Exhibit 10.17
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LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
MP MASK TECHNOLOGY CENTER, LLC
a Delaware Limited Liability Company
MEMBERSHIP INTERESTS IN MP MASK TECHNOLOGY CENTER, LLC, A DELAWARE LIMITED
LIABILITY COMPANY, HAVE NOT BEEN REGISTERED WITH OR QUALIFIED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE. THE
INTERESTS ARE BEING SOLD IN RELIANCE UPON EXEMPTIONS FROM SUCH REGISTRATION OR
QUALIFICATION REQUIREMENTS. THE INTERESTS CANNOT BE SOLD, TRANSFERRED, ASSIGNED
OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE RESTRICTIONS ON
TRANSFERABILITY CONTAINED IN THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF MP MASK TECHNOLOGY CENTER, LLC AND APPLICABLE FEDERAL AND STATE SECURITIES
LAWS.
Dated as of May 5, 2006
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TABLE OF CONTENTS
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Page
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ARTICLE 1. ORGANIZATIONAL MATTERS.................................................................................1
1.1 Continuation....................................................................................1
1.2 Name............................................................................................1
1.3 Principal Place of Business; Other Places of Business...........................................2
1.4 Business Purpose................................................................................2
1.5 Designated Agent for Service of Process.........................................................2
1.6 Term............................................................................................2
1.7 Objectives; Approved Technology.................................................................2
1.8 Transaction Documents...........................................................................3
ARTICLE 2. DEFINITIONS............................................................................................3
ARTICLE 3. CAPITAL; CAPITAL ACCOUNTS AND MEMBERS.................................................................13
3.1 Initial Capital Contributions of Members.......................................................13
3.2 Additional Capital Contributions by Members....................................................14
3.3 Capital Accounts...............................................................................14
3.4 Member Capital.................................................................................14
3.5 Liability of Members...........................................................................14
3.6 Certain Expenses...............................................................................14
ARTICLE 4. FINANCING OF THE COMPANY..............................................................................15
4.1 Types of Financing.............................................................................15
ARTICLE 5. MANAGEMENT............................................................................................16
5.1 Board of Managers..............................................................................16
5.2 Number of Managers; Appointment of Managers....................................................17
5.3 Effect of Reduction in Photronics' Percentage Interest on Photronics Managers..................17
5.4 Effect of Reduction in Micron's Percentage Interest on Micron Managers.........................17
5.5 Chairman of the Board of Managers..............................................................18
5.6 Meetings of Members and of the Board of Managers; Quorum.......................................18
5.7 Actions Requiring a Special Vote...............................................................20
5.8 Compensation of Managers.......................................................................22
5.9 Other Activities...............................................................................22
5.10 Accounting; Records and Reports................................................................22
5.11 Indemnification and Liability of the Managers..................................................24
5.12 General Manager................................................................................26
5.13 Technology Steering Committee..................................................................28
5.14 Non-Disclosure Agreement.......................................................................28
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5.15 Maintenance of Insurance.......................................................................28
5.16 Related Party Agreements.......................................................................28
ARTICLE 6. OPERATIONS............................................................................................28
6.1 Headquarters...................................................................................28
6.2 Surplus Equipment..............................................................................28
6.3 Printability Studies...........................................................................28
6.4 Operations Plan; Annual Budget.................................................................28
ARTICLE 7. DISPOSITION AND TRANSFERS OF INTERESTS................................................................29
7.1 Holding of Membership Interest.................................................................29
7.2 Transfer Moratorium............................................................................29
7.3 Purchase of Remaining Interest.................................................................29
7.4 Change in Control of Photronics................................................................30
7.5 Purchase and Sale Agreement....................................................................30
ARTICLE 8. DISSOLUTION, LIQUIDATION, AND TERMINATION OF THE COMPANY..............................................30
8.1 Limitations....................................................................................30
8.2 Exclusive Causes...............................................................................31
8.3 Effect of Dissolution..........................................................................32
8.4 No Capital Contribution Upon Dissolution.......................................................32
8.5 Liquidation....................................................................................32
ARTICLE 9. DISTRIBUTIONS.........................................................................................33
9.1 Distributions of Cash Available for Distribution...............................................33
9.2 Distributions Upon Liquidation.................................................................34
9.3 Withholding....................................................................................34
9.4 Distributions in Kind..........................................................................35
9.5 Limitations on Distributions...................................................................35
ARTICLE 10. ALLOCATIONS OF NET PROFITS AND NET LOSSES............................................................35
10.1 General Allocation of Net Profits and Losses...................................................35
10.2 Regulatory Allocations.........................................................................36
10.3 Tax Allocations................................................................................37
10.4 Other Provisions...............................................................................38
ARTICLE 11. MISCELLANEOUS........................................................................................40
11.1 Amendments.....................................................................................40
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**** Material omitted pursuant to a request for confidential treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
11.2 No Waiver......................................................................................40
11.3 Entire Agreement...............................................................................40
11.4 Further Assurances.............................................................................40
11.5 Notices........................................................................................40
11.6 Tax Matters....................................................................................41
11.7 Governing Law..................................................................................42
11.8 Construction; Interpretation...................................................................42
11.9 Rights and Remedies Cumulative.................................................................43
11.10 No Assignment; Binding Effect..................................................................43
11.11 Severability...................................................................................43
11.12 Counterparts...................................................................................43
11.13 Dispute Resolution.............................................................................43
11.14 Third-Party Beneficiaries......................................................................44
11.15 Specific Performance...........................................................................44
11.16 Consequential Damages..........................................................................44
EXHIBITS
Exhibit A Members, Addresses, Initial Capital Contributions,
and Percentage Interests
Exhibit B Initial Micron Managers
Exhibit C Initial Photronics Managers
Exhibit D Insurance
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**** Material omitted pursuant to a request for confidential treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
MP MASK TECHNOLOGY CENTER, LLC
THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT (together
with the Exhibits, this "Agreement") is made and entered into as of the 5th day
of May, 2006 (the "Effective Date"), by and between Micron Technology, Inc., a
Delaware corporation ("Micron"), and Photronics, Inc., a Connecticut corporation
("Photronics"), with respect to MP Mask Technology Center, LLC (the "Company"),
a limited liability company organized under the Delaware Limited Liability
Company Act, as amended from time to time (the "Act").
ARTICLE 1.
ORGANIZATIONAL MATTERS
1.1 Continuation
The Company was formed under the Act on April 10, 2006 by
filing a Certificate of Formation of the Company (the "Certificate") in the
Office of the Secretary of State of the State of Delaware as required by the
Act. The Members hereby continue the Company under the Act for the purposes and
upon the terms and conditions hereinafter set forth. Micron hereby continues as
a Member of the Company, and Photronics is admitted to the Company as a Member
upon its execution of this Agreement and receipt by Micron of $48 million of the
Purchase Price (as defined in the Contribution and Purchase Agreement). The
rights and liabilities of the Members shall be as provided in the Act, except as
otherwise expressly provided herein. In the event of any inconsistency between
any terms and conditions contained in this Agreement and any non-mandatory
provisions of the Act, the terms and conditions contained in this Agreement
shall govern. If any provision of this Agreement is prohibited or ineffective
under the Act, this Agreement will be considered amended to the smallest degree
possible in order to make such provision effective under the Act. Subject to the
provisions hereof, the Board of Managers may execute and file, or cause the
General Manager to file, any duly authorized amendments to the Certificate from
time to time in a form prescribed by the Act. The Board of Managers shall also
cause to be made, on behalf of the Company, such additional filings and
recordings as the Board of Managers shall deem necessary or advisable.
1.2 Name
The name of the Company shall be MP Mask Technology Center,
LLC. The Company may also conduct business at the same time under one or more
fictitious names if the Board of Managers determines that such is in the best
interests of the Company. The Board of Managers may change the name of the
Company from time to time, in accordance with Applicable Law.
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1.3 Principal Place of Business; Other Places of
Business
The principal place of business of the Company is located at
0000 Xxxx Xxxxxxxx Xxxx, Xxxxx, Xxxxx or at such other place within or outside
the State of Delaware as the Board of Managers may from time to time designate.
The Company may maintain offices and places of business at such other place or
places within or outside the State of Delaware as the Board of Managers deem
advisable.
1.4 Business Purpose
The purpose of the Company shall be the (a) development,
fabrication and sale of advanced photomasks; (b) entry into any other lawful
business, purpose or activity in which a limited liability company may be
engaged under Applicable Law (including, without limitation, the Act) as the
Members may determine from time to time, subject to and in accordance with the
terms of this Agreement; and (c) entry into any lawful transaction and
engagement in any lawful activity in furtherance of the foregoing purposes and
as may be necessary, incidental or convenient to carry out the business of the
Company as contemplated by this Agreement.
1.5 Designated Agent for Service of Process
The Company shall continuously maintain a registered office
and a designated and duly qualified agent for service of process on the Company
in the State of Delaware. As of the date hereof, the name of the duly qualified
agent for service of process is Corporation Service Company and the address of
the registered office of the Company in the State of Delaware is c/o Corporation
Service Company, 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000. The
registered office and the registered agent may be changed from time to time by
the Board of Managers, by causing the prescribed form, accompanied by the
requisite filing fee, to be filed with the Delaware Secretary of State in
accordance with the Act.
1.6 Term
The Company shall continue until the Company is terminated,
dissolved or liquidated in accordance with this Agreement and the Act.
Notwithstanding the dissolution of the Company, the existence of the Company
shall continue until termination pursuant to and as provided in Article 8 of
this Agreement.
1.7 Objectives; Approved Technology
The primary objectives of the Company (the "Primary
Objectives") are to: (i) develop and produce prototypes for industry-leading,
advanced, next-generation, high-end photomasks in accordance with Micron's
specifications; (ii) achieve sustainable, leading edge photomask production
capabilities; (iii) manufacture production photomasks for, and approved by,
Micron pursuant to Micron's specifications and in quantities required under the
Transaction Documents. To the extent the Company has excess capacity and
resources after completely fulfilling the Primary Objectives (inclusive of
fulfillment of Company and Micron engineering
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
needs appropriate to accomplish the foregoing, but recognizing that Photronics
may also support Micron's production photomask needs through its other
facilities as allowed pursuant to the Transaction Documents), the Company's
secondary objective (the "Secondary Objective") is to support the development of
leading edge logic applications and manufacture prototypes and, when approved by
the Technology Steering Committee, production photomasks, for use by external
Photronics customers; [****].
[****].
1.8 Transaction Documents
Contemporaneous with, or prior to, the execution of this
Agreement, Photronics, Micron and/or the Company have entered into the
agreements listed on Schedule B to the Contribution and Purchase Agreement
(collectively, the "Transaction Documents").
ARTICLE 2.
DEFINITIONS
Capitalized words and phrases used and not otherwise defined
elsewhere in this Agreement shall have the following meanings:
"Act" is defined in the preamble.
"Adjusted Capital Account Deficit" means, with respect to any
Member at any time, the deficit balance, if any, in such Member's Capital
Account as of such time, after giving effect to the following adjustments:
(1) Add to such Capital Account the amount that such Member is
obligated to restore or is deemed to be obligated to restore pursuant to
Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate sentence of each of
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(2) Subtract from such Capital Account such Member's share of
the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and
(6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
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**** Material omitted pursuant to a request for confidential treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
"Affiliate" of a Person means any other Person which, directly
or indirectly, controls, is controlled by, or is under common control with, such
Person. The term "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise. A Person
shall be deemed an Affiliate of another Person only so long as such control
relationship exists. The parties acknowledge and agree that neither Photronics
nor Micron is presently controlled by any other Person. Notwithstanding the
foregoing, a Company Entity shall not be deemed to be an Affiliate of either
Photronics or Micron, except where expressly provided in this Agreement.
"Agreement" shall mean this Limited Liability Company
Operating Agreement, together with the Exhibits, as amended or otherwise
modified from time to time, which shall constitute the limited liability company
agreement of the Company within the meaning of the Act.
"Annual Budget" is defined in Section 6.4.
"Applicable Law" means, with respect to a Person, any domestic
or foreign, national, federal, territorial, state or local constitution,
statute, law (including principles of common law), treaty, ordinance, rule,
administrative interpretation, regulation, order, writ, injunction, legally
binding directive, judgment, decree or other requirement or restriction of any
arbitrator or Governmental Authority applicable to such Person or its
properties, assets, officers, directors, employees, consultants or agents (in
connection with such officer's, director's, employee's, consultant's or agent's
activities on behalf of such Person).
"Assignment and Assumption Agreement" means the Assignment and
Assumption Agreement dated as of the date hereof, by and between Micron and the
Company.
"Base Contributions" is defined in Section 4.1.2(a).
"Board of Managers" means, at any time, the Board of Managers
of the Company designated in accordance with Section 5.2.
"Business" is defined in Section 5.7(g).
"Business Day" means any day other than a day on which
commercial banks in the United States are required or authorized to be closed.
"Capital Account" means the Capital Account maintained for
each Member on the Company's books and records in accordance with the following
provisions:
(1) To each Member's Capital Account there shall be added (a)
such Member's Capital Contributions, (b) such Member's allocable share of Net
Profits and any items in the nature of income or gain that are specially
allocated to such Member pursuant to Article 10
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**** Material omitted pursuant to a request for confidential treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
hereof or other provisions of this Agreement and (c) the amount of any Company
liabilities assumed by such Member or which are secured by any property owned by
such Member.
