[ARTICLE] 5
[MULTIPLIER] 1
CONFIDENTIAL TREATMENT REQUESTED
[*] Denotes information for which confidential
treatment has been requested. Confidential portions
omitted have been filed separately with the Commission.
JOINT VENTURE FORMATION AGREEMENT (this "Agreement"),
dated as of October 23, 1995, by and among AT&T Corp., a New York
Corporation ("AT&T"), ATOR Corp., a New York corporation (the "AT&T
Partner"), Cirrus Logic, Inc., a California corporation ("Cirrus"),
and Ciror, Inc., a California corporation (the "Cirrus Partner").
WHEREAS, the parties hereto desire to enter into a
cooperative arrangement with respect to the expansion and operation
of certain wafer fabrication facilities for the purpose of
processing silicon wafers; and
WHEREAS, the parties hereto consider it mutually
beneficial to establish a general partnership (the "Partnership")
and the AT&T Partner and the Cirrus Partner are entering into the
GP Agreement (as defined in Section 1.01 hereof) concurrently
herewith.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants, representations, warranties and agreements
hereinafter set forth, and intending to be legally bound hereby,
the parties hereto agree, subject to the conditions contained
herein, as follows:
ARTICLE I
DEFINITIONS
1.01. Definitions. For the purpose hereof, the
following terms will have the following meanings:
"AAA" will have the meaning set forth in Section 13.02
hereof.
"Affiliate" means any Person, directly or indirectly
controlled by, controlling or under common control with (as
hereinafter defined) another Person (as hereinafter defined);
"controlled by, controlling or under common control with" means the
power to direct the management and policies of a Person, whether
through the ownership of voting securities, by agreement or
otherwise.
"Annual Plan" means the initial annual plan of the
Partnership substantially in the form attached hereto as Appendix
I, and as amended in accordance with Article VI of the GP Agreement
(as hereinafter defined).
"AT&T" will have the meaning set forth in the preamble
hereto.
"AT&T Assets" means the capital equipment and other
assets which the AT&T Partner will cause to be leased, transferred,
sold or otherwise delivered to the Partnership.
"AT&T Employee Services and Staffing Agreement" means the
AT&T Employee Services and Staffing Agreement between the AT&T
Partner and the Partnership substantially in the form attached
hereto as Exhibit A.
"AT&T Financial Statements" will have the meaning set
forth in Section 8.04 hereof.
"AT&T Group" will have the meaning set forth in
Section 11.01 hereof.
"AT&T Partner" will have the meaning set forth in the
preamble hereto.
"AT&T Employee" means the Loaned Employees (as defined in
the AT&T Employee Services and Staffing Agreement) and the
Production Employees (as defined in the AT&T Employee Services and
Staffing Agreement).
"Authorized Representative" will have the meaning set
forth in Section 4.01 hereof.
"Board of Governors" means the Board of Governors of the
Partnership as set forth in the GP Agreement.
"Bonus Plan" will have the meaning set forth in
Section 4.06 hereof.
"Business" means the business of the Partnership in the
operation of certain wafer fabrication facilities in accordance
with the terms of the Annual Plan, for the purpose of processing
silicon wafers and such other activities as may be desirable and
proper in the furtherance thereof.
"Buy-Out Options" will have the meaning set forth in
Section 10.03 hereof.
"Cirrus" will have the meaning set forth in the preamble
hereto.
"Cirrus Assets" means the capital equipment and other
assets which the Cirrus Partner will cause to be leased, delivered,
sold or otherwise transferred to the Partnership.
"Cirrus Employee Services and Staffing Agreement" means
the Cirrus Employee Services and Staffing Agreement which may be
entered into between the Cirrus Partner and the Partnership upon
substantially similar terms and conditions as the AT&T Employee
Services and Staffing Agreement.
"Cirrus Financial Statements" will have the meaning set
forth in Section 9.04 hereof.
"Cirrus Group" will have the meaning set forth in
Section 11.01 hereof.
"Cirrus Partner" will have the meaning set forth in the
preamble hereto.
"Cirrus Employee" means an employee of Cirrus or an
Affiliate of Cirrus loaned to the Partnership pursuant to the
Cirrus Employee Services and Staffing Agreement.
"Claim" or "Claims" will have the meaning set forth in
Section 11.01 hereof.
"Closing" means the closing of the transactions
contemplated hereby and referred to in Section 7.01 hereof.
"Closing Date" will have the meaning set forth in
Section 7.01 hereof.
"Committee" will have the meaning set forth in
Section 4.01 hereof.
"Confidential Information" will have the meaning set
forth in Section 6.01 hereof.
"Deadlock" will have the meaning set forth in
Section 13.01 hereof.
"Dispute" will have the meaning set forth in
Section 13.01 hereof.
"Environmental Consultants" will have the meaning set
forth in Section 4.09 hereof.
"Environmental Report" will have the meaning set forth in
Section 4.09 hereof.
"Environmental Policy" will have the meaning set forth in
the Lease.
"First Representatives" will have the meaning set forth
in Section 13.02.
"GAAP" means generally accepted accounting principles
consistently applied.
"GP Agreement" means the General Partnership Agreement
between the AT&T Partner and the Cirrus Partner substantially in
the form attached hereto as Exhibit B.
"Hazardous Materials" will have the meaning set forth in
the Lease (as hereinafter defined).
"Hazardous Materials Laws" will have the meaning set
forth in the Lease.
"Implementation Plan" will have the meaning set forth in
Section 4.01 hereof.
"Independent Accountant" means the firm of independent
certified public accountants retained by AT&T from time to time
which will act as auditor for the Partnership as provided in
Section 12.01.
"Intellectual Property" will have the meaning set forth
in Section 4.03 hereof.
"LCCP Rules" will have the meaning set forth in
Section 13.03.
"Land" will have the meaning set forth in the Lease.
"Landlord" will have the meaning set forth in the Lease.
"Lease" means the Lease between AT&T and the Partnership
substantially in the form attached hereto as Exhibit C.
"Employees" means the AT&T Employees and the Cirrus
Employees.
"Material Agreements" means the following related
agreements:
(i) the GP Agreement;
(ii) the AT&T Employee Services and Staffing
Agreement;
(iii) if entered into, the Cirrus Employee
Services and Staffing Agreement;
(iv) the Lease;
(v) the Patent License Agreement (as
hereinafter defined);
(vi) the Technical Transfer Agreement (as
hereinafter defined); and
(vii) the Wafer Supply Agreement (as hereinafter
defined).
"OR1" will have the meaning set forth in Section 4.01
hereof.
"OR2" will have the meaning set forth in Section 4.01
hereof.
"Owner" will have the meaning set forth in Section 6.01
hereof.
"Partnership" will have the meaning set forth in the
preamble hereto.
"Patent License Agreement" means the Patent License
Agreement between the AT&T Partner and the Partnership which will
be consistent with the terms of the Term Sheet set forth at Exhibit
D hereto.
"Person" means any individual, partnership, association,
joint stock company, joint venture, corporation, trust,
unincorporated organization or government, or agency or political
subdivision thereof.
"Pre-Existing Contamination" will mean all past or
present actions, activities, circumstances, conditions, events or
incidents in, at, on or under the Land or the Premises, including,
without limitation, the release, emission, discharge or disposal of
any Hazardous Materials, in each such case as specifically
identified in the Environmental Report.
"Preliminary Implementation Plan" will have the meaning
set forth in Section 2.01 hereof.
"Premises" will have the meaning set forth in the Lease.
"Recipient" will have the meaning set forth in
Section 6.01 hereof.
"Restructuring" will mean the strategic restructuring of
AT&T announced September 20, 1995.
"Second Representatives" will have the meaning set forth
in Section 13.02.
"Structural Components" will have the meaning set forth
in the Lease.
"[*]" will have the meaning set forth in Section 10.03
hereof.
"Technical Transfer Agreement" means the Technical
Transfer Agreement between the AT&T Partner and the Partnership
substantially in the form attached hereto as Exhibit E.
"Wafer Supply Agreement" means the Wafer Supply Agreement
by and among the AT&T Partner, the Cirrus Partner and the
Partnership substantially in the form attached hereto as Exhibit F.
ARTICLE II
FORMATION OF THE JOINT VENTURE
2.01. Formation of the Partnership. Following the
execution and delivery of this Agreement and in no event less than
sixty (60) days prior to the Closing Date, the AT&T Partner and the
Cirrus Partner will cause the formation of the Partnership as a
general partnership under the laws of the State of New York in
accordance with the terms of the written plan set forth as Appendix
II hereto (the "Preliminary Implementation Plan") for the orderly
start-up of the Partnership's business and pursuant to this
Agreement and the GP Agreement.
2.02. Expenses. Each of the parties hereto will bear
the fees and expenses of its respective counsel, accountants and
experts and all other costs and expenses incurred by it incident to
the negotiation, preparation, execution and delivery of this
Agreement and the Material Agreements; provided, however, expenses
relating to the formation of the Partnership, including but not
limited to taxes, fees, registration charges, notarial expenses,
fees and expenses relating to required governmental or regulatory
approvals for the formation of the Partnership will be paid by the
Partnership.
