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Exhibit 1 to Form 8-K
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is dated as of December 16, 1993 (the
"Agreement") and is by and between Motorola, Inc., a Delaware corporation whose
principal executive offices are at 1303 East Algonquin Road, Schaumburg, IL
60196 ("Motorola"), and Western Digital Corporation, a Delaware corporation
whose principal executive offices are at 8105 Irvine Center Drive, Irvine,
California 92718 (the "Company").
Subject to the terms and conditions hereinafter set forth, Motorola desires
to purchase the Company's wafer fabrication facilities at 1 Banting in Irvine,
California (the "Banting Site") and certain related assets in exchange for the
consideration described in this Agreement. The Company is willing to sell, or
cause to be sold, such facilities and assets for this consideration. In order
to induce Motorola to acquire such facilities and assets, the Company is
prepared to make certain representations, warranties and covenants and provide
certain indemnities and other protections.
For purposes of this Agreement, the following terms shall be defined as
follows:
"Affiliate" of any Person means any other Person directly or
indirectly controlling (within the meaning of Rule 12b-2 under the Exchange Act
as in effect on the Closing Date), or directly or indirectly controlled by or
under direct or indirect common control with such Person.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or Governmental Authority.
"Subsidiary" of any Person shall mean a corporation, company or other
entity (i) 100% of whose outstanding shares of securities (representing the
right to vote for the election of directors or other managing authority) are,
or (ii) which does not have outstanding shares of securities (as may be the
case in a partnership, joint venture or unincorporated association), but 100%
of whose ownership interest representing the right to make decisions for such
other entity is, now or hereafter owned or controlled, directly or indirectly,
by such Person, but such corporation, company or other entity shall be deemed
to be a Subsidiary only so long as such ownership or control exists.
"Applicable Environmental Law" shall mean any statute, regulation,
rule, order, or law that regulates or prohibits the use, sale, treatment,
disposal, storage, of any Hazardous Material (as defined below), including but
not limited to the following federal laws: the Comprehensive, Environmental
Response, Compensation and Liability Act, the Resource Conservation and
Recovery Act, the Federal Water Pollution Control Act,
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the Clean Air Act, the Hazardous Materials Transportation Act, the
Clean Water Act and all applicable California laws concerning Hazardous
Materials.
"Hazardous Material" shall mean any substance that is prohibited or
regulated by Applicable Environmental Law.
"Joint Use Agreement" shall mean the Joint Use Agreement executed
concurrently herewith pursuant to which, on and after the Closing Date, the
Company will occupy and use certain portions of the facilities at the Banting
Site for a limited period of time as set forth therein.
"Wafer Supply Agreement" shall mean the Supply Agreement executed
concurrently herewith (to be effective as of the Closing Date) pursuant to
which Motorola will manufacture and sell semiconductor wafers to the
Company in accordance with the terms thereof.
Accordingly, the parties agree as follows:
1. Purchase of Assets; Assumption of Liabilities.
1.01 Purchase.
At the Closing Date (as defined in Section 6 below), except as set
forth in Section 1.03 below, the Company shall transfer and deliver to
Motorola, or cause to be transferred and delivered to Motorola, by appropriate
instruments in a form reasonably satisfactory to Motorola, and Motorola shall
acquire and accept, for the consideration hereinafter provided, all right,
title and interest in and to all of the assets and properties of the Company
located at the Banting Site including but not limited to:
(a) the real property at the Banting Site, as legally described in
Schedule 1.01 (a), comprised of parcels 1 to 3, inclusive, of
parcel map no. 89-404, in the City of Irvine, County of Orange
California, as per map recorded in book 269, pages 19 to 21,
inclusive, of parcel maps, in the office of the County
Recorder of said County, including such parcels of land and
all buildings, improvements, structures, fixtures and all
rights, privileges and easements appurtenant to the land,
including all development rights, air rights, water, water
rights and water stock relating to the land and any other
easements, rights-of-way or appurtenances used in connection
with the beneficial use and enjoyment of such parcels of land
(the "Real Property");
(b) all tangible personal property owned by the Company located at
the Banting Site, including without limitation furniture,
equipment, materials,
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raw material and work in process
inventories, supplies and consumable items;
(c) the Company s rights under all licenses, permits, warranties,
manuals, operating instructions, software, rights and
privileges related to the wafer fabrication operations
currently conducted by the Company at the Banting Site (the
"Wafer Fab Operations");
(d) the Company's rights under all service contracts, maintenance
contracts, equipment leases, leases of other personal
property, purchase orders and other contracts for the
acquisition or maintenance of tangible or intangible personal
property related to the Wafer Fab Operations; and
(e) all books and records, including electronic records, which are
related to the Real Property or necessary for conducting the
Wafer Fab Operations.
The assets, properties and rights to be acquired by Motorola
hereunder, exclusive of the Excluded Assets (as defined below), are
collectively referred to as the "Acquisition Assets." Should it be determined
at any time up to one year after the Closing Date that any tangible or
intangible assets which, pursuant to this Agreement, should have been
transferred to Motorola are still in the Company's possession, the Company
shall deliver them (or cause them to be delivered) promptly to Motorola, upon
reasonable notice and without additional charge.
1.02 Assumption of Liabilities.
On and subject to the terms and conditions of this Agreement, Motorola
agrees to assume and become responsible for all of the Assumed Liabilities as
of the Closing Date, but no other obligation or liability of the Company.
"Assumed Liabilities" means only those contracts and obligations in Schedule
1.02 attached hereto as updated by mutual agreement of the parties as of the
Closing Date.
1.03 Excluded Assets.
Notwithstanding the foregoing, there shall be excluded from the
assets, properties and rights to be conveyed to Motorola by the Company
pursuant to this Agreement all of the following assets, properties and rights
(the "Excluded Assets"):
(a) all the assets, properties and rights described in Schedule
1.03 attached hereto as updated by mutual agreement of the
parties as of the Closing Date;
(b) all accounts receivable of the Company; and
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(c) all of the Company s Intellectual Property, except to the
extent included as part of the Acquisition Assets under
Section 1.01(c) hereof, and except to the extent licensed or
covered under Section 7.11(a) hereof and the Wafer Supply
Agreement. As used herein, the "Company s Intellectual
Property" means every item of intellectual property the
Company owns or otherwise has the right to use including every
invention, patent application, patent, trade name, mark
(whether a trademark, service mark or other mark),
registration or application to register a mark, copyright,
registration or application to register a copyright, mask
work, registration or application to register a mask work, and
trade secret.
2. Consideration.
2.01 Payment at Closing.
The full consideration to be paid at the Closing by Motorola to the
Company for the sale of the Acquisition Assets shall be as follows:
(a) a cash payment of U.S. $100,905,472 by the wire transfer of
same day funds the day before the Closing Date to the escrow
account described in Section 6.01;
(b) an executed non-interest bearing promissory note made by
Motorola to the order of the Company (the "Buyer Note") in the
form of Exhibit A attached hereto which note shall be in an
aggregate principal amount equal to the agreed value of the
Company's raw material and work-in-process inventories (except
those, if any, included in the Excluded Assets) at the Wafer
Fab Operations as of 4:00 p.m. on the Closing Date determined
in a manner consistent with Schedule 2.01(b) attached hereto
and shall provide for 2 equal principal payments 30 days and
60 days after Closing;
(c) an additional cash payment equal to the sum of (i) the cost of
any capital assets included in the Acquisition Assets which
were (A) ordered on or before September 25, 1993 and received
by the Company prior to the Closing Date, but had not been
entered on the Company's capital asset register as of
September 25, 1993, and (B) ordered after September 25, 1993
with Motorola's approval (which may be obtained before or
after such order was placed) and received by the Company prior
to 4:00 p.m. on the Closing Date plus (without duplication)
(ii) payments actually made prior to the Closing Date by the
Company to third-party vendors of any capital assets which
would have met the description of either clause (A) or (B) of
clause (i) above in this Section 2.01(C) but for the fact that
such
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items had not been physically received by the Company
as of the Closing Date (it being understood and agreed that
the additional cash payment called for by this Section 2.01(C)
shall be determined as of the Closing Date in a manner
consistent with Schedule 2.01(C) attached hereto which
Schedule reflects an aggregate payment of $3,210,378 as of the
date of such Schedule, to be updated as mutually agreed by the
parties as of the Closing Date); and;
(d) assumption of the Assumed Liabilities.
2.02 Allocation.
The consideration for the purchase of the Acquisition Assets shall be
allocated among the assets as set forth in Schedule 2.02, which shall be
mutually agreed to by the parties and attached prior to the Closing Date.
Motorola and the Company will each file its federal and state income Tax
Returns, as well as Form 8594, Asset Acquisition Statement, under Section 1060
of the Internal Revenue Code of 1986, as amended (the "Code"), on the basis of
this allocation.