(2) From each Member's Capital Account there shall be
subtracted (a) the amount of (i) cash and (ii) the Gross Asset Value of any
Company Assets (other than cash) distributed to such Member pursuant to any
provision of this Agreement in its capacity as a Member (for the avoidance of
doubt, any payment to a Member pursuant to any license, consulting, services,
subcontracting, lease or other agreement between the Company and such Member or
any Affiliates of such Member shall not be treated as a "distribution"), (b)
such Member's allocable share of Net Losses and any other items in the nature of
expenses or losses that are specially allocated to such Member pursuant to
Article 10 or other provisions of this Agreement, and (c) liabilities of such
Member assumed by the Company or which are secured by any property contributed
by such Member.
(3) In the event any Interest in the Company is Transferred in
accordance with the terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to the Transferred
Interest.
(4) In determining the amount of any liability for purposes of
subsections (1) and (2) of this definition, there shall be taken into account
Code Section 752(c) and any other applicable provisions of the Code and
Regulations.
(5) The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Regulations Sections 1.704-1(b) and 1.704-2 and shall be interpreted and
applied in a manner consistent with such Regulations. In the event that the
Board of Managers shall determine that it is prudent to modify the manner in
which the Capital Accounts, or any additions or subtractions thereto, are
computed in order to comply with such Regulations, the Board of Managers may
make such modification, provided that it is not likely to have a material effect
on the amounts distributable to any Member pursuant to Article 8 hereof upon the
dissolution of the Company. The Board of Managers shall also make (a) any
adjustments that are necessary or appropriate, in the absence of guidance under
applicable Regulations, to maintain equality between the Capital Accounts of the
Members and the amount of Company capital reflected on the Company's balance
sheet, as computed for book purposes, in accordance with Regulations Section
1.704-1(b)(2)(iv)(q), and (b) any appropriate modifications in the event that
unanticipated events might otherwise cause this Agreement not to comply with
Regulations Sections 1.704-1(b) and 1.704-2.
"Capital Contributions" means, with respect to any Member, the
total amount of cash and the initial Gross Asset Value of property (other than
cash) contributed to the capital of the Company by such Member.
"Cash" means cash and cash equivalents determined by the Board
of Managers in good faith consistent with GAAP.
"Certificate" is defined in Section 1.1.
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
"Chairman of the Board" is defined in Section 5.5.
"Change in Control" shall be deemed to have occurred, with
respect to Micron or Photronics, when:
(1) Any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of shares
representing more than fifty percent (50%) of the combined voting power of the
then outstanding securities entitled to vote generally in elections of directors
of Micron or Photronics, as the case may be (the "Voting Stock");
(2) Micron or Photronics (A) consolidates with or merges into
any other Person or any other Person merges into Micron or Photronics, and in
the case of any such transaction, the outstanding common stock of Micron or
Photronics, as the case may be, is changed or exchanged into other assets or
securities as a result, unless the stockholders of Micron or Photronics, as the
case may be, immediately before such transaction own, directly or indirectly
immediately following such transaction, more than fifty percent (50%) of the
combined voting power of the outstanding voting securities of the corporation
resulting from such transaction in substantially the same proportion as their
ownership of the Voting Stock immediately before such transaction, or (B)
conveys, transfers or leases all or substantially all of its assets to any
Person; or
(3) Any time Continuing Directors do not constitute a majority
of the Board of Directors of Micron or Photronics, as the case may be (or, if
applicable, a successor Person to Micron or Photronics, as the case may be).
"Change in Control Notice" is defined in Section 7.4.1.
"Change in Control Closing" is defined in Section 7.4.2.
"Change in Control Closing Price" is defined in Section 7.4.3.
"Change in Control Option Price" is defined in Section 7.4.3.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time (or any corresponding provisions of succeeding law).
"Company" is defined in the preamble.
"Company Accountant" shall mean initially
PricewaterhouseCoopers LLP or such other independent accounting firm as
appointed from time to time by the Board of Managers.
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**** Material omitted pursuant to a request for confidential treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
"Company Assets" means all direct and indirect rights and
interests in real and personal property owned by the Company and its
subsidiaries from time to time, and shall include both tangible and intangible
property (including Cash).
"Company Correlative Item" is defined in Section 10.4.4(b).
"Company Entity" means the Company, or any of its directly or
indirectly majority owned subsidiaries (whether organized as corporations,
limited liability companies or other legal entities).
"Company Minimum Gain" has the meaning set forth in
Regulations Sections 1.704-2(b)(2) and 1.704-2(d)(1) for the phrase "partnership
minimum gain."
"Company Section 482 Allocation" is defined in Section
10.4.4(a).
"Competing Products" [****].
"Continuing Director" means, solely with respect to Micron or
Photronics, at any date, a member of Micron's or Photronics' Board of Directors,
as the case may be, (i) who was a member of such board as of the Effective Date
or (ii) who was nominated or elected by at least a majority of the directors who
were Continuing Directors at the time of such nomination or election or whose
election to such board was recommended or endorsed by at least a majority of the
directors who were Continuing Directors at the time of such nomination or
election or such lesser number comprising a majority of a nominating committee
comprised of independent directors if authority for such nominations or
elections has been delegated to a nominating committee whose authority and
composition have been approved by at least a majority of the directors who were
Continuing Directors at the time such committee was formed.
"Contribution and Purchase Agreement" means the Contribution
and Units Purchase Agreement dated as of the date hereof by and between the
Company, Micron and Photronics.
"Depreciation" means, for each Fiscal Year of the Company or
other period, an amount equal to the federal income tax depreciation,
amortization or other cost recovery deduction allowable with respect to an asset
for such year or other period, except that if the Gross Asset Value of an asset
differs from its adjusted basis for federal income tax purposes at the beginning
of such year or other period, Depreciation shall be an amount that bears the
same ratio to such beginning Gross Asset Value as the federal income tax
depreciation, amortization or other cost recovery deduction for such year or
other period bears to such beginning adjusted tax basis; provided, however, that
if the federal income tax depreciation, amortization or other cost recovery
deduction for such year or other period is zero, Depreciation shall be
determined with reference to such beginning Gross Asset Value using any
reasonable method selected by the Board of Managers.
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**** Material omitted pursuant to a request for confidential treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
"Economic Interest" means a Person's right to share in
allocations of Net Profits, Net Losses and other items of income, gains, losses,
deductions and credits hereunder and to receive distributions from the Company
as set forth in this Agreement, but does not include any other rights of a
Member including, without limitation, the right to vote or to participate in the
management of the Company, or, except as specifically provided in this Agreement
or required under the Act, any right to information concerning the business and
affairs of the Company.
"Effective Date" is defined in the preamble.
"Excess Allocation" is defined in Section 9.1.2.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fiscal Month" is defined in Section 5.10.1.
"Fiscal Quarter" is defined in Section 5.10.1.
"Fiscal Year" is defined in Section 5.10.1.
"GAAP" means generally accepted accounting principles in the
United States as in effect from time to time.
"GAAS" means generally accepted auditing standards in the
United States as in effect from time to time.
"General Manager" is defined in Section 5.12.1.
"Governmental Authority" means any foreign, domestic,
national, federal, territorial, state or local governmental authority,
quasi-governmental authority, instrumentality, court, government or
self-regulatory organization, commission, tribunal or organization or any
regulatory, administrative or other agency, or any political or other
subdivision, department or branch of any of the foregoing.
"Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(1) The initial Gross Asset Value of the Micron Contributed
Assets shall be as set forth on Exhibit A. The initial Gross Asset Value of any
other asset contributed by a Member shall be the fair value of such asset as
determined by the Board of Managers and the contributing Member.
(2) The Gross Asset Value of all Company Assets immediately
prior to the occurrence of any event described in subsections (a) through (d)
hereof shall be adjusted to equal their respective fair values, in accordance
with the applicable valuation provisions of this
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
Agreement, or if there are no such provisions, as determined by the Board of
Managers using such reasonable method of valuation as the Board of Managers may
adopt, upon the occurrence of the following events and in accordance with the
applicable Regulations:
(a) the acquisition of an additional Interest in the
Company (other than in connection with the
execution of this Agreement) by a new or existing Member in exchange for more
than a de minimis Capital Contribution, if the Board of Managers reasonably
determines that such adjustment is necessary or appropriate to reflect the
relative Economic Interests of the Members in the Company;
(b) the distribution by the Company to a Member of
more than a de minimis amount of Company Assets as
consideration for an Economic Interest or Interest in the Company, if the Board
of Managers reasonably determines that such adjustment is necessary or
appropriate to reflect the relative Economic Interests of the Members in the
Company;
(c) the liquidation of the Company within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g); and
(d) at such other times as the Board of Managers
shall reasonably determine necessary or advisable in
order to comply with Regulations Sections 1.704-1(b) and 1.704-2.
(3) The Gross Asset Value of any Company Asset distributed to
a Member shall be the gross fair market value of such Company Asset on the date
of distribution as determined by the Board of Managers.
(4) The Gross Asset Values of Company Assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such Company Assets pursuant to Code Section 734(b) or Code Section 743(b), but
only to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided,
however, that Gross Asset Values shall not be adjusted pursuant to this
subsection (4) of this definition to the extent that the Board of Managers
reasonably determines that an adjustment pursuant to subsection (2) of this
definition above is necessary or appropriate in connection with a transaction
that would otherwise result in an adjustment pursuant to this subsection (4) of
this definition.
(5) If the Gross Asset Value of a Company Asset has been
determined or adjusted pursuant to subsections (1), (2) or (4) of this
definition, such Gross Asset Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such Company Asset for purposes
of computing Net Profits and Net Losses.
"Increasing Member" is defined in Section 5.4.1
"Indemnified Loss" is defined in Section 5.11.1.
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**** Material omitted pursuant to a request for confidential treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
"Indemnitee" is defined in Section 5.11.1.
"Liquidators" is defined in Section 8.5.1.
"Majority Member" is defined in Section 7.3.1.
"Managers" means at any time the individuals designated in
accordance with Section 5.2 to serve on the Board of Managers.
"Maximum Base Contributions Amount" is defined in Section
4.1.2(a).
"Maximum Excess Contributions Amount" is defined in Section
4.1.2(b).
"Member" means a Person owning a Membership Interest.
"Member Correlative Item" is defined in Section 10.4.4(a).
"Member Minimum Gain" means "partner nonrecourse debt minimum
gain" as defined in Regulations Section 1.704-2(i)(2).
"Member Nonrecourse Debt" means "partner nonrecourse debt" as
set forth in Regulations Section 1.704-2(b)(4).
"Member Nonrecourse Deductions" means "partner nonrecourse
deductions" as set forth in Regulations Section 1.704-2(i).
"Member Section 482 Allocation" is defined in Section
10.4.4(b).
"Membership Interest" or "Interest" means the entire ownership
interest of a Member in the Company at any particular time, including without
limitation, the Member's Economic Interest, any and all rights to vote and
otherwise participate in the Company's affairs, and the rights to any and all
benefits to which a Member may be entitled as provided in this Agreement,
together with the obligations of such Member to comply with all of the terms and
provisions of this Agreement. A Membership Interest may be expressed as a number
of Units.
"Micron" is defined in the preamble.
"Micron Contributed Assets" mean the "Transferred Assets" (as
defined in the Contribution and Purchase Agreement) contributed by Micron to the
Company.
"Micron Manager" means any of the Managers designated by
Micron to serve on the Board of Managers in accordance with Section 5.2.
"Minority Closing" is defined in Section 7.3.1.
"Minority Closing Price" is defined in Section 7.3.2.
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**** Material omitted pursuant to a request for confidential treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
"Minority Member" is defined in Section 7.3.1.
[****]
"Net Profits" or "Net Losses" means, for each Fiscal Year or
other period, an amount equal to the Company's taxable income or loss for such
year or period determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(1) Any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Net Profits or Net
Losses pursuant to this definition shall be added to such taxable income or
loss;
(2) Any expenditure of the Company described in Code Section
705(a)(2)(B) or treated as a Code Section 705(a)(2)(B) expenditure pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Net Profits or Net Losses pursuant to this subsection (2) of this
definition, shall be subtracted from such taxable income or loss;
(3) Gain or loss resulting from any disposition of Company
Assets where such gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the Company Assets
disposed of, notwithstanding that the adjusted tax basis of such Company Assets
differs from its Gross Asset Value;
(4) In lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such Fiscal Year;
(5) To the extent an adjustment to the adjusted tax basis of
any asset included in Company Assets pursuant to Code Section 734(b) or Code
Section 743(b) is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts
as a result of a distribution other than in liquidation of a Member's Interest,
the amount of such adjustment shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases the basis of the asset) from the disposition of the asset and shall be
taken into account for the purposes of computing Net Profits and Net Losses;
(6) If the Gross Asset Value of any Company Asset is adjusted
in accordance with subsection (2) or subsection (3) of the definition of "Gross
Asset Value," the amount of such adjustment shall be taken into account in the
taxable year of such adjustment as gain or loss from the disposition of such
asset for purposes of computing Net Profits or Net Losses; and
(7) Notwithstanding any other provision of this definition,
any items of income, gain, loss or deduction that are specially allocated
pursuant to Sections 10.2 and 10.4.4 shall not be taken into account in
computing Net Profits or Net Losses. The amount of items of
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
income, gain, loss and deduction available to be specially allocated shall be
determined using principles analogous to those set forth in this definition.
