaries of the Company, or shall
set aside (as determined by TPG Holding), an amount in cash equal to the Company
Notes Amount. Such cash amount shall be used to pay
37
and/or repurchase (as determined by TPG Holding) each of the Company Notes
immediately upon receipt hereof.
(f) Payment of cash required by SECTIONS 5.2(c) AND 5.2(b)(vi)
shall be paid by wire transfer of immediately available funds to an account
designated by Motorola prior to the Closing.
ARTICLE VI
PRE-CLOSING DELIVERIES AND FILINGS
6.1 COMPANY DELIVERIES. Prior to the date hereof, Motorola has
delivered to TPG Holding:
(a) the audited combined balance sheets of the Business as of
December 31, 1998 and the accompanying audited combined statements of revenues
less direct and allocated expenses before taxes for the year then ended,
together with the report thereon of KPMG Peat Marwick LLP and the unaudited
combined balance sheets of the Business as of March 31, 1999 and the
accompanying unaudited combined statements of revenues less direct and allocated
expenses before taxes for the quarter then ended (collectively, the "FINANCIAL
STATEMENTS"). The audited combined balance sheet of the Business as of December
31, 1998 is hereinafter referred to as the "BALANCE SHEET," and December 31,
1998 is hereinafter referred to as the "BALANCE SHEET DATE";
(b) a true and correct copy of the Certificate of Incorporation
(or comparable document) of the Company and each SCG Post-Closing Entity which
exists as of the date hereof, including all amendments thereto, certified by an
appropriate Governmental Authority;
38
(c) a true and correct copy of the By-Laws (or comparable
documents) of the Company and each SCG Post-Closing Entity which exists as of
the date hereof certified by the Secretary of each such entity; and
(d) a disclosure letter of even date herewith addressed to TPG
and TPG Holding, signed by Motorola and accompanied or preceded by a true and
correct copy of each contract, agreement, commitment or plan or other document
or instrument referred to therein (if such item has not otherwise been made
available to TPG Holding or its counsel) (the "DISCLOSURE LETTER").
6.2 TPG ACQUISITION DELIVERY. Prior to the date hereof, TPG
Acquisition has delivered to Motorola true and correct copies of the commitment
letter, the engagement letter and certain related documents set forth in
EXHIBIT N from the financing sources identified therein, which provide for the
financing of the transactions contemplated hereby (the "TPG FINANCING
COMMITMENTS").
6.3 H-S-R FILING. As promptly as practicable following the execution
of this Agreement thereafter, Motorola and TPG Acquisition each covenant and
agree to file with the DOJ and FTC the pre-merger notification form required
pursuant to the H-S-R Act with respect to the transactions contemplated hereby.
The parties covenant and agree with each other that with respect to such filing
each shall: (a) promptly file after any request by the DOJ or FTC, any
information or documents requested by the DOJ or FTC; and (b) furnish each other
with any correspondence from or to, and notify each other of any other
communication with, the DOJ or FTC which relates to the transactions
contemplated hereunder, and to the extent practicable, to permit the other
parties to participate in any conferences with the DOJ or FTC. TPG Holding
39
shall pay all filing fees required by the DOJ and FTC in connection with the
pre-merger notification form filing.
6.4 OTHER FILINGS. Motorola, the Company and TPG Acquisition covenant
and agree with each other to (a) promptly file, or cause to be promptly filed,
with any Governmental Authority, all such notices, applications or other
documents as may be necessary to consummate the transactions contemplated
hereby; and (b) thereafter diligently pursue all Required Consents and
Approvals. Each of Motorola and TPG shall have the right to participate in all
discussions with third parties regarding the granting of Required Consents and
Approvals.
ARTICLE VII
PRE-CLOSING COVENANTS AND AGREEMENTS
7.1 PRE-CLOSING COVENANTS. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Closing Date, Motorola covenants and agrees as follows (except for the
Cody Restructuring, as set forth in the Disclosure Letter, as contemplated by
the Reorganization Agreement or with the prior written consent of TPG
Acquisition):
(a) (i) to use all Reasonable Efforts to consummate the
transactions contemplated by the Reorganization Agreement in accordance with the
terms of the Reorganization Agreement in accordance with the terms of the
Reorganization Agreement and (ii) not to amend any of the Reorganization
Agreement or the Collateral Agreements except as contemplated by the Interim
Manufacturing/Transition Agreement or with the consent of TPG Holding, which
consent shall not be unreasonably withheld;
(b) at all reasonable times prior to the Closing Date, to make
the office facilities, plants, machinery and equipment, inventories, books of
account and records of the
40
Business available for examination and inspection by TPG Acquisition and its
agents and representatives;
(c) to conduct the Business in the ordinary course of business
and in a manner consistent with past practice;
(d) not to issue, sell, pledge, dispose of or encumber, or
authorize the issuance, sale, pledge, disposition or encumbrance of, any shares
of capital stock of any class, or any options, warrants, convertible securities
or other rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom interest) in the
Company, any of the SCG Post-Closing Entities or any interest of Motorola in a
Joint Venture;
(e) not to sell, assign, transfer, convey, lease, pledge,
dispose of or encumber any Purchased Assets (except for (i) sales of assets in
the ordinary course of business and in a manner consistent with past practice,
(ii) dispositions of obsolete or worthless assets, and (iii) sales of immaterial
assets not in excess of $10.0 million in the aggregate);
(f) not to (i) acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership or other business
organization or division thereof; or (ii) incur any Indebtedness (other than
Indebtedness of the type described in clause (vii) of the definition thereof in
an aggregate amount not exceeding $5.0 million incurred in the ordinary course
of business consistent with past practice (but exclusive of refinancings or
replacements of such Indebtedness which exists as of the date hereof), or make
any loans or advances, except for loans or advances in an aggregate amount not
exceeding $5.0 million made in the ordinary course of business consistent with
past practice;
41
(g) not to increase the compensation payable, or to become
payable, to the employees of the Business, except for increases in salary or
wages of employees of the Business in the ordinary course, consistent with past
practices of the Business and not exceeding, in the aggregate on an annualized
basis, 5% of the total compensation expense of the Business for the year ended
December 31, 1998, or grant any severance, termination, retention or change in
control benefits or compensation to, or modify or enter into any employment,
severance, retention or change in control agreement or arrangement, in excess of
$200,000 on an annual basis with any employees of the Business having a current
annual base salary of $125,000 or more, or establish, adopt, enter into or amend
any collective bargaining agreement, Plan, trust, fund, policy or arrangement
for the benefit of any current or former employees or any of their
beneficiaries, except, in each case, as may be required by law;
(h) to use Reasonable Efforts to preserve intact the business,
operations, organization and goodwill of the Business;
(i) to use Reasonable Efforts to continue to maintain existing
business relationships of the Business with customers and suppliers other than
relationships not economically beneficial to the Business;
(j) to keep the books of account, records and files of the
Business in the ordinary course of business and in accordance with existing
practice;
(k) to maintain all material assets and properties of the
Business in their current condition, normal wear and tear excepted;
(l) to maintain insurance upon all of such assets and
properties in such amounts and of such kinds comparable to that in effect on the
date hereof with insurers of substantially the same or better financial
condition;
42
(m) to promptly notify TPG Acquisition of any (A) extraordinary
loss relating to the Business, (B) casualty losses or damages suffered relating
to the Business with respect to property or assets having an individual
replacement cost of more than $1.5 million or an aggregate replacement cost of
more than $10.0 million or which could cause a Material Adverse Effect, whether
or not such losses or damages are covered by insurance and (C) action, suit,
proceeding, claim or arbitration which could cause a Material Adverse Effect to
the Business;
(n) to comply in all material respects with all applicable Laws
to which the Business is subject;
(o) not to enter into any contract that would be a Material
Contract (which would reasonably be expected to involve more than $1.5 million
over the next 12 months, except with respect to Material Contracts as defined in
SECTION 8.22(c), (d) and (g), which shall not be subject to the provisions of
this parenthetical), modify, terminate, accelerate or amend in any material
respect any Material Contract or waive, release or assign any material rights or
claims thereunder (in each case as would reasonably be expected to involve less
than $1.5 million except with respect to Material Contracts as defined in
Section 8.22(a), (b), (e) and (f), which shall not be subject to the provisions
of this parenthetical).
(p) not to make any payment or prepayment of Taxes in excess of
the amount required by law;
(q) not to pay, discharge or satisfy any material claims,
litigation, arbitration, liabilities or obligations, or waive any material
right, associated with the Business (absolute, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction of
such liabilities or obligations in the ordinary course of business consistent
with
43
past practice; PROVIDED, that Motorola may take any of the actions specified in
this clause (p) with regard to any claim, litigation, arbitration, liability,
obligation or right which shall constitute a Retained Liability or an Excluded
Asset;
(r) not to take any action or refrain from taking any action
where such action or inaction would reasonably be expected to cause any of the
representations or warranties of Motorola contained herein to be untrue or
incorrect in any material respect;
(s) not to take any steps to sell finished inventory to its
distributors with the intent or expectation of increasing the finished
inventories of any such distributors to more than fourteen (14) weeks of
finished inventory at current resale rates, or to engage in other special
selling efforts, such as the implementation of extraordinary price discounts,
rebates or the like;
(t) to take the actions contemplated to be taken prior to the
Closing pursuant to the Collateral Agreements and the Interim
Manufacturing/Transition Agreement in accordance with the respective terms
thereof;
(u) not to agree or consent, and to cause its designees on the
Boards of Directors (or other governing bodies) of the Joint Ventures not to
agree or consent to any capital call, capital commitment or other Joint Venture
financing or other action presented for approval by Motorola, any of its
Affiliates, such Boards of Directors or other governing bodies, in each case
except as provided for Item 2 of the Disclosure Letter; and
(v) not to enter into any Contract to engage in any action
prohibited by the foregoing clauses (a) through (u).
Except as expressly provided in this Section 7.1, the provisions
of clauses (b) through (s) of this SECTION 7.1 shall not apply with respect to
any Joint Venture.
44
7.2 PRESS RELEASES. Prior to the Closing, neither Motorola nor TPG
Acquisition nor any of their Affiliates will issue or cause publication of any
press release or other announcement or public communication with respect to this
Agreement or the transactions contemplated hereby without the prior consent of
the other, which consent will not be unreasonably withheld; PROVIDED, HOWEVER,
that nothing herein will prohibit any party from issuing or causing publication
of any such press release, announcement or public communication to the extent
that such party determines such action to be required by law or the rules of any
national stock exchange applicable to it or its Affiliates, in which case the
party making such determination will allow the other party reasonable time to
comment on such release or announcement in advance of its issuance.
7.3 EXCLUSIVITY. Unless and until this Agreement is terminated
pursuant to SECTION 14.1, neither Motorola nor any of its Affiliates, officers,
directors, employees or agents will (a) solicit, initiate, or encourage the
submission of any proposal or offer (a "PROPOSAL") from any Person relating to
any (i) liquidation, dissolution, or recapitalization, (ii) merger or
consolidation, (iii) acquisition or purchase of securities or assets, or (iv)
similar transaction or business combination, in each case involving all or any
material portion of the Business; or (b) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or agree to or endorse in any other manner any effort or attempt
by any Person to do or seek any of the foregoing; PROVIDED, that the foregoing
shall not apply to any transaction or combination involving Motorola or
substantially all of the assets of Motorola and its subsidiaries and not
primarily the Business.
7.4 SATISFACTION OF CONDITIONS. Each of the parties will use
Reasonable Efforts with due diligence and in good faith to satisfy promptly all
conditions required hereby to be
45
satisfied by such party in order to expedite the consummation of the
transactions contemplated hereby. Without limiting the generality of the
foregoing, the parties shall use Reasonable Efforts to obtain all consents of
third parties which are required under the Material Contracts (which are not
terminable or cancelable by either party thereto upon less than 120 days'
notice) pursuant to the terms thereof to effect the assignment, license or
sub-lease thereof to the SCG Parties as contemplated by this Agreement, the
Reorganization Agreement and the Collateral Agreements (but shall not be
required to pay money or incur obligations to third parties in connection
therewith). Notwithstanding the foregoing, none of the parties hereto shall be
required to comply with the provisions of the previous sentence to the extent
that complying with such provisions is detrimental to the conduct of the
Business, as reasonably determined by senior management of SCG and communicated
in writing to Motorola and TPG.
7.5 REPLACEMENT OF GUARANTEES, ETC.
(a) Motorola and/or its Affiliates have provided certain
corporate guarantees or have obtained certain indemnity bonds and/or letters of
credit or letters of comfort (such guarantees, indemnity bonds, letters of
credit or letters of comfort, whether in existence on the date hereof or
provided or obtained after the date hereof, the "MOTOROLA BONDS") identified in
the Disclosure Letter in connection with the Business with respect to which
Motorola and/or its Affiliates (the "MOTOROLA PARTIES") has reimbursement,
indemnification or other obligations and, after the date hereof and prior to the
Closing, any Motorola Party may, (i) in its sole discretion but after consulting
with TPG Acquisition, in the ordinary course of business (but in each case,
excluding in connection with Indebtedness of the type described in clauses (i)
through (vi) of the definition thereof), issue additional Motorola Bonds (as
opposed to Motorola Bonds which are being issued to replace or refinance
existing Motorola Bonds) in connection with certain
46
obligations of the Business; PROVIDED, that the aggregate amount of such
Motorola Bonds is $5.0 million or less, and (ii) with the prior consent of TPG
Acquisition, issue additional Motorola Bonds in excess of $5.0 million. The
obligations of the Company with regard to the Motorola Bonds set forth in this
Agreement shall apply (i) to those Motorola Bonds in existence as of the date
hereof and (ii) to those Motorola Bonds provided or obtained after the date
hereof in accordance with the provisions of the previous sentence.
(b) TPG Acquisition shall use its Reasonable Efforts to, or
cause the Company to, replace the Motorola Bonds at the Closing Date (except for
any Motorola Bonds to be replaced by letters of credit to be issued under the
Senior Credit Facility which TPG Acquisition shall use its Reasonable Efforts to
cause the Company to replace immediately after the Closing Date). The Company
agrees, unconditionally and irrevocably, without right of setoff, to pay to,
reimburse, and indemnify the Motorola Parties, for and against all their
payments, costs and expenses incurred after the Closing and relating to such
Motorola Bonds, which shall be deemed to include, without limitation, all fees,
expenses and other amounts payable under its credit and bonding arrangements in
respect of such Motorola Bonds, in each case until the complete and
unconditional release of Motorola's obligations with respect thereto. All such
payments, reimbursements and indemnities by the Company shall be made within one
business day after receipt by it of written notice by Motorola that it has made
or incurred any such payment, cost or expense together with reasonable evidence
of such payment. If any Motorola Bonds are outstanding 60 days after the
Closing Date, the Company shall deliver an irrevocable letter of credit in an
amount sufficient to cover all of the Company's payment, reimbursement and
indemnification obligations under this SECTION 7.5(b). Motorola shall be the
beneficiary of any such letter of credit.
47
7.6 FINANCING. TPG Acquisition hereby agrees to use its Reasonable
Efforts to arrange and complete the Financing including, (i) to negotiate
definitive agreements with respect thereto and (ii) to satisfy all conditions
applicable to TPG Acquisition in such definitive agreements. TPG Acquisition
will keep Motorola informed at all times with respect to the status of its
efforts to arrange and complete the Financing, including, without limitation,
with respect to the occurrence of any event which TPG Acquisition believes may
have a material adverse effect on the ability of TPG Acquisition to obtain the
Financing. In the event TPG Acquisition is unable to arrange or complete any
portion of the Financing in the manner or from the sources originally
contemplated, TPG Acquisition will use its Reasonable Efforts to arrange any
such portion from alternative sources. Motorola hereby agrees to use its
Reasonable Efforts to assist TPG Acquisition to arrange and complete the
Financing, including to satisfy all conditions applicable to Motorola in
connection therewith and will use its Reasonable Efforts to cause the SCG
Parties to comply with their obligations under the definitive agreements with
respect to the Financing; PROVIDED, that Motorola shall not be obligated to
incur any monetary obligations or expenditures in connection with such
assistance unless reimbursed promptly in full by TPG Acquisition. Motorola
agrees to provide and make available upon reasonable notice the senior
management employees of the Business for (i) their participation in any "road
shows" for the Financing and (ii) to respond to questions and inquiries of
potential lenders and investors; PROVIDED, HOWEVER, Motorola accepts no
liability or responsibility for any such activities, and each definitive
agreement with respect to the Financing shall incorporate, where appropriate, an
adequate disclaimer of Motorola's liability acceptable to Motorola. Motorola
will use its Reasonable Efforts to deliver the Financial Information to TPG
Acquisition and to each of the financing providers under the TPG Financing
Commitments prior to August 1, 1999.