3. Pre-Closing Covenants.
3.01 Conduct of the Business Prior to the Closing Date.
During the period from the date of this Agreement to the Closing Date,
the Company shall conduct its Wafer Fab Operations according to its ordinary
and usual course of business consistent with its customs and practices
("Ordinary Course of Business") and use its reasonable best efforts to maintain
and preserve its business organization, prospects, and advantageous business
relationships and retain the services of employees associated with the Wafer
Fab Operations who are listed on Schedule 3.01 reasonably expected to transfer
to Motorola. Schedule 3.01 contains a list of current Company employees
involved in the Wafer Fab Operations to whom Motorola has offered employment to
be effective January 1, 1994 (contingent on the Closing). The process of
identifying the final list of employees to whom such employment will be offered
by Motorola is in progress and the parties agree to update Schedule 3.01 with
the final list as mutually agreed prior to Closing. The persons listed on such
Schedule 3.01 (as so updated) are referred to herein as the "Listed Employees."
3.02 Forbearance by the Company.
During the period from the date of this Agreement to the Closing Date,
the Company shall not, without the prior written consent of Motorola, which
Motorola shall not unreasonably withhold or delay:
(a) except in the Ordinary Course of Business, sell or transfer,
mortgage,
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encumber or otherwise dispose of any of its
properties or assets related to the Wafer Fab Operations, or
cancel, release or assign any claims held by it;
(b) except in the Ordinary Course of Business, make any capital
expenditures or investments related to the Wafer Fab
Operations;
(c) enter into, amend or terminate any material contract or
agreement related to the Wafer Fab Operations, or
make any change in any of its material leases, licenses,
agreements or contracts related to the Wafer Fab Operations,
other than any renewals without adverse changes in terms;
(d) increase in any manner the compensation or fringe benefits of
any of its employees involved in the Wafer Fab Operations,
except for regularly scheduled increases in the Ordinary
Course of Business, or pay any pension or retirement allowance
not required by any existing plan or agreement to any such
employees, or become a party to, amend or commit itself to
any pension, retirement, profit-sharing or welfare benefit
plan or agreement or employment agreement with or for the
benefit of, any such employee;
(e) permit any insurance policy naming it as a beneficiary, a
named insured or a loss payee and covering any of the
Acquisition Assets to be canceled or terminated or any of the
coverage thereunder to lapse unless, simultaneously with such
termination or cancellation, or replacement policy or policies
providing substantially the same or greater coverage with
comparable insurance carriers are in full force and effect;
(f) agree to, or make any commitment to, take any of the actions
prohibited by this Section 3.02;
(g) solicit, or authorize any person to solicit, from any third
party, any inquiries or proposals relating to the disposition
of all or any part of the Acquisition Assets (including by
operation of law) by any person other than Motorola, or
provide any such person with information (other than public
information) or assistance or negotiate with any such person
in furtherance of such inquiries or to obtain a proposal, and
the Company shall promptly notify Motorola orally of all of
the relevant details relating to all inquiries and proposals
which it may receive relating to any of such matters;
(h) improperly maintain the Acquisition Assets; or
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(i) incorrectly or inaccurately maintain its books, accounts and
records necessary for conducting the Wafer Fab Operations or
that are related to the Real Property.
4. Additional Agreements.
4.01 Access and Information.
The Company shall afford (or cause to be afforded) to Motorola, and to
Motorola s accountants, counsel and other representatives, full access during
normal business hours, during the period prior to the Closing Date, to all of
the Company s properties, books, contracts, commitments, permits, business
licenses and records to the extent reasonably necessary for purposes of
facilitating the transactions contemplated by this Agreement. During such
period, the Company shall promptly provide to Motorola a copy of each report,
schedule and other document filed or received pursuant to the requirements of
law that materially effects the Acquisition Assets.
4.02 Expenses.
Except as otherwise provided in this Agreement, each of the parties
shall pay its respective costs and expenses (including legal fees) in
connection with this Agreement and the transactions contemplated by this
Agreement.
4.03 Miscellaneous Agreements and Consents.
(a) Subject to the terms and conditions herein provided, each of
the parties hereto agrees to cooperate with the other and to use all reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement. The Company will
use its reasonable efforts to obtain consents of all third parties and
governmental bodies necessary or, in the opinion of Motorola, desirable for the
consummation of the transactions contemplated by this Agreement.
(b) With respect to the E-Beam writer covered by the Company's
existing Lease #251: (i) the E-Beam writer will be included in the Excluded
Assets and the related lease will not be included in the Assumed Liabilities;
(ii) the Company will continue to make the lease payments and otherwise perform
its obligations under such lease, the term of which ends in April 1995; (iii)
within 30 days after the termination of such lease, the Company will either (A)
purchase the equipment covered by such lease and transfer ownership of the same
to Motorola free and clear of any lien, encumbrance or similar interest (with
delivery at the Banting Site) or, at the Company's option, (B) pay $350,000 in
cash to Motorola.
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4.04 Filings.
Motorola and the Company have filed Notification and Report Forms
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "Hart-Scott
Rodino Act") with the Federal Trade Commission ("FTC") and the Antitrust
Division of the Department of Justice (the "Antitrust Division") and shall use
reasonable efforts to respond as promptly as practicable to all inquiries
received from the FTC or the Antitrust Division for additional information or
documentation. Motorola and the Company will each take, or cause to be taken,
all such other reasonable actions and will file, and, if appropriate, use its
reasonable efforts to have declared effective or approved, all such other
documents and notifications with governmental authorities which are necessary
or appropriate for the consummation of the transactions contemplated by this
Agreement, and each party shall give the other information reasonably requested
by such other party pertaining to it reasonably necessary to enable such other
party to take such actions.
4.05 Title Insurance.
The Company shall obtain and provide to Motorola for Motorola's
benefit an ALTA owner's policy and title insurance for each parcel of real
property conveyed to Motorola pursuant to this Agreement, in an amount and in
the form specified in the Escrow Agreement (as defined in Section 6.01).
4.06 Surveys.
With respect to each parcel of real property that the Company owns,
leases, or subleases, and as to which a title insurance policy is to be
procured, the Company will procure a current survey of the real property
certified to Motorola and Chicago Title Company, prepared by a licensed
surveyor and conforming to current ALTA Minimum Detail Requirements for Land
Title Surveys, disclosing the location of all improvements, easements, party
walls, sidewalks, roadways, utility lines, and other matters shown customarily
on such surveys, and showing access affirmatively to public streets and roads
(the "Survey").
4.07 Employees.
(a) Motorola agrees to offer employment to all Listed Employees
(as updated pursuant to Section 3.01) to be effective January 1, 1994.
(b) The Company agrees to act as an independent contractor,
providing all services reasonably necessary to continue Wafer Fab Operations in
the Ordinary Course of Business through its employees, for the period between
the Closing Date and 11:59:59 P.M. on December 31, 1993; provided that the
Closing Date is on or
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before December 31, 1993 (the "Service Period"). Motorola shall within thirty
(30) days after the Closing Date pay a service fee to the Company in an
amount to be mutually agreed upon by the parties prior to Closing (which
amount shall be reasonably calculated to approximate the Company's cost of
providing such services) as full payment therefor. The Company shall
continue to maintain and be responsible for the cost of all benefits for
its employees at the Wafer Fab Operations during the Service Period.
(c) Motorola shall assume (as an Assumed Liability) the accrued
unused vacation for those Listed Employees hired by Motorola corresponding to
the amount set forth below (the "Assumed Vacation Accrual"):
0 to 4 years 40 hours
5 to 9 years 60 hours
10 to 14 years 80 hours
Over 15 years 100 hours
Company shall offset against the consideration received from Motorola pursuant
to Section 2.01 or shall pay to Motorola as consideration for the assumption of
the Assumed Vacation Accrual an amount equal to the value of such Assumed
Vacation Accrual based upon the wages of the applicable employees in effect
immediately prior to the Closing Date (the "Vacation Accrual Value").
4.08 Sales Tax.
The parties agree that Motorola and Company shall each be responsible
for one-half of any sales tax with respect to the sale of the Acquisition
Assets hereunder.
5. Conditions.
5.01 Conditions to Each Party's Obligation to Close.
The respective obligations of Motorola and the Company to consummate
the purchase and sale of the Acquisition Assets and related transactions as
contemplated hereby shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions (except as each party may have waived
the condition(s) in writing):
(a) All applicable waiting periods under the Hart-Scott-Rodino Act
shall have expired.
(b) The Wafer Supply Agreement and Joint Use Agreement have been
concurrently executed, and will have an effective date as of the
Closing Date.
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(c) The Agreement among the Company, Motorola and AT&T dated as of
December 8, 1993 Granting Consent to Use of Licensed Technology
remains in full force and effect.
5.02 Conditions to Obligations of the Company to Close.
The obligations of the Company to consummate the sale of the Acquisition
Assets and related transactions as contemplated hereby shall be subject to the
fulfillment at or prior to the Closing Date of the following additional
conditions (except as the Company may have waived the condition(s) in writing):
(a) Representations and Warranties. The representations and warranties
of Motorola set forth in Section 8 hereof shall be true and
correct in all material respects as of the Closing Date as though
made on and as of the Closing Date, and the Company shall have
received a signed certificate from a Vice President of Motorola to
that effect.
(b) Performance of Obligations. Motorola shall have in all
material respects performed all obligations required to be
performed by it under this Agreement prior to the Closing Date,
and the Company shall have received a signed certificate from a
Vice President of Motorola to that effect.
(c) Permits, Authorizations, Etc. Motorola shall have obtained
any and all material permits, authorizations, consents or approvals
required to be obtained by Motorola under this Agreement for the
lawful consummation of the transactions contemplated by this
Agreements.