The Members acknowledge and agree that for financial
accounting purposes the results of the Company's operations will be reported in
accordance with GAAP.
"Non-Disclosure Agreement" means the Non-Disclosure Agreement,
dated as of the date hereof, by and among the Company, Micron and Photronics.
"Nonrecourse Deductions" has the meaning set forth in
Regulations Sections 1.704-2(b)(1) and 1.704-2(c).
"Officer" is defined in Section 5.12.3.
"Option Price" is defined in Section 7.3.2.
"Percentage Interest" means, with respect to a Member holding
one or more Units, its Interest in the Company as determined by dividing the
number of Units owned by such Member by the total number of Units of the Company
then outstanding as specified in Exhibit A attached hereto, as such exhibit may
be modified or supplemented from time to time in accordance with the terms of
this Agreement. A change in a Member's Capital Account shall not affect the
Percentage Interests of the Members unless expressly provided in this Agreement.
[****]
"Person" means any person or entity, whether an individual,
trustee, corporation, partnership, limited partnership, limited liability
company, trust, unincorporated organization, business association, firm, joint
venture, other legal entity or Governmental Authority.
"Photronics" is defined in the preamble.
"Photronics Manager" means any of the Managers designated by
Photronics to serve on the Board of Managers in accordance with Section 5.2.
"Primary Objectives" is defined in Section 1.7.
"Proceeding" means any action, suit, hearing, arbitration,
proceeding (public or private), investigation, examination, audit or claim
brought by or against any Governmental Authority.
"R&D" is defined in Section 3.6.
"Reducing Member" is defined in Section 5.4.1.
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
"Regulations" means temporary and final Treasury Regulations
promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding Treasury Regulations).
"Regulatory Allocations" is defined in Section 10.2.8.
"Representative" is defined in Section 5.11.7(e).
"Responsible Party" is defined in Section 5.11.6.
"Secondary Objective" is defined in Section 1.7.
"SG&A" is defined in Section 3.6.
"Special Vote" means the affirmative vote or consent of each
of Micron (provided that Micron shall be entitled to such vote or consent only
so long as Micron's Percentage Interest is at least twenty-five percent (25%))
and Photronics (provided that Photronics shall be entitled to such vote or
consent only so long as Photronics' Percentage Interest is at least twenty-five
percent (25%)).
"Tax" or "Taxes" means all taxes, levies, imposts and fees
imposed by any Governmental Authority (domestic or foreign) of any nature
including but not limited to federal, state, local or foreign net income tax,
alternative or add-on minimum tax, profits or excess profits tax, franchise tax,
gross income, adjusted gross income or gross receipts tax, employment related
tax (including employee withholding or employer payroll tax, FICA or FUTA), real
or personal property tax or ad valorem tax, sales or use tax, excise tax, stamp
tax or duty, any withholding or back up withholding tax, value added tax,
severance tax, prohibited transaction tax, premiums tax, occupation tax,
together with any interest or any penalty, addition to tax or additional amount
imposed by any Governmental Authority (domestic or foreign) responsible for the
imposition of any such tax.
"Tax Matters Partner" shall mean Micron.
"Technology License Agreement" means the Technology License
Agreement dated as of the date hereof by and among the Company, Micron and
Photronics.
"Technology Steering Committee" is defined in Section 5.13.
"Transaction Documents" is defined in Section 1.8.
"Transfer" (including, with correlative meaning, the term
"Transferred") means, with respect to any Unit, Membership Interest or Economic
Interest or portion thereof, a sale, conveyance, exchange, assignment, pledge,
encumbrance, gift, bequest, hypothecation or other transfer or disposition by
any other means, whether for value or no value and whether
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
voluntary or involuntary (including, without limitation, by operation of law),
or an agreement to do any of the foregoing.
"Unit" means, with respect to a Membership Interest, a
fractional, undivided share of such Membership Interest issued pursuant to
Article 3 of this Agreement. A Membership Interest may include a fractional
Unit. As of the date hereof, the Units are held by the Members in accordance
with Exhibit A, which Exhibit will be updated from time to time in accordance
with the terms of this Agreement.
"Voting Stock" is defined in the definition of "Change in
Control."
ARTICLE 3.
CAPITAL; CAPITAL ACCOUNTS AND MEMBERS
3.1 Initial Capital Contributions of Members
3.1.1 Capital Contributions. The Members acknowledge and agree
that as of the date hereof: (i) pursuant to the Contribution and Purchase
Agreement Micron has contributed to the Company the Micron Contributed Assets;
and (ii) pursuant to the Assignment and Assumption Agreement Micron has assigned
to the Company certain contractual rights and other liabilities, and the Company
has assumed certain liabilities of Micron in connection therewith. Upon
Photronics purchase of 49,990 Units, from Micron pursuant to the Contribution
and Purchase Agreement, Photronics' and Micron's Capital Account balances shall
have a relative ratio equal to 49.99 divided by 50.01.
3.1.2 Capital Account Balances. The names, addresses, initial
Capital Account balances of each Member (after giving effect to the transactions
described in Section 3.1.1 and the sale by Micron of an Interest in the Company
to Photronics pursuant to the LLC Units Sale and Purchase Agreement), Percentage
Interests of, and number of Units owned by, the Members are as set forth on
Exhibit A, provided that the gross asset value and capital account balances on
Exhibit A will not be finalized until the completion of the balance sheet
referenced in Section 5.10.3(a).
3.2 Additional Capital Contributions by Members
Except as provided in Section 3.1 and Section 4.1.2, no Member
shall be required to make any Capital Contributions to the Company.
3.3 Capital Accounts
A Capital Account shall be established and maintained by the
Company for each Member in accordance with the terms of this Agreement.
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
3.4 Member Capital
Except as otherwise provided in this Agreement or approved by
a Special Vote: (a) no Member shall demand or be entitled to receive a return of
or interest on any portion of its Capital Contributions or balance in its
Capital Account; (b) no Member shall withdraw any portion of its Capital
Contributions or receive any distributions from the Company as a return of
capital on account of such Capital Contributions; and (c) the Company shall not
redeem or repurchase the Membership Interest of any Member, provided that any
such return, distribution or redemption that is permitted hereunder shall be pro
rata based upon the Members' respective Percentage Interests.
3.5 Liability of Members
Except as otherwise required by any non-waivable provision of
the Act or other Applicable Law and except as provided in this Agreement or
other agreements between the Company and one or more Members or their
Affiliates, no Member shall be liable in any manner whatsoever for any debt,
liability or other obligation of the Company, whether such debt, liability or
other obligation arises in contract, tort, or otherwise solely by reason of
being a Member.
3.6 Certain Expenses.
[****]
ARTICLE 4.
FINANCING OF THE COMPANY
4.1 Types of Financing
4.1.1 General. The Board of Managers shall be responsible for
determining the type of financing required to fund the operations of the
Company, which may include Capital Contributions from Members or incurring debt
from Members or from public, private or bank markets.
4.1.2 Member Contributions.
(a) If the Board of Managers determines that the Company
requires additional funding by way of Capital Contributions, then the Members
shall make additional Capital Contributions of up to [****]. Any such written
notice shall include the amount of required Capital Contribution and the
required funding date and shall be sent to the Members at least twenty (20)
Business Days prior to the required funding date. Such required funding date
shall correspond to the end of a Fiscal Month. Subject to the dollar limitation
set forth in this Section 4.1.2(a), [****].
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
(b) If the Members (or one of the Members as allowed
pursuant to Section 4.1.2(c)) have made all of the Base Contributions provided
for by Section 4.1.2(a) during any year and the Board of Managers determines
that additional funding is required and advisable, then the Company shall pursue
its own additional needed financing. If, after using its reasonable efforts to
obtain such financing, the Company cannot obtain such financing on terms that
are acceptable to the Company, then the Company may request that the Members
make additional Capital Contributions in excess of the Base Contributions of up
to an additional aggregate amount equal to such amount as agreed between the
Members or, absent any such agreement, [****] (the "Maximum Excess Contributions
Amount") (each Member having the right to contribute its pro rata share,
determined by multiplying such amount by such Member's Percentage Interest (the
"Excess Contributions")) to the Company upon the written request of the Board of
Managers. Any such written request shall include the amount of requested Capital
Contribution and the required funding date and shall be sent to the Members at
least twenty (20) Business Days prior to the required funding date. Such
required funding date shall correspond to the end of a Fiscal Month. Subject to
the dollar limitation set forth in this Section 4.1.2(b), there shall be no
limit on the number of such requests for Excess Contributions that the Board of
Managers may make in any year. Subject to Section 4.1.2(c), each Member shall
have the right to make any Excess Contribution pro rata based on its Percentage
Interest.
(c) If a Member fails to make a required Base
Contribution or a requested Excess Contribution by the required funding date set
forth pursuant to Section 4.1.2(a) or (b) above, then the other Member may elect
to fund its portion and all or part of the non-funding Member's portion of such
Base Contribution or Excess Contribution; provided, however, that in no event
may a Member make during any year aggregate Base Contributions, including those
made for itself and for the non-funding Member, in excess of the Maximum Base
Contributions Amount or aggregate Excess Contributions, including those made for
itself and for the non-funding Member, in excess of the Maximum Excess
Contributions Amount, without the prior written consent of the other Member.
(d) Upon the payment by either or both Members of any
required Base Contribution or requested Excess Contribution, the Company shall
issue a number of additional Units (rounded down to the nearest whole Unit) to
the funding Member(s) equal to the amount of the Base Contribution or Excess
Contribution, as the case may be, funded by the funding Member(s) divided by a
fraction, the numerator of which is the [****]of the Company's Assets, less the
[****] of the Company's liabilities, as of the required funding date immediately
prior to the funding of the Base Contributions or Excess Contributions, as the
case may be, and the denominator of which is the number of Units outstanding
immediately prior to the funding of the Base Contributions or Excess
Contributions, as the case may be.
(e) The provisions of Sections 4.1.2(a)-(d) (including
any obligation to make any Base Contribution or Excess Contribution requested on
or prior to [****]) shall not apply following [****]unless neither Member has
provided notice pursuant to Section 8.2(f) prior to [****], in which case such
provisions shall again be applicable following [****].
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
ARTICLE 5.
MANAGEMENT
5.1 Board of Managers
5.1.1 Powers. Except as otherwise expressly provided in this
Agreement, all management powers over the business, property and affairs of the
Company are exclusively vested in a board of Managers (the "Board of Managers"),
and no Member shall have any right to participate in or exercise control or
management power over the business and affairs of the Company or otherwise to
bind, act or purport to act on behalf of the Company in any manner. Subject to
the limitations set forth in this Agreement, the Board of Managers shall have
all the rights and powers that may be possessed by a manager under the Act,
which shall include, without limitation, the power to incur indebtedness, the
power to enter into agreements and commitments of all kinds, the power to
manage, acquire and dispose of Company Assets, and all ancillary powers
necessary or convenient to the foregoing. Unless authorized by a Special Vote,
no individual Manager may, in his or her capacity as a Manager, act for the
Board of Managers or have authority to bind the Company. The Board of Managers
may also designate one or more persons to open bank accounts and conduct other
banking business on behalf of the Company. The Managers shall devote such time
to the business and affairs of the Company as is reasonably necessary for the
performance of their duties, but shall not be required to devote full time to
the performance of such duties.
5.1.2 Evaluation of General Manager. The Board of Managers
will be responsible for supervision and evaluation of the Company's General
Manager on an ongoing basis, including at least an annual review of his or her
performance to ensure he or she is acting in accordance with prudent business
practices.
5.2 Number of Managers; Appointment of Managers
The Board of Managers shall initially consist of six (6)
individuals (each such individual, a "Manager"). Subject to Sections 5.3 and 5.4
below, three (3) of the Managers shall be appointed by Micron and three (3) of
the Managers shall be appointed by Photronics. Unless a Manager resigns
(including by death or retirement) or is removed either by the Member who
appointed such Manager or in accordance with Section 5.3 or 5.4, each Manager
shall hold office until a successor shall have been duly appointed by the
appointing Member. Each Member having the right to nominate a Manager or
Managers pursuant to this Section 5.2 shall have the right, in its sole
discretion, to remove such Manager or Managers at any time, by delivery of
written notice to the other Member, the Company and the Manager(s) to be
removed. In the case of a vacancy in the office of a Manager for any reason
(including by reason of death, resignation, retirement, expiration of such
Manager's term or removal pursuant to the preceding sentence), the vacancy shall
be filled by the Member that nominated the Manager in question; provided,
however, that in the case of a vacancy created due to a change in a Member's
Percentage Interest as described in Section 5.3 or 5.4, such vacancy shall be
filled in accordance with Section 5.3 or 5.4. Micron hereby selects the
individuals specified on Exhibit B hereto to serve on the initial
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
Board of Managers. Photronics hereby selects the individuals specified on
Exhibit C hereto to serve on the initial Board of Managers.