ARTICLE III
SCOPE AND OBJECTIVES; ANNUAL PLAN
3.01. Purpose.
(a) The purpose of the Partnership will
be to operate the Business.
(b) The parties hereto expressly acknowledge that
the Partnership is being formed solely for the limited purpose set
forth in Section 3.01(a) above and agree that none of the parties
hereto has any obligation to the others or to the Partnership to
bring business opportunities to the Partnership or to any of the
other parties hereto and are each free to take advantage of such
opportunities on their own or with third parties; provided,
however, that none of the parties hereto will take any action or
fail to take any action which would reasonably cause a material
adverse effect to the Business or the Partnership. The parties
hereto further recognize that each of them is incurring a portion
of the risk of, and expects to realize a portion of the return
from, the Partnership through this Agreement and one or more of the
Material Agreements, and the parties hereto expressly acknowledge
and agree that this Agreement and the Material Agreements are fair
and reasonable to the Partnership and to each of the parties hereto
in light of the totality of the facts and circumstances.
3.02. Annual Plan.
(a) The Annual Plan sets forth the
objectives of the Partnership for the period beginning on [*] and
ending on [*]. The Board of Governors will review and update the
Annual Plan [*]. On or before [ * ] of each fiscal year of
the Partnership commencing [ * ], the Board of Governors
will, in accordance with the terms of Article VI of the GP
Agreement, ratify or amend the information set forth in the Annual
Plan for the [*] and include in the amended Annual Plan information
and objectives for the fiscal year next succeeding the last year
then covered by the Annual Plan. In the event that the Board of
Governors are unable to agree on such amendment in accordance with
the terms of Article VI of the GP Agreement, the information and
objectives for the fiscal year next succeeding the last year then
covered by the Annual Plan will be those of the last year then
covered by the Annual Plan.
(b) Each of the AT&T Partner and the Cirrus Partner
acknowledges that the Annual Plan will represent as of the Closing
Date their collective best views as to the matters described
therein. Each of the AT&T Partner and the Cirrus Partner agrees,
and agrees to cause its Affiliates, to cooperate with any of the
other parties hereto (and their Affiliates) and with the
Partnership and to use its reasonable best efforts to promote the
success of the Partnership in attaining the objectives set forth in
the Annual Plan. The parties hereto covenant and agree not to take
any action or fail to take any action which would reasonably cause
a material adverse effect to the Business or the Partnership.
3.03. Concurrence. Each of the parties hereto agrees
that it will vote and otherwise act and in all respects use its
best efforts and take all such steps as may be within its power so
as to comply, to cause its Affiliates to comply, and to cause the
Partnership to comply with and act in a manner in order to fully
effect the transactions contemplated hereby.
ARTICLE IV
OPERATION OF THE BUSINESS
4.01. Implementation Committee. As of the date hereof,
each of AT&T and Cirrus have designated [*] individuals to
represent them as members of an Implementation Committee (the
"Committee"), the purpose of which will be to finalize a mutually
acceptable written plan (the "Implementation Plan") for the orderly
start-up of the Partnership's business, which will be based
substantially upon the Preliminary Implementation Plan. Each of
the AT&T Partner and the Cirrus Partner will designate a
representative (an "Authorized Representative"), who will (i) be
acceptable to the other parties hereto, (ii) not be a member of the
Committee, (iii) be responsible for causing the transactions
contemplated by the Implementation Plan to be effected on behalf of
AT&T or Cirrus, as the case may be, and (iv) have been delegated
authority to enter into binding commitments on its behalf with
respect to matters covered by the Implementation Plan. Each party
hereto agrees to cooperate and to cause its Affiliates to cooperate
with the Committee in support of its effort to develop the
Implementation Plan in a manner which is consistent with
positioning the Partnership to attain the objectives of the Annual
Plan. The Implementation Plan will be based substantially on the
Preliminary Implementation Plan and will include: (a) a timetable
for AT&T's construction of the infrastructure and clean room
required to house and support an [*] silicon wafer fabrication
facility ("OR2") with capacity of approximately [*] wafer starts
per month at an approximate cost of $[*], specifying the respective
rights of the AT&T Partner and the Cirrus Partner to inspect,
modify (or cause to be modified) and approve such construction; (b)
details of the capital equipment and other assets located at AT&T's
current facility at Orlando ("OR1") which the AT&T Partner will
cause to be provided to the Partnership; (c) (i) a detailed summary
of the financing plan for the AT&T Assets, (ii) a detailed summary
of the financing plan for the Cirrus Assets and (iii) details of
the provision to the Partnership of approximately $[*] of AT&T
Assets and approximately $[*] of Cirrus Assets; and (d) details of
the technology, technology development and other intellectual
property which the AT&T Partner will cause to be transferred or
licensed, as the case may be, to the Partnership pursuant to the
Technical Transfer Agreement and the Patent License Agreement. The
Preliminary Implementation Plan will be effective from the date
hereof to and including the date of execution and delivery of the
Implementation Plan. The Implementation Plan will be effective
from the date of the execution and delivery thereof to and
including the Closing Date. Not later than [*] days after the
execution and delivery of this Agreement, the AT&T Partner and the
Cirrus Partner will execute the Implementation Plan. No member of
the Implementation Committee will have the authority or power to
bind any party hereto unless separately agreed to in writing by the
Authorized Representative of such party. The members of the
Implementation Committee (as provided in the immediately preceding
sentence) and the Authorized Representatives will have authority to
act on behalf of AT&T or Cirrus, as the case may be, until the
later of (a) formation of the Partnership and election of the Board
of Governors or (b) the Closing Date.
4.02. Financing of Capital Equipment; Delivery of
Capital Equipment. [ * ]
Each of the AT&T Partner and the Cirrus Partner covenant and agree
(a) to cause the AT&T Assets and the Cirrus Assets, respectively,
to be leased, delivered, sold or otherwise transferred to the
Partnership in accordance with the terms of the Implementation Plan
and (b) to cooperate with each other and their respective
Affiliates, and to cause their respective advisors to cooperate
with each other, in structuring such lease, delivery, sale or other
transfer to minimize any adverse accounting and tax implications on
any of AT&T, Cirrus, and their respective Affiliates which might
arise as a result of such lease, delivery, sale or other transfer.
4.03. Intellectual Property. The AT&T Partner will
cause AT&T to license or transfer, as the case may be, certain
technology, technology development and other intellectual property
(the "Intellectual Property") to the Partnership pursuant to, and
for the consideration specified in, the Technical Transfer
Agreement and the Patent License Agreement. [*].
4.04. Operation of Plant and Business. On and after the
Closing Date, the Partnership will conduct the Business in
accordance with this Section 4.04.
(a) Location. The Partnership will be located in
Orlando, Florida. On the Closing Date, the AT&T Partner will cause
AT&T to, and the Partnership will, execute and deliver the Lease.
(b) Operation.
(i) The Partnership will operate
OR1 solely for the benefit and for the account of the AT&T Partner.
The AT&T Partner will purchase the output of OR1 upon the terms and
subject to the conditions of the Wafer Supply Agreement. The
parties hereto acknowledge and agree that in no event will the
operation of OR1 be conducted in such a manner as to directly
result in a material adverse effect to the capacity, cost structure
or performance of OR2.
(ii) The Partnership will operate OR2 for the
mutual benefit of the AT&T Partner and the Cirrus Partner. The
AT&T Partner and the Cirrus Partner will purchase the output of OR2
upon the terms and subject to the conditions of the Wafer Supply
Agreement.
(iii) Operation of the Partnership will be in
accordance with the terms of the Annual Plan. The Partnership will
cause OR1 and OR2 to process wafers at the direction of the AT&T
Partner and the Cirrus Partner with respect to their respective
share of OR1 and OR2 capacity, consistent with the Annual Plan and
pursuant to the terms of the Wafer Supply Agreement, as long as
such operations do not adversely affect the capacity, cost
structure or performance of the manufacturing capabilities of OR2.
(c) Costs.
(i) OR1. [*] costs, charges, capital equipment and
working capital directly and indirectly associated with OR1 will be
paid by [*] pursuant to the cost allocations appearing in the
Annual Plan. Unless otherwise agreed to by the parties hereto,[*]
costs, charges, capital equipment and working capital directly
associated with a periodic wind-down or one-time shutdown of OR1
will be paid by [*].
(ii) (a) OR2 - Working Capital. The working
capital required with respect to OR2 will be provided [*] by [*].
(b) OR2 - Technology. [*] costs with respect
to the development of technology in accordance with the "technology
roadmap" specified in the Annual Plan will be paid by [*];
provided, however, that the cost of any variant to such technology
will be paid by [*]. All such wafers required for the development
or variation of technology will be provided from the portion of OR2
output to which [*] is entitled under the Wafer Supply Agreement.
(d) Profits. All profits and excess cash flow
attributable to OR1 will be distributed to the AT&T Partner in
accordance with the terms of the GP Agreement. All profits and
excess cash flow attributable to OR2 will be distributed to the
AT&T Partner and the Cirrus Partner in accordance with the terms of
the GP Agreement.
