Amendment No. 1 to Form S-1

As filed with the Securities and Exchange Commission on October 13, 2020

Registration No. 333-249348

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Amendment No. 1

to

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

ALLEGRO MICROSYSTEMS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   3674   46-2405937

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification No.)

955 Perimeter Road

Manchester, New Hampshire 03103

Telephone: (603) 626-2300

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

Ravi Vig

Chief Executive Officer

Allegro MicroSystems, Inc.

955 Perimeter Road

Manchester, New Hampshire 03103

Telephone: (603) 626-2300

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies of all communications, including communications sent to agent for service, should be sent to:

 

Peter M. Labonski, Esq.

Keith L. Halverstam, Esq.

Thomas J. Malone, Esq.

Latham & Watkins LLP

885 Third Avenue

New York, New York 10022

Telephone: (212) 906-1200

Fax: (212) 751-4864

 

Christopher E. Brown

General Counsel

Allegro MicroSystems, Inc.

955 Perimeter Road

Manchester, New Hampshire 03103

 

Derek J. Dostal, Esq.

Michael Kaplan, Esq.

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, NY 10017

Telephone: (212) 450-4000

Fax: (212) 701-5800

 

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement is declared effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ☐

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


EXPLANATORY NOTE

This Amendment No. 1 (the “Amendment”) to the Registration Statement on Form S-1 (File No. 333-249348) (the “Registration Statement”) of Allegro MicroSystems, Inc. is being filed solely for the purpose of filing Exhibits 2.1, 4.2, 10.3, 10.4, 10.5, 10.6, 10.7, 10.8, 10.9, 10.10, 10.13, 10.14, 10.15, 10.16, 10.17, 10.18, 10.27, 10.28, 10.29, 10.30, 10.31, 10.37, 10.38, 10.39, 10.40, 10.41, 10.44, 10.45, 10.46, 10.47, 10.48 and 10.49 and updating Item 16(a) (Index to Exhibits) of Part II of the Registration Statement. Accordingly, the Amendment consists solely of the facing page, this explanatory note, Part II of the Registration Statement, the signatures and the filed exhibits and is not intended to amend or delete any part of the Registration Statement except as specifically noted herein.


PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 13. Other expenses of issuance and distribution.

The following table sets forth all fees and expenses, other than the underwriting discount, payable solely by Allegro MicroSystems, Inc. in connection with the offer and sale of the securities being registered. All amounts shown are estimated except for the SEC registration fee, the Financial Industry Regulatory Authority, Inc. (“FINRA”), filing fee and the exchange listing fee.

 

     Amount to be
paid
 

SEC registration fee

   $              

FINRA filing fee

         

Exchange listing fee

         

Accounting fees and expenses

         

Legal fees and expenses

         

Printing expenses

         

Transfer agent and registrar fees

         

Miscellaneous expenses

         
  

 

 

 

Total

   $               * 
  

 

 

 

 

*

To be completed by amendment.

Item 14. Indemnification of directors and officers.

Section 102 of the DGCL permits a corporation to eliminate the personal liability of directors of a corporation to the corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director, except where the director breached his or her duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of the DGCL or obtained an improper personal benefit. We expect to adopt an amended and restated certificate of incorporation, which will become effective upon the closing of this offering, and which will provide that none of our directors shall be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability, except to the extent that the DGCL prohibits the elimination or limitation of liability of directors for breaches of fiduciary duty.

Section 145 of the DGCL provides that a corporation has the power to indemnify a director, officer, employee, or agent of the corporation, or a person serving at the request of the corporation for another corporation, partnership, joint venture, trust or other enterprise in related capacities, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with an action, suit or proceeding to which he or she was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by reason of such position, if such person 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 corporation, and, in any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful, except that, in the case of actions brought by or in the right of the corporation, no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Delaware Court of Chancery or other adjudicating court determines that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper.

 

II-1


Upon the closing of this offering, our amended and restated certificate of incorporation and amended and restated bylaws will provide indemnification for our directors and officers to the fullest extent permitted by the DGCL, subject to certain limited exceptions. We will indemnify each person who was or is a party or threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than an action by or in the right of us) by reason of the fact that he or she is or was, or has agreed to become, a director or officer, or is or was serving, or has agreed to serve, at our request as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (all such persons being referred to as an “Indemnitee”), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding and any appeal therefrom, if such Indemnitee acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests, and, with respect to any criminal action or proceeding, he or she had no reasonable cause to believe his or her conduct was unlawful. Our amended and restated certificate of incorporation and amended and restated bylaws will provide that we will indemnify any Indemnitee who was or is a party to an action or suit by or in the right of us to procure a judgment in our favor by reason of the fact that the Indemnitee is or was, or has agreed to become, a director or officer, or is or was serving, or has agreed to serve, at our request as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees) and, to the extent permitted by law, amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding, and any appeal therefrom, if the Indemnitee acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests, except that no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to us, unless a court determines that, despite such adjudication but in view of all of the circumstances, he or she is entitled to indemnification of such expenses. Notwithstanding the foregoing, to the extent that any Indemnitee has been successful, on the merits or otherwise, he or she will be indemnified by us against all expenses (including attorneys’ fees) actually and reasonably incurred in connection therewith. Expenses must be advanced to an Indemnitee under certain circumstances.

Prior to the closing of this offering, we intend to enter into separate indemnification agreements with each of our directors and executive officers. Each indemnification agreement will provide, among other things, for indemnification to the fullest extent permitted by law and our amended and restated certificate of incorporation and amended and restated bylaws against any and all expenses, judgments, fines, penalties and amounts paid in settlement of any claim. The indemnification agreements will provide for the advancement or payment of all expenses to the indemnitee and for the reimbursement to us if it is found that such indemnitee is not entitled to such indemnification under applicable law and our amended and restated certificate of incorporation and amended and restated bylaws.

We maintain a general liability insurance policy that covers certain liabilities of directors and officers of our corporation arising out of claims based on acts or omissions in their capacities as directors or officers.

In any underwriting agreement we enter into in connection with the sale of common stock being registered hereby, the underwriters will agree to indemnify, under certain conditions, us, our directors, our officers and persons who control us within the meaning of the Securities Act Securities Act against certain liabilities.

 

II-2


Item 15. Recent sales of unregistered securities.

The following is a summary of all transactions since April 1, 2017 involving sales of our securities that were not registered under the Securities Act, including the consideration received by us for such securities and information relating to the section of the Securities Act, or rule of the Securities and Exchange Commission, under which exemption from registration is claimed.

 

(a)

Issuance of Capital Stock.

 

  1.

In October 2017, we issued an aggregate of 6,720,000 shares of our Class A common stock to Sanken Electric Co., Ltd. (“Sanken”) in exchange for the 1,000 shares Sanken held of our previously existing class of common stock.

 

  2.

In October 2017, we issued an aggregate of 2,880,000 shares of our Class A common stock to OEP SKNA, L.P. for aggregate consideration of $291.0 million.

 

  3.

In October 2017, we issued an aggregate of 21,000 shares of restricted Class L common stock to certain of our directors for aggregate consideration of approximately $0.2 million.

 

  4.

In August 2018, we issued an aggregate of 1,220 shares of restricted Class L common stock to one of our directors for aggregate consideration of approximately $0.06 million.

 

  5.

In November 2018, we issued an aggregate of 4,000 shares of restricted Class L common stock to one of our directors for aggregate consideration of approximately $0.2 million.

 

(b)

Equity Awards.

 

  1.

In October 2017, we granted an aggregate of 400,000 shares of unvested Class A common stock to certain of our executive officers and other employees as compensation for services provided to us by such executive officers and employees.

 

  2.

Since April 1, 2017, we have granted an aggregate of 656,248 shares of restricted Class L common stock (17,950) shares of which were subsequently forfeited) to certain of our directors, executive officers and other employees as compensation for services provided to us by such directors, executive officers and employees.

Unless otherwise stated, the issuances of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder, or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701. Individuals who purchased securities as described above represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates issued in such transactions.

No underwriter or underwriting discount or commission was involved in any of the transactions set forth in this Item 15.

Item 16. Exhibits and financial statements.

(a) Exhibits

The following documents are filed as exhibits to this registration statement.

 

Exhibit No.

  

Description of Exhibit

  1.1*    Form of Underwriting Agreement.
  2.1†    Master Transaction Agreement, dated as of March 25, 2020, by and among Polar Semiconductor, LLC, Allegro MicroSystems, Inc., Allegro MicroSystems, LLC and Sanken Electric Co., Ltd.

 

II-3


Exhibit No.

  

Description of Exhibit

  3.1**    Amended and Restated Certificate of Incorporation of Allegro MicroSystems, Inc., as currently in effect.
  3.2*    Form of Amended and Restated Certificate of Incorporation of Allegro MicroSystems, Inc., to be in effect upon the closing of this offering.
  3.3**    Amended and Restated Bylaws of Allegro MicroSystems, Inc., as currently in effect.
  3.4*    Form of Amended and Restated Bylaws of Allegro MicroSystems, Inc., to be in effect upon the closing of this offering.
  4.1*    Specimen Stock Certificate evidencing the shares of common stock.
  4.2    Stockholders Agreement, dated as of September 30, 2020, by and among Allegro MicroSystems, Inc., Sanken Electric Co., Ltd. and OEP SKNA, L.P.
  4.3*    Amended and Restated Registration Rights Agreement, by and among the Company, Sanken Electric Co. and OEP SKNA, L.P.
  5.1*    Opinion of Latham & Watkins LLP.
10.1**    Revolving Credit Agreement, dated as of January 22, 2019, by and between Allegro MicroSystems, LLC and Mizuho Bank, Ltd.
10.2**    Amendment No. 1 to Revolving Credit Agreement, dated as of January 22, 2020, by and between Allegro MicroSystems,  LLC and Mizuho Bank, Ltd.
10.3    Consolidated and Restructured Loan Agreement, dated as of March 28, 2020, by and between Polar Semiconductor, LLC and Allegro MicroSystems, Inc. (included as Exhibit A to Exhibit 2.1).
10.4†    Amended and Restated Limited Liability Company Agreement of Polar Semiconductor, LLC, dated as of March  28, 2020, by and among Polar Semiconductor, LLC, Allegro MicroSystems, Inc. and Sanken Electric Co. Ltd. (included as Exhibit B to Exhibit 2.1).
10.5†    Wafer Foundry Agreement, dated as of April 12, 2013, by and between Allegro MicroSystems, LLC and Polar Semiconductor, LLC.
10.6†    Amendment No. 1 to Wafer Foundry Agreement, dated as of March 28, 2020, by and between Allegro MicroSystems, LLC and Polar Semiconductor, LLC. (included as Exhibit C to Exhibit 2.1).
10.7    Letter Agreement regarding FY21 Price Support, dated as of March 28, 2020, by and between Allegro MicroSystems, LLC and Polar Semiconductor, LLC (included as Exhibit D to Exhibit 2.1).
10.8†    Transition Services Agreement, dated as of March 28, 2020, by and among Polar Semiconductor, LLC, Sanken Electric Co., Ltd. and Allegro MicroSystems, Inc. (included as Exhibit E to Exhibit  2.1).
10.9†X    IC Technology Development Agreement, dated as of May 28, 2009, by and among Sanken Electric Co., Ltd., Polar Semiconductor, LLC and Allegro MicroSystems, Inc.
10.10†X    SG8 Collaboration Agreement, dated as of July 5, 2014, by and between Sanken Electric Co., Ltd., Polar Semiconductor, LLC and Allegro MicroSystems, LLC.
10.11**    Discrete Technology Development Agreement, dated as of April  1, 2015, by and among Polar Semiconductor, LLC, Allegro MicroSystems, Inc. and Sanken Electric Co., Ltd.
10.12**    Amendment No. 1 to Discrete Technology Development Agreement, dated as of June  15, 2018, by and among Polar Semiconductor, LLC, Allegro MicroSystems, Inc. and Sanken Electric Co., Ltd.
10.13†    Letter Agreement regarding Consolidation of Technology Agreements, by and among Allegro MicroSystems, LLC, Sanken Electric Co., Ltd. and Polar Semiconductor, LLC (included as Exhibit F to Exhibit 2.1).

 

II-4


Exhibit No.

  

Description of Exhibit

10.14    Letter Agreement regarding Termination of Distribution Agreement, dated as of March  28, 2020, by and between Allegro MicroSystems, LLC and Sanken Electric Co., Ltd. (included as Exhibit H to Exhibit 2.1).
10.15†    Distribution Agreement, dated as of July 5, 2007, by and between Allegro MicroSystems, Inc. and Sanken Electric Co., Ltd.
10.16†    Amended and Restated Transfer Pricing Agreement, dated as of March  28, 2020, by and among Sanken Electric Co., Ltd., Allegro MicroSystems, Inc., Allegro MicroSystems, LLC and Polar Semiconductor, LLC (included as Exhibit I to Exhibit 2.1).
10.17†    Sales Representative Agreement, dated as of July 5, 2007, by and between Sanken Electric Co., Ltd. and Allegro MicroSystems, Inc.
10.18†X    Royalty Sharing Agreement, dated as of September 3, 2013, by and between Sanken Electric Co., Ltd. and Allegro MicroSystems, LLC.
10.19**    Subblease Agreement, by and between Allegro MicroSystems Business Development, Inc. and Sanken Electric Co., Ltd.
10.20**    Contract of Lease, dated as of April 1, 2004, by and between Allegro MicroSystems Phils. Realty, Inc. and Allegro MicroSystems Philippines, Inc.
10.21**    Contract of Lease, dated as of May 23, 2008, by and between Allegro MicroSystems Phils. Realty, Inc. and Allegro MicroSystems Philippines, Inc.
10.22**    Contract of Lease, dated as of February 10, 2010, by and between Allegro MicroSystems Phils. Realty, Inc. and Allegro MicroSystems Philippines, Inc.
10.23**    Contract of Lease, dated as of December 29, 2017, by and between Allegro MicroSystems Phils. Realty, Inc. and Allegro MicroSystems Philippines, Inc.
10.24**    Board Executive Advisor Agreement, dated as of September  28, 2017, by and between Allegro MicroSystems, Inc. and Reza Kazerounian.
10.25**    Amendment to Board Executive Advisor Agreement, dated as of June  28, 2018, by and between Allegro MicroSystems, Inc. and Reza Kazerounian.
10.26#**    Director Offer Letter, dated as of June 28, 2018, by and between Allegro MicroSystems, Inc. and Reza Kazerounian.
10.27#    Form of Class A Restricted Stock Award Agreement.
10.28#    Form of Amendment to Class A Restricted Stock Award Agreement.
10.29#    Form of Class L Restricted Stock Award Agreement.
10.30#    Amended and Restated Allegro MicroSystems, LLC Executive Deferred Compensation Plan, dated as of September 15, 2015.
10.31#    Allegro MicroSystems, Inc. Long Term Incentive Plan (FY 2018).
10.32#*    Form of Allegro MicroSystems, Inc. 2020 Omnibus Incentive Compensation Plan.
10.33#*    Form of Restricted Stock Unit Agreement under Allegro MicroSystems, Inc. 2020 Omnibus Incentive Compensation Plan (Employees).
10.34#*    Form of Restricted Stock Unit Agreement under Allegro MicroSystems, Inc. 2020 Omnibus Incentive Compensation Plan (Board of Directors).
10.35#*    Form of Performance Stock Unit Agreement under Allegro MicroSystems, Inc. 2020 Omnibus Incentive Compensation Plan.
10.36#*    Form of Allegro MicroSystems, Inc. 2020 Employee Stock Purchase Plan.
10.37#    Amended and Restated Severance Agreement, dated as of September 30, 2020, by and between Allegro MicroSystems, LLC, Allegro MicroSystems, Inc. and Ravi Vig.

 

II-5


Exhibit No.

  

Description of Exhibit

10.38#    Amended and Restated Severance Agreement, dated as of September 30, 2020, by and between Allegro MicroSystems, LLC, Allegro MicroSystems, Inc. and Paul V. Walsh, Jr.
10.39#    Amended and Restated Severance Agreement, dated as of September 30, 2020, by and between Allegro MicroSystems, LLC, Allegro MicroSystems, Inc. and Michael C. Doogue.
10.40#    Amended and Restated Severance Agreement, dated as of September 30, 2020, by and between Allegro MicroSystems, LLC, Allegro MicroSystems, Inc. and Max R. Glover.
10.41#    Offer Letter, dated as of June 21, 2019, by and between Allegro MicroSystems, Inc. and Max R. Glover.
10.42#*    Form of Allegro MicroSystems, Inc. Non-Employee Director Compensation Program.
10.43*    Form of Indemnification Agreement between Allegro MicroSystems, Inc. and its directors and officers.
10.44    Term Loan Credit Agreement, dated as of September 30, 2020, by and between Allegro MicroSystems, Inc., Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent, and the other agents, arrangers and lenders party thereto.
10.45    Term Loan Security Agreement, dated as of September 30, 2020, by and between Allegro MicroSystems, Inc., the other grantors party thereto from time to time, and Credit Suisse AG, Cayman Islands Branch, as collateral agent.
10.46    Revolving Facility Credit Agreement, dated as of September 30, 2020, by and between Allegro MicroSystems, Inc., Mizuho Bank, Ltd., as administrative agent and collateral agent, and the other agents, arrangers and lenders party thereto.
10.47    Revolving Facility Security Agreement, dated as of September 30, 2020, by and between Allegro MicroSystems, Inc., the other grantors party thereto from time to time, and Mizuho Bank, Ltd., as collateral agent.
10.48    Form of Class A Share Repurchase Agreement.
10.49    Form of Class L Share Repurchase Agreement.
16.1**    Letter of Ernst  & Young LLP regarding changes in the independent registered public accounting firm of Allegro MicroSystems, Inc.
21.1*    Subsidiaries of Allegro MicroSystems, Inc.
23.1**    Consent of Grant Thornton LLP.
23.2*    Consent of Latham & Watkins LLP (included in Exhibit 5.1).
24.1**    Power of Attorney.
99.1**    Consent of Christine King to be named as a director nominee.

 

*

To be filed by amendment.

**

Previously filed.

#

Indicates a management contract or compensatory plan or arrangement.

Portions of this exhibit (indicated by “[XXX]”) have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K under the Securities Act of 1933, as amended, because they are both (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed.

X 

This exhibit is being re-filed to include, on the first page of such exhibit, the legend required pursuant to Item 601(b)(10)(iv) of Regulation S-K under the Securities Act of 1933, as amended.

(b) Financial Statement Schedules. Schedules not listed above have been omitted because the information required to be set forth in the schedules is either not applicable or is shown in the financial statements or notes thereto.

 

II-6


Item 17. Undertakings.

(a) The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction, the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

(c) The undersigned hereby further undertakes that:

(1) For purposes of determining any liability under the Securities Act the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

II-7


SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, Allegro MicroSystems, Inc. has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Manchester, New Hampshire, on this 13th day of October, 2020.

 

ALLEGRO MICROSYSTEMS, INC.
By:   /s/ Ravi Vig
  Ravi Vig
Chief Executive Officer

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement on Form S-1 has been signed by the following persons in the capacities set forth opposite their names and on the date indicated above.

 

Signature

  

Title

 

Date

/s/ Ravi Vig

Ravi Vig

  

Chief Executive Officer (Principal Executive Officer) and Director

  October 13, 2020

/s/ Paul V. Walsh, Jr.

Paul V. Walsh, Jr.

  

Chief Financial Officer (Principal Financial and Accounting Officer)

  October 13, 2020

*

Yoshihiro (Zen) Suzuki

  

Chairman of the Board of Directors

  October 13, 2020

*

Andrew Dunn

  

Director

  October 13, 2020

*

Noriharu Fujita

  

Director

  October 13, 2020

*

Reza Kazerounian

  

Director

  October 13, 2020

*

Richard Lury

  

Director

  October 13, 2020

*

Joseph Martin

  

Director

  October 13, 2020

*

Paul Carl (Chip) Schorr IV

  

Director

  October 13, 2020

*

Hideo Takani

  

Director

  October 13, 2020

 

By:

 

/s/ Ravi Vig

  Ravi Vig
  Attorney-in-Fact
EX-2.1

Exhibit 2.1

[XXX] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

MASTER TRANSACTION AGREEMENT

THIS MASTER TRANSACTION AGREEMENT (this “Agreement”), is made and entered into as of March 25, 2020, by and among Polar Semiconductor, LLC, a Delaware limited liability company (the “Company”), Allegro MicroSystems, Inc., a Delaware corporation (“Allegro”), Allegro MicroSystems, LLC a Delaware limited liability company and a wholly-owned subsidiary of Allegro (“AML”) and Sanken Electric Co., Ltd., a Japanese corporation (“Sanken”). The parties hereto are referred to collectively as the “Parties” and each individually as a “Party.”

R E C I T A L S

WHEREAS, the Parties hereto desire to undertake a series of restructuring transactions to effect, as of the Closing (as defined below), an organizational restructuring of certain of their affiliates and direct and indirect subsidiaries (including certain affiliates and/or subsidiaries to be formed as part of such organizational restructuring) which would result in (a) seventy percent (70%) of the issued and outstanding equity interests in the Company being held by Sanken and (b) thirty percent (30%) of the issued and outstanding equity interests in the Company being held directly by Allegro, in each case, on the terms and conditions set forth in this Agreement and the other Definitive Documents (as defined below) (such transaction, as addressed in more detail by the terms and conditions set forth in the respective Definitive Documents, the “Transaction”);

WHEREAS, as part of the Transaction, it is contemplated that (a) at the commencement of the Closing, (i) the indebtedness owed by the Company to AML under the loan agreements with AML set forth on Schedule 1 (the “Existing Allegro Loans”) will be assigned by AML to Allegro (the “AML Loan Assignment”) and (ii) immediately after the AML Loan Assignment, Allegro’s equity interests in the Company will be recapitalized in consideration for the contribution by Allegro to the Company of the Company’s obligations under a portion of the Existing Allegro Loans, which portion is currently estimated to be in an amount equal to approximately fifteen million dollars ($15,000,000), but which amount may be equitably adjusted by the Parties between the date hereof and the Closing in order to account for various matters resulting from the passage of time, including the Company’s cash position as of the Closing (such portion, the “Recapitalized Loan Amount” and, such recapitalization, the “Recapitalization”), (b) immediately following the Recapitalization, the amount of the outstanding indebtedness, as of the Closing, owed by the Company to Sanken under the loan agreements set forth on Schedule 2 (the “Sanken Loans”) will be assigned by the Company to Allegro, and Allegro will assume from the Company the liabilities thereunder (the “Allegro Liability Assumption”), (c) two (2) days following the Recapitalization and Allegro Liability Assumption, the Company will elect to be classified as an association taxable as a corporation for U.S. federal income tax purposes (the “Check the Box Election”) and (d) immediately following the Check the Box Election, Allegro will transfer to Sanken equity interests in the Company representing seventy percent (70%) of the issued and outstanding equity interests of the Company in exchange for the extinguishment of all of the outstanding indebtedness under the Sanken Loans (the “Sanken Equity Transfer”), which will result in Allegro owning thirty percent (30%) of the issued and outstanding equity interests of the Company and Sanken owning seventy percent (70%) of the issued and outstanding equity interests of the Company;


WHEREAS, as part of the Transaction, it is contemplated that, immediately following the Recapitalization, all remaining obligations (i.e., following contribution of the Recapitalized Loan Amount) under the Existing Allegro Loans will be cancelled and replaced with a new, consolidated loan agreement between Allegro and the Company, in the form attached hereto as Exhibit A (the “New Allegro Loan”);

WHEREAS, as part of the Transaction, it is contemplated that, immediately following the Sanken Equity Transfer, the Company, Allegro and Sanken will enter into an Amended and Restated Limited Liability Company Agreement of the Company, in the form attached hereto as Exhibit B (the “LLC Agreement”), setting forth the terms and conditions pertaining to, among other matters, the Company’s members, membership interests and governance structure;

WHEREAS, as part of the Transaction, it is contemplated that, at the conclusion of the Closing, AML and the Company will amend that certain Wafer Foundry Agreement, dated April 12, 2013, by and between AML and the Company, to be in the form attached hereto as Exhibit C (the “Supply Agreement”), to, among other matters, set forth the material supply terms between the parties thereto;

WHEREAS, as part of the Transaction, it is contemplated that, at the conclusion of the Closing, AML and the Company will enter into a pricing letter agreement, in the form attached hereto as Exhibit D (the “Pricing Letter Agreement”), to, among other matters, supplement the Supply Agreement;

WHEREAS, as part of the Transaction, it is contemplated that, at the conclusion of the Closing, Allegro, the Company and Sanken will enter into a Transition Services Agreement, in the form attached hereto as Exhibit E (the “TSA”), to, among other matters, govern the post-closing transition of services among Allegro, the Company and Sanken;

WHEREAS, as part of the Transaction, it is contemplated that, at the conclusion of the Closing, the Parties will enter into those certain IP Assignment and License Agreements, in the forms attached hereto as Exhibit F (each an “IP Agreement”, and collectively the “IP Agreements”), pursuant to which the Company will assign certain of its rights to intellectual property (“IP”) to Allegro and Sanken, who will license such IP back to the Company for use in the supplying of products for Allegro and Sanken;

WHEREAS, as part of the Transaction, it is contemplated that, at the conclusion of the Closing, the Company and Sanken will enter into a Sales Services Management Agreement, in the form attached hereto as Exhibit G (the “SSMA”), to, among other matters, set forth the material sales terms between the parties thereto, which shall be substantially similar to the sales terms in effect between Allegro and Sanken prior to the date of this Agreement;

 

2


WHEREAS, as part of the Transaction, it is contemplated that, at the conclusion of the Closing, AML and Sanken will enter into a Termination of Distribution Agreement Letter, in the form attached hereto as Exhibit H (the “Distribution Termination Letter”), to, among other matters, terminate that certain Distribution Agreement, dated as of July 5, 2007 (as amended from time to time) by and between AML and Sanken;

WHEREAS, as part of the Transaction, it is contemplated that, at the conclusion of the Closing, the Parties will amend and restate in its entirety that certain Transfer Pricing Agreement, dated April 1, 2019, by and between Sanken, Allegro, the Company and AML, in the form attached hereto as Exhibit I (the “A&R TPA” and together with this Agreement, the New Allegro Loan, the LLC Agreement, the Supply Agreement, the Pricing Letter Agreement, the TSA, the SSMA, the Distribution Termination Letter and the IP Agreements, the “Definitive Documents”), to, among other matters, expressly provide that Allegro and AML shall be removed as a parties thereto, but shall be named third party beneficiaries thereto; and

WHEREAS, at the conclusion of the Closing, it is contemplated that the Company will enter into certain employment agreements on terms to be agreed to by the parties thereto, including the terms set forth on Exhibit J hereto (or with such changes thereto as are negotiated between the Company and the applicable employees) (the “Employment Agreements”), with certain key employees of the Company named in the Employment Agreement (the “Key Employees”).

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree, as of the date hereof, as follows:

 

  1.

Closing. The consummation of the Transaction (the “Closing”) shall commence at 12:01 a.m., Eastern time on March 26, 2020 and shall proceed over a two (2) day period, as more particularly described herein. For avoidance of doubt the check the box election and Sanken equity transfer with occur at 12:01 am, Eastern time on March 28, 2020. At the commencement of the Closing, all Parties shall exchange electronic (or facsimile or .pdf) signature pages of the applicable persons or entities in respect of each of the documents and agreements described below. All such signature pages shall initially be held in escrow by each of the Parties, and they shall be automatically released (with no further action on the part of any party) at such time as the applicable document or agreement is required to be duly executed and delivered, or at such time as the applicable action is required to take place, in accordance with this Section 1 (and upon such release, such action, document or agreement shall be deemed effective for any and all purposes). In furtherance of the foregoing, in connection with, and as part of, the Closing:

 

  a.

AML Loan Assignment; Recapitalization. At the commencement of the Closing, (i) Allegro and AML shall effect the AML Loan Assignment, (ii) immediately after the AML Loan Assignment, Allegro and the Company

 

3


  shall effect the Recapitalization and (iii) immediately after the Recapitalization, Allegro and the Company shall effect the Allegro Liability Assumption. For the avoidance of doubt, the AML Loan Assignment, the Recapitalization and the Allegro Liability Assumption shall occur, effective as of the commencement of the Closing, by virtue of AML, Allegro, Sanken and the Company entering into this Agreement, as applicable, and no further action or documentation (other than the foregoing) on the part of any Party shall be required to evidence or memorialize the same at the commencement of the Closing.

 

  b.

New Allegro Loan. Effective immediately following the Recapitalization, Allegro and the Company shall duly execute and deliver to each other, the New Allegro Loan.

 

  c.

Check the Box Election. Two (2) days following the effectiveness of the Recapitalization and the Allegro Liability Assumption (i.e. March 28, 2020), the Company shall make the Check the Box Election.

 

  d.

Sanken Equity Transfer. Effective immediately after the Check the Box Election is made by the Company, as part of the conclusion of the Closing, Allegro and Sanken shall effect the Sanken Equity Transfer. For the avoidance of doubt, the Sanken Equity Transfer shall occur, effective immediately after the Check the Box Election is made by the Company, by virtue of AML, Allegro, Sanken and the Company entering into this Agreement and/or the LLC Agreement, as applicable, and no further action or documentation (other than the foregoing) on the part of any Party shall be required to evidence or memorialize the same at the Closing. The effective time of the Sanken Equity Transfer shall be deemed the “conclusion of the Closing” for all purposes hereof.

 

  e.

Existing Loans. In furtherance of and in consideration for the Sanken Equity Transfer (in the case of clause (i)) and the Recapitalization and New Allegro Loan (in the case of clause (ii), (i) the Company and Sanken agree and confirm that, as of the conclusion of the Closing, the Sanken Loans shall be terminated and of no further force and effect, and (ii) the Company, Allegro and AML agree and confirm that, as of immediately following the Recapitalization (i.e., the time the New Allegro Loan is deemed effective), the Existing Allegro Loans shall be terminated and of no further force or effect.

 

  f.

Tax Certificate. At or before the Closing, Sanken shall deliver to Allegro and the Company a duly completed and executed Internal Revenue Service Form W-8-BEN-E establishing a complete exemption from U.S. federal withholding tax on interest pursuant to Article 11 of the income tax treaty between the United States and Japan.

 

4


  g.

LLC Agreement. Concurrently with the conclusion of the Closing, Allegro and the Company shall duly execute and deliver to each other and to Sanken (and Sanken shall deliver to the Company and Allegro), the LLC Agreement.

 

  h.

Supply Agreement. Concurrently with the conclusion of the Closing, AML and the Company shall duly execute and deliver to each other the Supply Agreement.

 

  i.

Pricing Letter Agreement. Concurrently with the conclusion of the Closing, AML and the Company shall duly execute and deliver to each other the Pricing Letter Agreement.

 

  j.

TSA. Concurrently with the conclusion of the Closing, Allegro, the Company and Sanken shall duly execute and deliver to each other the TSA.

 

  k.

IP Agreements. Concurrently with the conclusion of the Closing, the Parties shall duly execute and deliver to each other the IP Agreements.

 

  l.

SSMA. Concurrently with the conclusion of the Closing, the Company and Sanken shall duly execute and deliver to each other the SSMA.

 

  m.

Distribution Termination Letter. Concurrently with the conclusion of the Closing, AML and Sanken shall duly execute and deliver to each other the Distribution Termination Letter.

 

  n.

A&R TPA. Concurrently with the conclusion of the Closing, Sanken, Allegro, AML and the Company shall duly execute and deliver to each other the A&R TPA.

 

  o.

Employment Agreements. Concurrently with the conclusion of the Closing, the Company shall, and shall cause the Key Employees to, duly execute and deliver to Sanken and Allegro the Employment Agreements.

 

  2.

Employment Agreements. Following the date hereof, Allegro, Sanken and the Company agree to negotiate and complete, as promptly as practicable following the date hereof, and in any event prior to the Closing, the Employment Agreements with the Key Employees.

 

  3.

Existing Agreements.

 

  a.

The Parties hereby agree, confirm and acknowledge that, other than the Definitive Documents, all other contracts, agreements, licenses or other legally binding commitment or undertaking (collectively, “Contracts”) currently in effect (or in effect immediately prior to Closing) between Allegro and the Company (other than (i) customary non-disclosure or confidentiality agreements, (ii) that certain IC Technology Development Agreement, dated May 28, 2009, by and among Sanken, the Company and Allegro and (iii) the Supply Agreement), along with all rights and obligations of the parties thereunder, shall be, as of the conclusion of the Closing, terminated and extinguished and shall be of no further force and effect.