48
7.7 PERMITS. The Motorola Transferors shall use their Reasonable
Efforts to cause all Company Permits to be transferred or reissued to the
appropriate SCG Party as of the Closing Date or as promptly thereafter as is
reasonably possible. Following the Closing Date, the Motorola Transferors shall
cooperate with any efforts of the SCG Parties to complete the actions required
to transfer or obtain the issuance of all Company Permits.
7.8 ACCESS TO INFORMATION. Upon reasonable notice from TPG to
Motorola and subject to the terms of the Non-Disclosure Letter, Motorola will
cause to be afforded to TPG and its financing providers, and their respective
officers, employees, representatives and advisors access during normal business
hours to the employees, representatives, representatives advisors, facilities
and books and records of Motorola and its Subsidiaries (and will use Reasonable
Efforts to provide such access with respect to the Joint Ventures) so as to
afford TPG and its financing providers full opportunity to make such review,
examination and investigation of the Business, the Purchased Assets, the Assumed
Liabilities and the Joint Ventures as they may reasonably deem necessary to make
in connection with the transactions contemplated hereby and by the
Reorganization Agreement.
7.9 FINAL DETERMINATION OF ASSETS, LIABILITIES. Each of the
parties acknowledges that the detailed identification of Purchased Assets,
Assumed Liabilities and Retained Liabilities is substantially, but not entirely,
complete. Promptly following the execution of this Agreement, the parties will
establish a committee consisting of one representative of TPG, one senior
officer of the Business and one senior officer of Motorola's Semiconductor
Products Sector (the "ASSET DESIGNATION COMMITTEE"). The Asset Designation
Committee shall, prior to the Closing, work in good faith to finalize the
detailed list of Purchased Assets, Assumed Liabilities and Retained Liabilities
to be delivered, assumed and retained at the
49
Closing; PROVIDED, HOWEVER, that the modifications made to the Purchased Assets,
Assumed Liabilities and Retained Liabilities shall not materially frustrate the
economic purpose of any party in engaging in the transactions contemplated
hereby. The modifications effected pursuant to this SECTION 7.9 shall be made
without invoking the provisions of Section 4.3 of the Reorganization Agreement
or ARTICLE XI hereof but if applicable may be used to reduce the $15.0 million
asset shortfall set forth in the Equipment Passdown Term Sheet included in the
Interim Manufacturing/Transition Agreement.
7.10 REFINANCE OR RENEGOTIATION OF JOINT VENTURE INDEBTEDNESS. The
parties acknowledge that under the terms of certain Indebtedness incurred by the
Joint Ventures pursuant to the credit facilities identified on EXHIBIT O (the
"JOINT VENTURE CREDIT FACILITIES"), Motorola has provided certain comfort
letters, letters of assurances or similar arrangements ("SUPPORT LETTERS"). The
parties further acknowledge that the consummation of the transactions
contemplated hereby may result in one or more defaults under the terms of such
Joint Venture Credit Facilities. In order to maintain the appropriate level of
financing at the Joint Ventures, TPG Holding and TPG Acquisition will use their
Reasonable Efforts to obtain sufficient financing to refinance or replace, at
Closing, the Joint Venture Credit Facilities. To facilitate the foregoing, the
parties shall work diligently from and after the date hereof to provide such
information as may be necessary to the principal lenders under the Financing to
enable due and prompt consideration of such refinancing proposal. If after 45
days from the date hereof, despite the Reasonable Efforts of TPG Holding and TPG
Acquisition and the Reasonable Efforts of all other parties hereto, the
principal lenders under the Financing have decided not to refinance or replace
the Joint Venture Credit Facilities at Closing, the parties hereto shall seek to
negotiate with the principal lenders under the Joint Venture Credit Facilities
to enable such facilities to be
50
maintained after Closing without Support Letters issued by Motorola and to
enable the waiver or forbearance of any defaults as a result of the transactions
contemplated hereby. Such negotiations shall include an offer by the Company to
provide Support Letters (on terms permitted under the Financing) in replacement
of the Support Letters issued by Motorola. The costs of any consent fee or
increased borrowing fees (including the present value of any additional interest
expense) shall be shared jointly by the Company and Motorola; PROVIDED, that
neither party shall be required to contribute an amount in excess of $2.0
million in the aggregate towards such costs.
7.11 LESHAN JV. The parties will undertake to transfer the
interests in the Leshan JV from Motorola to SCG Holding as set forth in the Term
Sheet attached hereto as EXHIBIT P.
7.12 COMPANY/SCI GROUND LEASE. The parties hereto acknowledge that
Motorola and the Company entered into the Existing Ground Lease in connection
with the Reorganization. In connection with the Company/SCI Asset Transfer, it
is contemplated that at TPG Holding's option, (i) the Company's leasehold
interest in the Existing Ground Lease shall be assigned from the Company to SCI
or LLC or (ii) to the extent necessary to resolve the Existing Ground Lease Open
Issues, the Existing Ground Lease shall be terminated and the Company/SCI Ground
Lease shall be entered into as of the Closing Date in order to resolve the
Existing Ground Lease Open Issues, which is the subject of the Existing Ground
Lease. In order to facilitate the possible election of option (ii) in the
previous sentence, Motorola and TPG Holding hereby agree to negotiate in good
faith after the date hereof in order to finalize the terms of the Company/SCI
Ground Lease prior to the Closing Date. In addition to options (i) and (ii) in
the second preceding sentence, the parties hereto agree that at TPG Holding's
option and to
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the extent it is reasonably feasible (taking into consideration Motorola's
desire to avoid negative publicity), the Company's leasehold interest in the
Existing Ground Lease shall be assigned from the Company to SCI LLC and SCI LLC
shall exercise an option to purchase the Premises (as defined in the Existing
Ground Lease) or to purchase the Subsurface Rights. In the event that TPG
Holding elects to pursue such purchase options, both parties agree to cooperate
in good faith in determining if such purchase options would be feasible. In the
event that such purchase options are feasible and TPG Holding elects such
option, (x) Motorola and SCI LLC shall execute a reciprocal declaration of
covenants and easements containing provisons substantially equivalent to the
provisions contained in the Existing Ground Lease and (y) the fees and costs of
exercising such purchase options shall be divided equally between the parties;
provided, however, if such fees and costs are unreasonably high, the parties
agree to cooperate in good faith in renegotiating the allocation of such costs.
7.13 COMPANY NOTES. (a) Motorola shall incorporate such terms into
the Company Notes as TPG Holding shall reasonably request, including terms
relating to assignability, interest rates, payment schedules, currency and
denominations.
(b) With regard to any contributions made by the Company or
SCI LLC, directly or indirectly, to the SCG Post-Closing Entities for the
purpose of repaying and/or repurchasing the Company Notes in accordance with the
terms of SECTION 3.6(f), Motorola shall cause the Company, SCI LLC and the SCG
Post-Closing Entities to contribute and/or loan such amounts to the SCG
Post-Closing Entities according to the manner chosen by TPG Holding.
(c) TPG Holding shall have the right to determine whether each
Company Note shall be prepaid in whole or in part and, in the event any Company
Note is not
52
paid in full, to designate the SCG Post-Closing Entity to which such Company
Notes shall be assigned.
(d) Notwithstanding anything herein to the contrary, each
Company Note shall be repaid an/or repurchased in full from the holders thereof
at the Closing such that, immediately after giving effect to the Closing, the
Company Notes Amount shall in the aggregate have been paid in full to Motorola
and its Subsidiaries (other than the Company and its Subsidiaries).
ARTICLE VIII
WARRANTIES AND REPRESENTATIONS OF MOTOROLA
Except as provided in the Disclosure Letter, Motorola warrants and
represents to and covenants with TPG Acquisition and TPG Holding, and their
respective successors and assigns, as follows:
8.1 DUE INCORPORATION. Motorola is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby. Each SCG Party is, or prior to the Closing will be, a
corporation (or other legal entity) duly organized and validly existing under
the laws of its jurisdiction of incorporation or organization identified in the
Disclosure Letter. Each SCG Party has, or prior to the Closing will have, the
power, and holds, or prior to the Closing, will hold, all rights, privileges,
franchises, immunities, licenses, permits, authorizations and approvals
(governmental or otherwise) necessary, to own and operate its properties and to
carry on and conduct its business as contemplated by the Reorganization
Agreement or hereby, except, in each case, where the failure to hold such
rights, privileges,
53
franchises, immunities, licenses, permits, authorizations and approvals
(governmental or otherwise) would not reasonably be expected to have a
Material Adverse Effect or a material adverse effect on the Business in any
Principal Location.
8.2 QUALIFICATION. Each SCG Party is, or prior to the Closing will
be, duly qualified to do business and is, or prior to the Closing will be, in
good standing (or the equivalent thereof) in each jurisdiction where the
character of the properties owned or leased or the nature of the activities
conducted by such corporation (or other legal entity) make such qualification
necessary, except where the failure to be so qualified or in good standing will
not have a material adverse effect on such SCG Party. The Disclosure Letter
sets forth a schedule of all jurisdictions where each SCG Party is, or prior to
the Closing will be, qualified to do business (or the equivalent thereof).
8.3 INVESTMENTS. Except for equity interests in another SCG Party
or the Joint Ventures and as described in the Disclosure Letter, no SCG Party
owns, and on the Closing Date no SCG Party will own, any securities or any other
direct or indirect interest in any Person (including any joint venture or
partnership).
8.4 CAPITALIZATION.
(a) The total number of shares of capital stock and the par
value thereof which the Company is authorized to issue and the number of such
shares which are issued and outstanding as of the date hereof, are, and at all
times prior to the Closing will be, as follows:
--------------------------------------------------------------------------------
Class Authorized Shares Issued and Outstanding Shares
--------------------------------------------------------------------------------
Common Stock, without 1,000 100
par value per share
--------------------------------------------------------------------------------
54
All of such shares are, and at all times prior to the Closing will be, owned by
Motorola free and clear of all Liens. As of the date hereof, no shares of
Company Stock were held in treasury. At the date hereof, there are, and at all
times prior to the Closing, there will be, no outstanding options, conversion
rights, warrants or other rights in existence to acquire or to require the
Company to issue, purchase or acquire any shares of the capital stock or other
securities of the Company.
(b) The Disclosure Letter sets forth a true and accurate
schedule of the total number of shares of capital stock or other equity
interests and the par value thereof (where applicable) which each SCG Party is,
or as of the Closing will be, authorized to issue and the number of such shares
which are, or as of the Closing will be, issued and outstanding (and held in
treasury as of the date hereof) and the owner thereof. Except as disclosed in
the Disclosure Letter, there are, and at all times prior to the Closing will be,
no outstanding options, conversion rights, warrants or other rights in existence
to acquire, or to require any SCG Party to issue, purchase or acquire any shares
of capital stock or other securities of any SCG Party.
(c) The issued and outstanding shares of capital stock of each
SCG Party have been, and at all times prior to the Closing will be, duly and
validly issued and are, and at all times prior to the Closing will be, fully
paid and nonassessable (as applicable in jurisdictions located outside of the
United States). At the Closing, all of the issued and outstanding shares of
capital stock or other equity interest of each SCG Post-Closing Entity will be
owned by the Company or one of its Subsidiaries free and clear of all Liens.
Except as set forth in the Disclosure Letter, there are, and at all times prior
to the Closing there will be, no voting trust agreements or other contracts,
agreements or arrangements restricting voting or dividend rights or
transferability with respect to the outstanding shares of capital stock of any
55
SCG Party. The provisions of this SECTION 8.4(c) shall be deemed to apply to
any SCG Party or SCG Post-Closing Entity only upon incorporation or organization
of such entity (to the extent such entity is incorporated or organized after the
date hereof).
(d) The Disclosure Letter sets forth a description of the
nature and amount of all interests, debt, equity or otherwise, held by Motorola
and its Affiliates in each Joint Venture, all of which are to be transferred to
the Company prior to the Closing pursuant to the Reorganization Agreement. All
of such interests are held by Motorola and its Affiliates and prior to the
Closing will be transferred to the Company, free and clear of all Liens. Except
as set forth in the Disclosure Letter, there are, and at all times prior to the
Closing will be, no outstanding options, conversion rights, warrants or other
rights in existence to acquire or to require any SCG Party or, to Motorola's
Knowledge, Joint Venture to issue, purchase or acquire, any interest in a Joint
Venture.
(e) To Motorola's Knowledge: (i) no more than $60.0 million
of Indebtedness of the SMP Joint Venture is outstanding as of the date hereof,
(ii) no more than $27.0 million of Indebtedness of the Leshan JV is outstanding
as of the date hereof, (iii) no more than $3.0 million of Indebtedness of SEI is
outstanding as of the date hereof, (iv) no more than $12.0 million of
Indebtedness of Terosil is outstanding as of the date hereof and (v) no more
than $40.0 million of Indebtedness of Tesla is outstanding as of the date
hereof. For the purposes of this clause (e), "INDEBTEDNESS" shall mean each and
every obligation identified under clauses (i) and (ii) of the definition of
Indebtedness contained herein. The amount of funds which the SCG Parties will
be obligated as of the Closing Date to contribute or lend to the Joint Ventures
(other than the Leshan JV) will not exceed, in the aggregate, $20 million.
56
8.5 DUE AUTHORIZATION.
(a) Motorola, each Motorola Transferor and each SCG Party has
all corporate power and authority which may be required for it to enter into,
and to perform its obligations under, this Agreement, the Collateral Agreements
and the Reorganization Agreement; Motorola, each Motorola Transferor and each
SCG Party has taken all corporate actions on its part necessary or appropriate
to execute, deliver and perform this Agreement, the Reorganization Agreement and
the Collateral Agreements and to consummate the Merger and the transactions
contemplated by the Reorganization Agreement, this Agreement and the
Reorganization Agreement, and, when executed, the Collateral Agreements shall
have been duly authorized, executed and delivered by Motorola and each SCG
Party, as applicable, and each is binding upon, and enforceable against,
Motorola and each SCG Party, as applicable, in accordance with its respective
terms and conditions, except as the enforceability thereof may be subject to or
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and judicial limitations upon the
specific performance of certain types of obligations. The provisions of this
SECTION 8.5(a) shall be deemed to apply to any SCG Party only upon incorporation
or organization of such entity (to the extent such entity is incorporated or
organized after the date hereof).
(b) Each of the Motorola Transferors has all corporate power
and authority which may be required for each to perform the transactions
contemplated by the Reorganization Agreement to be performed by it. Each
document or instrument of transfer and assignment executed by a Motorola
Transferor to implement the transactions contemplated thereby will be duly
authorized and binding upon, and enforceable against such Motorola Transferor in
accordance with its terms and conditions, except as the enforceability thereof
may
57
be subject to or limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally and judicial
limitation upon specific performance of certain types of obligations.