(e) Borrowings. The Partnership may enter into
such credit facilities as are specified in the Annual Plan.
4.05. Procurement of Administrative and Support
Services. The AT&T Partner and the Cirrus Partner acknowledge and
agree that either of the AT&T Partner or the Cirrus Partner may
provide such administrative or support services as the Partnership
may reasonably request, in which event such services will be
provided at such costs as the AT&T Partner and the Cirrus Partner
may mutually agree.
4.06. Personnel.
(a) The initial organization chart of
the Partnership and the headcount forecast, by category of employee
and position title, are set forth in the Annual Plan. AT&T will
make available to the Partnership, upon the terms and subject to
the conditions set forth in the AT&T Employee Services and Staffing
Agreement, the AT&T Employees. Cirrus may make available to the
Partnership, upon the terms and subject to the conditions set forth
in the Cirrus Employee Services and Staffing Agreement, the Cirrus
Employees. The parties hereto covenant and agree that the
Employees will be qualified to perform services in all of the
positions shown in the headcount forecast of the Partnership and
any other positions which the Board of Governors will, from time to
time, designate to be held by Employees.
(b) AT&T will review with Cirrus, and obtain
Cirrus' prior consent (such consent not to be unreasonably
withheld) to, personnel changes, reassignments or relocation of the
persons occupying the [*] positions which will be identified by
Cirrus at or prior to the Closing in accordance with the principles
set forth at Appendix III hereto. Other than with respect to the
persons referenced in the immediately preceding sentence, AT&T
agrees to limit reassignment or relocation of the AT&T Employees in
accordance with the principles set forth at Appendix III hereto.
(c) The Employees will be compensated as provided
in the AT&T Employee Services and Staffing Agreement and the Cirrus
Employee Services and Staffing Agreement, as the case may be.
(d) The Partnership will adopt and implement a
bonus plan (the "Bonus Plan"), the material terms of which are set
forth at Appendix IV hereto. The Bonus Plan may be amended or
modified in accordance with the terms of Article VI of the GP
Agreement. The Bonus Plan has the goal of encouraging Employees to
cause the manufacture of products by the Partnership at a cost and
defect rate and in a time frame in each case better than that
specified in the Annual Plan. The Bonus Plan will specify that
bonuses are to be calculated based upon the complete fiscal year
operation of the Partnership. [*] As more specifically set forth
in the Bonus Plan, in order to be entitled to such bonuses,
Employees (i) must have been assigned by AT&T or Cirrus, as the
case may be, to the Partnership, for the minimum time period set
forth in the Bonus Plan and (ii) must be engaged by the Partnership
on the date such bonuses are paid.
(e) Neither party hereto will, during the
employment of a Employee and during the [*] period following
termination of any such Employee, directly or indirectly, hire or
attempt to recruit or hire, as an employee, consultant, agent or
representative, such Employee if such Employee was a Employee of
the other party hereto. Notwithstanding the foregoing, an attempt
to recruit or hire by either party hereto will not include
advertisements, general employment searches and internal job
posting systems which are not specifically directed to the
Employees of the other party hereto.
4.07. Culture. The parties hereto agree to use their
reasonable best efforts to cause the creation of an
"entrepreneurial culture" within the Partnership.
4.08. Financing. From the date hereof to the Closing
Date, each of AT&T and Cirrus will use its reasonable best efforts
to secure such funds or financing as may be necessary to effect the
transactions contemplated hereby. Each of AT&T or the AT&T
Partner, on the one hand, and Cirrus or the Cirrus Partner, on the
other hand, will pay such interest carrying costs as may accrue
with respect to the AT&T Assets or the Cirrus Assets, respectively.
No later than [ * ] prior to the Closing, each of AT&T
and Cirrus will have delivered evidence to each other of the
availability of funds or financing as may be necessary to effect
the transactions contemplated by the Implementation Plan to occur
at or prior to the Closing Date.
4.09. Environmental Matters. As soon as reasonably
practicable following the execution and delivery of this Agreement,
AT&T and Cirrus will select a mutually acceptable nationally
recognized environmental consulting firm (the "Environmental
Consultants") to conduct a "Phase II" survey of the Land and the
Premises and to draft and deliver a report with respect thereto
(the "Environmental Report"). The Environmental Report will be
delivered no later than January 1, 1996 or as soon as practicable
thereafter to allow for the results of any required research or
laboratory testing. AT&T covenants and agrees to remediate or
otherwise correct, in accordance with the recommendations of the
Environmental Consultants, and in compliance with Hazardous
Materials Laws, all Pre-Existing Contamination that constitutes a
violation of Hazardous Materials Laws. Notwithstanding the
foregoing, AT&T covenants and agrees to comply with all
recommendations of the Environmental Consultants to the extent that
such recommendations comply with Hazardous Materials Laws.
4.10. Employee Matters.
(a)
(i) If the presence of
Hazardous Materials in, on, under or about the Premises is (x)
willfully caused by a natural person employed or retained by AT&T
or any Affiliate of AT&T (other than the Partnership and other than
the Landlord; provided, however, that this exclusion will not
release AT&T from any liability under this Section 4.10(a) (I) as
an entity acting other than as the Landlord) or any Agent of AT&T
and such natural person is not acting on the instruction of any
natural person employed or retained by Cirrus or (y) is caused by
the instruction of any natural person employed or retained by AT&T
or any Affiliate of AT&T (other than the Partnership and other than
the Landlord; provided, however, that this exclusion will not
release AT&T from any liability under this Section 4.10(a) (I) as
an entity acting other than as the Landlord) or any Agent of AT&T,
regardless of whether such instruction is followed by any natural
person employed or retained by AT&T or any natural person employed
or retained by Cirrus, and such presence of Hazardous Materials
results in contamination or deterioration of air, water or soil
resulting in a level of contamination or deterioration greater than
the levels established as acceptable by any governmental agency
having jurisdiction over such contamination or deterioration, then
AT&T will promptly take any and all action necessary to investigate
and remediate such contamination or deterioration if required by
Hazardous Materials Laws or as a condition to the issuance or
continuing effectiveness of any governmental approval which relates
to the use of the Premises or any part thereof.
(ii) If the presence of Hazardous Materials in,
on, under or about the Premises is (x) willfully caused by a
natural person employed or retained by Cirrus or any Affiliate of
Cirrus (other than the Partnership) or any Agent of Cirrus and such
natural person is not acting on the instruction of any natural
person employed or retained by AT&T or (y) is caused by the
instruction of any natural person employed or retained by Cirrus or
any Affiliate of Cirrus (other than the Partnership) or any Agent
of Cirrus, regardless of whether such instruction is followed by
any natural person employed or retained by AT&T or any natural
person employed or retained by Cirrus, and such presence of
Hazardous Materials results in contamination or deterioration of
air, water or soil resulting in a level of contamination or
deterioration greater than the levels established as acceptable by
any governmental agency having jurisdiction over such contamination
or deterioration, then Cirrus will promptly take any and all action
necessary to investigate and remediate such contamination or
deterioration if required by Hazardous Materials Laws or as a
condition to the issuance or continuing effectiveness of any
governmental approval which relates to the use of the Premises or
any part thereof.
(b)
(i) AT&T will make or cause to be made all
repairs to the Structural Components, and all repairs with respect
to any other damage or destruction to the Premises, to the extent
that any such repairs result from (i) the willful act or omission
of any natural person employed or retained by AT&T without having
been instructed to so act or omit to act by any natural person
employed or retained by Cirrus or (ii) the issuance of any
instruction by any natural person employed or retained by AT&T,
regardless of whether such instruction is followed by any natural
person employed or retained by AT&T or any natural person employed
or retained by Cirrus.
(ii) Cirrus will make or cause to be made all
repairs to the Structural Components, and all repairs with respect
to any other damage or destruction to the Premises, to the extent
that any such repairs result from (i) the willful act or omission
of any natural person employed or retained by Cirrus without having
been instructed to so act or omit to act by any natural person
employed or retained by AT&T or (ii) the issuance of any
instruction by any natural person employed or retained by Cirrus,
regardless of whether such instruction is followed by any natural
person employed or retained by AT&T or any natural person employed
or retained by Cirrus.
(iii) Notwithstanding anything to the contrary
contained in Article XI hereof, in the event of an insurable loss,
neither of AT&T or Cirrus, as the case may be, will be liable for
repairs in an amount greater than the Landlord's deductible under
applicable insurance policies.
ARTICLE V
MANAGEMENT; RIGHTS AND OBLIGATIONS OF THE PARTIES
5.01. Management; Rights and Obligations of the Parties.
The Partnership will be managed, and the AT&T Partner and the
Cirrus Partner will have the rights and obligations, as set forth
in the GP Agreement. The members of the Board of Governors will be
elected in accordance with the terms of the GP Agreement. The
officers of the Partnership will be appointed in accordance with
the terms of the GP Agreement.