 

5


  b.

The Parties hereby agree, confirm and acknowledge that, other than the Definitive Documents, all other Contracts related to technology development currently in effect (or in effect immediately prior to Closing) between Sanken and the Company (other than (i) customary non-disclosure or confidentiality agreements, (ii) that certain IC Technology Development Agreement, dated May 28, 2009, by and among Sanken, the Company and Allegro, (iii) those certain Discrete Technology Development Agreements, dated October 1, 2013 and April 1, 2015 (as amended by that certain Amendment to the Discrete Technology Development Agreement, dated June 15, 2018), (iv) that certain Agreement as to Sanken Employees on Loan to Polar Semiconductor, Inc., dated September 1, 2005 and (v) that certain Wafer Supply Agreement, dated July 26, 2017), along with all rights and obligations of the parties thereunder, shall be, as of the conclusion of the Closing, terminated and extinguished and shall be of no further force and effect.

 

  c.

The Parties acknowledge and agree that the terminations described in the foregoing clauses a. and b. shall be effective as of the conclusion of the Closing, without any further action, documentation, or agreement required on the part of any person.

 

  4.

Distribution-Related Matters.

 

  a.

The Parties hereby agree, confirm and acknowledge that, other than the Definitive Documents, all other Contracts related to the sale and distribution of Sanken products currently in effect between Allegro and Sanken (other than customary non-disclosure or confidentiality agreements), including that certain Distribution Agreement, dated July 2, 2007 (as amended), along with all rights and obligations of the parties thereunder, shall be, as of the conclusion of the Closing, terminated and extinguished and shall be of no further force and effect. The Parties acknowledge and agree that the foregoing termination shall be effective as of the conclusion of the Closing, without any further action, documentation, or agreement required on the part of any person.

 

  b.

Allegro hereby agrees, confirms and acknowledges that, as of the conclusion of the Closing, it shall sell, transfer, convey and deliver to the Company all of Allegro’s right, title and interest in and to the Sanken inventory owned by Allegro immediately prior to the conclusion of the Closing, and the Company hereby agrees, confirms and acknowledges that it accepts the sale, transfer, conveyance and delivery of the Sanken inventory as of the conclusion of the Closing, and in consideration therefore, the Company shall pay to Allegro an amount in cash equal to the book value of such inventory. The Parties acknowledge and agree that the foregoing sale, transfer, conveyance and delivery shall be effective as of the conclusion of the Closing, without any further action, documentation, or agreement required on the part of any person.

 

6


  5.

Representations and Warranties.

 

  a.

Each Party represents that it is a limited liability company or corporation, as applicable, validly existing and in good standing under the laws of its state, territory or country of organization or formation. Each Party represents that it has and shall at all times have the necessary power to enter into and perform its obligations under this Agreement and the Definitive Documents and has duly authorized the execution of this Agreement and the Definitive Documents.

 

  b.

Each Party represents that it has all requisite power and authority to execute and deliver the Definitive Documents, to carry out its obligations hereunder, and to consummate the transactions contemplated hereby, including the execution of, and performance under, the Definitive Documents. Each Party represents that it has obtained all necessary approvals for the execution and delivery of this Agreement, the performance of its obligations hereunder, and the consummation of the transactions contemplated hereby, including the Definitive Documents and the Transaction. This Agreement and the Definitive Documents have been duly authorized, executed and delivered by each Party and (assuming due authorization, execution and delivery by the other Parties) constitute such Party’s legal, valid and binding obligation, enforceable against it in accordance with its terms.

 

  c.

Each Party represents that the execution, delivery, observance and performance of this Agreement and the Definitive Documents shall not result in any violation of any Contract, law, statute, ordinance, rule or regulation applicable to any Party.

 

  6.

Liability. For the avoidance of doubt, the Parties hereby agree that Allegro shall not be liable for (and, as of the conclusion of the Closing, is hereby released from) any and all claims against (or liabilities of) the Company arising out of or related to any sales made by the Company or Allegro prior to the conclusion of the Closing to any other person or entity, and that the Company hereby assumes, as of the Closing, and agrees to discharge from and after the conclusion of the Closing any and all liability for such claims or liabilities, and the Company further agrees to indemnify and hold harmless, as of the conclusion of the Closing, Allegro and its subsidiaries from and against, any and all such claims and liabilities.

 

  7.

Further Assurances. Upon the terms and subject to the conditions set forth in this Agreement, each of the Parties hereto agrees (severally and not jointly), and shall cause its respective controlled affiliates and/or subsidiaries, as applicable, to (i) vote and exercise its powers or rights in any process of the Transaction to which they are legally entitled to participate and which require their voting, action or approval and (ii) reasonably cooperate with the other Parties in doing all things necessary, proper or advisable under applicable laws to consummate and make effective the Transaction as of the date hereof, including by executing and delivering such instruments, memorializations or other documentations to effect the Transaction. Without limiting the generality of the foregoing, in the event that any law or

 

7


governmental entity purports to prohibit, impede or block all or any part of the Transaction, or otherwise requires any unwinding of the Transaction following the Closing, Sanken shall take all actions as are necessary to eliminate such prohibition, impediment, block or requirement to unwind the Transaction, including by identifying a third party acquirer for Sanken’s equity interests in the Company (and then consummating a sale to such third party acquirer, subject to the terms of the LLC Agreement).

 

  8.

Withholding. The Parties shall be entitled to deduct and withhold any amounts in connection with the Transaction that are required to be deducted or withheld under applicable tax law. Any such amounts deducted or withheld pursuant to the previous sentence shall be treated for purposes of this Agreement and the Transaction as having been paid to the person in respect of which such deduction or withholding was done.

 

  9.

Intended Tax Treatment. The Parties agree that the AML Loan Assignment, the Recapitalization and the Allegro Liability Assumption are intended to be disregarded for U.S. federal income tax purposes. The Check the Box Election and the issuance of the New Allegro Loan are intended to be treated for U.S. federal income tax purposes as if Allegro contributed all of the Company’s assets to a newly formed corporation (i.e., the Company), in exchange for (x) common stock in the newly formed corporation, (y) the New Allegro Loan receivable and (z) the assumption by such newly formed corporation of the Company’s liabilities (including the New Allegro Loan payable) in a transaction that is taxable for U.S. federal income tax purposed under Internal Revenue Code Section 1001. The Sanken Equity Transfer is intended to be treated for U.S. federal income tax purposes as a taxable sale of stock under Internal Revenue Code Section 1001.

 

  10.

Waiver; Amendment. Neither this Agreement nor any provision hereof shall be waived, amended, modified, changed, discharged or terminated except by an instrument in writing executed by the Parties.

 

  11.

Governing Law: This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflicts provision thereof. Each Party expressly agrees that, consistent with its intention and agreement to be bound by the terms of this Agreement and to consummate the transactions contemplated hereby, including the Transaction, the remedy of specific performance shall be available to enforce performance of this Agreement by a breaching or defaulting Party. It is understood and agreed that injury and damages incurred by any Party due to the breach or default of the other Party would be irreparable and not adequately compensable by monetary damages. Consequently, such Party will not have an adequate remedy at law for any failure by a breaching or defaulting Party to perform its obligations hereunder to consummate the transactions contemplated hereby and shall be entitled to injunctive relief.

 

  12.

Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all

 

8


of which together shall be deemed to be one and the same agreement. Delivery of an executed counterpart to this Agreement by facsimile or PDF file will be deemed to be delivery of an original executed counterpart to this Agreement.

 

  13.

Severability. In the event that any part or parts of this Agreement shall be held illegal or unenforceable by any governmental authority, such determination shall not affect the remaining provisions of this Agreement, which shall remain in full force and effect.

[Signature Page Follows]

 

9


IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed on its behalf as of the date first above written.

 

ALLEGRO MICROSYSTEMS, INC.
By:  

/s/ Ravi Vig

Name:   Ravi Vig
Title:   President & CEO
ALLEGRO MICROSYSTEMS, LLC
By:  

/s/ Ravi Vig

Name:   Ravi Vig
Title:   President & CEO

 

[Signature Page to Master Transaction Agreement]


SANKEN ELECTRIC CO., LTD.

By:  

/s/ Yoshihiro Suzuki

Name:  

Yoshihiro Suzuki

Title:   Senior Vice President

 

[Signature Page to Master Transaction Agreement]


POLAR SEMICONDUCTOR, LLC

By:  

/s/ Kurt Walter

Name:

  Kurt Walter
Title:   VP, GLOBAL WAFER OPERATIONS

 

[Signature Page to Master Transaction Agreement]


SCHEDULE 1

EXISTING ALLEGRO LOANS

 

1.

Consolidated and Restructured Loan Agreement, dated August 26, 2015, by and between Polar Semiconductor, LLC and Allegro MicroSystems, LLC

 

2.

Amendment to the October, 30, 2015 Loan Agreement, dated as of August 25, 2016, by and between Polar Semiconductor, LLC and Allegro MicroSystems, LLC

 

3.

Amendment to August 26, 2016 Loan Agreement, dated August 26, 2017, by and between Polar Semiconductor, LLC and Allegro MicroSystems, LLC

 

4.

Amendment to August 25, 2016 Loan Agreement, dated September 24, 2017, by and between Polar Semiconductor, LLC and Allegro MicroSystems, LLC

 

5.

Loan Agreement, date January 26, 2017, by and between Polar Semiconductor, LLC and Allegro MicroSystems, LLC

 

6.

Loan Agreement, dated January 11, 2019, by and between Polar Semiconductor, LLC and Allegro MicroSystems, LLC

 

7.

Loan Agreement, dated March 12, 2019, by and between Polar Semiconductor, LLC and Allegro MicroSystems, LLC


SCHEDULE 2

SANKEN LOANS

 

1.

Credit Line Agreement, dated August 30, 2005, by and between Polar Semiconductor, Inc. and Sanken Electric Co., Ltd. ($10M)

 

2.

Long Term Credit Line Agreement, dated September 29, 2017, by and between Polar Semiconductor, LLC and Sanken Electric Co., Ltd. ($15M)

 

3.

Loan Agreement, dated April 24, 2018, by and between Polar Semiconductor, LLC and Sanken Electric Co., Ltd. ($5M)

 

4.

Loan Agreement, dated March 14, 2019, by and between Polar Semiconductor, LLC and Sanken Electric Co., Ltd. ($9.7M)

 

5.

Loan Agreement, dated February 24, 2020, by and between Polar Semiconductor, LLC and Sanken Electric Co., Ltd. ($3M)


EXHIBIT A

NEW ALLEGRO LOAN

[See attached].


EXHIBIT A

CONSOLIDATED AND RESTRUCTURED

LOAN AGREEMENT

THIS CONSOLIDATED AND RESTRUCTURED LOAN AGREEMENT is made as of 28, 2020, between Polar Semiconductor, LLC, a Delaware limited liability company headquartered at 2800 East Old Shakopee Road, Bloomington, Minnesota 55425 (“PSL”), and Allegro MicroSystems, Inc. (“Allegro”), a Delaware corporation headquartered at 115 Northeast Cutoff, Worcester, Massachusetts 01615.

WHEREAS, the PSL has entered into seven (7) total loan agreements between PSL and Allegro or between PSL and Allegro MicroSystems, LLC; and

WHEREAS, PSL desires to restructure the principal and interest payments for the loans as listed on Exhibit C hereto and to consolidate such loans into one Agreement; and

WHEREAS, Allegro is willing to consolidate and restructure the principal and interest payments for the loans listed on the attached Exhibit C and any amendments thereto.

NOW, THEREFORE, the parties hereby agree as follows:

 

1.

DEFINITIONS

In this Agreement, the following terms shall have the meanings set forth below:

“Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“Agreement” means this Consolidated and Restructured Loan Agreement.

“Business Day” means any day other than a Saturday, a Sunday or a legal holiday on which banks are authorized or required to be closed for the conduct of commercial banking business in Boston, Massachusetts.

 

1


“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlled” has the meaning correlative thereto.

“Event of Default” means any of the events specified in Section 6.1 hereof.

“Existing Facility” shall mean that certain General Financing Agreement, dated as of March 27, 2006, by and between PSL and Mizuho Corporate Bank, Ltd.

“Loan” means the loan extended pursuant to Section 2.1 hereof.

“Note” means the promissory note referred to in Section 2.2 hereof.

“Payment Date” means the date that a payment is due under Section 3.3.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental authority or other entity.

 

2.

TERM LOAN

2.1    Term Loan. Subject to the terms of this Agreement, Allegro hereby agrees to consolidate and restructure the loans listed on the attached Exhibit C (consolidated loans) and any amendments thereto into one term loan Agreement (the “Loan”) to PSL having an aggregate amount of Fifty-One Million Three Hundred Seventy-Six Thousand Eight Hundred Sixty-Four and 00/100 Dollars ($51,376,864.00). The consolidated Loan shall be made as of March 28, 2020 (the “Effective Date”).

2.2    Promissory Note. The Loan shall be evidenced by a promissory note from PSL to Allegro, dated as of the Effective Date, in the form set forth on Exhibit A to this Agreement (the “Note”).

2.3    Interest Rate. The interest rate on the Loan shall be 2.70 percent per annum.

 

2


3.

PAYMENT OF PRINCIPAL AND INTEREST.

3.1    Payment of Principal. PSL shall repay the principal amount of the Loan in six equal annual installments. The due date of the first repayment installment shall be March 28, 2022 and all subsequent repayments shall be due on March 28th of each subsequent year until the loan is repaid in full.

3.2    Interest Payments. At the time that each installment of principal is paid to Allegro pursuant to Section 3.1, PSL shall also pay accrued interest at the rate specified in Section 2.3. Principal and interest shall be transmitted in a single payment on the Payment Date in accordance with the schedule set forth on Exhibit B.

3.3    Time and Place of Payments. All payments by PSL hereunder shall be made without withholding, deduction, recoupment, setoff or counterclaim. Payments shall be made of immediately available funds prior to 12:00 noon, Eastern time, on the date due. However, if any due date is not a Business Day, the next succeeding Business Day. Payments shall be made by wire transfer to such account as Allegro shall designate to PSL from time to time.

3.4    Prepayment. PSL may at its option prepay, at any time, without premium or penalty, the whole or any portion of the Loan; provided that each such optional prepayment, if less than the entire principal amount of the Loan then outstanding, shall be in an amount of $100,000 or a multiple thereof. Each such prepayment shall be accompanied by payment of all accrued but unpaid interest as of the date of prepayment. Any partial prepayment of principal shall be applied to installments of principal thereafter coming due in inverse order of their normal maturity.

 

4.

REPRESENTATIONS AND WARRANTIES

As an inducement to Allegro to execute this Agreement and to extend the Loan, PSL hereby represents and warrants to Allegro that:

4.1    Organization. PSL is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. PSL has the legal power and authority to enter into and perform this Agreement.

 

3


4.2    Authorization. The execution, delivery and performance of this Agreement and the Note have been duly authorized by all necessary corporate action, and do not and will not require the consent or approval of any third party.

4.3    Validity and Binding Effect. This Agreement and the Note, when duly executed and delivered by PSL, will be legal, valid and binding obligations of PSL enforceable against PSL in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws of general application affecting lender rights generally and by general principles of equity limiting the availability of equitable remedies.

 

5.

COVENANTS OF PSL

5.1    Indebtedness. PSL shall not incur any other indebtedness from any of its Affiliates except for the Existing Facility (or a replacement facility of similar size entered into in the ordinary course of business), unless (i) such indebtedness is subordinated in right of payment to all obligations under this Loan or (ii) Allegro has provided written consent (such consent to be granted or withheld in the sole discretion of Allegro) at least one Business Day prior to the incurrence of such indebtedness.

 

6.

DEFAULT AND REMEDIES

6.1    Events of Default. The occurrence of any one of the following events shall constitute an Event of Default hereunder:

 

(a)

PSL shall fail to make any payment of principal or interest on the Loan by the required Payment Date unless a payment extension has been approved in writing by Allegro’s Chief Executive Officer or Chief Financial Officer.

 

(b)

Any representation or warranty of PSL contained herein shall prove to have been incorrect in any material respect when made.

 

(c)

PSL shall default in the performance of any other term, covenant or agreement contained in this Agreement and such default shall continue unremedied for thirty (30) days after notice thereof is given to PSL.

 

4


(d)

Default by PSL in the payment when due, whether by acceleration or otherwise (subject to any applicable grace period), of any other obligation for borrowed money having a principal amount, individually or in the aggregate, in excess of $500,000.

 

(e)

PSL shall be dissolved, or become insolvent or bankrupt or shall cease paying its debts as they mature or shall make an assignment for the benefit of lenders, or a trustee, receiver or liquidator shall be appointed for PSL or for a substantial part of its property, or bankruptcy, reorganization, arrangement, insolvency or similar proceeding shall be instituted by or against PSL under the laws of any jurisdiction.

 

(f)

Any person or persons other than Sanken Electric Co., Ltd. or its subsidiaries acquires more than 50% of the voting securities of PSL or acquires substantially all of PSL’s assets.

6.2    Right of Acceleration. Upon the occurrence of any Event of Default and at any time thereafter, in addition to any other rights and remedies available to Allegro hereunder, Allegro may declare the entire principal amount of the Loan and all accrued and unpaid interest to be immediately due and payable, whereupon the same shall become forthwith due and payable, without presentment, demand, protest or notice of any kind.

6.3    Right of Set-off. In addition to any other rights or remedies available to Allegro hereunder or under applicable law, and not in limitation of its rights or remedies, upon the occurrence and during the continuance of any Event of Default, Allegro is hereby authorized at any time or from time to time, without presentment, demand, protest or notice of any kind, have the right to appropriate and apply to the payment of the Loan and any accrued interest any and all accounts payable to PSL or any other amounts owed to PSL, whether incurred in the ordinary course of business or otherwise.

 

7.

MISCELLANEOUS PROVISIONS.

7.1    Entire Agreement. This Agreement, and the attached Exhibits, constitutes the entire understanding between the parties with respect to the subject matter hereof, and supersedes all prior agreements, negotiations and discussions between the parties regarding such subject matter.

 

5


7.2    Counterparts. This Agreement (and each amendment, modification and waiver in respect of this Agreement) may be executed and delivered in counterparts, all of which, taken together, shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart.

7.3    Amendments. No amendment or modification of this Agreement shall be effective unless set forth in writing and signed by a duly authorized representative of each party.

7.4    Assignment. This Agreement shall be binding upon and inure to the benefit of each party hereto and their respective successors, assigns, heirs and personal representatives. No party shall assign any or all of its rights and obligations under this Agreement without the prior written consent of the other party.

7.5    Waiver. Any failure by a party to exercise or enforce any right under this Agreement shall not be deemed a waiver of such party’s right thereafter to enforce each and every term and condition of this Agreement. The acceptance by Allegro of any partial payment shall not constitute a waiver of any default or of any of Allegro’s rights hereunder.

7.6    Notices. Notices under this Agreement may be sent by e-mail or courier service. Notice shall be sent to the address set forth on the first page of this Agreement or to such other address and contact person as a party may designate, or to the email address of any such designated contact person.

7.7    Severability. The unenforceability or invalidity of any provision of this Agreement shall not affect the enforceability or validity of any other provision herein and the invalidity or unenforceability of any provision of this Agreement to any person or circumstance shall not affect the enforceability or validity of such provision as it may apply to other persons or circumstances.

7.8    Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to any other conflicts of laws provisions thereof that would result in the application of the law of another jurisdiction.

 

6


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers as of the date first above written.

 

POLAR SEMICONDUCTOR, LLC     ALLEGRO MICROSYSTEMS, INC.

/s/ Yoshihiro Suzuki

   

/s/ Paul V. Walsh Jr.

By:   Yoshihiro Suzuki     By:   Paul V. Walsh Jr.
Title:   President and Chief Executive Officer     Title:   Sr. Vice President and C.F.O.

 

SIGNATURE PAGE TO CONSOLIDATED AND RESTRUCTURED LOAN AGREEMENT


EXHIBIT A

TERM NOTE

 

$51,376,864      March 28, 2020  

FOR VALUE RECEIVED, the undersigned, POLAR SEMICONDUCTOR LLC., a Delaware corporation (the “Company”), promises to pay to the order of ALLEGRO MICROSYSTEMS, INC., (“Holder”) the principal amount of 51,376.864 Dollars or, if less, the aggregate unpaid principal amount of the Loan extended pursuant to that certain Loan Agreement dated as of March 28, 2020 (together with all amendments and other modifications, if any, from time to time thereafter made thereto, the “Loan Agreement”) between Company and Holder. The principal of this Note shall be payable in installments as set forth in the Loan Agreement.

Company also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity, until paid, at the rates per annum and on the dates specified in the Loan Agreement.

Payments of both principal and interest are to be made in lawful money of the United States of America in same day or immediately available funds to the account designated by Holder pursuant to the Loan Agreement.

All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor and agree to pay, to the extent permitted by law, all costs and expenses, including, without limitation, reasonable attorney fees, incurred or paid by Holder in enforcing this note, whether or not litigation is commenced.

Governing Law. This Note and all matters related hereto shall in all respects be governed by and construed in accordance with the laws of the State of New York. Any proceeding to enforce, interpret, challenge the validity of, or recover for the breach of any provision of, this Note shall be filed exclusively in the United States District Court for the Southern District of New York or the state courts located in the State of New York, and the parties hereto expressly consent to the exclusive jurisdiction of such courts and expressly waive any and all objections to personal

 

8


jurisdiction, service of process or venue in connection therewith. Final judgment against the Company in any action, suit or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment. The Company hereby acknowledges that this Note constitutes an instrument for the payment of money, and consents and agrees that the Holder, at its sole option, in the event of a dispute by the Company in the payment of any moneys due hereunder, shall have the right to bring a motion-action under New York CPLR Section 3213. Nothing in this Section 10 shall affect the right of the Holder to (i) commence legal proceedings or otherwise sue the maker in any other court having jurisdiction over the Company or (ii) serve process upon the maker in any manner authorized by the laws of any such jurisdiction. The Company irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Note in any court referred to in this Section and the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

Waiver of Jury Trial. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING BROUGHT BY OR ON BEHALF OF ANY PARTY ARISING OUT OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).

Amendments; Waivers. Neither the Company nor Holder will (by act, delay, omission or otherwise) be deemed to have waived any of its rights or remedies hereunder, or any provision hereof, unless such waiver is in writing signed by such party, and any such waiver will be effective only to the extent specifically set forth therein. A waiver by either party of any right or remedy under this Note on any one occasion will not be construed as a bar to or waiver of any such right or remedy which such party would otherwise have had on any future occasion.

Severability. Wherever possible, each provision of this Note which has been prohibited by or held invalid under applicable law will be ineffective to the extent of such prohibition or invalidity, but such prohibition or invalidity will not invalidate the remainder of such provision or the remaining provisions of this Note.

 

9


Transfers; Assignees. This Note may not be transferred or assigned by the Company without Holder’s prior written consent. Holder may transfer or assign this Note only in compliance with the legend set forth hereon. If the transfer or assignment is based on an exemption under applicable securities laws, the Company may condition the transfer or assignment on receipt from Holder or the transferee/assignee of a reasonably acceptable opinion of counsel confirming the exemption. Wherever in this Note reference is made to the Company or Holder, such reference will be deemed to include, as applicable, a reference to their respective successors and assigns, legatees, heirs, executors, administrators and legal representatives, as applicable, and, in the case of Holder, any future holder of this Note. The provisions of this Note will be binding upon and will inure to the benefit of such successors, assigns, holders, legatees, heirs, executors, administrators and legal representatives, as applicable. Upon surrender for registration of transfer of this Note, the Company, at its expense, will execute and deliver, in the name of the designated transferee or transferees, one or more new Notes of the same type, and of a like aggregate principal amount. This Note may be exchanged at the option of the Holder thereof for Notes of a like aggregate principal amount but in different denominations, not less than Two Hundred and Fifty Thousand Dollars ($250,000) principal amount each. Whenever this Note is so surrendered for exchange, the Company, at its expense, will execute and deliver the Notes that the Holder making the exchange is entitled to receive. All Notes issued upon any registration of transfer or exchange will be the legal and valid obligations of the Company evidencing the same interests, and entitled to the same benefits, as the Notes surrendered upon such registration of transfer or exchange. The person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes, and the Company shall not be affected by any notice to the contrary, until due presentment of a Note for registration of transfer so provided herein.

Headings; Interpretation. The headings of the sections of this Note are solely for convenient reference and will not be deemed to affect the meaning or interpretation of any provision of this Note.

Securities Laws. Holder, by acceptance of this Note, hereby represents and warrants that Holder has acquired this Note for investment only and not for resale or distribution hereof. Holder, by acceptance of this Note, further understands, covenants and agrees that the Company is under no obligation and has made no commitment to provide for registration of this Note under the Act or state securities laws, or to take such steps as are necessary to permit the sale of this Note without registration under those laws.

 

10


Usury. It is the intention of the Company and Holder to conform strictly to all applicable usury laws now or hereafter in force, and any interest payable under this Note will be subject to reduction to an amount which is the maximum legal amount allowed under applicable usury laws as now or hereafter construed by the courts having jurisdiction over such matters.

Lost Notes, etc. If the original copy of this Note is mutilated, destroyed, lost or stolen, the Company will execute and deliver one or more new Notes for a like amount, in substitution therefor, in exchange for (i) the statement of the Holder, briefly setting forth the circumstances with respect to such mutilation, destruction, loss or theft, and (ii), except for a mutilation where the original mutilated original is delivered to the Company, a written agreement (without security or payment) to indemnify the Company and Holdco against any claim that may be made on account of the alleged mutilation, destruction, loss or theft. If requested by the Holder, the Company will issue replacement Notes following any merger or other reorganization of the Company not prohibited by this Note or requiring repayment.

Further Assurances. The Company agrees to (i) cooperate fully with the Holder, (ii) execute such further Instruments, documents, financing statements and agreements that may be required under applicable law and (iii) give such further written assurances and take such further action as may be reasonably requested by the Holder, in each case, as may be necessary to carry out and effectuate the provisions and purposes of this Note and the transactions contemplated hereunder.

 

POLAR SEMICONDUCTOR, LLC

/s/ Yoshihiro Suzuki

Yoshihiro Suzuki
President and Chief Executive Officer

 

11


Exhibit B

PSL

REPAYMENT SCHEDULE

 

Loan Principal: $51,376,864    Interest Rate: 2.70%
Term: 7 Years    Maturity Date: March 28, 2027
Issue Date: March 28, 2020    Payment Schedule: Principal & Interest due on March 28 of each year

 

Date   

Principal

Payment

    

Interest

Payment

    

Total

Payment

    

Principal

Balance

 

03/28/22

   $ 8,562,811      $ 2,774,351      $ 11,337,161      $ 42,814,053  

03/28/23

   $ 8,562,811      $ 1,155,979      $ 9,718,790      $ 34,251,243  

03/28/24

   $ 8,562,811      $ 924,874      $ 9,487,594      $ 25,688,432  

03/28/25

   $ 8,562,811      $ 693,588      $ 9,256,398      $ 17,125,621  

03/28/26

   $ 8,562,811      $ 462,392      $ 9,025,202      $ 8,562,811  

03/28/27

   $ 8,562,811      $ 231,196      $ 8,794,007      $ 0  

 

12


Exhibit C

 

Date Issued

   Loan Amount  

August 26, 2015

   $ 17,521,953.06  

October 30, 2015

   $ 2,500,000  

January 26, 2017

   $ 7,800,000  

August 26, 2015

   $ 19,357,202.81  

September 24, 2015

   $ 5,197,708.33  

January 11, 2019

   $ 7,000,000  

March 12, 2019

   $ 7,000,000  
   Total $ 66,376,864.20  

 

13


EXHIBIT B

LLC AGREEMENT

[See attached].


[XXX] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

EXHIBIT B

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

POLAR SEMICONDUCTOR, LLC

THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of POLAR SEMICONDUCTOR, LLC, a Delaware limited liability company (the “Company”), is dated March 28, 2020, by and among, the Company, ALLEGRO MICROSYSTEMS, INC., a Delaware corporation (“Allegro” or the “Allegro Member”), and SANKEN ELECTRIC CO., LTD., a Japanese corporation (“Sanken” or the “Sanken Member” and, together with the Allegro Member, each a “Member” and collectively, the “Members”).

RECITALS:

WHEREAS, the Company was formed as a corporation pursuant to a Certificate of Incorporation filed with the Secretary of State of the State of Delaware on July 11, 2005, and was converted to a limited liability company pursuant to a Certificate of Conversion and Certificate of Formation filed with the Secretary of State of the State of Delaware on March 26, 2013 (the “Certificates”);

WHEREAS, the Company is currently governed by that certain Operating Agreement of the Company, dated March 30, 2013 (the “Original Agreement”);

WHEREAS, the Company has entered into that certain Master Transaction Agreement, dated March 25, 2020, with Sanken (the “Master Transaction Agreement”), pursuant to which, among other matters, Sanken has agreed to obtain seventy percent (70%) of the equity interests of the Company in consideration for the contribution by Sanken of certain loans owed by the Company to Sanken;

WHEREAS, the parties hereto have determined that the Recapitalized Loan Amount (as defined in the Master Transaction Agreement) is equal to $15,000,000;

WHEREAS, the Company intends to be classified as a corporation for U.S. federal income tax purposes; and

WHEREAS, the Members desire to amend and restate the Original Agreement to effect the admission of Sanken as a Member, recapitalize the equity interests in the Company and to otherwise reflect the rights and obligations of the Members, all upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:

1.    Continuation. The Company was organized as a Delaware limited liability company pursuant to the filing of the Certificates. The Members hereby agree to continue the Company as a limited liability company in accordance with this Agreement and in accordance with the Delaware Limited Liability Company Act (as amended from time to time and any successor to such Act, the “Act”), and all other pertinent laws of the State of Delaware, for the purposes and upon the terms and conditions hereinafter set forth. The rights and obligations of the Members (in their capacity as members of the Company) and the administration and termination of the Company will be governed by this Agreement and the Act. 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 will govern.


2.    Name; Purpose; Term. The name of the Company shall be “Polar Semiconductor, LLC”, or such other name as shall be determined by the Board (as defined below) from time to time. The purpose and business of the Company is to engage in any lawful business or activity. The term of the Company shall continue perpetually until terminated pursuant to the terms of this Agreement.

3.    Principal Place of Business; Registered Agent and Office. The Company’s principal office shall be located at such place as the Board shall from time to time designate, within or outside the State of Delaware. The Company may conduct business at such additional places as the Board shall deem advisable. The registered agent of the Company and the registered office of the Company shall be as set forth in the Certificates, or such other agent or place as may hereafter be designated by the Board from time to time as provided by law.

4.    Books and Records. The Company shall maintain all books of account necessary to prepare financial statements and tax returns. All books of account shall be maintained at the offices of the Company and shall be open for inspection by any Member at any reasonable time.

5.    Fiscal Year. The fiscal year of the Company shall commence on the calendar day immediately following the last Friday of March and end on the last Friday of March of each year or such other dates as the Board may select in its discretion from time to time. All accounting and financial statements of the Company shall be prepared in a manner consistent with the Company’s fiscal year.

6.    Tax Classification; Capital Contributions; Membership Interests.

(a)    Tax Classification. The Members intend that the Company shall be treated as a corporation for U.S. federal income tax purposes. Accordingly, the Company, the Members, the Board, the Officers and their respective representatives are hereby specifically authorized to take any actions necessary to make and give effect to such classification (including preparing, signing and filing U.S. Internal Revenue Service Form 8832).

(b)    Capital Contributions. Each Member has made, or has been deemed to have made (including by virtue of recapitalization(s) and/or equity transfer(s), as applicable), a capital contribution to the Company, as reflected in the books and records of the Company, and in consideration therefor has been issued the Units (as defined below) set forth on Schedule 1 hereto. Except as set forth in Section 6(g) below, the Members shall have no obligation to make additional capital contributions to the Company. No Member shall be obligated to lend money to the Company.

(c)    Membership Interests.