(d) Legal Opinions. The Company shall have received a legal
opinion, in form and substance satisfactory to the Company from
Dirk H. Buikema, Division Counsel of Motorola, on the issues of
corporate authority and due authorization.
(e) Absence of Certain Litigation. On the Closing Date there shall
be no injunction, restraining order or order of any nature issued
by, or being requested from, any court of competent jurisdiction
which directs that any transactions contemplated by this Agreement
shall not be consummated as herein provided or compels Motorola to
dispose of or keep separate either a portion of the business
conducted by Motorola or the Acquisition Assets, nor shall there
be instituted, pending or threatened any action, suit or
proceeding by any governmental agency or regulatory or administra-
tive agency or commission challenging this Agreement or any of
the transactions contemplated by this Agreement or, which seeks to
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restrain or prevent such Agreement or transactions, or which
would affect Motorola's rights to operate, own or control any
part of the Acquisition Assets.
(f) Additional Instruments and Satisfaction. Motorola shall have
(i) delivered the consideration referred to in Section 2.01
and such additional instruments, consents and documents as
the Company reasonably deems necessary to carry out the
purposes of this Agreement, (ii) performed such acts as the
Company reasonably deems appropriate, and all other
proceedings, documents and other items contemplated by this
Agreement shall be satisfactory in form and substance to the
Company.
5.03 Conditions to Obligations of Motorola to Close.
The obligation of Motorola to consummate the purchase of the Acquisition
Assets and related transactions as contemplated hereby shall be subject to the
fulfillment at or prior to the Closing Date of the following additional
conditions (except as Motorola may have waived the condition(s) in writing):
(a) Representations and Warranties. The representations and
warranties of the Company set forth in Section 7 hereof shall
be true and correct in all material respects as of the Closing
Date as though made on and as of the Closing Date, and
Motorola shall have received signed certificates from the
President and Chief Financial Officer of the Company to that
effect.
(b) Performance of Obligations. The Company shall have in all
material respects performed all obligations required to be
performed by it under this Agreement prior to the Closing
Date, and Motorola shall have received signed certificates
from the President and Chief Financial Officer of the Company
to that effect.
(c) Permits, Authorizations, Etc. The Company shall have obtained
any and all consents or waivers from other parties to material
agreements, leases, instruments or other contracts, and from
governmental agencies or authorities needed for consummation
of the transactions contemplated by this Agreement and shall
have obtained any and all material permits, authorizations,
consents or approvals required for the lawful consummation of
the transactions contemplated by this Agreement.
(d) Legal Opinion. Motorola shall have received a legal opinion,
in form and substance satisfactory to Motorola, from Messrs.
Gibson, Dunn & Crutcher, counsel to the Company, to the
effect set forth in attached Schedule 5.03(d).
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(e) Absence of Certain Litigation. On the Closing Date, there
shall be no injunction, restraining order or order of any nature
issued by, or being requested from, any court of competent
jurisdiction which directs that any transaction contemplated by this
Agreement shall not be consummated as herein provided or compels
Motorola to dispose of or discontinue or keep separate a portion of
the business conducted by Motorola or of the Acquisition Assets, nor
shall there be instituted, pending or threatened any action or
proceeding by any governmental agency or regulatory or administrative
agency or commission challenging this Agreement or any of the
transactions contemplated hereby or which seeks to restrain or prevent
such Agreement or transactions or which would affect Motorola's rights
to operate, own or control any part of the Acquisition Assets.
(f) Books, Records. The Company shall have transferred and
delivered (or caused to be transferred and delivered) to Motorola, by
documents satisfactory in form and substance to Motorola, all of the
books and records currently in its possession which are necessary for
the conduct of the Wafer Fab Operations by Motorola on and after the
Closing Date or are related to the Real Property.
(g) Estoppel. Motorola shall have received an estoppel
certificate substantially in the form of Schedule 5.03(g) from The
Irvine Company.
(h) Additional Instruments. The Company shall have delivered to
Motorola the instruments described in Section 1.01 and such additional
instruments, consents and documents contemplated by this Agreement or
reasonably deemed appropriate by Motorola and performed such acts as
Motorola reasonably deems necessary to carry out the purposes of this
Agreement.
(i) Reasonable Satisfaction. All other proceedings and documents
and other items in connection with the transactions contemplated by
this Agreement shall be satisfactory in form and substance to
Motorola.
(j) Deed and Title Policy. The Escrow Holder (as defined in
Section 6.01) shall be prepared to record the grant deed delivered by
Company and to issue the title policy strictly in accordance with the
terms of Escrow Agreement (as defined in Section 6.01).
(k) FIRPTA. Company shall have delivered to Motorola an affidavit
of non-foreign status in accordance with Section 1445 of the Internal
Revenue Code in form reasonably satisfactory to Motorola.
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6. Closing and Escrow.
6.01 Escrow. The parties have entered into or will enter into a
separate escrow agreement with respect to the delivery and recordation of
certain documents and the transfer of certain funds with respect to
consummation of the purchase and sale of the Acquisition Assets contemplated
hereby (the "Escrow Agreement"), substantially in the form attached as Schedule
6. On or before December 21, 1993 the parties shall open an escrow ("Escrow")
pursuant to the terms of the Escrow Agreement with Chicago Title Company, 825
N. Broadway, Santa Ana, California 92701, Attention: Susie Jacobsen ("Escrow
Holder") by executing and delivering the Escrow Agreement to Escrow Holder.
Except as is set forth in Schedule 6 and this Section, the execution and
exchange of documents for the closing of the purchase and sale of the
Acquisition Assets and the other transactions contemplated by this Agreement
shall take place at the offices of Gibson, Dunn & Crutcher on December 21st and
22nd 1993, or such later date or other location as may be necessary for the
performance of the conditions set forth herein but in no event later than March
31, 1994. The recording of documents and disbursement of funds by the escrow
holder as provided in the Escrow Agreement shall take place on December 23,
1993, or such later date or other location as may be necessary for the
performance of the conditions set forth herein but in no event later than March
31, 1994 (the "Outside Closing Date"). The date the Grant Deed (as defined
below) is recorded in the Official Records of Orange County, California by
Escrow Holder in accordance with the Escrow Agreement is referred to herein as
the "Closing Date" and the "Closing" shall be deemed to take place at the time
of such recordation. If, however, any applicable waiting period provided for
in Section 7A of the Hart-Scott-Rodino Act applicable to Motorola's acquisition
shall not have expired by that date, the Closing and Closing Date shall take
place as soon as reasonably possible following the expiration of such waiting
period (but in no event later than March 31, 1994).
6.02 Additional Escrow Instructions.
The Company and Motorola agree to execute such additional and
supplemental escrow instructions as may be appropriate to enable the Escrow
Holder to comply with the terms of this Agreement; provided, however, that in
the event of any conflict between the provisions of this Agreement and any
supplementary escrow instructions, the terms of this Agreement shall control.
6.03 Closing Procedures.
The execution and exchange of documents and payment of consideration
into escrow shall take place at the Closing, subject to the recording and
delivery of documents and disbursement of funds by Escrow Holder pursuant to
the Escrow Agreement on the Closing Date. All documents shall be deemed
delivered on the date the grant deed delivered by the Company is recorded. In
the event the Closing does
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not occur on or before the Outside Closing Date,
Escrow Holder shall, unless it is notified by both parties to the contrary
within five (5) days after the Outside Closing Date, return to the depositor
thereof any items which may have been deposited hereunder together with
interest on any funds being returned by Escrow Holder.
6.04 Deposits into Escrow by Company.
At least one (1) business day prior to the Closing Date, Company shall
make the following deliveries into Escrow to be handled by Escrow Holder in
accordance with the terms of the Escrow Agreement:
(a) A Grant Deed in the form reasonably satisfactory to Motorola
executed and acknowledged on behalf of Company (with documentary transfer taxes
to be shown on a separate non-recorded affidavit);
(b) A Bill of Sale in the form reasonably satisfactory to
Motorola, duly executed on behalf of Company;
(c) Instructions for the disbursement of the Cash Payments (as
defined in Section 6.05 below); and
(d) Such other documents and instruments as are reasonably
requested by Escrow Holder in order to comply with the terms and conditions of
the Escrow Agreement.
6.05 Deposits into Escrow by Motorola.
At least one (1) business day prior to the Closing Date, Motorola shall
make the following deliveries into Escrow to be handled by Escrow Holder in
accordance with the terms of the Escrow Instructions:
(a) The Cash Payments (as defined below);
(b) Such other documents and instruments as are reasonably
requested by Escrow Holder in order to comply with the terms and conditions of
the Escrow Agreement.
For purposes hereof, the "Cash Payments" shall mean (A) the sum of (1) the cash
payments pursuant to Sections 2.01(a) and (c), (2) the prorations pursuant to
Section 6.06 below, (3) Motorola's portion of any sales tax payment pursuant to
Section 4.08; (B) reduced by the Vacation Accrual Value pursuant to Section
4.07(c). In the event that any of the foregoing amounts cannot be determined
by the time the Cash Payments are to be deposited into Escrow as provided
above, the parties shall reasonably agree upon the estimated amount of such
item, subject to final adjustment
December 16, 1993 Page 14
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15
payment(s) within thirty (30) days after the Closing Date or as soon as
the amounts can be accurately ascertained. Motorola and Company shall inform
Escrow Holder of the agreed-upon amount of the Cash Payments to be delivered
through the Escrow by a joint supplemental escrow instruction to be delivered
to Escrow Holder at least one (1) business day prior to the Closing Date.