ARTICLE VI
CONFIDENTIALITY
6.01. Confidential Information Defined. "Confidential
Information" means all marketing, technical or business information
created by the Partnership or disclosed by a party hereto (the
"Owner") to another party hereto(the "Recipient") which is
confidential, proprietary and/or not generally available to the
public. Information provided in tangible form will be clearly
marked "Confidential Information". Any technical information,
including but not limited to circuit layout, design, or software,
embedded in any device will be deemed to be Confidential
Information notwithstanding the absence of any marking on such
device. Information provided orally will be considered
Confidential Information if it is identified by the Owner as
Confidential Information at the time of oral disclosure and the
Owner summarizes such Confidential Information in a writing
provided to the Recipient within 20 (twenty) days following such
oral disclosure.
6.02. Treatment of Confidential Information. Unless
otherwise contemplated by this Agreement or the Material
Agreements, (a) Confidential Information provided by the Owner will
remain the property of the Owner and (b) no rights by license or
otherwise in any information will be granted solely by the
disclosure of Confidential Information. During the term hereof,
and for a period of three (3) years following the termination
hereof, the Recipient will, and will cause its Affiliates to, keep
confidential and will not disclose, and will cause its Affiliates
not to disclose, to third parties the Confidential Information
received from or made available by the Owner. The Recipient will
not use and will cause its Affiliates not to use such Confidential
Information for any purpose other than the performance of its
obligations under this Agreement or any of the Material Agreements
to which it is a party. At the conclusion of such three (3) year
period, written Confidential Information will be returned to the
Owner or destroyed as the Owner may elect, and no copies, extracts
or other reproductions will be retained by the Recipient. All
documents, memoranda, notes and other writings whatsoever prepared
by the Recipient which contain Confidential Information will be
returned to the Owner or destroyed at the Owner's request.
6.03. Excluded Information. Notwithstanding the
foregoing provisions of this Article VI, "Confidential Information"
will not include, and the Recipient will have no obligation with
respect to, any such information which:
(a) is already known to the Recipient as of the
date hereof;
(b) is or becomes publicly known, through
publication, inspection of a product, or otherwise, and through no
negligence or other wrongful act of the Recipient;
(c) is received by the Recipient from a third party
without similar restriction and without breach hereof;
(d) is independently developed by the Recipient; or
(e) is furnished to a third party by the Owner
without a similar restriction on the third party's rights.
6.04. Notice Prior to Disclosure. If the Recipient (or
its Affiliate) is requested or required (by oral questions,
interrogatories, requests for information or documents, subpoena,
civil investigative demand or similar process) to disclose any
Confidential Information, the Recipient will promptly notify the
Owner of such request or requirement so that the Owner may seek an
appropriate protective order or waive compliance with the
provisions of this Section 6.04. If, in the absence of a
protective order or the receipt of a waiver hereunder, the
Recipient (or any of its Affiliates) is, in the written opinion of
the Recipient's counsel, compelled to disclose the Confidential
Information or else stand liable for contempt or suffer other
censure or significant penalty, the Recipient (or its Affiliate)
may disclose only so much of the Confidential Information to the
party compelling disclosure as is required by law. The Recipient
will exercise (and will cause its Affiliate to exercise) reasonable
efforts to obtain a protective order or other reliable assurance
that confidential treatment will be accorded to Confidential
Information.
6.05. Agreements Confidential. Except as disclosure may
be required by law, the material terms and conditions of this
Agreement and the Material Agreements, and all Exhibits, Schedules,
Appendices, attachments and amendments hereto and thereto will be
deemed to be "Confidential Information" and treated in accordance
with the provisions of this Article VI. To the extent that such
disclosure is required by law, the parties hereto will not disclose
the terms and conditions of this Agreement and the Material
Agreements, and all Exhibits, Schedules, Appendices, attachments
and amendments hereto and thereto which the parties hereto deem to
be proprietary; provided, however, in no event will such disclosure
fail to satisfy the requirements of law which mandate such
disclosure.
ARTICLE VII
CLOSING
7.01. Closing Date. The Closing will be held on or
before [ * ] (the "Closing Date") at 10:00 a.m. local time
at the offices of AT&T, 131 Morristown Road, Basking Ridge, NJ, or
at such other date, time and place as the parties hereto will
mutually agree. Notwithstanding the foregoing, the transactions
contemplated hereby will be deemed to be effective as of 12:01 a.m.
on the Closing Date.
7.02. Conditions to the Obligations of Cirrus. The
obligation of Cirrus and the Cirrus Partner to consummate the
transactions contemplated hereby is subject to and conditioned upon
the satisfaction of each of the following conditions, any or all of
which may be waived in writing in whole or in part by Cirrus and
the Cirrus Partner:
(a) The representations and warranties of AT&T and
AT&T Partner contained in Article VIII and will be true and correct
at and as of the Closing Date as though such representations and
warranties were made at and as of such Closing Date.
(b) AT&T and the AT&T Partner will have performed
and complied in all material respects with all agreements,
covenants and conditions on its part required by this Agreement to
be performed or complied with at or prior to the Closing Date.
(c) On and prior to the Closing Date, no party to
the transactions contemplated hereby nor any of its Affiliates will
have received any notice of any threatened litigation or regulatory
proceeding being instituted or contemplated, and no such litigation
or proceedings will be pending, which challenge the legality hereof
or the transactions contemplated hereby or would have, individually
or in the aggregate, a material adverse effect on the transactions
contemplated hereby.
(d) All approvals of applications to public
authorities, federal, foreign, state or local, the granting of
which is necessary for the consummation of the transactions
contemplated hereby, will have been obtained and be satisfactory to
counsel to Cirrus.
(e) Cirrus will have received an opinion of counsel
to AT&T, who may be an employee of AT&T, dated the Closing Date, in
a form reasonably acceptable to counsel to Cirrus.
(f) All milestones to be achieved by AT&T set forth
in the Implementation Plan will have been completed.
(g) All material obligations of AT&T set forth in
the Implementation Plan will have been discharged.
7.03. Conditions to Closing of AT&T. The obligation of
AT&T and the AT&T Partner to consummate the transactions
contemplated hereby is subject to and conditioned upon the
fulfillment of each of the following conditions, any of which may
be waived in writing in whole or in part by AT&T and the AT&T
Partner:
(a) The representations and warranties of Cirrus
and the Cirrus Partner contained in Article IX will be true and
correct at and as of the Closing Date as though such
representations and warranties were made at and as of such Date.
(b) Cirrus and the Cirrus Partner will have
performed and complied in all material respects with all
agreements, covenants and conditions on its part required by this
Agreement to be performed or complied with prior to or at the
Closing Date.
(c) On or prior to the Closing Date, no party to
the transactions contemplated hereby nor any of their Affiliates
will have received any notice of any threatened litigation or
regulatory proceeding being instituted or contemplated, and no such
litigation or proceedings will be pending, which challenge the
validity or legality hereof or the transactions contemplated hereby
or could have, individually or in the aggregate, a material adverse
effect on the transactions contemplated hereby.
(d) All approvals of applications to public
authorities, federal, foreign, state or local, the granting of
which is necessary for the consummation of the transaction
contemplated hereby, will have been obtained and be satisfactory to
counsel to AT&T.
(e) AT&T will have received an opinion of counsel
for Cirrus dated the Closing Date, in a form reasonably acceptable
to counsel to AT&T.
(f) All milestones to be achieved by Cirrus set
forth in the Implementation Plan will have been completed.
(g) All material obligations of Cirrus set forth in
the Implementation Plan will have been discharged.
7.04. Actions and Deliveries at Closing. At or prior to
the Closing:
(a) The AT&T Partner and the Cirrus Partner will
take all of the actions required by them as partners in the
Partnership in order for the Partnership to perform the actions
required on its part by this Article VII and will cause their
nominees to the Board of Governors to vote for the approval of such
actions of the Partnership;
(b) the AT&T Partner and the Cirrus Partner will
make the initial capital contributions to the Partnership as set
forth in the GP Agreement;
(c) AT&T and the AT&T Partner will deliver to
Cirrus and the Cirrus Partner the certificates and documents
contemplated by Section 7.02 and 7.05 hereof;
(d) Cirrus and the Cirrus Partner will deliver to
AT&T and the AT&T Partner the certificates and documents
contemplated by Section 7.03 and 7.05 hereof;
(e) the Partnership, AT&T, Cirrus, the AT&T
Partner, the Cirrus Partner and the other parties to the Material
Agreements will execute and deliver original counterparts of the
Material Agreements; and
(f) the parties hereto will execute and deliver
such other documents, instruments, certificates or other items as a
party will reasonably request to be delivered at the Closing in
connection with the transactions contemplated herein.
7.05. Certificates. Each of the parties hereto will
furnish to the other party such certificates of such party's
officers or others and such other documents to evidence fulfillment
of the conditions set forth in this Article VII as the other party
may reasonably request.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF AT&T AND THE AT&T PARTNER
AT&T and the AT&T Partner jointly and severally represent
and warrant to Cirrus and the Cirrus Partner as follows:
8.01. Organization and Authority. Each of AT&T and the
AT&T Partner is a corporation duly organized and validly existing
under the laws of the State of New York, and has requisite power
and authority (corporate and other) to own its properties and to
carry on its business as now being conducted. Each of AT&T and the
AT&T Partner has full power to execute and deliver this Agreement
and the Material Agreements and to consummate the transactions
contemplated hereby and thereby.