(i)    The limited liability company interests of the Company, as defined in the Act (the “Membership Interests”) shall be represented by units (the “Units”). The Units shall entitle the holder thereof to an ownership interest in the income, losses and capital of the Company, as more particularly set forth in this Agreement, shall entitle the holder thereof to the share of distributions as more particularly set forth in this Agreement, and shall have the rights, powers and obligations more particularly set forth in this Agreement. The number of Units held by the Members, and their percentage holdings of all outstanding Units (the “Unit Percentages”) as of the date hereof are set forth on Schedule 1 hereto, as the same may be amended from time to time. In the event of any change with respect to the information stated on Schedule 1, the Board shall promptly cause (A) Schedule 1 to be amended to reflect such change, and (B) a copy of the revised Schedule 1 to be provided to each Member; provided, that the failure of the Board to cause Schedule 1 to be amended or to cause a revised copy of Schedule 1 to be provided to the Members shall not prevent the effectiveness of, or otherwise affect the underlying adjustments that would be reflected in, such an amendment.

 

- 2 -


(ii)    Except as expressly set forth herein (including in Section 8(a)(ii)) or as expressly required by applicable law, the Units shall have no voting, consent, approval or similar rights under this Agreement.

(d)    No Third Party Beneficiary. No creditor or other third party having dealings with the Company shall have the right to cause any Member to make a capital contribution to the Company or to pursue any other right or remedy hereunder or at law or in equity, it being understood and agreed that the provisions of this Agreement shall be solely for the benefit of, and may be enforced solely by, the parties hereto and their respective successors and assigns. None of the rights or obligations of the Members herein set forth to make capital contributions to the Company, if any, shall be deemed an asset of the Company for any purpose by any creditor or other third party nor may such rights or obligations be sold, transferred or assigned by the Company and such rights and obligations may not be pledged or encumbered to secure any debt or other obligation of the Company or of any of the Members.

(e)    Participation Rights. Each Member shall have the right to purchase such Member’s Unit Percentage, or any lesser number, of any New Securities that the Company may from time to time issue after the date of this Agreement. For purposes of this Agreement, “New Securities” means any Membership Interests of the Company (including any Units), whether now or hereafter authorized, any rights, options or warrants to purchase such Units, and any securities of any type whatsoever (including debt securities) that are, or may become, convertible into or exchangeable or exercisable for Units of the Company (collectively “Equity Securities”), provided, however, that “New Securities” shall not include any of the following: (i) issuances of any Equity Securities to employees of the Company, Managers (or similar governing body) and consultants for the primary purpose of soliciting or retaining their services pursuant to plans or agreements approved by the Board; (ii) the issuance of Equity Securities in an initial public offering; (iii) the issuance of Equity Securities to a third party that is not a Member or an Affiliate thereof for non-cash consideration pursuant to a merger, consolidation, acquisition, joint venture, strategic partnership, or similar business combination approved in accordance with this Agreement and which are dilutive to all Members in the same manner; (iv) the issuance of Equity Securities upon the exercise, conversion or exchange of any Equity Securities exercisable for, convertible into or exchangeable for Equity Securities that are issued in compliance with the provisions of this Agreement; and (v) the issuance of Equity Securities in connection with any equity split, dividend, in-kind equity distributions or other similar recapitalization. In the event that the Company proposes to undertake an issuance of New Securities, it shall give to each Member a written notice of its intention to issue New Securities (the “Participation Rights Notice”), describing the type of New Securities and the price and the general terms upon which the Company proposes to issue such New Securities. Each Member shall have ten (10) days from the receipt of such Participation Rights Notice to agree in writing to purchase such Member’s pro rata share of such New Securities for the price and upon the general terms specified in the Participation Rights Notice by giving written notice to the Company and stating therein the quantity of New Securities to be purchased. In the event that the Members fail to exercise in full the participation right within such ten (10)-day period, then the Company shall have ninety (90) days thereafter to sell the New Securities with respect to which the Members’ participation rights hereunder were not exercised, at a price and upon general terms not materially more favorable to the purchasers thereof than specified in the Company’s Participation Rights Notice to the Members. In the event that the Company has not issued and sold the New Securities within such ninety (90)-day period, then the Company shall not thereafter issue or sell any New Securities without again first offering such New Securities to the Members pursuant to this Section 6(e).

 

- 3 -


(f)    Representations by Members. Each Member hereby represents, warrants, agrees and acknowledges to the Company, severally and not jointly, as of the date hereof (or, if applicable, the date such Member becomes a party hereto), that:

(i)    (1) it has read and fully understands this Agreement, (2) information related to the Company has been made available to it, (3) it understands and has evaluated the risks associated with acquiring its Membership Interest (including any tax consequences of owning a Membership Interest), (4) it has been given an opportunity to ask questions of, and receive answers from, the Company and its representatives concerning the matters pertaining to the acquisition of its Membership Interest and has been given the opportunity to review such additional information as was necessary to evaluate the merits and risks of acquiring its Membership Interest, (5) it is an “accredited investor” as defined in the Securities Act of 1933, as amended, and (6) it is acquiring its Membership Interest as a Member for its own account for investment purposes only and not with a view to the distribution or resale thereof, in whole or in part, and agrees that it will not Transfer all or any part of its Membership Interest, or solicit offers to buy from or otherwise approach or negotiate in respect thereof with any person or persons whomsoever all or any part of its Membership Interest, in any manner that would violate this Agreement or violate applicable federal, state or foreign securities laws;

(ii)    if a legal entity and not an individual, it is a corporation, limited liability company, partnership, trust, or other legal entity, as applicable, duly organized or formed and validly existing and in good standing under the laws of the jurisdiction of its organization or formation; it has all requisite corporate, limited liability company, partnership, trust, or other entity power and authority to enter into this Agreement, to acquire and hold its Membership Interest and to perform its obligations hereunder; and the execution, delivery and performance of this Agreement has been duly authorized by all necessary corporate, limited liability company, partnership, trust, or other entity action, as applicable;

(iii)    its execution and delivery of this Agreement and the performance of its obligations hereunder will not conflict with, result in a breach of or constitute a default (or any event that, with notice or lapse of time, or both, would constitute a default) or result in the acceleration of any obligation under any of the terms, conditions or provisions of any other agreement or instrument to which it or any of its Affiliates is a party or by which it or any of its Affiliates is bound or to which any of its or any of its Affiliate’s property or assets are subject, conflict with or violate any of the provisions of its or any of its Affiliate’s organizational documents, or violate any law or statute or any order, rule or regulation of any court or governmental or regulatory agency, body or official, that would adversely affect the performance of its or any of its Affiliate’s obligations hereunder; and such Member has obtained any consent, approval, authorization or order of any person, court or governmental agency or body required for the execution, delivery and performance by such Member of its obligations hereunder;

(iv)    there is no action, suit or proceeding pending against such Member or, to its knowledge, threatened against such Member in any court or by or before any other governmental agency or instrumentality that would prohibit its entering into, or that could adversely affect its ability to perform its obligations under, this Agreement; and

(v)    this Agreement is a binding agreement on the part of such Member enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium or similar laws relating to creditors’ rights and general principles of equity.

(g)    Plan 5K Capital Investment Plan. Within six (6) months following the date hereof, Allegro and Sanken will agree upon a capital investment plan that will have the goal of increasing the Company’s capacity at the Company’s Bloomington Wafer Fab Facility by [XXX], with the goal of reducing cost and improving utilization by the Company in

 

- 4 -


the Company’s fiscal years 2023 and 2024 through the sale of Sanken products or third party business, as provided in that certain Amendment 1 to Wafer Foundry Agreement between Allegro MicroSystems, LLC and the Company, dated as of the date hereof (the “Wafer Supply Agreement” and such plan, in a form substantially similar to the plan attached hereto as Exhibit A, the “Plan 5K”). Additionally, within twelve (12) months following the date hereof, Allegro and Sanken will jointly review current and future business conditions to ensure that the intended capacity ramp set forth in Plan 5K remains valid and viable. Allegro, Sanken and the Company will mutually agree on a final version of Plan 5K and a schedule for implementation of Plan 5K. Allegro and Sanken will work together to determine how to fund the capital required for the Company to build out capacity to satisfy Plan 5K (which capital is, as of the date of this Agreement, anticipated to be approximately $[XXX] in the aggregate). If the Company cannot obtain sufficient capital to fund Plan 5K from available cashflow, the first $[XXX] of additional funding will come from the Company’s existing credit facility with Mizuho Corporate Bank, Ltd. If available amounts under such facility are insufficient to meet the required total funding of Plan 5K, Sanken and Allegro will support the Company by funding an additional amount, up to an aggregate of $[XXX], which investment shall be on a pro rata basis in accordance with their respective Unit Percentages, with such aggregate amount being invested over time based on planned revenue of the Company. Notwithstanding anything herein to the contrary, in no event shall the aggregate amount required to be funded by the Members pursuant to this Section 6(g) exceed ten million dollars ($10,000,000) (the “Cap”), and in no event shall either Member’s aggregate liability for funding pursuant to this Section 6(g) exceed such Member’s Unit Percentage of the Cap.

7.    Distributions. Distributions of cash or other assets of the Company may be effected by the Members from time to time at the discretion of the Board, upon approval by the Board, but subject in all instances to Section 8(a)(ii). The assets and amounts available for any such approved distribution to the Members shall be determined by Board, taking into account the amounts required to establish and fund reasonable reserves for future costs and contingent liabilities and to provide for the future needs of the business of the Company; provided that, for the avoidance of doubt, the assets and amounts available for any distributions shall be calculated after, and net of, any and all payments that are due or are reasonably expected to come due within twelve (12) months of any such determination under that certain Loan Agreement, dated as of the date hereof, by and between the Allegro Member and the Company. Each distribution of cash or other property by the Company will be allocated to the Members in accordance with their respective Unit Percentages.

8.    Management; Officers.

(a)    Action of Members.

(i)    Generally. The Members shall solely have the power to exercise the rights or powers granted to the Members pursuant to the express terms of this Agreement, and no other powers (whether in respect of their Membership Interests or otherwise). The approval or consent of the Members shall not be required in order to authorize the taking of any action by the Company and the Members shall have no right to reject, overturn, override, veto or otherwise approve or pass judgment upon any action taken by the Board or an authorized officer of the Company acting within the scope of authority granted by the Board, unless and then only to the extent that (a) this Agreement shall expressly provide therefor (including Section 8(a)(ii)), (b) such approval or consent shall be required by applicable law or (c) the Board shall have determined in its sole discretion that obtaining such approval or consent would be appropriate or desirable. The Members, as such, shall have no power to bind the Company except as provided in this Agreement (including Section 8(a)(ii)).

 

- 5 -


(ii)    Member Approvals. Notwithstanding anything contained in this Agreement to the contrary, without the prior written consent of each Member (in its capacity as a Member), the Board shall not and shall ensure that the Company shall not and shall not permit any of its controlled Affiliates to, directly or indirectly (by amendment, merger, consolidation or otherwise):

A.    (1) enter into any agreement, arrangement or similar transaction providing for a Sale of the Company or (2) initiate a process for, or consummate any Sale of the Company;

B.    terminate or transfer any line of business of the Company or any of its controlled Affiliates or any of their respective operations or otherwise materially change the nature of any of their respective businesses;

C.    transfer, sell, convey, encumber or otherwise dispose of any assets or properties in excess of $5,000,000 (unless such sale, conveyance, encumberance or disposal is made in the ordinary course of business);

D.    modify or change any term of (1) the Plan 5K wafer price schedule, (2) the Plan 5K capital approval and spending schedule, or (3) the installation timeline, each of the foregoing as set forth in the Wafer Supply Agreement;

E.    authorize, make, declare, pay or set aside any extraordinary dividend or other distribution (whether in cash, property or otherwise) on any of the Membership Interests, where such extraordinary dividend or other distribution is one that is greater than ten percent (10%) of consolidated net income of the Company and its subsidiaries for the last twelve (12) months for which internal financial statements are available, plus to the extent deducted in calculating consolidated net income and in each case with respect to the Company and its consolidated subsidiaries without duplication, (i) consolidated tax expense for such period and (ii) consolidated interest expense for such period, in each case, as set forth in such financial statements;

F.    except as set forth in Section 6(g), create, incur, assume or guarantee any indebtedness (including any indebtedness for borrowed money, debt represented by notes, bonds, debentures and the like, and any debt-like credit instruments (such as letters of credit, bankers acceptances and the like) of the Company or any of its controlled Affiliates, excluding any indebtedness created, incurred, assumed, or guaranteed in the ordinary course of business;

G.    authorize, issue, sell, transfer any Units or New Securities;

H.    enter into, amend, modify or terminate (other than in accordance with its terms) any agreement, arrangement or transaction with any Member or any Affiliate of any Member;

I.    agree to or effect any liquidation, dissolution, winding up, event of bankruptcy or similar action with respect to the Company or any controlled Affiliate;

J.    except as set forth in Section 6(g), require any Member to make any additional capital contributions; or

 

- 6 -


K.    change the entity classification of the Company for U.S. income tax purposes.

(b)    Management of the Company.

(i)    Generally. Except as otherwise expressly provided herein (including Section 8(a)(ii)) or in the Act, management decisions of the Company shall be made and implemented solely by the board of managers of the Company (the “Board”) consisting initially of five natural persons (each a “Manager”), who shall have sole and exclusive authority over and responsibility for the conduct of the Company’s business and affairs, subject to the provisions of this Agreement and applicable law. The authorized number of Managers shall be subject to change by the Board or otherwise in accordance with this Agreement. Managers need not be Members. The Board shall have full, exclusive and complete discretion to manage and control the business and affairs of the Company, to implement any and all policies relating to the operation of the business of the Company (including any compliance or similar policies), to make all decisions affecting the business and affairs of the Company and to take all such actions as it deems necessary or appropriate to accomplish the purposes of the Company as set forth herein.

(ii)    Election of Managers. The Sanken Member shall have the right to appoint in its sole discretion three (3) Managers (each a “Sanken Manager” and collectively, the “Sanken Managers”), the Allegro Member shall have the right to appoint in its sole discretion one Manager (the “Allegro Manager”), and the then-current President of the Company shall serve as a Manager (the “President Manager”). One of the Sanken Managers will serve as the Chairman of the Board. Any committees of the Board shall be created only upon the approval of the Board as provided in this Section 8. In the event any Manager for any reason ceases to serve as a member of the Board during his or her term of office, the resulting vacancy on the Board shall be filled by the Person or Persons entitled to appoint such vacating Manager pursuant to this Section 8(b)(ii). The initial Managers of the Company will be (A) Yoshihiro Suzuki, Hiroshi Takahashi, and Kazuyoshi Yagi, who shall be the initial Sanken Managers, (B) Thomas Teebagy, who shall be the initial Allegro Manager and (C) Kurt Walter, who shall be the initial President Manager. Each Manager shall hold office until a successor (if any) is appointed in accordance with this Section 8 or until such Manager’s earlier death, resignation or removal in accordance with the provisions hereof.

(iii)    Meetings of the Board. The Board shall meet from time to time to discuss the business of the Company. The Board may hold meetings either within or without the State of Delaware. A special meeting of the Board may be called by the Sanken Manager serving as Chairman, the President Manager or the Allegro Manager by providing one business day notice to each Manager, either personally, by telephone, by email, by facsimile or by any other similarly timely means of communication which notice requirement may be waived by the Managers, and which notice shall be deemed waived by any Manager who attends such meeting without objection.

(iv)    Quorum and Acts of the Board. At all meetings of the Board, the presence of a majority of the Managers (which majority shall include the Allegro Manager) shall constitute a quorum for the transaction of business. At any meeting at which there is a quorum, the Board may take action on any matter by a majority of the votes cast. If a quorum shall not be present at any meeting of the Board, the Managers present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Any action required or permitted to be taken at any meeting of the Board may be taken without a meeting, if the requisite number of votes in favor of such action as would be required at a meeting of the Board

 

- 7 -


are obtained thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board; provided, that a copy of any proposed written consent is provided to all Managers at least forty-eight (48) hours before such action is taken, which notice requirement may be waived by unanimous consent of the Managers, and which notice shall be deemed waived by any Manager that executes such written consent.

(v)    Electronic Communications. Members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

(vi)    Committees of Managers. The Board may, by resolution passed by consent of the Managers in accordance with Section 8.1(b)(iv), designate one or more committees. Such resolution shall specify the duties and quorum requirements of such committees, each such committee to consist of such number of Managers as the Board may fix from time to time; provided, that the Allegro Manager shall be entitled to be appointed to any particular committee if it so desires. Any such committee, to the extent provided in the resolution of the Board, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company; provided, that no such committee may take any action which the Board is prohibited from itself taking pursuant to this Agreement (including the actions described in Section 8(a)(ii)). Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board. Each committee shall keep regular minutes of its meetings and report the same to the Board when required. Unless otherwise set forth in the resolution establishing any committee, (a) at all meetings of any such committee, the presence of the committee members entitled to cast a majority of the votes available thereto shall constitute a quorum for the transaction of business, (b) at any meeting at which there is a quorum, such committee may take action on any matter by a majority of the votes cast, (c) if a quorum shall not be present at any meeting of such committee, the committee members present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present and (d) any action required or permitted to be taken at any meeting of such committee may be taken without a meeting, if the requisite number of votes in favor of such action as would be required at a meeting of such committee are obtained thereto in writing, and the writing or writings are filed with the minutes of proceedings of the committee.

(vii)    Expense Reimbursement of Managers. The Managers shall be reimbursed by the Company for the reasonable and properly documented expenses incurred in connection with attending meetings of the Board or committees thereof or events on behalf of the Company. No Manager shall be paid any compensation for service as a Manager, other than the expense reimbursement provided for in this Section 8(b)(vii).

(viii)    Resignation. Any Manager may resign at any time by giving written notice to the Company. The resignation of any Manager shall take effect upon receipt of such notice or at such later time as shall be specified in the notice; and, unless otherwise specified in the notice, the acceptance of the resignation by the Company, the Members or the remaining Managers shall not be necessary to make it effective. Upon the effectiveness of any such resignation, such Manager shall cease to be a “manager” (within the meaning of the Act).

(ix)    Removal of Managers. The Person or Persons appointing any Manager pursuant to Section 8(b)(ii) shall have the sole right to remove such Manager from the Board at any time with or without cause or reason. Upon the taking of any such action described above in this

 

- 8 -


Section 8(b)(ix), the removed Manager shall cease to be a “manager” within the meaning of the Act. Notwithstanding anything in this Agreement to the contrary, the removal from the Board (with or without cause) of any Manager shall only be at the written request of the Person or Persons appointing such Manager pursuant to Section 8(b)(ii), and under no other circumstances (unless the Manager being removed is the President Manager, as a result of such individual ceasing to be the President of the Company, in which event the President Manager shall be removed from the Board automatically). Upon receipt of any such written request, the Board will promptly take all such actions as shall be necessary or desirable to cause the removal of such Manager. Any vacancy caused by any such removal shall be filled in accordance with Section 8(b)(x).

(x)    Vacancies. Any vacancy shall be filled at any time in accordance with Section 8(b)(ii). A Manager elected to fill a vacancy shall hold office until his or her successor has been elected and qualified or until his or her earlier death, resignation or removal.

(xi)    Managers. Each person named as a Manager herein or subsequently appointed as a Manager is hereby designated as a “manager” (within the meaning of the Act) of the Company and no single Manager shall have the power to bind the Company and the Board shall have the power to act only collectively in the manner specified herein.

(c)    Officers.

(i)    The Board may, from time to time as it deems advisable, employ and/or designate one or more persons to be officers of the Company (collectively, the “Officers”). Any Officer so designated shall have only such authority and perform only such duties as the Board may, from time to time, expressly delegate to them; provided, however, that such employment or delegation shall not relieve the Board of its responsibilities and obligations under this Agreement or under applicable law. In its sole discretion but subject to Section 9(a), the Board is authorized to compensate (either through a written employment contract or otherwise) such Officers for such service. Unless the Board otherwise determines, if the title assigned to an Officer of the Company is one commonly used for officers of a business corporation or a limited liability company, then the assignment of such title shall constitute the delegation to such officer of the authority and duties that are customarily associated with such office.

(ii)    Each Officer shall hold office for the term for which such Officer is designated and until his or her successor shall be duly designated and shall qualify, or until his or her death, resignation or removal as provided in this Agreement. Any person may hold any number of offices. The following persons are hereby appointed Officers of the Company:

 

Yoshihiro Suzuki

   Chairman & CEO

Kurt Walter

   President & COO

James Moore

   Vice President & CFO

Kojiro Hatano

   Executive Vice President & Secretary

(iii)    Except as set forth in a written agreement between the Company and the Officer, any Officer of the Company may be removed as such, with or without cause, by the Board at any time. Any Officer of the Company may resign as such at any time upon written notice to the Company. Such resignation shall be made in writing and shall take effect at the time specified therein or, if no time is specified therein, at the time of its receipt by the Company. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation.

 

- 9 -


(iv)    Any vacancy occurring in any office of the Company may be filled by the Board.

9.    Conflicts of Interest; Duties.

(a)    Each Member recognizes that each other Member has or may have other business interests, activities and investments, some of which may be in conflict or competition with the business of the Company, and that each Member is entitled to carry on such other business interests, activities and investments, unless otherwise provided in the Master Transaction Agreement, the Wafer Supply Agreement or any other agreement or arrangement among or between the parties. No Member shall be obligated to devote all or any particular part of its time and effort to the Company and its affairs. Subject to the terms and conditions of the Master Transaction Agreement, the Wafer Supply Agreement or any other agreement or arrangement among or between the parties, each Member may engage in or possess an interest in any other business or venture of any kind, independently or with others, on its own behalf or on behalf of other entities with which it is affiliated or associated, and any Member may engage in such activities, whether or not competitive with the Company, without any obligation to offer any interest in such activities to the Company or any Member. Neither the Company nor any Member shall have any right, by virtue of this Agreement, in or to such activities, or the income or profits derived therefrom, and the pursuit of such activities, even if competitive with the business of the Company, and such activities shall not be deemed wrongful or improper.

(b)    Notwithstanding any other provision of this Agreement or anything to the contrary existing at law, in equity or otherwise, to the fullest extent permitted by law, no Member or Manager in its capacity as a Member or Manager, as applicable, shall owe any fiduciary or similar duties, or have any liabilities related thereto, to the Company or any Member, provided, however, that the Managers and the Officers shall have the duty to act in accordance with the implied contractual covenant of good faith and fair dealing.

(c)    To the maximum extent permitted by applicable law, each Member hereby waives any claim or cause of action against each Manager, its Affiliates and its and their respective directors, officers, employees, agents and representatives for any breach of any fiduciary or similar duties to the Company or to the Members, other than those expressly provided for herein, including as may result from a conflict of interest, and indemnifies such Manager, its Affiliates and its and their respective directors, officers, employees, agents and representatives for any liabilities resulting from any claim brought by such Member or its Affiliates in violation of such waiver.

(d)    To the maximum extent permitted by applicable law, the provisions of this Agreement, to the extent that they restrict, eliminate or are inconsistent with the duties (including fiduciary duties) and liabilities of any Manager, any Officer, or any Member otherwise existing at law or in equity, are agreed by the Members to replace such duties and liabilities. Whenever in this Agreement a Manager or other person is permitted or required to make a decision or take an action in “good faith” or under another expressed standard, to the extent permitted by applicable law, the Manager or such other person shall act under such express standard, shall not be subject to any other, different or additional standard or duty (including any fiduciary duty, except as otherwise expressly set forth herein) and shall not be treated as or otherwise considered to have breached any duty (including any fiduciary duty, except as otherwise expressly set forth herein) as the result of acting in accordance with such standard.

10.    Reliance by Third Parties. The Board and the Officers, acting in the name of the Company and carrying on the business of the Company, shall have the exclusive authority to bind the Company. Persons dealing with the Company are entitled to rely conclusively upon the power and authority of the Board and the Officers to bind the Company.

 

- 10 -


11.    Waiver and Indemnification. No Manager, Officer, Member, employee, agent or fiduciary of the Company shall be liable, responsible or accountable in damages or otherwise to the Company or to any Member for any act or omission to act by such person within the scope of the authority conferred upon such person pursuant to this Agreement or the Act; provided, that (i) such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the Company’s best interests, (ii) such action or omission does not constitute fraud, willful misconduct, bad faith, gross negligence or an intentional and material breach of this Agreement, and (iii) with respect to any criminal proceeding, such person had no reasonable cause to believe his conduct was unlawful, and the Company shall, and hereby does, indemnify and hold harmless each such person from and against all such damages to the fullest extent permitted by applicable law. No amendment to this Section 11 will impair the rights of any person arising at any time with respect to events occurring prior to such amendment. Notwithstanding anything to the contrary contained in this Agreement, no Member shall have any personal liability with respect to the indemnities set forth in this Section 11, and any such indemnities shall be satisfied solely out of the assets of the Company. To the fullest extent permitted by applicable law, if any portion of this Section 11 shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify each Member, Manager or Officer and may indemnify each employee or agent of the Company as to costs, charges and expenses (including reasonable attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Company, to the fullest extent permitted by any applicable portion of this Section 11 that shall not have been invalidated.

12.    Withholding; Other Tax Matters.

(a)    The Company shall withhold distributions or portions thereof, or pay taxes on behalf of or with respect to any Member, if it is required to do so by any applicable rule, regulation, or law. Each Member hereby authorizes the Company to withhold from or pay on behalf of or with respect to such Member any amount of federal, state, local or foreign taxes that the Company is required to withhold or pay with respect to any amount distributable under this Agreement to, or otherwise with respect to, such Member. Any amounts so withheld or paid on behalf of or with respect to a Member pursuant to this Section 12(c) shall be deemed to have been distributed to such Member, and to the extent such amounts paid by the Company with respect to a Member exceed the amount actually withheld by the Company at such time from distributions that otherwise would have been paid to such Member, such Member shall promptly reimburse the Company in cash for such excess. Without duplication of any such reimbursement that was actually already paid, each Member shall indemnify and hold harmless the Company and each other Member for any withholding or other similar tax paid by the Company or for which the Company is otherwise liable in respect of the indemnifying Member. Each Member that is a “United States person” within the meaning of Code Section 7701(a)(30) shall furnish the Company with a duly completed and executed Internal Revenue Service Form W-9, and each other Member shall furnish the Company with a duly completed and executed Internal Revenue Service Form W-8BEN-E (or other applicable form) claiming a reduction in or complete exemption from U.S. withholding tax with respect to any interest and dividends paid by the Company. In addition, each Member shall furnish the Company with such other information as is reasonably necessary for the Company to determine whether any withholding is required, and each Member shall promptly notify the Company if such Member determines at any time that it is subject to withholding relating to distributions from, or otherwise with respect to, the Company.

 

- 11 -


(b)    The taxable year of the Company shall be the same as the Company’s fiscal year, unless otherwise required by the Code. Subject to Section 8(a)(ii), the Board shall determine whether to make or revoke any available election of the Company pursuant to the Code.

13.    Limitation on Liabilities; Exculpation; Insurance.

(a)    Except as otherwise provided by the Act, no Member or Manager shall be bound by, or be personally liable for, the debts, expenses, liabilities or obligations of the Company unless such liabilities or obligations are expressly assumed by the Member or Manager in writing, and the liability of each Member shall be limited solely to the amount of its capital contribution to the Company required hereunder (including under Section 6(g)). Subject to any limitations provided under the Act, no distribution (or any part thereof) made to any Member in respect of its Membership Interest shall be deemed to be a return or withdrawal of its capital contribution. No Member shall be liable to the Company for any distribution, except as provided under the Act.

(b)    No Member or Manager shall be liable to the Company or any other Member or Manager for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Member or Manager in good faith on behalf of the Company and in a manner believed to be within the scope of authority conferred on such Member or Manager by this Agreement, except that a Member or Manager shall be liable for any such loss, damage or claim incurred by reason of such Member or Manager’s gross negligence, willful misconduct or willful breach of this Agreement.

(c)    The Company shall maintain insurance, at its expense, to protect any Member, Manager or Officer against any loss, damage, claim or expense described in Sections 8(b)(vii), 11, and 19 whether or not the Company would have the power to indemnify such Member, Manager or Officer against such loss, damage, claim or expense under the provisions of Sections 8(b)(vii), 11, and 19.

14.    Transfers; Drag-Along Right; Tag-Along Right; Right of First Refusal.

(a)    Except as set forth in Section 14(b) and Section 14(c), no Member may, directly or indirectly, sell, exchange, transfer, hypothecate, negotiate, gift, convey in trust, pledge, assign, encumber, or otherwise dispose of (including by adjudication of such Member (or any equityholder thereof) as bankrupt, by assignment for the benefit of creditors, by attachment, levy or other seizure by any creditor (whether or not pursuant to judicial process), or by operation of law or by passage or distribution of Units or Membership Interests under judicial order or legal process) (each, a “Transfer”) its Units or Membership Interest in the Company, or any portion thereof, to any person without the prior written consent of the other Member, which consent may be withheld in such other Member’s sole and absolute discretion; provided, that the foregoing shall not preclude any sale, exchange, transfer, hypothecation, negotiation, gifting, conveyance, pledge, assignment, encumbrance, or otherwise disposition of any equity interests in (i) Allegro or (ii) Sanken Electric Co., Ltd. In the event of a Transfer in accordance with the foregoing provisions, the transferee shall be admitted as a Member in addition to or in substitution for the transferor Member only in accordance with Section 15 hereof. Transfers in violation of this Agreement shall be null and void and of no legal force or effect.

(b)    Permitted Transfers. Notwithstanding the foregoing Section 14(a), each Member shall be permitted to Transfer its Units or Membership Interests to an Affiliate of such Member, but subject to Sections 14(d), 14(e) and 15. For purposes of this Agreement, “Affiliate” means, with respect to a specified person or entity, any other person or entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the first specified person or entity.

 

- 12 -


(c)    Right of First Refusal.

(i)    During the term of this Agreement, in the event that a Member wishes to Transfer all or a portion of its Units to an unaffiliated third party (the “Offered Units”), such Member may do so only with the consent of the other Member in accordance with Section 14(a). If such consent is obtained pursuant to Section 14(a), the transferring Member shall obtain from the third party a bona fide written offer (the “Offer”) to purchase the Offered Units stating the terms and conditions, including the amount and form of consideration to be paid, upon which such purchase is made. Such Member shall deliver to the other Member written notice (the “Offer Notice”) of the proposed Transfer of its Offered Units, together with a copy of the Offer.

(ii)    Such non-transferring Member shall have the right (the “ROFR Right” and such Member, the “ROFR Member”), but not the obligation, for a period of forty-five (45) days (the “Offer Period”) following receipt of the Offer Notice to purchase all but not less than all of the Offered Units on the same terms and conditions as those in the Offer. To exercise such right, the ROFR Member shall notify the transferring Member in writing within the Offer Period of its election to purchase all of the Offer Units.

(iii)    In the event the ROFR Member does not elect to purchase all of the Offered Units within the Offer Period, but otherwise consents to the Transfer pursuant to Section 14(a), the Transferring Member shall be entitled to Transfer the Offered Units to the third party on the terms set forth in the Offer, subject however to the ROFR Member’s rights in Section 14(b). If the Transferring Member has not completed the sale of the applicable Units within 90 days following the ROFR Member’s election not to purchase the Offered Units, it shall not be permitted to thereafter sell such Offered Units without first complying with the provisions of this Section 14(c).

(d)    Other Transfer Restrictions. Notwithstanding anything to the contrary contained herein:

(i)    Any Member proposing to Transfer its Units shall give notice to the Board of such Transfer at least five (5) business days prior to such Transfer.

(ii)    No Member may Transfer its Units or any portion thereof unless such Units or any portion thereof are first registered under the Securities Act and applicable state securities laws or an exemption from such registration is available.

(iii)    All reasonable expenses, including attorneys’ fees, incurred by the Company in connection with the Transfer of Units or any portion thereof shall be paid or reimbursed by the transferring Member upon demand by the Board.

(iv)    No transferee shall become a Member unless such transferee becomes a Member in accordance with the provisions of Section 15, and any purported Transfer shall be void unless and until the Transferee so becomes a Member.

(e)    Overriding Provisions.

(i)    The approval of any Transfer in any one or more instances shall not limit or waive the requirement for such approval in any other or future instance.

 

- 13 -


(ii)    All Transfers permitted under this Section 14 are subject to this Section 14(e).

(iii)    The Company shall promptly update its books and records to reflect any permitted Transfers of Units pursuant to this Section 14.

