Exhibit 2.01
AGREEMENT AND PLAN OF RECAPITALIZATION
between
STERLING HOLDING COMPANY, LLC
and
NATIONAL SEMICONDUCTOR CORPORATION
Dated January 24, 1997
TABLE OF CONTENTS
ARTICLE I DEFINITIONS 1
ARTICLE II RECAPITALIZATION 5
2.1. Formation of Fairchild Companies.............................. 5
2.2. Transactions at Closing....................................... 5
2.3. The Closing................................................... 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF NSC 7
3.1. Organization.................................................. 7
3.2. Corporate Power and Authority; Effect of Agreement............ 7
3.3. Consents...................................................... 8
3.4. Litigation.................................................... 8
3.5. Brokers....................................................... 8
3.6. Purchase for Investment....................................... 8
3.7. Asset Purchase Agreement Representations...................... 8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF INVESTOR 9
4.1. Organization.................................................. 9
4.2. Power and Authority; Effect of Agreement...................... 9
4.3. Consents...................................................... 9
4.4. Litigation.................................................... 10
4.5. Brokers....................................................... 10
4.6. Purchase for Investment....................................... 10
4.7. Financing..................................................... 10
4.8. Ownership of Investor......................................... 10
4.9. Inspections................................................... 10
4.10. Asset Agreement............................................... 11
ARTICLE V COVENANTS OF NSC 11
5.1. Fulfillment of Agreements..................................... 11
5.2. Access, Information and Documents............................. 11
5.3. Consents...................................................... 12
5.4. Conduct of Business........................................... 12
5.5. Capitalization; Liabilities................................... 13
5.6. Competing Financings.......................................... 14
ARTICLE VI COVENANTS OF INVESTOR 14
6.1. Fulfillment of Agreements..................................... 14
6.2. Consents...................................................... 14
6.3. Financing..................................................... 14
ARTICLE VII CONDITIONS TO INVESTOR'S OBLIGATIONS 14
(i)
7.1. Bringdown of Representations and Warranties................... 15
7.2. Performance and Compliance.................................... 15
7.3. Opinion of Counsel............................................ 15
7.4. Satisfactory Instruments...................................... 15
7.5. Required Consents............................................. 15
7.6. Litigation.................................................... 16
7.7. Ancillary Agreements.......................................... 16
7.8. Absence of Changes............................................ 16
7.9. Timely Satisfaction of Conditions............................. 16
ARTICLE VIII CONDITIONS TO NSC'S OBLIGATIONS 17
8.1. Bringdown of Representations and Warranties................... 17
8.2. Performance and Compliance.................................... 17
8.3. Opinion of Counsel............................................ 17
8.4. Satisfactory Instruments...................................... 17
8.5. Required Consents............................................. 17
8.6. Litigation.................................................... 18
8.7. Ancillary Agreements.......................................... 18
ARTICLE IX CERTAIN ADDITIONAL COVENANTS 18
9.1. Termination................................................... 18
9.2. Costs, Expenses and Taxes..................................... 19
9.3. Hart-Scott-Rodino Antitrust Improvements Act of 1976.......... 19
9.4. No Setoff..................................................... 19
ARTICLE X INDEMNIFICATION 19
10.1. Indemnification By NSC........................................ 19
10.2. Indemnification by Investor................................... 20
10.3. General Indemnification Procedures............................ 20
ARTICLE XI MISCELLANEOUS 22
11.1. Nature and Survival of Representations........................ 22
11.2. Notices....................................................... 22
11.3. Entire Agreement.............................................. 23
11.4. Assignment; Binding Effect; Severability...................... 23
11.5. Governing Law................................................. 24
11.6. Execution in Counterparts..................................... 24
11.7. Public Announcement........................................... 24
11.8. No Third Party Beneficiaries.................................. 24
11.9. Headings...................................................... 24
11.10. Further Assurances............................................ 24
11.11. Amendment and Waiver.......................................... 25
(ii)
EXHIBITS
1-A NSC Note
1-B Purchase Price Note
2.1-A Fairchild Charter
2.1-B Fairchild Parent Charter
2.2-A Asset Agreement
2.2-C-1 Technology Licensing and Transfer Agreement
2.2-C-2 Transition Services Agreement
2.2-C-3 Fairchild Foundry Services Agreement
2.2-C-4 Revenue Side Letter
2.2-C-5 Fairchild Assembly Services Agreement
2.2-C-6 National Foundry Services Agreement
2.2-C-7 National Assembly Services Agreement
2.2-C-8 Mil/Aero Wafer Services Agreement
2.2-C-9 Shared Facilities Agreement (for South Portland Site)
2.2-C-10 Shared Services Agreement (for South Portland Site)
2.2-C-11 Shared Services and Occupancy Agreement (for Santa Clara Site)
2.2-D Shareholders Agreement
4.7A Commitment from Credit Suisse First Boston, Bankers Trust New York
Corporation and CIBC Wood Gundy Securities Corp.
4.7B Commitment from Bankers Trust Company, Credit Suisse First Boston and
Canadian Imperial Bank of Commerce
4.7C Commitment from Citicorp Venture Capital Ltd.
7.3 Opinion of Counsel for NSC
8.3 Opinion of Counsel for Investor
DISCLOSURE SCHEDULES
A Closing Actions Outline
1 Purchase Price Adjustments
3.3 NSC's Consents
3.4 Litigation
7.5 Required Consents
(iii)
AGREEMENT AND PLAN OF RECAPITALIZATION
This Agreement and Plan of Recapitalization (the "Agreement") is made this
24th day of January, 1997, between STERLING HOLDING COMPANY, LLC, a Delaware
limited liability company ("Investor"), and NATIONAL SEMICONDUCTOR CORPORATION,
a Delaware corporation ("NSC").
Background
A. NSC is engaged as one of its businesses in the business of
manufacturing and distributing the Business Products (as hereinafter defined)
through its Fairchild Division.
B. The Board of Directors of NSC deems it advisable and in the best
interest of NSC, the Business (as hereinafter defined) and the stockholders of
NSC, to adopt a plan of recapitalization of the Business pursuant to which
(i) NSC will transfer the Purchased Assets and Assumed Liabilities of the
Business to Fairchild Semiconductor Corporation, a Delaware corporation to be
formed by NSC for such purpose ("Fairchild"), and Fairchild will accept the
Purchased Assets and assume the Assumed Liabilities, (ii) NSC will transfer all
of the outstanding common stock of Fairchild to FSC Semiconductor Corporation, a
Delaware corporation to be formed by NSC for such purpose ("Fairchild Parent"),
and (iii) Investor will purchase certain securities of Fairchild Parent, all on
the terms and conditions set forth herein.
C. In connection with the recapitalization of the Business, NSC will
enter into the Operating Agreements (as hereinafter defined) with Fairchild and
NSC and Fairchild will enter into an agreement regarding certain actions
relating to implementation of the transactions contemplated hereby in accordance
with the outline attached as Schedule A.
D. It is intended that the transactions contemplated hereby be recorded
as a recapitalization for financial reporting purposes.
Terms
In consideration of the mutual representations, warranties, covenants and
agreements, and upon the terms and subject to the conditions hereinafter set
forth, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
For the purposes of this Agreement, the following words and phrases shall
have the following meanings:
"Affiliate" of a Person means any Person controlling, controlled by,
or under common control with, such Person. For purposes of this definition,
"control" means the power
to direct the management and policies of a Person, whether through the
ownership of voting securities, by agreement or otherwise.
"Agreement" shall have the meaning set forth in the Introduction.
"Asset Agreement" shall have the meaning set forth in Section 2.2(a).
