EXHIBIT 2.3
AMENDMENT NO. 1 TO
AGREEMENT AND PLAN OF RECAPITALIZATION AND MERGER
This Amendment No. 1 made as of the 28th day of July, 1999 (this
"AMENDMENT") to the Agreement and Plan of Recapitalization and Merger, dated as
of May 11, 1999 (the "AGREEMENT"), by and among Motorola, Inc., a Delaware
corporation ("MOTOROLA"), SCG Holding Corporation, a Delaware corporation and a
wholly-owned subsidiary of Motorola, formerly known as "Motorola Energy Systems,
Inc." (the "COMPANY"), Semiconductor Components Industries, LLC, a Delaware
limited liability company ("SCI LLC"), the sole member of which is the Company,
TPG Semiconductor Holdings LLC, a Delaware limited liability company ("TPG
HOLDING"), and TPG Semiconductor Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of TPG Holding ("TPG ACQUISITION").
RECITALS
WHEREAS,
A. Motorola, the Company, SCI LLC, TPG Holding and TPG Acquisition are
parties to that certain Agreement and Plan of Recapitalization and Merger dated
as of May 11, 1999 (the "RECAPITALIZATION AGREEMENT");
B. Pursuant to Section 16.13 of the Recapitalization Agreement, the parties
hereto wish to amend the Recapitalization Agreement and to agree to the other
matters set forth herein, in all cases as provided herein.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, the parties hereto hereby
agree as follows:
SECTION 1. DEFINITIONS. Capitalized terms used but not defined herein shall
have the meanings set forth in the Recapitalization Agreement.
SECTION 2. AMENDMENTS TO THE RECAPITALIZATION AGREEMENT.
SECTION 2.1. The Preamble to the Recapitalization Agreement shall be
amended and restated in its entirety, and shall be replaced by the following:
"Agreement and Plan of Recapitalization and Merger made as of the 11th
day of May, 1999 (as amended by Amendment No. 1 thereto, dated as of July
28, 1999 ("AMENDMENT NO. 1"), this "AGREEMENT") by and among Motorola,
Inc., a Delaware corporation ("MOTOROLA"), SCG Holding Corporation, a
Delaware corporation and a wholly-owned subsidiary of Motorola, formerly
known as "Motorola Energy Systems, Inc." (the "COMPANY"), Semiconductor
Components Industries, LLC, a Delaware limited liability company ("SCI
LLC"), the sole member of which is the Company, TPG Semiconductor Holdings
LLC, a Delaware limited liability company ("TPG HOLDING"), and TPG
Semiconductor Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of TPG Holding ("TPG ACQUISITION")."
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SECTION 2.2. Recitals K, L and M of the Recapitalization Agreement shall be
amended and restated in their entirety, and shall be replaced by the following:
"K. At the Closing, TPG Holding will purchase from Motorola 30.4877
shares of Company Stock for aggregate consideration of $337.5 million;
L. Motorola and TPG Holding shall cause TPG Acquisition to merge with
and into the Company (the "MERGE") pursuant to which:
(i) the separate existence of TPG Acquisition shall cease;
(ii) the Company shall continue as the Surviving Corporation;
(iii) each share of the Company Stock shall be converted into 3,000
shares of Surviving Corporation Stock (after which (a) TPG
Holding shall hold 91,463 shares of Surviving Corporation Stock
and (b) Motorola shall hold 208,537 shares of shares of
Surviving Corporation Stock); and
(iv) the TPG Acquisition Stock shall be converted into Surviving
Corporation Preferred Stock having an original liquidation
preference of $150 million; and
M. Motorola shall cause the Surviving Corporation to redeem (the
"REDEMPTION") from Motorola 200,000 shares of Surviving Corporation Stock
(after which Motorola shall hold 8,537 shares of Surviving Corporation
Stock) in exchange for:
(i) the SCI LLC Junior Notes in the principal amount of $91.0
million;
(ii) 590 shares of Surviving Corporation Preferred Stock having an
original aggregate liquidation preference of $59.0 million; and
(iii) the Redemption Cash Consideration (directly or indirectly
through payment and/or purchase of the Company Notes);"
SECTION 2.3. Section 1.2 of the Recapitalization Agreement is amended by
(a) deleting in their entirety the definitions of each of COMPANY/SCI GROUND
Lease, COMPANY/SCI QUIT-CLAIM DEED, XXXX OF SALE AND SEVERANCE AGREEMENT OF
BUILDINGS AND FIXTURES ONLY AND NOT OF LAND and EXISTING GROUND LEASE OPEN
ISSUES, (b) amending and restating the definitions of each of COMPANY/SCI ASSET
TRANSFER, SCG POST-CLOSING ENTITY and WORKING CAPITAL AMOUNT in their entirety
and by replacing them with the following:
"COMPANY/SCI ASSET TRANSFER" shall mean the transfer by the Company to
SCI LLC of certain personal property identified in Attachment A to the
Company/SCI Xxxx of Sale in accordance with the terms of the Company/SCI
Xxxx of Sale.