(f)    Involuntary Transfers. Any purported transfer of title or beneficial ownership of a Member’s Units upon default, bankruptcy, foreclosure, forfeit, divorce, court order or otherwise than by a voluntary decision on the part of a Member (each, an “Involuntary Transfer”) shall be void unless the Member complies with this Section 14(f) and enables the other Member to exercise in full its rights hereunder. Upon the Involuntary Transfer, the Company shall have the right to purchase such Units pursuant to this Section 14(f) and the Person to whom such Units have been Transferred (the “Involuntary Transferee”) shall have the obligation to sell such Units in accordance with this Section 14(f). Upon the Involuntary Transfer, such Member shall promptly (but in no event later than two (2) days after such Involuntary Transfer) furnish written notice to the other Member indicating that the Involuntary Transfer has occurred, specifying the name of the Involuntary Transferee, giving a detailed description of the circumstances giving rise to, and stating the legal basis for, the Involuntary Transfer. Upon the receipt of the notice described in the preceding sentence, and for sixty (60) days thereafter, the other Member shall have the right to purchase, and the Involuntary Transferee shall have the obligation to sell, all (but not less than all) of the Units acquired by the Involuntary Transferee for a purchase price equal to the lesser of (a) the fair market value of such Unit and (b) the amount of the indebtedness or other liability that gave rise to the Involuntary Transfer plus the excess, if any, of the carrying value of such Units over the amount of such indebtedness or other liability that gave rise to the Involuntary Transfer.

15.    Admission of New Members; Additional Issuances. After the date hereof, and subject to the terms and conditions of this Agreement (including Section 6(e), Section 8(a)(ii) and Section 22(f)), additional persons may be admitted to the Company as Members (including by virtue of a Transfer of Membership Interests), new Membership Interests of any type, or any other debt or equity securities of the Company, including securities convertible into or exchangeable for equity securities of the Company, any equity or profit participation rights, or any rights, options or warrants to purchase any of the foregoing of the Company, may be created and issued to Members or non-Members, as determined by the Board on such terms and conditions as the Board may determine in its sole discretion, including the creation of different classes or groups of Members having different rights, powers and duties (but subject in all instances to Section 6(e), Section 8(a)(ii) and Section 22(f)). Any admission of a new Member (by virtue of an issuance or a Transfer of Membership Interests) shall be effective only after the new Member has executed and delivered to the Company a document including the new Member’s agreement to be bound in all respects by this Agreement. Following any issuance or Transfer approved in accordance with the terms hereof, the Board shall have the authority to amend Schedule 1 of this Agreement to reflect the updated register of Membership Interests.

16.    No Resignation. No Member may resign from the Company without the prior written consent of the Board. In the event of an approved resignation of a Member, such Member shall be entitled to receive only those distributions to which such Member is entitled under this Agreement that have been declared but are unpaid at the time of such Member’s resignation. Upon the resignation of any Member (whether under this Section 16 or otherwise), the Unit Percentages of all remaining Members shall automatically be adjusted.

17.    Certain Occurrences Respecting Members.

(a)    Generally. Unless otherwise provided hereunder, the (i) death, legal incompetency, dissolution, liquidation or termination, as the case may be, of a Member, or (ii) Transfer or

 

- 14 -


attempted Transfer of a Member’s Membership Interest in violation of this Agreement (each such event, a “Termination Event” and to each such member to which such Terminating Event has occurred, a “Terminating Member”) shall not cause a dissolution of the Company.

(b)    Succession. Upon the occurrence of a Termination Event the rights of the Terminating Member to share in any gain or loss of the Company, to receive distributions of Company funds and to assign its Membership Interest in the Company shall, on the happening of the Termination Event, devolve on its successors or assigns, subject to the terms and conditions of this Agreement. However, in no event shall such successor assignee become a Member without the consent(s) and the execution of the agreements required under Section 15 hereof.

18.    Dissolution; Liquidation. The Company will dissolve and its business and affairs will be wound up upon the written consent of the Members or the entry of a decree of judicial dissolution under the Act. Upon the dissolution of the Company, the affairs of the Company will be liquidated forthwith. In the dissolution of the Company: first, the assets of the Company will be used to pay or provide for the payment of all of the debts of the Company (including debts owed to Members), and second, the balance of the assets shall be distributed to the Members in accordance with their respective Unit Percentages.

19.    Waiver of Right of Partition and Appraisal Rights. Each of the Members does hereby agree to and does hereby waive any right it may have (whether as a Member, a dissociated member, or otherwise) to cause the Company’s property to be partitioned or divided among the Members or to file a complaint or institute any proceeding at law or in equity to cause the Company’s property to be partitioned or otherwise divided among the Members. No Member shall have any appraisal rights under the Act.

20.    Information Rights. The Company shall provide each Member with (a) monthly financial reporting, (b) quarterly financial statements of the Company for each of the first three fiscal quarters of each fiscal year, which shall be delivered within forty-five (45) days following the completion of each respective fiscal quarter, (c) annual financial statements of the Company for the most recently completed fiscal year, which shall be delivered within one hundred twenty (120) days following the completion of each respective fiscal year, and (d) advance written notice of any matters submitted to the Members (in their capacities as such) for a vote, consent, written resolution or other approval pursuant to this Agreement.

21.    Ratification. All acts, filings and other steps taken by any authorized person on behalf of the Company in connection with the formation of the Company, including without limitation the execution and filing of the Certificates and the execution and filing of a Form SS-4 Application for Employer Identification Number, with the Internal Revenue Service by any such person, are hereby ratified, confirmed and approved in all respects.

22.    Miscellaneous and Administrative Provisions.

(a)    Severability. Each of the provisions of this Agreement is to be read and interpreted separately. A question regarding the legality or constitutionality of any one paragraph or part thereof shall not affect any other paragraph or part thereof, and, if determined illegal or unconstitutional, the specific paragraph or part thereof shall be severed from this Agreement and the balance of the Agreement shall remain in full force and effect.

(b)    Governing Law; Dispute Resolution. The Company is established and shall be governed by the provisions of the Act; this Agreement, including its existence, validity, construction, and operating effect, and the rights of each of the parties hereto, shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to any conflicts or choice of laws provisions that would cause the application of the domestic substantive laws of any other jurisdiction. Any

 

- 15 -


party to this Agreement may seek remedies hereunder exclusively from the courts of the State of Delaware and of the United States sitting in New Castle County, Delaware, and each party hereto agrees not to commence any suit, action or other proceeding arising out of this Agreement or any transactions contemplated hereby other than in such court. Each party to this Agreement irrevocably submits to the exclusive jurisdiction of and venue in (and agrees not to object to the venue or claim inconvenient forum) such courts, and agrees that service of any process, summons, notice or document by U.S. registered mail to the address set forth in Section 22(c) hereof shall be effective service of process for any action, suit or proceeding brought against it in any such court. EACH PARTY TO THIS AGREEMENT IRREVOCABLE WAIVES SUCH PARTY’S RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY SUCH ACTION.

(c)    Notices. All notices to be delivered pursuant to this Agreement shall be in writing and shall be deemed to have been duly given (i) when delivered in person, (ii) ten (10) days after posting in the United States mail having been sent registered or certified mail return receipt requested, (iii) when delivered by FedEx or other nationally recognized overnight delivery service or (iv) when delivered by electronic mail communication, provided that the sender receives no evidence reasonably indicating delivery was unsuccessful, and provided further, that if such notice is sent after 5:00 p.m. local time at the location of the recipient, or is sent on a day other than a business day, such notice or communication shall be deemed given as of 9:00 a.m. local time at such location on the next succeeding business day, in each case, addressed to the Members at the addresses listed on the books of the Company, or at such other address as may have otherwise been specified by written notice. Whenever any notice is required to be given under the provisions of the Act, the Certificates or this Agreement, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

(d)    Headings; Gender; References. The headings used in this Agreement are used for convenience only and do not constitute substantive matter to be considered in construing the terms of this Agreement. Whenever the context of this Agreement so requires, words used in the masculine gender include the feminine and neuter; the singular includes the plural and the plural the singular. References to “Schedule” are, unless otherwise specified, to one of the Schedules attached to this Agreement, and references to an “Article” or a “Section” are, unless otherwise specified, to one of the Certificates or Sections of this Agreement. Each Schedule attached hereto and referred to herein is hereby incorporated herein by this reference.

(e)    Parties Bound; Entire Agreement. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective executors, administrators, legal representatives, heirs, permitted successors and permitted assigns, and shall inure to the benefit of the parties hereto, and, except as otherwise herein expressly provided, their respective executors, administrators, legal representatives, successors and assigns. This Agreement, and the schedules, exhibits and appendices hereto, contain the entire understanding among the parties hereto relating to the subject matter hereof and supersede any other prior understandings or written or oral agreements with respect to the subject matter hereof.

(f)    Amendment. This Agreement may be amended only by an instrument in writing signed by the Company and each Member.

(g)    Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which, when taken together, shall be deemed one agreement, but no counterpart shall be binding unless an identical counterpart shall have been executed and delivered by each of the other parties hereto.

 

- 16 -


(h)    Further Assurances. The parties agree that they will execute such other and further instruments and documents as are or may become necessary or convenient to effectuate and carry out the business of the Company.

Signature pages follow.

 

- 17 -


IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

 

ALLEGRO MICROSYSTEMS, INC.
By:  

/s/ Ravi Vig

  Name:   Ravi Vig
  Title:   President & CEO
SANKEN ELECTRIC CO., LTD.
By:  

/s/ Yoshihiro Suzuki

  Name:   Yoshihiro Suzuki
  Title:   Sr. Vice President
POLAR SEMICONDUCTOR, LLC
By:  

/s/ Kurt Walter

  Name:   Kurt Walter
  Title:   COO Polar Semiconductor

 

[Signature Page to Polar Semiconductor LLC Agreement]


SCHEDULE 1

 

Member

   Units    Unit Percentages  

Sanken Electric Co., Ltd.

   700 Common Units      70.00

Allegro MicroSystems, Inc.

   300 Common Units      30.00
  

 

  

 

 

 

TOTAL

   1,000 Units      100.00
  

 

  

 

 

 

 

1


EXHIBIT A

PLAN 5K

[XXX]


EXHIBIT C

SUPPLY AGREEMENT

[See attached].


[XXX] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

EXHIBIT C

AMENDMENT 1 TO WAFER FOUNDRY AGREEMENT

This Amendment No. 1 (“Amendment”) is effective as of March 28, 2020 (“Amendment 1 Effective Date”) and amends the Wafer Foundry Agreement by and between Allegro MicroSystems, LLC (“Allegro”) and Polar Semiconductor, LLC (“PSL”) dated April 12, 2013 (as amended, the “Agreement”).

RECITALS

WHEREAS, Allegro and PSL entered into the Agreement whereby PSL agreed to manufacture and sell semiconductor wafers for Allegro and Allegro agreed to purchase such semiconductor wafers from PSL;

WHEREAS, pursuant to that certain Master Transaction Agreement dated March 25, 2020 (the “MTA”) by and among Allegro, Sanken Electric Co., Ltd. (“Sanken”) and PSL, Allegro and Sanken have agreed, among other things, to undertake a series of restructuring transactions to effect an organizational restructuring of certain of their affiliates and direct and indirect subsidiaries, including PSL;

WHEREAS, Allegro and PSL now wish to amend the Agreement to, among other things, extend the term of the Agreement, and update and amend the economic and commercial terms relating to PSL’s manufacture of semiconductor wafers for Allegro; and

WHEREAS, based on the Parties’ expectations for forecasted volumes pursuant to Plan 5K (as defined herein), by PSL’s fiscal year 2023 Allegro intends (subject to various factors, any of which may change) to target volume demand that will constitute approximately [XXX]% of the current integrated circuit products capacity of semiconductor wafers manufactured by PSL.

NOW, THEREFORE, in consideration of the mutual promises made herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

AGREEMENT

 

1.

Definitions. Any capitalized terms used but not defined herein will have the meaning given to such term in the Agreement.

 

2.

Amendments to the Agreement.

 

  a.

Section 3: Forecast, Purchase Orders, Delivery Performance, Expedited Delivery.

 

  i.

The following is added to the beginning of Section 3.1:

“For general long-range planning purposes, Allegro will provide a rolling three-year forecast of the total Production Wafers required, by process technology, to be updated annually with the first update occurring at the end of Allegro fiscal year 2021. In addition”

 

1


  ii.

A new Section 3.8 will be added to the Agreement after Section 3.7 as follows:

Committed Capacity. PSL will reserve supply capacity in order to be able to supply Allegro with up to one hundred and ten percent (110%) of Allegro’s forecasted volumes as provided to PSL pursuant to the first sentence of Section 3.1.”

 

  iii.

A new Section 3.9 will be added as follows:

“Allegro agrees that it will purchase a minimum of ninety percent (90%) of its annual forecasted volumes for a fiscal year, calculated on a per-quarter basis (the “Minimum Purchase Quantity”). Unless otherwise agreed by the Parties, should the volume in a given PSL fiscal year fall below the Minimum Purchase Quantity for such year, Allegro agrees to pay PSL, within sixty (60) days following the end of the applicable year, an amount equal to the fixed (unburdened) direct cost per Production Wafer (as projected annually) multiplied by the difference between the actual number of Production Wafers for the impacted year and the Minimum Purchase Quantity (any such amount, the “Shortfall Amount”). As of the Amendment 1 Effective Date, the fixed cost of a Production Wafer is estimated to be [XXX]% of Production Wafer cost, subject to change by mutual written agreement as calculated during PSL’s annual financial planning process. Payment of the Shortfall Amount will be Allegro’s sole responsibility and liability in the event that Allegro fails to meet the Minimum Purchase Quantity. Allegro will have no obligation to pay the Shortfall Amount if PSL is unable for any reason to satisfy the Minimum Purchase Quantity at any time.”

 

  b.

Section 4: Facility Visits, Audits, and Operational Reviews: The following is added as a new Section 4.2:

“In addition to PSL’s obligations set forth above in Section 2, Section 4.1 and in Appendix F, PSL will permit Allegro at Allegro’s election to place up to three quality assurance employees at Allegro’s expense on site at the PSL Bloomington Wafer Fab Facility or any successor facilities, with such employees remaining on Allegro’s payroll. PSL will permit any such employees to access the facilities and monitor PSL’s manufacturing services on Allegro’s behalf.”

 

  c.

Section 6: Wafer/Mask Prices, Payment, and Invoices:.

 

  i.

The first sentence of Section 6.1 will be deleted in its entirety and replaced with the following:

“The prices of Production Wafers, Engineering Wafers and Masks will be as set forth in Appendix C.”

 

2


  d.

Section 12: Term, Termination of Agreement and Bankruptcy:

 

  i.

Section 12.1 will be deleted in its entirety and replaced with the following:

“The term of this Agreement will commence on the date first written above and continue until the three (3) year anniversary thereof, unless terminated earlier, pursuant to Sections 12.2, 12.3, or 12.4. The Agreement may be renewed for subsequent one (1) year periods by mutual written agreement of the Parties.”

 

  e.

Section 17: Assignment: The following will be added to the end of Section 17.1:

“Upon (a) an assignment of this Agreement by PSL pursuant to the foregoing, or (b) a change of control of PSL, the acquiring entity will remain bound by the terms of this Agreement. Within forty-five (45) days following any such assignment or change of control of PSL, as applicable, Allegro will provide an updated non-binding long-term Wafer demand forecast (not to exceed five years of production). Thereafter, the assignee or acquiring entity, as applicable, will be obligated to fulfill the updated Wafer demand forecast in accordance with the terms of this Agreement and the provisions of Section 3.9 will no longer apply.”

 

  f.

Appendix C: Appendix C to the Agreement will be replaced in its entirety with the Appendix C attached to this Amendment.

 

3.

No Other Changes. Except as modified by this Amendment, the Agreement will remain and continue in full force and effect. This Amendment will become part of the Agreement as if set forth in full therein, and references to the Agreement will be to the Agreement as amended.

 

4.

Governing Law. This Amendment will be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts except that its conflict of laws principles will not be used.

 

5.

Entire Agreement. The Agreement (as amended) constitutes the entire agreement between the Parties regarding the subject matter of the Agreement and supersede any prior understandings, agreements or representations by or between the Parties, written or oral, to the extent that they relate in any way to the subject matter of this Amendment. To the extent of any conflict or inconsistency between the terms of this Amendment and the Agreement, the terms of this Amendment will prevail.

 

6.

Counterparts. This Amendment may be executed in one or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. This Amendment and any other documentation contemplated hereby may be executed by facsimile, photo or electronic signature and such facsimile, photo or electronic signature will constitute an original for all purposes.

[Remainder of page left intentionally blank]

 

3


IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the Date first above written.

 

Allegro MicroSystems, LLC
By:  

/s/ Ravi Vig

Name:   Ravi Vig
Date:   President & CEO
Polar Semiconductor, LLC
By:  

/s/ Kurt Walter

Name:   Kurt Walter
Date:   COO Polar Semiconductor

 

4


Appendix C

Wafer Pricing

The Production Wafer prices for PSL fiscal year 2021 will be as set forth in Schedule 1 unless otherwise adjusted. Wafer prices for PSL fiscal years 2022 and beyond shall not exceed FY2021 wafer pricing, but will be adjusted downwards based on the achievement of improved efficiencies at the PSL Bloomington Wafer Fab Facility or any successor facilities. If utilization is improved by enabling increased production capacity pursuant to “Plan 5K” or any other plan to add increased production capacity or improve yields adopted by Polar at the PSL Bloomington Wafer Fab Facility or any successor facilities (currently targeted in fiscal year 2023), Wafer pricing will be adjusted downwards to share productivity improvements equitably between Sanken and Polar. If “Plan 5K” or similar plan is implemented, PSL will achieve an ASP reduction of [XXX]% to be implemented beginning immediately after the three (3)-month shipment average of [XXX] manufacturing alignments / week is achieved, but no later than the beginning of PSL fiscal year [XXX] if the Agreement is extended. The percentage ASP reduction may be different if a different productivity improvement plan is agreed by the Parties.

 

5


Schedule 1

Plan 5K

[XXX]


EXHIBIT D

PRICING LETTER AGREEMENT

[See attached].


EXHIBIT D

March 28, 2020

Polar Semiconductor, LLC

2800 East Old Shakopee Road,

Bloomington, MN 55425

RE: FY21 Price Support for Wafers Manufactured by Polar for Sanken and Allegro

Dear Mr. Walter:

This letter (“Letter Agreement”) by and among Allegro Microsystems, LLC (“Allegro”), and Polar Semiconductor, LLC (“PSL,” and collectively with Allegro the “Parties,” and each a “Party”) governs certain rights and obligations of the Parties (or their affiliates, as applicable) relating to the price support for wafers manufactured by PSL in FY21 for Allegro pursuant to the Wafer Foundry Agreement, dated April 12, 2013 by and between PSL and Allegro (as amended, the “Allegro Foundry Agreement”).

During PSL’s fiscal year 2021, the Parties agree that, irrespective of whether or not Allegro meets the Minimum Purchase Quantity (as defined in the Allegro Foundry Agreement) during PSL’s fiscal year 2021, Allegro shall pay to PSL prior to the end of fiscal year 2021, a price support payment of $5,930,000 (the “True Up Amount”) either by cash payment or as a reduction of PSL’s existing debt obligations to Allegro, at Allegro’s option. If Allegro elects to reduce PSL’s existing debt obligations, the reduction shall be applied to the payment amount due from PSL to Allegro on March 28, 2022 under the Consolidated and Restructured Loan Agreement between the parties dated March 28, 2020. The Parties agree that the price support payment of $5,930,000 is Allegro’s sole obligation for True Up in FY2021 and there will be no True Up Amount payable by Allegro in PSL’s fiscal year 2022 or any fiscal year thereafter.

The rights and obligations set forth in this Letter Agreement shall immediately terminate upon the sale or transfer by Allegro of its ownership interest in PSL.

This Letter Agreement shall not constitute a waiver, amendment, or modification of any provision of any other agreement except to the extent set forth herein. This Letter Agreement shall be governed by the laws of the Commonwealth of Massachusetts. This Letter Agreement may be executed in counterparts, each of which shall be deemed an original and together which shall constitute one and the same instrument. A validly executed counterpart that is delivered by one Party to the other via electronic transmission will be valid and binding to the same extent as one delivered physically.

Each Party hereby confirms its acceptance of the terms and conditions set out above by executing this Letter Agreement.


Signed,

 

ALLEGRO MICROSYSTEMS, INC.
By:  

/s/ Ravi Vig

Name:   Ravi Vig
Title:   President & CEO
Acknowledged and agreed:
POLAR SEMICONDUCTOR, LLC
By:  

/s/ Kurt Walter

Name:   Kurt Walter
Title:   COO Polar Semiconductor


EXHIBIT E

TSA

[See attached].


[XXX] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

EXHIBIT E

TRANSITION SERVICES AGREEMENT

This TRANSITION SERVICES AGREEMENT (this “Agreement”) is made and entered into as of March 28, 2020 (the “Effective Date”) by and among Polar Semiconductor, LLC (“Polar”), Sanken Electric Co., Ltd. (“Sanken”) and Allegro MicroSystems, Inc. (“Allegro”).

RECITALS

WHEREAS, pursuant to that certain Master Transaction Agreement dated March 25, 2020 (the “MTA”) by and among Allegro, Sanken and Polar, Allegro and Sanken have agreed, among other things, to undertake a series of restructuring transactions to effect an organizational restructuring of certain of their affiliates and direct and indirect subsidiaries; and

WHEREAS, in connection with the transactions contemplated by the MTA, certain parties (each in its capacity as a recipient of services, a “Recipient”) desire that certain other parties (each in its capacity as a provider of services, a “Service Provider”) provide, or cause certain of their Affiliates to provide, to Recipient, certain transition services under the terms and subject to the conditions set forth in this Agreement;

NOW, THEREFORE, in consideration of the mutual promises of the Parties, and of good and valuable consideration, the receipt of which is hereby acknowledged, it is agreed by and among the parties as follows:

1.    DEFINITIONS. The defined terms used in this Agreement shall have the meanings set forth in this Section 1 or as defined elsewhere in the Agreement, and capitalized terms used in this Agreement but not otherwise defined herein shall have the meanings set forth in the MTA.

1.1    Affiliate” means any person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the party specified, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of a person (whether through ownership of voting securities, contract or otherwise). For purposes of this Agreement, no party shall be considered an Affiliate of any other party.

1.2    Confidential Information” means any and all technical and non-technical information that a party provides or makes available to any other party, whether in written, oral, graphic or electronic form, that is marked or otherwise identified at the time of disclosure as confidential or proprietary, or that would reasonably be deemed in the context of its disclosure to be confidential or proprietary, including trade secrets, know-how, designs, schematics, bills of material, customer lists, vendor lists, employee and contractor information, techniques, processes, software, technical documentation, specifications, plans or any other information relating to any research project, work in process, future development, technology and product roadmaps, scientific, engineering, manufacturing, marketing or business plan or financial or personnel matter relating to the disclosing party, its present or future products, services, sales, suppliers, customers, employees, investors or business.


1.3    Force Majeure Event” means acts of God, fire, explosion, flood, earthquake, natural disaster, pandemic, epidemic, acts of war, terrorism, nuclear disasters, riots, embargoes, civil disorder, or any other similar event, to the extent that each such event is beyond the reasonable control of the party claiming relief under Section 10.10.

1.4    Governmental Body” means any government or any agency, bureau, commission, court, department, official, political subdivision, tribunal, board or other instrumentality of any administrative, judicial, legislative, executive, regulatory, police or taxing authority of any government, whether supranational, national, federal, state, regional, provincial, local, domestic or foreign.

1.5    Pass-Through Expenses” means the pre-agreed out-of-pocket expenses incurred by a Service Provider in the provision of Services to a Recipient and chargeable to a Recipient, if specified in a Service Schedule, but not including any overhead costs, profits or other mark-ups.

1.6    Service” means a set of tasks that a Service Provider will perform for a Recipient as further specified in a Service Schedule.

1.7    Service Schedule” means the written statements attached hereto as Schedule A, specifying the Services to be performed by a party.

1.8    Third Party Claim” means any losses, costs, judgments, awards, claims, suits, liabilities, damages and other penalties (including reasonable attorneys’ fees) arising out of or resulting from any actions, suits, claims, proceedings or demands brought by any third party.

 

2.

SERVICES.

2.1    Services. During the Term, each Service Provider shall provide each applicable Recipient the applicable Services specified in the Service Schedule. Unless otherwise specified in the Service Schedule, Services shall be performed in a manner generally consistent with the manner such Services were provided by such Service Provider during the twelve (12) months preceding the date of this Agreement (the “Reference Period”). To the extent any of the provisions of a Service Schedule expressly conflict with a provision of this Agreement, the provision of this Agreement, the provisions of this Agreement will prevail unless the Service Schedule expressly states that it is intended to supersede the terms of the Agreement.

2.2    Limitations. Each Recipient acknowledges that the applicable Service Provider may be providing similar services or services that involve the same resources as those used to provide the Services hereunder, to its internal organizations, its Affiliates, and third parties. A Service Provider shall not be obligated to perform or cause to be performed any Service in a manner that is materially more burdensome (with respect to service quality or quantity) than analogous services provided by such Service Provider for or within its own organization or group during the Reference Period. A Service shall be deemed materially more burdensome if its usage or the resources necessary to provide the Service consistently exceed the usage or the resources required to provide such Service during the Reference Period, or if such Service Provider is required to hire additional employees, engage additional contractors or make capital investments in respect of such Service greater than the maximum number of employees or contractors providing such Services during the Reference Period.

 

2


2.3    Modification of Services. The parties acknowledge that the scope or characteristics of the Services may change during the Term. Without limiting a party’s rights under Section 9, if a Service Provider desires to materially modify the scope or characteristics of an existing Service, it shall notify the applicable Recipient in writing of the requested modification, as well as the anticipated effects of the modification. The parties will discuss in good faith whether to implement the proposed modification; provided, however, that no modification will be implemented in the absence of written agreement between the affected parties to adopt the change by creating an amendment to the applicable Service Schedule. Each Service Provider reserves the right to unilaterally make reasonable modifications to the applicable Services in connection with changes to its internal organization in the ordinary course of business, such Service Provider’s policies and procedures or changes in applicable Law.

2.4    Third Party Consents. The parties shall use reasonable efforts to obtain any consent from a third party that is necessary in order for a Service Provider to provide any affected aspects of the Services. If any such consent is not obtained, such Service Provider shall use reasonable efforts to obtain a mutually agreed reasonable alternative arrangement to provide the relevant aspect of the Services sufficient for the purposes of the applicable Recipient. Any costs and expenses payable to third parties in connection with the procurement of any consents pursuant to this Section 2.4 shall borne by the applicable Recipient.

2.5    Subcontractors. The Services may be provided in whole or in part by Affiliates of a Service Provider or by third party subcontractors (each, a “Subcontractor”) selected by such Service Provider or its Affiliates, provided that such Service Provider shall remain responsible to the applicable Recipient for the performance of the Services and that any such Subcontractors are under a contractual obligation with such Service Provider (under terms and conditions at least as restrictive as those in this Agreement) to (a) hold any Confidential Information received from such Recipient in confidence and to not disclose such Confidential Information to third parties, and (b) to use and protect data of, or received from, such Recipient to the extent required by this Agreement.

2.6    Good Faith Cooperation. The parties will use good faith efforts to cooperate with each other in all matters relating to the provision and receipt of Services. Such cooperation will include, at a Recipient’s reasonable request in addition to, and without limiting any other obligations set forth in this Agreement, providing reasonable assistance and information to such Recipient in connection with such Recipient’s drafting of a plan to migrate responsibility for performance of the Services from a Service Provider and/or its agents to itself or such Recipient’s own agents and carrying out such Service Provider’s responsibilities under such plan.

2.7    Parties’ Obligations. Each party agrees to co-operate with the other party, including by delivering to the other party such information, materials, and assistance as are reasonably required or requested by such party in connection with the performance and receipt of the Services and within such reasonable time limits as the requesting party shall from time to time prescribe. Each party and any Subcontractors shall be able to rely upon the actions of or written

 

3


notice, information or materials supplied by the other party, without further inquiry as to whether such party’s representative had authority to take any such action or make any such notice or provide such information or materials.

2.8    Access to Systems. If a Recipient or a Service Provider is given access, whether on site or through remote access, to the computer systems, electronic data storage systems, or software (collectively, the “Systems”) of such Service Provider or Recipient, as applicable, in connection with the receipt or provision of Services, they shall comply with the applicable system security policies, information technology procedures, and user terms and requirements of the owner or operator of the Systems. Each Service Provider or Recipient, as applicable, shall access and use only those Systems for which such Service Provider or Recipient, as applicable has been granted access and shall use such Systems solely for the purpose of providing or receiving the applicable Services. Each Recipient or Service Provider, as applicable, shall not and shall cause each of its Affiliates and Subcontractors not to (a) break, bypass or circumvent, or attempt to break, bypass or circumvent, any security system of the owner or operator of the System or obtain access to any program or data other than that to which access has been specifically granted by a Service Provider or Recipient, as applicable, or (b) knowingly or by reason of its gross negligence, introduce any computer virus or other malicious code into the information technology systems, software or hardware of such Systems.

2.9    Access to Facilities. If a Recipient or a Service Provider is given access to the facilities or equipment (collectively, the “Facilities”) of a Service Provider or Recipient, as applicable, in connection with the receipt or provision of Services, they shall comply with the applicable Facility policies, operating instructions, and other procedures (including all procedures and instructions related to safety, security and access) as provided by the owner or operator of the Facilities. A Service Provider may only access and use the Facilities of a Recipient for purposes of providing the applicable Services. A Recipient may only access and use the Facilities of a Service Provider for purposes of receiving the applicable Services.

 

3.

MANAGEMENT.

3.1    Allegro Coordinator. Allegro will appoint an employee of Allegro (the “Allegro Coordinator”) who shall (a) have overall, day-to-day responsibility during the applicable Service Period (as defined in the Service Schedule) for managing and coordinating the delivery of the Services; (b) subject to the supervision of Allegro management, be authorized to act for and on behalf of Allegro with respect to all matters relating to such Service; and (c) be the primary contact with the Polar Coordinator and the Sanken Coordinator (as defined below). The Allegro Coordinator or Allegro Coordinator’s designees will coordinate and consult with the Polar Coordinator and the Sanken Coordinator, as applicable. Allegro may, at its discretion, and upon written notice to the other parties, designate other or additional individuals to serve in these capacities during the applicable Service Period.

3.2    Polar Coordinator. Polar will appoint an employee (the “Polar Coordinator”) who shall (a) have overall, day-to-day responsibility during the applicable Service Period for managing and coordinating the delivery and receipt of the Services; (b) subject to the supervision

 

4


of Polar management, be authorized to act for and on behalf of Polar with respect to all matters relating to this Agreement; and (c) be the primary contact with the Allegro Coordinator and Sanken Coordinator, as applicable. The Polar Coordinator or the Polar Coordinator’s designees will coordinate and consult with the Allegro Coordinator and the Sanken Coordinator, as applicable. Polar may, at its discretion, and upon written notice to the other parties, designate other or additional individuals to serve in these capacities during the applicable Service Period.

3.3    Sanken Coordinator. Sanken will appoint an employee (the “Sanken Coordinator”) who shall (a) have overall, day-to-day responsibility during the applicable Service Period for managing and coordinating the receipt of the Services; (b) subject to the supervision of Sanken management, be authorized to act for and on behalf of Sanken with respect to all matters relating to this Agreement; and (c) be the primary contact with the Allegro Coordinator and the Polar Coordinator, as applicable. The Sanken Coordinator or the Sanken Coordinator’s designees will coordinate and consult with the Allegro Coordinator and the Polar Coordinator, as applicable. Sanken may, at its discretion, and upon written notice to the other parties, designate other or additional individuals to serve in these capacities during the applicable Service Period.

 

4.

PERSONNEL.

4.1    Personnel. Each Service Provider agrees to use commercially reasonable efforts to make available such Service Provider’s (or its Affiliates’) employees and agents as are reasonably required to provide each of the Services, including any personnel specified in the applicable section of the applicable Service Schedule (the “Service Personnel”).