"Assumed Liabilities" shall have the meaning set forth in the Asset
Agreement.
"Best Efforts" is defined to require that the obligated party make a
diligent, reasonable and good faith effort to accomplish the applicable
objective. Such obligation, however, does not require any significant
expenditure of funds or the incurrence of any significant liability on the part
of the obligated party, nor the incurrence of any expense or liability which is
unreasonable in light of the related objective, nor does it require that the
obligated party act in a manner which would otherwise be contrary to prudent
business judgment or normal commercial practices in order to accomplish the
objective. The fact that the objective is not actually accomplished is no
indication that the obligated party did not in fact utilize its Best Efforts in
attempting to accomplish the objective.
"Business" means NSC's Logic, Memory and Discrete Power and Signal
Technologies Business Units as historically conducted and accounted for
(including Flash Memory, but excluding Public Networks, Programmable Products
and Mil Logic Products).
"Business Day" means a day which is not a Saturday, a Sunday or a
statutory or civic holiday in the State of New York or any other day on which
the principal offices of either Investor or NSC are closed or become closed
prior to 2:00 p.m. local time whether in accordance with established company
policy or as a result of unanticipated events including adverse weather
conditions.
"Business Products" shall have the meaning set forth in the Asset
Agreement.
"Cash Payment" means a cash amount equal to the principal amount of
the Purchase Price Note including interest accrued and unpaid thereon, if any.
"Claim Notice" shall have the meaning set forth in Section 10.3.
"Claim Response" shall have the meaning set forth in Section 10.3.
"Closing" shall have the meaning set forth in Section 2.3.
"Closing Date" shall have the meaning set forth in Section 2.3.
"Commitment Letters" shall have the meaning set forth in Section 4.7.
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"Confidentiality Agreement" means the letter from NSC to CVC regarding
confidentiality dated August 23, 1996 and the letter from BA Partners to CVC
regarding confidentiality dated September 4, 1996.
"CVC" means Citicorp Venture Capital Ltd., a New York corporation.
"Damages" means any and all losses, liabilities, damages, penalties,
obligations, awards, fines, deficiencies, interest, claims (including third
party claims, whether or not meritorious), costs and expenses whatsoever
(including reasonable attorneys', accountants' and environmental consultants'
fees and disbursements) resulting from, arising out of or incident to (i) any
matter for which indemnification is provided under this Agreement, or (ii) the
enforcement by an indemnified party of its rights to indemnification under this
Agreement; provided, however, that Damages shall not include consequential or
incidental damages (other than consequential or incidental damages that are
awarded to third parties under matters covered by the foregoing clauses (i) or
(ii)).
"Defense Notice" shall have the meaning set forth in Section 10.3.
"Department" shall have the meaning set forth in Section 9.3.
"Excluded Liabilities" shall have the meaning set forth in the Asset
Agreement.
"Fairchild" shall have the meaning set forth in the Background.
"Fairchild Charter" shall have the meaning set forth in Section
2.1(a).
"Fairchild Companies" shall mean Fairchild and Fairchild Parent.
"Fairchild Common Stock" means the Common Stock, par value $.01 per
share, of Fairchild.
"Fairchild Parent" shall have the meaning set forth in the Background.
"Fairchild Parent Charter" shall have the meaning set forth in Section
2.1(b).
"Financing" means the financing required to effect the transactions
contemplated by this Agreement (including, without limitation, the repayment of
the Purchase Price Note) and to pay related fees and expenses on terms and
conditions reasonably satisfactory to Investor.
"First Boston Commitment Letter" shall have the meaning set forth in
Section 5.6.
"FSC Class A Common Stock" means the Class A Common Stock, par value
$.01 per share, of Fairchild Parent.
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"FSC Class B Common Stock" means the Class B Common Stock, par value
$.01 per share, of Fairchild Parent.
"FSC Preferred Stock" means the 12% Series A Cumulative Compounding
Preferred Stock, par value $.01 per share, of Fairchild Parent.
"FSC Securities" means the FSC Class A Common Stock, FSC Class B
Common Stock and FSC Preferred Stock.
"FTC" shall have the meaning set forth in Section 9.3.
"HSR Act" shall have the meaning set forth in Section 5.3.
"Indemnitee" shall have the meaning set forth in Section 10.3.
"Indemnitor" shall have the meaning set forth in Section 10.3.
"Investor" shall have the meaning set forth in the Introduction.
"Management Investors" means the members of management of the Business
designated by Investor pursuant to Section 2.2 to acquire a portion of the FSC
Securities to be acquired by Investor pursuant to this Agreement.
"Market Disruption Event" shall have the meaning set forth in Section
7.8.
"Material Adverse Effect" shall have the meaning set forth in the
Asset Agreement.
"NSC" shall have the meaning set forth in the Introduction.
"NSC Note" means a promissory note in the principal amount of $77
million issued by Fairchild Parent to NSC, the principal terms of which are set
forth on Exhibit 1-A.
"Operating Agreements" means the Technology Licensing and Transfer
Agreement, Transition Services Agreement, Fairchild Foundry Services Agreement,
Revenue Side Letter, Fairchild Assembly Services Agreement, National Foundry
Services Agreement, National Assembly Services Agreement, Mil/Aero Wafer
Services Agreement, Shared Facilities Agreement (for South Portland Site),
Shared Services Agreement (for South Portland Site), and Shared Services and
Occupancy Agreement substantially in the forms of Exhibits 2.2-C-1, 2.2-C-2,
2.2-C-3, 2.2-C-4, 2.2-C-5, 2.2-C-6, 2.2-C-7, 2.2-C-8, 2.2-C-9, 2.2-C-10 and
2.2-C-11 respectively.
"Person" means and includes any individual, corporation, partnership,
firm, association, joint venture, joint stock company, trust or other entity, or
any government or
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regulatory administrative or political subdivision or agency, department or
instrumentality thereof.
"Purchase Price Note" means a demand promissory note in the principal
amount of $472.8 million (subject to the adjustments set forth on Schedule 1)
from Fairchild to NSC in the form of Exhibit 1-B.
"Purchased Assets" shall have the meaning set forth in the Asset
Agreement.
"Response Period" shall have the meaning set forth in Section 10.3.
"Shareholders Agreement" shall have the meaning set forth in Section
2.2(d).
"Transaction Agreements" means this Agreement, the Operating
Agreements and the Asset Agreement.
"Voluntary Participation" shall have the meaning set forth in Section
10.3.
ARTICLE II
RECAPITALIZATION
2.1. Formation of Fairchild Companies. Prior to the Closing, NSC shall
have taken the following actions:
(a) caused the certificate of incorporation of Fairchild to be filed
substantially in the form attached hereto as Exhibit 2.1-A (the "Fairchild
Charter") with the Secretary of State of the State of Delaware as required by
the Delaware General Corporation Law under the name "Fairchild Semiconductor
Corporation"; and
(b) caused the certificate of incorporation of Fairchild Parent to be
filed substantially in the form attached hereto as Exhibit 2.1-B (the "Fairchild
Parent Charter") with the Secretary of State of the State of Delaware as
required by the Delaware General Corporation Law under the name "FSC
Semiconductor Corporation".