8.6 NO CONFLICTS. Except as set forth in the Disclosure Letter,
neither the execution, delivery or performance of this Agreement, the
Reorganization Agreement, or the Collateral Agreements by each Motorola
Transferor and each SCG Party, nor the consummation of the Merger or any other
transaction contemplated hereby, by the Reorganization Agreement or by the
Collateral Agreements, does or will, after the giving of notice, or the lapse of
time, or otherwise:
(a) conflict with, result in a breach of, or constitute a
default under, the charter or By-Laws (or other constitutive instruments) of
Motorola, any SCG Party or any Motorola Transferor or any Joint Venture (which
would have a material adverse effect on such Joint Venture) or any U.S. or
non-U.S. federal, state or local law, statute, code, ordinance, rule or
regulation generally applicable to transactions of the type contemplated hereby,
by the Reorganization Agreement or by the Collateral Agreements, or any U.S. or
non-U.S. federal, state or local court or administrative order or process to
which Motorola, any SCG Party, any Joint Venture or any Motorola Transferor is a
party, or any contract, agreement, arrangement, commitment or plan to which
Motorola, any Joint Venture, any SCG Party or any Motorola Transferor is a
party, or under which Motorola, any SCG Party or any Motorola Transferor may be
obligated, or by which Motorola, any Joint Venture, any SCG Party or any
Motorola Transferor or any of their respective rights, properties or assets may
be subject or bound which conflict, breach or default, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect or a
material adverse effect on the Business in any Principal Location
58
or a material adverse effect on the SMP Joint Venture, the Leshan Joint
Venture, Tesla or Terosil;
(b) result in the creation of any mortgage, pledge, lien,
claim, charge, encumbrance or assessment upon any of the rights, properties or
assets of Motorola or the Company and which are included in the Purchased
Assets, which could reasonably be expected to have a Material Adverse Effect or
a material adverse effect on the Business in any Principal Location; or
(c) terminate, amend or modify, or give any party the right to
terminate, amend, modify, abandon or refuse to perform or comply with, any
contract, agreement, arrangement, commitment or plan to which Motorola, the
Company or any Joint Venture is a party and which is included in the Purchased
Assets, or under which Motorola, the Company or any Joint Venture may be
obligated and which is included in the Purchased Assets, or by which Motorola,
the Company or any Joint Venture or any of the rights, properties or assets of
Motorola, the Company or any Joint Venture may be subject or bound and which is
included in the Purchased Assets in each case, as could reasonably be expected
to have a Material Adverse Effect or a material adverse effect on the Business
in any Principal Location or a material adverse effect on the SMP Joint Venture,
Leshan JV, Tesla or Terosil.
8.7 GOOD TITLE AND LEASE.
(a) On the Closing Date, each SCG Party shall have good and
marketable title to the Purchased Assets (which title is fee simple in the case
of all owned Real Property located in the United States) and all other assets,
properties or rights owned or held by any SCG Party, subject to no Liens except
for Permitted Liens. Motorola has made available to
59
TPG Acquisition a true, correct and complete copy of each title insurance
policy, survey and appraisal relating to the Real Property which is in its
possession or reasonably available to it.
(b) To Motorola's Knowledge, all leases pursuant to which the
Business leases from others material amounts of real or personal property
relating to the Business, are in good standing, valid and effective in
accordance with their respective terms, and there is not, to Motorola's
Knowledge, under any such leases, any existing material default or event of
default (or event which with notice or lapse of time, or both, would constitute
a material default), except where the lack of such good standing, validity and
effectiveness or the existence of such default or event of default would not
have a material adverse effect on a Significant Property. Motorola has made
available to TPG Acquisition true, correct and complete copies of all such
leases and subleases, including any amendments or modifications thereunder.
8.8 COMPLIANCE; PERMITS.
(a) Except as disclosed in the Disclosure Letter, the Business
is in compliance with, and has not been conducted in conflict with, or in
default or violation of, any law, rule, regulation, permit, license, approval,
order, judgment or decree applicable to the Business or by which any of the
Business' properties (including Purchased Assets) is bound or affected, except
for any such conflicts, defaults or violations which would not reasonably be
expected to have a Material Adverse Effect.
(b) Except as disclosed in the Disclosure Letter, each SCG
Party will as of the Closing Date hold all permits, licenses and approvals from
Governmental Authorities which are material to the operation of the Business by
such SCG Party as it is now being conducted (collectively, the "COMPANY
PERMITS"); PROVIDED, no representations or warranties are
60
made in this SECTION 8.8 with respect to any tax incentives, privileges or
rights beyond those which are required to operate the Business.
8.9 FINANCIAL STATEMENTS. Except as set forth in the Disclosure
Letter, the Financial Statements were prepared in all material respects in
accordance with the books and records of the Business and in accordance with
GAAP and fairly present in all material respects the combined assets,
liabilities and business equity of the Business as at the dates thereof and the
related combined revenues less direct and allocated expenses before taxes for
each of the periods indicated therein, in each case on the basis described in
Note 1 to the Financial Statements, subject, in the case of unaudited financial
statements, to normal year-end adjustments and the omission of footnotes.
8.10 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
the Disclosure Letter, since the Balance Sheet Date, the Business has been
conducted in the ordinary course and there has not occurred: (i) any Material
Adverse Effect; (ii) any damage to, destruction or loss of any material asset of
the Business (whether or not covered by insurance) (including Purchased Assets);
(iii) any material change by the Company in its accounting methods, principles
or practices; (iv) any material revaluation by the Company of any of the assets
of the Business including, without limitation, writing down the value of
inventory or writing off notes or accounts receivable other than in the ordinary
course of business; (v) any sale of a material amount of property of the
Business, except in the ordinary course of business; (vi) any cancellation,
expiration, non-renewal or waiver of any right under any contract, lease,
agreement (which contract, lease or agreement would have constituted a Material
Contract), or material license, material permit or material approval, except in
the ordinary course of business;
61
or (vii) any other action or event that would have required the consent of TPG
Acquisition pursuant to SECTION 7.1 had such action or event occurred after the
date of this Agreement.
8.11 NO UNDISCLOSED LIABILITIES. Except as set forth in the
Disclosure Letter, as of the Closing Date, no SCG Party will have any
liabilities (absolute, accrued, contingent or otherwise) except for the (a)
liabilities reflected on the Balance Sheet, (b) liabilities which, if not
reflected on the Balance Sheet, would not have been required to be reflected on
the Balance Sheet in accordance with GAAP, (c) liabilities incurred since the
Balance Sheet Date in the ordinary course of business, (d) liabilities incurred
in connection with this Agreement or the Reorganization Agreement or (e)
obligations arising from the Motorola Bonds. As of the Closing Date, no SCG
Party will have any Indebtedness other than (i) Indebtedness set forth in the
Disclosure Letter and (ii) Indebtedness of the type described in clause (vii) of
the definition thereof in an aggregate amount not exceeding $7.5 million.
8.12 ABSENCE OF LITIGATION. Except as set forth in the Disclosure
Letter, there are no claims, actions, suits, proceedings, or investigations
pending or, to Motorola's Knowledge, overtly proposed or threatened against the
Business, the Company or any of the SCG Post-Closing Entities or any properties
or rights of the Business, the Company or any of the SCG Post-Closing Entities
before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or non-U.S., (i) which if adversely determined would
(x) hinder or impair in any material respect the ability of any Motorola
Transferor or any SCG Party to perform its obligations under this Agreement, the
Reorganization Agreement or the Collateral Agreements or (y) result in a
Material Adverse Effect or (ii) that seek to enjoin or obtain material damages
in respect of the consummation of the transactions contemplated hereby. No
Motorola Transferor or any SCG Party is subject to any outstanding orders,
rulings, judgments or decrees
62
that would hinder the ability of any Motorola Transferor or SCG Party to perform
their obligations under this Agreement, the Collateral Agreements or the
Reorganization Agreement.
8.13 RESTRICTIONS ON BUSINESS ACTIVITIES. Except for this Agreement
or as set forth in the Disclosure Letter or the Collateral Agreements, to
Motorola's Knowledge, there is no agreement, judgment, injunction, order or
decree binding upon any Motorola Transferor or SCG Party which has or would
reasonably be expected to have the effect of prohibiting or impairing any
material business practice of the Business, acquisition of any material property
by any Motorola Transferor or SCG Party with respect to the Business or the
conduct of any Motorola Transferor or SCG Party with respect to any material
aspect of the Business as currently conducted or as proposed to be conducted.
8.14 REAL PROPERTY. The Disclosure Letter lists all of the real
property owned, leased, used or occupied in the Business and which is to be
owned by or leased to SCG Parties, other than property to be made available
under the Motorola Facilities Lease or the SCG Master Lease (the "REAL
PROPERTY"). With respect to each Significant Property, except as disclosed in
the Disclosure Letter: (a) there are no pending, or to Motorola's Knowledge,
threatened or contemplated condemnation proceedings, lawsuits or administrative
actions relating thereto; (b) there are no leases, subleases, licenses,
occupancy agreements, concessions or other agreements, written or oral, granting
to any Person the right to use or occupy any portion thereof; (c) to Motorola's
Knowledge, no work has been performed on, or material supplied to, any
Significant Property within any applicable statutory period which could give
rise to any mechanics' or materialmen's liens, other than work or materials that
shall be paid for prior to the Closing Date or for which payment shall be
accrued and reflected in the Closing Balance Sheet; (d) with respect to owned
parcels of Significant Property, there are no outstanding accepted offers to
buy,
63
offers to sell, or options or rights of first refusal to purchase or sell or
otherwise use, occupy or enjoy any portion thereof or interest therein; (e) to
Motorola's Knowledge, there are no Persons, other than the SCG Parties, in
possession of the parcel, other than tenants under leases or subleases disclosed
in the Disclosure Letter, who are in possession of space to which they are
entitled under such lease or sublease; (f) there are no pending or to Motorola's
Knowledge, threatened or contemplated applications or proceedings to alter or
restrict the zoning or other use restrictions applicable to any owned
Significant Property; (g) to Motorola's Knowledge, none of the Significant
Property has suffered any material damage by fire or other casualty and not
heretofore been completely restored to its original condition; and (h) none of
the leases or subleases relating to any of the leased Significant Property
contains any operating covenants or restrictions which might or would have a
material adverse effect on the related Significant Property and/or the conduct
of the Business at such Significant Property, except, in each case of clauses
(a) through (h) above, as would not reasonably be expected to result in a
Material Adverse Effect or a material adverse effect on a Significant Property.
Motorola has not received any notice that improvements on and the present uses
of the owned Significant Property are in violation of applicable zoning
restrictions. Except as disclosed in the Disclosure Letter, the Business has
not received notice of and, to Motorola's Knowledge, there is no plan, study or
effort by any governmental or regulatory authority which would prevent the
continued use of the owned Significant Property in the manner it was used prior
to the Closing Date in the Business. The provisions of this SECTION 8.14 shall
not apply to any real property owned, leased, used or occupied by any Joint
Venture. Except as set forth in the Disclosure Letter, there is no material
default with respect to the obligations of any Existing SCG Entity under any
lease with respect to a Significant Property.
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8.15 TANGIBLE ASSETS. Except as set forth in the Disclosure Letter,
to Motorola's Knowledge, the tangible assets presently and actively used in the
operation of the Business are in good operating condition, free of any defects
(except those resulting from normal wear and operation) which individually or in
the aggregate, reasonably could be expected to have a Material Adverse Effect or
a material adverse effect on the Business in any Principal Location and for
which there are no replacement assets complying with the foregoing
representations which shall be included as Purchased Assets.
8.16 TAXES.
(a) Except as disclosed in the Disclosure Letter (with
paragraph references corresponding to those set forth below):
(i) the Company, SCI LLC and the Foreign Entities have
timely filed all material Tax Returns concerning Taxes required to be filed by
applicable law (or such Tax Returns have been filed on behalf of the Company,
SCI LLC and the Foreign Entities), and all such Tax Returns are true, correct
and complete in all material respects;
(ii) all amounts due in respect of material Taxes
payable by the Company, SCI LLC and the Foreign Entities have been paid (whether
or not actually shown on such Tax Returns);
(iii) as of the date hereof, neither the Company, SCI
LLC nor any of the Foreign Entities has executed (or had executed on its behalf)
any outstanding waivers or comparable consents regarding the application of the
statute of limitations with respect to any material Taxes or Tax Returns;
(iv) no claim has ever been made in writing addressed
to Motorola, the Company, SCI LLC or any Foreign Entity by any authority in a
jurisdiction where
65
neither the Company, SCI LLC nor any of the Foreign Entities files Tax Returns
that the Company, SCI LLC or any Foreign Entity is or may be subject to taxation
by that jurisdiction;
(v) as of the date hereof, there are no Liens with
respect to any material Taxes upon any of the assets and properties of the
Company, SCI LLC or the Foreign Entities;
(vi) the Company, SCI LLC and the Foreign Entities have
paid in full or set up reserves in accordance with GAAP in respect of all Taxes
for the periods covered by such Tax Returns, as well as all other Taxes,
penalties, interest, fines, deficiencies, assessments and governmental charges
that have become due or payable (including, without limitation, all Taxes that
the Company, SCI LLC and the Foreign Entities are obligated to withhold from
amounts paid or payable to or benefits conferred upon employees, creditors and
third parties). As of the date hereof, there is no proposed liability for any
material Tax to be imposed upon the Company, SCI LLC or any of the Foreign
Entities for the tax periods (or portions thereof) ending on or prior to the
Closing Date for which there is not an adequate reserve (regardless of whether
the liability for such Taxes is disputed); and
(vii) the transactions contemplated by this Agreement
will not result in the payment or series of payments by the Company, SCI LLC or
any of the Foreign Entities to any person of an "excess parachute payment"
within the meaning of section 280G of the Internal Revenue Code of 1986, as
amended (the "CODE"), or any other compensation payment which is not deductible
for federal income tax purposes under the Code.
(b) Except for the complete and accurate copies of the tax
sharing agreements made available to Buyer prior to the execution of this
Agreement, no contracts or
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agreements relating to the apportionment, allocation or sharing of Taxes exist
among Motorola or Affiliates of Motorola and the Company, SCI LLC or any of the
Foreign Entities.
(c) Set forth on the Disclosure Letter is a complete list of
income and other material Tax Returns filed by the Company, SCI LLC or any of
the Foreign Entities, or in which the Company, SCI LLC or any of the Foreign
Entities were included, or otherwise relating to the Business, pursuant to the
laws or regulations of any federal, state, local or foreign Tax authority, that
have been examined or audited by the IRS or other appropriate authority during
the preceding three years, and a list of all adjustments relating to the income,
assets, or operations of such Foreign Entities or the Business resulting from
each such examination or audit. Except as set forth on the Disclosure Letter,
no such examination or audit is in progress. Except as set forth on the
Disclosure Letter, all deficiencies relating to the income, assets, or
operations of such Foreign Entities or the Business, proposed as a result of
such examinations or audits have been paid or finally settled and no issue has
been raised in any such examination or audit that, by application of similar
principles, reasonably can be expected to result in the assertion of a
deficiency for any other tax period (or portion thereof) ending on or prior to
the Closing Date not so examined or audited and for which the statute of
limitations (taking into account extensions) has not expired. There are no
grounds for any liability for the Taxes of a person other than the Company, SCI
LLC or the Foreign Entities under Treasury Regulations section 1.1502-6 (or any
similar provision of foreign, state, or local Tax law), as transferee or
successor, by contract, or otherwise.
(d) The Company, SCI LLC and the Foreign Entities have not
executed (or had executed on their behalf) any closing agreement pursuant to
section 7121 of the Code or any predecessor provision thereof, or any similar
provision of state, local or foreign law.
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(e) No Tax is required to be withheld pursuant to section 1445
of the Code as a result of any transfers or deemed transfers contemplated by
this Agreement.
(f) None of the Company or the Foreign Entities has filed a
consent pursuant to section 341(f) of the Code or agreed to have section
341(f)(2) of the Code apply to any disposition of a subsection f asset (as such
term is defined in section 341(f)(4) of the Code) owned by the Company or the
Foreign Entities.
(g) None of the assets owned by the Company, SCI LLC or the
Foreign Entities is property that is required to be treated as owned by any
other person pursuant to section 168(f)(8) of the Internal Revenue Code of 1954,
as amended, as in effect immediately prior to the enactment of the Tax Reform
Act of 1986 or is "tax-exempt use property" within the meaning of section 168(h)
of the Code.
(h) Neither the Company, SCI LLC nor any of the Foreign
Entities has agreed or is required to make any adjustments pursuant to section
481(a) of the Code or any similar provision of state, local, or foreign law by
reason of a change in accounting method initiated by it or any other relevant
party and neither the Company, SCI LLC nor any of the Foreign Entities has
received any notice in writing from the IRS or other relevant authority
proposing any such adjustment or change in accounting method, nor does the
Company, SCI LLC or any Foreign Entity have any application pending with any
governmental or regulatory authority requesting permission for any changes in
accounting methods that relate to the Business or assets of the Company, SCI LLC
or any of the Foreign Entities.
(i) Motorola has not filed an election under Rev. Proc. 91-11,
1991-1 C.B. 470, as modified by Rev. Proc. 91-39, 1991-2 C.B. 694, or Rev. Proc.
95-39, 1995-2 C.B. 399.
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(j) The Company has maintained the books and records required
to be maintained pursuant to section 6001 of the Code and the rules and
regulations thereunder, and comparable laws, rules and regulations of the
countries, states, counties, provinces, localities and other political divisions
wherein it is required to file material Tax Returns and other reports relating
to Taxes.
