Exhibit 2.1
MASTER SEPARATION AND
DISTRIBUTION AGREEMENT
THIS MASTER SEPARATION AND
DISTRIBUTION AGREEMENT (the “ Agreement ”) is
made and entered into as of April 4, 2004, by and between Motorola,
Inc., a Delaware corporation (“ Motorola ”), and
Freescale Semiconductor, Inc., a Delaware corporation (“
Freescale ”). Capitalized terms used and not otherwise
defined in this Agreement have the meanings ascribed to such terms
in Article 1 of this Agreement.
RECITALS
WHEREAS, Motorola has determined
that it would be appropriate, desirable and in the best interests
of Motorola and Motorola’s stockholders to separate the SPS
Business from Motorola;
WHEREAS, in connection with the
separation of the SPS Business from Motorola, Motorola desires to
contribute or otherwise transfer, and to cause certain of its
Subsidiaries to contribute or otherwise transfer, certain Assets
and Liabilities associated with the SPS Business, including the
stock or other equity interests of certain of Motorola’s
Subsidiaries dedicated to the SPS Business, to Freescale and
certain of Freescale’s Subsidiaries (collectively, the
“ Contribution ”);
WHEREAS, Freescale intends to offer
and sell for its own account a limited number of shares of
Freescale Class A Common Stock pursuant to an initial public
offering of such shares (the “ IPO ”), and in
furtherance thereof, Freescale has previously filed the IPO
Registration Statement with the SEC which has not yet become
effective;
WHEREAS, in connection with the
Contribution and in exchange for the SPS Assets contributed by
Motorola directly to Freescale, Freescale intends to (i) convert
the Freescale Common Stock held by Motorola into shares of
Freescale Class B Common Stock such that Motorola will own all of
the outstanding Freescale Class B Common Stock immediately
following the consummation of the IPO, (ii) distribute to Motorola
a portion of the IPO proceeds and Freescale Borrowing proceeds,
which Motorola intends to transfer to creditors of Motorola, and
(iii) assume the SPS Liabilities;
WHEREAS, Motorola intends, after the
IPO, to distribute to holders of shares of Motorola Common Stock
the outstanding shares of Freescale Common Stock then owned by
Motorola (the “ Distribution ”);
WHEREAS, Motorola and Freescale
intend that the contribution of Assets by Motorola to Freescale
pursuant to Section 2.1 of this Agreement and the Distribution,
taken together, will qualify as a reorganization for U.S. federal
income tax purposes pursuant to which no gain or loss will be
recognized by Motorola or its stockholders under Section 355,
361(b)(3), 368(a)(1)(D) and related provisions of the Code, and
that this Agreement is intended to be, and is hereby adopted as, a
plan of reorganization under Section 368 of the Code;
and
WHEREAS, the parties intend in this
Agreement and the Ancillary Agreements to set forth the principal
arrangements between them regarding the Contribution, the IPO and
the Distribution:
AGREEMENT
NOW, THEREFORE, in consideration of
the foregoing and the mutual covenants and agreements set forth
below, and other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereby agree
as follows:
ARTICLE 1
DEFINITIONS
The following terms, as used in this
Agreement, have the following meanings:
“ Action ” means
any suit, arbitration, inquiry, proceeding or investigation by or
before any court, governmental or other regulatory or
administrative agency or commission or any arbitration tribunal
asserted by a Person.
“ ADR ” has the
meaning set forth in Section 9.3(b) of this Agreement.
“ Affiliate ” of
any specified Person means any other Person directly or indirectly
“ controlling ,” “ controlled by
,” or “ under common control with ”
(within the meaning of the Securities Act), such specified Person;
provided , however , that for purposes of this
Agreement, unless this Agreement expressly provides otherwise, the
determination of whether a Person is an Affiliate of another Person
will be made assuming that no member of the Motorola Group is an
Affiliate of any member of the Freescale Group.
“ Agreement ” has
the meaning set forth in the preamble to this Agreement.
“ Ancillary Agreements
” means each of the Contribution Agreements, the Employee
Matters Agreement, the Freescale Transition Services Agreement, the
Intellectual Property Assignment Agreement, the Intellectual
Property License Agreement, the Motorola Transition Services
Agreement, the Registration Rights Agreement and the Tax Sharing
Agreement, including any exhibits, schedules, attachments, tables
or other appendices thereto, and each agreement and other
instrument contemplated herein or therein.
“ Annual Financial
Statements ” has the meaning set forth in Section
5.1(a)(v) of this Agreement.
“ Assets ” means
assets, properties and rights (including goodwill and rights
arising under Contracts), wherever located (including in the
possession of vendors, other Persons or elsewhere), whether real,
personal or mixed, tangible, intangible or contingent, in each case
whether or not recorded or reflected or required to be recorded or
reflected on the books and records or financial statements of any
Person.
“ Bad Act ” has
the meaning set forth in Section 2.2 of this Agreement.
“ Business Day ”
means a day other than a Saturday, a Sunday or a day on which
banking institutions located in Chicago, Illinois or New York, New
York are authorized or obligated by law or executive order to
close.
“ Claimed Amount
” has the meaning set forth in Section 8.3(a) of this
Agreement.
“ Claim Notice ”
has the meaning set forth in Section 8.3(a) of this
Agreement.
“ Code ” means
the Internal Revenue Code of 1986, as amended.
“ Contracts ”
means any contract, agreement, lease, license, sales order,
purchase order, instrument or other commitment that is binding on
any Person or any part of its property under applicable
law.
“ Contribution ”
has the meaning set forth in the Recitals to this
Agreement.
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“ Contribution
Agreements ” means the agreements entered into by and
between Motorola and certain of the Motorola Subsidiaries, on the
one hand, and Freescale and certain of the Freescale Subsidiaries,
on the other hand, pursuant to which the Contribution will be
effected.
“ Controlling Party
” has the meaning set forth in Section 8.3(d)(ii) of this
Agreement.
“ Covered Subsidiary
” means a corporation or other legal entity controlled or
owned, directly or indirectly, by Motorola or Freescale, as
applicable, that satisfies the definition of
“Subsidiary” under a Motorola insurance
policy.
“ Damages ” means
all losses, claims, demands, damages, Liabilities, judgments, dues,
penalties, assessments, fines (civil, criminal or administrative),
costs, liens, forfeitures, settlements, fees or expenses (including
reasonable attorneys’ fees and expenses and any other
expenses reasonably incurred in connection with investigating,
prosecuting or defending a claim or Action), of any nature or kind,
whether or not the same would properly be reflected on a balance
sheet.
“ Dispute ” has
the meaning set forth in Section 9.3(a) of this
Agreement.