2.2. Transactions at Closing. The following transactions, which together
shall constitute the recapitalization, shall be consummated at the Closing on
the Closing Date in the following order and each transaction shall be
conditioned upon the occurrence of the other transactions:
(a) NSC and Fairchild shall enter into an Asset Purchase Agreement
substantially in the form attached hereto as Exhibit 2.2-A (the "Asset
Agreement"), and NSC shall transfer the Purchased Assets (other than the
Non-Assignable Assets) and the Assumed
5
Liabilities to Fairchild, and Fairchild shall accept the Purchased Assets (other
than the Non-Assignable Assets) and assume the Assumed Liabilities, pursuant to
such Asset Purchase Agreement in exchange for the Purchase Price Note and 100
shares of Fairchild Common Stock;
(b) NSC shall transfer all of the outstanding shares of Fairchild
Common Stock and cash in the amount of $12,837,000 to Fairchild Parent for
1,095,000 shares of FSC Class A Common Stock, 1,245,000 shares of FSC Class B
Common Stock and 11,667 shares of FSC Preferred Stock and the NSC Note;
(c) NSC shall enter into the Operating Agreements with Fairchild
substantially in the forms attached hereto as Exhibits 2.2-C-1 through -11,
(d) NSC, Investor, Management Investors and Fairchild Parent shall
enter into a Securities Purchase and Holders Agreement (the "Shareholders
Agreement") in the form attached hereto as Exhibit 2.2-D;
(e) NSC shall cause Fairchild Parent to sell, and Investor shall
purchase, 6,205,000 shares of FSC Class A Common Stock at a purchase price of
$0.50 per share, 7,055,000 shares of FSC Class B Common Stock at a purchase
price of $0.50 per share, and 58,333 shares of FSC Preferred Stock at a purchase
price of $1,000 per share, less the FSC Securities actually purchased by
Management Investors pursuant to Section 2.2(f);
(f) NSC shall cause Fairchild Parent to sell to Management Investors
such of the FSC Securities as would otherwise be purchased by Investor pursuant
to Section 2.2(e) in such amounts and to such Management Investors as shall have
been designated by Investor to Fairchild Parent in writing prior to Closing at
the purchase prices set forth in Section 2.2(e);
(g) Fairchild Parent shall contribute the cash proceeds from the sale
of FSC Securities to the capital of Fairchild;
(h) Fairchild shall obtain the proceeds of the Financing; and
(i) Fairchild shall repay the Purchase Price Note in cash.
The parties acknowledge that it is their intention that the foregoing
transactions all occur at the Closing on the Closing Date.
2.3. The Closing. (a) The closing of the transactions contemplated hereby
(the "Closing") shall take place at the offices of Dechert Price & Rhoads, 30
Rockefeller Plaza, New York, New York commencing at 9:00 a.m., local time, on a
date mutually agreed upon by the parties as soon as reasonably practicable
following satisfaction of the conditions set forth in Articles VII and VIII
hereof, or at such other time and place as the parties may mutually agree (the
"Closing Date"). The effective time of the transactions contemplated hereby
shall be deemed to be the opening of business on the Closing Date.
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(b) At the Closing,
(i) Fairchild and NSC shall make the closing deliveries required
by the Asset Agreement;
(ii) Fairchild Parent shall deliver to NSC against payment
therefor certificates representing the FSC Class A Common Stock, FSC Class B
Common Stock, FSC Preferred Stock and NSC Note being purchased by NSC pursuant
to Section 2.2(b), and NSC shall deliver to Fairchild Parent certificates
representing all of the outstanding shares of Fairchild Common Stock accompanied
by duly executed stock transfer powers;
(iii) Fairchild shall deliver to NSC the Cash Payment by wire
transfer of immediately available funds to an account designated by NSC to
Investor in writing at least three business days prior to Closing; and
(iv) Fairchild Parent shall deliver to Investor and the
Management Investors against payment therefor, certificates representing the FSC
Class A Common Stock, FSC Class B Common Stock and FSC Preferred Stock being
purchased by Investor and the Management Investors pursuant to Sections 2.2(e)
and 2.2(f), respectively.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NSC
NSC represents and warrants to Investor as follows:
3.1. Organization. NSC is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware, and has all
requisite corporate power and corporate authority to execute, deliver, and
perform the Transaction Agreements and to consummate the transactions
contemplated hereby and thereby.
3.2. Corporate Power and Authority; Effect of Agreement. The execution,
delivery and performance by NSC of the Transaction Agreements and the
consummation by NSC of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of NSC. The
Transaction Agreements have been duly and validly executed and delivered by NSC
and constitute the valid and binding obligations of NSC, enforceable against NSC
in accordance with their respective terms. The execution, delivery, and
performance by NSC of the Transaction Agreements and the consummation by NSC of
the transactions contemplated hereby and thereby will not, with or without the
giving of notice or the lapse of time, or both, (i) violate any provision of
law, rule, or regulation to which NSC is subject, (ii) violate any order,
judgment, or decree applicable to NSC or (iii) violate any provision of the
charter or the by-laws of NSC; except, in the case of (i) or (ii), for
violations that in the aggregate would not (x) materially hinder or impair the
consummation of the transactions contemplated hereby or thereby or
(y) materially interfere with the ability of
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Fairchild to conduct the Business after the Closing in substantially the same
manner in which the Business was conducted prior to the Closing.
3.3. Consents. Except as set forth in Schedule 3.3, no consent, approval,
or authorization of, or exemption by, or filing with, any governmental authority
is required to be obtained or made by NSC in connection with the execution,
delivery and performance by NSC of the Transaction Agreements or the taking by
NSC of any other action contemplated hereby or thereby, except for any of the
foregoing that in the aggregate would not (i) materially hinder or impair the
consummation of the transactions contemplated hereby or thereby or
(ii) materially interfere with the ability of Fairchild to conduct the Business
after the Closing in substantially the same manner in which the Business was
conducted prior to the Closing.
3.4. Litigation. Except as set forth on Schedule 3.4, there are no
actions, suits, investigations, or proceedings pending or, to the knowledge of
NSC, threatened (i) against NSC or any of its Affiliates which if adversely
determined would (x) materially hinder or impair the ability of NSC to perform
its obligations under the Transaction Agreements or (y) have a Material Adverse
Effect, or (ii) that seek to enjoin or obtain damages (which damages would
reasonably be expected to have a material adverse change in or effect upon the
business, financial condition or results of operations of the Business taken as
a whole) in respect of the consummation of the transactions contemplated hereby
or thereby. Neither NSC nor any of its Affiliates is subject to any outstanding
orders, rulings, judgments, or decrees that would (i) materially hinder or
impair the ability of NSC to perform its obligations under the Transaction
Agreements or (ii) have a Material Adverse Effect.
3.5. Brokers. NSC has not made any agreement or taken any other action
which might cause anyone to become entitled to a broker's or investment banker's
fee or commission, which is payable by Investor, Fairchild Parent or Fairchild,
or which could create a lien on any of the Purchased Assets, as a result of the
transactions contemplated hereunder.
3.6. Purchase for Investment. NSC is purchasing the FSC Securities and the
NSC Note pursuant to this Agreement for investment and not with a view to any
public resale or other distribution thereof, except in compliance with
applicable securities laws.
3.7. Asset Purchase Agreement Representations. The representations and
warranties set forth in the Asset Agreement (as modified by the schedules
thereto) in the form attached hereto are true and correct as of the date hereof
with the same force and effect as though such representations and warranties
have been made on, as of and with reference to the date hereof, except those
representations and warranties that address matters only as of a particular date
which shall be true and correct as of that date.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF INVESTOR
Investor hereby represents and warrants to NSC as follows:
4.1. Organization. Investor is a limited liability company duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
organization, and has all requisite limited liability company power and limited
liability company authority to carry on its business as it is now being
conducted, to execute, deliver, and perform this Agreement and to consummate the
transactions contemplated hereby.