(k) Except as set forth in the Disclosure Letter, prior to the
Closing Date the Company, SCI LLC and the Foreign Entities have taken no action,
or omitted or failed to take any action, that might jeopardize the availability,
scope or duration of any income tax holiday under the laws of the Philippines
for which Motorola Philippines, Inc. ("MPI") would otherwise be eligible with
respect to MPI's Carmona, Philippines facility, and MPI is currently eligible,
pursuant to the Philippines Omnibus Investments Code of 1987, for an exemption
from income tax in the Philippines with regard to all income earned by its
Carmona, Philippines facility prior to the first day of August, 2001.
(l) The Disclosure Letter lists each Foreign Entity for which
an election has been made pursuant to section 7701 of the Code and regulations
thereunder to be treated as other than its default classification for U.S.
federal income tax purposes. Except as set forth on the Disclosure Letter, each
Foreign Entity will be classified for U.S. federal income tax purposes according
to its default classification.
8.17 ENVIRONMENTAL MATTERS. Except as set forth in the Disclosure
Letter, and except in all cases as, alone or in the aggregate, has not had and
would not have a Material Adverse Effect, and in all cases as of the Closing
Date: (i) the Business has obtained all applicable approvals and Company
Permits which are required to be obtained under applicable Environmental Laws
and such approvals and Company Permits are in full force and effect, and
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timely request for renewal has been made, if applicable; (ii) the Business is in
compliance with all terms and conditions of such required approvals and Company
Permits; (iii) the Business and the facilities and operations of the Business
are not in violation of any applicable Environmental Laws; (iv) the Business has
not received any written Governmental Authority communication or third-party
notice of any violations of Environmental Laws; (v) the Business has not
received any administrative, regulatory or judicial action, suit or demand
letter by any Governmental Authority or other Person alleging noncompliance or
violation of any Environmental Laws by the Business, or, to the extent such
allegations relate to the Business or the Real Property, by any prior owner of
the Real Property; and (vi) the Business has not received any administrative,
regulatory or judicial action, suit or demand letter by any Person alleging or
asserting any Environmental Liability. This SECTION 8.17 sets forth the sole
and exclusive representations and warranties of Motorola and the Business with
respect to environmental matters, including without limitation any matters
arising under Environmental Laws.
8.18 YEAR 2000. The Disclosure Letter sets forth a true and correct
description of Motorola's Year 2000 plan ("YEAR 2000 PLAN"). The statements
made in such description of the Year 2000 Plan are true, correct and complete in
all material respects. Motorola, as of the date hereof, has, or has caused to
be, 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. To Motorola's Knowledge, there is no
event, occurrence, condition or reason that would prevent, or interfere with,
the implementation of the Year 2000 Plan substantially in accordance with the
guidelines and deadlines set forth in such plan.
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8.19 PRODUCT LIABILITY AND RECALLS. (a)Except as disclosed in the
Disclosure Letter, there is, and for the past 12 months there have been, no
pending or, to Motorola's Knowledge, threatened claim, action, suit, proceeding,
arbitration or investigation against any Transferor or SCG Party with respect to
the Business for injury to person or property of employees or any third parties
suffered as a result of the sale of any product or performance of any service by
the Business, including claims arising out of the alleged defective or unsafe
nature of its products or services, which would have a Material Adverse Effect.
(b) Except as disclosed in the Disclosure Letter,
there is no pending or, to Motorola's Knowledge, overtly threatened recall or
investigation of any product sold by the Business which recall or investigation
would have a Material Adverse Effect.
8.20 RELATED PARTY TRANSACTIONS. Except as disclosed in the Disclosure
Letter and except as provided in the Collateral Agreements, none of Motorola,
SCG senior management (including the senior SCG management official in each
Principal Location), or any of Motorola's Affiliates (which are not natural
persons): (i) owns, directly or indirectly, on an individual or joint basis, any
material interest in, or serves as an officer or director of, any customer,
competitor or supplier of the Business or any organization which has a Material
Contract (in each case as to any material interest or Material Contract of the
Business which will survive the Closing Date); or (ii) has any Material Contract
with any SCG Party which is not on arms-length terms, other than as disclosed in
the Disclosure Letter (in each case as to any Material Contract which will
survive the Closing Date). The Disclosure Letter will disclose any Indebtedness
between Motorola or any of its Affiliates on the one hand and any SCG Party on
the other hand which would constitute an Assumed Liability at the date hereof or
at the Closing Date, after giving effect to the consummation of the transactions
contemplated hereunder.
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8.21 NECESSARY ASSETS AND RIGHTS. Upon the consummation of the
transactions contemplated by this Agreement, the Collateral Agreements and the
Reorganization Agreement, except as set forth in the Disclosure Letter, the
assets, properties and rights of each SCG Party as of the Closing Date
(including rights under the Collateral Agreements) will include all of the
material assets, properties and rights of every type and description, real,
personal and mixed, tangible and intangible, used in and necessary for the
conduct of the Business as presently conducted and will enable the SCG Parties
to manufacture, sell and distribute Products in a manner consistent with the
present conduct of the Business; PROVIDED, that no representation is made (i) as
to the adequacy of the level of working capital of the Business or (ii) with
respect to intellectual property matters (all intellectual property matters are
governed by the IP Agreement); and PROVIDED, FURTHER, that the representations
and warranties in this SECTION 8.21 shall not apply to the business, assets,
properties or rights of any Joint Ventures.
8.22 CONTRACTS, AGREEMENTS AND INSTRUMENTS GENERALLY. The Disclosure
Letter sets forth all contracts, agreements, commitments, arrangements,
indentures, loans, mortgages, notes, leases, and other instruments of any kind
or character (whether oral or written) to which any Motorola Transferor or SCG
Party is a party relating to the Business and which constitute part of the
Assumed Liabilities (collectively, the "CONTRACTS") that involve a receipt or an
expenditure or require the performance of services or delivery of goods to, by,
through, on behalf of or for the benefit of the Business, in each case where the
amount delivered or received, or the outstanding obligation was in excess of
$5.0 million in 1998. The Disclosure Letter also identifies (whether oral or
written) the following additional Contracts:
(a) Contracts in effect with the top 50 customers of
the Business for 1998 by revenue, including, without limitation, all management
agreements, consulting services
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agreements, purchase commitments or service agreements (hereinafter referred to
as the "CUSTOMER CONTRACTS");
(b) leases, rental agreements or other contracts or
commitments affecting the ownership or leasing of, title to or use of any
interest in real or personal property included in the Purchased Assets with
payments equal to or greater than $100,000 per month and all maintenance or
service agreements relating to any real or personal property with payments equal
to or greater than $100,000 per month;
(c) material employment or consulting Contracts or
arrangements regarding employees or independent contractors (including, without
limitation, any standard form contracts such as employee nondisclosure
agreements) or other Contracts providing for any continuing payment or benefit
of any type or nature, including, without limitation, any severance,
termination, parachute, or other payments (whether due to a change in control,
termination or otherwise) and bonuses and vested commissions for any senior
management employees of the Business;
(d) Contracts restricting any Motorola Transferor or
SCG Party from carrying on the Business anywhere in the world;
(e) Contracts evidencing or related to indebtedness
for money borrowed or to be borrowed, whether directly or indirectly, by way of
purchase-money obligation, guaranty, subordination, conditional sale,
lease-purchase or otherwise providing for payments in excess of $100,000 per
month and constituting part of the Assumed Liabilities;
(f) joint product development Contracts with any party
other than Motorola and its Affiliates, other than Customer Contracts; and
(g) joint venture, partnership or similar Contracts.
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The contracts, agreements, commitments and other instruments required
to be listed in the Disclosure Letter by this SECTION 8.22 are herein referred
to as the "MATERIAL CONTRACTS." The revenue to which the Customer Contracts
relates represents at least 80.0% of the total revenue of the Business for the
year ended December 31, 1998.
All the Material Contracts are valid and binding upon the respective
Existing SCG Entities and, to Motorola's Knowledge, the other parties thereto
and are in full force and effect and enforceable in accordance with their terms,
except as enforceability may be affected by bankruptcy, insolvency, moratorium
or similar laws affecting creditors' rights generally and general principles of
equity relating to the availability of equitable remedies. None of the Motorola
Transferors or any SCG Party nor, to Motorola's Knowledge, any other party to
any Material Contract has breached or provided any written notice of an intent
to breach, in any material respect, any provision of, or is in default in any
material respect under, the terms thereof.
8.23 REORGANIZATION AGREEMENT. Each of the representations and
warranties of the Transferors contained in the Reorganization Agreement is true
and correct in all material respects.
8.24 ORDERS, COMMITMENTS AND RETURNS. As of April 3, 1999, the 13-week
financial backlog for the sale of Products entered into by the Motorola
Transferors or the Company in connection with the Business is approximately
$337.0 million, all of which Products were sold in the ordinary course of
business.
8.25 ACCOUNTS RECEIVABLE; INVENTORY. (a) Subject to any allowances set
forth in the balance sheets of SEI, MPI and MSSB previously delivered to TPG
Acquisition, the accounts receivable shown in such balance sheets arose in the
ordinary course of business; were not, as of
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the date of such balance sheets, subject to any material discount, contingency,
claim of offset or recoupment or counterclaim; and represented, as of the date
of such balance sheets, bona fide claims against debtors for sales, leases,
licenses and other charges.
(b) As of the Balance Sheet Date, the net inventories
shown on the Balance Sheet consisted in all material respects of items of a
quantity and quality usable or salable in the ordinary course of business. All
such inventories are valued on the Balance Sheet in accordance with GAAP and the
historical inventory valuation policies of the Business of the lower of cost or
market, and allowances have been established on the Balance Sheet Date, for
slow-moving, obsolete or unusable inventories.
8.26 MAJOR SUPPLIERS. Except as described in the Disclosure Letter,
none of the 25 largest suppliers of the Business in terms of purchases with
respect to each of the years ended December 31, 1997 and December 31, 1998 has
ceased doing business with the Existing Motorola Non-U.S. Entities and/or the
Company or materially and adversely changed its relationship with the Existing
Motorola Non-U.S. Entities and/or the Company and, to Motorola's Knowledge, none
of such suppliers intended to cease doing business with the Existing Motorola
Non-U.S. Entities and/or the Company or to materially and adversely change its
relationship with the Existing Motorola Non-U.S. Entities and/or the Company.
8.27 ABSENCE OF CERTAIN PRACTICES . None of the Existing Motorola
Non-U.S. Entities, the Company or any director, officer, agent, employee or
other person acting on their behalf has used any corporate or other funds for
unlawful contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activity to, or on behalf of, governmental
officials or others or accepted or received any unlawful contributions,
payments,
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gifts or expenditures, except for any such activity in each case as
would not reasonably be expected to result in a Material Adverse Effect.
8.28 DISCLAIMERS OF MOTOROLA. NOTWITHSTANDING ANYTHING CONTAINED IN
THIS ARTICLE VIII OR ANY OTHER PROVISION OF THIS AGREEMENT, TPG ACQUISITION AND
MOTOROLA ACKNOWLEDGE AND AGREE THAT NONE OF MOTOROLA OR ANY OF ITS AFFILIATES,
AGENTS, EMPLOYEES OR REPRESENTATIVES IS MAKING, WHETHER CONTAINED IN OR REFERRED
TO IN THE EVALUATION MATERIALS THAT HAVE BEEN OR SHALL HEREAFTER BE PROVIDED TO
TPG ACQUISITION OR ANY OF ITS AFFILIATES, AGENTS OR REPRESENTATIVES (SUCH
MATERIALS COLLECTIVELY, THE "EVALUATION MATERIALS"), ANY REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED BEYOND THOSE EXPRESSLY GIVEN BY MOTOROLA
IN THIS AGREEMENT, THE REORGANIZATION AGREEMENT AND THE COLLATERAL AGREEMENTS,
INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OR REPRESENTATION AS TO THE
VALUE, CONDITION, MERCHANTABILITY OR SUITABILITY AS TO ANY OF THE PROPERTIES OR
ASSETS OF THE BUSINESS CARRIED OUT BY MOTOROLA.
ARTICLE IX
WARRANTIES AND REPRESENTATION OF TPG ACQUISITION AND TPG HOLDING
TPG Acquisition and TPG Holding, jointly and severally, warrant and
represent to and covenant with Motorola as follows:
9.1 TPG HOLDING - DULY ORGANIZED. TPG Holding is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation or
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organization, with corporate power and authority to own its properties and to
conduct its business as now conducted. TPG Holding was recently organized and
has no significant assets or liabilities other than those relating to the
Merger.
9.2 TPG ACQUISITION - DULY ORGANIZED. TPG Acquisition is a corporation
duly organized, validly existing and in good standing under the laws of its
state of incorporation, with corporate power and authority to own its properties
and to conduct its business as now conducted. TPG Acquisition was recently
organized and has no significant assets or liabilities other than those relating
to the Merger.
9.3 TPG ACQUISITION - CAPITAL STOCK. The authorized capital
stock of TPG Acquisition consists of 1,000 shares of common stock, par value
$0.01 per share, 1,000 of which shares are validly issued and outstanding, fully
paid and nonassessable and are owned by TPG Holding, free and clear of all
liens, claims, security interests and encumbrances.
9.4 REQUIRED CORPORATE ACTION. TPG Acquisition and TPG Holding have
each taken all requisite corporate action to approve this Agreement and the
Merger.
9.5 BINDING AGREEMENT. This Agreement has been duly authorized,
executed and delivered by TPG Acquisition and TPG Holding and is binding upon,
and enforceable against each of TPG Acquisition and TPG Holding in accordance
with its terms and conditions, except as the enforceability thereof may be
subject to or limited by bankruptcy, insolvency, reorganization or similar laws
affecting the rights of creditors generally and judicial limitations upon the
specific performance of certain types of obligations.
9.6 NO CONFLICTS. Neither the execution, delivery or performance of
this Agreement by TPG Acquisition and TPG Holding, nor the consummation of the
Merger or any
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other transaction contemplated hereby, does or will, after the giving of notice,
or the lapse of time, or otherwise:
(a) conflict with, result in a breach of, or
constitute a default under, the charter or By-Laws of TPG Acquisition or TPG
Holding, or any U.S. or non-U.S., federal, state or local law, statute, code,
ordinance, rule or regulation generally applicable to transactions of the type
contemplated hereby, or any U.S. or non-U.S., federal, state or local court or
administrative order or process to which TPG Acquisition or TPG Holding is a
party, or any contract, agreement, arrangement, commitment or plan to which TPG
Acquisition or TPG Holding is a party, or under which TPG Acquisition or TPG
Holding may be obligated, or by which TPG Acquisition or TPG Holding or any of
their respective rights, properties or assets may be subject or bound which
conflict, breach or default, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect;
(b) result in the creation of any mortgage, pledge,
lien, claim, charge, encumbrance or assessment upon any of the rights,
properties or assets of TPG Acquisition or TPG Holding which could reasonably be
expected to have a material adverse effect on the ability of TPG Acquisition or
TPG Holding to consummate the transactions contemplated hereby; or
(c) terminate, amend or modify, or give any party the
right to terminate, amend, modify, abandon or refuse to perform or comply with,
any contract, agreement, arrangement, commitment or plan to which TPG
Acquisition or TPG Holding is a party, or under which TPG Acquisition or TPG
Holding may be obligated, or by which TPG Acquisition or TPG Holding or any of
the rights, properties or assets of TPG Acquisition or TPG Holding may be
subject or bound, in each case as could reasonably be expected to have a
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material adverse effect on the ability of TPG Acquisition or TPG Holding to
consummate the transactions contemplated hereby.
9.7 FINANCING. The TPG Financing Commitments are binding commitments
and have not been amended or modified or withdrawn or rescinded in any respect;
and neither TPG Acquisition nor TPG Holding is aware of any fact, event or
circumstance which would have a detrimental effect on the ability to consummate
the financing contemplated by the TPG Financing Commitments. The funds committed
under the TPG Financing Commitments, together with the consideration to be paid
by TPG Acquisition pursuant to the TPG Stock Purchase, are sufficient to enable
the Company to pay the Redemption Cash Consideration, to pay all related fees
and expenses (including the TPG Stock Purchase) of TPG Acquisition or TPG
Holding in connection with the transactions contemplated hereunder and to
provide for the anticipated working capital needs of the Company following the
consummation of the transactions contemplated hereunder (the financing necessary
to provide such funds being hereinafter referred to as the "FINANCING"). The TPG
Financing Commitments are in full force and effect as of the date hereof. There
are no conditions precedent or other contingencies related to the funding of the
full amount of the Financing other than as set forth in or contemplated by the
TPG Financing Commitments. All fees required to be paid by TPG Acquisition or
TPG Holding on or prior to the date hereof in respect of the TPG Financing
Commitments have been paid.