6.06 Prorations and Apportionments.
(a) The following items shall be prorated and apportioned as of
4:00 p.m. on the Closing Date, so that the Company shall bear
all expense with respect to such items for the period preceding
such date and time and Motorola shall bear all expense with
respect to such items thereafter:
(i) All operating leases and maintenance or service contracts
included in the Assumed Liabilities;
(ii) All expenses of the Real Property (not included in Section
6.06(a) above) including taxes (including personal property
taxes on personal property included in the Acquisition
Assets), real property assessments, water rates and sewer
fees, if any, assessments and membership fees of associations
in which Motorola will acquire a membership in connection with
its purchase of the Real Property, gas, electricity and other
utility charges, any unfixed meter charges, if any
(apportioned on the basis of the last meter readings), license
and permit fees and other expenses customarily prorated. If
possible, in lieu of prorating, utilities and other expenses
shall be contracted for in the name of Motorola as of the
Closing Date. In any event, Motorola shall have all prorated
utilities and other expenses contracted for in the name of
Motorola as soon as reasonably practicable after the Closing
Date.
6.07 Payment of Adjustments to Cash Payment Items.
Either party owing the other party a sum of money based on adjustments
with respect to the amounts included in the Cash Payments pursuant to Section
6.05 above after the Closing Date shall promptly pay that sum to the other
party, together with interest thereon at the rate of ten percent (10%) per
annum to the date of payment if payment is not made within 10 days after mutual
agreement of the amount due.
6.08 Costs and Expenses.
The Company shall pay the costs of the survey of the Real Property, the
premium and other costs and expenses for the title policy and the cost of
documentary
December 16, 1993 Page 15
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16
or other transfer taxes applicable to the sale. Motorola and the
Company shall share equally all other costs and charges of the escrow for the
purchase and sale of the Acquisition Assets.
6.09 Possession.
Subject to Section 4.07(b) and the Joint Use Agreement, possession of
the Real Property and the other Acquisition Assets will be delivered to
Motorola at 4:00 p.m. on the Closing Date.
7. Representations and Warranties of the Company.
The Company represents and warrants to Motorola that:
7.01 Ownership of Assets.
(a) As of the Closing Date the Company shall convey, and Motorola
will receive good, exclusive and marketable title to all of the Acquisition
Assets, free and clear of any liens, claims, debts, security interests,
judgments, mortgages or other encumbrances of any kind, except for the rights
of vendors, suppliers and equipment lessors associated with liabilities of the
Company which are included in the Assumed Liabilities. The representation and
warranty made in this Section 7.01(a) does not apply to the Real Property.
(b) The Acquisition Assets shall include all those assets, rights
and properties, tangible and intangible, owned or leased by the Company which
are needed to conduct the Wafer Fab Operations as conducted by the Company
(other than the items referred to in Section 4.03 hereof).
7.02 Organization and Authority.
The Company is duly organized, validly existing and in good standing
under the laws of the State of Delaware, has corporate power to own all of its
properties and assets and to carry on its business as it is now being
conducted, and is duly qualified to do business and is in good standing in the
State of California. The Company has all necessary Federal, state and local
authorizations to own or lease the Acquisition Assets and to carry on its Wafer
Fab Operations (it being understood that, to the extent previously disclosed to
Motorola, certain of the equipment used in the Wafer Fab Operations is covered
by a "permit to construct" which will need to be finalized).
7.03 Investment.
The Company (a) understands that the Buyer Note has not been, and will
not be,
December 16, 1993 Page 16
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17
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or under any state securities laws, and is being offered and
sold in reliance upon federal and state exemptions, (b) is acquiring the Buyer
Note solely for its own account for investment purposes, and not with a view to
the distribution thereof, (c) has received certain information concerning
Motorola and has had the opportunity to obtain additional information as
desired in order to evaluate the merits and the risks inherent in holding the
Buyer Note, (d) is able to bear the economic risk and lack of liquidity
inherent in holding the Buyer Note, and (e) is an Accredited Investor (as
defined in Regulation D under the Securities Act).
7.04 Charter Documents.
The Company has furnished Motorola with true, complete and correct
copies of its Certificate of Incorporation and its By-laws, certified by its
Secretary.
7.05 Authorization.
(a) The Company has the corporate power and authority to enter
into this Agreement and to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by the Company's Board of Directors and no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement and the transactions contemplated hereby. This Agreement is
a valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as limited by
bankruptcy and other laws of general application and relating to
or affecting enforcement of creditors' rights and except as
limited by the availability of equitable remedies.
(b) Except as set forth in Schedule 7.05 (b) attached hereto, no
notice to, filing with, or authorization, consent or approval of, any
government or governmental agency or authority is necessary on the
part of the Company for the consummation of the transactions
contemplated by this Agreement.
7.06 [intentionally omitted]
7.07 Properties, Leases and Licenses.
(a) The tangible personal property included in the Acquisition
Assets which is of material importance to the Wafer Fab Operations
(which expressly excludes all items expended or consumed in the
ordinary course of manufacturing) has been maintained in accordance
with normal industry practice, is in good operating condition and
repair (subject to normal wear
December 16, 1993 Page 17
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18
and tear), is suitable for the purposes
for which it presently is used and, to the best knowledge of the
Company, is free from material defects (patent and latent).
(b) With respect to the Real Property:
(i) there are no (A) pending or, to the knowledge of
Company, threatened condemnation proceedings
relating to such property, (B) pending or to the
knowledge of the Company, threatened litigation or
administrative actions against the Company or the
Real Property relating to the Real Property, or (C)
other matters known to the Company having a material
adverse impact on the current use of the Real
Property;
(ii) the property is not located within any flood plain
or subject to any similar type restriction for which
any permits or licenses necessary to the use thereof
have not been obtained;
(iii) to the best knowledge and belief of the Company,
except as otherwise previously disclosed to
Motorola, all facilities have received all approvals
of governmental authorities (including licenses and
permits) required in connection with the ownership
or operation thereof and have been operated and
maintained in all material respects in accordance
with applicable laws, rules, and regulations
including, without limitation, all building, zoning,
environmental, health and safety laws and
regulations (including, but not limited to,
earthquake, life and safety systems and handicap
laws, including without limitation, the Americans
with Disabilities Act all state and local disable
person access laws applicable thereto) which affect
the use and operation thereof, and the Company has
not received any notice of violation of law or
municipal ordinance, order or requirement from any
governmental agency having jurisdiction over the
Property, and knows of no facts which would
constitute grounds for receiving any notice of a
material violation of any such law, municipal order
or requirement;
(iv) there are no leases, subleases, licenses,
concessions, or other agreements, written or oral,
granting to any party or parties the right of use or
occupancy of any portion of the parcel of real
property;
December 16, 1993 Page 18
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(v) except for the "Permitted Title Exceptions" set
forth in the Escrow Agreement, there are no
outstanding options or rights of first refusal to
purchase the parcel of real property, or any portion
thereof or interest therein;
(vi) there are no parties (other than the Company) in
possession of the Real Property;
(vii) all facilities located on the parcel of real
property are supplied with utilities and other
services necessary for the operation of such
facilities, including gas, electricity, water,
telephone, sanitary sewer, and storm sewer, all of
which services are adequate in accordance with all
applicable laws, ordinances, rules, and regulations
and are provided via public roads or via permanent,
irrevocable, appurtenant easements benefiting the
parcel of real property; and
(viii) except for the "Permitted Title Exceptions" set
forth in the Escrow Agreement, to the knowledge of
Company, there are no liens, restrictions or other
encumbrances against the title to the Real Property
which will be binding upon Motorola or the Real
Property after the Closing Date and which will
materially adversely affect the use or value of the
Real Property.
With respect to the representation and warranty set forth in Section 7.08(viii)
above, Motorola waives any right to proceed against Company to the extent any
nondisclosed matter is covered by the title insurance policy procured by
Company pursuant to the Escrow Agreement.
7.08 Inventories.
All inventories of raw materials and work-in-process related to the
Wafer Fab Operations to be included in the Acquisition Assets, which are
assigned a value in Schedule 2.01(b) attached hereto, consist only of items of
a quality and quantity usable or salable by the Company in the Ordinary Course
of Business. All such inventory is merchantable and fit for the purpose for
which it was procured or manufactured, and none of which is slow-moving,
obsolete, damaged, or defective. It is understood and agreed that in the event
that any of the wafers within the inventories covered by this Section 7.08 are
later designated by the Company to be scrap material, the provisions of the
Wafer Supply Agreement will govern the consequences of scrapping such material
and, as a result, any such event will not be deemed a breach of this Section
7.08.
