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CLI-1027331v8
PURCHASE INCENTIVE AGREEMENT
This Purchase Incentive Agreement, dated as of November
27, 2002 (this "Purchase Incentive Agreement"), by and between Sterling
Semiconductor, Inc. ("Seller") and Dow Corning Enterprises, Inc. ("Buyer"):
BACKGROUND INFORMATION
WHEREAS, Seller has filed a petition for relief under chapter
11 of the United States Bankruptcy Code, 11 U.S.C. xx.xx. 101-1330 (the
"Bankruptcy Code") in the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court") and is operating its business as debtor in
possession in case 02-12473;
WHEREAS, simultaneously with the execution and delivery of
this Purchase Incentive Agreement, Seller and Buyer are entering into an Asset
Purchase Agreement (the "Purchase Agreement"), a copy of which (without exhibits
and schedules) is attached to this Purchase Incentive Agreement as Exhibit A;
WHEREAS, the Purchase Agreement provides for the purchase of
certain assets of Seller and the assumption of certain liabilities of Seller by
Buyer, on the terms and conditions set forth in the Purchase Agreement; and
WHEREAS, it is a condition precedent to Buyer's obligations
under the Purchase Agreement that the Bankruptcy Court enter an order approving
this Purchase Incentive Agreement (the "Sale Procedures Order").
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Seller agrees with Buyer as follows:
1. Definitions. Capitalized terms used in this Purchase Incentive
Agreement are used with the meanings ascribed to such terms in the Purchase
Agreement.
2. No Solicitation, Etc. During the period from the date of this Purchase
Incentive Agreement to the earlier of the Closing Date or the termination of the
Purchase Agreement in accordance with Article 10 of the Purchase Agreement,
Seller shall not directly, or indirectly through any of its Affiliates,
officers, directors, employees, representatives, agents, attorneys or otherwise,
initiate or solicit any proposals or offers from any Person (other than the
Buyer or its Affiliates) relating to any acquisition of the Business or any of
the Acquired Assets or assist any Person (other than the Buyer or its
Affiliates) in preparing, structuring or soliciting an offer or proposal
relating to an acquisition of the Business or any of the Acquired Assets.
Notwithstanding the preceding sentence, Seller may respond to inquiries for
information concerning the Business or the Acquired Assets as required under the
procedures for any such sale. In the event that Seller receives any offer or
proposal regarding an acquisition of the Business or any of the Acquired Assets,
Seller shall within two (2) Business Days notify Buyer of such proposal,
including the identity of the Person making such proposal and the principal
economic terms of such proposal.
3. Break-Up Fee, Etc.
(a) Break-Up Fee. In the event that, after the Bankruptcy Court enters the Sale
Procedures Order: (i) during the term of the Purchase Agreement, the Bankruptcy
Court approves any offer or agreement by any Person (other than the Buyer or its
Affiliates) to acquire the Business or all or a significant portion of the
Acquired Assets; (ii) during the term of the Purchase Agreement, the Bankruptcy
Court enters an order permitting the assignment, assumption, cancellation or
rejection of any of the Acquired Assets in a manner inconsistent with the
Purchase Agreement; or (iii) within the six-month period following the date of
termination of the Purchase Agreement, Seller sells the Business or all or a
significant portion of the Acquired Assets to any Person (other than Buyer or
its Affiliates), then Seller shall pay to Buyer, upon the Closing of the
transaction described in (i)-(iii) of this Section 3(a), a fee of $400,000 (the
"Fee") in cash, unless the Purchase Agreement has been validly terminated
pursuant to Section 10.1(b) of the Purchase Agreement.
(b) Expenses. If the Purchase Agreement is terminated pursuant to Section
10.1(c), (e), (f) or (i) of the Purchase Agreement, then Seller shall promptly
reimburse Buyer for its reasonable out-of-pocket expenses incurred in connection
with the transactions contemplated by this Purchase Incentive Agreement ("Buyer
Expenses"), up to a maximum of $300,000. Unless the Purchase Agreement has been
terminated pursuant to Section 10.1(e) of the Purchase Agreement, the Fee shall
be reduced by any amounts paid pursuant to this subsection (b).