9.8 INSPECTIONS; LIMITATION OF WARRANTIES. TPG Acquisition and TPG
Holding are informed and sophisticated participants in the transactions
contemplated by this Agreement and have undertaken such investigation, and have
been provided with and have evaluated certain documents and information in
connection with the execution, delivery and performance of this
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Agreement. TPG Acquisition and TPG Holding acknowledge that they are acquiring
the Business without any representation or warranty, express or implied, by
Motorola or any of its Affiliates except as expressly set forth herein, in the
Reorganization Agreement and in the Collateral Agreements, and TPG Acquisition
and TPG Holding acknowledge that no representation or warranty, express or
implied not expressly set forth herein, in the Reorganization Agreement or in
the Collateral Agreements shall form the basis of any claim against Motorola or
any of its advisors, or any of their respective Affiliates or representatives
with respect to the transactions contemplated hereby. With respect to any
financial projection or forecast delivered on behalf of Motorola to TPG
Acquisition or TPG Holding, TPG Acquisition and TPG Holding acknowledge that
there are uncertainties inherent in attempting to make such projections and
forecasts and that they are familiar with such uncertainties and acknowledge
that Motorola has not made any representation or warranty with respect to such
projections or forecasts.
9.9 CONSENTS. Except as set forth in the Required Consents and
Approvals, no consent, approval, or authorization of, or exemption by, or filing
with, any governmental authority is required to be obtained or made by TPG
Acquisition or TPG Holding in connection with the execution, delivery and
performance by TPG Acquisition or TPG Holding of this Agreement or the taking by
TPG Acquisition or TPG Holding of any other action contemplated hereby, except
for any of the foregoing that in the aggregate would not (i) materially hinder
or impair the consummation of the transactions contemplated hereby or thereby or
(ii) materially interfere with the ability of TPG Acquisition or TPG Holding to
conduct the Business after the Closing in substantially the same manner in which
the Business was conducted prior to the
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Closing. No statute, rule or regulation, or order of any court or administrative
agency prohibits TPG Acquisition or TPG Holding from consummating the
transactions contemplated hereby.
9.10 LITIGATION. There are no actions, suits, investigations, or
proceedings pending or, to the knowledge of TPG Acquisition or TPG Holding,
threatened (i) against TPG Acquisition, TPG Holding or any of their respective
Affiliates which if adversely determined would materially hinder or impair the
ability of TPG Acquisition or TPG Holding to perform its obligations under this
Agreement, or (ii) that seek to enjoin or obtain damages (which damages could
reasonably be expected to have a material adverse change in or effect upon the
business, financial condition or results of operations of TPG Acquisition or TPG
Holding taken as a whole) in respect of the consummation of the transactions
contemplated hereby. None of TPG Acquisition, TPG Holding or any of their
respective Affiliates is subject to any outstanding orders, rulings, judgments,
or decrees that would have a material adverse effect on the ability of TPG
Acquisition or TPG Holding to perform its obligations under this Agreement.
Article X
TAX MATTERS
10.1 TAX INDEMNIFICATION. Except as otherwise provided in this
Agreement (including SECTION 3.8), as among the parties hereto, Motorola shall
be responsible for and pay, and shall indemnify and hold each Tax Indemnitee
harmless from any and all Taxes levied or imposed on the Company, SCI LLC or any
of the Foreign Entities in respect of its income, business, property or
operations or for which the Company, SCI LLC or such Foreign Entity may
otherwise be liable (i) for any period ending prior to or on the Closing Date,
including the portion of any Straddle Period ending on the Closing Date, and
including Taxes arising out of the transactions and deemed transactions
contemplated in this Agreement, (ii) for any obligation to
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contribute to the payment of a Tax determined on a consolidated, combined, or
unitary basis with respect to a group of corporations of which Motorola or any
subsidiary of Motorola (other than the Company or a Subsidiary of the Company),
is or was the common parent, (iii) arising out of a breach of the
representations contained in Section 7.16 hereof, (iv) for any costs or expenses
of contests or controversies relating to Taxes indemnified hereunder, or (v) a
sale occurring on or prior to the Closing Date that is accounted for under the
installment method of accounting as defined in section 453(c) of the Code (or
any corresponding provision of state, local or foreign income Tax law). Any
indemnity payment required to be made by Motorola pursuant to this Section 10.1
shall be made within 30 days of written notice from the Company.
10.2 APPORTIONMENT OF TAXES.
(a) With respect to any Taxes imposed upon Company,
SCI LLC or the Foreign Entities that are payable with respect to a Straddle
Period, the portion of any such Taxes that are allocable to the portion of the
Straddle Period ending on the Closing Date shall, (1) in the case of Taxes that
are either (x) based upon or related to income, receipts or shareholders' equity
or (y) imposed in connection with any sale, transfer or assignment or any deemed
sale, transfer or assignment of property (real or personal, tangible or
intangible) be deemed equal to the amount that would be payable if the Tax year
ended on the Closing Date and (2) in the case of Taxes (other than those
described above in clause (1)) imposed on a periodic basis with respect to the
Company, SCI LLC or the Foreign Entities or otherwise measured by the level of
any item, be deemed to be the amount of such Taxes for the entire Straddle
Period (or, in the case of Taxes determined on an arrears basis, the amount of
such Taxes for the immediately preceding Tax period) multiplied by a fraction,
the numerator of which is the number of calendar days in the portion of the
Straddle Period ending on the Closing Date and the
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denominator of which is the number of calendar days in the entire Straddle
Period. For purposes of clause (1) of the preceding sentence, any exemption,
deduction, credit or other item that is calculated on an annual basis shall be
allocated to the portion of the Straddle Period ending on the Closing Date on a
pro rata basis determined by multiplying the entire amount of such item
allocated to the Straddle Period by a fraction, the numerator of which is the
number of calendar days in the portion of the Straddle Period ending on the
Closing Date and the denominator of which is the number of calendar days in the
entire Straddle Period. In the case of any Tax based upon or measured by capital
(including net worth or long-term debt) or intangibles, any amount thereof
required to be allocated under this Section 10.2(a) shall be computed by
reference to the level of such items on the Closing Date.
(b) Motorola shall be entitled to any refunds or
credits (including any interest paid or credited with respect thereto) in
respect of any liability for any Tax of Motorola or any of its Affiliates
(including, without limitation, the Company, SCI LLC and the Foreign Entities),
for any Tax periods or portion thereof ending on or before the Closing Date
(including any Taxes allocated to such period under SECTION 10.2(a) hereof) or
for which Motorola is otherwise liable under SECTION 10.1. Except as provided in
SECTION 3.8, the Company shall be entitled to any refunds or credits (including
any interest paid or credited with respect thereto) in respect of any liability
for any Tax of the Company or any of its Affiliates, for any Tax periods or
portion thereof beginning after the Closing Date (including any Taxes allocated
to such period under SECTION 10.2(a) hereof) and for which Motorola does not
have an indemnification obligation under SECTION 10.1. Each party shall cause
any amount to which the other party is entitled under this SECTION 10.2(b), but
which is received or credited to the party not so entitled or any of such
party's Affiliates, at any time after the Closing Date, to be paid to the party
so
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entitled in immediately available funds promptly after receipt (or, if the
amount of the credit or refund is applied against any other liability of the
party not so entitled, within ten days of the notice of such application).
10.3 TAX RETURNS.
(a) (i) Motorola shall be responsible for the timely
filing (taking into account any extensions received from the relevant tax
authorities) of all Tax Returns required by law to (A) be filed by the Company,
SCI LLC or any of the Foreign Entities or any of its Subsidiaries, on or prior
to the Closing Date or (B) include the Company, SCI LLC or the Foreign Entities
in a consolidated, combined or unitary Tax Return filed by Motorola or any
Affiliate (other than any Tax Indemnitee) with respect to any taxable period
ending prior to or including the Closing Date, (ii) such Tax Returns shall be
correct and complete in all material respects, and (iii) all Taxes indicated as
due and payable on such Tax Returns shall be paid or will be paid by Motorola as
and when required by law, except for such Taxes which are the responsibility of
the Company and SCI LLC pursuant to SECTION 3.8 which the Company or SCI LLC
shall pay (as and when required by law). Such Tax Returns shall be prepared and
filed on a basis consistent with those prepared for prior taxable periods unless
a different treatment of any item is required by an intervening change in law,
closing agreement or other settlement entered into with a taxing authority, or
decision of a judicial authority.
(b) The Company, SCI LLC and the Foreign Entities (or,
where relevant, the combined or consolidated group of which the Company or the
Foreign Entities are members) shall be responsible for the timely filing (taking
into account any extensions received from the relevant tax authorities) of all
Tax Returns required by law to be filed by the Company, SCI LLC or any of the
Foreign Entities, or to include the Company, SCI LLC or the Foreign
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Entities, after the Closing Date, it being understood that all Taxes
indicated as due and payable on such returns shall be the responsibility of the
Company, except for such Taxes which are the responsibility of Motorola pursuant
to this ARTICLE X and SECTION 3.8 which Motorola shall pay (as and when required
by law).
10.4 SURVIVAL. All obligations under this ARTICLE X shall
survive the Closing hereunder and continue until 30 days following the
expiration of the statute of limitations on assessment of the relevant Tax.
Notwithstanding the foregoing, any claim for indemnification shall survive such
termination date if any party, prior to such termination date, shall have
advised the other party in writing of facts that constitute or may give rise to
an alleged claim for indemnification under this ARTICLE X (such claim, a "TAX
CLAIM"), specifying in reasonable detail the basis under this Agreement for such
claim.
10.5 EXCLUSIVE REMEDY. Notwithstanding anything to the contrary in
this Agreement, all matters relating to Taxes will be governed exclusively by
this ARTICLE X following the Closing.
10.6 CONTESTS. Provided that Motorola does not dispute its obligation
to indemnify the Tax Indemnitees for the asserted liability, Motorola shall, at
its election, have the right to represent the Company's, SCI LLC's or any of the
Foreign Entities', as the case may be, interests in the portion of any Contest
(as defined below) relating to any Tax issue for which Motorola is responsible
to indemnify a Tax Indemnitee pursuant to this Agreement, employ counsel of its
choice at its expense and control the conduct of such Contest. For any such
Contest the Tax Indemnitees and Motorola agree that the following provisions of
this SECTION 10.6 will apply in handling any such claim. For purposes of this
Agreement, a "Contest" is any audit, court proceeding or other dispute with
respect to any Tax matter that affects the Company,
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SCI LLC or any of the Foreign Entities, as the case may be. Unless the Company
has previously received written notice from Motorola of the existence of such
Contest, the Company shall give written notice to Motorola of the existence of
any Contest relating to a Tax matter that is or may be Motorola's responsibility
under this ARTICLE X within ten days from the receipt by the Company of any
written notice of such Contest, but no failure to give such notice shall relieve
Motorola of any liability hereunder except to the extent, if any, that the
rights of Motorola with respect to such claim are actually prejudiced. Unless
Motorola has previously received written notice from the Company of the
existence of such Contest, Motorola shall give written notice to the Company of
the existence of any Contest within ten days from the receipt by Motorola of any
written notice of such Contest. The Company, on the one hand, and Motorola, on
the other, agree, in each case at no cost to the other party, to cooperate with
the other and the other's representatives in a prompt and timely manner in
connection with any Contest. Such cooperation shall include, but not be limited
to, making available to the other party, during normal business hours, all
books, records, returns, documents, files, other information (including, without
limitation working papers and schedules), officers or employees (without
substantial interruption of employment) or other relevant information necessary
or useful in connection with any Contest requiring any such books, records and
files. Motorola shall consult with the Company regarding any such Contest and
shall consider suggestions proposed by the Company (subject to Motorola's right
to control the Contest of such issue), inform the Company in a timely manner of
any material events concerning any such Contest, and shall allow the Company to
monitor (at its own expense) any proceedings with respect to such Contest. If
the Company is requested by Motorola to pay or, with respect to any Contest
relating to any taxable period ending after the Closing Date which also involves
any issue for which Motorola is not
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responsible to indemnify a Tax Indemnitee, the Company, in its sole discretion,
determines to pay (or have an Affiliate pay), the Tax claimed and ▇▇▇ for a
refund, Motorola shall advance to the Company, or its Affiliate, as the case may
be, on an interest-free basis, the amount of such claim (in which case Motorola
shall be entitled to any refund received with respect to such Tax). Motorola
shall have the right to settle or dispose of the portion of any Contest relating
to a Tax issue for which Motorola is responsible to indemnify a Tax Indemnitee
pursuant to this Agreement and in which it represents the Company pursuant to
this SECTION 10.6 provided, however, that no settlement or other disposition of
any claim for Tax which would adversely affect any Tax Indemnitee in any taxable
period in any manner or to any extent (including, but not limited to, the
imposition of income tax deficiencies, the reduction of asset basis and the
reduction of loss or credit carryovers) shall be agreed to without the Company's
prior written consent, which consent shall not be unreasonably withheld if
Motorola agrees to fully reimburse the Tax Indemnitee for any such adverse
effect.
10.7 CHARACTERIZATION AS PRICE ADJUSTMENT.
(a) All amounts paid pursuant to this Agreement by one
party to another party (other than interest payments) shall be treated by such
parties as an adjustment to the Purchase Price.
(b) If, contrary to the intent of the parties as
expressed in SECTION 10.7(a) hereof, any payment made pursuant to this Agreement
is treated as taxable income of the recipient, then the payor shall indemnify
and hold harmless the recipient from any liability for Taxes attributable to the
receipt of such payment. For the purposes of this SECTION 10.7(b), the
indemnified party will be considered to be liable for Tax in respect of any
payment treated as taxable income at the highest marginal tax rate then in
effect for corporations in the jurisdiction
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so characterizing the payment for the year such payment is considered to be
earned by the indemnified party.
10.8 PRIOR TAX SHARING AGREEMENTS. This Agreement terminates and
supersedes any and all other tax sharing or allocation agreements in effect on
the date hereof as between Motorola or any predecessor or Affiliate thereof on
the one hand, and the Company, SCI LLC or the Foreign Entities on the other
hand, for all taxes imposed by any federal, state, foreign or local government
or taxing authority, regardless of the period for which such taxes are imposed,
and obligations of or to the Company, SCI LLC and the Foreign Entities pursuant
to any such agreement shall be extinguished as of the Closing Date.
10.9 SECTION 338(h)(10) ELECTION. Motorola and TPG shall effect the
timely filing of a completed Form 8023 and shall take such other steps,
including those required by Form 8023 and Treasury Regulation section
1.338(h)(10)-1, as may be necessary to make an effective election for the
Company, SCG China Holdings, Inc., SCG Czech Holdings, Inc. and SMP Holdings,
Inc. pursuant to section 338(h)(10) of the Code with regard to the Merger. TPG
and Motorola shall mutually prepare Form 8594 pursuant to Temporary Treasury
Regulation Section 1.1060-1T or shall take such other action required pursuant
to the Treasury Regulations under section 338(h)(10) of the Code to report the
allocation of the Purchase Price, and shall take similar action with respect to
any similar forms required to be filed under state, local, or foreign law (such
allocation, including the determination of the aggregate deemed sales price
("ADSP") and modified aggregate deemed sales price ("MADSP") as defined in
Treasury Regulations under Code Section 338 hereinafter referred to as the
"Purchase Price Allocation"). The Purchase Price Allocation shall be mutually
agreed to by TPG and Motorola in accordance with the principles applied in
making the allocations set forth in EXHIBIT Q. Motorola and TPG agree
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that any subsequent allocation necessary as a result of an adjustment to the
consideration to be paid hereunder shall, to the extent possible, be made in a
manner consistent with such original allocation. Neither Motorola nor TPG shall,
nor permit any of their Affiliates to, file any Tax Return, or take any position
with a Tax authority, that is inconsistent with the Purchase Price Allocation.