4.2. Power and Authority; Effect of Agreement. The execution, delivery and
performance by Investor of this Agreement and the consummation by Investor of
the transactions contemplated hereby have been duly authorized by all necessary
limited liability company action on the part of Investor. This Agreement has
been duly and validly executed and delivered by Investor and constitutes the
valid and binding obligation of Investor, enforceable against Investor in
accordance with its terms. The execution, delivery, and performance by Investor
of this Agreement and the consummation by Investor of the transactions
contemplated hereby will not, with or without the giving of notice or the lapse
of time, or both, (i) violate any provision of law, rule, or regulation to which
Investor or any of its Affiliates is subject, (ii) violate any order, judgment,
or decree applicable to Investor or any of its Affiliates or (iii) violate any
provision of the organization documents of Investor or any of its Affiliates;
except, in the case of (i) and (ii), for violations that in the aggregate would
not (x) materially hinder or impair the consummation of the transactions
contemplated hereby or (y) materially interfere with the ability of Fairchild to
conduct the Business after the Closing in substantially the same manner in which
the Business was conducted prior to the Closing.
4.3. Consents. Except as set forth in Schedule 4.3, no consent, approval,
or authorization of, or exemption by, or filing with, any governmental authority
is required to be obtained or made by Investor in connection with the execution,
delivery and performance by Investor of this Agreement or the taking by Investor
of any other action contemplated hereby, except for any of the foregoing that in
the aggregate would not (i) materially hinder or impair the consummation of the
transactions contemplated hereby or thereby or (ii) materially interfere with
the ability of Fairchild to conduct the Business after the Closing in
substantially the same manner in which the Business was conducted prior to the
Closing. No statute, rule or regulation, or order of any court or
administrative agency prohibits Investor from consummating the transactions
contemplated hereby.
4.4. Litigation. There are no actions, suits, investigations, or
proceedings pending or, to the knowledge of Investor, threatened (i) against
Investor or any of its Affiliates which if adversely determined would (x)
materially hinder or impair the ability of Investor to perform its obligations
under this Agreement or (y) materially decrease the value of the Purchased
Assets as a whole, or (ii) that seek to enjoin or obtain damages (which damages
could reasonably be
9
expected to have a material adverse change in or effect upon the business,
financial condition or results of operations of Investor taken as a whole) in
respect of the consummation of the transactions contemplated hereby. Neither
Investor nor any of its Affiliates is subject to any outstanding orders,
rulings, judgments, or decrees that would have a material adverse effect on the
ability of Investor to perform its obligations under this Agreement.
4.5. Brokers. Investor has not made any agreement or taken any other
action which might cause anyone to become entitled to a broker's or investment
banker's fee or commission as a result of the transactions contemplated
hereunder.
4.6. Purchase for Investment. Investor is purchasing the FSC Securities
being purchased by it pursuant to Section 2.2(e) for investment and not with a
view to any public resale or other distribution thereof, except in compliance
with applicable securities laws.
4.7. Financing. Investor or CVC has received and delivered to NSC (a) a
commitment from Credit Suisse First Boston, Bankers Trust New York Corporation
and CIBC Wood Gundy Securities Corp. attached as Exhibit 4.7A, (b) a commitment
from Bankers Trust Company, Credit Suisse First Boston and Canadian Imperial
Bank of Commerce attached as Exhibit 4.7B and (c) a commitment from CVC attached
as Exhibit 4.7C (collectively, the "Commitment Letters"). The Commitment
Letters are sufficient to provide the Financing, have been duly accepted by
Investor and are in full force and effect. All fees required to be paid by
Investor or CVC on or prior to the date hereof in respect of the Commitment
Letters have been paid by Investor or CVC.
4.8. Ownership of Investor. CVC, employees, officers and directors of CVC
and corporations, partnerships and other entities at least a majority of the
equity in which is held in the aggregate by CVC and its employees, officers, and
directors hold in the aggregate no less than a majority of the economic
interests in Investor.
4.9. Inspections. Investor is an informed and sophisticated participant in
the transactions contemplated by this Agreement and has undertaken such
investigation, and has been provided with and has evaluated certain documents
and information in connection with the execution, delivery and performance of
this Agreement. Investor acknowledges that it is engaging in the transactions
contemplated hereby without any representation or warranty, express or implied,
by NSC or any of its Affiliates, except as expressly set forth in the
Transaction Agreements. In furtherance of the foregoing, and not in limitation
thereof, Investor acknowledges that, except as expressly set forth in the
Transaction Agreements, no representation or warranty, express or implied, of
NSC or any of its advisors, including, without limitation, Deutsche Morgan
Grenfell, BA Partners, NSC's lawyers (other than the opinions of such lawyers
delivered in connection with this Agreement), KPMG Peat Marwick (except in
connection with financial statements prepared by such accountants accompanied by
an opinion of such accountants thereon) or any of their respective Affiliates or
representatives, with respect to the Business (including, without limitation,
the Evaluation Materials (as defined in the Asset Agreement), the Confidential
Offering Memoranda (as provided to Investor pursuant to the
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Confidentiality Agreement), any other information provided to Investor pursuant
to the Confidentiality Agreement and any financial projection or forecast
delivered to Investor with respect to the revenues or profitability which may
arise from the Business either before or after the Closing Date) shall form the
basis of any claim against NSC or any of its advisors, or any of their
respective Affiliates or representatives. With respect to any financial
projections or forecasts delivered on behalf of NSC to Investor, Investor
acknowledges that there are uncertainties inherent in attempting to make such
projections and forecasts and that it is familiar with such uncertainties.
4.10. Asset Agreement. Investor acknowledges that Fairchild will have
ongoing obligations under the Asset Agreement and the Operating Agreements.
ARTICLE V
COVENANTS OF NSC
NSC hereby covenants and agrees with Investor as follows:
5.1. Fulfillment of Agreements. NSC shall use its Best Efforts to cause
all of the conditions to the obligations of Investor under Article VII of this
Agreement to be satisfied on or prior to Closing. NSC shall promptly notify
Investor of any event or fact coming to NSC's attention prior to Closing which
causes any of its representations, warranties, covenants or agreements contained
in any Transaction Agreement that are qualified by materiality limitations with
respect to the Business as a whole to be inaccurate and those that are not
qualified by materiality limitations with respect to the business as a whole to
be inaccurate in any material respect with respect to the Business as a whole.
From and after the date hereof and pending the Closing, NSC shall promptly
notify Investor of the occurrence of any condition or development (exclusive of
general economic or industry factors affecting business in general) coming to
NSC's attention of a nature that is materially adverse to the business,
financial condition or results of operations of the Business. NSC shall, and
shall cause Fairchild Parent and Fairchild to, cooperate with Investor (at
Investor's expense and assuming adequate indemnification (including control
person liability on any securities placements)) with respect to the Financing
and take all actions and do all things reasonably necessary, proper or advisable
to assist Investor in securing the Financing.
5.2. Access, Information and Documents. From and after the date hereof and
pending the Closing, upon reasonable notice, NSC will give to Investor and to
Investor's counsel, accountants and other representatives and financing sources
full access during normal business hours to all of the properties, books, tax
returns, contracts, commitments, records, officers, personnel and accountants
relating to the Business and will furnish to Investor all such documents and
copies of documents (certified to be true copies if requested) and all
information with respect to the affairs of the Business as Investor may
reasonably request; provided, that no such access shall unreasonably interfere
with NSC's operation of its business, including, without
11
limitation, the Business; and provided further, that all information received by
Investor or any of Investor's counsel, accountants and other representatives and
financing sources from NSC and NSC's counsel, accountants and other
representatives shall be subject to the provisions of the Confidentiality
Agreement.
