EXHIBIT 10.09
SECURITIES PURCHASE AND HOLDERS AGREEMENT
by and among
INTERSIL HOLDING CORPORATION,
STERLING HOLDING COMPANY, LLC,
MANATEE INVESTMENT CORPORATION
CITICORP MEZZANINE PARTNERS, L.P.,
Intersil Prism, LLC,
Xxxxxxx X. Xxxxx
and
Management Investors
August 13, 1999
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS.........................................................2
ARTICLE II. PURCHASE OF SECURITIES.............................................6
2.1 Purchase of Securities............................................6
2.2 Closing...........................................................7
2.3 Conditions to Investor's Obligations..............................7
2.4 Conditions to the Company's Obligations...........................7
2.5 Application of Prism LLC..........................................8
ARTICLE III. REPRESENTATION AND WARRANTIES OF THE COMPANY AND PRISM LLC........8
3.1 Representations and Warranties of the Company.....................8
3.2 Representations and Warranties of Prism LLC.......................9
ARTICLE IV. REPRESENTATIONS, WARRANTIES AND COVENANTS OF EACH INVESTOR.........9
4.1 Representations, Warranties and Covenants of Each Investor........9
4.2 Legends..........................................................10
4.3 Management Investor Representations and Warranties...............11
4.4 Restrictions on Transfers of Securities..........................11
4.5 Notation.........................................................13
4.6 Limitation on Repurchase of Company Stock........................13
4.7 Reliance.........................................................13
4.8 Subsequent Management Investors.................................13
4.9 Application to Prism LLC.........................................14
ARTICLE V. OTHER COVENANTS AND REPRESENTATIONS................................14
5.1 Observers' Rights................................................14
5.2 Financial Statements and Other Information.......................15
5.3 Regulatory Compliance Cooperation................................15
5.4 Small Business Administration Forms..............................16
5.5 Sale of the Company..............................................16
5.6 Tag-Along Rights.................................................16
5.7 Preemptive Rights................................................18
5.8 Covenant Not To Compete..........................................19
5.9 Application to Prism LLC.........................................20
ARTICLE VI. CORPORATE ACTIONS.................................................20
6.1 Certificate of Incorporation and Bylaws..........................20
6.2 Directors and Voting Agreements..................................20
6.3 Right to Remove Sterling Directors...............................21
6.4 Right to Fill Certain Vacancies in Company's Board...............21
6.5 Directors of Company Subsidiaries................................21
6.6 Termination of Voting Agreements.................................21
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ARTICLE VII. ADDITIONAL RESTRICTIONS ON TRANSFER OF SECURITIES
HELD BY MANAGEMENT INVESTORS.....................................22
7.1 Restrictions on Transfer.........................................22
7.2 Purchase Option..................................................22
7.3 Company's Right of First Refusal.................................27
7.4 Involuntary Transfers............................................27
7.5 Lapse............................................................27
7.6 Proprietary Information..........................................28
7.7 Proceeds upon Sale of the Company................................29
7.8 EBITDA Target Adjustments........................................30
7.9 Application to Prism LLC.........................................31
ARTICLE VIII. REGISTRATION RIGHTS.............................................31
ARTICLE IX. MISCELLANEOUS.....................................................31
9.1 Purchaser Representative.........................................31
9.2 Section 83(b) Elections..........................................32
9.3 Amendment and Modification.......................................32
9.4 LLC Expenses.....................................................32
9.5 Survival of Representations and Warranties.......................33
9.6 Successors and Assigns; Entire Agreement.........................33
9.7 Separability.....................................................33
9.8 Notices..........................................................33
9.9 Governing Law....................................................36
9.10 Consent to Exclusive Jurisdiction...............................36
9.11 Waiver of Jury Trial............................................37
9.12 ACKNOWLEDGMENT OF MANAGEMENT INVESTORS..........................37
9.13 No Effect on Employment.........................................37
9.14 Headings........................................................37
9.15 Counterparts....................................................37
9.16 Further Assurances..............................................37
9.17 Termination.....................................................37
9.18 Remedies........................................................38
9.19 Party No Longer Owning Securities...............................38
9.20 Pronouns........................................................38
9.21 Application to Prism LLC........................................38
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SECURITIES PURCHASE AND HOLDERS AGREEMENT
SECURITIES PURCHASE AND HOLDERS AGREEMENT, dated as of August 13,
1999 (the "Agreement"), by and among INTERSIL HOLDING CORPORATION, a Delaware
corporation formerly known as HSS Holding Corporation (the "Company"), STERLING
HOLDING COMPANY, LLC, a Delaware limited liability company ("Sterling"), MANATEE
INVESTMENT CORPORATION, a Delaware corporation ("Xxxxxx"), Intersil Prism, LLC,
a Delaware limited liability company ("Prism LLC"), Citicorp Mezzanine Partners,
L.P., a Delaware limited partnership ("CMP"), Xxxxxxx X. Xxxxx ("Xxxxx"), the
individuals designated on Schedule I as Management Investors (the "Management
Investors") and individuals who join in this Agreement, as hereinafter provided,
as Management Investors. The Management Investors and individuals joining this
Agreement as Management Investors are sometimes referred to hereinafter
individually as a "Management Investor" and collectively as the "Management
Investors." Sterling, Harris, Prism LLC, Xxxxx and the Management Investors are
sometimes referred to hereinafter individually as an "Investor" and collectively
as the "Investors."
Background
X. Xxxxxx, the Company and Intersil Corporation, a Delaware
corporation and a wholly-owned subsidiary of the Company formerly known as HSS
Operating Corporation ("Intersil") are parties to an Amended and Restated Master
Transaction Agreement dated June 2, 1999 (the "Master Agreement") pursuant to
which Xxxxxx is transferring certain assets and rights of the Business (as
defined in the Master Agreement), subject to certain liabilities, to the Company
and Intersil.
B. The authorized capital stock of the Company consists of shares of
(i) Class A Common Stock, par value $.01 per share ("Class A Common Stock"),
(ii) Class B Common Stock, par value $.01 per share ("Class B Common Stock" and,
collectively with the Class A Common Stock, the "Common Stock"), and (iii) 12%
Series A Cumulative Compounding Preferred Stock, par value $.01 per share
("Series A Preferred Stock"). The Company desires to sell, and each of the
Investors desires to purchase, the number of shares of Class A Common Stock,
Class B Common Stock and Series A Preferred Stock set forth opposite their
respective names on Schedule II. In addition, the Company will issue options to
purchase shares of Series A Preferred Stock to certain Management Investors (the
"Preferred Options"). The Common Stock, the Preferred Options and the Series A
Preferred Stock (including the Shares issuable upon exercise of the Preferred
Options) may hereinafter be referred to collectively as the "Shares."
C. Prism LLC desires to sell and each of the Investors desires to
purchase, the number of membership units of Prism LLC ("Membership Units") set
forth opposite their respective names on Schedule II.
D. CMP has received stock purchase warrants (together with all
warrants issued in substitution or replacement therefor, the "CMP Warrants") to
purchase Class A Common Stock,
pursuant to a Warrant Agreement, dated as of the date hereof, by and between the
Company and CMP (as amended, restated or modified from time to time, the
"Warrant Agreement").
E. The Management Investors will be employed by or will otherwise
render valuable services to the Company and/or Intersil, directly or indirectly.
The Board of Directors of the Company wishes to grant the opportunity to the
Management Investors to make an investment in the Company, and thereby to
acquire an increased personal and proprietary interest in the Company's success
and progress through the purchase of Shares pursuant to this Agreement.
F. As used herein, the term "Securities" shall mean the Shares held
by any party hereto, including the Preferred Options and including all shares of
Common Stock (including any Incentive Shares) and all other securities of the
Company (or a successor to the Company) received on account of ownership of
Shares, including all securities issued in connection with any merger,
consolidation, stock dividend, stock distribution, stock split, reverse stock
split, stock combination, recapitalization, reclassification, subdivision,
conversion or similar transaction in respect thereof.
G.The Investors and the Company wish to set forth certain agreements
regarding their future relationships and their rights and obligations with
respect to the Securities and the Membership Units.
Terms
In consideration of the mutual covenants contained herein and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. As used in this Agreement, the following capitalized terms shall have the
following meanings:
"Acquired Business" has the meaning set forth in Section 7.8 of this
Agreement.
"Acquired Business EBITDA" has the meaning set forth in Section 7.8
of this Agreement.
"Acquiring Entity" has the meaning set forth in Section 5.5(a) of
this Agreement.
"Acquisition" has the meaning set forth in Section 7.8 of this
Agreement.
"Adjusted Cost Price" has the meaning set forth in Section
7.2(a)(ii)(C)(1) of this Agreement.
"Affiliate" has the meaning set forth in Rule 12b-2 of the Rules
promulgated under the Exchange Act.
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"Agreement" has the meaning set forth in the Preamble of this
Agreement.
"Approved Sale" has the meaning set forth in Section 5.5(a) of this
Agreement.
"Assurance of Compliance" has the meaning set forth in Section 5.4
of this Agreement.
"Called Shares" has the meaning set forth in Section 7.2(a)(iii) of
this Agreement.
"Cause," when used in connection with the termination of a
Management Investor's employment with the Company, means the Management
Investor's (i) act or acts of dishonesty, moral turpitude or criminality with
respect to his or her employment with the Company, (ii) continued failure to
perform such Management Investor's duties as an employee, as reasonably
determined by the Board of Directors of the Company acting in good faith, after
reasonable notice of such failure is given to such employee by the Board of
Directors of the Company, for a period of 30 days after such notice and
opportunity to cure such failure, or (iii) willful or deliberate violations of
such Management Investor's obligations to the Company that result in material
injury to the Company.
"Class A Common Stock" has the meaning set forth in Background
Section B of this Agreement.
"Class B Common Stock" has the meaning set forth in Background
Section B of this Agreement.
"Closing" has the meaning set forth in Section 2.2 of this
Agreement.
"CMP" has the meaning set forth in Preamble to this Agreement.
"CMP Warrants" has the meaning set forth in Background Section D to
this Agreement.
"Common Stock" has the meaning set forth in Background Section B of
this Agreement.
"Company" means Intersil Holding Corporation, a Delaware
corporation, except that when used in Article VII, "Company" means the Company
and all other entities of which the Company from time to time owns, directly or
indirectly, 50% or more of the stock or assets.
"CSFB Warrants" means the Warrants as defined in the Warrant
Agreement dated as of August 13, 1999 between the Company and United States
Trust Company of New York, as warrant agent.
"EBITDA Target in Effect" has the meaning set forth in Section 7.8
of this Agreement.
"Escrow Amount" has the meaning set forth in Section 5.6(d)(i) of
this Agreement.
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"Escrow Notice" has the meaning set forth in Section 5.6(d)(ii) of
this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value Price" has the meaning set forth in Section
7.2(a)(ii)(C)(2) of this Agreement.
"Fair Market Value Price Percentage" has the meaning set forth in
Section 7.2(a)(iii)(B) of this Agreement.
"Xxxxxx" means Manatee Investment Corporation, a Delaware
corporation.
"Incentive Units" means the Membership Units owned by each
Management Investor designated as Incentive Units on Schedule I, and all other
securities of Prism LLC (or a successor to Prism LLC) received on account of
ownership of such Membership Units, including any and all incentive securities
issued in connection with any merger, consolidation, stock dividend, stock
distribution, stock split, reverse stock split, stock combination,
recapitalization, reclassification, subdivision, conversion or similar
transaction in respect thereof.
"Incentive Shares" means the shares of Class A Common Stock owned by
each Management Investor designated as Incentive Shares on Schedule I, and all
other securities of the Company (or a successor to the Company) received on
account of ownership of such shares, including any and all incentive securities
issued in connection with any merger, consolidation, stock dividend, stock
distribution, stock split, reverse stock split, stock combination,
recapitalization, reclassification, subdivision, conversion or similar
transaction in respect thereof.
"Intersil" has the meaning set forth in Background Section A of this
Agreement.
"Investor" and "Investors" have the meanings set forth in the
Preamble of this Agreement.
"Management Investor" and "Management Investors" have the meanings
set forth in the Preamble of this Agreement.
"Membership Units" has the meaning set forth in the Background
Section C of this Agreement.
"Observers" has the meaning set forth in Section 5.1 of this
Agreement.
"Option Purchase Price" has the meaning set forth in Section
7.2(a)(ii)(A) of this Agreement.
"Permitted Transferee" has the meaning set forth in Section 4.4(b)
of this Agreement.
"Person" means any individual, corporation, limited liability
company, partnership, firm, association, joint venture, joint stock company,
trust or other entity, or any government or regulatory administrative or
political subdivision or agency, department or instrumentality thereof.
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"Preemptive Notice" has the meaning set forth in Section 5.7(c) of
this Agreement.
"Preemptive Reply" has the meaning set forth in Section 5.7(c) of
this Agreement.
"Preferred Options" has the meaning set forth in Background Section
B of this Agreement.
"Prism LLC" has the meaning set forth in the Preamble of this
Agreement.
"Prism Option" has the meaning set forth in Section 4.1(f).
"Public Offering" means a successfully completed firm-commitment
underwritten public offering (other than a Unit Offering, as hereinafter
defined) pursuant to an effective registration statement under the Securities
Act in respect of the offer and sale of shares of Common Stock for the account
of the Company resulting in aggregate net proceeds to the Company and any
stockholder selling shares of Common Stock in such offering of not less than $30
million.
"Purchase Number" has the meaning set forth in Section 7.2(a)(ii) of
this Agreement.
"Purchase Option" has the meaning set forth in Section 7.2(a) of
this Agreement.
"Registration Rights Agreement" has the meaning set forth in Article
VIII of this Agreement.