"SCG POST-CLOSING ENTITY" means the entities listed on EXHIBIT G to
Amendment No. 1 but shall not include the Joint Ventures."
"WORKING CAPITAL AMOUNT" shall mean $136,500,000, plus the Malaysia
Net Intercompany Deficit (as defined below), minus the sum of (a) the
Philippines Net Intercompany Surplus, (as defined below), (b) the "Interim
Payroll Expenses (as defined below), and (c) the Reorganization Working
Capital Adjustment. The "MALAYSIA NET
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INTERCOMPANY DEFICIT" means $33,341, which represents the excess of (a) the
intercompany payables to be owing by SCG-Malaysia to Motorola and its
Affiliates (other than the Company and the SCG Post-Closing Entities) as of
12:01 am Phoenix time on July 31, 1999 over (b) the intercompany
receivables to be owing to SCG-Malaysia by Motorola and its Affiliates
(other than the Company and the SCG Post-Closing Entities) as of 12:01 am
Phoenix time on July 31, 1999. The "PHILIPPINES NET INTERCOMPANY SURPLUS"
means $4,319,975, which represents the excess of (x) the intercompany
receivables to be owing to SCG-Philippines by Motorola and its Affiliates
(other than the Company and the SCG-Post-Closing Entities) as of 12:01 am
Phoenix time on July 31, 1999 over (y) the intercompany payables to be
owing by SCG-Philippines to Motorola and its Affiliates (other than the
Company and the SCG Post-Closing Entities) as of 12:01 am Phoenix time on
July 31, 1999. The "INTERIM PAYROLL EXPENSES" means $139,384, which
represents payroll expenses to be incurred by Motorola and its Subsidiaries
for the period commencing on July 31, 1999 and thereafter relating to the
SCG employees. The "REORGANIZATION WORKING CAPITAL ADJUSTMENT" shall mean
the sum of (a) $18,224,121 (which equals $20,724,121 minus the Philippines
Pension Payment (as defined below), it being understood that $20,702,735 of
such $20,724,121 represents all cash and cash equivalents to be held by the
Company and the SCG Post-Closing Entities as of 12:01 Phoenix time on July
31, 1999 with the remaining $21,386 of such $20,724,121 constituting
interest to be accrued on such $20,702,735 from July 31, 1999 through the
Closing Date at a per annum. rate equal to 10%), and (b) $33,858, which
represents prepaid expenses in Japan relating to employee housing which are
to be funded prior to 12:01 Phoenix time on July 31, 1999. The "PHILIPPINES
PENSION PAYMENT" means $2,500,000, which represents a partial payment of
Motorola's obligations to SCG Philippines, Incorporated under Section 2 of
that certain Retirement Transfer Agreement to be made as of July 31, 1999
by and between Motorola and SCG Philippines in accordance with the terms
thereof. The parties hereto hereby agree and acknowledge that the Malaysia
Net Intercompany Deficit and the Philippines Net Intercompany Surplus each
is included in the calculation of Working Capital Amount and that in
addition (i) an amount equal to the Malaysia Net Intercompany Deficit shall
be paid by SCG Malaysia to Motorola (on behalf of its applicable
Affiliates) and (ii) an amount equal to the Philippines Net Intercompany
Deficit shall be paid by Motorola (on behalf of its applicable Affiliates)
to SCG Philippines, in each case prior to the close of business on August
6, 1999 in order to carry out the intent of the provisions of clause (vi)
of the definition of "Excluded Assets" and clause (iii) of the definition
of Retained Liabilities contained in the Reorganization Agreement.