“ Distribution ”
has the meaning set forth in the Recitals to this
Agreement.
“ Distribution Agent
” has the meaning set forth in Section 4.4(a) of this
Agreement.
“ Distribution Date
” means the date on which the Distribution occurs.
“ Effective Date
” means April 4, 2004.
“ Employee Matters
Agreement ” means that certain Employee Matters Agreement
entered into by and between Motorola and Freescale effective as of
the Effective Date, as such Employee Matters Agreement may be
amended from time to time.
“ Environmental Law
” means any federal, state, local, foreign or international
statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, common law (including tort and
environmental nuisance law), legal doctrine, order, judgment,
decree, injunction, requirement or agreement with any governmental
authority, now or hereafter in effect, relating to health, safety,
pollution or the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata) or to emissions,
discharges, releases or threatened releases of any substance
currently or at any time hereafter listed, defined, designated or
classified as hazardous, toxic, waste, radioactive or dangerous, or
otherwise regulated, under any of the foregoing, or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of any such
substances, including the Comprehensive Environmental Response,
Compensation and Liability Act, the Superfund Amendments and
Reauthorization Act and the Resource Conservation and Recovery Act
and comparable provisions in state, local, foreign or international
law.
“ Environmental
Liabilities ” means all Liabilities relating to, arising
out of, or resulting from, any Environmental Law or Contract
relating to environmental, health or safety matters (including all
removal, remediation or cleanup costs, investigatory costs,
response costs, natural resources damages, property damages,
personal injury damages, costs of compliance with any product take
back requirements or with any settlement, judgment or other
determination of Liability and indemnity, contribution or similar
obligations) and all costs and expenses, interest, fines, penalties
or other monetary sanctions in connection therewith.
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“ Exchange Act ”
means the Securities Exchange Act of 1934, as amended from time to
time, together with the rules and regulations promulgated
thereunder.
“ Existing IP Litigation
Matters ” means the following pending litigation matters:
(i) Motorola, Inc. v. Analog Devices, Inc., No. 1:03-CV-0131,
United States District Court, Eastern District of Texas (Beaumont
Division); (ii) STMicroelectronics v. Motorola, Inc., No.
4:03cv276, United States District Court, Eastern District of Texas
(Sherman Division); and (iii) Motorola, Inc. v. Micron Technology,
Inc., No. A04 CA 007, United States District Court, Western
District of Texas (Austin Division).
“ Financial Statements
” means the Annual Financial Statements and Quarterly
Financial Statements collectively.
“ Freescale ” has
the meaning set forth in the preamble to this Agreement.
“ Freescale Bank
Facilities ” means the term loan facility and revolving
credit facility, if any, contemplated to be entered into by
Freescale concurrently with the IPO with a syndicate of bank and
institutional lenders on such terms and conditions as agreed to by
Motorola, Freescale and the other parties to the Freescale Bank
Facilities.
“ Freescale High Yield
Notes ” means the senior unsecured notes contemplated to
be issued by Freescale concurrently with the IPO on such terms and
conditions as agreed to by Motorola, Freescale and the underwriters
for the Freescale High Yield Notes.
“ Freescale Borrowing
” means new indebtedness of Freescale and its Subsidiaries to
be incurred by the IPO pursuant to the Freescale Bank Facilities
and the issuance of the Freescale High Yield Notes.
“ Freescale Capital
Stock ” means all classes or series of capital stock of
Freescale, including the Freescale Class A Common Stock, the
Freescale Class B Common Stock, and all options, warrants and other
rights to acquire such capital stock.
“ Freescale Class A Common
Stock ” means the Class A common stock, $0.01 par value
per share, of Freescale.
“ Freescale Class B Common
Stock ” means the Class B common stock, $0.01 par value
per share, of Freescale.
“ Freescale Common
Stock ” means the common stock of Freescale, including
the Freescale Class A Common Stock and the Freescale Class B Common
Stock.
“ Freescale Group
” means Freescale, each Person that Freescale directly or
indirectly controls (within the meaning of the Securities Act)
immediately after the Effective Date, and each other Person that
becomes an Affiliate of Freescale after the Effective
Date.
“ Freescale
Indebtedness ” means the aggregate principal amount of
total liabilities (whether long-term or short-term) for borrowed
money (including capitalized leases) of the Freescale Group
collectively, as determined for purposes of its Financial
Statements prepared in accordance with GAAP.
“ Freescale Indemnified
Parties ” has the meaning set forth in Section 8.2 of
this Agreement.
“ Freescale Public
Documents ” has the meaning set forth in Section
5.1(a)(viii) of this Agreement.
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“ Freescale Shared
Contract ” means any Contract included in the SPS Assets
relating in part to the Motorola Business.
“ Freescale Transfer
Agent ” means the transfer agent and registrar for the
Freescale Class A Common Stock.
“ Freescale Transition
Services Agreement ” means the Transition Services
Agreement entered into by and between Motorola and Freescale
effective as of the Effective Date, pursuant to which one or more
members of the Motorola Group will provide certain transition
services to one or more members of the Freescale Group, as such
Freescale Transition Services Agreement may be amended from time to
time.
“ Freescale Voting
Stock ” has the meaning set forth in Section 5.2 of this
Agreement.
“ Freescale’s
Auditors ” has the meaning set forth in Section 5.1(b)(i)
of this Agreement.
“ GAAP ” means
U.S. generally accepted accounting principles, consistently
applied.
“ Global Reorganization and
Restructuring Plan ” means the Global Reorganization and
Restructuring Plan in substantially the form attached to this
Agreement as Exhibit A , pursuant to which certain Assets
and Liabilities will be transferred between the parties and their
Affiliates in connection with the Contribution.
“ Group ” means
either the Motorola Group or the Freescale Group, as the context
requires.
“ Indemnified Party
” has the meaning set forth in Section 8.3(a) of this
Agreement.
“ Indemnifying Party
” has the meaning set forth in Section 8.3(a) of this
Agreement.
“ Information ”
means information, whether or not patentable or copyrightable, in
written, oral, electronic or other tangible or intangible forms,
stored in any medium, including studies, reports, records, books,
contracts, instruments, surveys, discoveries, ideas, concepts,
know-how, techniques, designs, specifications, drawings,
blueprints, diagrams, models, prototypes, samples, flow charts,
data, computer data, disks, diskettes, tapes, computer programs or
other software, marketing plans, customer names, communications by
or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or
under their direction (including attorney work product), and other
technical, financial, employee or business information or
data.
“ Intellectual Property
” has the meaning set forth in the Intellectual Property
Assignment Agreement.