"Regulatory Problem" has the meaning set forth in Section 5.3 of
this Agreement.
"Restricted Investor" has the meaning set forth in Section 4.4 of
this Agreement.
"Sale Notice" has the meaning set forth in Section 7.3 of this
Agreement.
"Sale of Company Escrow Amount" has the meaning set forth in Section
7.7 of this Agreement.
"Securities" has the meaning set forth in Background Section E of
this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Stock" has the meaning set forth in Background
Section B of this Agreement.
"Shares" has the meaning set forth in Background Section B of this
Agreement.
"Significant Transfer" has the meaning set forth in Section 5.6(a)
of this Agreement.
"Size Status Declaration" has the meaning set forth in Section 5.4
of this Agreement.
"Small Debt-Financed Acquisition" has the meaning set forth in
Section 7.8 of this Agreement.
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"Sterling" means Sterling Holding Company, LLC, a Delaware limited
liability company.
"Xxxxx" has the meaning set forth in the Preamble of this Agreement.
"Subsequent Offering" has the meaning set forth in Section
7.2(a)(iii)(A) of this Agreement.
"Subsidiary" means, as to any Person, any corporation more than 50%
of whose stock of any class or classes having by the terms thereof ordinary
voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person.
"Tag-Along Acceptance Notice" has the meaning set forth in Section
5.6(b) of this Agreement.
"Tag-Along Right" has the meaning set forth in Section 5.6(a) of
this Agreement.
"Tag-Along Rightholders" has the meaning set forth in Section 5.6(a)
of this Agreement.
"Tag-Along Sale Notice" has the meaning set forth in Section 5.6(b)
of this Agreement.
"Tag-Along Seller" has the meaning set forth in Section 5.6(b) of
this Agreement.
"Termination Date" has the meaning set forth in Section 7.2(a) of
this Agreement.
"Transfer" has the meaning set forth in Section 4.5(a) of this
Agreement.
"Transfer Date" has the meaning set forth in Section 7.4 of this
Agreement.
"Unit Offering" means an underwritten public offering of a
combination of debt securities and Common Stock (or warrants or exchange rights
to purchase Common Stock) of the Company in which not more than 15% of the gross
proceeds received for the sale of such securities is attributed to Common Stock.
"83(b) Election" has the meaning set forth in Section 9.2 of this
Agreement.
ARTICLE II
PURCHASE OF SECURITIES
2.1. Purchase of Securities. Subject to the terms and conditions set forth
herein, at the Closing the Company will issue and sell to each of the Investors,
and each of the Investors will purchase, such Investor's Securities at a
purchase price of $0.05 per share of Common Stock, $1,000 per share of Series A
Preferred Stock and Prism LLC will issue and sell to each of the Investors, and
each of
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the Investors will purchase, such Investor's Membership Units at a purchase
price of $0.01 per Membership Unit, all as set forth opposite such Investor's
name on Schedule II. In addition, the Company will issue Preferred Options to
those Investors, and exercisable for the number of shares of Series A Preferred
Stock, as set forth on Schedule III.
2.2. Closing. The closing of the purchase and sale of the Securities (the
"Closing") will take place on the date of the Closing under the Master Agreement
(the "Closing Date"). At the Closing, (i) the Company will deliver to each
Investor certificates evidencing the number of shares of Class A Common Stock,
Class B Common Stock and Series A Preferred Stock to be purchased by such
Investor, against payment of the purchase price therefor by wire transfer of
immediately available funds or by certified check, and (ii) Prism LLC, at its
option, may deliver to each Investor certificates to evidence the number of
Membership Units to be purchased by such Investor, against payment of the
purchase price therefor by wire transfer of immediately available funds or by
certified check.
2.3. Conditions to Investor's Obligations. The obligation of each Investor
to purchase such Investor's Securities at the Closing is subject to the
satisfaction on or prior to the Closing Date of the following conditions:
(a) The representations and warranties of the Company set forth in
Article III shall be true and correct in all material respects on and as of the
Closing Date as though then made, and all covenants of the Company required to
be performed on or prior to the Closing shall have been performed in all
material respects.
(b) The Company's Certificate of Incorporation and Bylaws shall be
substantially in the forms of Exhibits A and B, respectively.
(c) The Prism LLC Limited Liability Company Agreement shall be
substantially in the form of Exhibit C.
(d) The Company shall have delivered to each of the Investors
certificates for the Securities being purchased by such Investor.
(e) The conditions to the closing of the Master Agreement shall have
been satisfied or waived.
(f) All corporate and other proceedings, if any, taken or to be
taken by the Company in connection with the transactions contemplated hereby
shall have been taken.
2.4. Conditions to the Company's Obligations. The obligations of the
Company to sell the Securities to each Investor as set forth herein at the
Closing are subject to the satisfaction on or prior to the Closing of the
following conditions:
(a) The representations and warranties of each Investor set forth in
Article IV shall be true and correct in all material respects at and as of the
Closing Date as though then made, and all covenants of each Investor required to
be performed at or prior to the Closing shall have been performed in all
material respects.
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(b) The conditions to the closing of the Master Agreement shall have
been satisfied or waived.
(c) Such Investor shall have delivered the purchase price required
of such Investor pursuant to this Article II.
2.5. Application to Prism LLC. The provisions of Sections 2.3 through 2.4
(other than Section 2.3(b)) shall apply to Prism LLC as well as to the Company.
Such sections are hereby incorporated into this Section 2.5 with each reference
to the Company therein replaced with a reference to Prism LLC, each reference to
Securities, Common Stock or shares of Common Stock replaced with a reference to
Membership Units, each reference to Incentive Shares replaced with a reference
to Incentive Units and each reference to the Company's Board of Directors
replaced with Prism LLC's Board of Directors.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND PRISM LLC
3.1. Representations and Warranties of the Company. The Company represents and
warrants to each of the Investors as follows:
(a) The Company is a corporation validly existing and in good
standing under the laws of the State of Delaware.
(b) The Company has full corporate power and corporate authority to
make, execute, deliver and perform this Agreement and to carry out all of the
transactions provided for herein.
(c) The Company has taken such corporate action as is necessary or
appropriate to enable it to perform its obligations hereunder, and this
Agreement constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
(d) The Shares are validly issued, fully paid and non-assessable.
(e) As of the Closing, the authorized capital stock of the Company
will consist of (i) 125,000,000 shares of Class A Common Stock, of which
22,974,612 will be issued and outstanding, (ii) 125,000,000 shares of Class B
Common Stock, of which 77,369,721.44 will be issued and outstanding and (iii)
2,000,000 shares of Preferred Stock, 1,000,000 of which are designated as shares
of Series A Preferred Stock, of which 83,434.13 will be issued and outstanding.
Except for the Preferred Options, the CMP Warrants, the CSFB Warrants and as
otherwise set forth herein, as of the Closing there will be no rights,
subscriptions, warrants, options, conversion rights or agreements of any kind
outstanding to purchase from the Company, or otherwise require the Company to
issue, any shares of capital stock of the Company or securities or obligations
of any kind convertible into or exchangeable for any shares of capital stock of
the Company; the Company will not be subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital stock; and the Shares will constitute all of the outstanding shares of
the Company's capital stock.
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3.2. Representations and Warranties of Prism LLC. Prism LLC represents and
warrants to each of the Investors as follows:
(a) Prism LLC is a limited liability company validly existing and in
good standing under the laws of the State of Delaware.
(b) Prism LLC has full power and authority to make, execute, deliver
and perform this Agreement and to carry out all of the transactions provided for
herein.
(c) Prism LLC has taken such action as is necessary or appropriate
to enable it to perform its obligations hereunder, and this Agreement
constitutes the legal, valid and binding obligation of Prism LLC, enforceable
against Prism LLC in accordance with its terms.
(d) The Membership Units are validly issued, fully paid and
non-assessable.
(e) As of the Closing, 100,000,000 Membership Units will be issued
and outstanding. Except as otherwise set forth herein, as of the Closing there
will be no rights, subscriptions, warrants, options, conversion rights or
agreements of any kind outstanding to purchase from Prism LLC, or otherwise
require Prism LLC to issue, any shares of capital stock of Prism LLC or
securities or obligations of any kind convertible into or exchangeable for any
shares of capital stock of Prism LLC; Prism LLC will not be subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock; and the Membership Units will constitute
all of the outstanding shares of Prism LLC's capital stock. Prism LLC intends to
issue a substantial amount of additional Membership Units in connection with the
exercise of the Prism Option (as defined below).
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF EACH INVESTOR
4.1. Representations, Warranties and Covenants of Each Investor. Each of the
Investors severally represents and warrants to, and covenants and agrees with,
the Company that:
(a) Such Investor has full legal right, power and authority
(including the due authorization by all necessary corporate action in the case
of corporate Investors) to enter into this Agreement and to perform such
Investor's obligations hereunder without the need for the consent of any other
Person; and this Agreement has been duly authorized, executed and delivered and
constitutes the legal, valid and binding obligation of such Investor enforceable
against such Investor in accordance with the terms hereof.
(b) The Securities are being purchased by such Investor for
investment and not with a view to any distribution thereof that would violate
the Securities Act, or the applicable securities laws of any state; and such
Investor will not distribute the Securities in violation of the Securities Act
or the applicable securities laws of any state.
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(c) Such Investor understands that the Securities have not been
registered under the Securities Act or the securities laws of any state and must
be held indefinitely unless subsequently registered under the Securities Act and
any applicable state securities laws or unless an exemption from such
registration becomes or is available.
(d) Such Investor is financially able to hold the Securities for
long-term investment, believes that the nature and amount of the Securities
being purchased are consistent with such Investor's overall investment program
and financial position, and recognizes that there are substantial risks involved
in the purchase of the Securities.
(e) Such Investor confirms that (i) such Investor is familiar with
the business of the Company, (ii) such Investor has had the opportunity to ask
questions of officers and directors of the Company and to obtain (and that such
Investor has received to its satisfaction) such information about the business
and financial condition of the Company as it or he has reasonably requested, and
(iii) such Investor, either alone or with such Investor's representative (as
defined in Rule 501(h) promulgated under the Securities Act), if any, has such
knowledge and experience in financial and business matters that such Investor is
capable of evaluating the merits and risks of the prospective investment in the
Securities.
(f) Such Investor acknowledges and understands that (i) Prism LLC's
only asset is an option to acquire the Prism chip set business of Intersil (the
"Prism Option"), (ii) if the Prism Option is not exercised, Prism LLC will have
no value, (iii) if the Prism Option is to be exercised, such Investor would be
required to invest significant additional funds in Prism LLC to fund the
exercise price under the Prism Option in order to avoid having such Investor's
interests in Prism LLC substantially diluted and (iv) consents of (A) the
holders of the 13.25% Senior Subordinated Notes Due 2009 of Intersil pursuant to
the Indenture governing such notes and (B) the lenders under the Credit
Agreement, dated as of the date hereof, among Intersil, the Company, the Lenders
named therein, Credit Suisse First Boston, Xxxxxxx Xxxxx Xxxxxx Inc. and Xxxxxx
Guaranty Trust Company of New York, are required for Prism LLC to exercise the
Prism Option.
4.2. Legends. (a) All Shares. All certificates representing Shares shall
bear the following legends in addition to any other legend required under
applicable law:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF
WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION IS NOT REQUIRED.
THE EXPRESS TERMS OF THE SHARES REPRESENTED BY THIS CERTIFICATE AND OF THE
OTHER CLASSES AND SERIES OF SHARES WHICH THE COMPANY IS AUTHORIZED TO
ISSUE ARE CONTAINED IN THE COMPANY'S CERTIFICATE OF INCORPORATION, A COPY
OF WHICH WILL BE MAILED TO THE HOLDER HEREOF WITHOUT CHARGE
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WITHIN FIVE DAYS AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO THE
TERMS AND CONDITIONS OF A SECURITIES PURCHASE AND HOLDERS AGREEMENT BY AND
AMONG THE COMPANY AND THE HOLDERS SPECIFIED THEREIN, A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY. THE SALE,
TRANSFER, ASSIGNMENT OR OTHER DISPOSITION OF THE SECURITIES IS SUBJECT TO
THE TERMS OF SUCH AGREEMENT AND THE SECURITIES ARE TRANSFERABLE ONLY UPON
PROOF OF COMPLIANCE THEREWITH.
(b) Incentive Shares. In addition to the legends required by Section
4.2(a) above, the following legend shall appear on certificates representing
Incentive Shares, provided, that the Company's failure to cause certificates
representing Incentive Shares to bear such legend shall not affect the Company's
Purchase Option described in Section 7.2:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT FOR A
PERIOD OF TIME TO A PURCHASE OPTION OF THE COMPANY APPLICABLE TO
"INCENTIVE SHARES" AS DESCRIBED IN THE SECURITIES PURCHASE AND HOLDERS
AGREEMENT BY AND AMONG THE COMPANY AND THE HOLDERS SPECIFIED THEREIN, A
COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.
4.3. Management Investor Representations and Warranties. Each Management
Investor severally represents and warrants to the Company that:
(a) such Management Investor has full legal right, power and
authority to perform such Management Investor's obligations hereunder without
the need for the consent of any other Person; and such obligations constitute
the legal, valid and binding obligation of such Management Investor in
accordance with the terms hereof;
(b) such Management Investor's residence, business address, business
and residence telephone numbers and social security number are as set forth
below such Management Investor's signature to this Agreement; and
(c) in formulating the decision to enter into this Agreement, such
Management Investor has relied solely upon an independent investigation of the
Company's business and upon consultations with such Management Investor's legal
and financial advisers with respect to this Agreement and the nature of such
Management Investor's investment; and that in entering into this Agreement no
reliance was placed upon any representations or warranties other than those
contained in this Agreement.