SECTION 2.4. The Recapitalization Agreement shall be amended by deleting
the references to "the Closing Date" contained in the definitions of Capital
Expenditure Deficit, Capital Expenditure Surplus and Remaining Xxxx Xxxx
Expenditure Amount and inserting "July 30, 1999" in lieu thereof. The parties
further agree that there shall be a further adjustment to the Capital
Expenditure Deficit in the amount of $550,000 representing funding of capital
expenditure amounts between July 30, 1999 and the Closing Date. Such amount
shall, notwithstanding anything to the contrary, be added to the Capital
Expenditure Deficit.
SECTION 2.5. EXHIBIT G to the Recapitalization Agreement shall be amended
and restated in its entirety, and shall be replaced by EXHIBIT G hereto.
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SECTION 2.6. The references to "90,000", "210,000", and "10,000" contained
in Sections 3.6, 3.7 and 5.2 of the Recapitalization Agreement shall be amended
and restated in their entirety, and shall be replaced by "91,463", "208,537",
and "8,537", respectively.
SECTION 2.7. Section 3.4(b) of the Recapitalization Agreement is amended
and restated in its entirety, and shall be replaced by the following:
"(b) At the Effective Time, the By-Laws of the Company shall be
amended and restated in their entirety to read substantially as set forth in
EXHIBIT H to Amendment No. l."
SECTION 2.8. Section 3.7(b) of the Recapitalization Agreement is amended
and restated in its entirety, and shall be replaced by the following:
"(b) For the purposes of this Agreement, (i) "REDEMPTION CASH PAYMENT"
shall mean the Redemption Cash Consideration MINUS the Company Notes Amount, and
(ii) "REDEMPTION CASH CONSIDERATION" shall mean $1,095,000,000 PLUS the sum of
(X) Capital Expenditure Surplus, if any, and (Y) the AGGREGATE PER DIEM
LIQUIDATED DAMAGE REDEMPTION AMOUNT (as defined in the next sentence), minus the
sum of (A) the Working Capital Amount, (B) the Remaining Xxxx Xxxx Expenditure
Amount and (C) the Capital Expenditure Deficit, if any. "AGGREGATE PER DIEM
LIQUIDATED DAMAGE REDEMPTION AMOUNT", which shall serve as liquidated damages in
lieu of any other right or remedy of Motorola arising from the failure of the
Closing Date to occur simultaneously with the occurrence of the Effective Date
(as defined in Section 5.1 of the Agreement), shall mean the product of $500,000
multiplied by the number of calendar days for the period beginning on and
including July 31, 1999 and ending on and including the day immediately
preceding the Closing Date (it being understood that if the Closing occurs on
August 4, 1999, the Aggregate Per Diem Liquidated Damage Redemption Amount shall
equal $2 million)."
SECTION 2.9. Section 3.7(c) is amended by (a) deleting "a date which is no
earlier than the third Business Day prior to" contained in the first sentence
thereof and (b) inserting to the end of Section 3.7(c) the following:
"The amounts set forth in the Cody Certificate and Capital Expenditure
Certificate shall be conclusive and binding among the parties absent
manifest error."
SECTION 2.10. Sections 3.7(d) and 3.7(e) are hereby deleted in their
entirety.
SECTION 2.11. Section 4.1(b) of the Recapitalization Agreement is amended
by deleting the references to "30 shares" and "$307.5 million" contained therein
and inserting "30.4877 shares" and "$337.5 million" in lieu thereof.