5.3 Effect of Reduction in Photronics' Percentage
Interest on Photronics Managers
Subject to Section 5.4.1 below, the number of Managers that
Photronics can appoint to or maintain on the Board of Managers shall depend on
Photronics' Percentage Interest as follows:
--------------------------------------------------------------------------------
Photronics' Percentage Interest Number of Photronics Managers
--------------------------------------------------------------------------------
[****] 3
--------------------------------------------------------------------------------
[****] 1
--------------------------------------------------------------------------------
[****] 0
--------------------------------------------------------------------------------
5.4 Effect of Reduction in Micron's Percentage
Interest on Micron Managers
Subject to Section 5.4.1 below, the number of Managers that
Micron can appoint to or maintain on the Board of Managers shall depend on
Micron's Percentage Interest as follows:
--------------------------------------------------------------------------------
Micron's Percentage Interest Number of Micron Managers
--------------------------------------------------------------------------------
[****] 3
--------------------------------------------------------------------------------
[****] 1
--------------------------------------------------------------------------------
[****] 0
--------------------------------------------------------------------------------
5.4.1 Procedure. If either Member's Percentage Interest should
be below any of the threshold levels set forth in Sections 5.3 or 5.4 above and
if such Member (the "Reducing Member") then has more designees serving on the
Board of Managers than the number to which it is entitled, such Reducing Member
shall immediately identify by written notice to the other Member the designee or
designees on the Board of Managers that will cease serving on the Board of
Managers, and each such designee shall thereupon cease to be a Manager or member
of the Board of Managers. If such Reducing Member fails to make such designation
within five (5) Business Days after written demand by the other Member (the
"Increasing Member"), the Increasing Member may designate by written notice to
the Reducing Member one or more (as appropriate) of the Reducing Member's
designees on the Board of Managers that will cease serving on the Board of
Managers and each such designee shall thereupon cease to be a Manager or member
of the Board of Managers. Upon the written notice described in either of the
immediately preceding two sentences, the Increasing Member may immediately fill
the vacancies created by such removals by written notice to the other Member
designating its selected Manager(s). Similarly, if a Member whose Percentage
Interest fell below any threshold
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
level set forth in Section 5.3 or 5.4 subsequently increases its Percentage
Interest above any such level, the process shall be reversed.
5.5 Chairman of the Board of Managers
A Chairman of the Board of Managers (the "Chairman of the
Board") shall preside at all meetings of the Board of Managers. The Chairman of
the Board shall be selected from among the Managers appointed by Micron;
provided, however, that if the Percentage Interest of Micron falls below [****],
then the Chairman of the Board will be selected by Photronics if Photronics'
Percentage Interest is above [****] or otherwise by the Board of Managers.
5.6 Meetings of Members and of the Board of
Managers; Quorum
5.6.1 Member Meetings. At any time, and from time to time, the
Board of Managers may, but shall not be required to, call meetings of the
Members. Special meetings of the Members for any proper purpose or purposes may
be called at any time by either Member. Written notice of any such meeting
(which may be given via confirmed facsimile, confirmed e-mail or other manner
provided for in Section 11.5) shall be given to all Members not less than five
(5) Business Days nor more than thirty-five (35) Business Days prior to the date
of such meeting. Each meeting of the Members shall be conducted by the Chairman
of the Board of Managers or any designee thereof. Each Member may authorize any
Person by written proxy to act for it or on its behalf on all matters in which
the Member is entitled to participate. Each proxy must be signed by a duly
authorized officer of the Member. All other provisions governing or otherwise
relating to the holding of meetings of the Members shall from time to time be
established in the sole discretion of the Board of Managers.
5.6.2 Action by Member Consent. Any action which may be taken
at any meeting of the Members may be taken without a meeting, without prior
notice and without a vote if a consent in writing, setting forth the action so
taken, is executed by all Members.
5.6.3 Board Meetings. The Board of Managers shall hold
meetings at least once every Fiscal Quarter. The presence of four (4) Managers
(with at least fifty percent (50%) of the Managers present being Micron
Managers), in each case, in person or by telephone conference or by other means
of communication acceptable to the Board of Managers, shall be necessary and
sufficient to constitute a quorum for the purpose of taking action by the Board
of Managers at any meeting of the Board of Managers. Each Member may authorize
any Person by written proxy to act for or on behalf of any Manager that such
Member has the right to nominate on all matters in which such Manager is
entitled to participate. Each proxy must be signed by a duly authorized officer
of the Member. Each Member shall be responsible for the expenses of the
Manager(s) appointed by such Member in connection with all meetings of the Board
of Managers. Either Member may place items on the agenda for any meeting of the
Board of
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
Managers, and the Chairman of the Board of Managers will call for a vote on any
matter at the reasonable request of any Member.
5.6.4 Notice; Waiver. The regular quarterly meetings of the
Board of Managers described in Section 5.6.3 shall be held upon not less than
five (5) Business Days written notice. Additional meetings of the Board of
Managers may be held at the request of any Manager, upon not less than five (5)
Business Days' written notice (which may be given via confirmed facsimile,
confirmed e-mail or other manner provided for in Section 11.5) or telephonic
notice to each Manager (which notice shall be provided to the other Managers by
the requesting Manager). The presence of any Manager at a meeting (including by
means of telephone conference or other means of communication acceptable to the
Board of Managers) shall constitute a waiver of notice of the meeting with
respect to such Manager. No action taken by the Managers at any meeting shall be
valid unless the requisite quorum is present.
5.6.5 Voting of Managers. Except as otherwise expressly
provided in this Agreement, all actions, determinations or resolutions of the
Board of Managers shall require the affirmative vote or consent of a majority of
the Board of Managers present at any meeting at which a quorum is present;
provided, however, that in the event of an evenly split vote, the Chairman of
the Board will automatically receive an additional vote to break any such evenly
split vote. Except as provided in the prior sentence, each Manager shall be
entitled to one (1) vote, and Managers shall be entitled to cast their vote
through proxies. The Board of Managers may act without a meeting if the action
is consented to in advance or subsequently ratified, in each case in writing, by
all of the Managers.
5.6.6 Meetings by Telecommunications. Managers and their
proxies shall have the right to participate in all meetings of the Board of
Managers by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other
at the same time and participation by such means shall constitute presence in
person at a meeting. Members and their representatives and proxies shall have
the right to participate in all meetings of the Members by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting.
5.6.7 Reliance by Third Parties. Any Person dealing with the
Company, the Micron Member, the Photronics Member, any Manager or any Officer
may rely upon a certificate signed by any one Micron Manager and one Photronics
Manager as to: (a) the identity of any Manager or Officer; (b) the existence or
non-existence of any fact or facts which constitute a condition precedent to
acts by the Managers or Officers or in any other manner germane to the affairs
of the Company; (c) the Persons who are authorized to execute and deliver any
instrument or document for or on behalf of the Company; or (d) any act or
failure to act by the Company or as to any other matter whatsoever involving the
Company, the Micron Member, the Photronics Member, any Manager or any Officer.
20
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
5.7 Actions Requiring a Special Vote
Notwithstanding the provisions of Section 5.6.5 or any other
provisions of this Agreement, the Company may not, and no Member or Manager may
cause the Company to, take any of the following actions (or any other action
specified in this Agreement as requiring a Special Vote) without a Special Vote:
(a) effect a merger or consolidation (in a transaction
or series of transactions) in which the Company is not the surviving entity or
in which the Company is the surviving entity but in either case in which the
Membership Interests or Units possessing more than fifty percent (50%) of the
total combined Membership Interests or Units are transferred to a Person or
Persons different than those who held such interests immediately prior to the
merger or consolidation or the initial transaction culminating in such merger or
consolidation;
(b) sell or otherwise transfer all or substantially all
of the assets of the Company to any other Person, including to another Company
Entity;
(c) settle any lawsuit, administrative proceeding, tax
claim or other legal proceeding where any Company Entity pays the settlement of
a dollar amount that is greater than [****] of the fair market value (subject to
the last paragraph of this Section 5.7, as determined by the Board of Managers)
of the assets of the Company Entities taken as a whole;
(d) effect any investment in, or acquisition of, assets
or equity interests (including by a merger, consolidation or otherwise) by a
Company Entity or Company Entities that comprise greater than [****] of the fair
market value of the assets of the Company Entities taken as a whole, as
determined by the Board of Managers (other than in connection with the Company's
routine cash management functions);
(e) approve the fairness of pricing terms and the
fairness of other terms having an economic impact of any contract, agreement,
arrangement or understanding (or any series of related contracts, agreements,
arrangements or understandings relating to the same or substantially similar
subject matter) entered into after the date hereof between any Company Entity on
the one hand, and either Member (or any of their respective Affiliates) on the
other hand, that involves actual or potential payments to or from any Company
Entity exceeding [****] in any Fiscal Year or [****] in the aggregate over the
life of the contract, agreement, arrangement or understanding;
(f) approve the fairness of pricing terms and the
fairness of other terms having an economic impact of any amendment to any
contract, agreement, arrangement or understanding (or any series of related
contracts, agreements, arrangements or understandings relating to the same or
substantially similar subject matter) between any Company Entity on the one
hand, and either Member (or any of their respective Affiliates) on the other
hand, which amendment involves (i) a change in actual or potential payments to
or from any Company Entity exceeding [****] in any Fiscal Year or [****] in the
aggregate over the life of the contract, agreement, arrangement or understanding
or (ii) a material reduction in the services, rights or
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
privileges received by any Company Entity under the contract, agreement,
arrangement or understanding without proportionate reduction in fees, royalties
or other payments to such Member (or its respective Affiliates, provided that no
Company Entity shall be deemed a Member Affiliate for the purposes of this
provision) thereunder;
(g) authorize any Company Entity to engage in or
undertake any material activity that is materially unrelated to the Company's
pursuit of the Business (for purposes of this subsection (g), "Business" shall
mean all activities related to or reasonably required in connection with the
design, development fabrication and sale of advanced photomasks);
(h) effect any distribution from the Company to its
Members other than in cash or any distribution in cash other than in accordance
with Article 9 of this Agreement;
(i) effect any resolution to wind-up the Company or any
Company Entity (unless the relevant governing documents or this Agreement
expressly provide for "automatic" dissolution upon the occurrence of specified
events);
(j) effect the filing of any application or petition for
bankruptcy, reorganization or other similar proceedings under Applicable Law
with respect to the Company or any Company Entity;
(k) file any lawsuit by the Company or any Company
Entity against any Person that is a customer of Photronics;
(l) suspend the Company's operations for a period of
greater than [****];
(m) issue any additional Units or Membership Interests,
or securities convertible into Units or Membership Interests, or admit any new
Member other than pursuant to the terms of this Agreement;
(n) change the Company's Fiscal Year; or
(o) [****].
5.8 Compensation of Managers
The Managers shall not be entitled to any compensation in
their capacities as Managers unless otherwise agreed upon in writing by all of
the Members.
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
5.9 Other Activities
Subject to Applicable Law and the provisions of the
Transaction Documents, the Members, their respective Affiliates and the Managers
may engage or invest in, and devote their time to, any other business venture or
activity of any nature and description (independently or with others), whether
or not such other activity may be deemed or construed to be in competition with
the Company. Neither the Company nor any Member, Affiliate of a Member, or
Manager shall have any right by virtue of this Agreement or the relationship
created hereby in or to such other venture or activity of any Member or its
Affiliates (or to the income or proceeds derived therefrom), and the pursuit
thereof, even if competitive with the business of the Company, shall not be
deemed wrongful or improper.
5.10 Accounting; Records and Reports
5.10.1 Accounting and Fiscal Year. The books, records and
accounts of the Company, including for all applicable tax purposes, will be
maintained in accordance with such methods of accounting as shall be determined
by the Board of Managers. The fiscal year of the Company ("Fiscal Year"),
including each of the fiscal quarters (the "Fiscal Quarters") and each of the
fiscal months ("Fiscal Months") thereof, shall correspond to that of Micron for
as long as Micron and/or an Affiliate of Micron holds a fifty percent (50%) or
greater Percentage Interest in the Company in the aggregate. The Company shall
have a taxable year which complies with Section 706(b) of the Code.
5.10.2 Books and Records. The Board of Managers shall cause to
be kept, at such location as the Board of Managers shall reasonably deem
appropriate, full and proper ledgers, other books of account, and records of all
receipts and disbursements and other financial activities of the Company in
accordance with Micron's record retention policies. The Board of Managers shall
also cause to be kept at such location copies of each of the following:
(a) a current list of the full name and last known
address of each Member, and the capital account, number of Units and Percentage
Interest held by each Member;
(b) a current list of the full name and last known
address of each Manager;
(c) the Certificate of the Company, any amendments to
the Certificate, and executed copies of any powers of attorney granted for the
purpose of executing the Certificate;
(d) the Company's federal, state and local income tax
returns and reports, if any, for the seven (7) most recent Fiscal Years;
(e) this Agreement and any amendments to this Agreement;
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
(f) financial statements of the Company for the five (5)
most recent Fiscal Years; and
(g) minutes of all meetings of the Board of Managers and
the Members and any written consents of the Board of Managers or the Members for
actions taken without a meeting.