5.3. Consents. NSC will use its Best Efforts, and will cooperate with
Investor, to secure all consents, approvals, authorizations, exemptions and
waivers from third parties (including any required pursuant to the
Hart-Scott-Rodino Antitrust Improvements act of 1976, as amended (the "HSR
Act")), set forth on Schedule 3.3 or otherwise required in order to enable NSC
to effect the transactions contemplated hereby.
5.4. Conduct of Business. From and after the date hereof and pending
Closing, and unless Investor shall otherwise consent or agree in writing, NSC
covenants and agrees that:
(a) Ordinary Course. The Business will be conducted only in the
ordinary course and consistent with past practice, including billing, shipping
and collection practices, inventory transactions and payment of accounts
payable.
(b) Preservation of Business. NSC will use its Best Efforts to
preserve the business organization of the Business intact in all material
respects, to keep available in all material respects to the Business the
services of the present officers and employees of the Business, and to preserve
in all material respects for the Business the good will of the material
suppliers, material customers and others having material business relations with
the Business.
(c) Material Transactions. NSC will not, and will cause its
Affiliates not to:
(i) enter into any contract or commitment relating to the
Business the performance of which may extend beyond the Closing, except those
made in the ordinary course of business the terms of which are consistent with
past practice or those the obligations of NSC under which do not exceed
$100,000;
(ii) enter into any employment or consulting contract or
arrangement with any Person relating to the Business which is not terminable at
will, without penalty or continuing obligation, subject to the requirements and
restrictions of applicable labor and employment laws and regulations, other than
consulting and employment agreements entered into in the ordinary course of
business consistent with past practice;
(iii) sell, transfer, lease or otherwise dispose of any
assets which would constitute Purchased Assets if the Closing were to occur on
the date of such disposition, other than in the ordinary course of business and
consistent with past practice;
(iv) incur, create, assume or suffer to exist any mortgage,
pledge, lien, restriction, encumbrance, tenancy, encroachment, covenant,
condition, right-of-way, easement, claim, security interest, charge or other
matter affecting title on any Purchased Assets, except
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for (A) the incurrence, creation, assumption or sufferance to exist of any of
the foregoing that does not result in any obligations of NSC or its Affiliates
in excess of $100,000, (B) the incurrence, creation, assumption or sufferance to
exist of any mechanics' liens and purchase money interests that may arise on the
acquisition of supplies, materials or equipment or (C) Assumed Liabilities
(provided that to the extent any Assumed Liability is incurred, created or
assumed after the date hereof, such Assumed Liability was incurred, created or
assumed in the ordinary course of business consistent with past practice);
(v) increase or otherwise change the compensation payable or to
become payable to any officer, employee or agent of the Business, except in the
ordinary course of business consistent with past practice;
(vi) waive any substantial right of the Business, other than for
consideration in the ordinary course of business consistent with past practice;
(vii) take any action or omit to take any action which will
result in a violation of any applicable law or cause a breach of any agreements,
contracts or commitments by the Business, in each case, which, individually or
in the aggregate, is material to the Business as a whole; or
(viii) enter into any agreement to do any of the foregoing.
5.5 Capitalization; Liabilities. Immediately prior to the Closing (except
as set forth in Section 2.2): (i) the authorized capital stock of Fairchild
Parent shall consist solely of (a) 70,000 shares of FSC Preferred Stock, (b)
30,000,000 shares of FSC Class A Stock and (c) 30,000,000 shares, of FSC Class B
Stock; (ii) the FSC Securities issued pursuant to Article II of this Agreement
shall be the only issued and outstanding shares of capital stock of Fairchild
Parent issued or outstanding immediately prior to the Closing; (iii) the
authorized capital stock of Fairchild shall consist solely of 1,000 shares of
Fairchild Common Stock; (iv) all of the issued and outstanding shares of capital
stock of Fairchild shall be held beneficially and of record by Fairchild Parent,
free and clear of any lien, security interest, restriction, encumbrance or
claim; (v) there shall be no outstanding options, warrants, rights, agreements,
calls, commitments or demands of any character relating to the capital stock of
Fairchild Parent or Fairchild or securities convertible into or exchangeable for
any of such capital stock; (vi) Fairchild Parent shall not have any liabilities
or obligations other than pursuant to the NSC Note and Delaware franchise taxes
incident to its organization; and (vii) Fairchild shall not have any liabilities
or obligations other than the Assumed Liabilities, pursuant to the Asset
Agreement and the Operating Agreements and Delaware franchise taxes incident to
its organization.
5.6. Competing Financings. From the date hereof through the Closing Date,
NSC shall not engage in any competing issues of debt securities or commercial
bank facilities as described in and during the period set forth in the Senior
Subordinated Notes/Commitment Letter included in the Commitment Letters (the
"First Boston Commitment Letter").
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ARTICLE VI
COVENANTS OF INVESTOR
6.1. Fulfillment of Agreements. Investor shall use its Best Efforts to
cause all of the conditions to the obligations of NSC under Article VIII of this
Agreement to be satisfied on or prior to the Closing and shall cooperate with
NSC in obtaining the Title Policies (as defined in the Asset Agreement) and
Surveys (as defined in the Asset Agreement). Investor shall promptly notify NSC
in writing of any event or fact which represents or is likely to cause a breach
of any of its representations, warranties, covenants or agreements contained
herein.
6.2. Consents. Investor will use its Best Efforts, and will cooperate with
NSC, to secure all consents, approvals, authorizations, exemptions, and waivers
from third parties (including any required pursuant to the HSR Act) as set forth
on Schedule 3.3 or otherwise required in order to enable Investor to effect the
transactions contemplated hereby.
6.3. Financing. In the event that a condition set forth in Section 7.1
through 7.9 or Article VIII has not been satisfied or waived prior to the date
on which CVC's right to deliver a purchase request under the First Boston
Commitment Letter is terminated and as a result the Fairchild Companies shall
not have obtained the proceeds of the Financing, Investor shall use its
reasonable efforts to obtain the Financing.
ARTICLE VII
CONDITIONS TO INVESTOR'S OBLIGATIONS
The obligation of Investor to consummate the transactions contemplated
hereby at the Closing shall be subject to the satisfaction (or waiver) at or
prior to the Closing of all of the following conditions:
7.1. Bringdown of Representations and Warranties. The representations and
warranties of NSC contained in the Transaction Agreements that are qualified by
materiality limitations with respect to the Business as a whole shall be true
and correct and those that are not qualified by materiality limitations with
respect to the Business as a whole shall be true and correct in all material
respects with respect to the Business as a whole, in each case as of the time of
Closing with the same force and effect as though such representations and
warranties had been made on, as of and with reference to such time, except those
representations and warranties that address matters only as of a particular date
which, if qualified by materiality limitations with respect to the Business as a
whole, shall be true and correct and, if not qualified by materiality
limitations with respect to the Business as a whole, shall be true and correct
in all material respects with respect to the Business as a whole, as of that
date and Investor shall have received a certificate to such effect signed by an
executive officer of NSC.
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7.2. Performance and Compliance. NSC shall have performed in all material
respects all of the covenants and complied in all material respects with all of
the provisions required by the Transaction Agreements to be performed or
complied with by it on or before the Closing and Investor shall have received a
certificate to such effect, signed by an executive officer of NSC.
7.3. Opinion of Counsel. Investor shall have received from Wachtell,
Lipton, Rosen & Katz, counsel for NSC, and John M. Clark, III, General Counsel
of NSC, opinions dated the date of the Closing collectively substantially to the
effect set forth in Exhibit 7.3. In rendering such opinions, such counsel may
rely on matters involving the application of laws other than the laws of the
State of New York, the General Corporation Law of the State of Delaware or laws
of the United States upon the opinion of other counsel of good standing who are
satisfactory to the counsel relying thereon, provided that NSC shall furnish a
copy of any such opinions to Investor and the counsel relying thereon shall
state that such other opinion is satisfactory in scope and form.