SECTION 2.12. Section 5.1 is amended by deleting the last sentence thereof
and inserting in lieu thereof the following:
"The Effective Date (as defined in the Reorganization Agreement), and the
time thereof, is currently contemplated by Motorola to be as of 12:01 a.m.
(Phoenix, Arizona time) on July 31, 1999."
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SECTION 2.13. Section 7.12 of the Recapitalization Agreement shall be
amended and restated in its entirety, and shall be replaced by the following:
"7.12 00XX XXXXXX REAL PROPERTY TRANSACTIONS. The parties hereto
acknowledge that Motorola and the Company entered into the Existing Ground
Lease in connection with the Reorganization. In connection with the Closing
hereunder, the Existing Ground Lease shall be terminated and SCI LLC shall
purchase from Motorola the surface rights with respect to the site at which
SCI LLC's 00xx Xxxxxx manufacturing facility is located, together with
certain buildings and fixtures. Motorola and SCI LLC at Closing (as defined
in the Reorganization Agreement) shall execute a declaration of covenants
and easements containing provisions substantially equivalent to the
provisions contained in the Existing Ground Lease. The fees and costs of
exercising such purchase of the Purchase Rights shall be divided equally
between the parties; provided, however, if such fees and costs are
unreasonably high, the parties agree to cooperate in good faith in
renegotiating the allocation of such costs."
SECTION 2.14. Section 11.3 of the Recapitalization Agreement shall be
amended by (a) deleting the word "or" which appears immediately prior to the
reference to "(iv)" contained in the first sentence of Section 11.3 and (b)
inserting at the end of the first sentence of Section 11.3 the following:
", or (v) any obligations arising out of or related to the issuance of the
Subordinated Notes, including without limitation obligations arising out of
or related to a claim made or asserted under applicable securities or
similar laws, whether or not such claim is based in whole or in part upon
any untrue statement or alleged untrue statement of a material fact made or
contained in any prospectus or offering memorandum (or in any supplement to
or amendment of such prospectus or offering memorandum) pursuant to which
such Subordinated Notes are issued"
SECTION 2.15. References to Section 3.6(f) in the definition of "Company
Notes Amount" and in Section 7.13(b) shall be deemed to be references to Section
3.6(e).
SECTION 3. AGREEMENT RE NETTING EXPOSURE.
SECTION 3.1. In connection with the Finance Services to be provided by
Motorola on a transition basis as contemplated by the Transition Services
Agreement, Motorola will provide administrative services to the Company after
the Closing pursuant to the netting of accounts payable and accounts receivable
under the London Netting System. As part of the London Netting System, a weekly
netting run is conducted, at which point the netting payments are determined and
are irreversibly set to be disbursed, typically in approximately two business
days following the weekly netting run (the "DISBURSEMENT DETERMINATION DATE").
If the amount of these payments is greater than the funds which are then held in
the SCG Citibank account in the U.S. that supports the netting system, Citibank
currently requires credit support from Motorola in connection with and for so
long as this shortfall exists. The parties hereto acknowledge that it is
intended that Motorola will be providing netting services of an administrative
nature, and that Motorola shall have minimal financial or credit exposure or
risk with respect to the underlying transactions for which Motorola is providing
services. Accordingly, for weekly netting runs in
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which it is determined that the amount of payments to be made to third parties
in connection with such netting run exceeds the funds which are then held in the
SCG Citibank account in the U.S. that supports the netting system, the Company
and/or SCI LLC shall, on the Disbursement Determination Date for such netting
run, deposit funds in the SCG Citibank account and/or provide alternative credit
support as described below in an amount equal to the lesser of (1) the amount of
such excess and (2) the following amounts corresponding to the following
periods:
Period Amount
------ ------
August 5, 1999 through October 4, 1999 $45 million
October 5, 1999 through November 4, 1999 $35 million
November 5, 1999 through December 4, 1999 $40 million
December 5, 1999 and thereafter $50 million
Alternative credit support shall take the form of making available an overdraft
line of credit or posting a letter of credit, in each case for the benefit of
Motorola and as reasonably acceptable to Motorola. In the event that the Company
shall not have deposited into the SCG Citibank account that supports the netting
system the deposit contemplated above or provided alternative credit support as
described above at any time in which the amount of payments to be made to third
parties in connection with such netting run exceeds the funds which are then
held in the SCG Citibank account in the U.S. that supports the netting system,
the amount so unpaid shall accrue interest at a rate per annum equal to 10%
until paid. In addition, in the event of a material breach by the Company of its
obligations under this Section 3.1, Motorola shall have the right to terminate
its obligations to provide services at any time thereafter to the Company and
the SCG Post-Closing Entities pursuant to the London Netting System (such
termination to be effected by delivery of written notice from Motorola to the
Company).