4.2    Responsibility for Service Personnel. All Service Personnel will be deemed to be employees or representatives solely of the applicable Service Provider (or its Affiliates or Subcontractors, as applicable) for purposes of all compensation and employee benefits and not to be employees or representatives of a Recipient. Service Personnel will be under the direction, control, and supervision of such Service Provider, and such Service Provider will have the sole right to exercise all authority with respect to the employment, termination, assignment, and compensation of such Service Personnel. Such Service Provider (or its Affiliates or Subcontractors, as applicable) will be solely responsible for payment of (a) all income, disability, withholding, and other employment taxes and (b) all medical benefit premiums, vacation pay, sick pay, or other fringe benefits for any employees, agents, or contractors of such Service Provider who perform the Services, unless otherwise set forth in a Service Schedule.

 

5.

FEES AND PAYMENT.

5.1    Fees. In consideration of the Services provided hereunder, each applicable Recipient shall pay to the applicable Service Provider the fees set forth on Schedule A during the Term to the extent that the applicable specific Services have not been earlier terminated in accordance with Section 9.

5.2    Expenses. Each Recipient shall be responsible for Pass-Through Expenses incurred by the applicable Service Provider after obtaining such Recipient’s consent (such consent not to be unreasonably withheld) and invoiced to such Recipient in accordance with Section 5.3.

 

5


5.3    Payment; Invoices. To the extent any Pass-Through Expenses are incurred in accordance with Section 5.2, the applicable Service Provider will, within thirty (30) days after the end of each calendar month, submit an invoice to the applicable Recipient for any amounts payable by such Recipient for the previous month itemizing the fees and Pass-Through Expenses payable and to which Service each is applicable.

5.4    Taxes.

(a)    If the provision or receipt of Services or the relationship created between the affected parties under this Agreement gives rise to any sales, use, gross receipts, excise, value-added, personal property, services or other similar taxes (but in each case, excluding any taxes based on the applicable Service Provider’s income, profits or gains), then such non-excluded taxes shall be the responsibility of the applicable Recipient.

(b)    On or before the Effective Date (and thereafter upon a reasonable request), (i) each Service Provider shall deliver to the applicable Recipient a duly completed and executed Internal Revenue Service Form W-9 and (ii) each Recipient shall deliver to the applicable Service Provider a duly completed and executed Internal Revenue Service Form W-9.

5.5    Records. Each Service Provider shall maintain true and correct records of all receipts, invoices, reports and such other documents relating to the applicable Services hereunder in accordance with its standard accounting practices and procedures, consistently applied. Except as otherwise set forth in a Service Schedule, each Service Provider shall retain such accounting records and make them available to the applicable Recipient’s authorized representatives and auditors for a period of not less than one (1) year from the closing of each calendar year; provided, however, that such Service Provider may, at its option, transfer such accounting records to the applicable Recipient upon termination of an applicable Service under this Agreement.

 

6.

CONFIDENTIALITY.

6.1    Obligations. Each party (a “Receiving party” or a “Disclosing party”) will maintain in confidence all Confidential Information disclosed to it by a Disclosing party. Each Receiving party agrees not to use, disclose, or grant use of such Confidential Information except as expressly authorized by this Agreement. To the extent that disclosure is authorized by this Agreement, each Receiving party agrees to disclose the Confidential Information of the Disclosing party only to such Receiving party’s employees, agents, or Subcontractors who need to know such Confidential Information for the purposes of this Agreement and agrees to obtain prior agreement from its employees, agents, or Subcontractors to whom disclosure is to be made to hold in confidence and not make use of such Confidential Information for any purpose other than those permitted by this Agreement. Each Receiving party agrees to use at least the same standard of care as it uses to protect its own most Confidential Information to ensure that such employees, agents, or Subcontractors do not disclose or make any unauthorized use of such Confidential Information, but in no event less than reasonable care. The Receiving party will promptly notify the Disclosing party upon discovery of any unauthorized use or disclosure of the Confidential Information.

 

6


6.2    Exceptions. The obligations of confidentiality contained in this Section 6 will not apply to the extent that it can be established by the Receiving party beyond a reasonable doubt that such Confidential Information: (a) was already known to the Receiving party, other than under an obligation of confidentiality, at the time of disclosure by the Disclosing party; (b) was generally available to the public or otherwise part of the public domain at the time of its disclosure to the Receiving party; (c) became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the Receiving party in breach of this Agreement; (d) was disclosed to the Receiving party, other than under an obligation of confidentiality, by a third party who had no obligation to the Disclosing party not to disclose such information to others; or (e) was developed independently by the Receiving party without any use of the Disclosing party’s Confidential Information.

6.3    Government Obligations. A Receiving party will not be considered to have breached its obligations under this Section 6.3 for disclosing Confidential Information of a Disclosing party to the extent required to satisfy any legal requirement of a Governmental Body, provided that promptly upon receiving any such request, and to the extent that it may legally do so, such party: (a) advises the Disclosing party prior to making such disclosure in order that the Disclosing party may object to such disclosure, take action to ensure confidential treatment of the Confidential Information, or take such other action as it considers appropriate to protect the Confidential Information; and (b) uses reasonable efforts to not disclose Confidential Information that is not required to satisfy such legal requirement.

6.4    Duration. The obligations under this Section 6 shall apply with respect to any Confidential Information for a period of two (2) years from the date of disclosure of such Confidential Information to the Receiving party, unless, with respect to any particular Confidential Information, the Disclosing party in good faith notifies the Receiving party that a longer period shall apply, in which case the obligations under this Section 6 with respect to such Confidential Information shall apply for such longer period.

 

7.

LIMITED WARRANTIES; WARRANTY DISCLAIMER.

7.1    Authority. Each of the parties hereby represents and warrants to the other that it is duly authorized and empowered to execute, deliver and perform this Agreement, and that such action does not conflict with or violate any provision of Law, policy, contract, deed of trust, or other instrument to which it is a party or by which it is bound and that this Agreement constitutes a valid and binding obligation of it enforceable in accordance with its terms.

7.2    Compliance with Laws. In performing its duties under this Agreement, each of the parties shall at all times comply with all international, federal, state, and local Laws and shall not engage in any illegal or unethical practices, including the Foreign Corrupt Practices Act of 1977 (or any applicable foreign equivalents) and any anti-boycott Laws, as amended, and any implementing regulations.

7.3    Disclaimer of Warranties. EACH PARTY ACKNOWLEDGES THAT NONE OF THE SERVICE PROVIDERS IS IN THE BUSINESS OF PROVIDING THE APPLICABLE SPECIFIED SERVICES TO THIRD PARTIES AND EACH SERVICE PROVIDER IS ENTERING INTO THIS AGREEMENT AS AN ACCOMMODATION TO EACH RECIPIENT

 

7


IN CONNECTION WITH THE MTA. THEREFORE, EXCEPT AS OTHERWISE SET FORTH IN A SERVICE SCHEDULE, NO SERVICE PROVIDER MAKES ANY EXPRESS OR IMPLIED REPRESENTATIONS, WARRANTIES, OR GUARANTEES RELATING TO THE SERVICES TO BE PROVIDED HEREUNDER OR THE QUALITY OR RESULTS OF THE SERVICES. ALL SERVICES PROVIDED HEREUNDER ARE PROVIDED ON AN “AS IS” BASIS, WITHOUT ANY WARRANTY OF ANY KIND. WITHOUT LIMITING THE FOREGOING, EACH SERVICE PROVIDER HEREBY DISCLAIMS ANY EXPRESS OR IMPLIED WARRANTIES OF ANY KIND, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT OF THIRD PARTY RIGHTS.

 

8.

LIMITATION OF LIABILITY.

EXCEPT TO THE EXTENT SET FORTH OTHERWISE IN A SERVICE SCHEDULE, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT WITH RESPECT TO BREACHES OF CONFIDENTIALITY, (A) IN NO EVENT WILL ANY PARTY BE LIABLE TO ANY OTHER PARTY HEREUNDER FOR ANY LOST PROFITS OR FOR ANY SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY KIND, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, IN CONNECTION WITH THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND (B) IN NO EVENT SHALL A PARTY’S CUMULATIVE LIABILITY TO ANY OTHER PARTY ARISING OUT OF THIS AGREEMENT EXCEED THE TOTAL AMOUNT OF FEES SUCH PARTY RECEIVED OR PAID, AS APPLICABLE, UNDER THE APPLICABLE SERVICE SCHEDULE GIVING RISE TO THE LIABILITY. Each party agrees that in the absence of the aforementioned limitations of liability, the terms of this Agreement would be substantially different.

 

9.

TERM AND TERMINATION.

9.1    Term. The term of this Agreement shall commence on the Closing and shall continue for twelve (12) months unless extended by written agreement by the parties or terminated earlier pursuant to Sections 9.2- 9.4 (the “Term”). The parties may mutually agree, on an annual basis in advance of the expiration of the then-current Term, to extend the Term for an additional twelve (12) months.

9.2    Termination for Convenience. Except as otherwise set forth in the applicable Service Schedule, a Recipient may terminate a specific Service prior to the end of the Term by providing the applicable Service Provider with no less than sixty (60) days written notice unless a different period is set forth in the applicable Service Schedule.

9.3    Termination for Cause.

(a)    A Service may be terminated by the applicable Recipient if the applicable Service Provider materially breaches any provision of this Agreement or applicable Schedule and such Service Provider fails to cure such breach within thirty (30) days after receipt written notice from the applicable Recipient describing such breach. 

 

8


(b)    A Service may be terminated by the applicable Service Provider if the applicable Recipient materially breaches any provision of this Agreement or applicable Service Schedule and such Recipient fails to cure such breach within thirty (30) days after receipt written notice from the applicable Service Provider describing such breach.

9.4    Other Rights of Termination. Each party, in its capacity as Service Provider or Recipient, as applicable, may immediately terminate an applicable Service if: (a) another party, in its capacity as Service Provider or Recipient of the applicable Service is not able to pay its debts in the ordinary course of business, or shall admit in writing to its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors or any proceeding having sufficient legal and factual grounds shall be instituted by or against such party seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any Law relating to bankruptcy, insolvency or reorganization, or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property and such proceeding shall not be stayed or dismissed within sixty (60) days from the date of institution thereof, or (b) another party, in its capacity as Service Provider or Recipient of the applicable Service takes any corporate action to authorize any of the actions set forth in clause (a) above.

9.5    Effect of Termination. If a Service Schedule or this Agreement is terminated, the applicable Service Provider(s) shall have no further obligation to continue offering the applicable Services and each applicable party shall return any Confidential Information of the other in its or their possession or control received in the performance or receipt of such Services hereunder.

9.6    Survival. Sections 1, 5.5, 6, 7, 9 and 10 of this Agreement shall survive any expiration or termination of this Agreement. In the event of termination, any amount outstanding and payable by a Recipient as of the date of the termination shall remain payable by such Recipient and due immediately upon termination.

 

10.

MISCELLANEOUS.

10.1    Relationship of the Parties. For purposes of this Agreement, the parties shall at all times be deemed to be independent contractors. It is agreed and understood that no party is the agent, representative or partner of any other party and no party has any authority or power to bind or contract in the name of or to create any liability against any other party in any way or for any purpose pursuant to this Agreement. Nothing contained in this Agreement shall be construed to give a party the power to direct and control the day-to-day activities of any other, constitute the parties as partners, joint venturers, principal and agent, employer and employee, co-owners, or otherwise as participants in a joint undertaking, or allow any party to create or assume any obligation on behalf of any other party for any purpose whatsoever.

10.2    No Third-Party Rights. This Agreement is not intended, and will not be construed, to create any rights in any parties other than the parties hereto, and no person may assert any rights as third-party beneficiary hereunder, including the directors, officers and employees of Polar, Sanken or Allegro.

 

9


10.3    Assignment. No Recipient may assign this Agreement or any part hereof without the prior written consent of the applicable Service Provider and any such transfer without prior written consent shall be null and void from the beginning. Nothing shall limit a Service Provider’s right to assign its responsibilities as a Service Provider under this Agreement without consent. Subject to the foregoing, upon any assignment by a party this Agreement shall be binding upon and inure to the benefit of the other parties and their permitted successors and assigns.

10.4    Waiver; Amendment. Neither this Agreement nor any provision hereof shall be waived, amended, modified, changed, discharged or terminated except by an instrument in writing executed by the parties.

10.5    Notices. All notices, requests, demands and other communications to any party or given under this Agreement shall be in writing. Any notice, request, demand and other communication hereunder shall be deemed duly delivered (a) two (2) Business Days after it is sent by registered or certified mail, return receipt requested, postage prepaid, (b) one (1) Business Day after it is sent for next Business Day delivery via overnight courier, (c) in the case of facsimile, when sent to the recipient via facsimile or (d) in the case of electronic mail, on the earlier of (i) when receipt is confirmed by the recipient and (ii) one (1) Business Day after it is sent to the intended recipient, in each case to the intended recipient as set forth below:

If to Polar, to:

Polar Semiconductor, LLC

2800 East Old Shakopee Road

Bloomington, MN 55425

Attn: Kurt Walter

Email: [***]

If to Allegro, to:

Allegro MicroSystems, Inc.

955 Perimeter Road

Manchester, NH 03103

Attn: Richard Kneeland; Gary Pepka

Email: [***]

[***]

Facsimile: [***]

If to Sanken, to:

Sanken Electric Co. Ltd.

3-6-3 Kitano Niiza-Shi,

Saitama-Ken, Japan 352-8666

Attn: Yoshihiro Suzuki

Email: [***]

 

10


10.6    Severability. In the event that any part or parts of this Agreement shall be held illegal or unenforceable by any governmental authority, such determination shall not affect the remaining provisions of this Agreement, which shall remain in full force and effect.

10.7    Export Control Regulations. The rights and obligations of the parties under this Agreement shall be subject in all respects to United States Laws as shall from time to time govern the license and delivery of technology abroad, including the United States Foreign Assets Control Regulations, Transaction Control Regulations and Export Control Regulations, as amended, and any successor legislation issued by any United States government agency or department including, but not limited to, the Department of State, the Department of Commerce, the Department of Treasury, International Trade Administration, or Office of Export Licensing.

10.8    Governing Law; Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflicts provision thereof.

10.9    Force Majeure. No party will be liable to any other party for any delay or non-performance of its obligations under this Agreement arising from any Force Majeure Event, provided that the affected party (a) promptly notifies the other party in writing of the cause of the delay or non-performance and the likely duration of the delay or non-performance, and (b) uses commercially reasonable efforts to limit the effect of that delay or non-performance on the other party.

10.10    Interpretation. As used in this Agreement, references to the singular will include the plural and vice versa and references to the masculine gender will include the feminine and neuter genders and vice versa, as appropriate. Unless otherwise expressly provided in this Agreement (a) the words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement will refer to this Agreement as a whole and not to any particular provision of this Agreement, (b) article, section, subsection, schedule and exhibit references are references with respect to this Agreement unless otherwise specified, (c) all references to “dollars” or “$” or “US$” in this Agreement refer to United States dollars, which is the currency used for all purposes in this Agreement, (d) the term “any” means “any and all,” and (e) the term “or” shall not be exclusive and shall mean “and/or”. Unless the context otherwise requires, the term “including” will mean “including, without limitation.” The headings in this Agreement and in the Exhibits are included for convenience of reference only and will not affect in any way the meaning or interpretation of this Agreement. This Agreement was negotiated among legal counsel for the parties and any ambiguity in this Agreement shall not be construed against the party that drafted this Agreement.

10.11    Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement. Delivery of an executed counterpart to this Agreement by facsimile or PDF file will be deemed to be delivery of an original executed counterpart to this Agreement.

10.12    Entire Agreement. This Agreement, including the Exhibits hereto, constitutes the entire understanding among the parties with respect to the subject matter hereof and shall supersede all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof.

 

11


[Remainder of page intentionally left blank; signature page follows]

 

12


IN WITNESS WHEREOF, each party has caused this Agreement to be executed by its duly authorized representative as of the date first written above.

 

POLAR SEMICONDUCTOR, LLC
By:  

/s/ Kurt Walter

  Name:   Kurt Walter
  Title:   COO Polar Semiconductor
ALLEGRO MICROSYSTEMS, INC.
By:  

/s/ Ravi Vig

  Name:   Ravi Vig
  Title:   President & CEO
SANKEN ELECTRIC CO. LTD
By:  

/s/ Yoshihiro Suzuki

  Name:   Yoshihiro Suzuki
  Title:   Sr. Vice President

 

[Signature Page to Transition Services Agreement]


SCHEDULE A

SERVICE SCHEDULE

 

I.

HR and Legal Services.

 

  1.

Parties:

 

   

Service Provider: Allegro MicroSystems, LLC (“AML”)

 

   

Recipient: Polar Semiconductor, LLC (“Polar”)

 

  2.

Service Period: Twelve (12) months from the Closing (subject to extension or earlier termination pursuant to Section 9 of the Agreement).

 

  3.

Service Description:

 

   

Legal: Allegro will provide responses to ordinary course questions that Polar may have regarding internal matters related to human resources and compliance issues. These Services will be provided in substantially the same manner as performed by Allegro on Polar’s behalf prior to the Effective Date. Litigation is not included in these Services. Such Services will only be provided by internal Allegro resources and Allegro is under no obligation to use any outside counsel to perform these Services.

 

   

HR: Allegro will provide reasonable assistance with employment and employee benefits questions that may arise in the ordinary course at Polar. These Services will be provided in substantially the same manner as performed by Allegro on Polar’s behalf prior to the Effective Date.

 

  4.

Fees: $50,000 annually, invoiced to Polar quarterly

 

II.

Sanken Products Sold in North America and South America, including Puerto Rico - Transition Services.

 

  1.

Parties:

 

   

Service Provider: Allegro MicroSystems, LLC (“AML”)

 

   

Service Recipient: Polar

 

  2.

Service Period: Six (6) months from the Closing (subject to extension or earlier termination pursuant to Section 9 of the Agreement).

 

  3.

Service Description:

 

   

During the six (6) months following the Closing (the “Service Period”), AML shall, if required, maintain sufficient staff to provide various supply chain and accounting services supporting the sales of Sanken Products currently provided to Sanken by AML in North America and South America, including Puerto Rico during the Reference Period in the manner provided during the Reference Period (the “Services”).


   

For such time as any employees of AML are providing the Services to Polar and its affiliates during the Service Period (the “Service Employees”), AML shall be solely responsible for the cost of all wages, bonuses, incentives, employee benefits and other compensation, benefits and perquisites, including any severance or similar costs and worker’s compensation, and the applicable employer taxes relating thereto (collectively, the “Employee Costs”), in any case, incurred by AML in connection with the Services during the Service Period and (ii) Polar shall promptly reimburse AML for such Employee Costs in accordance with Section II(4) below.

 

   

Polar may elect to offer employment to and relocate at its own cost AML Service Employees performing Services from AML’s Sanken product team to its own facilities. To the extent that Polar does not offer employment to any such AML Service Employee on or prior to the completion of the Service Period, Sanken will be responsible for all severance expenses.

 

  4.

Fees:

 

   

The Transition Services provided by AML hereunder shall be provided on a cost plus 10% basis, invoiced monthly, which includes all attributable costs.

 

   

Variable costs incurred as part of the Transition Services, such as freight and duties, are not included in the monthly fixed cost billing and as such will be invoiced separately on a monthly basis at cost plus 10%.

 

   

Polar shall promptly reimburse AML within thirty (30) days following receipt of any invoice.

 

III.

Sanken Products Sold in Europe - Transition Services.

 

  1.

Parties:

 

   

Service Provider: Allegro MicroSystems Europe Ltd. (“AME”) (on behalf of Polar)

 

   

Service Recipient: Polar

 

  2.

Service Period: Nine (9) months from the Closing (subject to extension or earlier termination pursuant to Section 9 of the Agreement).

 

  3.

Service Description:

 

   

During the months (9) months following the Closing (the “Service Period”), AME shall, on behalf of Polar, if required, maintain sufficient staff to provide various legal, human resource, supply chain, and accounting/payroll services supporting the sales of Sanken Products currently provided to Sanken by AME in Europe during the Reference Period in the manner provided during the Reference Period (the “AME Services”).

 

   

For such time as any employees of AME are providing the Services to Polar and its affiliates during the Service Period (the “AME Employees”), Sanken shall be solely


 

responsible for the cost of all wages, bonuses, incentives, employee benefits and other compensation, benefits and perquisites, including any severance or similar costs and worker’s compensation, and the applicable employer taxes relating thereto (collectively, the “Employee Costs”), in any case, incurred by AME in connection with the Services during the Service Period and (ii) Polar shall promptly reimburse AME for such Employee Costs in accordance with Section II(4) below.

 

   

Polar may elect to offer employment to and relocate at its own cost AME Service Employees performing Services from AME’s Sanken product team to its own facilities. To the extent that Polar does not offer employment to any such AME Service Employee on or prior to the completion of the Service Period, Sanken will be responsible for all severance expenses.

 

  4.

Fees:

 

   

The Transition Services provided by AME hereunder shall be provided on a cost plus 10% basis, invoiced monthly, which includes all attributable costs.

 

   

Variable costs incurred as part of Transition Services, such as freight and duties are not included in the monthly fixed cost billing and as such will be invoiced separately on a monthly basis at cost plus 10%.

 

   

Polar shall promptly reimburse AME within thirty (30) days following receipt of any invoice.

 

IV.

Accounting Transactions Associated with the Services Performed Pursuant to Sections (II) and (III):

The following is a summary of the accounting transactions relating to Sanken Product inventory owned by Allegro and/or its Affiliates pursuant to the termination of the Distribution Agreement between Sanken and Allegro, dated July 5, 2007 and amended on April 1, 2013 and again on April 1, 2015 (the “Allegro-Sanken Distribution Agreement”), the establishment of a new Distribution Agreement between Sanken and Polar dated March 28, 2020 (the “Sanken-Polar Distribution Agreement”) and the Services performed pursuant to Sections (II) and (III) above:

 

   

Transaction #1:

 

   

March 28, 2020: Sanken assumes liability for Allegro’s net assets and liabilities under the Allegro-Sanken Distribution Agreement on March 28, 2020 upon the termination of the Allegro-Sanken Distribution Agreement

 

   

Transaction #2:

 

   

March 28, 2020: The Sanken–Polar Distribution Agreement becomes effective on March 28, 2020

 

   

March 28, 2020: This Transition Services Agreement becomes effective requiring AML and AME to provide specific services to support the Sanken distribution business, pursuant to sections II and III above.


   

March 28, 2020: Polar, pursuant to this Transition Service Agreement, assumes the assets and liabilities assumed by Sanken from Allegro on March 28, 2020 through a transfer of such net assets and liabilities from Sanken

 

   

Transaction #3

 

   

Date to be Determined: Upon the termination or expiration of thie Services performed in Sections (II) and (III) above under this Transition Service Agreement, the adjusted balance of the net assets/liabilities related to the Sanken – Allegro Distribution Agreement is settled between AML and Polar, and AME and Polar, respectively.

 

V.

Additional Agreements. Prior to the expiration of the transition service period set forth in Section II.2 of this Exhibit A, Sanken may elect to enter into a separate sales representative agreement with Allegro at a [XXX]% commission basis of sales within the territory under customary sales representative terms. As part of this sales representative agreement, Allegro will facilitate the sales of Sanken products in the selected territory(ies).


EXHIBIT F

IP AGREEMENTS

[See attached].


[XXX] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

EXHIBIT F

March 28, 2020

Sanken Electric Co., Ltd.

3-6-3 Kitano Niiza-Shi,

Saitama-Ken, Japan 352-8666

Polar Semiconductor, LLC

2800 East Old Shakopee Road,

Bloomington, MN 55425

RE: Consolidation of Technology Agreements among Allegro, Sanken and Polar Entities

Dear Mr. Walter and Mr. Suzuki:

This letter (“Letter Agreement”) confirms the agreement by and among Allegro Microsystems, LLC (“Allegro”), Sanken Electric Co., Ltd (“Sanken”) and Polar Semiconductor, LLC (“Polar,” and collectively with Allegro and Sanken, the “Parties,” and each a “Party”) with respect to certain rights and obligations of the Parties (or their affiliates, as applicable) relating to the agreements listed on Schedule 1 hereto (the “Technology Agreements”), and is executed as part of the organizational restructuring of certain of the Parties’ affiliates and direct and indirect subsidiaries. Notwithstanding anything to the contrary set forth in any of the agreements in Schedule 1, and in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1.    Polar Assignment of Intellectual Property to Allegro and Sanken.

 

  a.

Regarding the technologies, including but not limited to recipes, masks, test structures, component designs, PDKs, and process sequences (collectively, “Technologies”) listed in Section 1 of Schedule 2 hereof and any derivatives, subsequent routing versions and any other intellectual property related to such Technologies, in each case along with any and all intellectual property rights relating thereto (collectively, the “Allegro IP”), the Parties agree that, as among the Parties, Allegro is the sole owner of the Allegro IP. Additionally, any manufacturing process technology developed by Polar that was, is, or is contemplated to be, primarily used by or for Allegro, shall be considered Allegro IP. Consistent with this intent, to the extent not already assigned pursuant to the terms of the Technology Agreements (i) Polar hereby assigns any and all of its right, title and interest in and to the Allegro IP to Allegro free and clear of any encumbrances and (ii) Polar hereby assigns all Technologies and all related intellectual property rights relating to the design, manufacture, use and support of magnetic sensors (the “Sensor IP”) to Allegro.

 

  b.

Regarding the Technologies listed in Section 2 of Schedule 2 hereof and any derivatives, subsequent routing versions and any other intellectual property related to such Technologies, in each case along with any intellectual property rights


  relating thereto (collectively, the “Sanken IP”), as among the Parties, the Parties agree that Sanken is the sole owner of the Sanken IP. Additionally, any manufacturing process technology developed by Polar that was, is, or is contemplated to be, primarily used by or for Sanken, shall be considered Sanken IP. Consistent with this intent, to the extent not already assigned pursuant to the Technology Agreements, Polar hereby assigns any and all of its right, title and interest in and to the Sanken IP to Sanken, free and clear of any encumbrances.

 

  c.

Regarding the Technologies listed in Section 3 of Schedule 2 hereof and any derivatives, subsequent routing versions, any MOSFET developments under the Amendment to the Discrete Technology Development Agreement, among Polar Semiconductor, LLC, Allegro MicroSystems, Inc. and Sanken Electric Company, Ltd, dated June 15, 2018, and any other intellectual property related to such Technologies, in each case along with any intellectual property rights relating thereto (collectively, the “Joint IP”), the Parties agree that, as among the Parties, Allegro and Sanken jointly own the Joint IP. Additionally, any manufacturing process technology developed by Polar that was, is, or is contemplated to be used by Allegro and Sanken that is not Allegro IP or Sanken IP pursuant to paragraphs (a) and (b) above, shall be considered Joint IP. Consistent with this intent, to the extent not already assigned pursuant to the Technology Agreements, Polar hereby assigns all of its right, title and interest in and to the Joint IP to Allegro and Sanken jointly free and clear of any encumbrances. To the extent that any of the intellectual property rights described in the first sentence above constitute Sensor IP, such Sensor IP shall continue to be owned solely by Allegro.

 

  d.

The Parties agree that, as among the Parties, the Technologies listed in Section 4 of Schedule 2 hereof and any derivatives, subsequent routing versions and any other intellectual property related to such Technologies, in each case along with any intellectual property rights relating thereto (collectively, the “Polar IP”) shall, as among the Parties, continue to be owned solely by Polar.

 

  e.

Notwithstanding anything to the contrary in Sections 1(a) through 1(d) of this Letter Agreement, to the extent that Polar has developed any manufacturing technology including, without limitation, manufacturing technology associated with tool maintenance, factory operation, and unit processing of various wafer processing steps which is not Allegro IP, Sanken IP, Sensor IP or Joint IP, Polar shall retain sole ownership of such manufacturing technology, along with any intellectual property rights relating thereto.

 

  2.

No Use Restrictions of Allegro IP and Sanken IP. Allegro and Sanken shall each be able to use and enjoy the Allegro IP and Sanken IP respectively without right of accounting and without any restrictions of any kind, whether in the nature of transfer, confidentiality or marketing restrictions, or otherwise, and any such provisions in any agreement to the contrary shall no longer be of any force and effect. For the avoidance of doubt, the foregoing shall not grant, or be construed to grant, a license under or to any intellectual property or technology related to magnetic sensing (including Sensor IP), semiconductor designs or any design technology of any kind.


  3.

Use Restrictions of Joint IP. Except with respect to the restrictions on Sanken’s use of the Joint IP contained in the Agreements set forth in Sections 1 and 3 of Schedule 1 hereof, Allegro and Sanken shall each be able to use and enjoy the Joint IP without right of accounting and without any restrictions of any kind, whether in the nature of transfer, confidentiality or marketing restrictions, or otherwise, and any such provisions in any agreement to the contrary shall no longer be of any force and effect.

 

  4.

Use of Polar Manufacturing Technology. Polar hereby grants to each of Allegro and Sanken a worldwide, non-exclusive, perpetual, irrevocable, royalty-free, fully-paid right and license under any applicable intellectual property rights to reproduce, use, modify, and make derivative works of any Polar manufacturing technology that is associated with the Allegro IP, Sanken IP, Sensor IP, and the Joint IP, as applicable without any restrictions of any kind.

 

  5.

Enforcement of Joint IP.

 

  a.

Notice. Each of Sanken and Allegro shall promptly notify the other of its knowledge of any actual or potential commercially material infringement of the Joint IP by a third party.

 

  b.

Joint IP Enforcement. Allegro shall have the initial right, but not the obligation, to take reasonable legal action to enforce the Joint IP against commercially material infringements. If Allegro does not take action sufficient to halt such infringement within six (6) months following receipt of notice of such infringement, then Sanken shall have the right, but not the obligation, to take action to stop such infringement at its sole expense.

 

  c.

Cooperation; Costs. Each of Sanken and Allegro agrees to render such reasonable assistance in connection with enforcement activities described in this Section 3 as the enforcing Party may request. Costs of maintaining any such action shall be paid by and belong to the Party bringing the action.

 

  d.

Recoveries. Any damages or settlement recovered from any action under Section 3(b) (after the deduction of the costs and fees of the action) shall be allocated 50% to Allegro and 50% to Sanken.

 

  e.

Third Party Claims of Infringement. If the manufacture, use or sale of any Joint IP results in any claim, suit or proceeding alleging patent infringement against Sanken or Allegro, the Party named as the defendant in that claim, suit or proceeding shall promptly notify the other Party in writing setting forth the facts of such claims in reasonable detail. The named defendant shall have the exclusive right and obligation to defend and control the defense of any such claim, at its own expense; provided, however, defendant shall not enter into any settlement which admits or concedes that any aspect of the Joint IP is invalid or unenforceable, without the prior written consent of the other Party. The named defendant shall keep the other Party reasonably informed of all material developments in connection with any such claim, suit or proceeding. The other Party shall, upon


  request, provide reasonable assistance and cooperation to the named defendant and may elect to participate in the defense of the claim, suit or proceeding, at its own expense using counsel of its own choice.

 

  6.

Allegro and Sanken Licenses to Polar of Assigned Intellectual Property.

 

  a.

To the extent not already granted pursuant to the applicable Technology Agreements, Allegro hereby grants to Polar a non-exclusive, limited, non-sublicensable, non-transferrable, royalty-free license to use the Allegro IP, the Sensor IP and the Joint IP solely to the extent necessary for Polar to manufacture products for Allegro under the Wafer Foundry Agreement between Polar Semiconductor, Inc. and Allegro Microsystems, Inc., dated April 12, 2013, as amended.

 

  b.

To the extent not already granted pursuant to the applicable Technology Agreements, Sanken hereby grants to Polar a non-exclusive, limited, non-sublicensable, non-transferrable, royalty-free license to use the Sanken IP and the Joint IP solely to the extent necessary for Polar to manufacture products for Sanken under the Wafer Supply Agreement between Polar Semiconductor, LLC and Sanken Electric Co., Ltd, dated July 26, 2017.

 

  c.

Subject to the terms and conditions of all applicable Technology Agreements, Allegro and Sanken hereby grant to Polar a non-exclusive, limited, non-sublicensable, non-transferrable license to use the Joint IP solely to the extent necessary for Polar to manufacture products for Allegro and Sanken under the Polar-Sanken Agreements. For the avoidance of doubt, the foregoing shall not grant, or be construed to grant, a license under or to any intellectual property or technology related to magnetic sensing (including Sensor IP), semiconductor designs or any design technology of any kind.

 

  7.