4.4. Restrictions on Transfers of Securities. The following restrictions
on Transfer shall apply to all Securities owned by any Restricted Investor. As
used herein, "Restricted Investor" shall mean CMP, any Investor or Permitted
Transferee except a Permitted Transferee by virtue of Section
11
4.4(b)(iii) hereof and "Securities" shall include the CMP Warrant and any Shares
acquired upon exercise of the CMP Warrant:
(a) No Restricted Investor shall Transfer (other than in connection
with a redemption or purchase by the Company) any Securities unless (i) such
Transfer is to a Permitted Transferee or a Person approved in advance in writing
by the holders of at least 50% of the outstanding Common Stock then held by the
Investors (including shares held by the transferor) and (ii) such Transfer
complies with the provisions, if applicable, of Sections 5.5, 5.6 and 5.7, this
Section 4.4 and, in addition, in the case of Securities held by Management
Investors, the applicable provisions of Article VII of this Agreement. No
Restricted Investor may effect any Transfer of Shares unless the transferee
(other than a Permitted Transferee under Section 4.5(b)(iii)) executes an
agreement pursuant to which such transferee agrees to be bound by the terms and
provisions of this Agreement applicable to the transferor (except as otherwise
specifically provided herein). Any purported Transfer in violation of this
Agreement shall be null and void and of no force and effect and the purported
transferee shall have no rights or privileges in or with respect to the Company.
As used herein, "Transfer" means the making of any sale, exchange, assignment,
hypothecation, gift, security interest, pledge or other encumbrance, or any
contract therefor, any voting trust or other agreement or arrangement with
respect to the transfer of voting rights or any other beneficial interest in any
of the Securities, the creation of any other claim thereto or any other transfer
or disposition whatsoever, whether voluntary or involuntary, affecting the
right, title, interest or possession in or to such Securities.
Prior to any proposed Transfer of any Securities, the holder thereof
shall give written notice to the Company describing the manner and circumstances
of the proposed Transfer accompanied by a written opinion of legal counsel,
addressed to the Company and the transfer agent, if other than the Company, and
reasonably satisfactory in form and substance to each addressee, to the effect
that the proposed Transfer of the Securities may be effected without
registration under the Securities Act and applicable state securities laws. Each
certificate evidencing the Securities transferred shall bear the legends set
forth in Section 4.2(a) and, if applicable, the legend set forth in Section
4.2(b), except that such certificate shall not bear the legends set forth in
Section 4.2(a) if the opinion of counsel referred to above is to the further
effect that such legend is not required in order to establish compliance with
any provision of the Securities Act or applicable state securities laws.
(b) As used herein, "Permitted Transferee" shall mean:
(i) in the case of any Investor or Permitted Transferee who is
a natural person, such person's spouse or children or grandchildren (in each
case, natural or adopted), any trust for the sole benefit of such person, such
person's spouse or children or grandchildren (in each case, natural or adopted),
any charitable trust the grantor of which is an Investor or Permitted
Transferee, or any corporation or partnership in which the direct and beneficial
owner of all of the equity interest is such individual person or such person's
spouse or children or grandchildren (in each case, natural or adopted) (or any
trust solely for the benefit of such persons);
(ii) in the case of any Investor or Permitted Transferee who
is, in each case, a natural person, the heirs, executors, administrators or
personal representatives upon the death
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of such person or upon the incompetency or disability of such person for
purposes of the protection and management of such person's assets;
(iii) in the case of any Investor or Permitted Transferee, any
Person if such Person takes such Securities pursuant to a sale in connection
with a Public Offering or following a Public Offering in open market
transactions or under Rule 144 under the Securities Act;
(iv) in the case of Sterling or any Permitted Transferee of
Sterling, (A) Citicorp Venture Capital Ltd., Citibank Delaware or any Affiliate
of Citigroup Inc., a Delaware corporation; (B) any officer, employee or director
of any of the foregoing entities, or any trust, partnership or other entity
established solely for the benefit of such officers, employees or directors; or
(C) any qualified institutional buyer (as such term is defined in Rule 144A
under the Securities Act) organized under the laws of the United States or any
State thereof, provided that such qualified institutional buyer shall only be a
Permitted Transferee of up to 3% of the outstanding Common Stock and up to $3.0
million in liquidation value of Series A Preferred Stock);
(v) in the case of Xxxxx and transfers to Sterling of his
interests in the Company and his Membership Units in Prism LLC;
(vi) in the case of Xxxxxx, any person who acquires or
succeeds to 50% or more of the outstanding capital stock or assets of Xxxxxx or
engages in any similar extraordinary transaction involving Xxxxxx or any
Affiliate of Xxxxxx Corporation, a Delaware corporation.
(vii) in the case of CMP, as a distribution in kind to its
general partner or its limited partners pro rata in accordance with their
respective partnership interests.
4.5. Notation. A notation will be made in the appropriate transfer records
of the Company with respect to the restrictions on transfer of the Securities
referred to in this Agreement.
4.6. Limitation on Repurchase of Company Stock. Each Investor understands
that concurrently with the issuance of the Shares, the Company is entering into
certain financing agreements which will contain prohibitions, restrictions and
limitations on the ability of the Company to purchase any of the Shares and to
pay dividends on the Shares.
4.7. Reliance. Each Investor acknowledges that the Company and each of the
other Investors is entering into this Agreement in reliance upon such Investor's
representations and warranties and other covenants and agreements contained
herein.
4.8. Subsequent Management Investors. (a) In the event that the Company
issues and sells shares of Class A Common Stock to any member of management of
the Business (hereinafter referred to as a "Subsequent Management Investor"),
the Company shall have the right and option at any time and from time to time
within 6 months of Closing (excluding any required notice period pursuant to
Section 4.8(b)) to repurchase from Sterling such number of shares of Class A
Common Stock, as the Company shall designate to be sold to such Subsequent
Management Investor at a purchase price equal to the price paid by Management
Investors for such Class A Common Stock at the time of issuance of such Class A
Common Stock (but in no event at a price less than $.05 per share of Class A
Common Stock) multiplied by the number of shares of Class A Common Stock
repurchased from Sterling. The number of shares of Securities to be repurchased
pursuant to this
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Section 4.8 shall not exceed 2,750,000 shares of Class A Common Stock.
Subsequent Management Investors shall agree to be bound by this Agreement as
Management Investors including but not limited to the provisions of Article VI
hereof with respect to such shares of Class A Common Stock.
(b) Such repurchase shall be exercised by written notice to Sterling
signed by an officer of the Company on behalf of the Company or by its
designee(s), as the case may be. Such notice shall set forth the number of
shares of Class A Common Stock desired to be purchased and shall set forth a
time and place of closing which shall be no earlier than 10 days and no later
than 60 days after the date such notice is sent. At such closing, Sterling shall
deliver the certificates evidencing the number of shares of Class A Common Stock
to be repurchased by the Company and/or its designee(s), accompanied by stock
powers duly endorsed in blank or duly executed instruments of transfer, and any
other documents that are necessary to transfer to the Company and/or its
designee(s) good title to such of the shares of Class A Common Stock to be
transferred, free and clear of all pledges, security interests, liens, charges,
encumbrances, equities, claims and options of whatever nature other than those
imposed under this Agreement, and concurrently with such delivery, the Company
and/or its designee(s) shall deliver to Sterling the full amount of the
repurchase price for such shares of Class A Common Stock in cash by certified or
bank cashier's check.
4.9. Application to Prism LLC. The provisions of Sections 4.1 through 4.7
shall apply to Prism LLC as well as to the Company. Such sections are hereby
incorporated into this Section 4.9 with each reference to the Company therein
replaced with a reference to Prism LLC, each reference to Securities, Shares,
Common Stock or shares of Common Stock replaced with a reference to Membership
Units, each reference to Incentive Shares replaced with a reference to Incentive
Units and each reference to the Company's Board of Directors replaced with Prism
LLC's Board of Directors.
ARTICLE V
OTHER COVENANTS AND REPRESENTATIONS
5.1. Observers' Rights. So long as Sterling or its Affiliates own at least 5% of
the Common Stock outstanding, if no employee of Sterling or its Affiliates is a
member of the Company's Board of Directors, Sterling shall have the right to
designate two observers (the "Observers") to attend meetings of the Company's
Board of Directors and committees thereof. If at least one employee of Sterling
or its Affiliates is a member of the Company's Board of Directors, Sterling
shall have the right to designate one Observer to attend meetings of the
Company's Board of Directors and committees thereof. So long as Xxxxxx or its
Affiliates own at least 5% of the Common Stock outstanding, if no officer of
Xxxxxx is a member of the Company's Board of Directors, Xxxxxx shall have the
right to designate one Observer to attend meetings of the Company's Board of
Directors and committees thereof. The Observers shall not have the right to vote
on any matter presented to the Board of Directors or any committee thereof. The
Company shall give each Observer written notice of each meeting of the Board of
Directors and committees thereof at the same time and in the same manner as the
members of the Board of Directors or such committee receive notice of such
meetings, and the Company shall permit each Observer to attend as an observer
all meetings of its Board of Directors and committees thereof. Each Observer
shall be entitled to receive all written materials and other information given
to the directors in connection with such meetings at the same
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time such materials and information are given to the directors, and each
Observer shall keep such materials and information confidential. If the Company
proposes to take any action by written consent in lieu of a meeting of its Board
of Directors or a committee thereof, the Company shall give written notice
thereof to each Observer prior to the effective date of such consent. The
Company shall provide to each Observer all written materials and other
information given to the directors in connection with such action by written
consent at the same time such materials and information are given to the
directors, and each Observer shall keep such materials and information
confidential. The Company shall pay the reasonable out-of-pocket expenses of
each Observer incurred in connection with attending such meetings.
5.2. Financial Statements and Other Information . So long as Sterling or
Xxxxxx or any of their Affiliates owns any of the Securities or any of the
Management Investors who purchased Securities hereunder and is a party to this
Agreement is an employee of the Company, the Company shall deliver to Sterling
(if any Securities are owned by it), Xxxxxx (if any Securities are owned by it
or an Affiliate) and each Management Investor who purchased Securities hereunder
and is a party to this Agreement (if such Management Investor is an employee of
the Company):
(a) as soon as available and in any event within 45 days after the
end of each of the first three quarters of each fiscal year of the Company,
consolidated balance sheets of the Company and its subsidiaries as of the end of
such period, and consolidated statements of income and cash flows of the Company
and its subsidiaries for the period then ended prepared in conformity with
generally accepted accounting principles applied on a consistent basis, except
as otherwise noted therein, and subject to the absence of footnotes and to
year-end adjustments; and
(b) as soon as available and in any event within 90 days after the
end of each fiscal year of the Company, a consolidated and consolidating balance
sheet of the Company and its subsidiaries as of the end of such year, and
consolidated and consolidating statements of income and cash flows of the
Company and its subsidiaries for the year then ended prepared in conformity with
generally accepted accounting principles applied on a consistent basis, except
as otherwise noted therein, together with an auditor's report thereon of a firm
of established national reputation and a written assessment containing the
information required by the provisions of 13 CFR 107.630(e).
5.3. Regulatory Compliance Cooperation. So long as Sterling or its
Affiliates beneficially own any of the Securities, before the Company redeems,
purchases or otherwise acquires, directly or indirectly, or converts or takes
any action with respect to the voting rights of, any shares of any class of its
capital stock or any securities convertible into or exchangeable for any shares
of any class of its capital stock, the Company shall give Sterling 30 days prior
written notice of such pending action. Upon the written request of Sterling made
within 30 days after its receipt of any such notice, stating that after giving
effect to such action Sterling would have a Regulatory Problem (as described
below), the Company will defer taking such action for such period (not to extend
beyond 90 days after Sterling's receipt of the Company's original notice) as
Sterling requests to permit it and its Affiliates to reduce the quantity of
Securities held by it and its Affiliates in order to avoid the Regulatory
Problem. In addition, the Company will not be a party to any merger,
consolidation, recapitalization or other transaction pursuant to which Sterling
would be required to take any voting securities, or any securities convertible
into voting securities, which might reasonably be expected to cause Sterling to
have a Regulatory Problem. For purposes of this paragraph, a Person will be
deemed to have a "Regulatory Problem" when such Person and such
15
person's Affiliates own, control or have power over (or believes that there is a
substantial risk of an assertion that such Person owns, controls or has power
over) a greater quantity of securities of any kind issued by the Company than
are permitted to be owned by such Person under any requirement of any
governmental authority applicable to such Person.
5.4. Small Business Administration Forms.
Prior to and after the Closing, the Company shall, if requested by
Sterling or any Permitted Transferee of Sterling, execute Forms 480 ("Size
Status Declaration") and 652-D ("Assurance of Compliance") of the Small Business
Administration and any other documents that may be required by the Small
Business Administration or any other governmental agency having jurisdiction
over the activities of Sterling, or which Sterling or such Permitted Transferee
may reasonably require in connection therewith.
5.5. Sale of the Company.
(a) So long as the Company has not consummated a Public Offering, if
holders of at least 50% of the Common Stock (including voting and non-voting
shares voting as a single class) then outstanding vote in favor of (at a duly
called and duly held meeting of stockholders of the Company) or consent in
writing to the merger or consolidation of the Company or the sale of all or
substantially all of its assets or sale of all or a majority of the outstanding
capital stock or any other similar transaction (any of the foregoing, an
"Approved Sale") to a person (the "Acquiring Entity"), (i) each Restricted
Investor will consent to, vote for, and raise no objections against, and waive
dissenters and appraisal rights (if any) with respect to, the Approved Sale,
(ii) if the Approved Sale includes a sale of Securities, each Restricted
Investor will agree to sell and will be permitted to sell all of such Restricted
Investor's Securities on the terms and conditions approved by the holders of a
majority of the Common Stock then outstanding. Each Restricted Investor will
take all necessary and desirable actions in connection with the consummation of
an Approved Sale.