(c) Superior Transaction. If the Purchase Agreement is validly terminated in
accordance with Section 10.1(h) of the Purchase Agreement, then Buyer shall be
entitled to a fee of $400,000 and payment of Buyer Expenses up to a maximum of
$300,000. If the Fee is or becomes payable under subsection (a) above, it shall
be reduced by any amounts paid pursuant to this subsection (c).
(d) Rights. Payment of the Fee and other amounts specified in this Section 3
shall constitute the exclusive damage remedies of Buyer against Seller under
this Purchase Incentive Agreement or the Purchase Agreement.
4. Cooperation. Seller and Buyer shall use all reasonable efforts consistent
with their obligations under the Bankruptcy Code to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or
advisable under the Bankruptcy Code and other applicable laws and regulations to
consummate and make effective the transactions contemplated by this Purchase
Incentive Agreement and the Purchase Agreement, including, without limitation,
making all reasonable efforts to obtain approval of this Purchase Incentive
Agreement and the Purchase Agreement by the Bankruptcy Court. Seller and Buyer
agree that the Fee and other amounts payable by Seller under this Purchase
Incentive Agreement are commercially reasonable and necessary to consummate the
transactions contemplated by the Purchase Agreement.
5. Due Authorization. Seller, subject to the Bankruptcy Court
entering the Sale Procedures Order, and Buyer hereby represent and warrant
that this Purchase Incentive Agreement has been duly authorized, executed and
delivered on its behalf.
6. Binding Effect; Priority of Claim; Resolution of Disputes.
(a) This Purchase Incentive Agreement shall be binding upon
and shall inure to the benefit of the parties to this Purchase Incentive
Agreement and their successors and permitted assigns. Neither this Purchase
Incentive Agreement nor any of the rights and obligations of the parties under
this Purchase Incentive Agreement may be assigned without the consent of all
other parties to this Purchase Incentive Agreement; provided, that Buyer may
assign its rights under this Purchase Incentive Agreement to any Affiliates of
Buyer, but, in such event, Buyer shall continue to be liable for any
nonperformance of its obligations under this Purchase Incentive Agreement.
(b) Upon entry of the Sale Procedures Order, any amounts payable by Seller to
Buyer pursuant to this Purchase Incentive Agreement shall be accorded the
priority of an administrative expense under sections 503 and 507(a)(i) of the
Bankruptcy Code.
(c) The Bankruptcy Court shall have exclusive jurisdiction to resolve any
disputes with respect to this Purchase Incentive Agreement and the parties to
this Purchase Incentive Agreement hereby consent to the jurisdiction of the
Bankruptcy Court.
7. Notices. All notices required to be given under this Purchase Incentive
Agreement or made with respect to this Purchase Incentive Agreement shall be in
writing (including, without limitation, telecommunication transmission), shall
be effective when received and shall be addressed as follows:
if to Seller: c/o Uniroyal Technology Corporation
000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
copy to: The Bayard Firm
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
if to Buyer: Dow Corning Corporation
0000 Xxxx Xxxxxxxx Xxxx
Mail #CO1242
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000
copy to: Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxxx
Facsimile: (000) 000-0000
or to such other address as any party to this Purchase Inventive Agreement may
designate to the other parties to this Purchase Incentive Agreement in
accordance with this Section 7.
8. Counterparts. This Purchase Incentive Agreement may be executed in
one or more counterparts, each of which will be deemed an original, but all
of which will constitute the same instrument.
9. Entire Agreement. This Purchase Incentive Agreement and the Purchase
Agreement contain the entire understanding between the parties with respect to
the transactions contemplated by this Purchase Incentive Agreement and supersede
and replace all prior and contemporaneous agreements and understandings, oral or
written, with regard to such transactions.
10. Governing Law; Jurisdiction. This Purchase Incentive Agreement
shall be governed by and construed in accordance with the Laws of the State of
Delaware, without reference to principles of choice and conflicts of
laws.
[Signatures are on the following page.]
CLI-1027331v8
CLI-1027331v8
IN WITNESS WHEREOF, Seller and Buyer by its respective
officers thereunto duly authorized, have executed this Purchase Incentive
Agreement as of the date first above written.
SELLER:
STERLING SEMICONDUCTOR, INC.
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
_______________________________
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President and Treasurer
BUYER:
DOW CORNING ENTERPRISES, INC.
By: /s/ Xxxx-Xxxx Xxxxxx
_______________________________
Xxxx-Xxxx Xxxxxx
Vice-President