“ Intellectual Property
Assignment Agreement ” means that certain Intellectual
Property Assignment Agreement entered into by and between Motorola
and Freescale effective as of the Effective Date, as such
Intellectual Property Assignment Agreement may be amended from time
to time.
“ Intellectual Property
License Agreement ” means that certain Intellectual
Property License Agreement entered into by and between Motorola and
Freescale effective as of the Effective Date, as such Intellectual
Property License Agreement may be amended from time to
time.
“ Intended Transferee
” has the meaning set forth in Section 2.5(b) of this
Agreement.
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“ Intended Transferor
” has the meaning set forth in Section 2.5(b) of this
Agreement.
“ Inter-Group
Indebtedness ” means indebtedness for borrowed funds
between a member of the Motorola Group and a member of the
Freescale Group as set forth on the Motorola Treasury
capitalization plan.
“ IPO ” has the
meaning set forth in the Recitals to this Agreement.
“ IPO Registration
Statement ” means the registration statement on Form S-1
(SEC File No. 111250) as filed by Freescale with the SEC in
connection with the IPO, together with all amendments and
supplements thereto.
“ IPO Settlement Date
” means the date on which the First Time of Delivery (as
defined in the Underwriting Agreement) occurs.
“ Iridium Claims
” means any Liability in respect of any governmental,
judicial or adversarial proceeding, litigation, arbitration,
dispute, claim, cause of action or investigation, relating to the
Iridium satellite communications business, including without
limitation Freeland v. Iridium World Communications, Inc., et al.,
M&C Partners III v. Galvin, et al., Statutory Committee of
Unsecured Creditors v. Motorola, Inc. and the proceedings relating
to the private criminal complaint and the civil suit brought by
Iridium India Telecom Ltd. against Motorola, Inc., et
al.
“ Iridium Data ”
means any data, disk or any other Information relating to the
Iridium satellite communications business, including, but without
limitation, data located on mainframe systems IBM 9672-Y36 and a
9672-R36 on enterprise storage server IBM 2105 Model F20 DASD with
any of the following volume identification numbers: PCIC40, PDAB02,
PDAB03, PDAB04, PDAB06, PDAB07, PDAB08, PDAB55, PDAB57, PDAB58,
PDB201, PDB204, PDB205, PDBT00, PMIG40, PPRV60, PPRV61, PPRV62,
PPRV63, PPRV64, PPRV65, PPRV66, PPRV67, PPRV68, PPRV69, PPRV6A,
PPRV6B, PPRV6C, PPRV6D, PPRV6E, PPRV6F, PPRV6G, PPRV6H, PPRV6I,
PPRV6J, PPRV6K, PPRV6L, PPRV6M, PPRV6N, PPRV6O, PPRV6P, PPRV6Q,
PPRV6R, PPRV6S, PPRV6T, PPRV6U, PPRV6V, PPRV6W, PPRV6X, PPRV6Y,
PPRV6Z, PPRV70, PPRV71, PPRV72, PPRV73, PPRV74, PPRV75, PPRV76,
PPRV77, PPRV78, PPRV79, PPRV7A, PPRV7B, PPRV7C, PPRV7D, PPRV7E,
PPRV7F, PPRV7G, PPRV7H, PPRV7I, PPRV7J, PPRV7K, PPRV7L, PPRV7M,
PPRV7N, PPRV7O, PPRV7P, PPRV7Q, PPRV7R, PPRV7S, PPRV7T, PPRV7U,
SGEGT1, SGEGT2, SGEGT3 and SGEGT4.
“ IRS ” means the
United States Internal Revenue Service.
“ Key Ancillary
Agreements ” means each of the Employee Matters
Agreement, the Freescale Transition Services Agreement, the
Intellectual Property Assignment Agreement, the Intellectual
Property License Agreement, the Motorola Transition Services
Agreement, the Registration Rights Agreement and the Tax Sharing
Agreement, including any exhibits, schedules, attachments, tables
or other appendices thereto.
“ Liabilities ”
means debts, liabilities (including Environmental Liabilities),
guarantees, assurances, commitments and obligations of any nature
or description, whether fixed, contingent or absolute, asserted or
unasserted, matured or unmatured, liquidated or unliquidated,
accrued or not accrued, known or unknown, due or to become due,
whenever or however arising (including, without limitation, whether
arising out of (i) any Contract or tort based on negligence or
strict liability or (ii) any act or failure to act by any past or
present Representative, whether or not such act or failure to act
was
6
within such Representative’s authority),
and whether or not the same would be required by GAAP to be
reflected in financial statements or disclosed in the notes
thereto.
“ Motorola ” has
the meaning set forth in the preamble to this Agreement.
“ Motorola Annual
Statements ” has the meaning set forth in Section
5.1(b)(ii) of this Agreement.
“ Motorola Business
” means the businesses or operations of the Motorola Group
other than the SPS Business.
“ Motorola Common Stock
” means the common stock, par value $3.00 per share, of
Motorola.
“ Motorola Credit
Agreement ” means that certain Motorola, Inc. Multi-Year
Credit Agreement dated as of May 30, 2002 entered into between
Motorola and the lenders party thereto, as the same may be amended
or replaced from time to time.
“ Motorola Disclosure
Portions ” means all material set forth in, or
incorporated by reference into, the IPO Registration Statement to
the extent relating exclusively to (i) the Motorola Group, (ii) the
Motorola Business, (iii) Motorola’s intentions with respect
to the Distribution, or (iv) the terms of the Distribution,
including, without limitation, the form, structure and terms of any
transaction(s) and/or offering(s) to effect the Distribution and
the timing of and conditions to the consummation of the
Distribution.
“ Motorola Group
” means Motorola and each Person that is an Affiliate of
Motorola (other than any member of the Freescale Group) immediately
after the Effective Date, and each other Person that becomes an
Affiliate of Motorola after the Effective Date.
“ Motorola Indemnified
Parties ” has the meaning set forth in Section 8.1 of
this Agreement.
“ Motorola Liabilities
” means the Liabilities of Motorola other than the SPS
Liabilities.
“ Motorola Public
Filings ” has the meaning set forth in Section
5.1(a)(xii) of this Agreement.
“ Motorola Shared
Contract ” means any Contract relating in part to the SPS
Business not included in the SPS Assets.
“ Motorola Transition
Services Agreement ” means the Transition Services
Agreement entered into by and between Motorola and Freescale
effective as of the Effective Date, pursuant to which one or more
members of the Freescale Group will provide certain transition
services to one or more members of the Motorola Group, as such
Motorola Transition Services Agreement may be amended from time to
time.
“ Motorola’s
Auditors ” has the meaning set forth in Section
5.1(b)(ii) of this Agreement.