7.4. Satisfactory Instruments. All instruments and documents reasonably
required on NSC's part to effectuate and consummate the transactions
contemplated hereby shall be delivered to Investor and shall be in form and
substance reasonably satisfactory to Investor and its counsel in all material
respects.
7.5. Required Consents. All consents and approvals of third parties to the
transactions contemplated hereby (including the consents and approvals which are
(a) set forth on Schedule 7.5, (b) material to the Business or (c) necessary for
Fairchild to conduct the Business after the Closing in substantially the same
manner in which the Business was conducted prior to the Closing) shall have been
obtained (except for such consents and approvals (other than those set forth on
Schedule 7.5) that if not obtained would not in the aggregate have a material
adverse effect on the Business as a whole), and all waiting periods specified by
law the passing of which are necessary for the consummation of such transactions
(including without limitation the waiting period under the HSR Act, if
applicable) shall have passed or been terminated.
7.6. Litigation. No statute, rule or regulation, or order of any court or
administrative agency, shall be in effect which restrains or prohibits the
transactions contemplated hereby or which would limit or adversely affect
Investor's ability to acquire the FSC Securities to be acquired by it pursuant
to this Agreement, Fairchild Parent's ownership or control of Fairchild or
Fairchild's ownership or control of the Purchased Assets (other than the
Non-Assignable Assets) or the Business and there shall not have been threatened
by any Governmental Authority, nor shall there be pending by any Person, any
action or proceeding by or before any court or governmental agency or other
regulatory or administrative agency or commission, challenging any of the
transactions contemplated by the Transaction Agreements or seeking monetary
relief (which monetary relief would reasonably be expected to have a material
adverse change in or effect upon the business, financial condition or results of
operations of the Business taken as a whole) by reason of the consummation of
such transactions.
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7.7. Ancillary Agreements. The Asset Agreement and the Operating
Agreements shall have been duly authorized, executed and delivered by the
respective parties thereto and shall be in full force and effect. NSC and
Fairchild Parent shall have executed and delivered the Shareholders Agreement.
7.8. Absence of Changes. There shall not have occurred or been threatened
(i) since May 26, 1996, any material adverse change (or series of changes
constituting a material adverse change) in the operations, properties, financial
condition or reasonable prospects of the Business taken as a whole, or
(ii) since the date of this Agreement, any "Market Disruption Event." As used
herein, "Market Disruption Event" shall mean (a) any suspension or limitation of
trading in securities generally on the New York Stock Exchange (not including
any suspension or limitation of trading in any particular security as a result
of computerized trading limits), or any setting of minimum prices for trading on
such exchange; (b) any banking moratorium declared by U.S. Federal or New York
authorities; (c) any outbreak or escalation of major hostilities in which the
Unites States is involved, any declaration of war by Congress or any other
substantial national or international calamity or emergency; or (d) any other
material adverse change in bank or capital market conditions that has had a
material adverse effect on the syndication of bank credit facilities or the
consummation of high yield offerings.
7.9. Timely Satisfaction of Conditions. This Section 7.9 shall only apply
if a condition set forth in Sections 7.1 through 7.8 or Article VIII has not
been satisfied or waived prior to the date on which CVC's right to deliver a
purchase request under the First Boston Commitment Letter is terminated and as a
result Investor shall not have obtained the proceeds of the Financing. In such
event, the obligation of Investor to consummate the transactions contemplated by
this Agreement shall be subject to the further condition that the Fairchild
Companies shall have obtained the proceeds of the Financing.
ARTICLE VIII
CONDITIONS TO NSC'S OBLIGATIONS
The obligation of NSC to consummate the transactions contemplated hereby at
the Closing shall be subject to the satisfaction (or waiver) at or prior to the
Closing of all of the following conditions:
8.1. Bringdown of Representations and Warranties. The representations and
warranties of Investor contained in this Agreement that are qualified by
materiality limitations shall be true and correct and those that are not
qualified by materiality limitations shall be true and correct in all material
respects, in each case as of the time of Closing with the same force and effect
as though such representations and warranties had been made on, as of and with
reference to such time, except those representations and warranties that address
matters only as of a particular date which, if qualified by materiality
limitations, shall be true and correct and, if not qualified by
16
materiality limitations, shall be true and correct in all material respects, as
of that date, and NSC shall have received a certificate to such effect signed by
an executive officer of Investor.
8.2. Performance and Compliance. Investor shall have performed in all
material respects all of the covenants and complied in all material respects
with all of the provisions required by this Agreement to be performed or
complied with by it on or before the Closing and NSC shall have received a
certificate to such effect, signed by an executive officer of Investor.
8.3. Opinion of Counsel. NSC shall have received from Dechert Price &
Rhoads, counsel for Investor, an opinion dated the date of the Closing
substantially to the effect set forth in Exhibit 8.3.
8.4. Satisfactory Instruments. All instruments and documents reasonably
required on Investor's part to effectuate and consummate the transactions
contemplated hereby shall be delivered to NSC and shall be in form and substance
reasonably satisfactory to NSC and its counsel in all material respects.
8.5. Required Consents. All consents and approvals of third parties to the
transactions contemplated hereby (including the consents and approvals which are
(a) set forth on Schedule 7.5, (b) material to the Business or (c) necessary for
Fairchild to conduct the Business after the Closing in substantially the same
manner in which the Business was conducted prior to Closing) shall have been
obtained (except for such consents (other than those set forth on Schedule 7.5)
that if not obtained would not in the aggregate have a material adverse effect
on the Business as a whole), and all waiting periods specified by law the
passing of which are necessary for the consummation of such transactions
(including without limitation the waiting period under the HSR Act, if
applicable) shall have passed or been terminated.
8.6. Litigation. No statute, rule or regulation, or order of any court or
administrative agency shall be in effect which restrains or prohibits the
transactions contemplated hereby, and there shall not have been threatened by
any Governmental Authority, nor shall there be pending by any Person, any action
or proceeding by or before any court or governmental agency or other regulatory
or administrative agency or commission, challenging any of the transactions
contemplated by the Transaction Agreements or seeking monetary relief (which
monetary relief would reasonably be expected to have a material adverse change
in or effect upon the business, financial condition or results of operations of
Investor taken as a whole) by reason of the consummation of such transactions.
8.7. Ancillary Agreements. Investor and Management Investors shall have
executed and delivered the Shareholders Agreement.
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ARTICLE IX
CERTAIN ADDITIONAL COVENANTS
9.1. Termination.
(a) When Agreement May Be Terminated. This Agreement may be
terminated at any time prior to Closing:
(i) by mutual consent of Investor and NSC;
(ii) by Investor if there has been a material breach by NSC of
any of its representations, warranties or covenants under the Transaction
Agreements which breach is not curable, or, if curable, is not cured within
thirty days of written notice thereof;
(iii) by NSC if there has been a material breach by Investor
of any of its representations, warranties or covenants under this Agreement
which breach is not curable, or, if curable, is not cured within thirty days of
written notice thereof; or
(iv) by either party if the Closing shall not have occurred prior
to October 31, 1997.
(b) Effect of Termination. In the event of termination of this
Agreement by either Investor or NSC, as provided above, this Agreement shall
forthwith terminate and there shall be no liability on the part of either
Investor or NSC or any of their respective officers or directors, except for
liabilities arising from a breach of this Agreement prior to such termination;
provided, however, that under no circumstances shall such liabilities include
any consequential or incidental damages; provided, further, that the obligations
of the parties set forth in Section 9.2 hereof shall survive such termination.