SECTION 4. REORGANIZATION AGREEMENT.
SECTION 4.1. The parties hereto agree and acknowledge that the transactions
contemplated by the Reorganization Agreement shall have been consummated in the
manner contemplated by the Reorganization Agreement with respect to those
matters set forth in Sections 4.2 through Section 4.9.
SECTION 4.2. With respect to Section 2.5 of the Reorganization Agreement,
no China Offices (as defined in the Reorganization Agreement) have been
established, and the Company may at TPG Holdings' sole discretion establish
China Offices after the Closing Date.
SECTION 4.3. With respect to Section 2.7 of the Reorganization Agreement,
the Finland Branch (as defined in the Reorganization Agreement) has not been
established, and in lieu thereof an office sharing arrangement has been entered
into.
SECTION 4.4. With respect to Section 2.8 of the Reorganization Agreement,
EURL (as defined in the Reorganization Agreement), holds an equity interest of
approximately 0.1% of the France Sub (as defined in the Reorganization
Agreement), and Motorola-France (as defined in the Reorganization Agreement)
holds the remaining 99.9% interest.
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SECTION 4.5. With respect to Section 2.11 of the Reorganization Agreement,
a liaison office in India, and not a private limited company, has been
established.
SECTION 4.6. With respect to Section 2.13 of the Reorganization Agreement,
the local share transfer instrument from SCI LLC to SCG Holding (Netherlands)
B.V. will be executed once the company registration is completed, confirming the
contribution agreement previously executed.
SECTION 4.7. With respect to Section 2.15 of the Reorganization Agreement,
the transfer of the Korea Assets by Motorola Korea to Korea Sub (in each case as
defined in the Reorganization Agreement) shall occur at least two business days
and no later than seven business days after the Closing Date. Such transaction
shall be effected pursuant to the form of business transfer agreement attached
to this Amendment as EXHIBIT I.
SECTION 4.8. With respect to Section 2.18 of the Reorganization Agreement,
upon contribution of the Europe Subs (as defined in the Reorganization
Agreement) by SCI LLC to Netherland Holdings (as defined in the Reorganization
Agreement), no new shares of Netherland Holdings were issued to SCI LLC.
Instead, the contribution in kind was recorded as voluntary share premium
("vrijwillig agio").
SECTION 4.9. With respect to Section 2.19 of the Reorganization Agreement,
pending a ruling from the Philippine Bureau of Internal Revenue, the parties
agreed to MIDC's remaining the legal owner of the MPI Stock, as such term is
defined in the Reorganization Agreement, in accordance with and subject to the
Interim Agreement by and among Motorola, Motorola International Development
Corp. and SCI LLC, dated July 31, 1999.
SECTION 4.10. With respect to Section 2.20 of the Reorganization Agreement,
a branch in Puerto Rico was established by Semiconductor Components Industries
Puerto Rico, Inc., a Delaware corporation, and not SCI LLC.
SECTION 4.11. The parties agreed to establish a branch of SCG Holding
(Netherlands) B.V. in Ireland.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
SECTION 5.1. TPG Acquisition and TPG Holding, jointly and severally,
warrant and represent to and covenant with Motorola that the execution, delivery
and performance of this Amendment by TPG Acquisition and TPG Holding have been
duly authorized by all necessary corporate and other action on the part of TPG
Acquisition and TPG Holding. This Amendment has been duly executed and delivered
by TPG Acquisition and TPG Holding and (assuming the valid authorization,
execution and delivery of this Amendment by Motorola and the Company)
constitutes the valid and binding obligation of TPG Acquisition and TPG Holding
enforceable against each of TPG Acquisition and TPG Holding in accordance with
its terms, except that such enforceability (i) may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to the
enforcement of creditors' rights generally and (ii) is subject to general
principles of equity.