“ Non-controlling Party
” has the meaning set forth in Section 8.3(d)(ii) of this
Agreement.
“ Ordinary Course of
Business ” means the ordinary course of the SPS Business
as conducted by Motorola and its Subsidiaries prior to the
Effective Date consistent with historical custom and practice
during normal day-to-day operations and not requiring any special
authorization of any nature.
“ Owning Party ”
has the meaning set forth in Section 6.2 of this
Agreement.
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“ Person ” means
an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity
or any department, agency, or political subdivision
thereof.
“ Possessor ” has
the meaning set forth in Section 6.3 of this Agreement.
“ Quarterly Financial
Statements ” has the meaning set forth in Section
5.1(a)(iv) of this Agreement.
“ Record Date ”
means the close of business on the date to be determined by
Motorola’s Board of Directors as the record date for
determining the stockholders of Motorola entitled to receive shares
of Freescale Common Stock pursuant to the Distribution.
“ Registration Rights
Agreement ” means the Registration Rights Agreement to be
entered into between Motorola and Freescale prior to the IPO, as
such Registration Rights Agreement may be amended from time to
time.
“ Regulation S-K
” means Regulation S-K of the General Rules and Regulations
promulgated by the SEC pursuant to the Securities Act.
“ Regulation S-X
” means Regulation S-X of the General Rules and Regulations
promulgated by the SEC pursuant to the Securities Act.
“ Representatives
” means, with respect to any Person, any of such
Person’s directors, officers, employees, agents, consultants,
advisors, accountants or attorneys.
“ Requestor ” has
the meaning set forth in Section 6.3 of this Agreement.
“ Retention Period
” has the meaning set forth in Section 6.4 of this
Agreement.
“ SEC ” means the
United States Securities and Exchange Commission or any successor
agency.
“ Securities Act
” means the Securities Act of 1933, as amended from time to
time, together with the rules and regulations promulgated
thereunder.
“ SPS Assets ”
means all of Motorola’s and its Subsidiaries’ right,
title and interest in and to:
(i) any and all Assets of Motorola
and its Subsidiaries that are used exclusively or held for use
exclusively in the SPS Business; and
(ii) any and all Assets that are
expressly listed, scheduled or otherwise clearly described in a
Contribution Agreement or any other Ancillary Agreement as Assets
to be transferred to Freescale or any other member of the Freescale
Group.
“ SPS Business ”
means (i) the businesses and operations conducted by the
Semiconductor Products Sector of Motorola and its Affiliates
(including, for purposes of this definition, any member of the
Freescale Group) prior to the Effective Date, including as
described in the IPO Registration Statement, and (ii) except as
otherwise expressly provided in this Agreement, any terminated,
divested or discontinued businesses or operations that at the time
of such termination, divestiture or discontinuation related to the
SPS Business (as described in the foregoing clause (i)) as then
conducted.
“ SPS Liabilities
” means the following:
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(i) any and all Liabilities to the
extent arising out of or relating to the SPS Business or the SPS
Assets, in each case whether such Liabilities arise or accrue prior
to, on or after the Effective Date (other than Tax-related
Liabilities which are specifically retained by Motorola under the
Tax Sharing Agreement and employee-related Liabilities which are
specifically retained by Motorola under the Employee Matters
Agreement);
(ii) any and all Liabilities to the
extent arising out of or relating to the operation of any business
conducted by any member of the Freescale Group at any time after
the Effective Date;
(iii) any and all Liabilities that
are expressly listed, scheduled or otherwise clearly described in a
Contribution Agreement or any other Ancillary Agreement as
Liabilities to be assumed by Freescale or any member of the
Freescale Group; and
(iv) all obligations of the
Freescale Group under or pursuant to this Agreement, any Ancillary
Agreement or any other instrument entered into in connection
herewith or therewith.
“ Steering Committee
” has the meaning set forth in Section 9.3(a)(i) of this
Agreement.
“ Subsidiary ”
means with respect to any specified Person, any corporation or
other legal entity of which such Person or any of its Subsidiaries
controls or owns, directly or indirectly, more than fifty percent
(50%) of the stock or other equity interest entitled to vote on the
election of the members to the board of directors or similar
governing body; provided , however , that unless the
context otherwise requires, references to Subsidiaries of Motorola
will not include the entities that will be transferred to Freescale
or other members of the Freescale Group pursuant to this Agreement,
including, without limitation, the entities listed on Exhibit 21.1
to the IPO Registration Statement, whether the transfer of such
entities occurs prior to or after the Effective Date.
“ Tax ” and
“ Taxes ” have the meanings set forth in the Tax
Sharing Agreement.
“ Tax Advisor ”
has the meaning set forth in the Tax Sharing Agreement.
“ Tax Control ”
means the definition of “control” set forth in Section
368(c) of the Code.
“ Tax-Free Status
” has the meaning set forth in the Tax Sharing
Agreement.
“ Tax Sharing Agreement
” means that certain Tax Sharing Agreement entered into by
and between Motorola and Freescale effective as of the Effective
Date, as such Tax Sharing Agreement may be amended from time to
time.
“ Third-Party Claim
” has the meaning set forth in Section 8.3(d)(i) of this
Agreement.
“ Underwriters ”
means the managing underwriters for the IPO as described in the IPO
Registration Statement.
“ Underwriting
Agreement ” means the Underwriting Agreement between
Motorola, Freescale and the Underwriters relating to the IPO, as
amended from time to time.
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ARTICLE 2
CONTRIBUTION AND
ASSUMPTION
Section 2.1
Contribution of SPS Assets . Unless otherwise provided in
this Agreement or in any Ancillary Agreement, on the Effective
Date, Motorola will (and Motorola will cause its applicable
Subsidiaries to) assign, transfer and convey to Freescale and its
applicable Subsidiaries, and Freescale will (and Freescale will
cause its applicable Subsidiaries to) receive and accept from
Motorola and its applicable Subsidiaries, all of Motorola’s
and its applicable Subsidiaries’ right, title and interest in
and to the SPS Assets. Such assignments, transfers and conveyances
will be effective at such times as provided in each respective
Ancillary Agreement and will be subject to the terms and conditions
of this Agreement and any applicable Ancillary
Agreement.