Perfection of Rights. At Allegro or Sanken’s request, as applicable, Polar will execute any instrument, or obtain the execution of any instrument, including from any employee or contractor, that may be appropriate, and shall provide Allegro and/or Sanken, as applicable, all design drawings and other documents detailing the design and operation of the Technologies described in Schedule 2, as applicable, in whatever format Allegro and/or Sanken, as applicable, may reasonably require, to confirm the assignment of the applicable rights to Allegro and/or Sanken, as applicable, in accordance with Section 1 above or perfect such rights in Allegro and/or Sanken’s name, as applicable.

 

  8.

Miscellaneous. This Letter Agreement shall not constitute a waiver, amendment, or modification of any provision of the agreements set forth on Schedule 1 except to the extent set forth herein. To the extent that a provision of this Letter Agreement conflicts with or differs from a provision of the agreements set forth on Schedule 1, such provision of this letter agreement shall prevail and govern. This Letter Agreement shall be governed by the laws of the Commonwealth of Massachusetts. This Letter Agreement may be executed in two counterparts, each of which shall be deemed an original and together which shall constitute one and the same instrument. A validly executed counterpart that is delivered by one party to the other via electronic transmission will be valid and binding to the same extent as one delivered physically.


[Signature page follows]


Each party hereby confirms its acceptance of the terms and conditions set out above by executing this Letter Agreement.

Signed,

 

ALLEGRO MICROSYSTEMS, LLC
By:  

/s/ Ravi Vig

Name:   Ravi Vig
Title:   President & CEO

 

[Signature Page to Consolidation of Technology Agreements Letter]


Acknowledged and agreed:
SANKEN ELECTRIC CO. LTD.
By:  

/s/ Yoshihiro Suzuki

Name:   Yoshihiro Suzuki
Title:   Senior Vice President

 

[Signature Page to Consolidation of Technology Agreements Letter]


POLAR SEMICONDUCTOR, LLC

By:  

/s/ Kurt Walter

Name:   Kurt Walter
Title:   VP, GLOBAL WAFER OPERATIONS

 

[Signature Page to Consolidation of Technology Agreements Letter]


Schedule 1

Technology Agreements

1.    Allegro and Polar Agreements

 

  a.

ABC3/ABCD3 Foundry Agreement between Allegro Microsystems, Inc. and PolarFab, dated as of May 25, 2001

 

  b.

Technology Development Agreement between PolarFab and Allegro Microsystems, Inc., dated November 6, 2001.

 

  c.

Wafer Foundry Agreement between Polar Semiconductor, Inc. and Allegro Microsystems, Inc., dated August 1, 2007.

2.    Sanken and Polar Agreements

 

  a.

Discrete Technology Development Agreement, between Polar Semiconductor, Inc. and Sanken Electric Company, Ltd., dated October 1, 2013.

3.    Allegro, Sanken and Polar Agreements

 

  a.

Joint Technology Development Agreement, among Polar Semiconductor, Inc., Sanken Electric Company, Ltd. and Allegro Microsystems, Inc., dated February 15, 2006.

 

  b.

IC Technology Development Agreement, among Polar Semiconductor, Inc., Sanken Electric Company, Ltd., and Allegro MicroSystems, LLC, dated May, 28, 2009.

 

  c.

SG8 Collaboration Agreement between Sanken Electric Company, Ltd., Polar Semiconductor, LLC and Allegro MicroSystems, LLC, dated July 5, 2014.

 

  d.

Discrete Technology Development Agreement, between Polar Semiconductor, Inc. and Sanken Electric Company, Ltd., dated April 1, 2015, as amended by the Amendment to the Discrete Technology Development Agreement, among Polar Semiconductor, LLC, Allegro MicroSystems, Inc. and Sanken Electric Company, Ltd, dated June 15, 2018.


Schedule 2

Technologies

[XXX].


EXHIBIT G

SSMA

[XXX]


EXHIBIT H

DISTRIBUTION TERMINATION LETTER

[See attached].


EXHIBIT H

March 28, 2020

Sanken Electric Co., Ltd.

3-6-3 Kitano Niiza-Shi,

Saitama-Ken, Japan 352-8666

RE: Termination of Distribution Agreement

Dear Yoshihiro Suzuki:

This letter confirms that Allegro Microsystems, LLC (“Allegro”) and Sanken Electric Co., Ltd (“Sanken”) agree to terminate the Distribution Agreement by and between Allegro and Sanken dated as of July 5, 2007 as amended by the First Amendment to the Distribution Agreement dated as of April 1, 2013 and the Second Amendment to the Distribution Agreement dated as of April 1, 2015 (collectively, the “Allegro-Sanken Distribution Agreement”) as follows:

 

  (a)

With respect to the services provided in North America and South America, including Puerto Rico, such services shall terminate, and Allegro shall have no further obligations to provide any services in North American and South America, including Puerto Rico, effective as of March 28, 2020;

 

  (b)

With respect to the services provided in Europe, at the election of Sanken, such services shall continue for nine (9) months after the date set forth in paragraph (a) above, which date shall be the date of termination for all purposes under the Allegro-Sanken Distribution Agreement, unless an extension is agreed to in writing by the parties prior to such termination; and

 

  (c)

Upon the termination of the Allegro-Sanken Distribution Agreement, Sanken will assume liability for Allegro’s net assets and liabilities under the Allegro-Sanken Distribution Agreement.

By signing this letter below, Allegro and Sanken hereby (i) waive the requirement set forth in Section 8.1 of the Allegro-Sanken Distribution Agreement that requires a party to provide the other party with twelve (12) months notice of the termination of the Agreement, and (ii) agree that the Agreement will, as of the date set forth in paragraph (b) above, be terminated and canceled in its entirety, and that neither Sanken nor Allegro shall have any continuing duties, rights or obligations under the Allegro-Sanken Distribution Agreement other than as set forth therein that survive termination of the Allegro-Sanken Distribution Agreement pursuant to the terms thereof.

[Signature page follows]


Each party hereby confirms its acceptance of the terms and conditions set out above by executing this letter.

Signed,

 

ALLEGRO MICROSYSTEMS, LLC
By:  

/s/ Ravi Vig                                        

Name:   Ravi Vig
Title:   President & CEO

 

[Signature Page to Termination of Distribution Agreement Letter]


Acknowledged and agreed:
SANKEN ELECTRIC CO., LTD
By:  

/s/ Yoshihiro Suzuki                                

Name:   Yoshihiro Suzuki
Title:   Senior Vice President

 

[Signature Page to Termination of Distribution Agreement Letter]


EXHIBIT I

A&R TPA

[See attached].


[XXX] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

EXHIBIT I

AMENDED AND RESTATED

TRANSFER PRICING AGREEMENT

This AMENDED AND RESTATED TRANSFER PRICING AGREEMENT (this “A&R Agreement”), is made and entered into as of March 28, 2020, by and among SANKEN ELECTRIC CO., LTD. a Japanese company (“Sanken”), ALLEGRO MICROSYSTEMS, INC., a Delaware corporation (“AMI”), ALLEGRO MICROSYSTEMS, LLC, a Delaware limited liability company (“AML”) and POLAR SEMICONDUCTOR, LLC, a Delaware limited liability company (“PSL” and along with each of Sanken, AMI and AML, each a “Party” and collectively the “Parties”). This A&R Agreement amends and replaces in its entirety the Transfer Pricing Agreement (the “TPA”), dated as of April 1, 2019, among the Parties.

RECITALS

WHEREAS, as a condition to the Parties entering into the transactions contemplated by the Master Transaction Agreement, dated March 25, 2020 (the “MTA”), by and between the Parties, the Parties desire to amend and restate the TPA; and

WHEREAS, Sanken purchases fabricated semiconductor wafers (“Wafers”) from PSL from time to time.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

1.

Amendment & Restatement. This A&R Agreement amends and replaces in its entirety the TPA, and the TPA shall have no effect on or after the date hereof; provided, however, that following the consummation of the transactions contemplated by the MTA, cash settlements for FY2020 may still be made in accordance with the provisions of the TPA. In addition, all tax liabilities and cash obligations of Sanken and PSL related to AMI’s FY2020 tax compliance will be remitted by such Parties from and after the consummation of the transactions contemplated by the MTA on a schedule that is consistent with the Parties’ past practices under that certain Tax Sharing Agreement, dated March 30, 2013.

 

2.

True-Up Amounts. On a quarterly basis, Sanken and PSL shall meet and confer (which meeting may be done telephonically) to determine (each such determination, an “EBIT Determination”) whether the financial performance of PSL and its consolidated subsidiaries is such that the margin of (a) consolidated net income of PSL and its subsidiaries for the last twelve (12) months for which internal financial statements are available, plus to the extent deducted in calculating consolidated net income and in each case with respect to PSL and its consolidated subsidiaries without duplication, (i) consolidated tax expense for such period and (ii) consolidated interest expense for such period over (b) the revenues of PSL and its consolidated subsidiaries for such period, in each case, determined in accordance with GAAP, consistently applied (the “EBIT Margin”) meets the target level EBIT Margin that the Parties have then-determined should apply (provided, that such target level shall in no event be less than [XXX] percent ([XXX] %)) (such then-applicable target level, the “Target EBIT Margin”). PSL shall prepare the financial reports and information to determine the EBIT Margin in advance of any such EBIT Determination, and prior to any such meeting, PSL shall notify Sanken as to the then-


  applicable EBIT Margin, which amount shall be final and binding on the Parties absent a manifest arithmetical error. In the event that the EBIT Margin as determined aforesaid is lower than the Target EBIT Margin for any particular time period, PSL will invoice Sanken for such amount as would be necessary to increase the then-applicable EBIT Margin to be equal to the Target EBIT Margin (the “True Up Amount”), and Sanken shall pay to PSL, no later than sixty (60) days from receipt of the invoice, transfer price adjustments in an amount, in cash, equal to the True Up Amount (and for the avoidance of doubt, any True Up Amount so paid shall, from and after such time as it is actually paid, be deemed, together with any other true up payments made during the applicable period, included in the calculation of EBIT Margin for the period immediately prior to the EBIT Determination that gave rise to such payment).

 

3.

Express Beneficiaries. It is expressly acknowledged and agreed that AML and AMI’s willingness to enter into the Master Transaction Agreement is expressly conditioned on the amendment and restatement of the TPA hereby. Moreover, it is acknowledged that AMI and AML directly or indirectly own thirty percent (30%) of PSL and have an interest in the compliance by Sanken of its obligations hereunder. Accordingly, each of the Parties hereto agree that AML and AMI are express beneficiaries of this A&R Agreement, with the right to enforce the rights of PSL hereunder directly. AML and AMI shall not have any obligations or liabilities of any kind, either to Sanken or to PSL, hereunder. Notwithstanding the foregoing, each of AML and AMI shall also have the right, but not the obligation, to prepare financial reports and information on behalf of PSL should PSL fail to do so and to represent PSL in meetings with Sanken to calculate the EBIT Determination.

 

4.

Obligations Absolute; Waiver of Suretyship Defenses. Sanken hereby agrees that its obligations hereunder are absolute, unconditional and irrevocable and shall not be subject to any reduction, limitation, impairment, set-off, defense, counterclaim, discharge or termination for any reason. To the extent that the obligations of Sanken hereunder may be construed as a guarantee or suretyship obligation, Sanken expressly waives any and all suretyship defenses and agrees that it shall not have any rights of contribution or subrogation against any of the other Parties hereto.

 

5.

Term and Termination. The term of this A&R Agreement shall commence on the date hereof and shall continue in perpetuity (the “Term”). Notwithstanding the foregoing, the Parties may mutually agree to terminate this A&R Agreement at any time upon written consent by all Parties hereto.

 

6.

Notices. All notices, demands, or consents required or permitted hereunder will be in writing and will be delivered, delivered by e-mail, or sent by facsimile, or mailed to the respective Parties at the addresses set forth below, or at such other address as will have been given to the other Parties, in writing for the purposes of this clause. Such notices and other communications will be deemed effective upon the earliest to occur of:

 

  (a)

Actual delivery (e-mail, facsimile, hard copy);


  (b)

Five (5) days after mailing, addressed and postage prepaid, return receipt requested:

 

To AMI:    Allegro MicroSystems, Inc.
   955 Perimeter Road
   Manchester, NH 03103
   Attn: Richard Kneeland; Gary Pepka
   Phone: [***]
To AML:    Allegro MicroSystems, LLC
   955 Perimeter Road
   Manchester, NH 03103
   Attention: Sr. Vice President of Operations
   Phone: [***]
To PSL:    Polar Semiconductor, LLC
   2800 East Old Shakopee Road
   Bloomington, MN 55425
   Attention: Chief Operating Officer
   Phone: [***]
To Sanken    Sanken Electric Co., Ltd.
   3-6-3 Kitano Niiza-Shi,
   Saitama-Ken, Japan 352-8666
   Attn: Sr. Vice President of Global Strategy Office
   Phone: [***]

 

7.

Waiver; Amendment. Neither this A&R Agreement nor any provision hereof shall be waived, amended, modified, changed, discharged or terminated except by an instrument in writing executed by the Parties.

 

8.

Governing Law: This A&R Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflicts provision thereof.

 

9.

Counterparts. This A&R Agreement may be executed in any number of counterparts, and any Party hereto may execute any such counterpart, each of which when executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute one and the same instrument. This A&R Agreement shall become effective when each Party hereto shall have received a counterpart hereof signed by the other Parties hereto. The Parties agree that the delivery of this A&R Agreement may be effected by means of an exchange of facsimile or portable document format signature with original copies to follow by mail or courier service.

 

10.

Severability. In the event that any part or parts of this A&R Agreement shall be held illegal or unenforceable by any governmental authority, such determination shall not affect the remaining provisions of this A&R Agreement, which shall remain in full force and effect.

Signature page follows.


IN WITNESS WHEREOF, the parties hereto have executed this A&R Agreement on the date first above written.

 

Sanken Electric Co., Ltd.
By:  

/s/ Yoshihiro Suzuki

  Name:   Yoshihiro Suzuki
  Title:   Sr. Vice President
Allegro MicroSystems, Inc.
By:  

/s/ Ravi Vig

  Name:   Ravi Vig
  Title:   President & CEO
Allegro MicroSystems, LLC
By:  

/s/ Ravi Vig

  Name:   Ravi Vig
  Title:   President & CEO
Polar Semiconductor, LLC
By:  

/s/ Kurt Walter

  Name:   Kurt Walter
  Title:   COO Polar Semiconductor

 

[Signature Page to A&R Agreement]


EXHIBIT J

EMPLOYMENT AGREEMENTS

[XXX]

EX-4.2

Exhibit 4.2

EXECUTION VERSION

STOCKHOLDERS AGREEMENT OF

ALLEGRO MICROSYSTEMS, INC.

This STOCKHOLDERS AGREEMENT (as it may be amended, amended and restated or otherwise modified from time to time in accordance with the terms hereof, this “Agreement”) is entered into by and among Allegro Microsystems, Inc., a Delaware corporation (the “Corporation”), OEP SKNA, L.P., a Cayman Islands exempted limited partnership (“OEP”) and Sanken Electric Co., Ltd., a Japanese corporation (“Sanken” and together with OEP, the “Stockholders”) as of September 30, 2020 but effective only immediately prior to effectiveness of the registration statement on Form 8-A filed with the SEC in connection with the IPO (as defined below). Certain terms used in this Agreement are defined in Section 9.

RECITALS

WHEREAS, each Stockholder owns, directly or indirectly, outstanding shares of common stock, par value $0.01 per share, of the Corporation (“Common Stock”);

WHEREAS, the Corporation is contemplating an offering and sale of the shares of Common Stock of the Corporation in an underwritten initial public offering (the “IPO”);

WHEREAS, in order to induce the Stockholders to take such other actions as shall be necessary to effectuate the transactions related to the IPO, the parties hereto desire to set forth their agreement with respect to the matters set forth herein in connection with their respective investments in the Corporation; and

WHEREAS, the Stockholders and the Corporation desire for this Agreement to become automatically effective immediately prior to effectiveness of the registration statement on Form 8-A filed with the SEC in connection with the IPO.

NOW, THEREFORE, in consideration of the covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Corporation and the Stockholders agree as follows, with such agreement to be automatically effective immediately prior to effectiveness of the registration statement on Form 8-A filed with the SEC in connection with the IPO:

AGREEMENT

Section 1. Election of the Board of Directors.

(a) Subject to the other provisions of this Section 1, the number of Directors constituting the full Board shall initially be fixed at eleven (11). From and after the First Annual Meeting, the number of Directors constituting the full Board shall be fixed at nine (9).

(b) Subject to this Section 1(b), for so long as Sanken and its Affiliates beneficially owns, directly or indirectly, in the aggregate at least five percent (5%) or more of all issued and outstanding shares of Common Stock, Sanken shall be entitled to designate for nomination by the Board in any applicable election that number of individuals, which, assuming all such individuals are successfully elected to the Board, when taken together with any incumbent Sanken Director(s) not standing for election in such year, would result in there being (i) prior to the First Annual Meeting, four (4) Sanken Directors on the Board and (ii) following the First Annual Meeting, three (3) Sanken Directors on the Board. The Sanken Directors shall be apportioned among the three (3) classes of Directors as nearly equal in number as possible. The initial Sanken Directors shall be Noriharu Fujita (as a Class I Director), Hideo Takani (as a Class I


Director), Yoshihiro Suzuki (as a Class II Director), and Richard R. Lury (as a Class III Director) (collectively, the “Pre-Approved Sanken Directors”). Notwithstanding anything herein to the contrary, Sanken shall not nominate any individual pursuant to the first sentence of this Section 1(b) other than the Pre-Approved Sanken Directors without first consulting with OEP and then receiving OEP’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed). Yoshihiro Suzuki shall serve as the initial Chairperson of the Board (as defined in the Bylaws) through completion of his initial term as a Class II Director following the First Annual Meeting, in accordance with this Agreement and the Bylaws, after which the Chairperson of the Board shall be determined in accordance with this Agreement and the Bylaws.

(c) For so long as OEP and its Affiliates beneficially owns, directly or indirectly, in the aggregate at least five percent (5%) or more of all issued and outstanding shares of Common Stock, OEP shall be entitled to designate for nomination by the Board in any applicable election that number of individuals, which, assuming all such individuals are successfully elected to the Board, when taken together with any incumbent OEP Director(s) not standing for election in such year, would result in there being (i) prior to the First Annual Meeting, three (3) OEP Directors on the Board and (ii) following the First Annual Meeting, two (2) OEP Directors on the Board. The OEP Directors shall be apportioned among the three (3) classes of Directors as nearly equal in number as possible. The initial OEP Directors shall be Reza Kazerounian (as a Class I Director), Chip Schorr (as a Class II Director) and Andrew Dunn (as a Class III Director) (collectively, the “Pre-Approved OEP Directors”). Notwithstanding anything herein to the contrary, OEP shall not nominate any individual pursuant to the first sentence of this Section 1(c) other than the Pre-Approved OEP Directors without first consulting with Sanken and then receiving Sanken’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed).

(d) In addition to OEP’s designation rights in Section 1(c), subject to this Section 1(d), for so long as OEP beneficially owns, directly or indirectly, in the aggregate at least five percent (5%) or more of all issued and outstanding shares of Common Stock, OEP shall be entitled to designate for nomination by the Board in any applicable election that number of individuals, which, assuming all such individuals are successfully elected to the Board, when taken together with any incumbent OEP-Appointed Independent Director(s) not standing for election in such year, would result in there being three (3) OEP-Appointed Independent Directors on the Board. The OEP-Appointed Independent Directors shall be apportioned among the three (3) classes of Directors as nearly equal in number as possible. Notwithstanding anything contained herein to the contrary, any individual designated by OEP pursuant to this Section 1(d) shall be required to meet the Independence Requirements, as a pre-requisite for any such designation. The initial OEP-Appointed Independent Directors shall be Joe Martin (as a Class I Director), Christine King (as a Class III Director) (collectively, the “Pre-Approved OEP Independent Directors”) and another individual to be designated by OEP following the closing of the IPO pursuant to this Section 1(d) (as a Class II Director). Notwithstanding anything herein to the contrary, OEP shall not nominate any individual pursuant to the first sentence of this Section 1(d) other than the Pre-Approved OEP Independent Directors without first consulting with Sanken and then receiving Sanken’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed).

(e) Unless the Stockholders otherwise agree, the then-current Chief Executive Officer of the Corporation shall be designated for nomination by the Board in any applicable election (unless the class of directors in which such individual then-sits is not then-standing for election) (the “CEO Director”). The CEO Director shall be a Class I Director.

(f) Each Stockholder agrees to take such Necessary Action as may be required to provide that (i) one of the OEP Directors then-serving as a Class I Director and one of the Sanken Directors then-serving as a Class I Director will not stand for re-election at the First Annual Meeting (with OEP and Sanken being required to mutually agree on the identity of such individuals), (ii) effective from and after the First Annual Meeting, the size of the Board shall be decreased to nine (9) members (and the size of Class I shall be reduced to three (3) members) in accordance with Section 1(a) and (iii) in connection with such reduction in size, the individuals described in the foregoing clause (i) shall cease to serve on the Board.

 

2


(g) Subject to the other provisions of this Section 1, each of the Stockholders hereby agree to vote, or cause to be voted, all outstanding shares of Common Stock held by such Stockholder at any annual or special meeting of stockholders of the Corporation at which Directors of the Corporation are to be elected or removed, or to take all Necessary Action to cause the election, removal or replacement (or vacancy filling) of the Sanken Directors, OEP Directors and OEP-Appointed Independent Directors as and to the extent provided in this Section 1 and Section 2.

Section 2. Vacancies and Replacements.

(a) If the number of Directors that the Stockholders have the right to designate to the Board is decreased pursuant to Section 1(b), 1(c) or 1(d) (each such occurrence, a “Decrease in Designation Rights”), then:

(i) each of the Stockholders shall use its reasonable best efforts to cause each of (x) the appropriate number of Sanken Directors that Sanken ceases to have the right to designate to serve as a Sanken Director, (y) the OEP Directors that OEP ceases to have the right to designate to serve as an OEP Director, or (z) the designees that OEP ceases to have the right to designate as an OEP-Appointed Independent Director, respectively, to offer to tender his, her or their resignation(s), and each of such Directors so tendering a resignation, as applicable, shall resign within thirty (30) days from the date that Sanken and/or OEP, as applicable, incurs a Decrease in Designation Rights. In the event any such Director, as applicable, does not resign as a Director by such time as is required by the foregoing, the Stockholders, as holders of Common Stock, the Corporation and the Board, to the fullest extent permitted by law and, with respect to the Board, subject to its fiduciary duties to the Corporation’s stockholders, shall thereafter take all Necessary Action, including voting in accordance with Section 1(c), to cause the removal of such individual as a Director; and

(ii) the vacancy or vacancies created by such resignation(s) and/or removal(s) shall be filled with one or more Directors, as applicable, designated by the Board upon the recommendation of the Nominating and Corporate Governance Committee, so long as it is established.

(b) Each of the Stockholders shall have the sole right to request that one or more of their respective designated Directors (including, for the avoidance of doubt, in the case of OEP, the OEP-Appointed Independent Directors), as applicable, tender their resignations as Directors of the Board, in each case, with or without cause at any time, by sending a written notice to such Director and the Corporation’s Secretary stating the name of the Director or Directors whose resignation from the Board is requested (the “Removal Notice”); provided, however, that (i) Sanken shall not be permitted to deliver a Removal Notice in respect of a Sanken Director, or to otherwise cause or request the removal or resignation of a Sanken Director, without the prior written consent of OEP (not to be unreasonably withheld, conditioned or delayed) and (ii) OEP shall not be permitted to deliver a Removal Notice in respect of an OEP Director, or to otherwise cause or request the removal or resignation of an OEP Director, without the prior written consent of Sanken (not to be unreasonably withheld, conditioned or delayed). If the Director subject to such Removal Notice does not resign within thirty (30) days from receipt thereof by such Director, the Stockholders, as holders of Common Stock, the Corporation and the Board, to the fullest extent permitted by law and, with respect to the Board, subject to its fiduciary duties to the Corporation’s stockholders, shall thereafter take all Necessary Action, including voting in accordance with Section 1(f) to cause the removal of such Director from the Board (and such Director shall only be removed by the parties to this Agreement in such manner as provided herein).

 

3


(c) Each of the Stockholders, as applicable, shall have the exclusive right to designate a replacement Director for nomination or election by the Board to fill vacancies created as a result of not designating their respective Directors (including, for the avoidance of doubt, in the case of OEP, the OEP-Appointed Independent Directors) initially or by death, disability, retirement, resignation, removal (with or without cause) of their respective Directors, or otherwise by designating a successor for nomination or election by the Board to fill the vacancy of their respective Directors created thereby on the terms and subject to the conditions of Section 1; provided, however, that (i) Sanken shall not have the right to designate any such replacement as a Sanken Director other than a Pre-Approved Sanken Director without the prior written consent of OEP (which consent shall not be unreasonably withheld, conditioned or delayed), (ii) OEP shall not have the right to designate any such replacement as an OEP Director other than a Pre-Approved OEP Director without the prior written consent of Sanken (which consent shall not be unreasonably withheld, conditioned or delayed) and (iii) OEP shall not have the right to designate any such replacement as an OEP Independent Director other than a Pre-Approved OEP Independent Director without the prior written consent of Sanken (which consent shall not be unreasonably withheld, conditioned or delayed).

Section 3. Board Committees. For so long as OEP has the right to designate any OEP Director pursuant to Section 1 above, it shall have the right to designate at least 1 Director to any committee of the Board, unless otherwise prohibited pursuant to any law or stock exchange rules (including in respect of the audit committee of the Board). For so long as Sanken has the right to designate any Sanken Director pursuant to Section 1 above, it shall have the right to designate at least 1 Director to any committee of the Board, unless otherwise prohibited pursuant to any law or stock exchange rules (including in respect of the audit committee of the Board).

Section 4. Rights of the OEP and Sanken Stockholders.

In addition to any voting requirements contained in the organizational documents of the Corporation or any of its Subsidiaries, the Corporation shall not (and shall cause its Subsidiaries not to) (whether by merger, consolidation or otherwise) enter into, amend or terminate any contract, agreement or arrangement with Sanken, OEP, any Affiliate of the Corporation or any Affiliate or member of the Immediate Family of any of the foregoing Persons (or agree to, approve, or authorize any of the foregoing) (collectively, “Affiliate Transactions”) without the prior written approval of (1) OEP for as long as OEP and its Affiliates beneficially own, directly or indirectly, in the aggregate five percent (5%) or more of all issued and outstanding shares of Common Stock and (2) Sanken for as long as Sanken and its Affiliates beneficially own, directly or indirectly, in the aggregate five percent (5%) or more of all issued and outstanding shares of Common Stock.

Section 5. Certain Covenants of the Corporation and the Stockholders.

(a) The Corporation agrees to take all Necessary Action to cause (i) the Board to be comprised of at least that number of Directors contemplated by Section 1(a) from time to time, or such other number of Directors as the Board may determine, subject to the terms of this Agreement, the Charter or the Bylaws of the Corporation; (ii) the individuals designated in accordance with Section 1 to be included in the slate of nominees to be elected to the Board at the next annual or special meeting of stockholders of the Corporation at which Directors are to be elected, in accordance with the Bylaws, Charter and General Corporation Law of the State of Delaware and at each annual meeting of stockholders of the Corporation thereafter at which such Director’s term expires; (iii) the individuals designated in accordance with Section 2(c) to fill the applicable vacancies on the Board, in accordance with the Bylaws, Charter, Securities Laws, General Corporation Law of the State of Delaware and the NASDAQ rules; and (iv) to adhere to, implement and enforce the provisions set forth in Section 4.

 

4


(b) The Stockholders shall comply with the requirements of the Charter and Bylaws when designating and nominating individuals as Directors, in each case, to the extent such requirements are applicable to Directors generally. Notwithstanding anything to the contrary set forth herein, in the event that the Board determines, within sixty (60) days after compliance with the first sentence of this Section 5(b), in good faith, after consultation with outside legal counsel, that its nomination, appointment or election of a particular Director designated in accordance with Section 1 or Section 2, as applicable, would constitute a breach of its fiduciary duties to the Corporation’s stockholders or does not otherwise comply with any requirements of the Charter or Bylaws, then the Board shall inform the Stockholders of such determination in writing and explain in reasonable detail the basis for such determination and shall, to the fullest extent permitted by law, nominate, appoint or elect another individual designated for nomination, election or appointment to the Board by the Stockholders (subject in each case to this Section 5(b)). The Board and the Corporation shall, to the fullest extent permitted by law, take all Necessary Action required by this Section 5 with respect to the election of such substitute designees to the Board.

(c) In the event the Board recommends that its stockholders vote in favor of any matter that the Board has determined in good faith (after reasonable consultation with such Persons as the Board deems appropriate (including the Corporation’s or the Board’s legal and financial advisors, as applicable), and following any deliberations of the Board that the Board determines are necessary or appropriate to consider the matter) to be advisable and in the best interests of its stockholders, then, if requested by OEP, Sanken hereby agrees to vote all outstanding shares of Common Stock held thereby (i) in favor of such matter and any other matter that the Board has determined is necessary or appropriate in connection with such matter and (ii) against and in opposition to any matter that would reasonably be expected to oppose, impede, frustrate, prevent or nullify such matter. The Stockholders acknowledge that Sanken has agreed to the matters in the foregoing sentence in order to protect OEP’s rights as a minority stockholder of the Corporation, and in consideration therefor, OEP agrees that, at the reasonable request of Sanken, it will use good faith efforts to be generally supportive of the Corporation’s proposed strategic direction unless OEP determines (in its good faith discretion) that such proposed strategic direction would reasonably be expected to materially and adversely affect the Corporation or OEP. For the avoidance of doubt, this Section 5(c), is an agreement as between the Stockholders and a covenant only of the Stockholders and not of the Corporation, and the Corporation shall have no rights or obligations under this Section 5(c).

(d) In the event that either Stockholder desires to sell a portion of its shares of Common Stock on the open market which is greater than two percent (2%) of all of the then-issued and outstanding shares of Common Stock to any other Person(s), it shall, subject to any applicable confidentiality restrictions imposed on such Stockholder by law, contract or otherwise, use commercially reasonable efforts to discuss any such possible sale with the other Stockholder, so that the Stockholders can consider in good faith any potential commercial or other matters that may result from such potential sale; provided, however, that in no event shall the foregoing provide any Stockholder with a consent, approval or other right in respect of any sale of, or transaction involving, the other Stockholder’s shares of Common Stock. In addition, in no event shall either Stockholder directly sell a portion of its shares of Common Stock which is greater than ten percent (10%) of all of the then-issued and outstanding shares of Common Stock to any other Person that is a material competitor of the Corporation or a material competitor of the other Stockholder without the prior written consent of the other Stockholder (which consent shall not be unreasonably withheld, conditioned or delayed); provided, that, for the avoidance of doubt, the foregoing restriction shall only apply to a direct sale of shares of Common Stock from a Stockholder to any such material competitor in a privately negotiated transaction solely between such Stockholder and such material competitor, and shall not apply to any other transaction, including any underwriter-led or other secondary sale or offering, block trade, open market sale, tender offer, merger or sale of the Corporation or other similar transactions.

 

5


Notwithstanding anything to contrary contained herein, in no event shall this Section 5(d) operate to restrain, limit or supersede the agreements of the Stockholders in Section 5(c), and in all events this Section 5(d) shall be subordinate to the provisions of Section 5(c). For the avoidance of doubt, this Section 5(d), is an agreement as between the Stockholders and a covenant only of the Stockholders and not of the Corporation, and the Corporation shall have no rights or obligations under this Section 5(d).

Section 6. Termination.

This Agreement shall terminate upon the earliest to occur of any one of the following events:

(a) each of (i) Sanken and its Affiliates and (ii) OEP and its Affiliates ceasing to own any shares of Common Stock; and

(b) the unanimous written consent of the parties hereto.

For the avoidance of doubt, the rights and obligations (i) of Sanken under this Agreement shall terminate upon Sanken and its Affiliates ceasing to own any shares of Common Stock and (ii) of OEP under this Agreement shall terminate upon OEP and its Affiliates ceasing to own any shares of Common Stock. Notwithstanding the foregoing, nothing in this Agreement shall modify, limit or otherwise affect, in any way, any and all rights to indemnification, exculpation and/or contribution owed by any of the parties hereto, to the extent arising out of or relating to events occurring prior to the date of termination of this Agreement or the date the rights and obligations of such party under this Agreement terminates in accordance with this Section 6.