10.10 COOPERATION ON TAX MATTERS. After the Closing, TPG, the Company,
SCI LLC and the Foreign Entities, on the one hand, and Motorola and Affiliates
of Motorola, on the other hand, will make available to the other, as reasonably
requested, and to any taxing authority, all information, records or documents
relating to the liability for Taxes or potential liability of the Company, SCI
LLC or any of the Foreign Entities for Taxes for all periods prior to or
including the Closing Date and will preserve such information, records or
documents until the expiration of any applicable statute of limitations or
extensions thereof. TPG, Motorola and the Company agree to cooperate, and to
cause their Affiliates to cooperate, with regard to any qualification or filing
requirements or similar requirements relating to Taxes described in SECTION 3.8
for the purpose of minimizing such Taxes. Motorola agrees that it will promptly
make (and cause its Affiliates to promptly make) all registrations and filings,
and take all other actions necessary, to ensure that any refundable or
creditable value-added tax (including, but not limited to, V.A.T. under the laws
of Mexico and the Philippines and the consumption tax under the laws of Japan)
paid by the Company, SCI LLC or any of the Foreign Entities in connection with
the Reorganization will give rise to a credit or remittance to the payor in
accordance with the laws of the state imposing such value-added tax, except that
any such registration, filing or other action to be performed by the Company,
SCI LLC or any of the Foreign Entities after the Closing Date shall be done
promptly by the Company, SCI LLC or Foreign Entity, as the case may be.
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Article XI
INDEMNIFICATION
11.1 SURVIVAL PERIODS. Except as provided in SECTION 10.4, all
representations and warranties contained or made in, or in connection with, this
Agreement or any certificate, document or other instrument delivered in
connection herewith, shall survive the Closing for a period of eighteen (18)
months; PROVIDED, HOWEVER, that the representations and warranties of Motorola
in SECTION 8.16 shall survive until 30 days after the expiration of the
applicable statute of limitations and the representations and warranties of
Motorola in SECTION 8.17 shall survive for four years from the Closing Date. The
covenants and agreements in this Agreement shall survive except to the extent
they are specifically limited by their terms. Time periods for indemnities
provided for in ancillary agreements will be governed by the provisions of such
ancillary agreements.
11.2 INDEMNIFICATION BY MOTOROLA.
(a) Motorola hereby agrees to indemnify and hold
harmless TPG Acquisition and the Company from and against any Damages suffered
by TPG Acquisition, the Company or SCG Parties arising out of or resulting from
(i) any inaccuracy in or breach by Motorola of its representations or warranties
contained in this Agreement (it being understood that any claim pursuant to
SECTION 8.4(a) shall be governed by clause (vi) of SECTION 11.2(a) and that any
claim pursuant to SECTION 8.21 shall be governed by the provisions of SECTION
11.2(c)), (ii) any breach by Motorola of its obligations, covenants or
agreements under this Agreement, (iii) Pre-Closing Environmental Liabilities;
PROVIDED, that to the extent that the activities of TPG Acquisition, TPG Holding
or the Company have been conducted solely for the purpose of creating a claim
that is indemnifiable, Motorola will be relieved of its obligation under this
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SECTION 11.2 with respect to such claim, (iv) any liabilities of the Company
arising out of or resulting from conduct of the Company prior to April 30, 1999,
(v) except as provided in SECTION 11.3, any Damages associated with Motorola's
ownership, occupancy or use of the Real Property after the Closing Date and any
operations related thereto, including but not limited to Damages associated with
the Release of Hazardous Substances by Motorola or the protection of the
environment, natural resources, or human health, (vi) any inaccuracy in or
breach by Motorola of its representations and warranties contained in SECTION
8.4(a), (vii) the Retained Liabilities; or (viii) any obligations of Motorola to
the Company for the allocation of assets disputed by the parties pursuant to
Section 4.3 of the Reorganization Agreement, as such dispute is finally
determined under Section 4.3 of the Reorganization Agreement. In the event that
an indemnification claim can be made pursuant to more than one of the foregoing
clauses of this SECTION 11.2(a), the Company shall have the right to elect the
clause pursuant to which indemnification shall be claimed.
(b) Notwithstanding anything to the contrary in
SECTION 11.2(a), (i) Motorola shall not be liable for claims arising under
SECTION 11.2(a)(i) unless the aggregate of all such claims under SECTION 11.2(a)
exceeds U.S. $5.0 million (the "DEDUCTIBLE AMOUNT"), at which point when such
claims equal or exceed the Deductible Amount, Motorola shall be liable for, and
provide indemnification with respect to, the amount of all such claims in excess
of the Deductible Amount, and (ii) Motorola's liability (x) for claims arising
under SECTION 11.2(a)(i), (ii) and (viii) and (y) for claims under Section
16(a)(ii)(Y) of the Transition Services Agreement in excess of U.S.$40.0 million
shall not exceed in the aggregate U.S. $100.0 million (the "MAXIMUM AMOUNT").
There shall be no limitation on claims for indemnification pursuant to any other
clause of SECTION 11.2(a).
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(c) Any claim under SECTION 8.21 must first attempt to
be resolved using the asset or liability dispute resolution method described in
Section 4.3 of the Reorganization Agreement but shall otherwise be subject to
the provisions of this ARTICLE XI, including, without limitation, SECTION
11.2(b).
(d) Any payment required to be made by Motorola after
the Closing Date pursuant to this ARTICLE XI shall be made to the Company.
11.3 INDEMNIFICATION BY THE COMPANY. The Company hereby agrees to
indemnify and hold harmless Motorola from and against any Damages suffered by
Motorola or the Motorola Transferors arising out of or resulting from (i) any
inaccuracy in or breach by TPG Acquisition or TPG Holding of its representations
or warranties contained in this Agreement, (ii) any breach by TPG Acquisition or
TPG Holding of its obligations, covenants or agreements under this Agreement,
(iii) the Assumed Liabilities, or (iv) any obligations of the Company to
Motorola for the allocation of assets disputed by the parties pursuant to
Section 4.3 of the Reorganization Agreement, as such dispute is finally
determined under Section 4.3 of the Reorganization Agreement. The Company agrees
that it will be responsible for, and shall indemnify Motorola against, all
Damages associated with TPG Acquisition's or TPG Holding's ownership, occupancy
or use of the Real Property and any operations related thereto, after the
Closing Date, including, but not limited to, Damages associated with the Release
of Hazardous Substances or the protection of the environment, natural resources
or human health, but exclusive of Pre-Closing Environmental Liabilities;
PROVIDED, that to the extent that the activities of Motorola have been conducted
solely for the purpose of creating a claim that is indemnifiable, the Company
will be relieved of its obligation under this SECTION 11.3 with respect to such
claim.
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The Company's liability for claims arising under SECTION 11.3(iv)
shall not exceed in the aggregate the Maximum Amount.
11.4 CERTAIN INDEMNITIES. Notwithstanding anything to the contrary in
this ARTICLE XI, Motorola's obligation to indemnify the Company with respect to
Non-assumed Tax Liabilities shall not be limited by this ARTICLE XI.
11.5 GENERAL INDEMNIFICATION PROCEDURES.
(a) In the event that any party incurs or suffers any
Damages with respect to which indemnification may be sought by such party
pursuant to this ARTICLE XI, the party seeking indemnification (the
"INDEMNITEE") must assert the claim by giving written notice (a "CLAIM NOTICE")
to the party from whom indemnification is sought (the "INDEMNITOR"). The Claim
Notice must state the nature, basis and amount (if known) of the claim in
reasonable detail based on the information available to the Indemnitee and, if
the Claim Notice is being given with respect to a third party claim, it must be
accompanied by a copy of any written notice from the third party claimant. If
the Claim Notice is being given by reason of any third party claim, it shall be
given in a timely manner but in no event more than 30 days after the filing or
other written assertion of any such claim against the Indemnitee, but the
failure of the Indemnitee to give the Claim Notice within such time period shall
not relieve the Indemnitor of any liability for indemnification under this
ARTICLE XI, except to the extent that the Indemnitor is actually prejudiced
thereby. If the amount of the claim is not known at the time the Claim Notice is
given, the Indemnitee shall also give notice of such amount to the Indemnitor at
such time as the amount of the claim is reasonably ascertainable. Each
Indemnitor to whom a Claim Notice is given shall respond to any Indemnitee that
has given a Claim Notice (a "CLAIM RESPONSE") within 30 days (the "RESPONSE
PERIOD") after the date that the Claim Notice is received by
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Indemnitor. Any Claim Response shall specify whether or not the Indemnitor given
the Claim Response disputes the claim described in the Claim Notice in whole or
in part. If any Indemnitor fails to give a Claim Response within the Response
Period, such Indemnitor shall be deemed not to dispute the claim described in
the related Claim Notice. If any Indemnitor elects not to dispute a claim
described in a Claim Notice, whether by failing to give a timely Claim Response
or otherwise, then such claim shall be conclusively deemed to be an obligation
of such Indemnitor.
(b) If any Indemnitor shall be obligated to indemnify
any Indemnitee hereunder, then such Indemnitor shall pay to such Indemnitee
within 30 days after the last day of the applicable Response Period (or at such
later time as the amount is ascertainable) the amount to which such Indemnitee
shall be entitled (which, where applicable, shall be subject to the procedures
and limitations set out in SECTION 11.6).
(c) If there shall be a dispute as to the amount or
manner of indemnification under this Agreement, then, except in the case of any
such dispute involving an Environmental Liability (which, where applicable,
shall be subject to the procedures and limitations set out in SECTION 11.6 and
SECTION 11.7 in addition to the procedures set forth in this SECTION 11.5) or
any Tax Liability (which, where applicable, shall be subject to the procedures
and limitations set out in ARTICLE X), the Indemnitor and the Indemnitee shall
seek to resolve such dispute through negotiations and, if such dispute is not
resolved within 45 days of receipt by the Indemnitee of the Claims Response, the
Indemnitee may pursue whatever legal remedies may be available for the recovery
of the Damages claimed from any Indemnitor.
(d) If any Indemnitor fails to pay all or any part of
any indemnification obligation on or before the later to occur of (x) 45 days
after the last day of the applicable Response Period, and (y) if the Claim
Notice relates to Damages that have not been determined
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as of the date of the Claim Notice, the date on which all or any part of such
Damages shall have become determined, then the Indemnitor shall also be
obligated to pay to the Indemnitee interest on the unpaid amount for each day
during which the obligation remains unpaid at an annual rate of six percent. The
provisions of this SECTION 11.5(d) shall be in addition to, and not in lieu of,
any interest or similar amounts which may comprise Damages.
(e) The Indemnitee shall provide to the Indemnitor on
request all information and documentation reasonably necessary to support and
verify any Damages that the Indemnitee believes give rise to the claim for
indemnification hereunder and shall give the Indemnitor reasonable access to all
books, records and personnel in the possession or under the control of the
Indemnitee that would have a bearing on such claim.
(f) Except as hereinafter provided, in the case of
third party claims for which indemnification is sought, the Indemnitor shall
have the option: (x) to conduct any proceedings or negotiations in connection
therewith, (y) to take all other steps to settle or defend any such claim
(PROVIDED, that the Indemnitor shall not settle any such claim without the
consent of the Indemnitee (which consent shall not be unreasonably withheld, it
being understood that it shall not be unreasonable for the Indemnitee to
withhold its consent from any settlement which (1) commits the Indemnitee to
take, or to forbear to take, any action, (2) requires the Indemnitee to admit
fault or responsibility or (3) does not provide for a complete release of the
Indemnitee by such third party) and (z) to employ counsel to contest any such
claim or liability in the name of the Indemnitee or otherwise. In any event, the
Indemnitee shall be entitled to participate at its own expense and by its own
counsel (a "VOLUNTARY PARTICIPATION") in any proceedings relating to any third
party claim. The Indemnitor shall, within 45 days of receipt of the Claim
Notice, notify the Indemnitee of its intention to assume the defense of the
claim (a "DEFENSE NOTICE") with
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counsel of the Indemnitor's choice (and reasonably acceptable to the Indemnitee)
at the Indemnitor's expense. Notwithstanding the Indemnitor's election to assume
the defense of such action, the Indemnitee shall have the right to employ
separate counsel and to participate in the defense of such action, and the
Indemnitor shall bear the reasonable fees, costs and expenses of such separate
counsel if (i) the use of counsel chosen by the Indemnitor to represent the
Indemnitee would present such counsel with a conflict of interest; (ii) the
actual or potential defendants in, or targets of, any such action include both
the Indemnitor and the Indemnitee, and the Indemnitee shall have reasonably
concluded that there may be legal defenses available to the Indemnitee which are
different from or additional to those available to the Indemnitor (in which case
the Indemnitor shall not have the right to assume the defense of such action on
Indemnitee's behalf; (iii) the Indemnitor shall not have employed counsel to
represent the Indemnitee within a reasonable time after delivery of the Defense
Notice; or (iv) the Indemnitor shall authorize the Indemnitee to employ separate
counsel at the Indemnitor's expense. Until the Indemnitee has received the
Defense Notice, the Indemnitee shall take reasonable steps to defend (but may
not settle without prior written approval from the Indemnitor) the claim. If the
Indemnitor declines to assume the defense of any such claim or fails to give a
Defense Notice within 45 days after receipt of the Claim Notice, the Indemnitee
shall defend against the claim but shall not settle such claim without the
consent of the Indemnitor (which consent shall not be unreasonably withheld).
The expenses of all proceedings, contests or lawsuits (other than those incurred
in a Voluntary Participation) with respect to claims as to which a party is
entitled to indemnification under this ARTICLE XI shall represent indemnifiable
Damages under this Agreement. Regardless of which party shall assume the defense
of the claim, the parties shall cooperate fully with one another in connection
therewith. Notwithstanding the foregoing, the Indemnitor shall not be
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entitled (except with the consent of the Indemnitee) to take any of the actions
referred to in clauses (x), (y) or (z) of the first sentence of this
subparagraph unless: (a) the third party claim involves principally monetary
damages; and (b) the Indemnitor shall have expressly agreed in writing that, as
between the Indemnitor and the Indemnitee, the Indemnitor shall be solely
obligated to satisfy and discharge such third party claim.
11.6 CERTAIN ENVIRONMENTAL INDEMNIFICATION PROCEDURES.
(a) MOTOROLA'S RIGHTS TO CONDUCT REMEDIATION. In addition
to the other provisions of this ARTICLE XI, if any claim for indemnification is
sought against Motorola with respect to any Pre-Closing Environmental Liability,
the resolution of which involves or includes Remediation at Real Property owned
or operated by TPG Acquisition or its Affiliates, including the Company at the
time such Remediation is to be conducted, Motorola may, at its discretion, elect
to assume full control over the Remediation in connection with any such claim.
Upon receipt of notice of such election in writing from Motorola, the Company
shall: (i) provide Motorola (and its duly authorized representatives and
consultants) with access to the Real Property at all reasonable times to enable
Motorola to perform such Remediation; PROVIDED, that unless required by a final
order of a Governmental Authority, Motorola shall not undertake a Remediation at
the Real Property without first obtaining the written consent of the Company
which will not be unreasonably delayed or withheld; (ii) furnish Motorola with
such relevant records, information, reports, studies, data, and cost estimates
in the Company's possession; and (iii) participate in such conferences,
proceedings, hearings, trials, or appeals regarding any Remediation as the
Company chooses or Motorola shall reasonably request with sufficient advance
notice. For any Remediation performed by Motorola, Motorola shall: (i) provide
the Company with reasonable advance notice to allow the Company to participate
in any
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conferences, proceedings, hearings, trials, or appeals regarding any
Remediation; and (ii) prior to submission to any Governmental Authority, provide
the Company with a reasonable opportunity to review and approve, which approval
shall not be unreasonably withheld, all proposals, reports, submissions, data,
correspondence, or other documents; and (iii) consult with the Company regarding
any action or lack of action that could reasonably be expected to interfere with
the conduct of the Business or result in liability or obligations to the Company
under law in effect at the time. In addition, Motorola and the Company may
mutually agree, in writing, to allow the Company to assume full control over
Remediation at any time during the course of the Remediation. In the event that
the Company shall refuse to reasonably cooperate as set forth in this SECTION
11.6(a) with respect to the taking of a Remediation, Motorola shall have no
further liability, including obligation to indemnify, to the Company with
respect to the Remediation, except to the extent required by law or any
Governmental Authority.