Section 2.2
Assumption of Liabilities . Unless otherwise provided in
this Agreement or in any Ancillary Agreement, on the Effective
Date, Freescale will (and Freescale will cause its applicable
Subsidiaries to) assume, and on a timely basis pay, perform,
satisfy and discharge the SPS Liabilities in accordance with their
respective terms. Freescale and its applicable Subsidiaries will be
responsible for all SPS Liabilities, regardless of (a) when or
where such Liabilities arose or arise, (b) whether the facts on
which they are based occurred on, prior to or subsequent to the
Effective Date, (c) where or against whom such Liabilities are
asserted or determined, (d) whether asserted or determined on,
prior to or subsequent to the Effective Date, or (e) whether
arising from or alleged to arise from negligence, recklessness,
violation of law, fraud or misrepresentation (each, a “
Bad Act ”) by any member of the Motorola Group, the
Freescale Group or any of their respective past or present
Representatives; provided , however , that this
clause 2.2(e) will not limit Freescale’s right to make a
claim against a Motorola Group member for Damages suffered by it to
the extent that such Damages are a direct result of a Bad Act
committed by a Motorola Group member subsequent to the Effective
Date; provided further , however , that
Freescale’s right to make such a claim may otherwise be
limited in any Ancillary Agreement. Such assumptions of SPS
Liabilities will be effective at such times as provided in each
respective Ancillary Agreement and will be subject to the terms and
conditions of this Agreement and any applicable Ancillary
Agreement.
Section 2.3
Effective Date; Deliveries . In furtherance of the
assignment, transfer and conveyance of the SPS Assets and the
assumption of the SPS Liabilities as set forth in this Agreement
and the Ancillary Agreements, unless otherwise provided in this
Agreement or in any Ancillary Agreement, on the Effective Date, the
parties will execute and deliver, and they will cause their
respective Subsidiaries and Representatives, as applicable, to
execute and deliver: (a) each of the Contribution Agreements and
other Ancillary Agreements; (b) such bills of sale, stock powers,
certificates of title, assignments of Contracts, subleases and
other instruments of transfer, conveyance and assignment as, and to
the extent, necessary or convenient to evidence the transfer,
conveyance and assignment to Freescale (or, as applicable, its
Subsidiaries) of all of Motorola’s (or, as applicable, its
Subsidiaries’) right, title and interest in and to the SPS
Assets; and (c) such assumptions of Contracts and other instruments
of assumption as, and to the extent, necessary or convenient to
evidence the valid and effective assumption of the SPS Liabilities
by Freescale (or, as applicable, its Subsidiaries).
Section 2.4
No Representations or Warranties . Freescale (on behalf of
itself and each member of the Freescale Group) acknowledges and
agrees that, except as expressly set forth in this Agreement or any
Ancillary Agreement, (a) no member of the Motorola Group is making
any representations or warranties in this Agreement or any
Ancillary Agreement, express or implied, as to the condition,
quality, merchantability or fitness of any SPS Asset transferred
pursuant to this Agreement, any Ancillary Agreement or any other
agreement contemplated hereby or thereby, (b) all such SPS Assets
will be transferred on an “ as is ,” “
where is ” basis (and in the case of any real
property, by means of a quitclaim or similar form deed or
conveyance), and (c) Freescale and its Affiliates will bear the
economic and legal risks that any conveyance will prove to be
insufficient to vest in them good and marketable title,
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free and clear of any security interest, pledge,
lien, charge, claim or other encumbrance of any nature
whatsoever.
Section 2.5
Transfers Not Effected On the Effective Date .
(a) The parties acknowledge and
agree that some of the transfers contemplated by this Article 2 may
not be effected on the Effective Date due to the inability of the
parties to obtain necessary consents or approvals or the inability
of the parties to take certain other actions necessary to effect
such transfers on the Effective Date. To the extent any transfers
contemplated by this Article 2 have not been fully effected on the
Effective Date, Motorola and Freescale will cooperate and use
commercially reasonable efforts (and will cause the applicable
members of its respective Group to use such efforts) to obtain any
necessary consents or approvals or take any other actions necessary
to effect such transfers as promptly as practicable following the
Effective Date.
(b) Nothing in this Agreement will
be deemed to require the transfer or assignment of any Contract or
other Asset by Motorola or one of its Subsidiaries (an “
Intended Transferor ”) to Freescale or one of its
Subsidiaries (an “ Intended Transferee ”) to the
extent that such transfer or assignment would constitute a material
breach of such Contract or cause forfeiture or loss of such Asset;
provided , however , that even if such Contract or
other Asset cannot be so transferred or assigned, such Contract or
other Asset will be deemed a SPS Asset solely for purposes of
determining whether any Liability is a SPS Liability.
(c) If an attempted assignment would
be ineffective or would impair an Intended Transferee’s
rights under any such SPS Asset so that the Intended Transferee
would not receive all such rights, then the parties will use
commercially reasonable efforts to provide to, or cause to be
provided to, the Intended Transferee, to the extent permitted by
law, the rights of any such SPS Asset and take such other actions
as may reasonably be requested by the other party in order to place
the Intended Transferee, insofar as reasonably possible, in the
same position as if such SPS Asset had been transferred as
contemplated hereby. In connection therewith, (i) the Intended
Transferor will promptly pass along to the Intended Transferee when
received all benefits derived by the Intended Transferor with
respect to any such SPS Asset, and (ii) the Intended Transferee
will pay, perform and discharge on behalf of the Intended
Transferor all of the Intended Transferor’s obligations with
respect to any such SPS Asset in a timely manner and in accordance
with the terms thereof which it may do without breach. If and when
such consents or approvals are obtained or such other required
actions have been taken, the transfer of the applicable SPS Asset
will be effected in accordance with the terms of this Agreement and
any applicable Ancillary Agreement.
Section 2.6
Shared Contracts . The parties agree as follows:
(a) At the written request of
Freescale, Motorola will, and will cause other members of the
Motorola Group to, to the extent permitted by the applicable
Motorola Shared Contract and applicable law, make available to
Freescale or applicable members of the Freescale Group the benefits
and rights under the Motorola Shared Contracts (except where the
benefits or rights under such Motorola Shared Contracts are
specifically provided pursuant to an Ancillary Agreement) which are
substantially equivalent to the benefits and rights enjoyed by the
Motorola Group under each Motorola Shared Contract for which such
request is made by Freescale, to the extent such benefits relate to
the SPS Business; provided , however , that the
applicable members of the Freescale Group will assume and discharge
(or promptly reimburse Motorola for) the obligations and
liabilities under the relevant Motorola Shared Contracts associated
with the benefits and rights so made available to them.
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(b) At the written request of
Motorola, Freescale will, and will cause other members of the
Freescale Group to, to the extent permitted by the applicable
Freescale Shared Contract and applicable law, make available to
Motorola or applicable members of the Motorola Group the benefits
and rights under the Freescale Shared Contracts (except where the
benefits or rights under such Freescale Shared Contracts are
specifically provided pursuant to an Ancillary Agreement) which are
substantially equivalent to the benefits and rights enjoyed by the
Freescale Group under each Freescale Shared Contract for which such
request is made by Motorola, to the extent such benefits relate to
the Motorola Business; provided , however , that the
applicable members of the Motorola Group will assume and discharge
(or promptly reimburse Freescale for) the obligations and
liabilities under the relevant Freescale Shared Contracts
associated with the benefits and rights so made available to
them.