5.10.3 Reports. The Board of Managers shall also cause to be
sent to each Member of the Company, the following:
(a) within forty-five (45) days after the Effective
Date, the Company shall provide each Member with an unaudited balance sheet of
the Company as of the Effective Date;
(b) within 180 days following the end of each Fiscal
Year, Schedule K-1 to IRS Form 1065 and such other information as may be
reasonably required by the Members for preparation of their respective federal,
state and local income or franchise tax returns;
(c) a copy of the Company's federal, state and local
income tax or information returns for each Fiscal Year, concurrent with the
filing of such returns;
(d) within seventy-five (75) days after the end of each
Fiscal Year or as soon thereafter as reasonably practicable, the Company shall
provide each Member with an audited balance sheet, income statement and
statement of cash flows for and as of the last day of the Fiscal Year then
ended, audited in accordance with GAAS by an auditor agreed to by Micron;
provided, that Photronics shall reimburse the Company for the cost of such
audit;
(e) within forty-five (45) days after the end of each
Fiscal Quarter or as soon thereafter as reasonably practicable, the Company
shall provide each Member with an unaudited balance sheet, income statement and
statement of cash flows for and as of the last day of the year or quarter (as
appropriate) then ended, prepared in accordance with GAAP, as well as such other
financial information as any Member may reasonably request to enable such Member
and its Affiliates to prepare their consolidated quarterly and annual financial
statements; and
(f) within a reasonable period of time, notice of any
material litigation filed against the Company or any written claim by a
Governmental Authority of any material violation of any state, federal or
foreign law, statute, rule or regulation.
5.10.4 Access to Company Books and Records.
(a) To the extent not in violation of Applicable Law,
Members (personally or through an authorized representative) may, for purposes
reasonably related to their interests in the Company, during reasonable business
hours (i) examine and copy (at their own cost and expense) the books and records
of the Company, including the records listed in
24
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
Section 5.10.2, and (ii) have access to the Company's management, internal and
external accountants and attorneys, plans, properties and other assets to
conduct due diligence and other investigations regarding the Business and assets
of the Company at such Member's sole expense, and the Company shall reasonably
cooperate with such Member in such due diligence and investigations. Upon
reasonable notice, Photronics may also request reasonable short-term and
temporary access to the properties of the Company by Photronics customers for
technology review and validation. Any information obtained as a result of this
Section 5.10.4 shall be used by a Member solely for purposes reasonably related
to such Member's participation in the Company and shall be subject to the
Non-Disclosure Agreement.
(b) Any Member's request for documents or request to
inspect or copy documents or have access to the Company's management, plans,
properties and other assets under this Section 5.10.4 (i) may be made by that
Member or that Member's authorized representative and (ii) shall be made in
writing to the General Manager and shall state the purpose of such demand. If a
Member is not satisfied with the response of the General Manager, the Member may
make such request of the Technology Steering Committee and/or the Board of
Managers.
5.11 Indemnification and Liability of the Managers
5.11.1 Indemnification. The Company shall indemnify and hold
harmless each Manager, the General Manager and all other Officers (individually,
an "Indemnitee") to the fullest extent permitted by Applicable Law from and
against any and all losses, claims, demands, costs, damages, liabilities,
whether joint or several, expenses of any nature (including reasonable
attorneys' fees and disbursements), judgments, fines, settlements and other
amounts (each an "Indemnified Loss") arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
in which the Indemnitee may be involved as a defendant, or threatened to be
involved as a defendant (other than all claims, demands, actions, suits or
proceedings brought by the Member who nominated such Manager, if applicable),
relating to the performance or nonperformance of any act concerning the
activities of the Company or by reason of the Indemnitee's status as a Manager,
General Manager or Officer, as applicable, regardless of whether the Indemnitee
retains such status at the time any such Indemnified Loss is paid or incurred,
if (a) the Indemnitee acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the Company and, in
the case of a criminal proceeding, had no reasonable cause to believe that his
or her conduct was unlawful, and (b) the Indemnitee's conduct did not constitute
an act or omission which involved intentional misconduct or a knowing violation
of the law. The termination of an action, suit or proceeding by judgment, order,
settlement, or upon a plea of nolo contendere or its equivalent, shall not, in
and of itself, create a presumption or otherwise constitute evidence that the
Indemnitee acted in a manner contrary to that specified in clauses (a) or (b)
above.
5.11.2 Expenses. Expenses incurred by an Indemnitee in
defending any claim, demand, action, suit or proceeding subject to this Section
5.11 shall be advanced by the Company prior to the final disposition of such
claim, demand, action, suit, or proceeding.
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
5.11.3 Company Expenses. Any indemnification provided
hereunder shall be satisfied solely out of the Company Assets, as an expense of
the Company. No Member shall be subject to liability by reason of these
indemnification provisions.
5.11.4 No Other Rights. The provisions of this Section 5.11
are for the benefit of the Indemnitees and shall not be deemed to create any
rights for the benefit of any other Person; provided, however, that the
indemnification rights provided in this Section 5.11 will inure to the benefit
of the heirs, legal representatives, successors, assigns and administrators of
the Indemnitee.
5.11.5 No Liability. No Indemnitee shall be liable to the
Company or to any Member for any losses sustained or liabilities incurred as a
result of any act or omission of any Indemnitee if (a) the Indemnitee acted in
good faith and in a manner he or she reasonably believed to be in, or not
opposed to, the best interests of the Company and, in the case of a criminal
proceeding, had no reasonable cause to believe that his or her conduct was
unlawful, and (b) the Indemnitee's conduct did not constitute an act or omission
which involved intentional misconduct or a knowing violation of the law.
5.11.6 Reliance Upon Agreement. To the extent that any
Manager, General Manager or Officer (each, a "Responsible Party") has, under
Applicable Law or in equity, duties (including, without limitation, fiduciary
duties) to the Company, any Member or other Person bound by the terms of this
Agreement, such Responsible Parties acting in accordance with this Agreement
shall not be liable to the Company, any Member, or any such other Person for its
good faith reliance on the provisions of this Agreement.
5.11.7 No Fiduciary Duties.
(a) In connection with the determination of any and all
matters presented for action to the Members, the Board of Managers or the
Technology Steering Committee, as applicable, the Members acknowledge and agree
that each Member will be acting on its own behalf and each Representative
serving on the Board of Managers or the Technology Steering Committee will be
acting on behalf of the Member that appointed such Representative.
(b) Each Member may act, and, to the fullest extent permitted
by Applicable Law, will be protected for acting, in its own interest (subject to
the express terms of any contract entered into by such Member) without regard to
the interest of the other Member or the Company or any of its subsidiaries, and,
subject to Section 5.11.7(E), each Representative may act, and, to the fullest
extent permitted by Applicable Law, will be protected for acting, at the
direction or control of, or in a manner that such Representative believes is in
the best interest of, the Member that appointed the Representative without
regard to the interest of the other Member or the Company or any of its
subsidiaries. Further, each Member may, to the fullest extent permitted by
Applicable Law (subject to the express terms of any contract entered into by
such Member), make decisions and exercise direction and control over the
decisions of the
26
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
Representatives appointed by such Member without duty to or regard for the
interests of the other Member or the Company or any of its subsidiaries.
(c) The Company, on its own behalf and on behalf of each of
its subsidiaries, and each Member waive, to the fullest extent permitted by
Applicable Law, (1) any claim or cause of action against any Member or Manager
or member of the Technology Steering Committee appointed by a Member based on
the determination of any and all matters presented for action to the Members,
the Board of Managers or the Technology Steering Committee, as applicable, (2)
breach of fiduciary duty, duty of care, duty of loyalty or any other duty or (3)
breach of the Act; provided, however, the foregoing will not limit any Member's
obligation under or liability for breach of the express terms of this Agreement
or any other agreement that they have entered into with the Company or any of
its subsidiaries or the other Member.
(d) The Company and each Member, by entering into this
Agreement, expressly acknowledge that neither Member nor any of its designated
Managers shall owe any fiduciary duties to the Company or to the other Member by
virtue of such Member's ownership of a majority of the Units of the Company or
such Member's Managers' positions on, and majority control of, the Board of
Managers or the Technology Steering Committee.
(e) The term "Representative" shall mean, with respect to a
Member, the Managers and members of the Technology Steering Committee appointed
by such Member, but not including, only for purposes of Section 5.11.7(c)(2),
the General Manager or any other officer of the Company (and each such officer
shall be bound by such fiduciary and other duties (including the duty of care
and the duty of loyalty) as would apply to an officer having comparable
authority and duties under the DGCL).
5.12 General Manager
5.12.1 General Manager. The Company will have a General
Manager (the "General Manager") to be selected by Micron with input from the
Board of Managers and Photronics; provided, however, that if the Percentage
Interest of Micron falls below [****]then the General Manager will (after input
from the Board of Managers and Micron) be selected by Photronics if Photronics'
Percentage Interest is above [****] or otherwise by the Board of Managers.
5.12.2 Duties and Powers of the General Manager. The General
Manager shall, subject to the control of the Board of Managers, have general
supervision, direction and control of the day-to-day affairs of the Company and
shall report directly to the Board of Managers. Unless limited by the Board of
Managers or this Agreement, he or she shall have the general powers and duties
of management usually vested in the office of chief executive officer of
corporations and shall have such other powers and duties as may be prescribed by
the Board of Managers. Only the General Manager, the Board of Managers or
individuals authorized by the General Manager or the Board of Managers shall
have the ability to enter into binding agreements or approve payments on behalf
of the Company.
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
5.12.3 Other Officers; Employment; Removal. The Company may
also have a chief financial officer, a secretary and such other officers as
determined by the Board of Managers, each of whom will be accountable to the
General Manager (the General Manager and any other officers elected in
accordance with this Section 5.12.3, each, an "Officer" and collectively, the
"Officers"). The General Manager and any other Officer may be removed at any
time upon an affirmative vote of the majority of the Board of Managers.
5.12.4 Duties and Powers of Chief Financial Officer. Any chief
financial officer of the Company shall keep and maintain, or cause to be kept
and maintained, books and records of accounts of the properties and business
transactions of the Company, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses and capital. He or she shall disburse the
funds of the Company as may be ordered by the Board of Managers and shall render
to the Board of Managers at their request an account of all his or her
transactions as chief financial officer and of the financial condition of the
Company. Authorizations with respect to the Company's depositories, disbursement
of funds and related banking matters shall be as set forth in resolutions of the
Board of Managers.
5.12.5 Duties and Powers of Secretary.
(a) Any secretary of the Company shall attend (in person
or by telephone conference) all meetings of the Board of Managers and all
meetings of the Members (whether any of such meetings are in person, by
telephone conference or both) and record all votes and the minutes of all
proceedings in a book to be kept for that purpose, and shall perform like duties
for any standing committees when requested by such committee.
(b) Any secretary of the Company shall keep, or cause to
be kept, at the principal executive office or at the office of the Company's
transfer agent or registrar, as determined by resolution of the Board of
Managers, a register, or a duplicate register, showing the names of all Members
and their addresses, Economic Interests and Percentage Interests, the number and
date of certificates issued for the same (if any), and the number and date of
cancellation of every certificate surrendered for cancellation (if any).
5.12.6 General Provisions Regarding Officers.
(a) The Board of Managers may, from time to time,
designate Officers of the Company and delegate to such Officers such authority
and duties as the Board of Managers may deem advisable and may assign titles
(including, without limitation, president, vice-president and/or treasurer) to
any such Officer. Unless the Board of Managers otherwise determines, if the
title assigned to an Officer of the Company is one commonly used for Officers of
a business corporation, then, subject to the terms of this Agreement, the
assignment of such title shall constitute the delegation to such Officer of the
authority and duties that are customarily associated with such office. Any
number of titles may be held by the same Officer.
(b) Any Officer to whom a delegation is made pursuant to
the foregoing shall serve in the capacity delegated unless and until such
delegation is revoked by the
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
Board of Managers for any reason or no reason whatsoever, with or without cause,
or such Officer resigns.
5.13 Technology Steering Committee
The Company will establish a Technology Steering Committee
(the "Technology Steering Committee") in accordance with the provisions of the
Technology License Agreement.
5.14 Non-Disclosure Agreement
The parties acknowledge and agree that the contents and terms
and conditions of all of the Transaction Documents and all proprietary or
nonpublic information disclosed by one party to another party in connection with
the Transaction Documents is subject to the Non-Disclosure Agreement.
5.15 Maintenance of Insurance
The Company shall at all times be covered by insurance of the
types and in the amounts set forth on Exhibit D. Such insurance coverage may be
provided through the coverage under one or more insurance policies maintained by
the Company or by either Member. A certificate of insurance will be provided to
the Members annually evidencing coverage.
5.16 Related Party Agreements
Micron, Photronics and the Company agree that any contract,
agreement, amendment, arrangement or understanding entered into after the date
hereof between any Company Entity on the one hand, and either Member (or any of
their respective Affiliates) on the other hand, shall be on an arms-length
basis.
ARTICLE 6.
OPERATIONS
6.1 Headquarters
The Company's world headquarters shall be in Boise, Idaho.
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
6.2 Surplus Equipment
[****]
6.3 Printability Studies
[****]
6.4 Operations Plan; Annual Budget
The Company will operate in accordance with an operations
plan, which plan shall be initially developed and agreed upon by Micron and
Photronics, and amended from time to time by the Board of Managers and in no
event less than annually. The Board of Managers will also be responsible for
approving an annual budget (the "Annual Budget") on at least an annual basis.
ARTICLE 7.
DISPOSITION AND TRANSFERS OF INTERESTS
7.1 Holding of Membership Interest
For so long as Micron or Photronics, directly or indirectly,
maintains a Membership Interest in the Company, Micron or Photronics, as
applicable, must own and hold such Membership Interest either (a) itself or (b)
through one or more wholly owned (including indirect wholly owned) subsidiaries.