(b) The obligations of each of the Investors with respect to an
Approved Sale are subject to the satisfaction of the conditions that upon the
consummation of the Approved Sale all of the Investors and Permitted Transferees
will receive the same form and amount of consideration per share of Common
Stock, or if any holder of Common Stock is given an option as to the form and
amount of consideration to be received, all Investors and Permitted Transferees
will be given the same option.
5.6. Tag-Along Rights.
(a) Except in the case of a Public Offering or a Transfer to a
Permitted Transferee, Sterling and its Permitted Transferees that are not
natural persons that collectively own more than 40% of the outstanding Common
Stock shall not effect a Transfer of shares of Common Stock in, or otherwise
participate in, any transaction or series of related transactions that
constitute a "Significant Transfer" unless all other Investors and their
Permitted Transferees and assigns and CMP (collectively, the "Tag-Along
Rightholders") are offered an equal opportunity (the "Tag-Along Right") to
participate in such transaction or transactions on a pro rata basis and on
identical terms. As used herein, a "Significant Transfer" means a Transfer alone
or in the aggregate to any
16
Person or Persons of 50% or more of the total number of shares of Common Stock
owned by Sterling and such Permitted Transferees.
(b) Prior to any sale of Common Stock subject to these provisions,
the seller (the "Tag-Along Seller") shall notify the Company in writing of the
proposed sale. Such notice (the "Tag-Along Sale Notice") shall set forth (i) the
number of shares of Common Stock subject to the proposed sale; (ii) the name and
address of the proposed purchaser; and (iii) the proposed amount of
consideration and terms and conditions of payment offered by such proposed
purchaser. The Company shall promptly, and in any event within ten days, mail or
cause to be mailed the Tag-Along Sale Notice to the Tag-Along Rightholders. Each
Tag-Along Rightholder may exercise the Tag-Along Right by delivery of a written
notice (the "Tag-Along Acceptance Notice") to the Tag-Along Seller within
fifteen days of the date the Company mailed or caused to be mailed the Tag-Along
Sale Notice. The Tag-Along Acceptance Notice shall state the number of shares of
Common Stock that the Tag-Along Rightholder proposes to include in the proposed
sale. If no Tag-Along Acceptance Notice is received during the fifteen-day
period referred to above, Tag-Along Seller shall have the right for a 120-day
period to effect the proposed sale of shares of Common Stock on terms and
conditions no more favorable to the transferee than those stated in the
Tag-Along Sale Notice.
(c) Each Tag-Along Rightholder other than Sterling acknowledges and
agrees that Sterling or a Permitted Transferee of Sterling may grant similar
"tag-along" rights to other Persons and, in such event, such other Persons shall
be offered an equal opportunity to participate in such transaction or
transactions to the same extent as such Tag-Along Rightholders hereunder and
shall be included in the calculation of the pro rata basis upon which such
Tag-Along Rightholders may participate in such transaction or transactions.
(d) (i) Notwithstanding the requirements of this Section 5.6, a
Tag-Along Seller may sell Common Stock at any time without complying with the
requirements of Section 5.6(b) so long as the Tag-Along Seller deposits into
escrow with an independent third party at the time of sale that amount of
consideration received in the sale equal to the "Escrow Amount." As used herein,
the "Escrow Amount" shall equal that amount of consideration as all Tag-Along
Rightholders would have been entitled to receive if they had the opportunity to
participate in the sale on a pro rata basis, determined as if each Tag-Along
Rightholder (A) delivered a Tag-Along Notice to the Tag-Along Seller in the time
period set forth in Section 5.6(b) and (B) proposed to include all of his, her
or its shares of Common Stock in such sale.
(ii) The Tag-Along Seller shall notify the Company in writing
of the proposed sale pursuant to this Section 5.6(d) no later than the date of
such sale. Such notice (the "Escrow Notice") shall set forth the information
required in the Tag-Along Sale Notice, and in addition, such notice shall state
the name of the escrow agent and, if the consideration (in whole or in part) for
the sale was cash, then the account number of the escrow account. The Company
shall promptly, and in any event within ten days, mail or cause to be mailed the
Escrow Notice to each Tag-Along Rightholder. Such Tag-Along Rightholder may
exercise the tag-along right by delivery to the Tag-Along Seller, within ten
days of the date the Company mailed or caused to be mailed the Escrow Notice, of
(A) a written notice specifying the number of shares of Common Stock it proposes
to sell; and (B) the certificates for such Common Stock, with stock powers duly
endorsed in blank and with signatures guaranteed.
17
(iii) Promptly after the expiration of the tenth day after the
Company has mailed or caused to be mailed the Escrow Notice, (A) the Tag-Along
Seller shall purchase that number of shares of Common Stock as the Tag-Along
Seller would have been required to include in the sale had the Tag-Along Seller
complied with the provisions of Section 5.6(b), (B) all shares of Common Stock
not required to be purchased by the Tag-Along Seller shall be returned to the
Tag-Along Rightholders thereof and (C) all funds and other consideration held in
escrow shall be released to the Tag-Along Seller. If the Tag-Along Seller
received consideration other than cash in his, her or its sale, the Tag-Along
Seller shall purchase the shares of Common Stock tendered by paying to the
Tag-Along Rightholders non-cash consideration and cash in the same proportion as
received by the Tag-Along Seller in the sale.
(e) The Tag-Along Rights provided pursuant to this Section 5.6 shall
terminate upon the earlier of (i) a Public Offering or sale of the Company; and
(ii) the day after the date on which Sterling and its Permitted Transferees that
are not natural persons own less than 40% of the Common Stock. In addition, the
rights of the Management Investors under this Section 5.6 shall terminate on the
date on which the Management Investors and their Permitted Transferees own less
than 50% of the shares of Common Stock purchased or retained by the Management
Investors hereunder.
5.7. Preemptive Rights.
(a) If the Company proposes to issue and sell any of its shares of
Common Stock or any securities containing options or rights to acquire any
shares of Common Stock or any securities convertible or exchangeable into shares
of Common Stock to Sterling, Citicorp Venture Capital Ltd. or any of their
respective corporate Affiliates, the Company will first offer to each of the
other Investors (as used in this Section 5.7, "Investors" shall include CMP) a
portion of the number or amount of such securities proposed to be sold in any
such transaction or series of related transactions equal to the product of (i)
the percentage each such Investor and such Investor's Permitted Transferees
holds of all shares of Common Stock then held by
(b) or issuable to the Investors and (ii) the number of shares
represented by the securities proposed to be issued and sold by the Company in
any such transaction or series of related transactions, all for the same price
and upon the same terms and conditions as the securities that are being offered
to Sterling, Citicorp Venture Capital Ltd. and their respective Affiliates in
such transaction or series of transactions.
(c) Notwithstanding the foregoing, the provisions of this Section
5.7 shall not be applicable to the issuance of shares of Common Stock (i) upon
the conversion of shares of one class of Common Stock into shares of another
class; (ii) as a dividend on all the outstanding shares of Common Stock; (iii)
in any transaction in respect of a Security that is available to all holders of
such Security on a pro rata basis, provided, that for purposes of this clause
(iii) all classes of Common Stock shall be treated as a single security; (iv) in
connection with grants of stock or options to employees or directors of the
Company; or (v) in an offering or sale of securities pursuant to a registration
statement filed with, and declared effective by, the Securities and Exchange
Commission pursuant to the Securities Act.
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(d) The Company will deliver or cause to be delivered to the
Investors a written notice setting forth the terms and conditions (including the
consideration per share) upon which the Investors may purchase such shares or
other securities (the "Preemptive Notice"). After receiving a Preemptive Notice,
an Investor must deliver or cause to be delivered to the Company a written
notice (the "Preemptive Reply") within 45 days of the date of such Preemptive
Notice that such Investor agrees to purchase the shares or other securities
offered pursuant to this Section 5.7 on the date of sale to Sterling, Citicorp
Venture Capital Ltd. and their respective Affiliates. If any Investor fails to
make a Preemptive Reply in accordance with this Section 5.7, shares or other
securities offered to such Investor in accordance with this Section 5.7 may
thereafter, for a period not exceeding 90 days following the expiration of such
45-day period, be issued, sold or subjected to rights or options to Sterling,
Citicorp Venture Capital Ltd. and their respective Affiliates at a price not
less than that at which they were offered to the Investors and on such other
terms and conditions no more favorable than those offered to the Investors. Any
such shares or other securities not so issued, sold or subjected to rights or
options to Sterling, Citicorp Venture Capital Ltd. and their respective
Affiliates during such 90-day period will thereafter again be subject to the
preemptive rights provided for in this Section 5.7.
5.8. Covenant Not To Compete.
(a) In consideration of the opportunity to participate in the equity
offering of the Company, each Management Investor covenants and agrees that, for
one (1) year after termination of such Management Investor's employment with the
Company or any of its Subsidiaries, neither Management Investor nor any of his
or her Affiliates which are not natural Persons shall directly or indirectly,
engage in, represent in any way, be connected with, become employed by or have
any interest in any business or activity competing in any manner with any
businesses carried on by the Company, any Subsidiary of the Company, or any
entity directly or indirectly controlled by the Company or any such Subsidiary
at the time of such termination, provided that a Management Investor shall be
permitted to own not more than 5% of any publicly traded company.
(b) In consideration of the opportunity to participate in the equity
offering of the Company, each Management Investor covenants and agrees that, for
one (1) year after termination of such Management Investor's employment with the
Company or any of its Subsidiaries, neither Management Investor nor any of his
or her Affiliates shall solicit, employ, retain as a consultant, interfere with
or attempt to entice away from the Company or its Affiliates any individual who
is, has agreed to be or within six months of such solicitation, employment,
retention, interference or enticement has been, employed or retained by the
Company or any of its Affiliates in a senior executive capacity.
(c) In consideration of the opportunity to participate in the equity
offering of the Company, each Management Investor covenants and agrees that, for
one (1) year after termination of such Management Investor's employment with the
Company or any of its Subsidiaries, neither Management Investor nor any of his
or her Affiliates shall divert or attempt to divert any customers or accounts of
the Company or any of its Subsidiaries which accounted for at least 1% of
aggregate sales of the Company and its Subsidiaries within one year of such
diversion or attempted diversion (the "Customers"), or any of the business or
patronage of any of the Customers, from the Company or any of its Subsidiaries.
19
(d) Each Management Investor acknowledges and agrees that the remedy
at law for any breach, or threatened breach, of any of the provisions of this
Section 5.8 will be inadequate and, accordingly, each Management Investor
covenants and agrees that the Company shall, in addition to any other rights and
remedies which the Company may have, be entitled to equitable relief, including
injunctive relief, and to the remedy of specific performance with respect to any
breach or threatened breach of such covenant, as may be available from any court
of competent jurisdiction. Such right to obtain equitable relief may be
exercised, at the option of the Company, concurrently with, prior to, after, or
in lieu of, the exercise of any other rights or remedies which the Company may
have as a result of any such breach or threatened breach.
(e) In the event that the provisions of this Section 5.8 shall be
determined by a court of competent jurisdiction to be unenforceable under
applicable law as to that jurisdiction (the parties agreeing that such decision
shall not be binding, res judicata or collateral estoppel in any other
jurisdiction) for any reason whatsoever, then any such provision or provisions
shall not be deemed void, but the parties hereto agree that said limits may be
modified by the court and that said covenant contained in this Section 5.8 shall
be amended in accordance with said modifications, it being specifically agreed
by each Management Investor and the Company that it is their continuing desire
that this covenant be enforced to the full extent of its terms and conditions or
if a court finds the scope of the covenant unenforceable, the court should
redefine the covenant so as to comply with applicable law.
5.9. Application to Prism LLC. The provisions of Sections 5.1 through 5.8
shall apply to Prism LLC as well as to the Company. Such sections are hereby
incorporated into this Section 5.9 with each reference to the Company therein
replaced with a reference to Prism LLC, each reference to Securities, Shares,
Common Stock or shares of Common Stock replaced with a reference to Membership
Units, each reference to Incentive Shares replaced with a reference to Incentive
Units and each reference to the Company's Board of Directors replaced with Prism
LLC's Board of Directors.
ARTICLE VI
CORPORATE ACTIONS
6.1. Certificate of Incorporation and Bylaws. Each Investor has reviewed the
Certificate of Incorporation of the Company and the Bylaws of the Company in the
forms attached hereto as Exhibits A and B, respectively, and hereby approves and
ratifies the same.
6.2. Directors and Voting Agreements. Each Investor shall take, at any
time and from time to time, all action necessary (including, without limitation,
voting the Class A Common Stock owned by him, her or it, calling special
meetings of stockholders and executing and delivering written consents) to
ensure that the Board of Directors of the Company is composed at all times of up
to five persons, determined as follows: (i) the chief executive officer of the
Company; (ii) one individual designated by Sterling; (iii) up to two independent
directors, who shall be designated by Sterling (to the extent permitted by
applicable law as determined by Sterling in its sole discretion), subject to the
right of the holders of a majority of the outstanding shares of Class A Common
Stock (including any shares of Class A Common Stock held by Sterling) to veto
the election of any such independent director, provided that in the event that
Sterling concludes that it is unable to designate,
20
or elects not to designate for any reason, one or more of such independent
directors or the election of any such independent director is not approved by
the holders of a majority of the outstanding shares of Class A Common Stock,
such directorship(s) shall not be filled by the remaining members of the
Company's Board of Directors but shall remain vacant until the election of a
director designated by Sterling to fill such vacancy in accordance with this
Section 6.2; and (iv) at all times, but only at such times, when the Board of
Directors of the Company includes two independent directors determined in
accordance with clause (iii) of this Section 6.2, one additional individual
designated by Sterling, and provided that, notwithstanding clauses (i) through
(iv) of this Section 6.2, if Sterling at any time owns of record in excess of
50% of the Class A Common Stock then outstanding, then the Board of Directors of
the Company shall consist of the chief executive officer of the Company and up
to four individuals designated by Sterling in its sole discretion. The initial
directors named pursuant to this Section 6.2 shall be Xxxxxxx X. Xxxxxxxx, Xxxxx
X. Xxxx and Xxxx X. Xxxx.
6.3. Right to Remove Sterling Directors. Sterling may request that any
director designated by Sterling pursuant to clause (ii) or (iv) of Section 6.2
be removed (with or without cause) by written notice to the other Investors,
and, in any such event, each Investor shall promptly consent in writing or vote
or cause to be voted all shares of Common Stock entitled to vote thereon now or
hereafter owned or controlled by it for the removal of such Sterling Director as
a director. In the event any person ceases to be a director, such person shall
also cease to be a member of any committee of the Board of Directors of the
Company.