(b) THE COMPANY'S RIGHTS TO CONDUCT REMEDIATION. If
Motorola and the Company agree to allow the Company to assume full control over
Remediation pursuant to SECTION 11.6(a), the Company shall (i) after Motorola
gives reasonable notice, permit representatives of Motorola (including advisors
and consultants) to visit and inspect from time to time any properties to which
such a claim for indemnification relates; (ii) after Motorola gives reasonable
notice, allow Motorola to enter such properties from time to time for the
purposes of conducting such environmental tests as Motorola may reasonably
desire with respect to the Liability, all during normal business hours and at
Motorola's expense; and (iii) prior to submission to any Governmental Authority,
provide Motorola with a reasonable opportunity to review and approve, which
approval shall not be unreasonably withheld, all proposals, reports,
submissions, data, correspondence, or other documents related to the
Remediation. In the event
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that the Company assumes control of the Remediation and refuses to reasonably
cooperate as set forth in this SECTION 11.6(b), Motorola shall have no further
liability, including obligation to indemnify, to the Company with respect to the
Remediation.
(c) MINIMIZATION OF REMEDIATION COSTS. Motorola and the
Company agree to use their Reasonable Efforts to minimize costs of Remediations
subject to indemnification under this ARTICLE XI, and, in deciding among various
alternative courses of Remediation, due consideration shall be given to
minimization of costs and minimization of disruption of operations or other use
of the property by the Company; PROVIDED, that such Remediation shall be
conducted in accordance with the requirements of any Governmental Authority. All
Remediation subject to indemnification under this ARTICLE X shall be done in a
manner to comply with applicable Remediation Standards and legal requirements
but not solely for the purpose of increasing the market value of the property at
which such Remediation is being done.
11.7 ALLOCATION OF SHARED REMEDIATION COSTS. Notwithstanding
anything to the contrary in this ARTICLE XI, if a Remediation arises after
Closing at the Real Property (other than such Real Property previously owned,
leased, used, or occupied by the Joint Ventures) and it is unclear to the extent
to which the Company is entitled to indemnification under SECTION 11.2 or
Motorola is entitled to indemnification under SECTION 11.3 and for which it is
otherwise unclear as to how the costs of such Remediation are to be allocated,
Motorola and the Company shall allocate between them any costs of such
Remediation in accordance with the following schedule. For the purposes of this
SECTION 11.7, a Remediation shall be deemed to arise upon receipt by either
party of a Claim Notice regarding the Remediation from the other party pursuant
to SECTION 11.5.
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(a) If the Remediation arises on or before 180 days after
the Closing Date, the parties shall presume that the Remediation is related to
Motorola's operation of the Business and Motorola shall bear 100% of the costs
associated with, related to, or arising from the Remediation unless Motorola can
prove that it is more likely than not that the Company's operation of the
Business after the Closing Date that caused the costs of Remediation.
(b) If the Remediation arises more than 180 days after
the Closing Date but on or before the Third Anniversary of the Closing Date, the
parties shall presume that the Remediation is related jointly to Motorola's
operation of the Business and to the Company's operation of the Business after
the Closing Date. Motorola shall bear 75% and the Company shall bear 25% of the
costs associated with, related to, or arising from the Remediation unless
Motorola can prove that it is more likely than not that the Company's operation
of the Business after the Closing Date, caused more than 25% of the cost of
Remediation or the Company can prove that the Company's operation of the
Business after the Closing Date, caused less than 25% of the cost of
Remediation.
(c) If the Remediation arises after the Third Anniversary
but on or before the Fourth Anniversary of the Closing Date, the parties shall
presume that the Remediation is related jointly to Motorola's operation of the
Business and to the Company's operation of the Business after the Closing Date.
Motorola and the Company shall each bear 50% of the costs associated with,
related to, or arising from the Remediation unless the Company can prove that it
is more likely than not that Motorola's operation of the Business caused more
than 50% of the costs of Remediation or Motorola can prove that Motorola's
operation of the Business caused less than 50% of the cost of Remediation.
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(d) If the Remediation arises after the Fourth
Anniversary but on or before the Fifth Anniversary of the Closing Date, the
parties shall presume that the Remediation is related jointly to Motorola's
operation of the Business and to the Company's operation of the Business after
the Closing Date. The Company shall bear 75% and Motorola shall bear 25% of the
costs associated with, related to, or arising from the Remediation unless the
Company can prove that it is more likely than not that Motorola's operation of
the Business caused more than 25% of the costs of Remediation or Motorola can
prove that Motorola's operation of the Business caused less than 25% of the cost
of Remediation.
(e) If the Remediation arises after the Fifth Anniversary
of the Closing Date, the parties shall presume that the Remediation is related
to the Company's operation of the Business after the Closing Date and the
Company shall bear 100% of the costs associated with, related to, or arising
from the Remediation unless the Company can prove that it is more likely than
not that Motorola's operation of the Business caused the costs of Remediation.
11.8 NET RECOVERY. The amount of any loss, damage or expense for
which indemnification is sought under this ARTICLE XI shall be net of any
amounts recovered by the Indemnitee under insurance policies, including, without
limitation, any title insurance policy, or from any other third parties with
respect to such indemnification claims and shall be reduced (or amounts paid by
Indemnitor to Indemnitee shall be refunded) to take account of any related tax
benefit actually realized from the Indemnitee's payment or incurrence of any
loss, damage or expense.
11.9 CERTAIN LIMITATIONS. Motorola shall not have liability to TPG
Acquisition for amounts claimed under SECTION 11.2(a)(i) or (ii) to the extent
Motorola proves that any
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member of the TPG Team had actual knowledge at the date of this Agreement of the
facts and circumstances of the breach underlying such claim and the extent of
such breach.
11.10 AVAILABILITY OF REMEDIES. (a) Each party acknowledges and
agrees that, from and after the Closing, except as set forth in SECTIONS 10.5
and 11.10(b), the sole and exclusive remedy with respect to any and all claims
relating to the subject matter of this Agreement and the Reorganization
Agreement (other than equitable remedies where applicable) shall be pursuant to
the indemnification provisions set forth in this ARTICLE XI.
(b) None of the provisions set forth in this Agreement
shall be deemed a waiver by any party to this Agreement of any right or remedy
which such party may have at law or equity based on any other party's fraudulent
acts or omission, nor shall any such provisions limit, or be deemed to limit,
the recourse which any such party may seek with respect to a claim for fraud.
The parties to each Collateral Agreement shall have no remedy under this
Agreement with respect to any claim arising under such Collateral Agreement and
the sole and exclusive remedy with respect to any such claim shall arise from in
the respective Collateral Agreement, subject to any limitation set forth
therein. In addition, the parties to the Reorganization Agreement and all
agreements entered into in connection with the transactions contemplated
thereunder shall have no remedy under this Agreement with respect to any claim
arising under any such agreement, other than with respect to (i) the Collateral
Agreements, for which provision is made in the previous sentence and (ii) claims
under Section 4.3 of the Reorganization Agreement, for which provision is made
under SECTIONS 11.2 and 11.3.
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ARTICLE XII
CONDITIONS OF CLOSING APPLICABLE TO TPG ACQUISITION AND TPG HOLDING
The obligations of TPG Acquisition and TPG Holding hereunder
(including the obligation of TPG Acquisition and TPG Holding to close the
transactions and consummate the Merger herein contemplated) are subject to the
following conditions precedent:
12.1 NO TERMINATION. Neither TPG Acquisition nor Motorola shall
have terminated this Agreement pursuant to SECTION 14.1.
12.2 BRING-DOWN OF WARRANTIES.
(a) The warranties and representations made by Motorola
herein to TPG Acquisition and TPG Holding shall be true and correct on and as of
the Closing Date with the same effect as if such warranties and representations
had been made on and as of the Closing Date and Motorola shall have performed
and complied with all agreements and covenants under SECTION 7.1 on its part
required to be performed or complied with on or prior to the Closing Date
except, in each case, where the failure of such warranties and representations
to be true and correct or the failure to perform and comply with all such
agreements and covenants shall not, in the aggregate, have a Material Adverse
Effect (except that the representation and warranty made in the third sentence
of SECTION 8.4(e) shall be true and correct in all respects) and (b) Motorola
shall have performed and complied in all material respects with all agreements,
covenants and conditions (other than as set forth in SECTION 7.1) on its part
required to be performed or complied with on or prior to the Closing Date; and
at the Closing, TPG Acquisition and TPG Holding shall have received a
certificate executed by the President or any Vice President of Motorola to the
foregoing effect.
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12.3 NO PROCEEDINGS. (a) No investigation, action, suit, claim,
arbitration or proceeding by any Governmental Authority, and no action, suit or
proceeding by any other Person, shall be pending on the Closing Date which (i)
challenges, or might result in a challenge to, this Agreement or the Merger or
any other transaction contemplated hereby, or which claims, or might give rise
to a claim for, damages in a material amount as a result of the consummation of
the Merger and (ii) is not disclosed on the Disclosure Letter.
(b) No temporary restraining order, preliminary or
permanent injunction, or other order, decree or judgment of any court, agency or
other Governmental Authority or other legal restraint or prohibition shall be in
effect which would prohibit, render unlawful or materially and adversely affect
the ability of any party hereto to consummate, the transactions contemplated by
this Agreement in accordance with its terms.
12.4 REORGANIZATION AGREEMENT. The transactions contemplated by the
Reorganization Agreement shall have been substantially completed. Without
limiting the foregoing, Motorola and the SCG Parties shall have executed and
delivered the Collateral Agreements as provided in the Reorganization Agreement.
12.5 STOCKHOLDERS AGREEMENT. Motorola shall have executed the
Stockholders Agreement with respect to the Company with the terms and provisions
substantially as those set forth in the Term Sheet attached hereto as EXHIBIT R
(the "STOCKHOLDERS AGREEMENT").
12.6 REQUIRED CONSENTS AND APPROVALS. The Required Consents and
Approvals shall have been obtained in form and substance reasonably satisfactory
to TPG Holding and shall be in full force and effect.
12.7 ADEQUATE FINANCING. The conditions to the funding contemplated
by the TPG Financing Commitments with respect to the Financing shall have been
satisfied in full or
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waived, and the cash contemplated by such TPG Financing Commitments shall have
been provided or made available to the SCG Parties.
12.8 ACCOUNTING TREATMENT. TPG Acquisition shall not have received
after the date hereof written advice addressed to it from PricewaterhouseCoopers
LLP ("PWC") to the effect that PWC has reasonably concluded that the ability to
account for the transactions contemplated hereby as a "recapitalization" under
the rules and regulations of the SEC shall have been materially and adversely
affected by the occurrence of an event after the date hereof.
12.9 NECESSARY PROCEEDINGS. All proceedings to be taken in
connection with the consummation of the transactions contemplated by this
Agreement (including the delivery of documents pursuant to SECTION 5.2(a)) and
the Reorganization Agreement and all documents incident thereto (other than
proceedings and documents which, if not taken or delivered, would not prevent
TPG Acquisition from recognizing substantially all of the benefits otherwise to
be realized by it hereunder or at a Closing in which all such proceedings and
documents had been taken or delivered), shall be reasonably satisfactory in form
and substance to TPG Acquisition and its counsel, and TPG Acquisition shall have
received copies of such documents as TPG Acquisition and its counsel may
reasonably request in connection with said transactions.
12.10 EXPIRATION OF H-S-R WAITING PERIOD. The waiting period
(including extensions thereof) required by the H-S-R Act shall have expired or
been terminated.
12.11 DELIVERY OF FINANCIAL STATEMENTS. Motorola and the Company
shall have furnished the Financial Information, in accordance with SECTION 7.6,
to TPG Acquisition and to each of the financing providers under the TPG
Financing Commitments.
12.12 INFORMATION TECHNOLOGY CONVERSION. Either (i) the Information
Technology Systems shall have been cloned, as contemplated by the Information
Technology
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Termsheet included in the Interim Manufacturing/Transition Agreement, or (ii) a
"shadow system" replicating the operation of the Information Technology Systems
shall have been established and Motorola shall have furnished to TPG Holding and
the Company reasonable commitments to complete such cloning process prior to
December 31, 1999, in each case such that the Company shall be able to manage
and record appropriately its working capital, cash flow and financial results of
operations.
12.13 PENSION PLAN FUNDING. All amounts required to be paid or
transferred by Motorola Transferor to an SCG Party at or prior to the Closing
pursuant to the Employee Matters Agreement shall have been so paid or
transferred.
12.14 JOINT VENTURE FINANCING. As of the Closing Date, the aggregate
amount of funds that will be required in order to retire or repay all
Indebtedness which constitute liabilities which are required to be reflected on
a balance sheet in accordance with GAAP (as defined in SECTION 8.4(e) hereof) of
the Leshan JV, SEI, Terosil and Tesla will not exceed (a) $95 million if the
Closing occurs on or prior to September 1, 1999 or (b) $105 million if the
Closing occurs after September 1, 1999 and prior to December 31, 1999.
12.15 INVENTORY. As of the Closing Date, the level of inventories of
the SCG Parties constituting Purchased Assets shall be consistent with the
inventory plan provided to TPG Holdings prior to the date hereof.
12.16 TITLE INSURANCE. Motorola shall have delivered to the Company
(at Motorola's cost, except for the cost of any special endorsements or lender's
coverage, which shall be borne by the Company) a customary final and binding
commitment in form and substance agreeable to TPG Holding, by Commonwealth Land
Title Insurance Company (or other mutually agreeable title insurance company) to
insure Buyer's (and Buyer's mortgagee's)
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title, both fee and leasehold, to the Premises and Buildings (each as defined in
the Existing Ground Lease).
12.17 DELIVERY OF FINANCIAL INFORMATION. Motorola shall have
delivered to TPG Holding the Financial Information in accordance with Section
7.6.
Except for the condition set forth in SECTIONS 12.4 and 12.10,
TPG Acquisition and TPG Holding shall have the right to waive any of the
foregoing conditions precedent.
ARTICLE XIII
CONDITIONS TO CLOSING APPLICABLE TO MOTOROLA
The obligations of Motorola hereunder (including the obligation of
Motorola to close the transactions herein contemplated) are subject to the
following conditions precedent:
13.1 NO TERMINATION. None of TPG Acquisition, TPG Holding or
Motorola shall have terminated this Agreement pursuant to SECTION 14.1.
13.2 BRING DOWN OF WARRANTIES. All warranties and representations
made by TPG Acquisition and TPG Holding herein to Motorola shall be true and
correct in all material respects on and as of the Closing Date with the same
effect as if such warranties and representations had been made on and as of the
Closing Date, and TPG Acquisition and TPG Holding shall have performed and
complied in all material respects (except for the payment obligations which
shall be absolute) with all agreements, covenants and conditions on their part
required to be performed or complied with on or prior to the Closing Date, and
at the Closing, Motorola shall have received a certificate executed by the
President or any Vice President of TPG Acquisition and TPG Holding to the
foregoing effect.
13.3 NO PROCEEDINGS. No investigation, action, suit or proceeding
by any Governmental Authority, and no action, suit or proceeding by any other
Person, shall be pending
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on the Closing Date which (i) challenges or might result in a challenge to this
Agreement or the Merger or any other transaction contemplated hereby, or which
claims, or might give rise to a claim for, damages against Motorola in a
material amount as a result of the consummation of the Merger or any other
transaction contemplated hereby and (ii) is not disclosed on the Disclosure
Letter.
13.4 REORGANIZATION AGREEMENT. All transactions contemplated by the
Reorganization Agreement shall have been consummated in substantially the manner
contemplated by the Reorganization Agreement. Without limiting the foregoing,
the Collateral Agreements shall have been executed by the parties thereto as
provided in the Reorganization Agreement.
13.5 STOCKHOLDERS AGREEMENT. TPG Holding shall have executed the
Stockholders Agreement with respect to the Company.
13.6 PAYMENT OF COMPANY NOTES. At the Effective Time, TPG Holding,
the Company, and/or SCI LLC shall have funds available to pay the Company Notes
simultaneously with the consummation of the Merger and the Redemption.
13.7 NECESSARY PROCEEDINGS. All proceedings to be taken in
connection with the consummation of the transactions contemplated by this
Agreement and the Reorganization Agreement, and all documents incident thereto,
(other than proceedings and documents which, if not taken or delivered, would
not prevent TPG Holding from recognizing substantially all the benefits
otherwise to be realized by it hereunder or at a Closing in which all such
proceedings and documents had been taken or delivered), shall be reasonably
satisfactory in form and substance to Motorola and its counsel, and Motorola and
its counsel shall have received copies of
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such documents as they and their counsel may reasonably request in connection
with said transactions.