December 16, 1993 Page 19
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20
7.09 Commitments.
To the best knowledge and belief (after due inquiry and investigation)
of the Company, except as disclosed in Schedule 7.09 attached hereto, all
contracts and agreements included in the Assumed Liabilities are valid,
binding, enforceable, fully assignable and in full force and effect and will
not expire prior to January 1, 1994 (except for such contracts and agreements
which will be renewed on substantially similar economic terms). Neither the
Company nor, to the best knowledge of the Company, any other party to any such
contract or agreement is in default, or will be in default upon Closing Date,
under any such contract or agreement (including, but not limited to, any event
which would, with the giving of notice or the passage of time or both,
constitute an event of default). True, correct and complete copies of all such
written contracts and agreements have been previously given to Motorola. The
Company is not a party to any employment, consulting or similar agreement with
or for the benefit of any of its employees involved in the Wafer Fab
Operations. The Company does not expect that any change is reasonably likely
to occur in the relationships of the Company with suppliers to its Wafer Fab
Operations which change would be materially adverse to the Wafer Fab Operations
(provided that this representation and warranty shall not include changes in
such relationships arising due to this transaction).
7.10 Absence of Certain Changes.
Since September 25, 1993 there has not been:
(a) any change in the nature of the Wafer Fab Operations, or
manner of conducting the Wafer Fab Operations which has had,
or may reasonably be expected to have, a material adverse
effect on the Wafer Fab Operations;
(b) any material damage, destruction or other casualty loss
(whether or not covered by insurance) affecting the
Acquisition Assets;
(c) any increase in the compensation payable or to become payable
by the Company to any Listed Employees or to agents directly
involved in the Wafer Fab Operations over the amount paid, at
September 25, 1993, other than normal merit increases,
increases which are not material and increases consented to by
Motorola in writing;
(d) any sale, lease, transfer or assignment of any of the
Acquisition Assets, tangible or intangible, other than
nonmaterial transfers (such as transfers of finished goods)
for a fair consideration in the Ordinary Course of Business;
December 16, 1993
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21
(e) any material acceleration, termination, modification or
cancellation of any contract, lease, sublease, license, or
sublicense (or series of related contracts, leases, subleases,
licenses, and sublicenses) relating to the Wafer Fab
Operations or the Real Property to which the Company is a
party or by which it is bound;
(f) any delaying or postponing by the Company (beyond practice in
the Ordinary Course of Business) of the payment of accounts
payable and other liabilities related to the Wafer Fab
Operations;
(g) any loan to, or entry into any other transaction with, any of
the Listed Employees substantially involved in the Wafer Fab
Operations outside the Ordinary Course of Business;
(h) any entry into or commitment to enter into any employment
contract or collective bargaining agreement, written or oral,
with Listed Employees or modification of the terms of any such
existing contract or agreement;
(i) any adoption of (A) bonus, (B) profit-sharing, (C) incentive
compensation, (D) pension, (E) retirement, (F) medical,
hospitalization, life, or other insurance, (G) severance, or
(H) other plan, contract, or commitment for any Listed
Employees, or any modification or termination of any such
existing plan, contract or commitment; or
(j) any commitment to do any of the foregoing.
7.11 Intellectual Property.
(a) Pursuant to law, the Company owns or has the right to use
under license, sublicense, agreement, or permission all
Relevant Intellectual Property. As used herein, "Relevant
Intellectual Property" means only the copyrighted works, mask
works, and trade secrets which are owned or used by the
Company and which are necessary for the conduct of the Wager
Fab Operations by Motorola on and after the Closing Date.
Immediately after the Closing Date, each item of Relevant
Intellectual Property is hereby licensed to Motorola by the
Company as otherwise will be available for use by Motorola on
identical terms and conditions to those under which each item
of Relevant Intellectual Property is used or is available for
use by the Company.
(b) With respect to each such item of Relevant Intellectual
Property:
December 16, 1993 Page 21
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22
(i) the license, sublicense, agreement, or permission
covering the item is legal, valid, binding,
enforceable, and in full force and effect;
(ii) the license, sublicense, agreement, or permission
will continue to be legal, valid, binding,
enforceable, and in full force and effect on
identical terms to those available to the Company;
(iii) neither the Company nor to the Company's knowledge
any other party to the license, sublicense,
agreement, or permission is in breach or default,
and no event has occurred which with notice or lapse
of time would constitute a breach or default or
permit termination, modification, or acceleration
thereunder;
(iv) neither the Company nor to the Company's knowledge
any other party to the license, sublicense,
agreement, or permission has repudiated any
provision thereof;
(v) with respect to each sublicense, the representations
and warranties set forth in subsection (a) above and
this subsection (b) are true and correct with
respect to the underlying license;
(vi) the underlying item of Relevant Intellectual
Property is not subject to any outstanding judgment,
order, decree, stipulation or injunction; and
(vii) no complaint, action, suit, proceeding, hearing,
investigation, claim, or demand is pending or, to
the Company s knowledge, is threatened which
challenges the legality, validity, or enforceability
of the underlying item of Relevant Intellectual
Property.
7.12 Undisclosed Liabilities.
To the best knowledge of the Company, except for the Assumed
Liabilities, there are no liabilities of the Company of any kind whatsoever
attributable to pre-Closing activities, whether or not accrued and whether or
not contingent or absolute, in respect of which Motorola may properly be held
liable at or after the Closing Date as a result of the consummation of the
transactions contemplated by this Agreement. This representation and warranty
does not apply to liabilities under Applicable Environmental Law.
December 16, 1993 Page 22
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7.13 Insurance.
Schedule 7.13 sets forth the following information with respect to
each insurance policy covering any of the Acquisition Assets (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which the Company has been a
party, a named insured, or otherwise the beneficiary of coverage at any time
within the past four years:
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(c) the policy number and the period of coverage;
(d) the scope (including an indication of whether the coverage was
on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are
calculated and operate) of coverage; and
(e) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
The Company has been covered during the past four years by insurance
in scope and amount customary and reasonable for the business in which it has
engaged during the aforementioned period. Schedule 7.13 describes any
self-insurance arrangements affecting the Company.
7.14 Litigation.
The Company (i) is not subject to any unsatisfied judgment, order,
decree, stipulation or injunction and (ii) is not a party or, to the knowledge
of the Company, threatened to be made a party to any charge, complaint, action,
suit, proceeding, hearing, or investigation of or in any court or
quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator which is attributable to
pre-Closing activities by the Company and which could reasonably be expected to
have an adverse impact on the Acquisition Assets.
7.15 Taxes.
(a) The Company has filed all Tax Returns (as defined below) that
it was required to file. All such Tax Returns were correct and
complete in all material respects. All Taxes shown as due on
such Tax Returns have
December 16, 1993 Page 23
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24
been paid. There are no security interests on any of the
assets of the Company that arose in connection with any
failure (or alleged failure) to pay any Tax (as defined
below). "Tax" means any federal, state, local, or foreign
income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Code Sec. 59A), customs
duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or
not. "Tax Return" means any return, declaration, report,
claim for refund, or information return or statement relating
to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
(b) The Company has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid
or owing to any employee, creditor, independent contractor, or
other third party.
7.16 Employees.
The Company is not a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes, grievances, claims of unfair
labor practices, or other collective bargaining disputes. The Company has not
committed any unfair labor practice. The Company does not have any knowledge
of any organizational effort presently being made or threatened by or on behalf
of any labor union with respect to employees of the Company. No work stoppage
involving the Company is pending or, to the best of the Company's knowledge,
threatened. Neither the Company nor, to the best of the Company's knowledge,
any supplier of the Company, is involved in, or threatened with or affected by,
any labor dispute, arbitration, lawsuit or administrative proceeding which
could materially and adversely affect the Acquisition Assets. Employees of the
Company are not represented by any labor union nor are any collective
bargaining agreements otherwise in effect with respect to such employees.
7.17 Employee Benefits.
The Company Profit Sharing Plan is a qualified plan under I.R.C. Section
401(a), as amended. The Company s Wafer Fab Operations constitute a "trade or
business" under I.R.C. Section 401(k)(10)(A)(ii) and I.R.C. Regulation Section
1.401(k)-1(d). The Acquisition Assets constitute substantially all the
assets used in that trade or business for the purposes of I.R.C. Section
401(k)(10)(A)(ii) and I.R.C. Regulation Section 401(k)-1(d). The Company has
no benefit plan insured by the Pension Benefit Guaranty Corporation.
December 16, 1993 Page 24
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7.18 [intentionally omitted]
7.19 Environment, Health, and Safety.
Except as otherwise previously disclosed, to the best knowledge
of the Company with respect to the Acquisition Assets:
(a) The Company, its predecessors and its affiliates each has
complied with all laws (including rules and regulations thereunder) of
federal, state, local, and foreign governments (and all agencies
thereof) concerning the environment, public health and safety, and
employee health and safety, and no charge, complaint, action, suit,
proceeding, hearing, investigation, claim, demand, or notice has been
filed or commenced against any of them alleging any failure to comply
with any such law or regulation.
(b) The Company has no liability (and there is no basis related to
the past or present operations, properties, or facilities of its
respective predecessors and affiliates for any present or future
charge, complaint, action, suit, proceeding, hearing, investigation,
claim, or demand against giving rise to any liability) under the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, the Resource Conservation and Recovery Act of 1976, the
Federal Water Pollution Control Act of 1972, the Clean Air Act of
1970, the Safe Drinking Water Act of 1974, the Toxic Substances
Control Act of 1976, the Refuse Act of 1899, or the Emergency Planning
and Community Right-to-Know Act of 1986 (each as amended), or any
other law (or rule or regulation thereunder) of any federal, state,
local, or foreign government (or agency thereof), concerning release
or threatened release of hazardous substances, public health and
safety, or pollution or protection of the environment.