8.02. Authorization.
(a) The execution and delivery of
this Agreement and the Material Agreements by AT&T and the AT&T
Partner, and the documents and agreements provided for herein and
therein, and the consummation by AT&T and the AT&T Partner of all
transactions contemplated hereby or thereby, have been duly
authorized by all requisite corporate action. This Agreement and
the Material Agreements and all such other agreements and written
obligations entered into and undertaken in connection with the
transactions contemplated hereby or thereby to which each of AT&T
and the AT&T Partner is a party, constitute or will constitute
following the execution and delivery thereof valid and legally
binding obligations of AT&T and the AT&T Partner, enforceable
against them in accordance with their respective terms, subject as
to enforcement of remedies to applicable bankruptcy, insolvency,
reorganization and other laws affecting generally the enforcement
of the rights of creditors and subject to a court's discretionary
authority with respect to the granting of a decree ordering
specific performance or other equitable remedies;
(b) The execution, delivery and performance by AT&T
and the AT&T Partner of this Agreement and the Material Agreements,
as the case may be, and the documents and agreements provided for
herein and therein, and the consummation by AT&T and the AT&T
Partner of the transactions contemplated hereby and thereby, will
not, with or without the giving of notice or the passage of time or
both: (i) violate the provisions of any applicable law;
(ii) violate the provisions of the Certificate of Incorporation or
by-laws (each as amended from time to time) of AT&T or the AT&T
Partner or any resolution of its directors or shareholders; and
(iii) violate any judgment, decree, order or award of any court,
governmental agency or arbitrator; or (iv) conflict with or result
in the breach or termination of any material term or provision of,
or constitute a default under, or cause any acceleration under, any
license, permit, concession, franchise, indenture, mortgage, lease,
equipment lease, contract, permit, deed of trust or other
instrument or agreement by which AT&T or the AT&T Partner is or may
be bound; and
(c) Each of AT&T and the AT&T Partner is not
precluded by the terms of any contract, agreement or other
instrument by which either of them is bound from entering into this
Agreement and the Material Agreements, and the documents and
agreements provided for herein or therein or the consummation by
AT&T and the AT&T Partner of the transactions contemplated hereby
and thereby.
8.03. Litigation. There are no actions, suits,
investigations or other proceedings pending or, to the knowledge of
AT&T or the AT&T Partner, threatened, there is no order, judgment
or decree of any court or governmental agency, and to the knowledge
of AT&T or the AT&T Partner no facts or circumstances exist, which
could reasonably be expected to give rise to a claim, action, suit
or proceeding which could materially and adversely affect the
Partnership or the transactions contemplated hereby and by the
Material Agreements.
8.04. Financial Information. AT&T has previously
delivered or will deliver prior to the Closing Date to Cirrus the
financial statements set forth in the Reports on Form 10-K for the
years ended December 31, 1994 and December 31, 1995, and the
Reports on Form 10-Q for the quarters ended September 30, 1995 and
March 31, 1996 (collectively referred to herein as the "AT&T
Financial Statements"). The AT&T Financial Statements present
fairly in all material respects the financial position and results
of operations of AT&T as of the dates and for the periods indicated
thereon and are in conformity with GAAP, consistently applied,
except that the financial statements set forth in the Reports on
Form 10-Q for the quarters ended September 30, 1995 and March 31,
1996 are subject to normal year-end adjustments and any other
adjustments described therein, and do not contain all of the
footnote disclosures required by GAAP.
8.05. Other Representations and Warranties. Certain
representations and warranties of AT&T and the AT&T Partner are
made and set forth in the Material Agreements. Such
representations and warranties are incorporated herein by reference
and made a part hereof.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES OF Cirrus AND THE CIRRUS PARTNER
Cirrus and the Cirrus Partner jointly and severally
represent and warrant to AT&T and the AT&T Partner as follows:
9.01. Organization and Authority. Each of Cirrus and
the Cirrus Partner is a corporation duly organized and validly
existing under the laws of the State of California, and has
requisite power and authority (corporate and other) to own its
properties and to carry on its business as now being conducted.
Each of Cirrus and the Cirrus Partner has full power to execute and
deliver this Agreement and the Material Agreements and to
consummate the transactions contemplated hereby and thereby.
9.02. Authorization.
(a) The execution and delivery of
this Agreement and the Material Agreements by Cirrus and the Cirrus
Partner, and the documents and agreements provided for herein and
therein, and the consummation by Cirrus and the Cirrus Partner of
all transactions contemplated hereby or thereby, have been duly
authorized by all requisite corporate action. This Agreement and
the Material Agreements and all such other agreements and written
obligations entered into and undertaken in connection with the
transactions contemplated hereby or thereby to which each of Cirrus
and the Cirrus Partner is a party, constitute or will constitute
following the execution and delivery thereof valid and legally
binding obligations of Cirrus and the Cirrus Partner, enforceable
against them in accordance with their respective terms, subject as
to enforcement of remedies to applicable bankruptcy, insolvency,
reorganization and other laws affecting generally the enforcement
of the rights of creditors and subject to a court's discretionary
authority with respect to the granting of a decree ordering
specific performance or other equitable remedies;
(b) The execution, delivery and performance by
Cirrus and the Cirrus Partner of this Agreement and the Material
Agreements, as the case may be, and the documents and agreements
provided for herein and therein, and the consummation by Cirrus and
the Cirrus Partner of the transactions contemplated hereby and
thereby, will not, with or without the giving of notice or the
passage of time or both: (i) violate the provisions of any
applicable law; (ii) violate the provisions of the Articles of
Incorporation or by-laws (each as amended from time to time) of
Cirrus or the Cirrus Partner or any resolution of its directors or
shareholders; (iii) violate any judgment, decree, order or award of
any court, governmental agency or arbitrator; or (iv) conflict with
or result in the breach or termination of any material term or
provision of, or constitute a default under, or cause any
acceleration under, any license, permit, concession, franchise,
indenture, mortgage, lease, equipment lease, contract, permit, deed
of trust or other instrument or agreement by which Cirrus or the
Cirrus Partner is or may be bound.
(c) Each of Cirrus and the Cirrus Partner is not
precluded by the terms of any contract, agreement of other
instrument by which either of them is bound from entering into this
Agreement and the Material Agreements, and the documents and
agreements provided for herein or therein or the consummation by
Cirrus and the Cirrus Partner of the transactions contemplated
hereby and thereby.
9.03. Litigation. There are no actions, suits,
investigations or other proceedings pending or, to the knowledge of
Cirrus and the Cirrus Partner, threatened, there is no order,
judgment or decree of any court or governmental agency, and to the
knowledge of Cirrus or the Cirrus Partner no facts or circumstances
exist, which could reasonably be expected to give rise to a claim,
action, suit or proceeding which could materially and adversely
affect the Partnership or the transactions contemplated hereby and
by the Material Agreements.
9.04. Financial Information. Cirrus has previously
delivered or will deliver prior to the Closing Date to AT&T the
financial statements set forth in the Report on Form 10-K for the
year ended April 1, 1995 and the Reports on Form 10-Q for the
quarters ended July 1, 1995, September 30, 1995 and December 30,
1995 (collectively referred to herein as the "Cirrus Financial
Statements"). The Cirrus Financial Statements present fairly in
all material respects the financial position and results of
operations of Cirrus as of the dates and for the periods indicated
thereon and are in conformity with GAAP, consistently applied,
except that the financial statements set forth in the Reports on
Form 10-Q for the quarters ended July 1, 1995, September 30, 1995
and December 30, 1995 are subject to normal year-end adjustments
and any other adjustments described therein, and do not contain all
of the footnote disclosures required by GAAP.
9.05. Other Representations and Warranties. Certain
representations and warranties of Cirrus and the Cirrus Partner are
made and set forth in the Material Agreements. Such
representations and warranties are incorporated herein by reference
and made a part hereof.
ARTICLE X
TERM AND TERMINATION
10.01. Term. Unless extended by agreement of the
parties hereto, this Agreement will terminate (a) in accordance
with the provisions of this Article X or (b) upon termination of
the GP Agreement in accordance with the terms thereof. Upon such
termination, the parties hereto agree to take all of the actions
required to liquidate and dissolve to the Partnership in an orderly
manner.