Section 7. Information Rights. The Corporation will furnish to each Stockholder owning at least five percent (5%) of the all issued and outstanding shares of Common Stock the following information:

(a) As soon as available, but no later than the later of (i) ninety (90) days following completion of each fiscal year and (ii) the applicable filing deadline under Securities Exchange Commission (the “SEC”) rules, the audited consolidated balance sheet of the Corporation and its Subsidiaries as at the end of each such fiscal year and the audited consolidated statements of income, cash flows and changes in stockholders’ equity for such year of the Corporation and its Subsidiaries, setting forth in each case in comparative form the figures for the next preceding fiscal year, accompanied by the report of independent certified public accountants of recognized national standing; provided that this requirement shall be deemed to have been satisfied if, on or prior to such date, the Corporation files its annual report on Form 10-K for the applicable fiscal year with the SEC;

(b) As soon as available, but no later than the later of (i) forty-five (45) days following completion of each fiscal quarter (other than the fourth fiscal quarter) and (ii) the applicable filing deadlines under SEC rules, the consolidated balance sheet of the Corporation and its Subsidiaries as at the end of such quarter and the consolidated statements of income, cash flows and changes in stockholders’ equity for such quarter and the portion of the fiscal year then ended of the Corporation and its Subsidiaries, setting forth in each case the figures for the corresponding periods of the previous fiscal year in comparative form; provided that this requirement shall be deemed to have been satisfied if, on or prior to such date, the Corporation files its quarterly report on Form 10-Q for the applicable fiscal quarter with the SEC;

(c) Within ninety (90) days after the end of each fiscal year, such information that the Corporation then-has which is reasonably necessary for the preparation of such Stockholder’s income tax returns (whether federal, state or foreign);

 

6


(d) Reasonable access, to the extent reasonably requested by the Stockholder, to the offices and the properties of the Corporation and its Subsidiaries, including its and their books and records, and to discuss its and their affairs, finances and accounts with its and their officers, all upon reasonable notice and at such reasonable times and as often as the Stockholder may reasonably request; provided that any investigation pursuant to this Section 7(c) shall be conducted in a manner as not to interfere unreasonably with the conduct of the business of the Corporation and its Subsidiaries;

provided, that, in each case, the Corporation shall not be obligated to provide such access or materials if the Corporation determines, in its reasonable judgment, that doing so would reasonably be expected to (i) result in the disclosure of trade secrets or competitively sensitive information to third parties, (ii) violate applicable law or any contractual or other obligation of confidentiality owing to a third party, (iii) jeopardize the protection of an attorney-client privilege, attorney work product protection or other legal privilege (provided, however, that the Corporation shall use reasonable efforts to provide alternative, redacted or substitute documents or information in a manner that would not result in the loss of the ability to assert attorney-client privilege, attorney work product protection or other legal privileges), or (iv) expose the Corporation to risk of liability for disclosure of personal information. In furtherance of the foregoing, each Stockholder agrees that it shall not (and shall cause its Subsidiaries not to) use or disclose any information or materials received pursuant to this Section 7 (or otherwise received from or in respect of the Corporation or its Subsidiaries or which is otherwise related to the Corporation’s or its Subsidiaries’ business) in a manner that would reasonably be expected to be adverse to the Corporation or its Subsidiaries or their respective businesses, except that the foregoing shall not in any way limit, restrict or supersede in any respect any waiver of corporate opportunity doctrine or similar provision in favor of any Stockholder in any of the Corporation’s Governing Documents (including the Charter) (and in the event of any conflict between any such provision and this sentence with respect to any Stockholder, such provision shall control).

Section 8. Public Announcements. Subject to each Stockholder’s disclosure obligations imposed by law or regulation or the rules of any stock exchange upon which its securities are listed, each of the parties hereto will cooperate with each other in the development and distribution of all news releases and other public information disclosures with respect to the Corporation and/or its Subsidiaries, and no Stockholder will make any such news release or public disclosure without first consulting with the other Stockholder hereto, and, in each case, also receiving the consent of such Stockholder (which shall not be unreasonably withheld or delayed) and each Stockholder shall coordinate with the party whose consent is required with respect to any such news release or public disclosure. Notwithstanding the foregoing, this Section 8 shall not apply to any press release or other public statement made by a Stockholder (a) which is consistent with prior disclosure and does not contain any information that has not been previously announced or made public in accordance with the terms of this Agreement or (b) is made to its auditors, attorneys, accountants, financial advisors or limited partners (who, in the case of this clause (b), are bound by customary duties of confidentiality).

Section 9. Definitions.

As used in this Agreement, any term that it is not defined herein, shall have the following meanings:

Affiliate” means as to any Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person, provided, however, that (i) none of the Corporation, any Subsidiary of the Corporation or any officers, directors, employees, advisors or agents of the Corporation or any of its Subsidiaries shall be deemed an Affiliate of OEP or any of its Affiliates (and vice versa), (ii) none of the Corporation, any Subsidiary of the Corporation or any officers, directors, employees, advisors or agents of the Corporation or any of its Subsidiaries shall be deemed an Affiliate of Sanken or any of its Affiliates (and vice versa) and (iii) Sanken and its Affiliates shall not be

 

7


deemed to be Affiliates of OEP and its Affiliates (and vice versa). For purposes of this definition, “control,” 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 or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.

Board” means the board of directors of the Corporation.

Bylaws” means the amended and restated bylaws of the Corporation, dated as of the date hereof, as the same may be further amended, restated, amended and restated or otherwise modified from time to time.

Charter” means the amended and restated certificate of incorporation of the Corporation, effective as of the date hereof, as the same may be further amended, restated, amended and restated or otherwise modified from time to time.

Director” means a member of the Board.

Equity Securities” means, with respect to any Person, any (i) shares of capital stock, equity interests, voting securities or other ownership interests in such Person or (ii) options, warrants, calls, subscriptions, “phantom” rights, interest appreciation rights, performance units, profits interests or other rights or convertible or exchangeable securities.

First Annual Meeting” means the first annual meeting of the Corporation’s stockholders occurring following the closing of the IPO.

Governing Documents” means the legal documents by which any Person (other than an individual) establishes its legal or which govern its internal affairs, including the articles or certificate of incorporation or formation, bylaws, operating agreement, limited liability company agreement, partnership agreement, equityholders’ agreement, voting agreement, voting trust agreement, joint venture agreement, and any similar agreement and any amendments or supplements to any of the foregoing.

“Immediate Family” means, as to any individual, such individual’s parents, mother-in-law, father-in-law, spouse, brother or sister, brother-in-law or sister-in-law, son-in-law or daughter-in-law and children (including by way of adoption), and any person who either lives in the same household as, provides material support to, or receives material support from, such individual.

Independence Requirements” means, with respect to a Director, an individual who satisfies the applicable independence requirements under the rules of the Nasdaq Global Market LLC or any other stock exchange where the Corporation’s stock is listed, as well as any requirements of such stock exchange and under the rules of the Securities Exchange Act of 1934, as amended, as may be applicable, where the Director serves on a committee of the Corporation’s Board.

Necessary Action” means, with respect to a specified result, all commercially reasonable actions required to cause such result that are within the power of a specified Person, including (i) voting or providing a written consent or proxy with respect to the equity securities owned by the Person obligated to undertake the necessary action, (ii) causing any Director appointed or designated by, or affiliated with or employed by, such specified Person to vote in favor of or consent to the specified result, (iii) voting in favor of the adoption of stockholders’ resolutions and amendments to the organizational documents of the Corporation, (iv) executing (or causing such Person’s employees or representatives to execute) agreements and instruments, and (v) making, or causing to be made, with governmental, administrative or regulatory authorities, all filings, registrations or similar actions that are required to achieve such result.

 

8


Nominating and Corporate Governance Committee” means the nominating and corporate governance committee of the Board or any committee of the Board authorized to perform the function of recommending to the Board the nominees for election as Directors or nominating the nominees for election as Directors.

OEP Director” means any Director who had initially been designated for nomination by OEP in accordance with Section 1(c).

OEP-Appointed Independent Director” means any Director who had initially been designated for nomination by OEP in accordance with Section 1(d).

Person” means any individual, corporation, limited liability company, partnership, trust, joint stock company, business trust, unincorporated association, joint venture, governmental authority or other entity or organization, including a government or any subdivision or agency thereof.

Sanken Director” means any Director who had initially been designated for nomination by Sanken in accordance with Section 1(b).

SEC” means the United States Securities and Exchange Commission.

Securities Laws” means the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder.

Subsidiary” means with respect to any Person, any corporation, limited liability company, partnership, association, trust or other form of legal entity, of which (a) such first Person directly or indirectly owns or controls at least a majority of the securities or other interests having by their terms voting power to elect a majority of the board of directors or others performing similar functions, or (b) such first Person is a general partner or managing member (excluding partnerships in which such Person or any Subsidiary thereof does not have a majority of the voting interests in such partnership).

Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender; (ii) words using the singular or plural number also include the plural or singular number, respectively; (iii) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement; (iv) the terms “Article” or “Section” refer to the specified Article or Section of this Agreement; (v) the word “including” shall mean “including, without limitation”; (vi) each defined term has its defined meaning throughout this Agreement, whether the definition of such term appears before or after such term is used; and (vii) the word “or” shall be disjunctive but not exclusive. References to agreements and other documents shall be deemed to include all subsequent amendments and other modifications thereto. References to statutes shall include all regulations promulgated thereunder and references to statutes or regulations shall be construed as including all statutory and regulatory provisions consolidating, amending or replacing the statute or regulation.

Section 10. Choice of Law and Venue; Waiver of Right to Jury Trial.

(a) THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE. EACH OF THE PARTIES HERETO ACKNOWLEDGES AND AGREES THAT IN THE EVENT OF ANY BREACH OF THIS AGREEMENT, THE NON-BREACHING PARTY WOULD BE

 

9


IRREPARABLY HARMED AND COULD NOT BE MADE WHOLE BY MONETARY DAMAGES, AND THAT, IN ADDITION TO ANY OTHER REMEDY TO WHICH THEY MAY BE ENTITLED AT LAW OR IN EQUITY, THE PARTIES SHALL BE ENTITLED TO SUCH EQUITABLE OR INJUNCTIVE RELIEF AS MAY BE APPROPRIATE. THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT OF A DELAWARE FEDERAL OR STATE COURT, OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SUCH A JUDGMENT, IN ANY OTHER APPROPRIATE JURISDICTION.

(b) IN THE EVENT ANY PARTY TO THIS AGREEMENT COMMENCES ANY LITIGATION, PROCEEDING OR OTHER LEGAL ACTION IN CONNECTION WITH OR RELATING TO THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN, THE PARTIES TO THIS AGREEMENT HEREBY (1) AGREE UNDER ALL CIRCUMSTANCES ABSOLUTELY AND IRREVOCABLY TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURT OF CHANCERY OF THE STATE OF DELAWARE, OR IF (AND ONLY IF) SUCH COURT FINDS IT LACKS SUBJECT MATTER JURISDICTION, THE SUPERIOR COURT OF THE STATE OF DELAWARE (COMPLEX COMMERCIAL DIVISION), OR IF UNDER APPLICABLE LAW, SUBJECT MATTER JURISDICTION OVER THE MATTER THAT IS THE SUBJECT OF THE ACTION OR PROCEEDING IS VESTED EXCLUSIVELY IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA, THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, AND APPELLATE COURTS FROM ANY THEREOF, WITH RESPECT TO ALL ACTIONS AND PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY; (2) AGREE THAT IN THE EVENT OF ANY SUCH LITIGATION, PROCEEDING OR ACTION, SUCH PARTIES WILL CONSENT AND SUBMIT TO THE PERSONAL JURISDICTION OF ANY SUCH COURT DESCRIBED IN CLAUSE (1) OF THIS SECTION 10(b) AND TO SERVICE OF PROCESS UPON THEM IN ACCORDANCE WITH THE RULES AND STATUTES GOVERNING SERVICE OF PROCESS; (3) AGREE TO WAIVE TO THE FULL EXTENT PERMITTED BY LAW ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH LITIGATION, PROCEEDING OR ACTION IN ANY SUCH COURT OR THAT ANY SUCH LITIGATION, PROCEEDING OR ACTION WAS BROUGHT IN ANY INCONVENIENT FORUM; (4) AGREE TO WAIVE ANY RIGHTS TO A JURY TRIAL TO RESOLVE ANY DISPUTES OR CLAIMS RELATING TO THIS AGREEMENT; (5) AGREE TO SERVICE OF PROCESS IN ANY LEGAL PROCEEDING BY MAILING OF COPIES THEREOF TO SUCH PARTY AT ITS ADDRESS SET FORTH HEREIN FOR COMMUNICATIONS TO SUCH PARTY; (6) AGREE THAT ANY SERVICE MADE AS PROVIDED HEREIN SHALL BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (7) AGREE THAT NOTHING HEREIN SHALL AFFECT THE RIGHTS OF ANY PARTY TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

Section 11. Notices.

Any notice, request, claim, demand, document and other communication hereunder to any party shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered personally or sent by facsimile, or by electronic mail, or first class mail, or by Federal Express or other similar courier or other similar means of communication, as follows:

 

10


  (a)

If to the Corporation, addressed as follows:

Allegro MicroSystems, Inc.

955 Perimeter Road

Manchester, New Hampshire, 03103

Attention: Ravi Vig, President and Chief Executive Officer

                Christopher Brown, General Counsel and Assistant Secretary

Email: [***]

 

  (b)

If to Sanken, addressed as follows:

Sanken Electric Co., Ltd.

3-6-3 Kitano Niiza-Shi

Saitama, 352-8666 JAPAN

Attention: President;

        General Manager of Administration Headquarters;

        Mr.Yoshihiro Suzuki

Facsimile: [***]

Email: [***]

 

  (c)

If to OEP, addressed as follows:

OEP SKNA

c/o One Equity Partners

510 Madison Avenue, 19th Floor

New York, NY 10022

Attn: Chip Schorr; Andrew Dunn

E-mail: [***]

with a copy (which copy shall not constitute notice) to:

Latham & Watkins LLP

885 Third Avenue

New York, New York 10022

Attn: Thomas Malone; Jonathan Solomon

Facsimile: [***]

E-mail: [***]

or, in each case, to such other address or email address as such party may designate in writing to each party by written notice given in the manner specified herein. All such communications shall be deemed to have been given, delivered or made when so delivered by hand or sent by facsimile (with confirmed transmission), on the next business day if sent by overnight courier service (with confirmed delivery) or when received if sent by first class mail, or in the case of notice by electronic mail, when the relevant email enters the recipient’s server.

Section 12. Assignment; Aggregation of Shares.

Except as otherwise provided herein, all of the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the respective successors and permitted assigns of the parties hereto. This Agreement may not be assigned (by operation of law or otherwise) without the express prior written consent of the other parties hereto, and any attempted assignment, without such consents, will be null and void; provided, however, that each of the Stockholders

 

11


is permitted to assign this Agreement to its respective Affiliates in connection with a transfer of the Common Stock to such Affiliate. In furtherance of the foregoing, each of the Stockholders shall cause any of its Affiliates that obtains any shares of Common Stock to become a party to this Agreement upon obtaining such shares. For the avoidance of doubt, for purposes of (a) determining whether any party meets any threshold contained herein which is based on ownership of shares of Common Stock or (b) any provisions that require the parties hereto to vote or take any other actions with respect to any shares of Common Stock, such determinations or provisions shall be deemed to include all shares of Common Stock held by any Affiliate of any Stockholder that becomes party to this Agreement pursuant to this Section 12; provided, however, that for purposes hereof, in no event shall (x) beneficial ownership of shares of Common Stock of one party hereto be counted towards the beneficial ownership of shares of Common Stock of any other party hereto solely as a result of such parties being in the same “group” (as defined in the Exchange Act) or being party to this Agreement and (y) any party hereto by considered an Affiliate of any other party hereto solely by virtue of being in the same “group” (as defined in the Exchange Act) or being party to this Agreement.

Section 13. Amendment and Modification; Waiver of Compliance.

This Agreement may not be amended, modified, altered or supplemented except by means of a written instrument executed on behalf of each of the Corporation and each Stockholder. Except as otherwise provided in this Agreement, any failure of any of the parties to comply with any obligation, covenant, agreement or condition herein may be waived by the party or parties entitled to the benefits thereof only by a written instrument signed by the party or parties granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

Section 14. Waiver.

No failure on the part of either party hereto to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of either party hereto in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver thereof; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy.

Section 15. Severability.

If any provision of this Agreement, or the application of such provision to any Person or circumstance or in any jurisdiction, shall be held to be invalid or unenforceable to any extent, (i) the remainder of this Agreement shall not be affected thereby, and each other provision hereof shall be valid and enforceable to the fullest extent permitted by law, (ii) as to such Person or circumstance or in such jurisdiction such provision shall be reformed to be valid and enforceable to the fullest extent permitted by law and (iii) the application of such provision to other Persons or circumstances or in other jurisdictions shall not be affected thereby.

Section 16. Counterparts.

This Agreement may be executed in any number of counterparts and signatures may be delivered by facsimile, each of which may be executed by less than all parties, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.

 

12


Section 17. Further Assurances.

At any time or from time to time after the date hereof, the parties hereto agree to cooperate with each other, and at the request of any other party, to execute and deliver any further instruments or documents and to take all such further action as any other party may reasonably request in order to evidence or effectuate the provisions of this Agreement and to otherwise carry out the intent of the parties hereunder.

Section 18. Titles and Subtitles.

The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

Section 19. Representations and Warranties.

(a) Each Stockholder and each Person who becomes a party to this Agreement after the date hereof, severally and not jointly and solely with respect to itself, represents and warrants to the Corporation as of the time such party becomes a party to this Agreement that (a) if applicable, it is duly authorized to execute, deliver and perform this Agreement; (b) this Agreement has been duly executed by such party and is a valid and binding agreement of such party, enforceable against such party in accordance with its terms; and (c) the execution, delivery and performance by such party of this Agreement does not violate or conflict with or result in a breach of or constitute (or with notice or lapse of time or both constitute) a default under any agreement to which such party is a party or, if applicable, the organizational documents of such party.

(b) The Corporation represents and warrants to each other party hereto that (a) the Corporation is duly authorized to execute, deliver and perform this Agreement; (b) this Agreement has been duly authorized, executed and delivered by the Corporation and is a valid and binding agreement of the Corporation, enforceable against the Corporation in accordance with its terms; and (c) the execution, delivery and performance by the Corporation of this Agreement does not violate or conflict with or result in a breach by the Corporation of or constitute (or with notice or lapse of time or both constitute) a default by the Corporation under the Charter or Bylaws, any existing applicable law, rule, regulation, judgment, order, or decree of any governmental authority exercising any statutory or regulatory authority of any of the foregoing, domestic or foreign, having jurisdiction over the Corporation or any of its Subsidiaries or any of their respective properties or assets, or any agreement or instrument to which the Corporation or any of its Subsidiaries is a party or by which the Corporation or any of its Subsidiaries or any of their respective properties or assets may be bound.

Section 20. No Strict Construction.

This Agreement shall be deemed to be collectively prepared by the parties hereto, and no ambiguity herein shall be construed for or against any party based upon the identity of the author of this Agreement or any provision hereof.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

13


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the day and year first above written.

 

ALLEGRO MICROSYSTEMS, INC.
By:  

/s/ Ravi Vig

Name:   Ravi Vig
Title:  

[Signature Page to Stockholders Agreement]


OEP SKNA, L.P.
By:  

/s/ Paul Carl Schorr IV

Name:   Paul Carl Schorr IV
Title:  
SANKEN ELECTRIC CO., LTD
By:  

/s/ Yoshihiro Suzuki

Name:   Yoshihiro Suzuki
Title:  

[Signature Page to Stockholders Agreement]

EX-10.5

Exhibit 10.5

[XXX] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

WAFER FOUNDRY AGREEMENT

This Wafer Foundry Agreement (“Agreement”) is made and entered into this 12th day of April 2013, (the “Effective Date”) by and between Allegro MicroSystems, LLC, a limited liability company duly organized and existing under the laws of the State of Delaware, (“Allegro”), and Polar Semiconductor, LLC, a limited liability company duly organized and existing under the laws of the State of Delaware (“PSL”). PSL and Allegro are sometimes referred to herein individually as a “Party” and collectively as the “Parties”.

Witnesseth:

WHEREAS, Allegro wishes to purchase certain semiconductor wafers; and

WHEREAS, PSL wishes to manufacture and sell such semiconductor wafers to Allegro; and

WHEREAS, the Parties wish to set forth their respective rights and obligations with respect to the purchase and sale of such semiconductor wafers; and

WHEREAS, Allegro desires PSL to use certain technology and intellectual property rights owned or otherwise controlled by Allegro for the purpose of manufacturing semiconductor wafers in accordance with this Agreement, and in furtherance thereof, Allegro desires to grant to PSL a non-exclusive license to use such technology and intellectual property rights for such purpose in accordance with this Agreement.

NOW, THEREFORE, in consideration of the mutual promises made herein, the Parties hereto agree as follows:

Definitions:

As used in this Agreement, the following terms will have the following respective meanings:

 

A)

Wafers” means the semiconductor Wafers for Device Types, fabricated by PSL using the process technologies listed in Appendix A. Wafers will include Engineering Wafers, Production Wafers, and Process Qualification Wafers, as defined below.

 

B)

Device Type” will mean any of the various Allegro integrated circuit devices specified by Allegro.

 

C)

Process Qualification Wafers” or “PQW” means Wafers manufactured for the purposes of qualifying a new or changed Wafer manufacturing process, in accordance with Section 2.1 of this Agreement.

 

D)

Engineering Wafers” will mean any Wafers manufactured with unverified masks or requiring process splits for product characterization based on qualified processes, as described in Section 2.2 of this Agreement.

 

E)

“Days. day or days” will mean calendar days unless stated otherwise.


F)

Production Wafers” will mean those Wafers manufactured at PSL after successful Mass Production Wafer Approval, as referenced in Appendix B.

 

G)

“Allegro Wafer Manufacturing Technology” or “Allegro WMT” means, from time to time during the term of this Agreement, those certain processes and related technical information, whether or not patentable, then owned or controlled by Allegro, necessary for manufacturing Wafers, and listed in Appendix K attached hereto, as such Appendix may from time to time, during the term of this Agreement, be amended by Allegro in its sole and absolute discretion in order for PSL to fulfill its obligations hereunder. In no event shall Allegro WMT be deemed to include any process or technical information previously known by PSL prior to its receipt from Allegro, received from another party, becomes part of the public domain, or is independently developed by PSL.

 

H)

“Allegro WMT Documentation” means, from time to time during the term of this Agreement, all documents and other manifestations, in any form whatsoever (including, without limitation, Allegro WMT Production Records, operating procedures, masks, reticles, and the like) that describe, memorialize or otherwise make manifest the processes or other inventions comprising the Allegro WMT and the use thereof by PSL.

 

I)

“Allegro WMT Production Records” means all production records, data, analyses, and the like generated by PSL in the course of manufacturing Wafers.

 

J)

“Allegro Intellectual Property Rights” means, from time to time during the term of this Agreement, all right, title and interest in, to and under the Allegro WMT then owned or otherwise controlled by Allegro.

 

K)

“PSL Bloomington Wafer Fab Facility” means that certain facility owned by PSL and located at 2800 East Old Shakopee Road, Bloomington, Minnesota.

 

L)

“PSL Wafer Manufacturing Technology” or “PSL WMT” means, from time to time during the term of this Agreement, those certain processes and related technical information, whether or not patentable, then owned or controlled by PSL, used by PSL in manufacturing Wafers, and listed in Appendix K, attached hereto, as such Appendix shall from time-to-time during the term of this Agreement be amended in order to reflect the manufacturing processes or other inventions then being used by PSL to fulfill its obligations under this Agreement. It is further understood and agreed to by the Parties that technical information, documentation and intellectual property rights related to PSL’s [XXX] process shall not be included within PSL WMT or PSL Intellectual Property Rights.

 

M)

“PSL WMT Documentation” means, from time to time during the term of this Agreement, all documents and other manifestations, in any form whatsoever (including, without limitation, operating procedures, masks, reticles, and the like) that describe, memorialize or otherwise make manifest the processes or other inventions comprising the PSL WMT and the use thereof by PSL.

 

N)

“PSL Intellectual Property Rights” means, from time to time during the term of this Agreement, all right, title and interest in, to and under the PSL Wafer Manufacturing Patents and the PSL WMT then owned or otherwise controlled by PSL. It is further understood and agreed to by the Parties that technical information, documentation and intellectual property rights related to PSL’s [XXX] process shall not be included within PSL WMT or PSL Intellectual Property Rights.


O)

written” or “writing” includes email or other electronic documents.

Section 1.     Scope and Grant of License:

 

1.1

Subject to the terms of this Agreement, PSL will fabricate certain Wafers ordered by Allegro, and PSLL will deliver and sell such Wafers to Allegro.

 

1.2

This Agreement does not constitute a purchase order or release for such services. PSL will not undertake any expenses or other acts on Allegro’s behalf before receiving and agreeing to an actual purchase order or other written authorization from Allegro.

 

1.3

Subject to the terms and conditions set forth in this Agreement, Allegro grants to PSL, and PSL accepts, a non-exclusive, royalty-free license under the Allegro Intellectual Property Rights, limited in accordance with the terms and conditions of this Agreement, to use the manufacturing processes and other inventions comprising the Allegro WMT and the Allegro WMT Documentation in order to make the Wafers in compliance with PSL’s obligations under this Agreement or such other uses as the Parties may agree to in writing. Such license shall be limited to the manufacture of Wafers by PSL in the PSL Bloomington Wafer Fab Facility (or such other facility operated or subcontracted by PSL and to which Allegro agrees in writing in its sole and absolute discretion), shall not be sublicensed or otherwise transferred by PSL to any third party, and shall be subject to revocation, in whole or in part, by Allegro at any time in Allegro’s sole and absolute discretion, and in the event of such revocation, PSL shall cease any further use of such portion or all, as specified by Allegro, of such manufacturing processes, other inventions and Allegro WMT.

 

  1.3.1

The license granted by Allegro to PSL, under this Section 1 of this Agreement, shall terminate upon the expiration or termination of this Agreement.

 

  1.3.2

Upon the termination of the license granted by Allegro to PSL, in this Section 1 of this Agreement, PSL shall promptly return to Allegro any and all Allegro WMT Documentation and, if requested in writing by Allegro, PSL shall certify that all Allegro WMT has been returned to Allegro.

 

  1.3.3

Allegro shall have the right, upon reasonable notice to PSL, during the term of this Agreement, during reasonable times to inspect and copy the Allegro WMT Documentation. Documentation and information received by Allegro from PSL in this manner shall be used solely by Allegro to manufacture Wafers during a force majeure condition or if a default event has occurred, unless otherwise agreed to in writing by PSL and Allegro.

 

  1.3.4

PSL agrees at all times during the term of this Agreement to maintain the Allegro WMT Production Records in a secure manner at least as rigorous as it maintains its own information of a similar nature and consistent with PSL’s implementation of the requirements as set forth in the TS 16949 specifications.

 

  1.3.5

PSL agrees at all times during the term of this Agreement to maintain the PSL WMT Documentation in a secure manner at least as rigorous as PSL’s most important documents and consistent with its implementation of the requirements as set forth in the TS 16949 specifications.


Section 2.     Wafer Fabrication:

PSL will fabricate all Wafers at its Bloomington, Minnesota facility, using the process technologies stated in Appendix A.

 

2.1

PSL will provide Allegro with PQW or qualification reports to establish wafer fabrication processes with the following conditions:

 

  2.1.1

Wafer lot sizes will be as specified in Appendix D;

 

  2.1.2

Split Wafer lots for PQW will be mutually agreed upon by Allegro and PSL;

 

  2.1.3

PQW processed to standard conditions shall meet optical and mutually agreed upon electrical specification(s);

 

  2.1.4

PQW not processed to standard conditions will meet optical and mutually agreed upon electrical specification(s);

 

  2.1.5

Allegro acknowledges that the sale of all PQW not processed to standard conditions, but processed correctly within practical limits according to the mutually agreed upon process flow, will be made “AS IS” and with all faults and without warranties, either express or implied, except as provided in Section 2.1.4;

 

  2.1.6

Future Wafer processes, including modifications to current Wafer processes, that are developed by PSL may be added to this Agreement by mutual consent;

 

  2.1.7

PSL may subcontract various wafer processes at an outside subcontractor subject to Allegro’s prior written consent;

 

  2.1.8

PSL will not transfer Allegro product from one fabrication facility to another regardless of the process or technology being qualified at another fab without Allegro’s prior written consent;

 

  2.1.9

Subject to Allegro’s prior written consent, PSL may terminate the use of a Wafer process at the PSL Fab. At least [XXX] prior to the date of the discontinuance of any process, PSL will provide Allegro with written notice of its intent to terminate such Wafer process and will cooperate with Allegro on a transition plan that allows Allegro to meet all of Allegro’s contractual obligations with Allegro’s customers that provides Allegro’s customer with a maximum supply of [XXX] of inventory. PSL will also reimburse Allegro for all expenses incurred to redesign and requal affected devices independent of whether the replacement design is manufactured at PSL.

 

2.2

PSL will accept Allegro’s purchase orders for Engineering Wafers for Device Types, based on qualified processes with the following conditions:

 

  2.2.1

Wafer lot sizes will be as specified in Appendix D;

 

  2.2.2

Split Wafer lots for Engineering Wafers will be mutually agreed upon by Allegro and PSL;


  2.2.3

Special instructions for Engineering Wafers will be documented in Allegro purchase orders;

 

  2.2.4

Engineering Wafers processed to PSL’s standard process specifications will meet optical and mutually agreed upon electrical specification(s);

 

  2.2.5

Engineering Wafers not processed to standard conditions will meet optical and mutually agreed upon electrical specification(s); and

 

  2.2.6

Allegro acknowledges that the purchase of all Engineering Wafers that meet agreed upon Wafer Evaluation Specifications, according to the mutually agreed upon process flow, will be made “AS IS” and with all faults and without warranties, either express or implied, except as provided in Section 2.2.5.

 

2.3

PSL will accept purchase orders for Production Wafers with the following conditions:

 

  2.3.1

Wafer lot sizes will be as specified in Appendix D; and

 

  2.3.2

Both Parties have determined that the Device Type has been successfully approved for Mass Production Wafers, as set forth in Appendix B.

 

2.4

Upon acceptance, PSL will fabricate Production Wafers ordered by Allegro per the specifications referred to in Appendix A. These specifications may be changed only upon mutual agreement in writing by both Parties. PSL will comply with all the requirements set forth in “Allegro’s Quality Plan”, as set forth in Appendix F.

 

2.5

PSL will make available PSL’s wafer evaluation and electrical data for the wafer technologies, as set forth in Appendix A, to Allegro through electronic means for each lot of Wafers delivered to Allegro prior to the shipment of the Wafers. PSL will also supply relevant reliability, optical and process control information, as set forth in Appendix E and Appendix F upon Allegro’s request.

 

2.6

PSL will follow Allegro’s change procedures as set forth in Appendix E and Appendix F with respect to processes utilized to manufacture Allegro Wafers.

 

2.7

For any lots not meeting the relevant criteria, as specified above, PSL will provide a Non-Conforming Material Permission (“NMP”) sheet electronically to the Director of Manufacturing Engineering, along with all applicable data, for Allegro’s review. If the material is determined by Allegro to be acceptable, Allegro will complete the NMP and PSL will deliver the acceptable Wafers to Allegro.

Section 3.     Forecast, Purchase Orders, Deliveries, Delivery Performance, Expedited Delivery:

 

3.1

Allegro will provide, by the 15th of each calendar month, a six (6) month, rolling forecast, for months subsequent to the current month, of the total Production Wafers required, by process technology. The forecast will be used for planning purposes only and does not represent a commitment by Allegro to make any purchases beyond as agreed to in Section 6.2.

 

3.2

Allegro will issue purchase orders for each of the following: (1) Engineering Wafers, (2) Production Wafers, and (3) Process Qualification Wafers.