(c) The Company has no liability (and none of the Company and its
respective predecessors and affiliates has handled or disposed of any
substance, arranged for the disposal of any substance, or owned or
operated any property or facility in any manner that could form the
basis for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand (under the common
law or pursuant to any statute) against the Company giving rise to any
liability) for damage to any site, location, or body of water (surface
or subsurface) or for illness or personal injury.
(d) The Company has no liability (and there is no basis for any
present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand against the Company giving
rise to any liability) under the Occupational Safety and Health Act,
as amended, or any other law (or
December 16, 1993 Page 25
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26
rule or regulation thereunder) of any
federal, state, local, or foreign government (or agency thereof)
concerning employee health and safety.
(e) The Company has no liability (and the Company has not exposed
any employee to any substance or condition that could form the basis
for any present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand (under the common law or
pursuant to statute) against giving rise to any liability) for any
illness of or personal injury to any employee.
(f) The Company has obtained and been in compliance with all the
terms and conditions of all permits, licenses, and other
authorizations which are required under, and has complied with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are
contained in, all federal, state, local, and foreign laws (including
rules, regulations, codes, plans, judgments, orders, decrees,
stipulations, injunctions, and charges thereunder) relating to public
health and safety, worker health and safety, and pollution or
protection of the environment, including laws relating to emissions,
discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes into ambient air, surface water, group water, or lands or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes.
(g) All properties and equipment used by the Company (or any
predecessors or affiliates) have been free of asbestos, PCB's,
methylene chloride, trichloroethylene, 1, 2-trans-dichloroethylene,
dioxins, dibenzofurans, and Extremely Hazardous Substances (as defined
in Section 302 of the Emergency Planning and Community Right-to-Know
Act of 1986, as amended).
(h) All product labeling of the Company has been in conformity
with applicable laws (including rules and regulations thereunder).
(i) No pollutant, contaminant, or chemical, industrial, hazardous,
or toxic material or waste ever has been buried, stored, spilled,
leaked, discharged, emitted, or released on any real property that
Company (or predecessor or affiliate) owns or ever has owned or that
Company (or predecessor or affiliate) leases or ever has leased.
December 16, 1993 Page 26
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7.20 Legal Compliance.
Except as otherwise previously disclosed, to the best knowledge of the
Company with respect to the Acquisition Assets, the Company has complied in all
material respects with all laws (including rules and regulations thereunder) of
federal, state, local, and foreign governments (and all agencies thereof) which
affect any of the Acquisition Assets.
7.21 [intentionally omitted]
7.22 Brokers and Finders.
Neither the Company nor any officers, directors, stockholders or
employees has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or finders' fees, and no
broker or finder has acted directly or indirectly for the Company in connection
with this Agreement or the transactions contemplated hereby.
7.23 [intentionally omitted]
7.24 Disclosure.
No written representation, statement or information made or furnished by
the Company (or any agent) to Motorola in this Agreement contains any statement
of a material fact that was untrue when made or omits or shall omit any
material fact necessary to make the information contained in such
representation, statement or information not misleading.
7.25 Other Agreements.
Except as otherwise previously disclosed, to the best knowledge of the
Company with respect to the Acquisition Assets, the Company is not a party to
or bound by any agreement requiring Motorola to pay any royalty, fee or other
payment in connection with conducting Wafer Fab Operations.
8. Representations and Warranties of Motorola.
Motorola represents and warrants to the Company that:
8.01 Organization and Authority.
Motorola is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware, has corporate power to own
all of its properties
December 16, 1993 Page 27
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28
and assets and to carry on its business as it is now
being conducted.
8.02 Authorization.
Motorola has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all corporate proceedings on
the part of Motorola which are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement is a valid and binding
obligation of Motorola enforceable against Motorola in accordance with its
terms, except as limited by bankruptcy and other laws of general application
relating to or affecting enforcement of creditors' rights and except as
limited by the availability of equitable remedies.
Neither the execution, delivery and performance of this Agreement by
Motorola, nor the consummation of the transactions contemplated hereby, nor
compliance by Motorola with any of the provisions hereof or thereof will (i)
violate, conflict with, or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under (x) the Certificate of Incorporation or
Bylaws of Motorola or (y) any material note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which
Motorola is a party or by which Motorola may be bound, or by which it is, or
any of its properties or assets may be subject, except for such violations,
conflicts, breaches and defaults which would not, in the aggregate, have a
material adverse effect on the business, results of operations, prospects or
financial condition of Motorola and its subsidiaries taken as a whole, or (ii)
subject to compliance with the statutes and regulations referred to in the next
paragraph, to Motorola's knowledge, violate any material judgment, ruling,
order, writ, injunction, decree, statute, rule or regulation applicable to
Motorola or any of its properties or assets.
Other than in connection with or in compliance with the provisions of
the Delaware General Corporation Law and the Hart-Scott-Rodino Act, to
Motorola's knowledge, no notice to, filing with, or authorization, consent or
approval of, any public body or authority is necessary for the consummation by
Motorola of the transactions contemplated by this Agreement.
9. Termination.
9.01 Termination of Agreement.
Certain of the parties may terminate this Agreement as provided below:
December 16, 1993 Page 28
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(a) Motorola and the Company may terminate this Agreement by
mutual written consent at any time prior to the Closing Date;
(b) Motorola may terminate this Agreement by giving written notice
to the Company at any time prior to the Closing Date in the
event the Company is in breach, and the Company may terminate
this Agreement by giving written notice to Motorola at any
time prior to the Closing Date in the event Motorola is in
breach of any material representation, warranty, or covenant
contained in this Agreement in any material respect;
(c) Motorola may terminate this Agreement by giving written notice
to the Company at any time prior to the Closing Date if the
Closing Date shall not have occurred on or before March 31,
1994 by reason of the failure of any condition precedent
(unless the failure results primarily from Motorola breaching
any representation, warranty, or covenant contained in this
Agreement); or
(d) the Company may terminate this Agreement by giving written
notice to Motorola at any time prior to the Closing Date if the
Closing Date shall not have occurred on or before March 31,
1994 by reason of the failure of any condition precedent
(unless the failure results primarily from the Company
breaching any representation, warranty, or covenant contained
in this Agreement).
9.02 Effect of Termination.
In the event of termination, this Agreement shall forthwith become void
and there shall be no liability on the part of either Motorola or the Company,
or their respective officers or directors except in the case of a willful
breach. Obligations with respect to confidentiality, under the agreement
attached as Schedule 9.02, shall survive termination of this Agreement.
10. Indemnification.
10.01 Indemnification by the Company.
Subject to the limitations contained in this Section 10, the Company
agrees to indemnify and hold harmless Motorola and its Affiliates and its
Subsidiaries against and in respect of any or all of the following, including
any damage, expense, loss, claims, incidental and consequential damages, and
any such amounts related to, arising from or caused by the following:
December 16, 1993 Page 29
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(a) all liabilities of any nature, whether accrued, absolute,
contingent or otherwise, arising from, caused by or attributed
to any act or omission by the Company on or prior to the
Closing Date, including, without limitation:
(i) all tax liabilities, if any, accrued in respect of
or measured by the Company's, or any affiliated or
predecessor company's income for any period prior to
the Closing Date, or arising out of transactions
entered into, or any set of facts existing, prior to
the Closing Date;
(ii) any and all losses, liabilities, damages or
obligations resulting from or relating to any claim
or action by any creditor, potential creditor or
person claiming any proprietary or equity interest
in the Acquisition Assets or the Wafer Fab
Operations questioning the validity of or otherwise
seeking to rescind the transfer of all right, title
and interest in the Acquisition Assets and the Wafer
Fab Operations to Motorola;
(iii) any and all losses, liabilities, damages or
obligations relating to any liability of the Company
to the Pension Benefit Guaranty Corporation, or to
any multiemployer plan, which is enforced or which
is attempted to be enforced against either the
Acquisition Assets or the Wafer Fab Operations;
(iv) any and all losses, liabilities, damages or
obligations resulting from or relating to any claim
or action by any Company employee related to or
resulting from inaccurate personnel file information
provided to Motorola or the validity of the
Company's obtaining a Company employee's
authorization for disclosure of such information;
(v) all actions, suits, proceedings, claims, demands,
assessments (whether asserted prior to or following
the Closing Date), judgments, costs and expenses
incident to any of the foregoing;
(vi) any Hazardous Material storage, use, manufacture,
transportation, disposal, release, discharge or
emission by the Company, including, but not limited
to, the Wafer Fab Operations, on or prior to the
Closing Date;
December 16, 1993 Page 30
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(vii) with respect to Hazardous Material other than
trichloroethylene ("TCE"), any Hazardous Material
which is found to be present in or on the Real
Property, on or prior to Closing Date as a result of
any acts or omissions of the Company on or prior to
the Closing Date;
(viii) the exposure to any Hazardous Material on or prior
to the Closing Date, of any existing or former
Company employee engaged in the Wafer Fab Operations
or its related activities, or any other person
engaged in activities on the Real Property, the
presence of which is attributable to any act or
omission of the Company on or prior to the Closing
Date; and
(ix) any disposal into any landfill or other disposal
facility of a Hazardous Material by the Company or
by any person to whom Hazardous Materials have been
directly or indirectly delivered, by the Company
including, but not limited to, the Wafer Fab
Operations.