10.02. Termination Prior to the Closing Date. This
Agreement may be terminated and the transactions herein
contemplated may be abandoned as follows:
(a) By consent of the parties hereto at any time on
or prior to the Closing Date; or
(b) By AT&T or the AT&T Partner if any of the
conditions provided for in Section 7.03 hereof will not have been
met, or not have been waived in writing by AT&T and the AT&T
Partner, prior to or on the Closing Date; or
(c) By Cirrus or the Cirrus Partner if any of the
conditions provided for in Section 7.02 hereof will not have been
met, or not have been waived in writing by Cirrus and the Cirrus
Partner, prior to or on the Closing Date; provided, however, that
if the Closing has not occurred and this Agreement has not been
earlier terminated, or extended by agreement of the parties hereto,
this Agreement will terminate on [ * ]. If this
Agreement is terminated as provided herein, then no party hereto
will have any liability or further obligation to any other party
hereto, except as stated in Section 2.02 and Article VI hereof, and
except that nothing herein will relieve any party from liability
for any breach hereof prior to such termination. Notwithstanding
anything to the contrary contained in this Agreement, in the event
that any party hereto willfully fails to consummate the
transactions contemplated by this Agreement required to have been
consummated on or prior to the Closing Date, any other party hereto
may seek any and all available remedies in a court of competent
jurisdiction with respect to liability therefor.
10.03. Termination Following the Closing Date; Events of
Default; Remedies.
(a) For purposes of this Agreement, each of the
events in Section 10.03(b) hereof will constitute an "Event of
Default" hereunder. For purposes of this Agreement, the party
hereto giving rise to the Event of Default is referred to herein as
the "Defaulting Partner" and the party not giving rise to the Event
of Default is referred to herein as the "Non-Defaulting Partner".
If an Event of Default occurs, the remedies for such Event of
Default will be as set forth in Section 10.03(b) hereof with
respect to such Event of Default; provided, however, that no Event
of Default will give rise to the remedies set forth in
Section 10.03(b) hereof unless such Event of Default is continuing
without resolution following the procedures set forth in
Section 10.03(c) hereof. The remedies provided herein are
cumulative and will not preclude the assertion by any party hereto
of any other rights or seeking any other remedies otherwise
available against the other party hereto (including but not limited
to damages, specific performance and injunctive or other equitable
relief).
(b) Events of Default and the remedies therefor are
as follows:
(i) A party hereto becomes insolvent (however
such insolvency may be evidenced) or makes a general assignment for
the benefit of creditors; in such event, the Non-Defaulting Partner
may elect to terminate this Agreement upon written notice and in
the event of such election to terminate will also elect in such
notice one of the following options (such options collectively
being referred to herein as the "Buy-Out Options"):
a. The Non-Defaulting Partner will purchase
the interest in the Partnership of the Defaulting Partner.
Following such notice, the Defaulting Partner will sell its
interest in the Partnership to the Non-Defaulting Partner for
an agreed upon price, or if no price can be agreed upon, the
fair market value of such interest as determined by an
independent qualified appraiser appointed by the Defaulting
Partner and the Non-Defaulting Partner. If they cannot agree
on an appraiser, the Non-Defaulting Partner and the Defaulting
Partner will each choose an appraiser and the two appraisers
will choose one additional appraiser. The fair market value
of the interest of the Defaulting Partner will be determined
by the three appraisers or, if they cannot agree, will be the
average of the three appraisers' valuation. At the
consummation of the sale of the interest in the Partnership of
the Defaulting Partner, the fair market value of the
Defaulting Partner's interest will be paid in cash or in the
form of a promissory note with such terms, interest rates,
payment amounts and other terms as will be mutually agreed
upon by the Non-Defaulting Partner and the Defaulting Partner;
or
b. The Non-Defaulting Partner will sell its
interest in the Partnership to the Defaulting Partner or,
subject to the consent limitations set forth in subsections
(b)(v) and (vi) below, to a third party; or
c. The Non-Defaulting Partner and the
Defaulting Partner will take all actions required to dissolve
the Partnership.
(ii) A petition in bankruptcy, or for any
relief under any law relating to the relief of debtors,
readjustment of indebtedness, reorganization, composition or
extension will be filed, or any proceeding will be instituted under
any such law, by or against a party hereto; in such event, the Non-Defaulting
Partner may elect to terminate this Agreement upon
written notice and in the event of such election to terminate will
also elect one of the Buy-Out Options.
(iii) Any governmental authority or any court
at the instance thereof will take possession of all or
substantially all of the property of, or assume control over the
affairs or operations of, or a receiver will be appointed for all
or substantially all of the property of, or a writ or order of
attachment or garnishment will be issued or made against all or any
substantial part of the property of, a party hereto; in such event,
the Non-Defaulting Partner may elect to terminate this Agreement
upon written notice and in the event of such election to terminate
will also elect one of the Buy-Out Options.
(iv) Any party's failure to fund working
capital obligations of the Partnership following the Closing Date
or make any payments required under this Agreement or any of the
Material Agreements following the Closing Date; in such event, the
Non-Defaulting Partner will have the option to increase its share
of OR2's Wafer (as defined in the Wafer Supply Agreement) capacity
in an amount equal to [*]. Illustrating by way of example but not
of limitation, if the Non-Defaulting Partner was entitled to [*] of
the capacity of OR2 prior to invocation of the [*], the Non-Defaulting
Partner would be entitled to [*] of the capacity of OR2
following invocation of the [*]. The [*] will be subject to the
following limitations:
(a) the [*] will continue for so long as the
Event of Default remains uncured and for [ * ] thereafter;
(b) the Non-Defaulting Partner will purchase
Wafers subject to the [*] at [*] of the consideration payable
for such Wafers in the absence of the [*] and the Defaulting
Partner will pay to the Partnership [*] of the consideration
payable for such Wafers in the absence of the [*], in each
case pursuant to the terms of the Wafer Supply Agreement, for
so long as the [*] is in effect;
(c) the [*] may not be imposed with respect to
the continuation of an Event of Default during the period that
such Event of Default remains uncured;
(d) the [*] will be limited to a maximum of
[*] of the total capacity of OR2, and the [*] will at all
times be based on total capacity of OR2 (and not the capacity
of OR2 remaining after any application of any [*]).
(v) A change in the beneficial ownership or
voting control of more than [ * ] percent ([ * ]%) of the equity
securities of Cirrus, the Cirrus Partner or the Integrated Circuits
Group of AT&T Microelectronics such that after the change the same
are owned directly or indirectly by one Person (or any Affiliate
of such Person), the merger or consolidation of Cirrus, the Cirrus
Partner or the Integrated Circuits Group of AT&T Microelectronics
with or into any person or entity which is not an Affiliate of such
party, or the sale of all or substantially all of the assets of
Cirrus, the Cirrus Partner or the Integrated Circuit Division of
AT&T Microelectronics; in such event, the Non-Defaulting Partner
may, subject to the following, terminate this Agreement upon
written notice and in the event of such election to terminate will
also elect one of the Buy-Out Options:
(a) The foregoing will not apply to any change
of control pursuant to any transaction effecting the
Restructuring; and
(b) Demonstration by the Non-Defaulting
Partner, exercising its reasonable business judgment, that
such change of control is unacceptable.
(vi) The material breach by any party hereto of
any other provision of this Agreement or any of the Material
Agreements (other than the failure to make payments hereunder or
thereunder and other than a breach of the Lease); in such event,
the Non-Defaulting Partner may elect to terminate this Agreement
upon written notice and in the event of such election to terminate
will also elect one of the Buy-Out Options; provided, however, that
if the Non-Defaulting Partner elects option (a) of the Buy-Out
Options, the fair market value determined by the appraisers, and
therefore the amount paid by the Non-Defaulting Partner for the
interest in the Partnership of the Defaulting Partner, will be
[ * ]; and provided, further, that any sale
to a third party pursuant to option (b) of the Buy-Out Options will
be subject to the consent of the Defaulting Party, such consent not
to be unreasonably withheld.
[ * ]
(c) The parties hereto will follow the following
procedures in connection with the foregoing:
(i) Notice. If an event occurs which, if
uncured, would give rise to an Event of Default, the Non-Defaulting
Partner will give a notice to the Defaulting Partner specifying in
reasonable detail such event, and the Defaulting Partner will have
[ * ] after receipt of such notice to cure such event.
In the absence of such cure, an Event of Default will be deemed to
have occurred as of the first date of the occurrence of such event.
Notwithstanding anything to the contrary contained in this
Agreement, the procedures set forth in this Section 10.03 will
commence and continue during the [ * ] cure period.
(ii) Consultation/Mediation/Arbitration. The
parties will attempt to resolve the event through consultation and
mediation in accordance with the provisions of Section 13.02(b)
hereof (even during the [ * ] cure period described in
the immediately preceding subsection (i)), but any mediation
pursuant to Section 13.02(b) hereof will occur within [ * ]
after selection of the mediator, or such other period to which
the parties may otherwise agree. If the event giving rise to the
Event of Default specified in sections (b)(i) through (iv) of this
Section 10.03 remains uncured following the [ * ] cure
period, the Non-Defaulting Partner may invoke the applicable
remedies specified in section (b) of this Section 10.03. If the
event giving rise to the Event of Default specified in sections
(b)(v) or (vi) of this Section 10.03 remains uncured following the
[ * ] cure period, the parties hereto will pursue
resolution of the matter pursuant to the procedures for mediation
and arbitration set forth in Article XIII hereof. No failure by a
party to provide notice as set forth in this Section 10.03(c) with
respect to a breach hereof or a default by any other party will
constitute a waiver of the former party's right to enforce any
provision hereof or to take action with respect to such breach or
default or any subsequent breach or default.