7.2 Transfer Moratorium
No Member may Transfer all or any portion of its Membership
Interest to any other Person without the prior written consent of the other
Member and any such attempted Transfer shall be deemed void and of no force or
effect, nor shall Micron or Photronics without the prior written consent of the
other sell or transfer, or allow to be sold or transferred, or in any way
dispose of, its ownership interest, either direct or indirect, in any wholly
owned subsidiary (including any indirect wholly owned subsidiary) that owns,
directly or indirectly, the Membership Interest held by Micron or Photronics,
respectively, in each case other than [****].
7.3 Purchase of Remaining Interest
7.3.1 If the Percentage Interest of a Member (the "Minority
Member") drops to [****] or less and remains at or below [****] for more than
six (6) consecutive months, the other Member or a wholly owned subsidiary
thereof (such other Member or Affiliate thereof, the "Majority Member") shall
have the option to purchase all of the remaining Interest of the Minority Member
at a cash purchase price equal to the Option Price, subject to the terms and
conditions set forth below. The Majority Member may exercise this purchase
option by delivering a written notice of its intent to exercise to the Minority
Member. The closing of the
30
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
purchase and sale of the Minority Member's remaining Interest (the "Minority
Closing") shall take place as of the last day of the Fiscal Month in which the
notice is delivered (unless such notice is delivered within the last ten (10)
days of the end of a Fiscal Month, in which case the Minority Closing shall take
place on the last day of the first full Fiscal Month thereafter). Such Minority
Closing shall take place at the principal office of the Company or at such other
location as the Majority Member and the Minority Member may mutually determine.
At the Minority Closing, (i) the Minority Member shall transfer its remaining
Interest in the Company to the Majority Member, free and clear of any liens or
encumbrances, (ii) the Majority Member shall pay the Minority Member the
Minority Closing Price by wire transfer of immediately available funds and (iii)
the Minority Member shall deliver to the Majority Member such instrument or
instruments of conveyance as the Majority Member reasonably requests.
7.3.2 Upon the Minority Closing, the Majority Member shall pay
to the Minority Member a sum (the "Minority Closing Price") equal to the product
of (i) the difference of [****]. Within five (5) Business Days after the
month-end balance sheet becomes available (prepared in accordance with GAAP
consistently applied and as of the last day of the Fiscal Month in which the
Minority Closing occurred), [****]. If the Option Price is greater than the
Minority Closing Price, the Majority Member shall deliver the difference to the
Minority Member by wire transfer of immediately available funds within three (3)
Business Days of such recalculation. If the Option Price is less than the
Minority Closing Price, the Minority Member shall refund the difference to the
Majority Member by wire transfer of immediately available funds within three (3)
Business Days of such recalculation.
7.4 Change in Control of Photronics
7.4.1 [****].
7.4.2 [****].
7.4.3 [****].
7.4.4 [****].
7.5 Purchase and Sale Agreement
In the event of any purchase and sale of Membership Interests
under Section 7.3, 7.4 or 8.5.3, the parties thereto shall enter into a
commercially reasonable agreement to implement such purchase and sale. Such
agreement will include that (a) the selling Member is released from any
obligation to make future capital contributions to the Company and (b) income
and loss for the year in which such closing occurs will be allocated to the
selling Member on a basis that reflects the actual operations of the Company's
business for the period prior to the Closing and will not be allocated based on
the product of the Company's income and loss for the entire year times that
percentage of the year in which the selling Member held a Membership Interest.
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
ARTICLE 8.
DISSOLUTION, LIQUIDATION, AND TERMINATION OF THE COMPANY
8.1 Limitations
The Company may be dissolved, liquidated, and terminated only
pursuant to the provisions of this Article 8, and the parties hereto do hereby
irrevocably waive, to the extent permitted by Applicable Law, any and all other
rights they may have to cause a dissolution, liquidation or termination of the
Company or a sale or partition of any or all of the Company Assets in connection
with such dissolution or liquidation.
8.2 Exclusive Causes
Notwithstanding the Act, the following and only the following
events shall cause the Company to be dissolved, liquidated, and terminated:
(a) the election of all of the Members;
(b) the entry of a decree of judicial dissolution
pursuant to Section 18-802 of the Act;
(c) any Member's election, if the Company ceases
operation for more than six (6) months unless due to Force Majeure (as defined
in the Supply Agreement dated as of the date hereof between Photronics and
Micron);
(d) Photronics' election following a material breach of
this Agreement or any other material provision of any of the Transaction
Documents by Micron and, if the material breach is capable of cure, such
material breach continues uncured for a period (i) specified in such Transaction
Document or (ii) of ninety (90) days of a written notice from Micron to
Photronics of such material breach if no cure period is specified in such
Transaction Document; provided that if the breach in the case of (ii) is capable
of being cured and the breaching party has worked diligently and in good faith
since the receipt of the notice to cure such breach, but has not cured the
breach during the allotted time, the cure period will be extended for an
additional thirty (30) days;
(e) Micron's election following a material breach of
this Agreement or any other material provision of any of the Transaction
Documents by Photronics; and, if the material breach is capable of cure, such
material breach continues uncured for a period (i) specified in such Transaction
Document or (ii) of ninety (90) days of a written notice from Micron to
Photronics of such material breach if no cure period is specified in such
Transaction Document; provided that if the breach in the case of (ii) is capable
of being cured and the breaching party has worked diligently and in good faith
since the receipt of the notice to cure such breach, but has not cured the
breach during the allotted time, the cure period will be extended for an
additional thirty (30) days;
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Securities and Exchange Commission.
(f) either Member's election upon at least [****] notice
prior to (i) the ten-year anniversary of this Agreement or (ii) the last date of
each successive five-year period following the ten-year anniversary of this
Agreement, such termination to be effective upon such ten-year anniversary or
the last date of such five-year period, as applicable;
(g) the election by a Member with a Percentage Interest
of at least 90% to dissolve and wind up the affairs of the Company (which
election shall not require the consent of the other Member), upon delivery of
written notice of such election to the Company and the other Member;
(h) the occurrence of any other event that, under the
Act, makes it unlawful, impossible or impractical to carry on the business of
the Company;
(i) the election by either Member to dissolve and wind
up the affairs of the Company upon (a) the occurrence of a bankruptcy of the
Company, provided that the Member making such election is not in default of any
payment obligation to the Joint Venture Company or (b) the bankruptcy,
dissolution or liquidation of a Member, and further provided that, in either
event, such election shall be made only after entry by the court presiding over
the bankruptcy of an order granting relief from the automatic stay to make such
election to the Member making such election; or
(j) [****].
To the fullest extent permitted by law, any dissolution of the Company other
than as provided in this Section 8.2 shall be a dissolution in contravention of
this Agreement. The parties agree that the failure of a Member to make Base
Contributions (but not the failure of a Member to make Excess Contributions) or
the Transfer of Membership Interests by a Member in contravention of this
Agreement shall, among other matters, constitute a material breach of this
Agreement.
8.3 Effect of Dissolution
The dissolution of the Company shall be effective on the day
on which the event occurs giving rise to the dissolution, but the Company shall
not terminate until it has been wound up and its assets have been distributed as
provided in Section 8.5.1 or 8.5.3 of this Agreement. Notwithstanding the
dissolution of the Company, prior to the termination of the Company, the
business of the Company and the affairs of the Members, as such, shall continue
to be governed by this Agreement.
8.4 No Capital Contribution Upon Dissolution
Each Member shall look solely to the Company Assets for all
distributions with respect to the Company, its Capital Contribution thereto, its
Capital Account and its share of Net Profits or Net Losses, and shall have no
recourse therefor (upon dissolution or otherwise) against any other Member.
Accordingly, if any Member has a deficit Capital Account balance (after giving
effect to all contributions, distributions and allocations for all taxable
years, including the
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
year during which the liquidation occurs), then such Member shall have no
obligation to make any Capital Contribution with respect to such deficit, and
such deficit shall not be considered a debt owed to the Company or to any other
Person for any purpose whatsoever.
8.5 Liquidation
8.5.1 Upon dissolution of the Company, the Board of Managers
(or other Person(s) designated by a decree of court) shall act as the
"Liquidators" of the Company. The Liquidators shall liquidate the Company
Assets, and after allocating (pursuant to Article 10 of this Agreement) all
income, gain, loss and deductions resulting therefrom, shall apply and
distribute the proceeds thereof as follows:
(a) first, to (i) the payment of the obligations of the
Company to third parties, including, but not limited to and on a pari passu
basis, taxes, debts, lease and other payments to Persons other than Members or
their Affiliates; (ii) the expenses of liquidation; and (iii) the setting up of
any reserves for contingencies, debts or liabilities to Persons other than the
Members or their Affiliates, whether the whereabouts of the creditor is known or
unknown, which the Board of Managers may consider necessary;
(b) thereafter, amounts due to either Member or their
respective Affiliates (other than a Company Entity) pursuant to intellectual
property license agreements, consulting agreements, services agreements,
subcontracting agreements, lease agreements and other similar agreements; and
(c) thereafter, to the Members in proportion to the
positive balances in the Members' respective Capital Accounts, determined after
taking into account all Capital Account adjustments for the Company's taxable
year during which such liquidation occurs, by the end of the taxable year in
which such liquidation occurs or, if later, within ninety (90) days after the
date of the liquidation.
8.5.2 Notwithstanding Section 8.5.1 of this Agreement, in the
event that the Board of Managers determines that an immediate sale of all or any
portion of the Company Assets would cause undue loss to the Members, the Board
of Managers, in order to avoid such loss to the extent not then prohibited by
the Act, may either defer liquidation of and withhold from distribution for a
reasonable time any Company Assets except those necessary to satisfy the
Company's debts and obligations, or, subject to Section 9.4, distribute the
Company Assets to the Members in kind (in accordance with the second sentence of
Section 8.5.1).
8.5.3 Notwithstanding Section 8.5.1 or 8.5.2 of this
Agreement, in the event of termination pursuant to Section 8.2 (other than
pursuant to Section 8.2(d)) Micron shall have the right, exercisable within
thirty (30) days of such termination, to acquire, free and clear of all liens
and other encumbrances (i) from Photronics, Photronics' Membership Interest at a
purchase price equal [****]. The foregoing purchase price shall be determined
(and adjusted as necessary) in the manner provided in Section 7.4.3.
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
ARTICLE 9.
DISTRIBUTIONS
9.1 Distributions of Cash Available for Distribution
9.1.1 Use of Cash. Subject to applicable legal and contractual
restrictions and to Section 9.2 and Article 8, Company cash will be treated as
follows (in the following order of priority):
(a) First, cash will be retained in the Company in an
amount sufficient to fund the Company's operations. Such amount will take into
consideration scheduled debt service, lease and other payments to third parties
and payments of amounts due to either Member or their respective Affiliates
pursuant to intellectual property license agreements, consulting agreements,
services agreements, subcontracting agreements, lease agreements and other
similar agreements; and
(b) Second, subject to Section 9.1.2, any excess cash
remaining will be distributed at the discretion of the Board of Managers to
Micron and Photronics pro rata based on their Percentage Interests at the time
of such distribution.
9.1.2 Excess Allocations. Subject to Section 9.2 and Article
8, to the extent a Member's Percentage Interest is adjusted for any reason as
provided in this Agreement and the aggregate allocations of Net Profit (and
similar items) net of any allocations of Net Losses (and similar items) made to
such Member pursuant to Article 10 on a cumulative basis through the effective
time of such adjustment exceeded: (a) the aggregate distributions made to such
Member pursuant to Sections 9.1.1(b) and 9.4 plus (b) all amounts previously
distributed to such Member pursuant to this Section 9.1.2 through such effective
time (collectively, an "Excess Allocation"), then prior to the making of any
further distributions pursuant to Section 9.1.1(b), distributions shall first be
made pro rata among the Members according to their respective Excess Allocation
amounts existing at such time, to the extent thereof.
9.2 Distributions Upon Liquidation
Distributions made in conjunction with the final liquidation
of the Company shall be applied or distributed as provided in Article 8 hereof.
9.3 Withholding
The Company may withhold amounts in respect of allocations or
distributions if it is required to do so by any Applicable Law, and each Member
hereby authorizes the Company to withhold from or pay on behalf of or with
respect to such Member such amount of federal, state, local or foreign taxes
that the Tax Matters Partner determines the Company is required to withhold or
pay with respect to any amount distributable or allocable to such Member
pursuant to this Agreement, provided that the Tax Matters Partner shall provide
Photronics with twenty (20) Business Days advance written notice of the amount
of any withholding to be made
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Securities and Exchange Commission.
in respect of allocations or distributions to Photronics (or any Affiliate of
Photronics) which notice shall demonstrate the calculation thereof. Any amount
paid on behalf of or with respect to a Member pursuant to this Section 9.3 shall
constitute a loan by the Company to such Member, which loan shall be repaid by
such Member within twenty (20) Business Days after notice from the Company that
such payment must be made unless: (i) the Company withholds such payment from a
distribution that would otherwise be made to the Company or (ii) the Tax Matters
Partner determines, in its sole discretion, that such payment may be satisfied
out of Company Assets available therefor which would, but for such payment, be
distributed to the Member. Any amounts withheld pursuant to this Section 9.3
shall be treated as having been distributed to such Member. Each Member hereby
represents that it has provided to the Company IRS Form W-9 and that it has
provided and will from time to time provide such other forms or documents as may
reasonably be required in order to establish the status of such Member for
purposes of the tax laws of any applicable jurisdiction. Each Member agrees to
indemnify and hold harmless the Company from any liability imposed on the
Company for (i) any action taken by the Company in reliance upon such
representation of tax withholding status or (ii) any failure to withhold from
any amount distributable or allocable, or deemed distributable or allocable, to
such Member pursuant to this Agreement. A Member's obligations hereunder shall
survive the dissolution, liquidation or winding up of the Company. If a
Governmental Authority asserts in writing to any Person that the Company failed
to withhold Tax at the time and/or in the amounts required by Chapter 3 of the
Code or comparable provisions of other Tax laws in respect of Photronics and/or
its Affiliates, then Photronics and/or its Affiliates, as applicable, shall
promptly upon receipt of a copy of such writing accompanied by a written notice
from the Company specifying that a payment is required pursuant to this Section
9.3 pay to such Governmental Authority an amount in full satisfaction of the
amount of Taxes so asserted by such Governmental Authority. If Photronics and
its Affiliates do not promptly pay such amount to such Governmental Authority,
then, unless Photronics provides satisfactory written evidence of settlement in
full of the matter asserted by the Governmental Authority, the Company shall
withhold such amount from the next distribution(s) to Photronics, shall promptly
pay such withheld amounts over to such Governmental Authority in payment of such
asserted liability for Taxes and shall treat the amounts so withheld and paid
over as actually distributed to Photronics.