9.2. Costs, Expenses and Taxes. Each party to this Agreement will bear all
the fees, costs and expenses which are incurred by it in connection with the
transactions contemplated hereby; provided, however, that the filing fees for
the HSR Act and any similar foreign clearances or approvals shall be paid
equally by NSC and Investor; and provided, further, that if the Closing occurs,
all fees and expenses of Investor shall be borne by Fairchild.
9.3. Hart-Scott-Rodino Antitrust Improvements Act of 1976. Promptly after
the date hereof, Investor and NSC will file the required notifications, if any,
with the Federal Trade Commission ("FTC") and the Antitrust Division of the
Department of Justice ("Department") pursuant to and in compliance with the HSR
Act and filings required to obtain any necessary foreign approvals. The parties
hereto shall not intentionally or negligently delay submission of information
requested by FTC and Department under the HSR Act and shall use their respective
Best Efforts promptly to supply, or cause to be supplied, such information and
shall use their Best Efforts to obtain early termination of the applicable
waiting period.
18
9.4. No Setoff. A purported failure of performance by a party under a
Transaction Agreement, the Shareholders Agreement or the NSC Note shall not
reduce the rights of, or result in a claim of set-off against, such party under
any other Transaction Agreement, the Shareholders Agreement or the NSC Note.
The rights and obligations of the parties to each of the foregoing agreements
shall be deemed to be, and shall be construed as, independent of the rights and
obligations of each such party to each of the other such agreements.
ARTICLE X
INDEMNIFICATION
10.1. Indemnification By NSC. NSC hereby agrees to indemnify and hold
harmless Investor and the Fairchild Companies from and against any Damages
arising out of or resulting from (i) the breach or inaccuracy of any
representation or warranty made by NSC in this Agreement, other than the
representation of NSC in Section 3.7; or (ii) the breach by NSC of any covenant
contained in this Agreement. Notwithstanding anything to the contrary contained
herein, if as of the Closing, Investor has actual knowledge of the breach by
NSC, or the inaccuracy, of any representation or warranty made by NSC in this
Agreement, and NSC does not have such actual knowledge, then (A) Investor shall
not be entitled to indemnification from NSC with respect to such breach or
inaccuracy and (B) the Closing shall be deemed to be a waiver by Investor of any
claim for Damages with respect to such breach or inaccuracy and no other remedy,
set-off or indemnity shall be applicable.
10.2. Indemnification by Investor. Investor hereby agrees to indemnify
and hold harmless NSC from and against any Damages arising out of or resulting
from (i) the breach or inaccuracy of any representation or warranty made by
Investor in this Agreement; or (ii) the breach by Investor of any covenant
contained in this Agreement. Notwithstanding anything to the contrary contained
herein, if as of the Closing, NSC has actual knowledge of the breach by
Investor, or the inaccuracy, of any representation or warranty made by Investor
in this Agreement, and Investor does not have such actual knowledge, then
(A) NSC shall not be entitled to indemnification from Investor with respect to
such breach or inaccuracy and (B) the Closing shall be deemed to be a waiver by
NSC of any claim for Damages with respect to such breach or inaccuracy and no
other remedy, set-off or indemnity shall be applicable.
10.3. General Indemnification Procedures.
(a) In the event that any party incurs or suffers any Damages with
respect to which indemnification may be sought by such party pursuant to this
Article X, the party seeking indemnification (the "Indemnitee") must assert the
claim by giving written notice (a "Claim Notice") to the party from whom
indemnification is sought (the "Indemnitor"). The Claim Notice must state the
nature, basis and amount (if known) of the claim in reasonable detail based on
the information available to the Indemnitee and, if the Claim Notice is being
given with respect to a third party claim, it must be accompanied by a copy of
any written notice of the
19
third party claimant. If the Claim Notice is being given by reason of any third
party claim, it shall be given in a timely manner but in no event more than 30
days after the filing or other written assertion of any such claim against the
Indemnitee, but the failure of the Indemnitee to give the Claim Notice within
such time period shall not relieve the Indemnitor of any liability for
indemnification under this Article X, except to the extent that the Indemnitor
is prejudiced thereby. If the amount of the claim is not known at the time the
Claim Notice is given, the Indemnitee shall also give notice of such amount to
the Indemnitor at such time as the amount of the claim is reasonably
ascertainable. Each Indemnitor to whom a Claim Notice is given shall respond to
any Indemnitee that has given a Claim Notice (a "Claim Response") within 30 days
(the "Response Period") after the date that the Claim Notice is received by
Indemnitor. Any Claim Response shall specify whether or not the Indemnitor
given the Claim Response disputes the claim described in the Claim Notice. If
any Indemnitor fails to give a Claim Response within the Response Period, such
Indemnitor shall be deemed not to dispute the claim described in the related
Claim Notice, in whole or in part. If any Indemnitor elects not to dispute a
claim described in a Claim Notice, whether by failing to give a timely Claim
Response or otherwise, then such claim shall be conclusively deemed to be an
obligation of such Indemnitor. If any Indemnitor shall be obligated to
indemnify an Indemnitee hereunder, such Indemnitor shall pay to such Indemnitee
within 30 days after the last day of the applicable Response Period (or at such
later time as the amount is ascertainable) the amount to which such Indemnitee
shall be entitled. If there shall be a dispute as to the amount or manner of
indemnification under this Agreement, the Indemnitor and the Indemnitee shall
seek to resolve such dispute through negotiations and, if such dispute is not
resolved within 20 days, the Indemnitee may pursue whatever legal remedies may
be available for the recovery of the Damages claimed from any Indemnitor. If
any Indemnitor fails to pay all or any part of any indemnification obligation on
or before the later to occur of (x) 30 days after the last day of the applicable
Response Period, and (y) if the Claim Notice relates to Damages that have not
been liquidated as of the date of the Claim Notice, the date on which all or any
part of such Damages shall have become liquidated and determined, then the
Indemnitor shall also be obligated to pay to the Indemnitee interest on the
unpaid amount for each day during which the obligation remains unpaid at an
annual rate of ten percent.
(b) The Indemnitee shall provide to the Indemnitor on request all
information and documentation reasonably necessary to support and verify any
Damages that the Indemnitee believes give rise to the claim for indemnification
hereunder and shall give the Indemnitor reasonable access to all books, records
and personnel in the possession or under the control of the Indemnitee that
would have bearing on such claim.
(c) Except as hereinafter provided, in the case of third party claims
for which indemnification is sought, the Indemnitor shall have the option:
(x) to conduct any proceedings or negotiations in connection therewith, (y) to
take all other steps to settle or defend any such claim (provided that the
Indemnitor shall not settle any such claim without the consent of the Indemnitee
(which consent shall not be unreasonably withheld, it being understood that it
shall not be unreasonable for the Indemnitee to withhold its consent from any
settlement which (1) commits the Indemnitee to take, or to forbear to take, any
action, or (2) does not provide for
20
a complete release of the Indemnitee by such third party)), and (z) to employ
counsel to contest any such claim or liability in the name of the Indemnitee or
otherwise. In any event, the Indemnitee shall be entitled to participate at its
own expense and by its own counsel (a "Voluntary Participation") in any
proceedings relating to any third party claim. The Indemnitor shall, within
45 days of receipt of the Claim Notice, notify the Indemnitee of its intention
to assume the defense of the claim (a "Defense Notice"). Until the Indemnitee
has received the Defense Notice, the Indemnitee shall take reasonable steps to
defend (but may not settle) the claim. If the Indemnitor declines to assume the
defense of any such claim or fails to give a Defense Notice within 45 days after
receipt of the Claim Notice, the Indemnitee shall defend against the claim but
shall not settle such claim without the consent of the Indemnitor (which consent
shall not be unreasonably withheld). The expenses of all proceedings, contests
or lawsuits (other than those incurred in a Voluntary Participation) with
respect to claims as to which a party is entitled to indemnification under this
Article X shall represent indemnifiable Damages under this Agreement.