(iii) Arbitration. If the event remains
unresolved following exhaustion of the procedures set forth in the
immediately preceding subsection (ii), the event will be subject to
the arbitration provisions set forth in Section 13.02(c) hereof.
(d) The parties hereto hereby agree that in the
event of a sale pursuant to this Section 10.03:
(i) for purposes of this Section 10.03 only,
the interest in the Partnership of AT&T will be deemed to include
the AT&T Assets, the other assets of AT&T and the AT&T Partner
comprising OR2, OR1, the Premises and the Land;
(ii) for purposes of this Section 10.03 only,
the interest in the Partnership of Cirrus will be deemed to include
the Cirrus Assets and the other assets of Cirrus and the Cirrus
Partner comprising OR2; and
(iii) such sale will be consummated as soon as
reasonably practicable following the occurrence of the Event of
Default and the election of option (a) or (b) of the Buy-Out
Options by the Non-Defaulting Partner.
In the event of any such sale in which the AT&T Partner is the
Partner selling its interest in the Partnership, AT&T will use its
reasonable best efforts to cause all leases and other agreements
covering the AT&T Assets to be assigned to the Partner or third-party
purchasing such interest, and the Partner or third-party
purchasing such interest will assume all obligations under any such
leases and other agreements. In the event of any such sale in
which the Cirrus Partner is the Partner selling its interest in the
Partnership, Cirrus will use its reasonable best efforts to cause
all leases and other agreements covering the Cirrus Assets to be
assigned to the Partner or third-party purchasing such interest,
and the Partner or third-party purchasing such interest will assume
all obligations under any such leases and other agreements. The
parties hereto acknowledge and agree that AT&T and its Affiliates
may, in its or their sole discretion, enter into transactions,
agreements, understandings or arrangements with respect to the
Premises and/or the Land, including but not limited to those which
may give rise to sales, over leases, mortgages, security interests,
liens or encumbrances; provided, however, that in the event of any
such transactions, agreements, understandings or arrangements, the
Lease will not be terminated other than in accordance with the
terms thereof.
(e) Notwithstanding anything to the contrary
contained in this Article X, the parties hereto agree that a
Deadlock will not result in an Event of Default or be subject to
arbitration hereunder and will be resolved in accordance with the
procedures contained in Sections 13.02 and 3.02(a) hereof.
10.04. Continuing Obligations of the Parties.
Notwithstanding the termination of this Agreement pursuant to
Section 10.03, (i) each of the Material Agreements will continue or
terminate in accordance with its terms, (ii) each party hereto
agrees, and agrees to cause its Affiliates, to continue for [ * ]
transition period, or if shorter as may be agreed to by
the parties hereto and thereto, as the case may be, for their
remaining terms, such agreements and arrangements between the
Partnership and such party or its Affiliate with respect to the
furnishing of products, premises or services as may then be in
existence and (iii) each party hereto agrees to provide for such
transition period the reasonable assistance, on terms and
conditions to be agreed upon, of such party and its Affiliates in
effecting an orderly transition of the Partnership's business.
Unless otherwise agreed to in writing by the parties hereto and
their Affiliates which are parties to the Material Agreements, the
transition period under clauses (ii) and (iii) of this
Section 10.04 will not extend for more than [ * ] following
the consummation of a sale pursuant to Section 10.03.
10.05. Survival. All representations and warranties
will survive the Closing Date and any investigation at any time
made by or on behalf of any party until the third anniversary of
the Closing Date. All covenants and agreements made by the parties
hereto or pursuant hereto or in any other agreement, instrument or
document delivered in connection herewith, including, but not
limited to, the Material Agreements, will survive the Closing Date.
ARTICLE XI
INDEMNIFICATION
11.01. Agreement to Indemnify.
(a) Upon the terms and
subject to the conditions of this Article XI, AT&T and the AT&T
Partner (the "AT&T Group") hereby agrees to indemnify:
(i) Cirrus and the Cirrus Partner (the "Cirrus
Group") from and against any liabilities or damages resulting to
the Cirrus Group by reason or resulting from any inaccuracy in, or
any breach of, any representation or warranty, covenant or
agreement of the AT&T Group contained in or made pursuant to this
Agreement or in or made pursuant to the Material Agreements, except
as otherwise specified therein; and
(ii) the Landlord from and against any
liabilities or damages resulting to the Landlord by reason or
resulting from any matter or the existence of any condition
described in Section 4.10(a)(i) and 4.10(b)(i) hereof.
(b) Upon the terms and subject to the conditions of
this Article XI, the Cirrus Group hereby agrees to indemnify:
(i) the AT&T Group from and against any
liabilities or damages resulting to the AT&T Group by reason or
resulting from any inaccuracy in, or any breach of, any
representation or warranty, covenant or agreement of the Cirrus
Group contained in or made pursuant to this Agreement or in or made
pursuant to the Material Agreements, except as otherwise specified
therein; and
(ii) the Landlord from and against any
liabilities or damages resulting to the Landlord by reason or
resulting from any matter or the existence of any condition
described in Section 4.10(a)(ii) and 4.10(b)(ii) hereof.
(c) Each matter for which the AT&T Group or the
Cirrus Group has agreed to provide indemnification pursuant to
Section 11.01(a) or 11.01(b) hereof is hereinafter referred to as a
"Claim" and collectively as "Claims".
11.02. Conditions of Indemnification. The obligations
and liabilities of the AT&T Group, on the one hand, and the Cirrus
Group, on the other hand, under Section 11.01 hereof with respect
to Claims will be subject to the following terms and conditions:
(a) The person seeking indemnification (the
"Indemnified Party") will give the person providing indemnification
(the "Indemnifying Party") prompt notice of any such Claim, which
notice will set forth the details of the Claim and the specific
provisions of this Agreement relating thereto, and the Indemnifying
Party will undertake the defense thereof by representatives chosen
by it. The notice will set forth the details of the Claim and the
specific provisions of this Agreement relating thereto.
(b) The Indemnified Party will make available to
the Indemnifying Party all records or other materials reasonably
requested by it for its use in contesting any Claim and will
cooperate fully with the Indemnifying Party in the defense of all
such Claims.
(c) If the Indemnifying Party, within a reasonable
time after notice of any such Claim, fails to defend the
Indemnified Party, the Indemnified Party (upon further notice to
the Indemnifying Party) will have the right to undertake the
defense, compromise or settlement of such Claim on behalf of and
for the account and risk of the Indemnifying Party, subject to the
right of the Indemnifying Party to assume the defense of such Claim
at any time prior to settlement, compromise or final determination
thereof.
(d) Anything in this Section 11.02 to the contrary
notwithstanding, (i) if there is a reasonable probability that a
Claim may materially and adversely affect the Indemnified Party
other than as a result of money damages or other money payments,
the Indemnified Party will have the right to defend, compromise or
settle such Claim; provided, however, that no settlement which
would require indemnification by the Indemnifying Party will be
entered into without the consent of the Indemnifying Party, which
consent will not be unreasonable withheld or delayed, and (ii) the
Indemnifying Party, will not settle or compromise any Claim or
consent to the entry of any judgment which does not include, as an
unconditional term thereof, the giving by the claimant or the
plaintiff to the Indemnified Party of a release from all liability
in respect of such Claim.
(e) The AT&T Group will have no obligation to
indemnify for liabilities or damages under Section 11.01(a)(i)
hereof and the Cirrus Group will have no obligation to indemnify
for liabilities or damages under Section 11.01(b)(i) hereof unless
and until the aggregate of their respective liabilities or damages
exceeds $[*], and in no event will the amount payable pursuant to
the AT&T Group's obligation to indemnify for liabilities or damages
under Section 11.01(a)(i) hereof or the amount payable pursuant to
the Cirrus Group's obligation to indemnify for liabilities or
damages under Section 11.02(b)(i) exceed $[*].
(f) No loss, damage or expense will be deemed to
have been sustained by an Indemnified Party under this Article XI
to the extent of (i) any tax savings realized by such Indemnified
Party with respect thereto or (ii) any proceeds received by such
Indemnified Party from any insurance policies with respect thereto;
provided, however, that the parties hereto acknowledge and agree
that no party will be required pursuant to this Article XI to
mitigate liabilities or damages by seeking tax savings or insurance
proceeds.
ARTICLE XII
AUDITORS; ACCOUNTING MATTERS
12.01. Independent Accountant. The Partnership will
retain Coopers & Lybrand as its initial Independent Accountant. In
the event that AT&T or its successors or assigns does not appoint
Coopers & Lybrand as its independent public accountant, the
Partnership will retain such other independent public accountant as
AT&T or its successors or assigns may appoint.
12.02. Financial Statements. The Partnership will
maintain at its principal office books, records and reports
pertaining to all operations and reflecting, in accordance with the
accounting standard prescribed in this Section 12.02, all receipts
and expenditures of the Partnership and as otherwise required by
applicable law. The financial statements and books and records of
the Partnership will be maintained in accordance with GAAP. The
year-end financial statements of the Partnership will be audited by
the Independent Accountant. The Independent Accountant will submit
to the Partnership its report(s) on the financial statements of the
Partnership and the schedules with respect thereto prepared in
accordance with GAAP and in such form and substance as to allow
consolidation of the Partnership's financial statements with the
financial statements of AT&T.