6.4. Right to Fill Certain Vacancies in Company's Board. In the event that
a vacancy is created on the Company's Board of Directors at any time by the
death, disability, retirement, resignation or removal (with or without cause) of
a Sterling Director, or if otherwise there shall exist or occur any vacancy on
the Company's Board of Directors in a directorship subject to designation by
Sterling, such vacancy shall not be filled by the remaining members of the
Company's Board of Directors but each Investor hereby agrees promptly to consent
in writing or vote or cause to be voted all shares of Common Stock entitled to
vote thereon now or hereafter owned or controlled by it to elect that individual
designated to fill such vacancy and serve as a director, as shall be designated
by Sterling, which individual shall thereafter be a Sterling Director.
6.5. Directors of Company Subsidiaries. The Company shall take, and each
of the Investors agrees that he or it shall cause the Company to take, at any
time and from time to time, all action necessary (including voting all shares of
common stock of any Subsidiary of the Company, calling special meetings of
stockholders and executing and delivering written consents) to ensure that the
Boards of Directors of all Subsidiaries of the Company are identical to the
Board of Directors of the Company.
6.6. Termination of Voting Agreements. The voting agreements in Sections
6.2, 6.3, 6.4 and 6.5 shall terminate on the earlier of (i) the date the Company
consummates a Public Offering (if requested by the underwriter with respect to
such offering) and (ii) the date when Sterling and its Permitted Transferees and
their respective Affiliates no longer own at least 15% of the issued and
outstanding Common Stock.
21
ARTICLE VII
ADDITIONAL RESTRICTIONS ON TRANSFERS OF
SECURITIES HELD BY MANAGEMENT INVESTORS
7.1. Restrictions on Transfer. In addition to any restrictions on Transfer
imposed by Section 4.4, no Management Investor shall effect a Transfer of any
Securities (other than a Transfer to a Permitted Transferee pursuant to Sections
4.4(b)(i) or 4.4(b)(ii)) without the consent of the Company, as evidenced by a
resolution duly adopted by at least a majority of the Board of Directors. In the
event of such a Transfer to a Permitted Transferee, for purposes of determining
the applicability of the Purchase Option of the Company described in Section 7.2
and, if applicable, the amount of the Option Purchase Price for Incentive Shares
purchased under such Purchase Option, reference shall be made to the Termination
Date of the Management Investor who first owned the Incentive Shares transferred
in such Transfer. In exercising the consent and approval described in the first
sentence of this Section 7.1, the Company may employ its sole discretion in
evaluating the nature of the proposed transferee and the Company may impose such
conditions on Transfer as it deems appropriate in its sole discretion,
including, but not limited to, requirements that the transferee be an employee
of the Company and that the transferee purchase the Management Investor's
Securities as a "Management Investor" subject to the restrictions of this
Article VII. Any purported Transfer in violation of this Agreement shall be null
and void and of no force and effect and the purported transferees shall have no
rights or privileges in or with respect to the Company.
7.2. Purchase Option.
(a) General Terms. In the event that on or prior to the fifth
anniversary of the Closing, any Management Investor shall cease to be employed
by the Company for any reason (including, but not limited to, death, temporary
or permanent disability, retirement at age 62 or more under the Company's normal
retirement policies, resignation or termination by the Company with or without
Cause), such Management Investor (or such Management Investor's heirs,
executors, administrators, transferees, successors or assigns) shall give prompt
notice to the Company of such termination (except in the case of termination by
the Company with or without Cause), and the Company, or one or more designee(s)
selected by a majority of the members of the Board of Directors, shall have the
right and option at any time within 90 days after the later of the effective
date of such termination of employment (the "Termination Date") or the date of
the Company's receipt of the aforesaid notice, to purchase from such Management
Investor, any Person purchasing Securities hereunder on behalf of such
Management Investor, or such Management Investor's or Person's heirs, executors,
administrators, transferees, successors or assigns, as the case may be, any or
all of the Incentive Shares then owned by such Management Investor and such
Management Investor's Permitted Transferees at a purchase price equal to the
Option Purchase Price. The Company or its designee(s) shall give notice to the
terminated Management Investor (or such Management Investor's heirs, executors,
administrators, transferees, successors or assigns) of its intention to purchase
Incentive Shares at any time not later than 90 days after the Termination Date.
(The right of the Company and its designee(s) set forth in this Section 7.2 to
purchase a terminated Management Investor's Incentive Shares is hereinafter
referred to as the "Purchase Option"). As a condition to purchasing a Management
Investor's Incentive Shares pursuant to this Section 7.2, any designee(s)
selected by the Board of Directors must agree in writing to assume the Company's
obligations under Section 7.2(a)(iii). A designee's agreement to assume such
obligations will relieve
22
the Company of its obligations under Section 7.2(a)(iii) with regard to the
particular terminated Management Investor and such Management Investor shall
thereafter have no recourse against the Company under Section 7.2(a)(iii).
(i) Exercise of Purchase Option. The Purchase Option shall be
exercised by written notice to the terminated Management Investor (or such
Management Investor's heirs, executors, administrators, transferees, successors
or assigns) signed by an officer of the Company on behalf of the Company or by
its designee(s), as the case may be. Such notice shall set forth the number of
Incentive Shares desired to be purchased and shall set forth a time and place of
closing which shall be no earlier than ten days and no later than 60 days after
the date such notice is sent. At such closing, the seller shall deliver the
certificates evidencing the number of Incentive Shares to be purchased by the
Company and/or its designee(s), accompanied by stock powers duly endorsed in
blank or duly executed instruments of transfer, and any other documents that are
necessary to transfer to the Company and/or its designee(s) good title to such
of the Incentive Shares to be transferred, free and clear of all pledges,
security interests, liens, charges, encumbrances, equities, claims and options
of whatever nature other than those imposed under this Agreement, and
concurrently with such delivery, the Company and/or its designee(s) shall
deliver to the seller the full amount of the Option Purchase Price for such
Incentive Shares in cash or by certified or bank cashier's check.
(ii) Option Purchase Price. (A) If the Management Investor
shall be terminated by the Company without Cause or shall cease to be employed
by the Company by reason of death, normal retirement at age 62 or more under the
Company's normal retirement policies, or temporary or permanent disability, the
"Option Purchase Price" for the Incentive Shares to be purchased from such
Management Investor or such Management Investor's Permitted Transferees pursuant
to the Purchase Option (such number of Incentive Shares being the "Purchase
Number") shall equal the price calculated as set forth in the table below
opposite the applicable Termination Date of such Management Investor:
23
If the Termination Date Occurs: Option Purchase Price
------------------------------- ---------------------
On or prior to the first anniversary Adjusted Cost Price multiplied by
of the Closing the Purchase Number
After the first anniversary of the Adjusted Cost
Closing, and on or prior to Price multiplied by 80% of the
the second anniversary of the Closing Purchase Number, plus Fair Market
Value Price multiplied by 20% of the
Purchase Number
After the second anniversary of the Adjusted Cost
Closing, and on or prior to Price multiplied by 60% of the
the third anniversary of the Closing Purchase Number, plus Fair Market
Value Price multiplied by 40% of the
Purchase Number
After the third anniversary of the Adjusted Cost
Closing, and on or prior to Price multiplied by 40% of the
the fourth anniversary of the Closing Purchase Number, plus Fair Market
Value Price multiplied by 60% of the
Purchase Number
After the fourth anniversary of the Adjusted Cost
Closing, and on or prior to Price multiplied by 20% of the
the fifth anniversary of the Closing Purchase Number, plus Fair Market
Value Price multiplied by 80% of the
Purchase Number
provided, however, that, on each of the first four anniversaries of the Closing,
Incentive Shares shall vest an additional 7.5 percentage points (and the above
table shall be adjusted accordingly) each time the actual EBITDA for any of the
Company's prior fiscal years completed following the Closing was at least 110%
of the EBITDA target for such fiscal year as established by the Company's Board
of Directors and as adjusted pursuant to Section 7.8; provided further, that on
a Public Offering or an Approved Sale (subject to Section 7.7), if less than 80%
of the Incentive Shares have vested, a number of unvested Incentive Shares shall
immediately vest so that 80% of all Incentive Shares are vested.
By way of example, assume that (i) the Company's actual EBITDA was
at least 110% of the EBITDA targets for each of the first two completed fiscal
years following Closing and (ii) a certain Management Investor is terminated by
the Company without Cause after the second anniversary of the Closing, but prior
to the third anniversary of the Closing. The Option Purchase Price for the
Incentive Shares to be purchased from this terminated Management Investor shall
equal Adjusted Cost Price multiplied by 45% of the Purchase Number, plus Fair
Market Value Price multiplied by 55% of the Purchase Number. This Option
Purchase Price is calculated as follows: (A) the Purchase Number to be
multiplied by the Adjusted Cost Price shall be decreased, and the Purchase
Number to be multiplied by the Fair Market Value Price shall be increased, by 20
percentage points on each of the first and second anniversaries of the Closing
as shown in the table above; and (B) the Purchase Number to be multiplied by the
Adjusted Cost Price shall be decreased, and the Purchase Number to be multiplied
by the Fair Market Value Price shall be increased, by 7.5
24
percentage points on each of the first and second anniversaries of the Closing
as a result of 110% of the EBITDA targets being reached in two different years.
(B) If the Management Investor shall cease to be
employed by the Company for any reason other than those set forth in clause (A)
of this Section 7.2(a)(ii) (including, but not limited to, as the result of
voluntary resignation or termination for Cause), the Option Purchase Price for
all Incentive Shares to be purchased from the Management Investor (and such
Management Investor's Permitted Transferees) pursuant to the Purchase Option
shall equal the Adjusted Cost Price multiplied by the Purchase Number.
(C) As used herein:
1. "Adjusted Cost Price" for each Incentive Share means
five cents ($0.05), which represents the Management Investor's original cost per
share;
2. "EBITDA" shall have the meaning assigned to such term
in the Indenture governing the $200.0 million 13.25% Senior Subordinated Notes
Due 2009 of Intersil Corporation;
3. "EBITDA Multiple" shall mean (i) with respect to an
entity that has common stock registered under the Exchange Act, (A) the product
of (x) the average of the daily market prices for each business day during the
period commencing 15 business days before the Termination Date and ending on the
date one day prior to the Termination Date or, if the common stock has been
registered under the Exchange Act for less than 15 consecutive business days
before the Termination Date, then the average of the daily market prices for all
of the business days before the Termination Date for which daily market prices
are available and (y) the number of shares of such common stock outstanding on
the Termination Date divided by (B) such entity's EBITDA during the 12 full
calendar months ending at the end of the fiscal quarter immediately preceding
the Termination Date as reflected in such entity's financial statements and (ii)
with respect to an entity that does not have common stock registered under the
Exchange Act, the EBITDA multiple as determined in good faith by the Company's
Board of Directors;
4. "Fair Market Value Price" for each Incentive Share
means (A) the amount obtained by subtracting (y) from (x) where (x) equals the
product of the Company's EBITDA during the 12 full calendar months ending at the
end of the fiscal quarter immediately preceding the Termination Date as
reflected in the Company's financial statements and the greater of (I) the
number 4.9 and (II) upon the occurrence of a Change in Control (as defined in
the Indenture, dated as of the Closing Date, for the Company's $90.0 million
11.13% Subordinated Pay-In-Kind Notes Due 2010), the acquiring entity's EBITDA
Multiple and (y) equals all Indebtedness of the Company and its Subsidiaries
outstanding at the end of the fiscal quarter immediately preceding the
Termination Date plus the aggregate liquidation preference (plus accrued and
unpaid dividends) of all shares of preferred stock of the Company outstanding on
such date less all cash, cash equivalents and similar type investments
(including marketable securities) of the Company and its Subsidiaries on such
date ("Cash") (to the extent such Cash is available to the Company for general
corporate purposes without incurring substantial repatriation costs) (the amount
clause (x) exceeds clause (y) being referred to herein as the "Enterprise
Value"), divided by (B) the number of shares of Common Stock outstanding on the
Termination Date (adjusted to
25
reflect the pro forma exercise of all dilutive securities, regardless of whether
such securities are then exercisable or would otherwise satisfy requirements
under generally accepted accounting principles as they relate to the
determination of "dilutive securities"); provided, that if any class of Common
Stock is listed on a national securities exchange or reported on the National
Association of Securities Dealers, Inc. Automated Quotation System, the "Fair
Market Value Price" shall equal for each Incentive Share the closing price per
share of Common Stock on such exchange or as so reported on the Management
Investor's Termination Date; and
5. "Indebtedness" includes all obligations, contingent
and otherwise, which in accordance with generally accepted accounting principles
should be classified upon the obligor's balance sheet as liabilities, or to
which reference should be made by footnotes thereto, including without
limitation, in any event and whether or not so classified: (I) all debt and
similar monetary obligations, whether direct or indirect; (II) all liabilities
secured by any mortgage, pledge, security interest, lien, charge, or other
encumbrance existing on property owned or acquired subject thereto, whether or
not the liability secured thereby shall have been assumed; (III) all guaranties,
endorsements and other contingent obligations whether direct or indirect in
respect of Indebtedness of others, including any obligation to supply funds to
or in any manner to invest in, directly or indirectly, the debtor, to purchase
Indebtedness, or to assure the owner of Indebtedness against loss, through an
agreement to purchase goods, supplies, or services for the purpose of enabling
the debtor to make payment of the Indebtedness held by such owner or otherwise;
(IV) obligations to reimburse issuers of any letters of credit and (V) all
obligations under leases which shall have been or should be, in accordance with
generally accepted accounting principles, recorded as capital leases in respect
of which the Company or its Subsidiaries are liable as lessee.