Regardless of which party shall assume the defense of the claim, the parties
shall cooperate fully with one another in connection therewith. Notwithstanding
the foregoing, the Indemnitor shall not be entitled (except with the consent of
the Indemnitee) to take any of the actions referred to in clauses (x), (y) or
(z) of the first sentence of this subparagraph unless: (a) the third party
claim involves principally monetary damages; and (b) the Indemnitor shall have
expressly agreed in writing that, as between the Indemnitor and the Indemnitee,
the Indemnitor shall be solely obligated to satisfy and discharge such third
party claim. Damages payable hereunder shall be appropriately adjusted to
reflect the receipt of insurance proceeds, tax benefits and detriments and
proceeds received with respect to condemnation, expropriation or eminent domain
proceedings.
ARTICLE XI
MISCELLANEOUS
11.1. Nature and Survival of Representations. The representations,
warranties, covenants and agreements of NSC and Investor contained in this
Agreement shall survive the Closing; provided, however, that the representation
of NSC contained in Section 3.7 shall not survive the Closing and the covenants
and agreements of NSC contained in Article V of this Agreement, other than those
contained in Section 5.4(c)(iii) and Section 5.5, shall not survive the Closing.
11.2. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given (i) three Business Days
after mailing if mailed by certified or registered mail, return receipt
requested, (ii) one Business Day after delivery to Federal Express or other
nationally recognized overnight express carrier, if sent for overnight delivery
with fee prepaid, (iii) upon receipt if sent via facsimile with receipt
confirmed, or (iv) upon receipt if delivered personally, addressed as follows or
to such other address or addresses of which the respective party shall have
notified the other:
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If to Investor:
c/o Citicorp Venture Capital Ltd.
399 Park Avenue, 14th Floor
New York, New York 10043
Attention: Richard M. Cashin, Jr.
Fax No.: (212) 888-2940
With a required copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: G. Daniel O'Donnell
Fax No.: (215) 994-2222
If to NSC, to:
National Semiconductor Corporation
2900 Semiconductor Drive
Santa Clara, CA 95052
Attention: General Counsel
Fax No.: (408) 733-0293
With a required copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Barry A. Bryer
Fax No.: (212) 403-2000
11.3. Entire Agreement. The agreement of the parties, which is
composed of this Agreement and the Schedules and Exhibits hereto and the
documents referred to herein, sets forth the entire agreement and understanding
between the parties and supersedes any prior agreement or understanding, written
or oral, relating to the subject matter of this Agreement.
11.4. Assignment; Binding Effect; Severability. This Agreement may not
be assigned by any party hereto without the written consent of the other party;
provided that Investor may assign its rights but not its obligations hereunder
to Management Investors designated by Investor as set forth in Section 2.2(f);
provided further that Investor and the Fairchild Companies may assign their
rights hereunder as collateral security to any bona fide financial institution
engaged in financing in the ordinary course providing financing to consummate
the transactions
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contemplated hereby or any bona fide financial institution engaged in financing
in the ordinary course through whom such financing is refunded, replaced, or
refinanced and any of the foregoing financial institutions may, in enforcing its
rights in connection with such financing, assign such rights or cause Investor
and the Fairchild Companies to assign their rights in connection with a sale of
FSC, Fairchild or the business in the form then being conducted by Fairchild
substantially as an entirety. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the successors and permitted assigns of
each party hereto. The provisions of this Agreement are severable, and in the
event that any one or more provisions are deemed illegal or unenforceable the
remaining provisions shall remain in full force and effect unless the deletion
of such provision shall cause this Agreement to become materially adverse to any
party, in which event the parties shall use Best Efforts to arrive at an
accommodation which best preserves for the parties the benefits and obligations
of the offending provision.
11.5. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws (as opposed to the conflicts
of laws provisions) of the State of New York.
11.6. Execution in Counterparts. This Agreement may be executed in any
number of counterparts with the same effect as if the signatures thereto were
upon one instrument.
11.7. Public Announcement. Prior to Closing, neither Investor nor NSC
shall, without the approval of the other party hereto, make any press release or
other public announcement concerning the terms of the transactions contemplated
by this Agreement, except as and to the extent that any such party shall be so
obligated by law, in which case the party shall use its Best Efforts to advise
the other party thereof and the parties shall use their Best Efforts to cause a
mutually agreeable release or announcement to be issued; provided that the
foregoing shall not preclude communications or disclosures necessary to
(a) implement the provisions of this Agreement (including the Financing) or
(b) comply with accounting, securities laws and Securities and Exchange
Commission disclosure obligations. Investor will provide NSC with a reasonable
opportunity to review and comment on any references to NSC made by Investor (and
shall not include any such references to NSC without the written consent of NSC,
which consent shall not be unreasonably withheld or delayed) in any written
materials that are intended to be filed with the Securities and Exchange
Commission in connection with obtaining the Financing or intended to be
distributed to prospective purchasers pursuant to an offering made under Rule
144A promulgated under the Securities Act of 1933 in connection with obtaining
the Financing.
11.8. No Third Party Beneficiaries. Nothing in this Agreement, express
or implied, is intended to or shall (i) confer on any person other than the
parties hereto and their respective successors or permitted assigns any rights
(including third party beneficiary rights), remedies, obligations or liabilities
under or by reason of this Agreement, other than the rights to indemnification
from NSC to the Fairchild Companies pursuant to Article X, or (ii) constitute
the parties hereto as partners or as participants in a joint venture. This
Agreement shall not provide third parties with any remedy, claim, liability,
reimbursement, cause of action or other
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right in excess of those existing without reference to the terms of this
Agreement, other than the rights to indemnification from NSC to the Fairchild
Companies pursuant to Article X.
11.9. Headings. The headings preceding the text of the sections and
subsections hereof are inserted solely for convenience of reference, and shall
not constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
11.10. Further Assurances. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby. Each party will provide such certificates from appropriate officers
thereof confirming compliance by such party with the terms of this Agreement as
may reasonably be requested by the other party at Closing.
11.11. Amendment and Waiver. The parties may by mutual agreement amend
this Agreement in any respect, and any party, as to such party, may (a) extend
the time for the performance of any of the obligations of any other party, (b)
waive any inaccuracies in representations by any other party, (c) waive
compliance by any other party with any of the agreements contained herein and
performance of any obligations by such other party, and (d) waive the
fulfillment of any condition that is precedent to the performance by such party
of any of its obligations under this Agreement. To be effective, any such
amendment or waiver must be in writing and be signed by the party against whom
enforcement of the same is sought.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf as of the date first above written.
NATIONAL SEMICONDUCTOR CORPORATION
By:_____________________________
Name:
Title:
STERLING HOLDING COMPANY, LLC
By: CITICORP VENTURE CAPITAL LTD.,
a member
By:_____________________________
Name:
Title:
The undersigned hereby represents and warrants that it is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of New York, has all requisite corporate power and corporate authority to
execute, deliver, and perform the following guarantee and the following
guarantee constitutes the valid and binding obligation of the undersigned,
enforceable against the undersigned in accordance with its terms. The
undersigned hereby unconditionally and irrevocably guarantees the performance by
Investor of its obligations under this Agreement to be performed by Investor on
or prior to Closing.
CITICORP VENTURE CAPITAL LTD.
By:__________________________
Name:
Title:
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