9.4 Distributions in Kind
Subject to Section 8.5.3, no right is given to any Member to
demand or receive any distribution of property other than cash as provided in
this Agreement. Upon a vote of the Board of Managers and a Special Vote, the
Board of Managers may determine (subject to the approval of the Special Vote) to
make a distribution in kind of Company Assets to the Members, and such Company
Assets shall be distributed in such fashion as to ensure that the fair market
value thereof (as determined by the Board of Managers and approved by the
Special Vote) is distributed, and any items of gain or loss resulting from such
distribution are allocated, in accordance with this Article 9 and Articles 6 and
10 hereof.
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
9.5 Limitations on Distributions
Notwithstanding any provision to the contrary contained in
this Agreement, neither the Company nor the Board of Managers, on behalf of the
Company, shall be required to or shall knowingly make a distribution to any
Member or the holder of any Economic Interest on account of its Membership
Interest or Economic Interest in the Company (as applicable) in violation of the
Act or other Applicable Law.
ARTICLE 10.
ALLOCATIONS OF NET PROFITS AND NET LOSSES
10.1 General Allocation of Net Profits and Losses
10.1.1 Net Profits and Net Losses shall be determined and
allocated with respect to each Fiscal Year or other period of the Company as of
the end of such Fiscal Year or other period and at such other times, if any, as
the Board of Managers shall determine is appropriate for purposes of
administering this Agreement. Subject to the other provisions of this Agreement,
an allocation to a Member of a share of Net Profits or Net Losses shall be
treated as an allocation of the same share of each item of income, gain, loss or
deduction that is taken into account in computing Net Profits or Net Losses.
10.1.2 Subject to the other provisions of this Article 10, Net
Profits, Net Losses and any other items of income, gain, loss and deduction for
any Fiscal Year shall be allocated in proportion to the Members' respective
Percentage Interests.
10.2 Regulatory Allocations
Notwithstanding the foregoing provisions of this Article 10,
the following special allocations shall be made in the following order of
priority:
10.2.1 If there is a net decrease in Company Minimum Gain
during a Company taxable year, then, to the extent required by Regulations
Section 1.704-2(f), each Member shall be allocated items of Company income and
gain for such taxable year (and, if necessary, for subsequent years) in an
amount equal to such Member's share of the net decrease in Company Minimum Gain,
determined in accordance with Regulations Section 1.704-2(g)(2). This Section
10.2.1 is intended to comply with the minimum gain chargeback requirement of
Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.
10.2.2 If there is a net decrease in Member Minimum Gain
attributable to a Member Nonrecourse Debt during any Company taxable year, each
Member who has a share of the Member Minimum Gain attributable to such Member
Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5), shall, to the extent required by Regulations Section
1.704-2(i)(4), be specially allocated items of Company income and gain for such
taxable year (and, if necessary, subsequent years) in an amount equal to such
Member's share of the net decrease in Member Minimum Gain attributable to such
Member Nonrecourse Debt, determined
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Securities and Exchange Commission.
in a manner consistent with the provisions of Regulations Section 1.704-2(g)(2).
This Section 10.2.2 is intended to comply with the partner nonrecourse debt
minimum gain chargeback requirement of Regulations Section 1.704-2(i)(4) and
shall be interpreted consistently therewith.
10.2.3 If any Member unexpectedly receives an adjustment,
allocation, or distribution of the type contemplated by Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6), and after receiving such adjustment,
allocation, or distribution, such Member has an Adjusted Capital Account
Deficit, items of income and gain shall be allocated to all such Members (in
proportion to the amounts of their respective Adjusted Capital Account Deficits)
in an amount and manner sufficient to eliminate the Adjusted Capital Account
Deficit of such Member as quickly as possible. This Section 10.2.3 is intended
to constitute a "qualified income offset" within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
10.2.4 If the allocation of Net Loss to a Member as provided
in Section 10.1 would create or increase an Adjusted Capital Account Deficit for
such Member, there shall be allocated to such Member only that amount of Net
Loss as will not create or increase an Adjusted Capital Account Deficit. The Net
Loss that would, absent the application of the preceding sentence, otherwise be
allocated to such Member shall be allocated to the other Members in accordance
with their relative Percentage Interests, subject to the limitations of this
Section 10.2.4. If, after the allocation of Net Loss pursuant to the preceding
two sentences, no additional amount of Net Loss can be allocated to any Member
without creating or increasing an Adjusted Capital Account Deficit for such
Member, then Net Loss shall be allocated to the Members in accordance with their
relative Percentage Interests. This Section 10.2.4 is intended to implement the
alternate test for economic effect set forth in Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
10.2.5 To the extent that an adjustment to the adjusted tax
basis of any Company Asset pursuant to Code Section 734(b) or Code Section
743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or
Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in
determining Capital Accounts as the result of a distribution to a Member in
complete liquidation of its Interest in the Company, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such gain or loss shall be specially allocated to the
Members in accordance with their interests in the Company in the event that
Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Members to whom
such distribution was made in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
10.2.6 The Nonrecourse Deductions for each taxable year of the
Company shall be allocated to the Members in proportion to their Percentage
Interests.
10.2.7 The Member Nonrecourse Deductions shall be allocated
each year to the Member that bears the economic risk of loss (within the meaning
of Regulations Section
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
1.752-2) for the Member Nonrecourse Debt to which such Member Nonrecourse
Deductions are attributable.
10.2.8 The allocations set forth in Sections 10.2.1, 10.2.2,
10.2.3, 10.2.4, 10.2.5, 10.2.6 and 10.2.7 (the "Regulatory Allocations") are
intended to comply with certain requirements of Regulations Sections 1.704-1(b)
and 1.704-2. Notwithstanding the provisions of Section 10.1.2, the Regulatory
Allocations shall be taken into account by the Board of Managers in specially
allocating other items of income, gain, loss and deduction among the Members so
that, to the extent possible, the net amount of such allocations of other items
and the Regulatory Allocations to each Member shall be equal to the net amount
that would have been allocated to each such Member if the Regulatory Allocations
had not occurred. In exercising its discretion under this Section 10.2.8, the
Board of Managers shall take into account future Regulatory Allocations that,
although not yet made, are likely to offset other Regulatory Allocations
previously made.
10.3 Tax Allocations
10.3.1 Except as provided in Section 10.3.2, for income tax
purposes under the Code and the Regulations and for purposes of applicable state
and local law, each Company item of income, gain, loss and deduction shall be
allocated between the Members in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to this Article 10.
10.3.2 Tax items with respect to Company Assets that are
contributed to the Company with a Gross Asset Value that varies from its basis
in the hands of the contributing Member immediately preceding the date of
contribution shall be allocated between the Members for income tax purposes
pursuant to Regulations promulgated under Code Section 704(c) or, if applicable,
corresponding provisions of applicable state or local law so as to take into
account such variation. The Company shall account for such variation under any
permissible method under Section 704(c) as determined by the Tax Matters
Partner. If the Gross Asset Value of any Company Asset is adjusted pursuant to
subsection (2) of the definition of "Gross Asset Value," subsequent allocations
of income, gain, loss and deduction with respect to such Company Asset shall
take account of any variation between the adjusted basis of such Company Asset
for federal income tax purposes and its Gross Asset Value under any permissible
method under Section 704(c) as determined by the Tax Matters Partner. Any tax
credits will be allocated to the Members in accordance with the requirements of
applicable tax law. Allocations pursuant to this Section 10.3.2 are solely for
purposes of federal, state and local taxes and shall not affect, or in any way
be taken into account in computing, any Member's Capital Account or share of Net
Profits, Net Losses and any other items or distributions pursuant to any
provision of this Agreement.
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
10.4 Other Provisions
10.4.1 For any Fiscal Year during which any Membership
Interest or Economic Interest or portion thereof is Transferred between the
Members or to another Person or is otherwise disposed of or acquired, or there
is for any other reason a change in the Members' respective Percentage
Interests, the portion of the Net Profits, Net Losses and other items of income,
gain, loss, deduction and credit with respect to such Membership Interest or
Economic Interest or portion thereof shall be allocated and, to the extent
necessary apportioned, under any method allowed pursuant to Section 706 of the
Code and the applicable Regulations, as reasonably determined by the Board of
Managers; provided, that the Board of Managers shall utilize consistent methods
with respect to the same or substantially similar transactions and items in
making such allocations or apportionments with respect to all such changes in
the Members' respective Percentage Interests, whether occurring within a single
Fiscal Year or in different Fiscal Years.
10.4.2 In the event that the Code or any Regulations require
allocations of items of income, gain, loss, deduction or credit different from
those set forth in this Article 10, the Board of Managers is hereby authorized
to make new allocations in reliance on the Code and such Regulations, and no
such new allocation shall give rise to any claim or cause of action by any
Member, provided that such allocations are consistent with the advice of the
Company Accountant or tax counsel and are not likely to alter materially the
amounts which each Member is entitled to receive under the terms of this
Agreement.
10.4.3 For purposes of determining a Member's proportional
share of the Company's "excess nonrecourse liabilities" within the meaning of
Regulations Section 1.752-3(a)(3), each Member's interest in Net Profits shall
be such Member's Percentage Interest.
10.4.4 Section 482 Adjustments.
(a) Company Section 482 Adjustment. If the Internal
Revenue Service or any applicable state or local taxing authority reallocates an
item of income, deduction or loss to the Company pursuant to Code Section 482 or
any similar rule or principle of law (a "Company Section 482 Allocation"), and a
Member or an Affiliate of such Member has a corresponding "correlative item," as
determined under Regulations Section 1.482-1(g) (the "Member Correlative Item"),
the item of income, deduction or loss constituting such Company Section 482
Allocation shall be specially allocated to and reflected in the Capital Account
of the Member who received (or whose Affiliate received) such Member Correlative
Item, and such Member shall be treated as making any corresponding deemed
capital contribution or receiving any corresponding deemed distribution, with
such deemed capital contribution or distribution, as the case may be, reflected
in the Capital Account of such Member.
(b) Member Section 482 Adjustment. If the Internal
Revenue Service or any applicable state or local taxing authority reallocates an
item of income, deduction or loss to a Member or an Affiliate of such Member
pursuant to Code Section 482 or any similar rule or
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
principle of law (a "Member Section 482 Allocation"), and the Company has a
corresponding "correlative item," as determined under Regulations Section
1.482-1(g) (the "Company Correlative Item"), such Company Correlative Item shall
be specially allocated to and reflected in the Capital Account of the Member
that received (or whose Affiliate received) such Member Section 482 Allocation,
and such Member shall be treated as making any corresponding deemed capital
contribution or receiving any corresponding deemed distribution, with such
deemed capital contribution or distribution, as the case may be, reflected in
the Capital Account of such Member.
(c) Corresponding Treatment if Foreign Adjustment. If
any taxing authority outside the United States makes an adjustment to the
income, deduction or loss of the Company or a Member (or an Affiliate of a
Member) that is analogous to an adjustment under Code Section 482, the Board of
Managers shall use commercially reasonable efforts to handle any affected items
of the Company in a manner analogous to the treatment of an adjustment under
Code Section 482 as set forth in Sections 10.4.4(a) and 10.4.4(b) above.
10.4.5 The Members acknowledge and are aware of the income tax
consequences of the allocations made by this Article 10 and hereby agree to be
bound by the provisions of this Article 10 in reporting their shares of the
Company's income and loss for federal, state and local income tax purposes.
Without limiting the foregoing sentence, each Member acknowledges that, while it
presently has no plan or intention to take a position in preparing a tax return
that requires it to file a notice of inconsistent treatment under Code Section
6222(b), if it intends to do so in the future, it shall use its best efforts to
provide at least ten (10) days advance notice of such intent to the Company and
shall, if so requested by the Company, consult with the Tax Matters Partner
concerning such position.
All matters concerning the allocations and other determinations provided for in
this Article 10 and any accounting procedures not expressly provided for in this
Agreement shall be determined by the Board of Managers in a manner consistent
with the terms and intent of this Agreement.
ARTICLE 11.