(iii) Adjustments to Option Purchase Price. If the Company or
its designee exercises the Purchase Option with respect to any or all of the
Incentive Shares of any Management Investor whose employment with the Company
was terminated by the Company without Cause (the "Called Shares"), and if within
six months after the closing pursuant to such exercise of the Purchase Option by
the Company or its designee:
(A) the Company is merged into, consolidated with or
otherwise combined with or acquired by another Person, or there is a liquidation
of the Company, or there is a Public Offering (a "Subsequent Offering") of the
Company's Common Stock pursuant to an effective registration statement under the
Securities Act in which other Management Investors participate as selling
stockholders (other than (1) a registration statement on Form S-8 or any
successor forms or any other registration statement relating to a special
offering to the Company's employees or (2) a registration statement relating to
a Unit Offering); and
(B) the per share consideration received by the
stockholders of the Company in such transaction, or the per share net proceeds
received for the Company's Common Stock in the Subsequent Offering, as the case
may be (in each case after being adjusted downward to reflect what the per share
consideration or per share net offering proceeds, as the case may be, would have
been had the Common Stock of such terminated Management Investor purchased by
the Company or its designee pursuant to the Purchase Option been outstanding on
the date of the closing of such transaction or Subsequent Offering), exceeds the
Fair Market Value Price used in calculating the Option Purchase Price pursuant
to the exercise of the Purchase Option, then
26
such Management Investor shall be entitled to receive from the Company or its
designee an amount per Called Share equal to such excess multiplied by the
applicable Fair Market Value Price Percentage within 30 days after the closing
of any such transaction or Subsequent Offering. "Fair Market Value Price
Percentage" means 20% multiplied by the number of full years elapsed between the
Closing and the Termination Date for such Management Investor.
7.3. Company's Right of First Refusal. If a Management Investor or his or
her Permitted Transferees proposes to sell any or all of such Management
Investor's or Permitted Transferee's Securities to a third party in a bona fide
transaction, and provided such transaction is permitted under any applicable
restrictions set forth in Sections 4.4 and 7.1, the Management Investor, or his
Permitted Transferees, may not Transfer such Securities without first offering
to sell such Securities to the Company pursuant to this Section 7.3.
The Management Investor, or his Permitted Transferees, shall deliver
a written notice (a "Sale Notice") to the Company describing in reasonable
detail the Securities being offered, the name of the offeree, the purchase price
requested and all other material terms of the proposed Transfer. Upon receipt of
the Sale Notice, the Company, or a designee selected by a majority of the
directors appointed by Sterling pursuant to Section 6.2, shall have the right
and option to purchase all or any portion of the Securities being offered at the
price and on the terms of the proposed Transfer set forth in the Sale Notice.
Within 30 days after receipt of the Sale Notice, the Company shall notify such
Management Investor, or his Permitted Transferees, whether or not it wishes to
purchase any or all of the offered Securities.
If the Company elects to purchase any of the offered Securities, the
closing of the purchase and sale of such Securities shall be held at the place
and on the date established by the Company in its notice to the Management
Investor, or his Permitted Transferees, in response to the Sale Notice, which in
no event shall be less than ten or more than 60 days from the date of such
notice. In the event that the Company does not elect to purchase all the offered
Securities, the Management Investor, or his Permitted Transferees, may, subject
to the other provisions of this Agreement, Transfer the remaining offered
Securities to the offeree specified in the Sale Notice at a price no less than
the price specified in the Sale Notice and on other terms no more favorable to
the transferee(s) thereof than specified in the Sale Notice during the 180-day
period immediately following the last date on which the Company could have
elected to purchase the offered Securities. Any such Securities not transferred
within such 180-day period will be subject to the provisions of this Section 7.3
upon subsequent Transfer.
7.4. Involuntary Transfers. In the event that Securities owned by any
Management Investor, or his Permitted Transferees, shall be subject to sale or
other Transfer (the date of such sale or Transfer shall hereinafter be referred
to as the "Transfer Date") by reason of (i) bankruptcy or insolvency
proceedings, whether voluntary or involuntary, or (ii) distraint, levy,
execution or other involuntary Transfer, then such Management Investor, or his
Permitted Transferees, shall give the Company written notice thereof promptly
upon the occurrence of such event stating the terms of such proposed Transfer,
the identity of the proposed transferee, the price or other consideration, if
readily determinable, for which the Securities are proposed to be transferred,
and the number of shares of Common Stock to be transferred. After its receipt of
such notice or, failing such receipt, after the Company otherwise obtains actual
knowledge of such a proposed Transfer, the Company, or a designee selected by a
majority of the non-employee members of the Board of Directors of the
27
Company, shall have the right and option to purchase all, but, not less than all
of such Securities which right shall be exercised by written notice given by the
Company to such proposed transferor within 60 days following the Company's
receipt of such notice or, failing such receipt, the Company's obtaining actual
knowledge of such proposed Transfer. Any purchase pursuant to this Section 7.4
shall be at the price and on the terms applicable to such proposed transfer. If
the nature of the event giving rise to such involuntary Transfer is such that no
readily determinable consideration is to be paid for the Transfer of the
Securities, the price to be paid by the Company shall be the Option Purchase
Price that would have been applicable hereunder had the Management Investor
incurred a Termination Date as of the date of such proposed Transfer of the
Securities and such Securities had been Incentive Shares. The closing of the
purchase and sale of Securities shall be held at the place and the date to be
established by the Company, which in no event shall be less than ten or more
than 60 days from the date on which the Company gives notice of its election to
purchase the Securities. At such closing, the Management Investor, or his
Permitted Transferees, shall deliver the certificates evidencing the number of
shares of Common Stock to be purchased by the Company, accompanied by stock
powers duly endorsed in blank or duly executed instruments of transfer, and any
other documents that are necessary to transfer to the Company good title to such
of the securities to be transferred, free and clear of all pledges, security
interests, liens, charges, encumbrances, equities, claims and options of
whatever nature other than those imposed under this Agreement, and concurrently
with such delivery, the Company shall deliver to the Management Investor, or his
Permitted Transferees, the full amount of the purchase price for such Securities
in cash by certified or bank cashier's check.
7.5. Lapse.
(a) The provisions of Sections 7.1, 7.3 and 7.4, insofar as they
relate to Securities other than Incentive Shares and Incentive Shares that have
vested pursuant to Section 7.2(ii), shall terminate (i) immediately after
consummation of an Approved Sale or (ii) upon the consummation of a Public
Offering.
(b) The provisions of Section 7.2 shall terminate and the provisions
of Section 7.7 shall govern immediately after consummation of an Approved Sale.
7.6 Proprietary Information.
(a) Each Management Investor covenants and agrees that (i) during
such Management Investor's employment with the Company or any of its
Subsidiaries, such Management Investor will not (A), directly or indirectly,
engage in any activity in competition with the Company or its Affiliates or (B)
plan, or otherwise take, any preliminary steps, either alone or in concert with
others, to set up or engage in any semiconductor manufacturing or designing in
competition with the Company or its Affiliates; (ii) during such Management
Investor's employment with the Company or any of its Subsidiaries and for a
period of one (1) year thereafter, such Management Investor will not, either
directly or indirectly, either alone or in concert with others, solicit or
entice any employee of or consultant to the Company or its Affiliates to leave
the Company or its Affiliates or work for anyone in competition with the Company
or its Affiliates or solicit, entice or in any way divert any customer or
supplier to do business with any business entity in competition with the Company
or its Affiliates; and (iii) for one (1) year after termination of such
Management Investor's employment with the Company or any of its Subsidiaries,
such
28
Management Investor will not accept any employment or engage in any activities
competitive with the Company or its Affiliates, if the loyal and complete
fulfillment of the duties of the competitive employment or activities would
inherently call upon such Management Investor to reveal Proprietary Information
to which such Management Investor had access or learned during his Employment.
With respect to any period following termination of a Management Investor,
Affiliates of the Company shall be determined as of the date of termination of
such Management Investor's employment with the Company. As used herein,
"Proprietary Information" shall mean information generally unavailable to the
public that has been created, discovered, developed, or otherwise become known
to the Company or any of its Subsidiaries or in which property rights have been
assigned or otherwise conveyed to the Company or any of its Subsidiaries, which
information has material economic value or potential material economic value to
the business in which the Company or any of its Subsidiaries is or will be
engaged. Proprietary Information shall include, but not be limited to trade
secrets, processes, formulas, data, know-how, negative know-how, improvements,
discoveries, developments, designs, inventions, techniques, all technical data,
customer and supplier lists, and any modifications or enhancements thereto,
programs, and information (whether or not necessarily in writing) which has
actual or potential economic value to the Company or any of its Subsidiaries.
(b) In addition to any other provision contained herein, if upon the
cessation of any Management Investor's employment with the Company or any of its
Subsidiaries the Company repurchases all Securities held by such Management
Investor, then such Management Investor covenants and agrees that, for one (1)
year after such termination, neither Management Investor nor any of his or her
Affiliates shall (i) directly or indirectly, engage in, represent in any way, be
connected with, become employed by or have any interest in any business or
activity competing in any manner with any businesses carried on by the Company
or any of its Affiliates at the time of such termination, (ii) solicit, employ,
retain as a consultant, interfere with or attempt to entice away from the
Company or its Affiliates any individual who is, has agreed to be or within six
months of such solicitation, employment, retention, interference or enticement
has been, employed or retained by the Company or any of its Affiliates in a
senior executive capacity or (iii) divert or attempt to divert any Customers, or
any of the business or patronage of any of the Customers, from the Company or
any of its Subsidiaries.
7.7. Proceeds upon Sale of the Company.
(a) Each Management Investor agrees, subject solely to the
conditions set forth in this Section 7.7(a), that a portion of the cash proceeds
of any sale of Incentive Shares pursuant to Section 5.5 equal to (x) multiplied
by (y) (such portion, the "Sale of Company Escrow Amount"), where (x) equals (i)
the aggregate of the total amount of such cash proceeds and all cash proceeds
received by such Management Investor upon sales of Incentive Shares pursuant to
an Approved Sale less (ii) the Adjusted Cost Price multiplied by all Incentive
Shares owned by such Management Investor and (y) equals (i) 20% if immediately
prior to such Approved Sale less than or equal to 80% of such Management
Investor's Incentive Shares had vested or (ii) the percentage of such Management
Investor's Incentive Shares that were unvested immediately prior to such
Approved Sale if greater than 80% of such Management Investor's Incentive Shares
had vested by such time, shall not be paid to such Management Investor and shall
instead be deposited into a trust for the exclusive benefit of the Management
Investors, until there is an event of forfeiture (as described below), at which
time the funds subject to such forfeiture shall be paid on a pro rata basis to
those
29
Management Investors who are employed by the Company at such time. Such trust
shall be established in accordance with such agreements and instruments as shall
be reasonably determined by the Board of Directors of the Company and shall
permit the trustee thereunder to invest the funds of such trust in such manner,
consistent with such trustee's fiduciary obligations, as such trustee shall
reasonably determine. The trust agreement shall provide (i) that the assets of
the trust shall not be subject to the claims of the Company or any successor to
the Company, except as provided herein in the case of forfeiture and (ii) that
in the event a Management Investor prevails in a suit against the Company or the
trustee regarding his right to funds held in the trust, the Company shall pay
the reasonable attorneys' fees and expenses of the Management Investor incurred
in such suit. The trustee shall release to a Management Investor an amount equal
to the cash investment of such Management Investor in the Acquiring Entity (as
defined in Section 5.5(a)). In addition, on the first anniversary of an Approved
Sale, the trustee shall distribute to each Management Investor all funds held
for the account of such Management Investor (with interest) less any amount
distributed by the trustee pursuant to the immediately preceding sentence;
provided, however, that in the event that the employment of the Management
Investor is terminated by the Company or its successor without Cause (for
purposes of this paragraph, the definition of "Cause" shall not include clause
(ii) of the definition of "Cause" set forth in Section 1.1 of this Agreement) or
by reason of death, disability or retirement under the Company's normal
retirement policies, the trustee shall promptly pay all remaining funds held for
the account of such Management Investor, to such Management Investor, or to his
heirs, administrators, or estate (with interest), and in the event that the
Management Investor shall cease to be employed by the Company or its successor
or a subsidiary thereof (other than by reason of an approved leave of absence)
for any reason other than death, disability or retirement under the Company's
normal retirement policies or termination by the Company or a subsidiary thereof
without Cause, all interest of the Management Investor in such funds shall
immediately terminate. A Management Investor shall not be bound by the
provisions of this Section 7.7(a) unless the Acquiring Entity agrees in writing
to continue such Management Investor's employment through the period ending on
the fifth anniversary of the Closing (or, if earlier, the second anniversary of
the closing of the Approved Sale) on terms and conditions at least as favorable,
in the aggregate, to the Management Investor as the terms and conditions of his
employment prior to the Approved Sale.