12.03. Reports. As soon as available and in any event
within forty-five (45) days after the end of each fiscal quarter of
the Partnership during the first fiscal year of the Partnership,
and within thirty (30) days after the end of each fiscal quarter of
the Partnership thereafter, the Partnership will provide to each
party hereto an unaudited consolidated balance sheet and profit and
loss statement of the Partnership and its subsidiaries, if any, and
a cash flow statement for such period prepared in accordance with
GAAP. As soon as available and in any event within ninety
(90) days after the close of the first fiscal year of the
Partnership, and within sixty (60) days after the close of each
fiscal year of the Partnership thereafter, the Partnership will
provide each party hereto with a consolidated balance sheet and
profit and loss statement of the Partnership and its subsidiaries,
if any, and a cash flow statement as at the end of and for the
fiscal year, reviewed (but not audited) by the Independent
Accountant, prepared in accordance with GAAP.
12.04. Fiscal Year. The Partnership's fiscal year will
be the calendar year unless otherwise designated at a general
meeting of the members of the Partnership.
ARTICLE XIII
NOTICE OF DEADLOCK OR DISPUTE; DISPUTE RESOLUTION;
ARBITRATION
[ * ]
ARTICLE XIV
MISCELLANEOUS
14.01. Notices. Any notice to be given under this
Agreement will be deemed to have been duly given upon receipt when
in writing and delivered in person, by facsimile transmission, by
telex or by courier, addressed as follows:
(a) If to AT&T or the AT&T Partner:
AT&T Corp.
555 Union Boulevard
Allentown, PA 18103
Attention: Paul Mostek
Facsimile: 610-712-5336
with a copy to:
AT&T Corp.
AT&T Microelectronics
Two Oak Way
Berkeley Heights, NJ 07922
Attention: Law Department
Facsimile: 908-771-4582
(b) If to Cirrus or the Cirrus Partner:
Cirrus Logic, Inc.
3100 West Warren Avenue
Fremont, CA 94538-6423
Attention: Ed Ross
Facsimile: 510-226-2230
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
Attention: Arthur F. Schneiderman, Esq.
Facsimile: 415-493-6811
(c) If to the Partnership:
Addressed to the Partnership as
Named in the General Partnership
Agreement
9333 South John Young Parkway
Orlando, FL
with a copy to:
AT&T Corp.
555 Union Boulevard
Allentown, PA 18103
Attention: Paul Mostek
Facsimile: 610-712-5336
and with an additional copy to:
Cirrus Logic, Inc.
3100 West Warren Avenue
Fremont, CA 94538-6423
Attention: Ed Ross
Facsimile: 510-226-2230
Any party or the Partnership may change its address provided above
for the purpose hereof by giving written notice to the other party
hereto of such change in the manner hereinabove provided.
14.02. Governing Law. This Agreement and all questions
of its interpretation will be construed in accordance with the laws
of the State of New York without regard to its principles of
conflicts of laws.
14.03. Assignment. Except to the extent permitted under
Article X hereof, the rights and obligations under this Agreement
may not be assigned by any party to any person; provided, however,
AT&T may assign this Agreement and its rights and obligations
hereunder in connection with any transaction effecting the
Restructuring and any such assignment will release AT&T of its
obligations and liabilities hereunder. Any other attempted
assignment in contravention of this provision will be void.
14.04. Limitation of Liability. Notwithstanding
anything to the contrary contained herein, none of the parties
hereto or their respective Affiliates will be liable for the
incidental, indirect, special or consequential damages of the other
party hereto or its Affiliates. THEREFORE, THE PARTIES HERETO
(INCLUDING FOR THIS PURPOSE THEIR AFFILIATES) EXPRESSLY ACKNOWLEDGE
AND AGREE THAT THEY WILL NOT BE LIABLE FOR EACH OTHER'S INCIDENTAL,
INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS
OR LOST REVENUES) UNDER THIS AGREEMENT OR THE MATERIAL AGREEMENTS,
REGARDLESS OF WHETHER SUCH LIABILITY ARISES IN TORT, CONTRACT,
BREACH OF WARRANTY, INDEMNIFICATION OR OTHERWISE.
14.05. Further Assurances. The parties hereto and the
Partnership will, from time to time and without further
consideration, execute and deliver such other documents and
instruments of transfer, conveyance and assignment and take such
further action as the other may reasonably require to effect the
transactions contemplated hereby.
14.06. Entire Agreement. This Agreement and the
Material Agreements, together with all Exhibits, Schedules,
Appendices and attachments hereto and thereto, represent the entire
agreement and understanding between the parties hereto with respect
to the subject matter hereof and supersedes any prior agreement or
understanding, written or oral, that the parties hereto may have
had, except for that certain letter agreement between AT&T and
Cirrus dated May 5, 1995.
14.07. Amendments. Any modification, amendment, or
waiver of any provision hereof will be effective if, but only if,
in writing and signed in person or by an authorized representative
of each party against whom enforcement of such modification,
amendment or waiver is sought.
14.08. Captions. The title headings of the respective
articles and sections hereof are inserted for convenience and will
not be deemed to be a part hereof or considered in construing this
Agreement.
14.09. Severability. If any article, section or
paragraph, or part thereof, hereof, or any agreement or document
appended hereto or made a part hereof is invalid, ruled illegal by
any court of competent jurisdiction, or unenforceable under present
or future laws effective during the term hereof, then it is the
intention of the parties hereto that the remainder of the
Agreement, or any agreement or document appended hereto or made a
part hereof, will not be affected thereby unless the deletion of
such provision will cause this Agreement to become materially
adverse to any party in which case the parties hereto will
negotiate in good faith such changes to this Agreement as will best
preserve for the parties hereto the benefits and obligations of
such provision.
14.10. Counterparts. This Agreement may be executed in
two or more counterparts, and by each party on the same or
different counterparts, but all of such counterparts will together
constitute one and the same instrument.
14.11. Waivers. No failure by a party to take any
action with respect to a breach hereof or a default by any other
party will constitute a waiver of the former party's right to
enforce any provision hereof or to take action with respect to such
breach or default or any subsequent breach or default. Waiver by
any party of any breach or failure to comply with any provision
hereof by a party will not be construed as, or constitute, a
continuing waiver of such provision, or a waiver of any other
breach of or failure to comply with any other provision hereof.
14.12. Public Announcements. No party hereto will,
without the approval of both AT&T and Cirrus, make any press
release or other public announcement or response to an inquiry
initiated by the press concerning the terms of the transactions
contemplated by this Agreement or any of the Material Agreements,
except as and to the extent that any such party will be so
obligated by law, in which case both AT&T and Cirrus will be so
advised and the parties hereto will use their best efforts to cause
a mutually agreeable release or announcement to be made. If either
party hereto receives any inquiries with respect to this Agreement
or the transactions contemplated hereby, such party may address
such inquiry to the extent required by law; provided, however, in
no event will such party disclose Confidential Information in the
course of such disclosure, except as otherwise permitted in
accordance with Article VI hereof. The parties hereto will
cooperate in making public announcements concerning this Agreement
immediately following the date of its execution by all parties
hereto and immediately following the Closing Date. Nothing in this
Section 14.12 will be construed to restrict the Partnership from
conducting its marketing, advertising, public relations and related
activities.
14.13. No Agency. This Agreement will not constitute
either party hereto as the legal representative or agent of the
other, nor will either party hereto have the right or authority, to
assume, create or incur any liability or obligation, express or
implied, against, in the name of, or on behalf of the other party
hereto, or the Partnership.
14.14. No Third Party Beneficiaries. Nothing expressed
or mentioned in this Agreement is intended or will be construed to
give any person other than the parties hereto, the Partnership and
their respective successors and permitted assigns any legal or
equitable right, remedy or claim under or in respect hereof or any
provision herein contained.
IN WITNESS WHEREOF, this Agreement has been duly executed
by or on behalf of each of the parties hereto as of the date first
above written.
AT&T CORP.
By:
Name:
Title:
ATOR CORP.
By:
Name:
Title:
CIRRUS LOGIC, INC.
By:
Name:
Title:
CIROR, INC.
By:
Name:
Title:
Appendix
Relocation Positions; Relocation Principles
1. Ten Positions: AT&T will obtain prior consent from Cirrus,
such consent not to be unreasonably withheld, for relocation
of employees staffing jobs identified in the list to be
provided by Cirrus at or prior to the Closing. In the event
that such relocation is initiated by an employee rather than
by AT&T, Cirrus will provide its consent to such relocation,
which relocation will occur within ninety (90) days of notice
by AT&T. In the event of a proposed relocation, AT&T will
identify a replacement for such relocated employee prior to
seeking Cirrus' approval for such relocation.
2. Other AT&T Employees: Reassignment will be limited in
accordance with the terms of the Annual Plan.