The parties’ rights and
obligations pursuant to this Section 2.6 will terminate upon the
earliest to occur of (i) the Distribution Date, (ii) the
termination of Motorola’s obligation to effect the
Distribution pursuant to Section 9.14(b), and (iii) with respect to
any Motorola Shared Contract or Freescale Shared Contract in
particular, such time that the arrangement pursuant to this Section
2.6 is no longer permitted thereunder.
Section 2.7
Inter-Group Indebtedness . On or prior to the IPO Settlement
Date, each party will repay, and each party will cause each of its
Subsidiaries to repay, as applicable, its respective Inter-Group
Indebtedness in accordance with the terms of such Inter-Group
Indebtedness.
Section 2.8
Global Reorganization and Restructuring Plan . In connection
with the Contribution, each of Motorola and Freescale will take,
and each party will cause each member of its respective Group to
take, such action as reasonably necessary to consummate the
transactions contemplated by the Global Reorganization and
Restructuring Plan (whether prior to or after the Effective
Date).
ARTICLE 3
THE IPO
Section 3.1
Transactions Prior to the IPO . Subject to the conditions
hereof, Motorola and Freescale will use their commercially
reasonable efforts to consummate the IPO, including, without
limitation, by taking the actions specified in this Section
3.1.
(a) Freescale will file such
amendments or supplements to the IPO Registration Statement as may
be necessary in order to cause the IPO Registration Statement to
become and remain effective as required by applicable law or by the
Underwriters, including, without limitation, filing such amendments
and supplements thereto as may be required by the Underwriting
Agreement, the SEC or applicable securities laws. Motorola and
Freescale will also cooperate in preparing, filing with the SEC and
causing to become effective a registration statement registering
the Freescale Class A Common Stock under the Exchange Act, and any
registration statements or amendments thereto which are required to
reflect the establishment of, or amendments to, any employee
benefit and other plans necessary or appropriate in connection with
the IPO, the Distribution or the other transactions contemplated by
this Agreement and the Ancillary Agreements.
(b) Freescale and Motorola will
enter into the Underwriting Agreement, in form and substance
reasonably satisfactory to each party, and each party will comply
with its respective obligations thereunder.
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(c) Freescale will use its
commercially reasonable efforts to take all such action as may be
necessary or appropriate under applicable state securities and blue
sky laws of the United States (and any comparable laws under any
foreign jurisdictions) in connection with the IPO.
(d) Freescale will prepare, file and
use commercially reasonable efforts to seek to make effective, an
application for listing of the Freescale Class A Common Stock to be
issued in the IPO on the New York Stock Exchange, subject to
official notice of issuance.
(e) Freescale will participate in
the preparation of materials and presentations that Motorola and
the Underwriters will deem necessary or desirable.
(f) Freescale will cooperate in all
respects with Motorola in connection with the pricing and timing of
the Freescale Class A Common Stock to be issued in the IPO and
will, at Motorola’s direction, promptly take any and all
actions necessary or desirable to consummate the IPO as
contemplated by the IPO Registration Statement and the Underwriting
Agreement.
Section 3.2
Proceeds of the IPO; Consideration for SPS Assets . The IPO
will be a primary offering of Freescale Class A Common Stock, and
the net proceeds of the IPO will be used as described in the IPO
Registration Statement in the section entitled “Use of
Proceeds”. The contribution or other transfer of SPS Assets
by Motorola to Freescale in connection with the Contribution will
be in exchange for (a) the conversion of the Freescale Common Stock
held by Motorola into shares of Freescale Class B Common Stock such
that Motorola will own all of the outstanding Freescale Class B
Common Stock immediately following the consummation of the IPO, (b)
the distribution to Motorola of a portion of the IPO proceeds and
Freescale Borrowing proceeds, and (c) the assumption by Freescale
of SPS Liabilities. Motorola intends to transfer such IPO proceeds
and Freescale Borrowing proceeds received by Motorola from
Freescale to Motorola’s creditors in retirement of
outstanding third-party indebtedness.
Section 3.3
Conditions Precedent to Consummation of the IPO . The
obligations of the parties to consummate the IPO will be subject to
such conditions as Motorola will determine in its sole and absolute
discretion, which conditions will be for the sole benefit of
Motorola, may be waived by Motorola in its sole and absolute
discretion, and any determination by Motorola regarding the
satisfaction or waiver of any of such conditions will be
conclusive. Such conditions will include, without limitation, the
following:
(a) The IPO Registration Statement
will have been declared effective by the SEC, and there will be no
stop order in effect with respect thereto and no proceeding for
that purpose will have been instituted by the SEC;
(b) The actions and filings with
regard to state securities and blue sky laws of the United States
(and any comparable laws under any foreign jurisdictions) referred
to in Section 3.1 will have been taken and, where applicable, have
become effective or been accepted;
(c) The Freescale Class A Common
Stock to be issued in the IPO will have been accepted for listing
on the New York Stock Exchange, on official notice of
issuance;
(d) Freescale will have entered into
the Underwriting Agreement and all conditions to the obligations of
Freescale and the Underwriters thereunder will have been satisfied
or waived;
(e) Motorola will be satisfied in
its sole and absolute discretion that (i) it will possess Tax
Control of Freescale immediately following the consummation of the
IPO, (ii) all other matters regarding the Tax-Free Status will, to
the extent applicable as of the time the IPO is consummated,
be
13
satisfied or can reasonably be
anticipated to be satisfied, and (iii) there will be no event or
condition that may cause any of such conditions not to be satisfied
as of the time of the Distribution or thereafter;
(f) No order, injunction or decree
issued by any court or agency of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the
IPO or any of the other transactions contemplated by this Agreement
or any Ancillary Agreement will be in effect;
(g) Motorola will have determined
that the terms of the IPO, including the timing and pricing
thereof, and other material matters in connection therewith, are
acceptable to Motorola;
(h) Freescale will have incurred the
Freescale Borrowing on terms and with lender(s) acceptable to
Motorola; and
(i) This Agreement will not have
been terminated.
Section 3.4
Conversion of Outstanding Freescale Common Stock into Freescale
Class B Common Stock . Prior to the consummation of the IPO,
Motorola and Freescale will each take all actions (including,
without limitation, such actions that are required to effect the
adoption by Freescale of an amended and restated certificate of
incorporation) that Motorola determines, in its sole discretion,
may be required to provide for the conversion of the issued and
outstanding shares of Freescale Common Stock held by Motorola as of
the date hereof into a number of shares of Freescale Class B Common
Stock such that Motorola possesses Tax Control of Freescale at all
times before, at the time of, and immediately following, the
consummation of the IPO.