(b) If the Company or any Investor enters into any negotiation or
transaction for which Rule 506 (or any similar rule then in effect) promulgated
by the Securities and Exchange Commission under the Securities Act may be
available with respect to such negotiation or transaction (including a merger,
consolidation or other reorganization), each Management Investor will, at the
request of the Company, appoint a purchaser representative (as such term is
defined in Rule 501(h) promulgated by the Securities and Exchange Commission
under the Securities Act) reasonably acceptable to the Company. If any
Management Investor appoints the purchaser representative designated by the
Company, the Company will pay the fees of such purchasers representative, but if
any Management Investor declines to appoint the purchaser representative
designated by the Company such Management Investor will appoint another
purchaser representative (reasonably acceptable to the Company), and such
Management Investor will be responsible for the fees of the purchaser
representative so appointed.
7.8. EBITDA Target Adjustments. (a) In the event that the Company
consummates an acquisition (an "Acquisition") of a business, brand or product
line (an "Acquired Business"), the EBITDA target for the fiscal year during
which such acquisition occurs (the "EBITDA Target in
30
Effect") shall be adjusted pursuant to Section 7.8(b) below; provided, however,
that the EBITDA Target in Effect shall not be adjusted in the event that the
aggregate consideration paid by the Company for such Acquisition is less than
$1,000,000 (such Acquisition, a "Small Debt-Financed Acquisition").
(b) In connection with an Acquisition (other than a Small
Debt-Financed Acquisition), the Company shall make a reasonable projection,
prepared in good faith, of the EBITDA for the Acquired Business for the same
period used to determine the EBITDA Target in Effect (the "Acquired Business
EBITDA"). Concurrently with the closing of the Acquisition, the EBITDA Target in
Effect shall be reset for all purposes hereunder to an amount equal to (i) the
EBITDA Target in Effect, plus (ii) the Acquired Business EBITDA.
7.9. Application to Prism LLC. The provisions of Sections 7.1 through 7.8
shall apply to Prism LLC as well as to the Company. Such sections are hereby
incorporated into this Section 7.9 with each reference to the Company therein
replaced with a reference to Prism LLC, each reference to Securities, Shares,
Common Stock or shares of Common Stock replaced with a reference to Membership
Units, each reference to Incentive Shares replaced with a reference to Incentive
Units and each reference to the Company's Board of Directors replaced with Prism
LLC's Board of Directors; provided, that any reference to employment or
termination of employment of a Management Investor shall mean employment or
termination of employment, as the case may be, with the Company and shall not
mean employment or termination of employment with Prism LLC provided further,
that if the Prism Option has not been exercised prior to a Management Investor's
termination of employment with the Company, such Management Investor's
Membership Units shall be automatically cancelled upon the purchase by the
Company or its designee(s) of all of such Management Investor's Incentive
Shares.
ARTICLE VIII
REGISTRATION RIGHTS
The Investors shall have registration rights with respect to the
Shares as set forth in the Registration Rights Agreement among the parties
hereto and dated as of the date hereof, the form of which is attached hereto as
Exhibit D (the "Registration Rights Agreement"). Each of the Investors agree not
to effect any public sale or distribution of any securities of the Company
during the periods specified in the Registration Rights Agreement, except as
permitted by the Registration Rights Agreement, and each such Investor agrees to
be bound by the rights of priority to participate in offerings as set forth
therein.
ARTICLE IX
MISCELLANEOUS
9.1. Purchaser Representative. If the Company or any Investor enters into any
negotiation or transaction for which Rule 506 (or any similar rule then in
effect) promulgated by the Securities and Exchange Commission under the
Securities Act may be available with respect to such negotiation or
31
transaction (including a merger, consolidation or other reorganization), each
Management Investor will, at the request of the Company, appoint a purchaser
representative (as such term is defined in Rule 501(h) promulgated by the
Securities and Exchange Commission under the Securities Act) reasonably
acceptable to the Company. If any Management Investor appoints the purchaser
representative designated by the Company, the Company will pay the fees of such
purchaser representative, but if any Management Investor declines to appoint the
purchaser representative designated by the Company such Management Investor will
appoint another purchaser representative (reasonably acceptable to the Company),
and such Management Investor will be responsible for the fees of the purchaser
representative so appointed.
9.2. Section 83(b) Elections. Each Management Investor shall make the
election (the "83(b) Election") to include in such Management Investor's income,
in the year such Management Investor receives the Incentive Shares, the excess,
if any, of the fair market value of the Incentive Shares on the date such shares
are acquired (determined without regard to restrictions which lapse) over five
cents ($0.05), the price deemed paid per Incentive Share, pursuant to Section
83(b) of the Internal Revenue Code of 1986, as amended, in the manner and within
the time period specified by the regulations promulgated thereunder. EACH
MANAGEMENT INVESTOR ACKNOWLEDGES THAT (1) HE OR SHE ALONE IS RESPONSIBLE FOR
FILING WITH THE INTERNAL REVENUE SERVICE, BY THE APPLICABLE DEADLINE, ALL
APPLICABLE FORMS REQUIRED TO EFFECT THE 83(b) ELECTION, (2) NO EXTENSION OF THE
83(b) ELECTION DEADLINE WILL BE AVAILABLE UNDER LAW AND (3) ADVERSE TAX
CONSEQUENCES MAY RESULT TO SUCH MANAGEMENT INVESTOR IF THE 83(b) ELECTION IS NOT
TIMELY MADE.
9.3. Amendment and Modification. This Agreement may be amended or
modified, or any provision hereof may be waived, provided that such amendment,
modification or waiver is set forth in a writing executed by (i) the Company
(such Company consent is not required to amend the sections referenced in clause
(z) of the below proviso), (ii) Sterling (so long as Sterling and its Permitted
Transferees own in the aggregate at least 15% of the outstanding Common Stock on
a fully diluted basis) and (iii) the holders of a majority of the outstanding
Common Stock on a fully diluted basis (including Shares owned by Sterling and
its Affiliates) held by the Investors; provided, however that (x) the provisions
of this Agreement which affect Xxxxxx' rights or obligations hereunder cannot be
amended, modified or waived, unless Xxxxxx also executes such amendment,
modification or waiver, (y) without the approval of the holders of a majority of
the outstanding Common Stock then held by Management Investors, (A) the
provisions of this Agreement cannot be amended to treat Management Investors
differently than the other Investors and (B) the provisions of Sections 4.4,
5.2, 5.6, 5.7, 5.8, 6.2, 9.3 and Article VII of this Agreement may not be
amended or modified to the detriment of Management Investors, (z) without the
written approval of Prism LLC, the provisions of Sections 2.5, 4.9, 5.9, 7.9 and
9.21 may not be amended or modified and (aa) without the written approval of
CMP, the provisions of Sections 4.4, 5.5, 5.6 and 5.7 may not be amended or
modified. No course of dealing between or among any Persons having any interest
in this Agreement will be deemed effective to modify, amend or discharge any
part of this Agreement or any rights or obligations of any Person under or by
reason of this Agreement.
9.4. LLC Expenses. The Company shall be responsible for the payment of the
reasonable expenses incurred by (i) Sterling in connection with its purchase of
Securities hereunder and (ii) Prism LLC in connection with its formation and the
Investors' investments therein.
32
9.5. Survival of Representations and Warranties. All representations,
warranties, covenants and agreements set forth in this Agreement will survive
the execution and delivery of this Agreement, the Closing, and the consummation
of the transactions contemplated hereby and by the Master Agreement, regardless
of any investigation made by an Investor or on its behalf.
9.6. Successors and Assigns; Entire Agreement. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns and
executors, administrators and heirs. This Agreement, together with the
Registration Rights Agreement, sets forth the entire agreement and understanding
among the parties as to the subject matter hereof and merges and supersedes all
prior discussions, agreements and understandings of any and every nature among
them.
9.7. Separability. In the event that any provision of this Agreement or
the application of any provision hereof is declared to be illegal, invalid or
otherwise unenforceable by a court of competent jurisdiction, the remainder of
this Agreement shall not be affected except to the extent necessary to delete
such illegal, invalid or unenforceable provision unless that provision held
invalid shall substantially impair the benefits of the remaining portions of
this Agreement.
9.8 Notices. All notices provided for or permitted hereunder shall be made
in writing by hand delivery, registered or certified first-class mail,
telecopier or air courier guaranteeing overnight delivery to the other party at
the following addresses (or at such other address as shall be given in writing
by any party to the others):
If to the Company to:
Intersil Holding Corporation
0000 Xxxx Xxx Xxxx XX
Building 53 M/S 53/198
Xxxx Xxx, XX 00000
Telecopy number: (000) 000-0000
Attention: General Counsel
with required copies to:
Citicorp Venture Capital Ltd.
000 Xxxx Xxxxxx
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy number: (000) 000-0000
Attention: Xxxx X. ("Chip") Xxxxxx, IV
33
and
Dechert Price & Xxxxxx
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopy number: (000) 000-0000
Attention: G. Xxxxxx X'Xxxxxxx
If to Sterling to:
Sterling Holding Company, LLC
c/o Citicorp Venture Capital Ltd.
000 Xxxx Xxxxxx
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy number: (000) 000-0000
Attention: Xxxx X. ("Chip") Xxxxxx, IV
with a required copy to:
Dechert Price & Xxxxxx
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopy number: (000) 000-0000
Attention: G. Xxxxxx X'Xxxxxxx
If to CMP to:
Citicorp Mezzanine Partners, L.P.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Telecopy No.: (000) 000-0000
34
with a required copy to:
Xxxxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxx Xxxx, Esq.
Telecopy No.: (000) 000-0000
If to Xxxxxx to:
Manatee Investment Corporation
0000 Xxxx XXXX Xxxxxxxxx
Xxxxxxxxx, XX 00000
Telecopy number: (000) 000-0000
Attention: Corporate Secretary
with a required copy to:
Squire, Xxxxxxx & Xxxxxxx L.L.P.
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
X.X. Xxx 000
Xxxxxxxxxx, XX 00000-0000
Telecopy number: (000) 000-0000
Attention: Xxxx Xxxxx
If to Prism LLC to:
Intersil Prism, LLC
c/o Intersil Holding Corporation
0000 Xxxx Xxx Xxxx XX
Building 53 M/S 53/198
Xxxx Xxx, XX 00000
Telecopy number: (000) 000-0000
Attention: General Counsel
with a required copy to:
Dechert Price & Xxxxxx
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopy number: (000) 000-0000
Attention: G. Xxxxxx X'Xxxxxxx
35
If to Xxxxx to:
Xxxxxxx X. Xxxxx
0000 X. XxXxxxxx Xxxx
Xxxx, XX 00000
Telecopy number: _____________________
with a required copy to:
Bartlit Xxxx Xxxxxx Xxxxxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Telecopy number: (000) 000-0000
Attention: Xxxxxx Xxxxxxxx
If to the Management Investors or any of them, to their addresses as
listed in the books of the Company.
All such notices shall be deemed to have been duly given: when
delivered by hand, if personally delivered; five business days after being
deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if
telecopied; and on the next business day, if timely delivered to an air courier
guaranteeing overnight delivery.
9.9. Governing Law. The validity, performance, construction and effect of
this Agreement shall be governed by and construed in accordance with the
internal law of Delaware, without giving effect to principles of conflicts of
law.
9.10 Consent to Exclusive Jurisdiction. Each of the Company, Prism LLC,
Stout, Sterling, Xxxxxx and the Management Investors agree that any legal action
or proceeding with respect to this Agreement or any agreement, certificate or
other instrument entered into in contemplation of the transactions contemplated
by this Agreement, or any matters arising out of or in connection this Agreement
or such other agreement, certificate or instrument, and any action for the
enforcement of any judgment in respect thereof, shall be brought exclusively in
the Chancery Court of New Castle County, Delaware or the courts of the United
States of America for the District of Delaware. By execution and delivery of
this Agreement, each of the Company, Sterling, Xxxxxx and the Management
Investors irrevocably consent to service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, or by recognized
express carrier or delivery service, to the applicable party at his or its
address referred to herein. Each of the Company, Sterling, Xxxxxx and the
Management Investors hereby irrevocably waives any objection which he or it may
now or hereafter have to the laying of venue of any of the aforementioned
actions or proceedings arising out of or in connection with this Agreement, or
any related agreement, certificate or instrument referred to above, brought in
the courts referred to above and hereby further irrevocably waive and agree, to
the fullest extent permitted by applicable law, not to plead or claim in any
such court that any such action or proceeding brought in any such court has been
brought in any inconvenient
36
forum. Nothing herein shall affect the right of any party to serve process in
any other manner permitted by law.
9.11. Waiver of Jury Trial. Each of the parties to this Agreement waives,
to the fullest extent permitted by law, any right to trial by jury of any claim,
demand, action or cause of action (i) arising under this Agreement or (ii) in
any way connected with or related or incidental to the dealings of the parties
hereto in respect of this Agreement or any of the transactions related hereto,
in each case whether now existing or hereafter arising, and whether in contract,
tort, equity or otherwise. Each of the parties to this Agreement agrees and
consents that any such claim, demand, action or cause of action shall be decided
by court trial without a jury and that the parties to this Agreement may file an
original counterpart of a copy of this Agreement with any court as written
evidence of the consent of the parties hereto to the waiver of the right to
trial by jury.