MISCELLANEOUS
11.1 Amendments
Any provision of this Agreement may be amended if, and only
if, such amendment is in writing and is duly executed by all Members; provided,
however, that amendments may be made to this Agreement from time to time by the
Board of Managers, without the consent of either Member, to take such actions as
may be reasonably necessary (if any) to insure that the Company will be treated
as a partnership for federal income tax purposes. Upon the making of any
amendment to this Agreement in accordance with the previous sentence, the Board
of Managers shall prepare and file such documents and certificates as may be
required under the Act and under any other Applicable Law.
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Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
11.2 No Waiver
Any provision of this Agreement may be waived if, and only if,
such waiver is in writing and is duly executed by the party against whom the
waiver is to be enforced. No failure or delay by any party in exercising any
right, power or privilege under this Agreement shall operate as a waiver thereof
nor shall any single or partial waiver or exercise thereof preclude the
enforcement of any other right, power or privilege.
11.3 Entire Agreement
This Agreement, together with the other documents, exhibits
and schedules referred to herein and therein, constitute the entire agreement
between the parties hereto pertaining to the subject matter hereof, and
supersede any and all prior oral and written, and all contemporaneous oral,
agreements or understandings pertaining thereto. There are no agreements,
understandings, restrictions, warranties or representations relating to such
subject matter among the parties other than those set forth herein and in the
other documents, exhibits and schedules referred to herein and therein.
11.4 Further Assurances
Each of the parties hereto does hereby covenant and agree on
behalf of itself, its successors and its assigns, without further consideration,
to prepare, execute, acknowledge, file, record, publish, and deliver such other
instruments, documents and statements, and to take such other action as may be
required by law or reasonably necessary or advisable to effectively carry out
the purposes of this Agreement.
11.5 Notices
Unless otherwise provided herein, all notices, requests,
instructions or consents required or permitted under this Agreement shall be in
writing and will be deemed given: (a) when delivered personally; (b) when sent
by confirmed facsimile; (c) ten (10) Business Days after having been sent by
registered or certified mail, return receipt requested, postage prepaid; or (d)
three (3) Business Days after deposit with an internationally recognized
commercial overnight carrier specifying next-day delivery, with written
verification of receipt. All communications will be sent to the addresses listed
on Exhibit A (or to such other address or facsimile number as may be designated
by a party giving written notice to the other parties pursuant to this Section
11.5).
11.6 Tax Matters
11.6.1 Tax Matters Partner.
(a) The Company shall file an election pursuant to Code
Section 6231(a)(1)(B)(ii) to have Code Section 6231(a)(1)(B)(i) not apply. For
so long as Micron and/or any of its Affiliates has an aggregate Percentage
Interest greater than fifty percent (50%), Micron
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Securities and Exchange Commission.
shall serve as the Company's "Tax Matters Partner" (as defined in Code Section
6231(a)(7)) and shall perform any similar or corresponding role under applicable
state law. The Tax Matters Partner shall perform the duties imposed on a Tax
Matters Partner under the Code and shall be entitled to expend Company funds for
(or to be reimbursed for) reasonable third-party costs relating thereto. All
legal and accounting fees relating to any audits of the Company shall be borne
by the Company; provided, that the Members shall bear the costs of any audits of
their separate tax returns. In the event the United States Internal Revenue
Service or any other applicable Governmental Authority notifies the Tax Matters
Partner of any proposed Proceeding relating to the Company's information or tax
returns or to the amount of the liability of the Company for any Tax, the Tax
Matters Partner shall promptly notify the other Members of such matter, shall
provide relevant factual information (to the extent known) describing any
asserted liability for Tax in reasonable detail and shall provide copies of any
notice or other documents received from the Internal Revenue Service or other
applicable Governmental Authority with respect to such matter. The Tax Matters
Partner shall at all times keep the other Members informed as to the status of
all such Proceedings.
(b) The Member designated as Tax Matters Partner is
hereby authorized to make all elections available to the Company for federal,
state, local, and foreign tax purposes, except that in no event shall the
Company file an election to be treated as a corporation or as an association
taxable as a corporation for United States federal income tax purposes or for
purposes of income or corporate franchise tax purposes under the law of any
State of the United States.
(c) The Tax Matters Partner shall prepare or cause to be
prepared all appropriate income and information tax returns for the Company. All
such returns shall be subject to review by the other Member(s) before filing and
shall be delivered to the other Member(s) for review not fewer than ten (10)
Business Days in advance of the due date thereof (taking into account any
extensions actually obtained). All third-party costs and expenses reasonably
incurred by the Tax Matters Partner in performing its duties described in this
Section 11.6 or otherwise in accordance with the terms of this Agreement
(including legal and accounting fees) shall be borne by the Company. Each Member
shall provide to the Tax Matters Partner such information as the Tax Matters
Partner deems necessary or appropriate in connection with its activities as Tax
Matters Partner. The Tax Matters Partner shall cooperate with the Members by
providing to each Member such information as the Member may reasonably request
concerning the Company and its transactions in connection with the determination
of such Member's liability for any Tax or any Proceeding relating thereto.
(d) The provisions of this Section 11.6 shall survive
the termination or dissolution of the Company and shall remain binding on the
Members for such period of time as is necessary to resolve any and all matters
regarding the Tax treatment of the Company and Tax items attributable to the
Company.
11.6.2 Standards. The Tax Matters Partner and its Affiliates
shall not be liable, responsible, or accountable, in damages or otherwise, to
the Company or to any other Member(s)
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for doing any act or failing to do any act, with respect to the Tax Matters
Partner's duties set forth in this Section 11.6 or otherwise performed, the
effect of which may cause or result in loss or damage to the Company or any
Member(s), unless the Tax Matters Partner or one of its Affiliates engages in
gross negligence or willful misconduct.
11.7 Governing Law
This Agreement will be governed by and construed in accordance
with the laws of the State of Delaware, United States of America, as applied to
agreements among Delaware residents entered into and wholly to be performed
within the State of Delaware (without reference to any choice or conflicts of
laws rules or principles that would require the application of the laws of any
other jurisdiction).
11.8 Construction; Interpretation
11.8.1 Certain Terms. The words "hereof," "herein," "hereto,"
"hereunder" and similar words refer to this Agreement as a whole and not to any
particular provision of this Agreement. The term "including" is not limited and
means "including without limitation."
11.8.2 Section References; Titles and Subtitles. Unless
otherwise noted, all references to Sections and Exhibits herein are to Sections
and Exhibits of this Agreement. The titles, captions and headings of this
Agreement are inserted for convenience of reference only and are not intended to
be a part of or to affect the meaning or interpretation of this Agreement.
11.8.3 Reference to Persons, Agreements, Statutes. Unless
otherwise expressly provided herein, (i) references to a Person include its
successors and permitted assigns, (ii) references to agreements (including this
Agreement) and other contractual instruments shall be deemed to include all
subsequent amendments, restatements and other modifications thereto or
supplements thereof and (iii) references to any statute or regulation are to be
construed as including all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting such statute or regulation.
11.8.4 Presumptions. No party, nor its counsel, shall be
deemed the drafter of this Agreement for purposes of construing the provisions
of this Agreement, and all provisions of this Agreement shall be construed in
accordance with their fair meaning, and not strictly for or against any party.
11.9 Rights and Remedies Cumulative
The rights and remedies provided by this Agreement are
cumulative and the use of any one right or remedy by any party shall not
preclude or waive its right to use any or all other remedies. Said rights and
remedies are given in addition to any other rights the parties may have by law,
statute, ordinance or otherwise.
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Securities and Exchange Commission.
11.10 No Assignment; Binding Effect
Except as otherwise expressly provided herein, no party may
assign, delegate or otherwise transfer any of its rights or obligations
hereunder to any third party, whether by assignment, transfer, Change in Control
or other means, without the prior written consent of each other party. Any
attempted assignment in violation of the foregoing shall be null and void.
Subject to the foregoing, this Agreement shall be binding on and inure to the
benefit of the Members, their heirs, executors, administrators, successors and
all other Persons hereafter holding, having or receiving an interest in the
Company.
11.11 Severability
If any provision in this Agreement will be found or be held to
be invalid or unenforceable, then the meaning of said provision will be
construed, to the extent feasible, so as to render the provision enforceable,
and if no feasible interpretation would save such provision, it will be severed
from the remainder of this Agreement which will remain in full force and effect
unless the severed provision is essential and material to the rights or benefits
received by any party. In such event, the parties will use their respective best
efforts to negotiate, in good faith, a substitute, valid and enforceable
provision or agreement which most nearly effects the parties' intent in entering
into this Agreement.
11.12 Counterparts
This Agreement may be executed in counterparts, each of which
so executed will be deemed to be an original and such counterparts together will
constitute one and the same agreement. Execution and delivery of this Agreement
by exchange of facsimile copies bearing the facsimile signature of a party shall
constitute a valid and binding execution and delivery of this Agreement by such
party.
11.13 Dispute Resolution
The parties hereby agree that claims, disputes or
controversies of whatever nature, arising out of, in connection with, or in
relation to the interpretation, performance or breach of this Agreement (or any
other agreement contemplated by or related to this Agreement), shall be first
raised to the chief executive officer or another officer of each of the Members
(appointed by such Member's chief executive officer) for discussion and attempt
at resolution in good faith among such chief executive officers or any
individuals appointed by such chief executive officers for such discussions and
attempt at resolution, and if after thirty (30) days of such raising to the
chief executive officers the parties are unable to come to a resolution, each of
the parties shall be free to pursue any such claim, dispute or controversy in
court.
11.14 Third-Party Beneficiaries
None of the provisions of this Agreement shall be for the
benefit of or be enforceable by any creditor of the Company or by any
third-party creditor of any Member. This
45
**** Material omitted pursuant to a request for confidential treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
Agreement is not intended to confer any rights or remedies hereunder upon, and
shall not be enforceable by, any Person other than the parties hereto, their
respective successors and permitted assigns and, solely with respect to the
provision of Section 5.11, each Indemnitee and each other indemnified Person
addressed therein.
11.15 Specific Performance
The parties agree that irreparable damage will result if this
Agreement is not performed in accordance with its terms, and the parties agree
that any damages available at law for a breach of this Agreement would not be an
adequate remedy. Therefore, the provisions hereof and the obligations of the
parties hereunder shall be enforceable in a court of equity, or other tribunal
with jurisdiction, by a decree of specific performance, and appropriate
injunctive relief may be applied for an granted in connection therewith. Such
remedies and all other remedies provided for in this Agreement shall, however,
be cumulative and not exclusive and shall be in addition to any other remedies
that a party may have under this Agreement, at law or in equity.
11.16 Consequential Damages
No party shall be liable to any other party under any legal
theory for indirect, special, incidental, consequential or punitive damages, or
any damages for loss of profits, revenue or business, even if such party has
been advised of the possibility of such damages (it being understood that
consequential damages arising from the breach of the confidentiality
restrictions set forth in the Non-Disclosure Agreement shall not be considered
to fall within any such category of damages).
(Signature Page Follows)
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**** Material omitted pursuant to a request for confidential treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
MEMBERS
MICRON TECHNOLOGY, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-------------------------------------
PHOTRONICS, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-------------------------------------
S-1
EXHIBIT A
---------------------------------------------------------------------------------------------------------------
Name and Address of Gross Asset Value of Capital Account Percentage Number of Units
Members Contributed Property Balance Interest
---------------------------------------------------------------------------------------------------------------
Micron Technology, Inc. 50.01% 50,010
0000 X. Xxxxxxx Xxx
Xxxxx, Xxxxx 00000-0000
Attn: Chief Operating
Officer
Fax: (000) 000-0000
With a required copy to:
General Counsel
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------
Photronics, Inc. 49.99% 49,990
00 Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X.
Xxxxx, Senior Vice
President and General
Counsel
Fax: (000) 000-0000
And
00 Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxx,
Senior Vice President and
Chief Financial Officer
Fax: (000) 000-0000
---------------------------------------------------------------------------------------------------------------
A-1
EXHIBIT B
[****]
B-1
**** Material omitted pursuant to a request for confidential treatment under
Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the
Securities and Exchange Commission.
EXHIBIT C
Xxxxxxx X. Xxxxxxx, Xxxx X. Xxxxx and Xxxxxxxxxxx X. Xxxxxxx.
C-1
EXHIBIT D
INSURANCE POLICIES AT CLOSING
1. Property Insurance: Coverage for "all risk" property insurance,
insuring against physical damage on a replacement basis for assets, and
insuring against resultant business interruption from physical damage
on an actual-loss sustained basis. The property insurance limit must
equal full replacement value of all physical property and one year
business interruption insurance.
2. Transit Insurance: Coverage for repair or replacement of capital
equipment in transit up to the invoiced amount for the equipment.
3. Liability Insurance:
o Commercial general liability insurance, including but not
limited to contractual liability, personal injury, completed
operations, product liability and host liquor liability,
coverage for bodily injury and property damage liability, with
a limit of not less than $50 million for each loss occurrence
and not less than $50 million in annual aggregate coverage.
o Automobile liability coverage for bodily injury and property
damage liability with a limit of not less than $10 million for
each loss occurrence and not less than $10 million in annual
aggregate coverage, for owned, hired, and non-owned
automobiles.
4. Workers Compensation & Employers Liability: Statutory workers
compensation coverage for employees, if any, of the Company and its
subsidiaries, including employers' liability coverage with a limit of
not less than $10 million for each loss occurrence and $10 million in
annual aggregate coverage.
D-1