13.8 EXPIRATION OF H-S-R WAITING PERIOD. The waiting period
(including extensions thereof) required by the H-S-R Act shall have expired or
been terminated.
13.9 SOLVENCY OPINION. Motorola shall have received an opinion
addressed to the Board of Directors of the Company and Motorola (and any other
Affiliates of Motorola required by Motorola) which shall be substantially
similar to (and may be the same opinion as) any opinion delivered to any banks
or other lenders party to the Senior Credit Facility and which provides
assurance or conclusions, from which a reasonable person could obtain assurance
that the Recapitalization does not result in a violation of the Delaware
fraudulent conveyance statutes, Section 548 of the U.S. Bankruptcy Code or the
relevant sections of the Delaware General Corporation Law concerning the payment
of dividends, or purchase or redemption of shares, by a corporation.
Except for conditions set forth in SECTIONS 13.4 and 13.8, Motorola
shall have the right to waive any of the foregoing conditions precedent.
ARTICLE XIV
TERMINATION
14.1 TERMINATION EVENTS. This Agreement may be terminated at any
time prior to the Closing as follows, and in no other manner:
(a) by mutual consent of Motorola and TPG Holding;
(b) by Motorola if the Closing of the transactions
contemplated by this Agreement shall not have occurred on or before September 1,
1999, or such later date as may have been agreed upon in writing by the parties,
PROVIDED, that any such failure to close is not
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due to any failure to perform, default or breach by Motorola; PROVIDED, FURTHER,
that Motorola may, in its sole discretion, by providing written notice to TPG
Holding no later than August 27, 1999, extend such date from September 1, 1999
to October 1, 1999; PROVIDED, FURTHER, if such date is extended to October 1,
1999, Motorola may, in its sole discretion, by providing written notice to TPG
Holding no later than September 27, 1999, further extend such date from October
1, 1999 to November 1, 1999;
(c) by TPG Holding, if the Closing of the transactions
contemplated by this Agreement shall not have occurred on or before the later of
September 1, 1999, and the date as extended by Motorola pursuant to clause (b)
above, or such later date as may have been agreed upon in writing by the
parties; PROVIDED, that any such failure to close is not due to any failure to
perform, default or breach by TPG Acquisition or TPG Holding;
(d) by TPG Holding, provided it is not then in breach of
any of its obligations hereunder, if Motorola fails to perform in any material
respect any covenant in this Agreement when performance thereof is due or
Motorola shall have breached in any material respect any of the representations
and warranties contained in this Agreement and does not cure the failure or
breach within thirty (30) days after TPG Holding delivers written notice
thereof; or if there has been a material breach by Motorola of any of its
representations, warranties or covenants under this Agreement and the Collateral
Agreements which breach is not curable, or, if curable, is not cured within
thirty (30) days of written notice thereof; PROVIDED, that TPG Holding shall not
have the right to terminate this Agreement under this SECTION 14.1(d) for reason
of a material breach by Motorola of any representation or warranty made by it in
this Agreement if Motorola shall prove that such breach and the extent thereof
was actually known by a member of the TPG Team on the date hereof;
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(e) by Motorola, provided it is not then in breach of any
of its obligations hereunder, if TPG Acquisition or TPG Holding fails to perform
in any material respect any covenant in this Agreement when performance thereof
is due or TPG Acquisition or TPG Holding shall have breached in any material
respect any of the representations and warranties contained in this Agreement
and does not cure the failure or breach within thirty (30) business days after
Motorola delivers written notice thereof; or if there has been a material breach
by TPG Acquisition or TPG Holding of any of its representations, warranties or
covenants under this Agreement which breach is not curable, or, if curable, is
not cured within thirty (30) days of written notice thereof. Any termination
pursuant to this ARTICLE XIV shall not limit or restrict the rights or other
remedies of any party;
(f) by TPG Holding if it reasonably determines that
either the conditions set forth in SECTION 12.7 or the conditions set forth in
SECTION 12.8 cannot be satisfied prior to November 1, 1999;
(g) by either TPG Holding or Motorola if any Governmental
Authority shall have issued a permanent injunction, order, decree or ruling or
taken any other action (which injunction, order, decree or ruling TPG Holding
and Motorola shall use their Reasonable Efforts to lift), in each case
permanently restraining, enjoining, rendering unlawful or otherwise prohibiting
the consummation of the transactions contemplated by this Agreement, the
Reorganization Agreement or the Collateral Agreements or any material part
thereof in accordance with the terms hereof or thereof, and such order, decree,
ruling or other action shall have become final and nonappealable;
(h) by TPG Holding if there shall have occurred a
Material Adverse Effect which it reasonably determines is not likely to be cured
prior to November 1, 1999;
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PROVIDED, that if Motorola notifies TPG Holding in writing of the existence of a
Material Adverse Effect occurring after the date hereof, TPG Holding shall be
entitled to terminate this Agreement pursuant to this SECTION 14.1(h) by reason
of the events, circumstances or state of facts having such Material Adverse
Effect only for a period of 30 days following TPG Holding's receipt of
Motorola's written notice; PROVIDED FURTHER, HOWEVER, that TPG Holding's right
to terminate this Agreement shall be reinstated in the event that there shall
occur a material and adverse exacerbation of such events, circumstances or state
of facts; or
(i) by TPG Holding if the condition set forth in SECTION
12.11 shall not have been satisfied prior to August 1, 1999.
14.2 TERMINATION FEE.
(a) In addition to, and without limiting any other right
or remedy of the parties hereto, and notwithstanding anything contained herein
to the contrary, in the event this Agreement is terminated pursuant to (i)
SECTION 14.1(b) in circumstances where the only conditions which shall not have
been satisfied are those set forth in SECTION 12.7 and/or SECTION 12.8, (ii)
SECTION 14.1(e) or (iii) SECTION 14.1(f), THEN TPG Holding shall pay to Motorola
within five (5) days of the date of such termination an aggregate amount equal
to the sum of $5.0 million (the "TPG TERMINATION FEE").
(b) In addition to, and without limiting any other right
or remedy of the parties hereto, and notwithstanding anything contained herein
to the contrary, in the event this Agreement is terminated by TPG Holding
pursuant to SECTION 14.1(d), THEN, Motorola shall pay to TPG Holding within five
(5) days of the date of such termination an aggregate amount equal to the sum of
$5.0 million (the "MOTOROLA TERMINATION FEE").
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ARTICLE XV
POST-CLOSING MATTERS
15.1 FURTHER ASSURANCES.
(a) Each party covenants that at any time, and from time
to time, after the Closing Date, it will execute such additional instruments and
take such actions as may be reasonably requested by the other parties to confirm
or perfect or otherwise to carry out the intents and purposes of this Agreement.
(b) In furtherance of the foregoing, Motorola shall, and
shall cause its Affiliates to, afford reasonable access to the Company and its
representatives to documents (including making copies at the Company's expense)
and other information relating to the Business, the Purchased Assets, Assumed
Liabilities and the Joint Ventures.
ARTICLE XVI
MISCELLANEOUS
16.1 EXPENSES.
(a) Motorola shall pay its costs and expenses (including
attorneys' fees and other legal costs and expenses and accountants' fees and
other accounting costs and expenses) in connection with this Agreement and the
Merger, subject to the provisions of SECTION 3.7(d), SECTION 3.8, SECTION 7.6
and SECTION 14.2.
(b) Motorola shall pay the Company's costs and expenses
(including attorneys' fees and other legal costs and expenses and accountants'
fees and other accounting costs and expenses and the costs and expenses of
establishing new SCG Post-Closing Entities) in connection with this Agreement
incurred through and including the Closing Date; PROVIDED, HOWEVER, that
Motorola shall not pay any of the Company's costs and expenses (including
attorney's fees and other legal costs and expenses and accountants' fees and
other accounting
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costs and expenses) in connection with the Senior Secured Loan, Subordinated
Notes, the Bridge Loan, any other credit facility relating to the financing of
the transactions contemplated by this Agreement including commitment,
arrangement and similar fees thereunder paid to financing providers or their
advisors, and fees and expenses incurred in connection with SECTION 7.10, all of
which fees and expenses under this proviso shall be paid by either (x) TPG
Acquisition if the Closing shall not occur or (y) the Company if Closing shall
occur.
(c) TPG Holding shall pay all costs and expenses incurred
by it including the fees and expenses of attorneys, accountants, financing
providers and other advisors in connection with the transactions contemplated
hereby, PROVIDED, if the Closing shall occur, such costs, fees and expenses will
be borne by the Company at the time of the Closing.
16.2 FINANCIAL ADVISORS' FEES.
(a) Neither Motorola nor any of its Affiliates has
retained any broker, finder, investment banker or financial advisor in
connection with this Agreement or the Merger or any other transaction
contemplated hereby, except for ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., whose fees and expenses
shall be paid by Motorola (all obligations of Motorola and its Subsidiaries to
▇▇▇▇▇▇▇, Sachs & Co. being Retained Liabilities); and except for ▇▇▇▇▇▇▇, ▇▇▇▇▇
& Co., the Business has not incurred or paid, and neither TPG Acquisition, TPG
Holding nor any SCG Parties will incur or be required to pay, any broker's,
finder's, investment banker's, financial advisor's or similar fee in connection
with the Reorganization Agreement, this Agreement or the Merger or any other
transaction contemplated hereby to any person, firm, corporation or entity
acting as broker, finder, investment banker, financial advisor or in any similar
capacity on behalf of Motorola or the Business.
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(b) Neither TPG Acquisition nor TPG Holding has retained
any broker, finder, investment banker or financial advisor in connection with
this Agreement or the Merger or any other transaction contemplated hereby; and
except for the payment at the Closing by the Company to an affiliate of TPG
Acquisition and TPG Holding of a transaction advisory fee in an amount
previously disclosed by TPG Acquisition and TPG Holding to Motorola, neither TPG
Acquisition nor TPG Holding has incurred or paid, and neither Motorola nor any
of its Affiliates will incur or be required to pay, any broker's, finder's,
investment banker's, financial advisor's or similar fee in connection with the
Reorganization Agreement, this Agreement or the Merger to any person, firm,
corporation or entity acting as broker, finder, investment banker, financial
advisor or in any similar capacity on behalf of TPG Acquisition or TPG Holding.
(c) TPG Acquisition, TPG Holding and Motorola agree to
indemnify each other and hold each other harmless from any loss, damage or
expense resulting from a breach by such party of its respective warranty set
forth in this SECTION 16.2 and this indemnity shall not be subject to the
limitations set forth in SECTION 11.2.
16.3 SURVIVAL OF WARRANTIES. All warranties, representations,
agreements and covenants made by the respective parties in this Agreement shall
survive the Closing Date, subject to SECTION 11.1.
16.4 ENTIRE AGREEMENT. This Agreement (including the Disclosure
Letter and the Exhibits hereto and thereto), the Reorganization Agreement, the
Collateral Agreements and the Non-Disclosure Agreement contain the entire
agreement between the parties with respect to the transactions contemplated
hereunder, and supersedes all negotiations, representations, warranties,
commitments, offers, contracts and writings prior to the date hereof, except for
the
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Non-Disclosure Agreement. Without limiting the foregoing, any information
provided to TPG Acquisition, TPG Holding or its representatives pursuant to this
Agreement shall be held by TPG Acquisition or TPG Holding and its
representatives in accordance with, and shall be subject to the terms of, the
Non-Disclosure Agreement dated November 10, 1998 (the "NON-DISCLOSURE
AGREEMENT") by and among TPG Acquisition, TPG Holding and Motorola, all of the
terms of which are hereby incorporated in this Agreement as though fully set
forth herein.
16.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which,
together, shall constitute one and the same instrument.
16.6 SAVINGS CLAUSE. If any provision hereof 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 shall
not affect the validity or effect of any other provision hereof.
16.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the heirs, personal representatives, successors and
assigns of the parties. No party hereto may assign or transfer any of its rights
or obligations under this Agreement, except with the prior written consent of
the other parties hereto, except that (i) TPG Holding shall be entitled to
assign its rights hereunder to an Affiliate of TPG Holding, and (ii) the Company
shall be entitled to assert its rights hereunder to or for the account of the
Senior Secured Lender solely and specifically for the purpose of securing the
Financing, which assignment in either case shall not affect TPG Holding's or the
Company's obligations under this Agreement.
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16.8 NO THIRD-PARTY BENEFICIARY; NO RECOURSE.
(a) This Agreement is for the sole benefit of the parties
and nothing herein expressed or implied shall give or be construed to give any
person or entity other than the parties any legal or equitable rights hereunder.
(b) The directors, officers and stockholders of the
parties hereto and their Affiliates shall not have any personal liability or
obligation arising under this Agreement, the Reorganization Agreement or the
Collateral Agreements or any transaction contemplated hereby or thereby solely
by reason of their capacity as such.
16.9 CAPTIONS. The captions of the various Sections and Articles of
this Agreement have been inserted only for convenience and shall not be deemed
to modify, explain, enlarge or restrict any of the provisions of this Agreement.
16.10 GOVERNING LAW AND CONSENT TO JURISDICTION.
(a) The validity, interpretation and effect of this
Agreement shall be governed exclusively by the laws of the State of New York,
not including the "conflict of laws" rules of the state.
(b) Each of the parties irrevocably submits to the
jurisdiction of (i) the Supreme Court of New York of the State of New York, and
(ii) the United States District Court for the Southern District of New York, for
the purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby. Each of the parties further
agrees that service of any process, summons, notice or document by U.S.
registered mail to such party's respective address set forth herein shall be
effective service of process for any action, suit or proceeding in New York with
respect to any matters to which it has submitted to jurisdiction as set forth
above in the immediately preceding sentence. Each of the parties irrevocably and
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unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the Supreme Court of New York of the State of New York or (ii) the
United States District Court for the Southern District of New York, and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
16.11 NOTICES. All notices, requests, demands and other
communications under this Agreement shall be in writing and delivered in person,
sent by facsimile or telecopy or sent by registered or certified mail, postage
prepaid, and properly addressed as follows:
TO MOTOROLA, THE COMPANY OR SCI LLC:
Motorola, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax: 847/▇▇▇-▇▇▇▇
WITH COPY TO:
Winston & ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: 312/▇▇▇-▇▇▇▇
TO TPG ACQUISITION OR TPG HOLDING:
TPG Semiconductor Holdings Corp.
c/o Texas Pacific Group
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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WITH COPY TO:
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may from time to time change its address for the purpose of
notices to that party by a similar notice specifying a new address, but no such
change shall be deemed to have been given until it is actually received by the
party sought to be charged with its contents.
All notices and other communications required or permitted under this
Agreement which are addressed as provided in this SECTION 16.11 if delivered
personally or sent by facsimile or telecopy shall be effective upon delivery,
and if delivered by mail, shall be effective upon deposit in the United States
mail, postage prepaid.
16.12 U.S. DOLLARS. All amounts expressed in this Agreement and all
payments required by this Agreement are in United States dollars.
16.13 AMENDMENT; WAIVER. The parties hereto may amend this Agreement
by mutual consent in any respect. Any failure on the part of any party to comply
with any of its obligations, agreements or conditions hereunder may be waived by
any other party to whom such compliance is owed. No waiver of any provision of
this Agreement shall be deemed, or shall constitute, a waiver of any other
provision, whether or not similar, nor shall any waiver constitute a continuing
waiver. Any such amendment or waiver, to be effective, must be in writing and be
signed by the party against whom enforcement of the same is sought.
16.14 SPECIFIC PERFORMANCE. In the event Motorola should fail to
comply with the terms of SECTION 7.3, TPG Holding shall be entitled, in addition
to other relief, as may be
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proper, to equitable relief as may be necessary to cause Motorola and the
Company to comply with SECTION 7.3.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement and
Plan of Recapitalization and Merger the day and year first above written.
MOTOROLA, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
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Title: Executive Vice President
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SCG HOLDING CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Title: Attorney in Fact
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SEMICONDUCTOR COMPONENTS
INDUSTRIES, LLC
By: SCG HOLDING CORPORATION,
its sole member
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Title: Attorney in Fact
-----------------------------------
TPG SEMICONDUCTOR HOLDINGS CORP.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇
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Title: Vice President
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TPG SEMICONDUCTOR ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇
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Title: Vice President
-----------------------------------