ARTICLE 4
THE DISTRIBUTION
Section 4.1
The Distribution . Motorola intends, following the
consummation of the IPO, to complete the Distribution by December
31, 2004. Motorola will, in its sole and absolute discretion,
determine the date of the consummation of the Distribution and all
terms of the Distribution, including without limitation, the form,
structure and terms of any transaction(s) and/or offering(s) to
effect the Distribution and the timing of and conditions to the
consummation of the Distribution. In addition, Motorola may, at any
time and from time to time until the completion of the
Distribution, modify or change the terms of the Distribution,
including, without limitation, by accelerating or delaying the
timing of the consummation of all or part of the Distribution.
Freescale will cooperate with Motorola in all respects to
accomplish the Distribution and will, at Motorola’s
direction, promptly take any and all actions necessary or desirable
to effect the Distribution, including, without limitation, to the
extent necessary, the registration under the Securities Act and the
Exchange Act of the Freescale Common Stock on an appropriate
registration form or forms to be designated by Motorola. Motorola
will select any investment banker(s) and manager(s) in connection
with the Distribution, as well as any financial printer,
solicitation and/or exchange agent and financial, legal, accounting
and other advisors for Motorola, provided , howeve r,
that nothing in this Agreement will prohibit Freescale from
engaging (at its own expense) its own financial, legal, accounting
and other advisors in connection with the Distribution.
Section 4.2
Actions Prior to the Distribution . In connection with the
Distribution, the parties will take the actions set forth in this
Section 4.2.
(a) Motorola and Freescale will
prepare and mail, prior to any Distribution Date, to the holders of
Motorola Common Stock, such information concerning Freescale and
the Distribution and such other matters as Motorola reasonably
determines and as may be required by law. Motorola and Freescale
will prepare, and Freescale will, to the extent required by
applicable law, file with the SEC any
14
such documentation that Motorola determines is
necessary or desirable to effect the Distribution, and Motorola and
Freescale will each use its commercially reasonable efforts to
obtain all necessary approvals from the SEC with respect thereto as
soon as practicable.
(b) Freescale will use its
commercially reasonable efforts to take all such action as may be
necessary or desirable under applicable state securities and blue
sky laws of the United States (and any comparable laws under any
foreign jurisdictions) in connection with the
Distribution.
(c) Freescale will prepare, file and
use commercially reasonable efforts to seek to make effective, an
application for listing of the Freescale Common Stock to be
distributed in the Distribution on the New York Stock Exchange,
subject to official notice of issuance.
(d) Freescale will take all
reasonable steps necessary or desirable to cause the conditions set
forth in Section 4.3 to be satisfied and to effect the
Distribution.
Section 4.3
Conditions to Distribution . The consummation of the
Distribution will be subject to the satisfaction, or waiver by
Motorola in its sole and absolute discretion, of the conditions set
forth in this Section 4.3. Any determination by Motorola regarding
the satisfaction or waiver of any of such conditions will be
conclusive. For the avoidance of doubt, in the event that Motorola
determines not to consummate the Distribution because one or more
of such conditions is not satisfied or for any other reason, such
determination by Motorola will not impact the effectiveness of the
Contribution or the IPO.
(a) The receipt by Motorola, in form
and substance satisfactory to it, of either, at its option and in
its sole and absolute discretion, a ruling by the IRS or an opinion
from its Tax Advisor regarding the Tax-Free Status and such other
matters, as it will determine to be necessary or advisable in its
sole and absolute discretion.
(b) The receipt of any governmental
approvals and material consents necessary to consummate the
Distribution, which approvals and consents will be in full force
and effect.
(c) No order, injunction, decree or
regulation issued by any court or agency of competent jurisdiction
or other legal restraint or prohibition preventing the consummation
of the Distribution will be in effect and no other event outside
the control of Motorola will have occurred or failed to occur that
prevents the consummation of the Distribution.
(d) The actions and filings
necessary or appropriate under applicable securities laws in
connection with the Distribution will have been taken or made, and,
where applicable, have become effective or been
accepted.
(e) The Freescale Common Stock to be
distributed in the Distribution will have been accepted for listing
on the New York Stock Exchange, subject to official notice of
issuance.
(f) The receipt by Motorola, in form
and substance satisfactory to it, of (i) an opinion from Delaware
counsel, selected by Motorola in its sole and absolute discretion,
regarding the appropriateness of the determination by the Motorola
Board of Directors that Motorola has sufficient surplus under
Delaware law to permit the Distribution, (ii) an opinion from its
financial advisor with respect to (A) the fairness, as of the date
of such opinion, to holders of Motorola Common Stock, from a
financial point of view, of the Distribution, and (B) the ability
of Motorola and Freescale, given their respective capital
structures following the Distribution, to finance their respective
operating and capital requirements through a specified date based
on conditions in the capital markets as of the date of
such
15
opinion, and (iii) appropriate certificates from
Freescale and/or Freescale’s senior management with respect
to factual matters required by the advisors to render the opinions
referenced in (i) and (ii).
Section 4.4
Certain Stockholder Matters .
(a) Subject to Section 4.3 hereof,
on or prior to the Distribution Date, Motorola will deliver to a
distribution agent to be appointed by Motorola (the “
Distribution Agent ”) for the benefit of holders of
record of Motorola Common Stock on the Record Date, a single stock
certificate, endorsed by Motorola in blank, representing all of the
outstanding shares of Freescale Common Stock then owned by
Motorola, and Motorola will instruct the Distribution Agent to
deliver to the Freescale Transfer Agent true, correct and complete
copies of the stock and transfer records reflecting the holders of
Motorola Common Stock entitled to receive shares of Freescale
Common Stock in connection with the Distribution. Motorola will
cause its transfer agent to instruct the Distribution Agent to
distribute on the Distribution Date or as soon as reasonably
practicable thereafter the appropriate number of shares of
Freescale Common Stock to each such holder or designated
transferee(s) of such holder. Motorola will cooperate, and will
instruct the Distribution Agent to cooperate, with Freescale and
the Freescale Transfer Agent, and Freescale will cooperate, and
will instruct the Freescale Transfer Agent to cooperate, with
Motorola and the Distribution Agent, in connection with all aspects
of the Distribution and all other matters relating to the issuance
and delivery of certificates representing, or other evidence of
ownership of, the shares of Freescale Common Stock to be
distributed to the holders of Motorola Common Stock in connection
with the Distribution.