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SECTION 5.2. Motorola warrants and represents to and covenants with TPG
Acquisition and TPG Holding that the execution, delivery and performance of this
Amendment by Motorola, the Company and SCI LLC have been duly authorized by all
necessary corporate or other action on the part of Motorola, the Company or SCI
LLC. This Amendment has been duly executed and delivered by Motorola, the
Company and SCI LLC (assuming the valid authorization, execution and delivery of
this Amendment by TPG Acquisition and TPG Holding), constitutes the valid and
binding obligation of Motorola, the Company and SCI LLC enforceable against them
in accordance with its terms, except that such enforceability (i) may be limited
by bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to the enforcement of creditors' rights generally and (ii) is subject
to general principles of equity.
SECTION 6. MISCELLANEOUS.
SECTION 6.1. The parties hereto agree and acknowledge that all amounts
outstanding to White House Productions relating to services provided or to be
provided by White House Productions in connection with the launch of the
Company's new name shall be the obligation of the Company after the Closing
Date.
SECTION 6.2. The parties acknowledge and agree for purposes of
clarification that neither Motorola nor any of its Affiliates shall have any
obligation for $1.8 million of unfunded expenses incurred by Slovakia
Electronics Industries, a.s. prior to Closing.
SECTION 6.3. Other than as set forth in Section 2.1 through Section 2.13,
Section 3 hereof and Section 4 hereof, this Amendment does not modify, change or
delete any other addendum, term, provision, representation, warranty or covenant
(the "Provisions") relating to or contained in the Recapitalization Agreement,
and all such Provisions remain in full force and effect. For the avoidance of
doubt, all references in the Recapitalization Agreement to "the date hereof" or
"the date of this Agreement" shall be deemed to be references to the date May
11, 1999, and all references to "this Agreement" or the "Recapitalization
Agreement" shall be deemed references to the Recapitalization Agreement as
amended hereby.
SECTION 6.4. This Amendment may be executed in one or more counterparts,
each of which shall be deemed an original but all of which, together, shall
constitute one and the same instrument.
SECTION 6.5. The captions of the various Sections and Articles of this
Agreement have been inserted only for convenience and shall not be deemed to
modify, explain, enlarge or restrict any of the provisions of this Amendment.
SECTION 6.6. The validity, interpretation and effect of this Agreement
shall be governed exclusively by the laws of the State of New York, not
including the "conflict of laws" rules of the state.
SECTION 6.7. All amounts expressed in this Agreement and all payments
required by this Agreement are in United States dollars.
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SECTION 6.8. This Amendment and any of the provisions hereof may not be
amended, altered or added to in any manner except by a document in writing and
signed by each party hereto.
[signature page follows]
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IN WITNESS WHEREOF, the undersigned have executed this Amendment the
day and year first above written.
MOTOROLA, INC.
By: /s/ Xxxx X. Xxxxxxxxx
----------------------
Title: Executive Vice-President &
Chief Financial Officer
SCG HOLDING CORPORATION
By:/s/ Xxxxxxxx X. Xxxxxxxxx
-------------------------
Title: Vice-President
SEMICONDUCTOR COMPONENTS
INDUSTRIES, LLC
By: SCG HOLDING CORPORATION,
Its sole member
By: /s/ Xxxxxxxx X. Xxxxxxxxx
--------------------------
Title: Vice-President
TPG SEMICONDUCTOR HOLDINGS
LLC
By: /s/ Xxxxxxxx Xxx
-----------------------------
Title:
--------------------------
TPG SEMICONDUCTOR ACQUISITION
CORP.
By: /s/ Xxxxxxxx Xxx
-----------------------------
Title:
--------------------------