(b) all damage or deficiency resulting from the inaccuracy of a
representation or warranty made by the Company in this
Agreement, or resulting from a misrepresentation, breach of
warranty or nonfulfillment of an agreement, or covenant
contained herein, upon the part of the Company under, or in a
document delivered in connection with, this Agreement or from
a misrepresentation in or omission from a certificate or other
instrument furnished or to be furnished to Motorola hereunder,
and all claims relating to a matter covered by any such
representation or warranty, whether or not such claim is
valid;
(c) with respect to TCE Hazardous Material, any TCE which is found
to be present in or on the Real Property (or other real
property, on which the presence of TCE is claimed to be the
result of the Wafer Fab Operations or related activities
taking place on the Real Property), at any time on or prior to
the Closing Date or after the Closing Date, other than TCE
which is proved to be present in or on the Real Property (or
such other real property) as a result of disposal, release,
discharge or emission by Motorola or which is proved to be
present in or on the Real Property (or such other property) as
a result of disposal, release, discharge or emission by a new
source which had not begun any of the activities which result
in any such disposal, release, discharge or emission prior to
the Closing Date.
December 16, 1993 Page 31
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10.02 Indemnification by Motorola.
Subject to the limitations contained in this Section 10, Motorola
agrees to indemnify and hold harmless the Company and its Affiliates and its
Subsidiaries against and in respect of any or all of the following, including
any damage, expense, loss, claims, incidental and consequential damages, and
any such amounts related to, arising from or caused by the following:
(a) all liabilities of any nature, whether accrued, absolute,
contingent or otherwise, arising from, caused by or attributed
to any act or omission by Motorola after the Closing Date,
including without limitation:
(i) any Hazardous Material storage, use, manufacture,
transportation, disposal, release, discharge or
emission by Motorola in connection with the use of
the Acquisition Assets after the Closing Date;
(ii) any Hazardous Material which is found to be present
in or on the Real Property as a result of acts or
omissions of Motorola after the Closing Date;
(iii) the exposure to any Hazardous Material after the
Closing Date of any person engaged in activities on
the Real Property, provided the presence of such
Hazardous Material is not the result of any act of
omission by the Company on or prior to the Closing
Date; and
(iv) any disposal after the Closing Date into any landfill
or other disposal facility of a Hazardous Material by
Motorola or by any person to whom Hazardous Materials
have been directly or indirectly delivered in
connection with the use by Motorola of the
Acquisition Assets; and
(b) all damage or deficiency resulting from the inaccuracy of a
representation or warranty made by Motorola in this Agreement,
or resulting from a misrepresentation, breach of warranty or
nonfulfillment of an agreement, or covenant contained herein,
upon the part of Motorola under, or in a document delivered in
connection with, this Agreement or from a misrepresentation in
or omission from a certificate or other instrument furnished
or to be furnished to the Company hereunder, and all claims
relating to a matter covered by any such representation or
warranty, whether or not such claim is valid.
December 16, 1993 Page 32
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10.03 Matters Involving Third Parties.
If any third party shall notify any party hereto (the "Indemnified
Party") with respect to any matter which may give rise to a claim for
indemnification against any other party (the "Indemnifying Party") under this
Section, then the Indemnified party shall notify each Indemnifying Party
thereof promptly; provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any liability or obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is damaged.
In the event any Indemnifying Party notifies the Indemnified Party
within 15 days after the Indemnified Party has given notice of the matter
giving rise to the claim that the Indemnifying Party is assuming the defense
thereof, (a) the Indemnifying Party will defend the Indemnified Party against
the matter with counsel of the Indemnifying Party s choice reasonably
satisfactory to the Indemnified Party, (b) the Indemnified Party may retain
separate co-counsel at its sole cost and expense (except that the Indemnifying
Party will be responsible for the fees and expenses of the separate co-counsel
to the extent the Indemnified Party reasonably concludes that the counsel the
Indemnifying Party has selected has a conflict of interest), (c) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the matter without the written consent of the
Indemnifying Party, such consent not to be unreasonably withheld), and (d) the
Indemnifying Party will not consent to the entry of any judgment with respect
to the matter, or enter into any settlement which does not include a provision
whereby the plaintiff or claimant in the matter releases the Indemnified Party
from all liability with respect thereto, without the written consent of the
Indemnified Party such consent not to be unreasonably withheld.
However, in the event that the Indemnifying Party does not notify the
Indemnified Party with 15 days after receipt of notice from the Indemnified
Party, that the Indemnifying Party will be assuming the defense thereof, the
Indemnified Party may defend against, or enter into any settlement with respect
to, the matter in any manner it deems appropriate.
10.04 Other Indemnification Provision.
The foregoing indemnification provisions are in addition to, and not
in derogation of, any statutory or common law remedy any party may have for
breach of representation, warranty, or covenant.
December 16, 1993 Page 33
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34
10.05 Tax Indemnification Procedure.
If any Tax arises out of the Wafer Fab Operations or the Acquisition
Assets before the Closing Date is assessed or claimed on or after such date by
a taxing authority, Motorola shall notify the Company and it will take over the
defense of each such tax claim as well as the liability for any settlement,
penalty, interest or tax due. Motorola will take such action as is necessary
to cooperate in any proceedings with respect to any such tax or proposed tax.
If any Sales Tax payment arising out of Motorola s purchase of the
Acquisition Assets is challenged by a taxing authority, Motorola and the
Company shall mutually agree on the defense of such claim and split the cost of
such defense equally. Any additional tax, penalty or interest shall be split
equally. Any tax refund shall likewise be split equally.
11. Miscellaneous.
11.01 Survival.
With the exception of (i) the representations and warranties with
respect to the condition of certain Acquisition Assets in Sections 7.07(a) and
7.08 hereof, which shall survive the Closing Date for one (1) year, (ii) any
representation and warranty covering Taxes which shall survive until expiration
of applicable statute(s) of limitation and (iii) the license and other rights
granted to Motorola pursuant to Section 7.11 hereof which shall survive the
Closing Date forever, all of the other representations and warranties of the
parties contained in Sections 7 and 8 of this Agreement shall survive the
Closing Date hereunder for five (5) years. All of the covenants and
indemnities of the parties contained in this Agreement shall survive the
Closing Date forever.
11.02 Press Releases and Announcements.
No party shall issue any press release or announcement relating to the
subject matter of this Agreement prior to the Closing Date without the prior
written approval of the other parties; provided, however, that any party may
make any public disclosure it believes in good faith is required by law or
regulation (in which case the disclosing party will advise the other parties
prior to making the disclosure).
11.03 No Third Party Beneficiaries.
This Agreement shall not confer any rights or remedies upon any person
other than the parties and their respective successors and permitted assigns.
December 16, 1993 Page 34
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35
11.04 Entire Agreement.
This Agreement (including the documents referred to herein)
constitutes the entire agreement between the parties and supersedes any prior
understandings, agreements, or representations by or between the parties,
written or oral, that may have related in any way to the subject matter hereof.
11.05 Succession and Assignment.
This Agreement shall be binding upon and inure to the benefit of the
parties named herein and their respective successors and permitted assigns. No
party may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other party;
provided, however, that Motorola may (i) assign any or all of its rights and
interests hereunder to one or more of its Subsidiaries and (ii) designate one
or more of its Subsidiaries to perform its obligations hereunder (in any or all
of which Motorola nonetheless shall remain liable and responsible for the
performance of all of its obligations hereunder).
11.06 Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together will constitute one
and the same instrument.
11.07 Headings.
The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
11.08 Notices.
All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given if (and then two business
days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set
forth below:
If to the Company:
Corporate Secretary
Western Digital Corporation
8105 Irvine Center Drive
Irvine, California 92713
December 16, 1993 Page 35
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36
If to Motorola:
Corporate Secretary
Motorola Inc.
1303 East Algonquin Road
Schaumburg, Illinois 60196
Any party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended. Any party may
change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other party notice
in the manner herein set forth.
11.09 Governing Law.
This Agreement shall be governed by and construed in accordance with
the internal laws (and not the law of conflicts) of the State of California.
11.10 Amendments and Waivers.
No amendment of any provision of this Agreement shall be valid unless
the same shall be in writing and signed by the Company and Motorola. No waiver
by any party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to
any prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
11.11 Severability.
Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or
phrases, or to replace any invalid or
December 16, 1993 Page 36
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37
unenforceable term or provision with a term or provision that is valid
and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
11.12 Construction.
The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party. Any reference to any federal,
state, local, or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise. Nothing in the Schedules shall be deemed adequate to disclose an
exception to a representation or warranty made herein unless the Schedules
identify the exception with reasonable particularity and describes the relevant
facts in reasonable detail. The parties intend that each representation,
warranty, and covenant contained herein shall have independent significance.
If any party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the party has not breached shall not
detract from or mitigate the fact that the party is in breach of the first
representation, warranty, or covenant.