9.12. ACKNOWLEDGMENT OF MANAGEMENT INVESTORS. EACH MANAGEMENT INVESTOR
ACKNOWLEDGES THAT HE IS A SOPHISTICATED BUSINESSPERSON WHO WAS ADEQUATELY
REPRESENTED BY COUNSEL DURING NEGOTIATIONS REGARDING THE PROVISIONS OF THIS
AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE PROVISIONS RESTRICTING THE
TRANSFER OF SECURITIES BY MANAGEMENT INVESTORS SET FORTH IN SECTION 4.4 AND
ARTICLE VII, AND SPECIFICALLY SECTION 7.2, WHICH SETS FORTH THE COMPANY'S
PURCHASE OPTION WITH RESPECT TO INCENTIVE SHARES. EACH MANAGEMENT INVESTOR
ACKNOWLEDGES THAT ANY PROPERTY RIGHT THAT HE HAS IN INCENTIVE SHARES IS SUBJECT
IN ALL RESPECTS TO THE COMPANY'S PRIOR RIGHT TO REPURCHASE SUCH INCENTIVE SHARES
AS PROVIDED IN ARTICLE VII. EACH MANAGEMENT INVESTOR FURTHER ACKNOWLEDGES THAT
IF THE COMPANY EXERCISES ITS PURCHASE OPTION SUCH MANAGEMENT INVESTOR'S
INCENTIVE SHARES COULD BE PURCHASED BY THE COMPANY AT A PRICE THAT IS LESS THAN
THE FAIR MARKET VALUE OF SUCH SECURITIES AT THE TIME OF SUCH EXERCISE.
9.13. No Effect on Employment. Nothing herein contained shall confer on
any Management Investor the right to remain in the employ of the Company or any
of its subsidiaries or Affiliates.
9.14. Headings. The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor shall they
affect its meaning, construction or effect.
9.15. Counterparts. This Agreement may be executed in two or more
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same instrument.
9.16. 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.
9.17. Termination. Unless sooner terminated in accordance with its terms,
this Agreement shall terminate on the tenth anniversary of the Closing.
37
9.18. Remedies. In the event of a breach or a threatened breach by any
party to this Agreement of its obligations under this Agreement, any party
injured or to be injured by such breach, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The parties
agree that the provisions of this Agreement shall be specifically enforceable,
it being agreed by the parties that the remedy at law, including monetary
damages, for breach of such provision will be inadequate compensation for any
loss and that any defense in any action for specific performance that a remedy
at law would be adequate is waived.
9.19. Party No Longer Owning Securities. If a party hereto ceases to own
any Securities, such party will no longer be deemed to be an Investor or
Management Investor for purposes of this Agreement.
9.20. Pronouns. Whenever the context may require, any pronouns used herein
shall be deemed also to include the corresponding neuter, masculine or feminine
forms.
9.21. Application to Prism LLC. The provisions of Article IX shall apply
to Prism LLC as well as to the Company. Such sections are hereby incorporated
into this Section 9.21 with each reference to the Company therein (other than
with respect to references to a Management Investor's employment with the
Company) replaced with a reference to Prism LLC, each reference to Securities,
Shares, Common Stock or shares of Common Stock replaced with a reference to
Membership Units, each reference to Incentive Shares replaced with a reference
to Incentive Units and each reference to the Company's Board of Directors
replaced with Prism LLC's Board of Directors.
38
IN WITNESS WHEREOF, the parties hereto have executed this Securities
Purchase and Holders Agreement the day and year first above written.
INTERSIL HOLDING CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxx
Vice President
STERLING HOLDING COMPANY, LLC
CITICORP VENTURE CAPITAL LTD.
By: /s/ Xxxxx X. Xxxx
-------------------------------------
Xxxxx X. Xxxx
Vice President
MANATEE INVESTMENT CORPORATION
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
Xxxxxx Xxxxxxx
President
CITICORP MEZZANINE PARTNERS, L.P.
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Xxxxx X. Xxxxx
Title:
INTERSIL PRISM, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxx
Vice President
S-1
/s/ Xxxxxxx X. Xxxxx
----------------------------------------------
Xxxxxxx X. Xxxxx
Social Security Number: ###-##-####
Residence Address: 0000 XxXxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Residence Telephone: (000) 000-0000
Business Address: 0000 X. XxXxxxxx Xxxx
Xxxx, XX 00000
Business Telephone: (000) 000-0000
MANAGEMENT INVESTORS
/s/ Xxxxxxx X. Xxxxxx
----------------------------------------------
Xxxxxxx X. Xxxxxx
Social Security Number: ###-##-####
Residence Address: 0000 Xxxxxx Xxxx
Xxxxxxx, XX 00000
Residence Telephone: (000) 000-0000
Business Address: 0000 Xxxx Xxx Xxxx XX
Xxxx Xxx, XX 00000
Business Telephone: (000) 000-0000
/s/ Xxxxxxxx X. Xxxxxxx
----------------------------------------------
Xxxxxxxx X. Xxxxxxx
Social Security Number: ###-##-####
Residence Address: 000 Xxxxxx Xx. XX
Xxxx Xxx, XX 00000
Residence Telephone: (000) 000-0000
Business Address: 0000 Xxxx Xxx Xxxx XX
Xxxx Xxx, XX 00000
Business Telephone: (000) 000-0000
S-2
/s/ Xxxxxxx X. Xxxx
----------------------------------------------
Xxxxxxx X. Xxxx
Social Security Number: ###-##-####
Residence Address: 00 Xxxxx Xxxx Xx.
Xxxxxxxxxxx, XX 00000
Residence Telephone: (000) 000-0000
Business Address: 0000 Xxxx Xxx Xxxx XX
Xxxx Xxx, XX 00000
Business Telephone: (000) 000-0000
/s/ Xxxx Xxxxxxx
----------------------------------------------
Xxxx Xxxxxxx
Social Security Number: ###-##-####
Residence Address: 000 Xxxxxxxxx Xx. XX
Xxxx Xxx, XX 00000
Residence Telephone: (000) 000-0000
Business Address: 0000 Xxxx Xxx Xxxx XX
Xxxx Xxx, XX 00000
Business Telephone: (000) 000-0000
/s/ Xxxxxx Xxxxxxxxx
----------------------------------------------
Xxxxxx Xxxxxxxxx
Social Security Number: ###-##-####
Residence Address: 0000 Xxxxxx Xxx. XX
Xxxx Xxx, XX 00000
Residence Telephone: (000) 000-0000
Business Address: 0000 Xxxx Xxx Xxxx XX
Xxxx Xxx, XX 00000
Business Telephone: (000) 000-0000
S-3
/s/ Xxxxxx X. Xxxxxxxx
-------------------------------------------------
Xxxxxx X. Xxxxxxxx
Social Security Number: ###-##-####
Residence Address: 000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Residence Telephone: (000) 000-0000
Business Address: 0000 Xxxx Xxx Xxxx XX
Xxxx Xxx, XX 00000
Business Telephone: (000) 000-0000
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------------------
Xxxxxxx X. Xxxxxxxx
Social Security Number: ###-##-####
Residence Address: 0000 Xxxxxxxxxxxx Xx.
Xxxxxxx, XX 00000
Residence Telephone: (000) 000-0000
Business Address: 0000 Xxxx Xxx Xxxx XX
Xxxx Xxx, XX 00000
Business Telephone: (000) 000-0000
/s/ Xxxx XxXxxxxx
-------------------------------------------------
Xxxx XxXxxxxx
Social Security Number: ###-##-####
Residence Address: 000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxx Xxxxxxx Xxxxx, XX
00000
Residence Telephone: (000) 000-0000
Business Address: 0000 Xxxx Xxx Xxxx XX
Xxxx Xxx, XX 00000
Business Telephone: (000) 000-0000
S-4
/s/ W. Xxxxxxx Xxxxxx
-----------------------------------------------
W. Xxxxxxx Xxxxxx
Social Security Number: ###-##-####
Residence Address: 000 Xxxxx Xxx Xxxx
Xxxxxxxxxxx, XX 00000
Residence Telephone: (000) 000-0000
Business Address: 0000 Xxxx Xxx Xxxx XX
Xxxx Xxx, XX 00000
Business Telephone: (000) 000-0000
/s/ Xxxxxxx X. Xxxx
-----------------------------------------------
Xxxxxxx X. Xxxx
Social Security Number: ###-##-####
Residence Address: 000 Xxxxxxxxx Xxxxx XX
Residence Telephone: (000) 000-0000
Business Address: 0000 Xxxx Xxx Xxxx XX
Xxxx Xxx, XX 00000
Business Telephone: (000) 000-0000
/s/ Xxxxx Xxxx
-----------------------------------------------
Xxxxx Xxxx
Social Security Number: ###-##-####
Residence Address: 0000 Xxxx Xxxx Xx., Xxx. 000
Xxxxxxxxx, XX 00000
Residence Telephone: (000) 000-0000
Business Address: 0000 Xxxx Xxx Xxxx XX
Xxxx Xxx, XX 00000
Business Telephone: (000) 000-0000
S-5
/s/ CB Teh
-----------------------------------------------------
CB Teh
Social Security Number: Malaysian citizen - no US SSN
Residence Address: Xx. 0, Xxxxxx Xxxxxxx,
Xxxx Xxxxxxx
00000 Xxxxxx
Xxxxxxxx, Xxxxxxxx
Residence Telephone: 000-000-000-0000
Business Address: 0000 Xxxx Xxx Xxxx XX
Xxxx Xxx, XX 00000
Business Telephone: 000-000-000-0000
/s/ Xxxxxxx Xxxxx
-----------------------------------------------------
Xxxxxxx Xxxxx
Social Security Number: ###-##-####
Residence Address: 0000 Xxxx Xxxxx Xx. XX
Xxxx Xxx, XX 00000
Residence Telephone: (000) 000-0000
Business Address: 0000 Xxxx Xxx Xxxx XX
Xxxx Xxx, XX 00000
Business Telephone: (000) 000-0000
/s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------------------
Xxxxxxx X. Xxxxxxxx
Social Security Number: ###-##-####
Residence Address: 000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Residence Telephone: (000) 000-0000
Business Address: 0000 Xxxx Xxx Xxxx XX
Xxxx Xxx, XX 00000
Business Telephone: (000) 000-0000
S-6
Schedule I
Management Investors
Incentive Shares Incentive Units
-------------------- -------------------
Xxxxxxx X. Xxxxxxxx ................. 3,000,000 3,000,000
Xxxxxxx X. Xxxxxx ................... 300,000 300,000
Xxxxxxxx X. Xxxxxxx ................. 150,000 150,000
Xxxxxxx X. Xxxx ..................... 176,429.60 145,537
Xxxxxxx X. Xxxx XXX ................. 123,570.40 154,463
Xxxx Xxxxxxx ........................ 150,000 150,000
Xxxxxx Xxxxxxxxx .................... 600,000 600,000
Xxxxxx X. Xxxxxxxx .................. 300,000 300,000
Xxxxxxx X. Xxxxxxxx ................. 150,000 150,000
Xxxx XxXxxxxx ....................... 200,000 200,000
W. Xxxxxxx Xxxxxx ................... 500,000 500,000
Xxxxxxx X. Xxxx ..................... 500,000 500,000
Xxxxx Xxxx .......................... 600,000 600,000
CB Teh .............................. 200,000 200,000
Xxxxxxx Xxxxx ....................... 300,000 300,000
Schedule II
Investors
Class A Class B
Common Common Series A Membership
Stock Stock Preferred Stock Units
------------- ------------- --------------- ----------
Sterling Holding Company, LLC ...... 10,988,165.36 67,822.346.61 73,556.48 78,810,512
Sterling Holding Company, LLC ...... 2,750,000.00 2,750,000
Manatee Investment Corporation ..... 2,263,027.86 6,797,374.83 8,456.38 9,060,403
Xxxxxxx X. Xxxxx* .................. 100,671.14 93.96 100,671
Xxxxxxx X. Xxxxxxxx ................ 3,316,574.95 45.47 3,316,575
Xxxxxxx X. Xxxxxxxx XXX ............ 30,740.49 28.69 30,740
Xxxxxxx X. Xxxxxx .................. 365,880.96 61.49 365,881
Xxxxxxxx X. Xxxxxxx ................ 185,590.52 33.22 185,591
Xxxxxxx X. Xxxx .................... 176,429.60 145,537
Xxxxxxx X. Xxxx XXX ................ 166,130.99 39.72 197,024
Xxxx Xxxxxxx ....................... 190,890.60 38.16 190,891
Xxxxxx Xxxxxxxxx ................... 684,563.76 3.93 684,564
Xxxxxx X. Xxxxxxxx ................. 382,634.09 27.13 382,634
Xxxxxxx X. Xxxxxxxx ................ 164,390.18 13.43 164,390
Xxxx XxXxxxxx ...................... 533,905.28 311.64 533,905
W. Xxxxxxx Xxxxxx .................. 1,025,247.45 415.23 1,025,247
Xxxxxxx X. Xxxx .................... 570,020.50 15.35 570,020
Xxxxx Xxxx ......................... 835,916.17 145.19 835,916
CB Teh ............................. 303,988.25 97.06 303,988
Xxxxxxx Xxxxx ...................... 355,280.54 51.60 355,281
------------
* To be contributed from Xxxxx to Sterling Holding Company, LLC the following:
100,671.14 shares of Class A Common Stock, 93.96 shares of Series A Preferred
Stock and 100,671 membership units.
Schedule III
Preferred Options
Number of Shares of Series A
Investor Preferred Stock Subject to Option
-------- ---------------------------------
Xxxxxx Xxxxxxxxx 100
Xxxxxx Xxxxxxxx 66.67
W. Xxxxxxx Xxxxxx 100
Xxx Xxxx 66.67
Xxxxx Xxxx 100
Xxxxxxx Xxxxxxxx 333.33
EXHIBIT A
CERTIFICATE OF INCORPORATION
EXHIBIT B
BYLAWS
EXHIBIT C
LIMITED LIABILITY COMPANY AGREEMENT
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