(b) Subject to Section 4.4(d), each
holder of Motorola Common Stock on the Record Date (or such
holder’s designated transferee(s)) will be entitled to
receive in the Distribution a number of shares of Freescale Common
Stock equal to the number of shares of Motorola Common Stock held
by such holder on the Record Date, multiplied by a fraction, (i)
the numerator of which is the number of shares of Freescale Common
Stock beneficially owned by Motorola or any other member of the
Motorola Group on the Record Date, and (ii) the denominator of
which is the number of Shares of Motorola Common Stock outstanding
on the Record Date. In the event that the Distribution consists of
more than one class of Freescale Common Stock, each holder of
Motorola Common Stock will receive shares of Freescale Common
Stock, calculated as provided above, except that the calculation
will be performed separately for each such class of
stock.
(c) Until such Freescale Common
Stock is duly transferred in accordance with applicable law,
Freescale will regard the Persons entitled to receive such
Freescale Common Stock as record holders of Freescale Common Stock
in accordance with the terms of the Distribution without requiring
any action on the part of such Persons. Freescale agrees that,
subject to any transfers of such stock, (i) each such holder will
be entitled to receive all dividends payable on, and exercise
voting rights and all other rights and privileges with respect to,
the shares of Freescale Common Stock then held by such holder, and
(ii) each such holder will be entitled, without any action on the
part of such holder, to receive one or more certificates
representing, or other evidence of ownership of, the shares of
Freescale Common Stock then held by such holder.
(d) Notwithstanding anything to the
contrary in this Section 4.4, in the event that the Distribution is
not made in the form of a pro rata distribution of Freescale Common
Stock to holders of Motorola Common Stock, the above provisions of
this Section 4.4 will not apply to the Distribution.
ARTICLE 5
FINANCIAL AND OTHER
COVENANTS
Section 5.1
Financial and Other Information .
16
(a) Financial Information .
Freescale agrees that, for so long as Motorola is required to
consolidate the results of operations and financial position of
Freescale and any other members of the Freescale Group or to
account for its investment in Freescale under the equity method of
accounting (determined in accordance with generally accepted
accounting principles consistently applied and consistent with SEC
reporting requirements):
(i)
Disclosure of Financial Controls . Freescale will, and will
cause each other member of the Freescale Group to, maintain, as of
and after the Effective Date, disclosure controls and procedures
and internal control over financial reporting as defined in
Exchange Act Rule 13a-15 promulgated under the Exchange Act;
Freescale will cause each of its principal executive and principal
financial officers to sign and deliver certifications to
Freescale’s periodic reports and will include the
certifications in Freescale’s periodic reports, as and when
required pursuant to Exchange Act Rule 13a-14 and Item 601 of
Regulation S-K; Freescale will cause its management to evaluate
Freescale’s disclosure controls and procedures and internal
control over financial reporting (including any change in internal
control over financial reporting) as and when required pursuant to
Exchange Act Rule 13a-15; Freescale will disclose in its periodic
reports filed with the SEC information concerning Freescale
management’s responsibilities for and evaluation of
Freescale’s disclosure controls and procedures and internal
control over financial reporting (including, without limitation,
the annual management report and attestation report of
Freescale’s independent auditors relating to internal control
over financial reporting) as and when required under Items 307 and
308 of Regulation S-K and other applicable SEC rules; and, without
limiting the general application of the foregoing, Freescale will,
and will cause each other member of the Freescale Group to,
maintain as of and after the Effective Date internal systems and
procedures that will provide reasonable assurance that (A) the
Financial Statements are reliable and timely prepared in accordance
with GAAP and applicable law, (B) all transactions of members of
the Freescale Group are recorded as necessary to permit the
preparation of the Financial Statements, (C) the receipts and
expenditures of members of the Freescale Group are authorized at
the appropriate level within Freescale, and (D) unauthorized use or
disposition of the assets of any member of the Freescale Group that
could have material effect on the Financial Statements is prevented
or detected in a timely manner.
(ii)
Fiscal Year . Freescale will, and will cause each member of
the Freescale Group organized in the U.S. to, maintain a fiscal
year that commences and ends on the same calendar days as
Motorola’s fiscal year commences and ends, and to maintain
monthly accounting periods that commence and end on the same
calendar days as Motorola’s monthly accounting periods
commence and end.
(iii)
Monthly Financial Reports . No later than ten (10) Business
Days after the end of the first three (3) monthly accounting
periods of Freescale following the Effective Date Freescale will
deliver to Motorola a consolidated income statement and balance
sheet for Freescale for such period and an income statement and
balance sheet for each Freescale Affiliate which is consolidated
with Freescale, as the case may be, in such format and detail as
Motorola may request, and no later than twelve (12) Business Days
after the end of the first three (3) monthly accounting periods of
Freescale following the Effective Date Freescale will deliver to
Motorola a consolidated statement of cashflow for Freescale for
such period and statement of cashflow for each Freescale Affiliate
which is consolidated with Freescale, as the case may be, in such
format and detail as Motorola may request. No later than five (5)
Business Days after the end of each monthly accounting period of
Freescale thereafter (including the last monthly accounting period
of Freescale of each fiscal year), Freescale will deliver to
Motorola a consolidated income statement, balance sheet and
statement of cash flow for Freescale for such period and an income
statement, balance sheet and statement of cash flow for each
Freescale Affiliate which is consolidated with Freescale, as the
case may be, in such format and detail as Motorola may
request.
17
(iv)
Quarterly Financial Statements . As soon as practicable, and
in any event no later than the earlier of (x) ten business (10)
days prior to the date on which Freescale is required to file a
Form 10-Q or other document containing Quarterly Financial
Statements (as defined below) with the SEC for each of the first
three (3) fiscal quarters in each fiscal year of Freescale and (y)
five business (5) days prior to the date on which Motorola has
notified Freescale that Motorola intends to file its Form 10-Q or
other document containing quarterly financial statements with the
SEC, Freescale will deliver to Motorola drafts of (A) the
consolidated financial statements of the Freescale Group (and notes
thereto) for such periods and for the period from the beginning of
the current fiscal year to the end of such quarter, setting forth
in each case in comparative form for each such fiscal quarter of
Freescale the consolidated figures (and notes thereto) for the
corresponding quarter and periods of the previous fiscal year and
all in reasonable detail and prepared in accordance with Article 10
of Regulation S-X and GAAP, and (B) a discussion and analysis by
management of the Freescale Group’s financial condition and
results of operations for such fiscal period, including, without
limitation, an explanation of any material period-to-period change
and any off-balance sheet transactions, all in reasonable detail
and prepared in ac