11.13 Incorporation of Exhibits and Schedule.
The Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
11.14 Specific Performance.
Each of the parties acknowledges and agrees that the other parties
would be damaged irreparably in the event any of the provisions of this
Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the parties agrees that the other
parties shall be entitled to an injunction or injunctions to prevent breaches
of the provisions of this Agreement and to enforce specifically this Agreement
and the terms and provisions hereof in any action instituted in any court of
the United States or any state thereof having jurisdiction over the parties and
the matter (subject to the provisions set forth below), in addition to any
other remedy to which it may be entitled, at law or in equity.
11.15 Alternative Dispute Resolution.
The parties will attempt to settle any claim or controversy arising
out of this Agreement through consultation and negotiation in good faith and in
a spirit of mutual cooperation. If those attempts fail, then such dispute will
be mediated by a mutually-
December 16, 1993 Page 37
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38
acceptable mediator to be chosen by the parties within fifteen (15)
business days after written notice by one of the parties demanding mediation.
Neither the Company nor Motorola may unreasonably withhold consent to the
selection of the mediator. By mutual agreement, however, the Company and
Motorola may postpone mediation until the Company and Motorola have each
completed some specified but limited discovery regarding the dispute. The
parties may also mutually agree to replace mediation with some other form of
alternative dispute resolution ("ADR"), such as neutral fact-finding or a
mini-trial.
Any dispute which the parties cannot resolve through negotiation,
mediation or another form of ADR within forty-five (45) days of the date of the
initial demand for ADR by one of the parties may be submitted to any federal or
state court of competent jurisdiction located in the State of California for
resolution. The Company and Motorola agree to waive any objection to personal
jurisdiction or venue in any forum located in the State of California. The use
of any ADR procedures will not be construed under the doctrine of laches,
waiver or estoppel to affect adversely the rights of any party. Nothing in
this Section 11.15 will prevent any party from resorting to judicial
proceedings if (i) good faith efforts to resolve the dispute under these
procedures have been unsuccessful, or (ii) interim relief from a court is
necessary to prevent serious and irreparable injury to such party.
11.16 Mutual Release.
Motorola releases the Company and the Company releases Motorola from
every claim of infringement of every patent (whether a U.S. patent or
otherwise) for any acts carried out anywhere in the world at any time on or
before the Closing Date.
11.17 [Intentionally Omitted]
11.18 [Intentionally Omitted]
12. Post-Closing Activities.
12.01 Further Assistance.
From and after the Closing Date, upon the request of Motorola, the
Company shall execute, acknowledge and deliver to Motorola (or cause to be
executed, acknowledged and delivered by others) all such further bills of sale,
assignments, transfers, conveyances, and other documents, in a form reasonably
satisfactory to Motorola, as may be required to convey, transfer and deliver to
Motorola, and protect Motorola's right, title and interest in the Acquisition
Assets, and as otherwise may be
December 16, 1993 Page 38
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39
appropriate to carry out the transactions contemplated by this Agreement.
12.02 Regulatory Filings.
Each of the parties hereto will furnish to the other parties hereto
such necessary information and reasonable assistance as such other parties may
reasonably request in connection with its preparation of necessary filings or
submissions to any governmental agency.
12.03 [intentionally omitted]
12.04 Litigation and IRS Support.
In the event and for so long as any party actively is contesting or
defending against any charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand in connection with (i) any transaction
contemplated under the agreement or (ii) any fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing Date
involving the Company, each of the other parties will cooperate with the
contesting or defending party and his or its counsel in the contest or defense,
make available his or its personnel, and provide such testimony and access to
his or its books and records as shall be necessary in connection with the
contest or defense, all at the sole cost and expense of the contesting or
defending party (unless the contesting or defending party is entitled to
indemnification therefor).
IN WITNESS WHEREOF, Motorola, and the Company have caused this
Agreement to be signed by their respective corporate seals to be affixed
hereto, all as of the date first written above.
MOTOROLA INC., WESTERN DIGITAL CORPORATION,
a Delaware Corporation a Delaware Corporation
By:__________________________ By:__________________________
Murray A. Goldman A. Travis White
Senior Vice President Executive Vice President
and Assistant General Manager Group General Manager
Semiconductor Products Sector Microcomputer Products
December 16, 1993 Page 39
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40
WESTERN DIGITAL CORPORATION
8105 IRVINE CENTER DRIVE
IRVINE, CA 92718
(714) 932-5000
Dated as of
December 23, 1993
Motorola Inc.
6501 William Cannon Drive West
Austin, TX 78721
Attn: Richard Timmins
Vice President/Controller
Microcontroller Technologies Group
Mail Drop OE16
Dear Rick:
Reference is made to the Asset Purchase Agreement dated as of
December 16, 1993 (the "Agreement") by and between Motorola Inc. ("Motorola")
and Western Digital Corporation (the "Company"). As used herein, the terms
"Closing" and "Closing Date" shall have the meanings ascribed to them in the
Agreement. In consideration of the mutual promises contained herein, Motorola
and the Company hereby agree as follows:
1. Section 2.01(b) of the Agreement provides for calculation of
the amount to be paid by Motorola to the Company for raw material and
work-in-process inventories based on Schedule 2.01(b) to the Agreement, to be
updated as of 4:00 p.m. on the Closing Date. The parties have agreed to use
the dollar amount set forth in such Schedule 2.01(b) ($6,735,267.65) for
purposes of the Closing and hereby agree to adjust that amount to reflect the
final raw material and work-in-process schedule which will be prepared in a
manner consistent with such Schedule 2.01(b) and will be available after the
Closing. If the adjusted amount is higher than the amount used for Closing,
Motorola will pay the additional amount to the Company in two equal
installments at the time of payments on the Buyer Note. If the adjusted amount
is lower, then the difference will be offset against the two installments due
under the Buyer Note.
2. Sections 3.01 and 4.07 of the Agreement, as well as other
sections of the Agreement, refer to "Listed Employees" as reflected in Schedule
3.01 to the Agreement. Such Schedule 3.01 has been prepared as of the most
recent
41
Motorola Inc.
Page 2
practicable time prior to the Closing; however, the parties are
continuing the process of determining whether certain additional Company
employees (approximately 15 or less in number) will become "Listed Employees"
subject to such additional employees qualifying under Motorola's employment
policies. The persons to be added to the list of "Listed Employees" will be
designated in writing by Motorola in its discretion prior to January 1, 1994.
3. Schedule 1.03 (Excluded Assets) to the Agreement contains,
among other things, a schedule of excluded supplies which will need to be
updated as of 4:00 p.m. on the Closing Date. Since this update will not be
available until after the Closing, the parties agree to complete such update in
a manner consistent with the schedule of excluded supplies which is included in
such Schedule 1.03 as of the Closing.
4. The allocation referred to in Section 2.02 of the Agreement
will be completed and agreed to by the parties by January 30, 1994.
Very truly yours,
Western Digital Corporation
By:_____________________________
Timothy J. Leyden
Vice President and
Controller, Microcomputer Products
Accepted to and accepted
as of the date first
written above:
Motorola Inc.
By:______________________________
Richard Timmins
Vice President and Controller
Microcontroller Technologies Group
42
LIST IDENTIFYING CONTENTS OF OMITTED SCHEDULES
PURSUANT TO REGULATION S-K ITEM 601(B)(2)
Schedule 1.01(a) Description of Real Property
Schedule 1.02 Assumed Liabilities
Schedule 1.03 Excluded Assets
Schedule 2.01(b) Raw Material/WIP
Schedule 2.01(c) Capital Float
Schedule 3.01 Listed Employees
Schedule 5.03(d) Legal Opinion by Gibson Dunn & Crutcher
Schedule 5.03(g) Estoppel Certificate
Schedule 6 Joint Escrow Instructions
Schedule 7.05(b) Government Approvals and Consents
Schedule 7.09 Excluded Contracts
Schedule 7.13 Insurance Information
Schedule 9.02 Confidentiality Agreement
Registrant will furnish supplementally a copy of any omitted
schedule to the Commission upon request.
43
EXHIBIT A
PROMISSORY NOTE
$6,735,267.65 December 23, 1993
FOR VALUE RECEIVED, Motorola, Inc., the undersigned promises to pay to the
order of Western Digital Corporation or holder the sum of Six Million Seven
Hundred Thirty-Five Thousand, Two Hundred Sixty-Seven and 65/100 dollars
($6,735,267.65) payable in two (2) equal installments, thirty (30) and sixty
(60) days from the date hereof.
At the option of the holder, this note shall become immediately due and
payable without notice or demand upon occurrence of any of the following
events: (a) voluntary or involuntary filing of a petition in bankruptcy or for
reorganization; (b) application for appointment or appointment of a Receiver;
or (c) assignment for the benefit of creditors or adjudication in bankruptcy
by or against the undersigned.
The liability of the undersigned hereunder shall be absolute and
unconditional. Maker hereby waives presentment, demand for payment, notice of
dishonor, protest, and any and all notices and demands in connection with the
performance, default or enforcement of this note.
All amounts in arrears to bear interest at the rate of one and a half
percent per month or the legal maximum until finally paid. If after any
default, the holder shall place this note with an attorney for collection,
then, if permitted by law, the undersigned agrees to pay all costs and expenses
of such action, and a reasonable attorney's fee.
Witness:
_________________________ _____________________________
Richard F. Timmins
Vice President and Controller
Microcontroller Technologies Group
Motorola Inc.
END OF EXHIBIT 1 TO FORM 8-K