3.3

Allegro’s purchase requirements, with requested delivery dates, will be submitted weekly via a purchase order, and/or a purchase order release, and will result in a binding purchase obligation by Allegro to PSL, subject to cancellation charges, as set for in Section 3.5. PSL will acknowledge and provide a scheduled ship date in writing for each purchase requirement within [XXX]. Cycle-time requirements will be as defined in Appendix G. Any changes to Appendix G will require the Parties written mutual agreement. PSL will commence Production Wafer starts within ten (10) business days following the acknowledgment to the extent accepted. PSL will commence Engineering Wafer starts within three (3) business days following the acknowledgment to the extent accepted.

 

3.4

PSL will provide Allegro with real-time, on-line access to Allegro Work in Progress (WIP) and delivery information. PSL will promptly notify Allegro of any delivery deviations beyond the tolerance specified in Sections 3.6 and 3.7.

 

3.5

Purchase orders for Wafers are cancelable. Purchase Order cancellations for Wafers will incur charges (Wafer Termination Charges) for WIP, according to the following schedule:

 

     Process Technologies
(Excluding [XXX])
     [XXX]  

Before Wafer Scribe

     [XXX]% of Wafer Price        [XXX]% of Wafer Price  

Prior to Device Mask

     [XXX]% of Wafer Price        [XXX]% of Wafer Price  

Subsequent to Device Mask and Prior to Resistor Mask

     [XXX]% of Wafer Price        [XXX]% of Wafer Price  

Subsequent to Resistor Mask and Prior to Contact Mask

     [XXX]% of Wafer Price        [XXX]% of Wafer Price  

Subsequent to Contact Mask

     [XXX]% of Wafer Price        [XXX]% of Wafer Price  

All Wafer lots on hold, in excess of [XXX] days, will be reviewed by Allegro and PSL. This review will result in a formal determination of whether the lots should be terminated, finished or remain on hold. After [XXX] days of a Wafer lot being placed on hold, and provided that PSL notifies Allegro’s Director of Planning in writing within [XXX] business days, Wafers can be terminated by PSL and termination charges, as set forth in this Section 3.5, are applied.

 

3.6

Delivery Performance. Delivery performance goal is [XXX]% on-time delivery for all purchase orders issued and accepted by PSL for a specified time period, as set forth in Allegro’s purchase order and/or release ([XXX] days early, [XXX] day late to the specified delivery date). Failure to meet [XXX]% on time delivery for [XXX] consecutive weeks will require PSL to submit a corrective action plan and provide up to [XXX] to Allegro at no charge until the delivery performance improves and meets [XXX]% on time delivery for [XXX] consecutive weeks.


3.7

Expedited Delivery. PSL agrees to provide expedited delivery of 6” and 8” Production Wafer lots as follows:

 

6” Hot Lots * -    Up to [XXX] actively running lots at any given time.
6” Nuclear Lots **-    Up to [XXX] actively running lot at any given time.

 

•6”

Hot Lots are defined as lots with a fab process technology lead time not to exceed a cycle time of [XXX] days ([XXX] hours) per mask level for the PSL interval (maximum of [XXX] Wafers per lot).

 

**6”

Nuclear Lots are defined as lots with a fab process technology lead-time not to exceed a cycle time of [XXX] day ([XXX] hours) per mask level for the PSL interval (maximum of [XXX] Wafers per lot).

 

8” Hot Lots * -    Up to [XXX] actively running lots at any given time.
8” Nuclear Lots **-    Up to [XXX] actively running lot at any given time.

 

•8”

Hot Lots are defined as lots with a fab process technology lead time not to exceed a cycle time of [XXX] days ([XXX] hours) per mask level for the PSL interval (maximum of [XXX] Wafers per lot).

 

**8”

Nuclear Lots are defined as lots with a fab process technology lead-time not to exceed a cycle time of [XXX] days ([XXX] hours) per mask level for the PSL interval (maximum of [XXX] Wafers per lot)

Section 4.     Facility Visits, Audits, and Operational Reviews:

 

4.1

Facility visits and audits (by customers and/or Allegro) are permitted, for any reason or purpose, on a reasonable basis and any such visits and audits will be conducted, upon Allegro providing reasonable notice to PSL, during PSL’s regular business hours and without undue disruption of PSL’s business. Allegro, at its discretion, may schedule operational reviews with PSL on a quarterly basis.

Section 5.    Procedure for Wafer Return and Credit:

 

5.1

Allegro will notify PSL in writing of its reasons for rejection of Production Wafers and provide product information and engineering data within [XXX] days following Allegro’s receipt of such Production Wafers. Such data will include, as applicable:

 

  5.1.1

Optical and electrical data from Production Wafers; and/or

 

  5.1.2

Yield data for Production Wafers failing to meet the probe yield target per device, as set forth in Appendix H.

 

  5.1.3

Product information will include product name, lot number, quantity, purchase order number, and date of receipt at Allegro.

 

  5.1.4

If any Production Wafers pass the acceptance criteria, specified in Sections 5.1.1 and 5.1.2, but are rejected by Allegro, or Allegro’s customer, at a subsequent date still within the warranty period, as specified in Section 8, due to the fact that the failure is process related, Allegro will notify PSL in writing without undue delay.


5.2

Allegro will notify PSL in writing its reasons for rejection of Engineering Wafers and provide product information and engineering data within [XXX] days following Allegro’s receipt of such Engineering Wafers. Such data will include, as applicable:

 

  5.2.1

Optical and electrical data product information will include product name, lot number, quantity, purchase order number, and date of receipt at Allegro.

 

5.3

PSL shall provide Allegro an accept or reject response within [XXX] days following PSL’s receipt of supporting information and data as stated in Section 5.1 and 5.2. If no written response is provided by PSL within [XXX] days of its receipt of all data and product required to make a determination, the rejection shall be deemed as valid and accepted by PSL. Formal Return Material Authorizations (“RMA”) shall be issued by PSL within [XXX] business days. For Production Wafers failing to meet the probe yield target per device, as set forth in Appendix H. If a rejection submitted by Allegro is not accepted by PSL and challenged by Allegro, resolution will be addressed by the Allegro and PSL Directors of Quality or their designees.

Section 6.    Wafer/Mask Price, Payment, and Invoices:

 

6.1

The prices of Production Wafers, Engineering Wafers and Masks will be established and fixed for [XXX] as mutually agreed to in writing by the Parties. All prices are on an ExWorks Bloomington, Minnesota basis for the term of this Agreement, except for replacement Wafers for which PSL will pay all applicable shipping charges. All prices stated in this Agreement are in U.S. Dollars. All prices stated in this Agreement are exclusive of all applicable state and local sales, use, and other similar taxes. Unless Allegro advises PSL in writing, reasonably acceptable to PSL that an exemption applies, Allegro will pay all applicable state and local sales, use and other similar taxes. Taxes payable by Allegro will be billed as separate items.

 

6.2

Allegro and PSL shall establish a six month binding forecast as well as the corresponding Wafer and Mask pricing associated to this forecast on a fiscal half year basis. The forecast and pricing will be finalized no later than [XXX] days prior to the start of the new fiscal half year period (April and October). Wafer pricing will be established based on the forecasted volumes. Mutually agreed upon pricing adjustments will be established during the price setting sessions for increases or decreases beyond [XXX] of the six month forecast.

 

6.3

PSL will issue an invoice with each shipment, and the date on this invoice will be no earlier than the shipment date, with the shipment date referenced on the invoice. The invoice will include the purchase order number, purchase order line number, purchase order line description, purchase order quantity, purchase order unit of measure, and purchase order unit price.


6.4

All payments due PSL under this Agreement will be delivered to PSL at the address shown on its invoice, net [XXX] and Allegro reserves the right to any credit setoff. Notwithstanding the foregoing, Allegro will not be obligated to pay invoices for Wafers for which an RMA number has been issued or for which an RMA request is pending.

 

6.5

Allegro will bear all taxes, duties, levies and similar charges (and any related interest and penalties), however designated, in connection with the existence of this Agreement, or the transactions contemplated thereby, other than income taxes imposed upon PSL by any governmental authority in any jurisdiction.

Section 7.     Title and Risk of Loss:

 

7.1

Title and risk of loss and damage to all Wafers purchased by Allegro will vest in Allegro when the Wafers are placed by PSL in the possession of a carrier at the F.O.B. point of origin, freight collect, with freight charges being billed directly by the carrier to Allegro. PSL will pack and ship Wafers, as set forth in Appendix I.

Section 8.     Warranty/Liability:

 

8.1

Warranty/Liability

For a period of [XXX] from the receipt of the Production Wafers by Allegro, PSL warrants that all Production Wafers shall be (i) free from defects in manufacturing; and (ii) conform to the specifications, and Wafer and electrical specifications, stated in Appendix A.

8.1.1 In the event that PSL and Allegro disagree on the cause and/or ownership of nonconformities, PSL and Allegro shall attempt to resolve their differences by referring the matter to their respective heads of operations or their designees for resolution. If the matter remains unresolved, PSL and Allegro may use a mutually agreed third party technical consultant to assist in resolving the matter. The cost of utilizing technical consultant(s) shall be borne equally by PSL and Allegro.

8.1.2 Cost of Warranty/Non Compliance. Subject to Section 8.1.3 in this Agreement, PSL shall reimburse Allegro for Allegro’s reasonable and verifiable costs incurred for product recalls, and the sorting, inspection, replacement, repair, disposal and/or re-shipment of defective products resulting from the nonconformity of any Wafer(s).

8.1.3 The maximum liability of PSL pursuant to this Agreement during any [XXX] month period shall be limited to [XXX] of the previous [XXX] months overall cumulated sales between PSL and Allegro or [XXX] Dollars whichever is greater. All liability costs must be verified and mutually agreed on by PSL and Allegro and must exceed a minimum of [XXX] Dollars before a claim for liability is made by Allegro.

8.1.4 The limimitions of liability in Section 8.1.3 shall not apply to liability for intellectual property rights infringement indemnification.

8.1.5 Except as otherwise stated in this Agreement, neither Party shall be liable to the other Party, whether in contract, in tort (including negligence), under any warranty or otherwise for any special, punitive, indirect, incidental, consequential loss or damage or loss of profits or revenues resulting from, arising out of or in connection with this Agreement.


8.2

Remedies. In addition to any other remedies in this Agreement, Production Wafers failing to conform to any warranty during the relevant warranty period with prompt written notification to PSL, following the discovery of such failure, PSL will, at Allegro’s sole option, either [XXX], or provide to Allegro [XXX], as applicable. The foregoing notice from Allegro will include a description of the basis for Allegro’s warranty claim, lot number, and original date received by Allegro. To the extent practicable (for example, provided that the Wafers have not been shipped to a customer), Allegro will return such defective Production Wafers to PSL, and, if such defective Wafers have already been packaged, PSL will [XXX] for such Wafers. PSL will return any Production Wafers replaced under any warranty to Allegro, transportation prepaid.

 

8.3

LIMITATIONS. THIS WARRANTY IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WHICH ARE HEREBY EXPRESSLY DISCLAIMED.

Section 9.    Intellectual Property:

 

9.1

PSL agrees to and shall, at its option, either negotiate and/or defend all claims, suits or proceedings brought against Allegro if the manufacturing of any product supplied hereunder that uses any PSL originated unit process, manufacturing process, or technology constitutes an infringement of any patent, provided PSL is notified promptly in writing and given complete authority and information required for the defense or settlement of same. PSL shall pay all judgments, decrees, compromises, costs (including attorneys fees) and expenses arising from any charge or infringement against Allegro, but PSL shall not be liable for compromises incurred or made by Allegro without PSL’s prior written consent. Where PSL’s compliance with Allegro’s designated designs or specifications furnished by Allegro results in an infringement, Allegro shall defend, indemnify and hold PSL harmless against any claim of infringement of any patent.

 

9.2

The foregoing Section 9.1 state the entire liability of the Parties for any patent, trademark, copyright, or other proprietary right infringement.

Section 10.    Identification:

 

10.1

PSL will not, without Allegro’s prior written consent, engage in advertising, promotion or publicity related to this Agreement, or make public use of any Identification (as hereinafter defined) in any circumstances related to this Agreement. As used in this Agreement, the term “Identification” means any copy or semblance of any trade name, trademark, service mark, insignia, symbol, logo, or any other product, service or organization designation, or any specification or drawing of Allegro or its respective affiliates, or evidence of inspection by or for any of them.

 

10.2

PSL will remove or destroy any Identification prior to any use or disposition of any Wafers rejected or not purchased by Allegro, and, will indemnify, defend (at Allegro’s request) and


  save harmless Allegro and its respective affiliates and each of their officers, directors and employees from and against any losses, damages, claims, demands, suits, liabilities, fines, penalties and expenses (including reasonable attorneys’ fees) arising out of the PSL’s failure to so remove or obliterate Identification.

Section 11.    Protection of Proprietary Information:

 

11.1

The Non-Disclosure Agreement between PSL and Allegro having an effective date of October 25, 2005, is hereby incorporated in its entirety into this Agreement.

Section 12.    Term, Termination of Agreement and Bankruptcy:

 

12.1

Term; The term of this Agreement will commence on the date first written above and continue through February 12, 2018, unless terminated earlier, pursuant to Sections 12.2, 12.3, or 12.4.

 

12.2

Immediate Termination Events. Either Party may terminate or suspend this Agreement immediately and without liability upon written notice to the other Party, if any one of the following events occurs:

 

  (a)

The other Party files a voluntary petition in bankruptcy or otherwise seeks protection under any law for the protection of debtors;

 

  (b)

A proceeding is instituted against the other Party under any provision of any bankruptcy law, which is not dismissed within ninety (90) days;

 

  (c)

The other Party is adjudged bankrupt;

 

  (d)

A court assumes jurisdiction of all or a substantial portion of the assets of the other Party under a reorganization law;

 

  (e)

A trustee or receiver is appointed by a court for all or a substantial portion of the assets of the other Party;

 

  (f)

The other Party becomes insolvent or ceases or suspends all or substantially all of its business; or

 

  (g)

The other Party makes an assignment of the majority of its assets for the benefit of creditors.

 

12.3

Termination for Breach. In case either Party breaches or defaults in the effective performance of any of the terms, conditions, covenants, or agreements contained in this Agreement, then the Parties will first attempt in good faith to resolve such breach. [XXX] after delivery of written notice to the breaching Party that a breach, described in this Section 12.3 has occurred, the non-breaching Party may terminate this Agreement without liability for such termination; provided, that if the breaching Party has begun substantial corrective action to remedy the breach, the non-breaching Party may only terminate this Agreement without liability for such termination [XXX] after delivery of its written notice to the breaching Party, if such breach remains uncured as of such date; provided, however, that if allowing [XXX] for the breaching Party to cure the breach would cause irreparable harm to the business prospects of the


  non-breaching Party, notwithstanding any dispute resolution provisions herein to the contrary, temporary or preliminary injunctive relief in a court of competent jurisdiction will be appropriate to prevent either an initial or continuing breach in addition to any other relief to which the non-breaching Party may be entitled.

 

12.4

In case that PSL terminates this Agreement, pursuant to Section 12.3, Allegro will be liable for any and all Wafer finished goods and Work-in-Process held by PSL at the time of termination, and resulting from an order issued by Allegro hereunder. In case that Allegro terminates this Agreement, pursuant to Section 12.3, Allegro may cancel any or all orders without any liability to PSL.

 

12.5

Notwithstanding any provision of this Agreement, subject to its compliance with the following, PSL will have the right to terminate this Agreement in the event it ceases operations at its Bloomington, Minnesota facility:

 

  12.5.1

PSL will give Allegro at least twenty-four (24) months prior written notice prior to the date PSL ceases operations at its Bloomington, Minnesota foundry.

 

  12.5.2

In addition to its rights to purchase Wafers under this Agreement, Allegro will have the option during such twenty-four (24) month period, described in 12.5.1, to place, and PSL will fulfill regardless of any Wafer production capacity commitment, as set forth in Appendix D, a “life-time” purchase order for Wafers, provided that such “life time” purchase order is issued by Allegro at least [XXX] prior to the closing of the facility, with deliveries not to extend beyond [XXX] from planned closure.

 

  12.5.3

PSL will bear all costs (including all Allegro’s costs) associated with the product and process qualification of, and the reticle transfer to, a new fabrication line (including within the Bloomington facility) for the manufacture of the Wafers where the transfer is a PSL initiated requirement.

 

12.6

In the event that PSL becomes the subject of voluntary, or involuntary, petition in bankruptcy, or any proceeding related to insolvency or composition for the benefit of creditors, and such proceeding is not dismissed within [XXX], PSL agrees to grant Allegro the right to access the PSL WMT and a non-exclusive, worldwide, royalty-free license, with the right to grant sublicenses, to use the manufacturing processes comprising the PSL WMT in order to make, or have made, Wafers that PSL would have otherwise been obligated to manufacture and supply to Allegro in compliance with this Agreement, but for such bankruptcy, insolvency or composition for the benefit of creditors. Such license shall terminate upon the earlier of (i) such time that PSL emerges from any such bankruptcy or insolvency proceeding and (ii) such time that this Agreement would have otherwise terminated in accordance with its terms; upon any such termination, Allegro shall cease any further use of such manufacturing processes, other inventions and the PSL WMT. Such right of access to the PSL WMT and license shall be effected through PSL’s prompt provision to Allegro of complete and full disclosure to Allegro of all PSL WMT used to manufacture and supply Wafers to Allegro, including, without limitation, the PSL WMT Documentation, and any and all Allegro WMT Documentation then in the possession of PSL. Such full and complete disclosure of PSL’s WMT and delivery of the Allegro WMT Documentation will be provided to Allegro without delay. In the event PSL emerges from any such bankruptcy, or insolvency proceeding, the PSL WMT (including, without limitation, the PSL WMT Documentation) will be returned to PSL, and PSL will resume manufacture and supply of Wafers to Allegro, in accordance with the terms and conditions of this Agreement.


12.7

Survival of Obligations. The following Sections will survive any expiration, termination or cancellation of this Agreement, and the Parties will continue to be bound by the terms and conditions thereof: 8, 9, 10, 11, 12.4, 12.6, 15, 18, 19, 21, and 26.

Section 13.     Force Majeure:

 

13.1

Neither Party will be held responsible for any delay or failure in performance of any part of this Agreement, to the extent such delay or failure, is caused by fire, flood, explosion, war, embargo, government requirement, civil or military authority, act of God, act or omission of carriers, or other similar causes beyond its control and without the fault or negligence of the delayed or nonperforming Party or its subcontractors (“force majeure conditions”). Notwithstanding the foregoing, PSL’s liability for loss or damage to Allegro’s material in PSL’s possession or control will not be modified by this clause. If any force majeure condition occurs, the Party delayed or unable to perform will give immediate notice to the other Party, stating the nature of the force majeure condition and any action being taken to avoid or minimize its effect. The Party affected by the other’s delay or inability to perform may elect to: (1) suspend this Agreement or an order for the duration of the force majeure condition and (i) at its option buy, sell, obtain or furnish elsewhere material or services to be bought, sold, obtained or furnished under this Agreement or an order (unless such sale or furnishing is prohibited under this Agreement) and deduct from any commitment the quantity bought, sold, obtained or furnished or for which commitments have been made elsewhere and (ii) once the force majeure condition ceases, resume performance under this Agreement or order with an option to the affected Party to extend the period of this Agreement or an order up to the length of time the force majeure condition endured and/or (2) when the delay or nonperformance continues for a period of at least [XXX], terminate, at no charge, this Agreement or an order, or the part of it relating to material not already shipped, or services not already performed. Unless written notice is given within [XXX] after the affected Party is notified of the force majeure condition, (1) will be deemed selected.

In the event that force majeure conditions prevent PSL from manufacturing and supplying Wafers to Allegro, in accordance with this Agreement, for a period of [XXX], Allegro shall have the option to require PSL to promptly deliver to Allegro copies of all PSL WMT Documentation and Allegro WMT Documentation then in PSL’s possession and to grant to Allegro a license to use the PSL Wafer Manufacturing Technology to the extent necessary and sufficient for Allegro to make or have made, use or have used, sell or have sold, import or have imported, and otherwise commercialize Wafers for a period of time equal to the duration of the Force Majeure event preventing PSL’s performance.

Section 14.    Emergency Backup Plan:

 

14.1

Within [XXX] of the execution of this Agreement, PSL will furnish to Allegro, a written plan of action (an “Emergency Backup Plan”) that covers PSL’s plans on how it will continue to perform its obligations under this Agreement in case of an unforeseen catastrophe, including a force majeure condition, or any other condition in which PSL will be unable to produce and ship Wafers for [XXX] weeks. The Emergency Backup Plan will identify PSL’s secondary manufacturing location(s), if any, and include the estimated time for the implementation of such Emergency Backup Plan and production of Wafers.


Section 15.     Notices:

 

15.1

All notices, demands, or consents required or permitted hereunder will be in writing and will be delivered, delivered by e-mail, or sent by facsimile, or mailed to the respective Parties at the addresses set forth below, or at such other address as will have been given to the other Party, in writing for the purposes of this clause.

Such notices and other communications will be deemed effective upon the earliest to occur of:

 

  (a)

Actual delivery (e-mail, facsimile, hard copy),

 

  (b)

Five (5) days after mailing, addressed and postage prepaid, return receipt requested,

 

To Allegro:    Allegro MicroSystems, LLC
   115 Northeast Cutoff
   Worcester, MA 01606
   Attention: Vice President of Operations
   Phone: [***]
With a Copy to:    Allegro MicroSystems, LLC
   115 Northeast Cutoff
   Worcester, MA 01606
   Attention: General Counsel
   Phone: [***]
To PSL:    Polar Semiconductor, LLC
   2800 East Old Shakopee Road
   Bloomington, MN 55425
   Attn: Chief Operating Officer
   Phone: [***]

Section 16.     Waiver and Amendment:

 

16.1

Failure by either Party, at any time, to require performance by the other Party, or to claim a breach of any provision of this Agreement, will not be construed as a waiver of any right accruing under this Agreement, nor will it affect any subsequent breach or the effectiveness of this Agreement, or any part hereof, or prejudice either Party with respect to any subsequent action. A waiver of any right accruing to either Party, pursuant to this Agreement, will not be effective unless given in writing.

Section 17.     Assignment:

 

17.1

Neither Party will assign, transfer, or otherwise dispose of this Agreement in whole or in part, without the prior written consent of the other Party, and such consent will not be


  unreasonably withheld provided, however, that this Agreement may be assigned by either Party to any successor entity, whether by merger, consolidation, or acquisition of all or substantially all of the assets of such Party related to the performance of this Agreement. Upon the completion of such assignment, the assigning Party will promptly provide a written notice to the other Party to this Agreement.

Section 18.     Governing Law:

 

18.1

This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts except that its conflict of laws principles shall not be used.

Section 19.    Compliance with Laws; Environmental Compliance:

 

19.1

PSL, and all persons furnished by PSL, will comply at their own expense with all applicable federal, state and local laws, ordinances, regulations and codes, including those relating to the use of chlorofluorocarbons, and including the identification and procurement of required permits, certificates, licenses, insurance, consents and inspections in performance under this Agreement.

 

19.2

PSL agrees to meet the requirements associated with Environmental Compliance, as set forth in the attached Appendix J.

Section 20.     Severability:

 

20.1

In the event that any provision of this Agreement is found to be unlawful or otherwise unenforceable, such provision will be severed, and the entire Agreement will not fail on account thereof, the balance continuing in full force and effect, and the Parties will endeavor to replace the severed provision with a similar provision that is not unlawful or otherwise unenforceable.

Section 21.     Exports:

 

21.1

The Parties agree and stipulate that no Wafers, technical information, or other information furnished under this Agreement or any direct product thereof, will be exported or re-exported, directly or indirectly, to any destination restricted or prohibited by export regulations of the United States, without the authorization from the competent governmental authorities. Any successor provisions to the export regulations apply to all future export and re-export transactions and the requirements of this Section will survive indefinitely, including any termination of this Agreement. Should a Party to this Agreement be held to have breached any applicable export regulations, such Party will indemnify and hold harmless the other Party from any costs or damages actually incurred by the non-breaching Party, to the extent that such non-breaching Party is held not accountable for such breach by competent governmental authorities.

Section 22.     Headings:

 

22.1

The headings of the various sections of this Agreement have been inserted for convenience of reference only and will not be deemed to be a part of, or affect the interpretation of, any provision of this Agreement.


Section 23.    Counterparts:

 

23.1

This Agreement may be executed in any number of counterparts, and each such counterpart hereof will be deemed to be an original instrument, but all such counterparts together will constitute but one Agreement.

Section 24.     Communication and Representatives:

 

24.1

Throughout the term hereof, each Party agrees to designate in writing one of its employees to represent it in connection with day-to-day operations under this Agreement.

Section 25.    Rights of Non-Submitting Party to Comment (Public Disclosure):

 

25.1

The Parties to this Agreement shall consult with each other as to the form, substance and timing of any press release or other public disclosure related to this Agreement, or the transactions contemplated hereby, and no such press release or other public disclosure shall be made without the prior written consent of the other Party hereto, which consent shall not be unreasonably withheld or delayed. Each Party shall determine in its sole discretion whether such Party is required to file or otherwise submit this Agreement with, or to, any governmental authorities, including, without limitation, the U.S. Securities and Exchange Commission. If a Party (as the Submitting Party) determines that this Agreement is required to be so filed or submitted, then such Submitting Party shall with respect to such proposed filing or submission: (i) provide a copy of such filing or submission to the other Party (as the Non-Submitting Party) reasonably prior to its filing or submission, (ii) identify to the extent that the Submitting Party intends to request confidential treatment for any portion or portions of this Agreement, (iii) provide a reasonable amount of time for the Non-Submitting Party’s review of the filing or submission and such confidentiality request and any redactions comprising such intended request and (iv) give good faith consideration to the Non-Submitting Party’s comments and requests for any additional or different redactions.

Section 26     Integration:

 

26.1

This Agreement, and each Appendix, attached, sets forth the entire Agreement and understanding between the Parties, as to the subject matter hereof, and merges all prior discussions between them, and none of the Parties will be bound by any conditions, definitions, warranties, modifications, understandings or representations with respect to such subject matter other than as expressly provided herein, or as duly set forth on or subsequent to the effective date hereof in writing and signed by a proper and duly authorized representative of the Party to be bound thereby. This Agreement supersedes and replaces in its entirety the Agreement between Allegro MicroSystems, Inc. and PolarFab (presently PSL) dated January 29, 2001 and the agreement between PSL and Allegro dated August 1, 2007. This Agreement may be modified or amended as set forth in writing and signed by a duly authorized representative of each Party.

Section 27.     Relationship Between Parties:

 

27.1

Neither Party to this Agreement will have the power to bind the other by any guarantee or representation that it may give, or to incur any debts or liabilities in the name of or on behalf of the other Party. The Parties acknowledge and agree that nothing contained in this Agreement will be deemed or construed to constitute or create between the Parties hereto a partnership, association, joint venture or other agency.


Section 28.     No Implied Licenses:

 

28.1

No licenses are granted hereunder by implication, estoppel or otherwise. Each Party may make reasonable references by name to any other Party in its advertising material relative to Wafers, provided that the prior written consent of an authorized representative of the other Party has been obtained.

Section 29.     No Third-Party Beneficiaries:

 

29.1

No person not a Party to this Agreement will have any rights under this Agreement as a third-party beneficiary, or otherwise, other than persons entitled to indemnification as expressly set forth herein.

Section 30.     Dispute Resolution:

 

30.1

In the event of any dispute, claim, question, or disagreement arising from, or relating to this Agreement, the Parties hereto shall use their best efforts to settle the dispute, claim, question, or disagreement. To this effect, they shall consult and negotiate with each other in good faith and, recognizing their mutual interests, attempt to reach a just and equitable solution satisfactory to both Parties. If they do not reach such solution within a period of [XXX], then, upon notice by either Party to the other, all such disputes, claims, questions, or differences shall be finally settled by arbitration administered by the American Arbitration Association in accordance with the provisions of its Commercial Arbitration Rules. All aribitartion proceedings shall take place in Massachusetts or as otherwise mutually agreed to by the Parties. Judgment on the award rendered by the Arbitrator(s) may be entered in any court having jurisdiction thereof.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement, as of the Effective Date first above written.

 

Allegro MicroSystems, LLC
By:  

/s/ Dennis H. Fitzgerald

Name:   Dennis H. Fitzgerald
Title:   President & Chief Executive Officer
Polar Semiconductor, LLC
By:  

/s/ Yoshihiro Suzuki

Name:   Yoshihiro Suzuki
Title:   President & Chief Executive Officer


APPENDIX A

APPLICABLE SPECIFICATIONS

AND

WAFER EVALUATION ACCEPTANCE CRITERIA

[XXX]


APPENDIX B

MASS PRODUCTION WAFER

APPROVAL REQUIREMENTS AND PROCEDURES

[XXX]


APPENDIX C

INTENTIONALLY LEFT BLANK


APPENDIX D

WAFER LOT SIZES

 

Wafer Type

   # of Wafers Per Lot  

6” Engineering Wafers

     [XXX

6” Production Wafers

     [XXX

6” Process Qualification Wafers

     [XXX

Wafer Type

   # of Wafers Per Lot  

8” Engineering Wafers

     [XXX

8” Production Wafers

     [XXX

8” Process Qualification Wafers

     [XXX


APPENDIX E

RELIABILITY AND PROCESS CONTROL INFORMATION

[XXX]


APPENDIX F

ALLEGRO’S QUALITY PLAN

[XXX]


APPENDIX G

PSL CYCLE TIME BY WAFER TECHNOLOGY

[XXX]


APPENDIX H

PROBE SCRAP LIMITS

[XXX]


APPENDIX I

SHIPPING CRITERIA

All Wafers to be delivered to Allegro under this Agreement will be packed, marked, and shipped by PSL, [XXX], as outlined in the Quality Manual, and care for transportation of Wafers of a similar type. All Wafers will be accompanied by the following information, as appropriate: (i) purchase order number, (ii) Device Type, (iii) Allegro lot number, (iv) lot quantity and (v) any process information, to be mutually agreed upon in writing by both Parties. Items (i),(ii), (iii), and (iv) will be clearly marked on the outside of each Wafer cassette, shipping carton and reflected on the Packing Slip by PSL. Shipments are ExWorks, via an Allegro nominated carrier. PSL is the exporter of record for all export international shipments. PSL will make daily shipments via Federal Express Priority Overnight unless modified by Allegro. In the event of a return shipment, whereby a RMA # is issued to Allegro from PSL, all transportation costs (freight, insurance and liability) are [XXX].


APPENDIX K

ALLEGRO WAFER MANUFACTURING TECHNOLOGY

AND

PSL WAFER MANUFACTURING TECHNOLOGY

[XXX]

EX-10.9

[XXX] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

Exhibit 10.9

IC TECHNOLOGY DEVELOPMENT AGREEMENT

THIS IC TECHNOLOGY DEVELOPMENT AGREEMENT (Agreement”) is entered into as of May 28, 2009 by and among Polar Semiconductor, Inc., a Delaware corporation headquartered in Bloomington, Minnesota (“PSI”); Sanken Electric Co., Ltd., a Japanese corporation headquartered in Saitama, Japan (“Sanken”); and Allegro MicroSystems, Inc., a Delaware corporation headquartered in Worcester, Massachusetts (“Allegro”). Such parties are singularly referred to herein as a “Party” and collectively referred to as “Parties.”

WHEREAS, the Parties may, from time to time, cooperate in the development of new technology with the anticipation that such technology may be used by PSI to manufacture products for Sanken and Allegro; and

WHEREAS, the Parties wish to stipulate the terms and conditions that will apply to such technology development; and

WHEREAS, the Parties have entered into several prior agreements concerning technology development, and wish to integrate such agreements into a single agreement that will act as a successor to the prior agreements.

NOW, THEREFORE, the Parties hereby agree as follows:

1.     Development Activities. The Parties may, from time to time, agree upon certain technologies to be developed pursuant to this Agreement. In such case, the Parties will cooperate to establish an IC process road map and agree upon the process development and enhancement activities necessary to implement such road map (the “Development Activities”). The technology resulting from the Development Activities, together with derivatives thereof, is referred to herein as the “Technology.”

2.     Development Team. The Parties have established an IC Process Development Steering Committee (hereinafter the “Team”) to agree upon and monitor the Development Activities. The Team will be comprised of an equal number of members from each Party representing both the business and technology segments of each Party. Unless otherwise agreed by the Parties, the Team will not exceed twelve (12) members. It is anticipated that the Team will meet on a quarterly basis. The technology roadmap for the Development Activities shall be based upon requirement inputs from Allegro and Sanken and shall be updated at least annually. The Team will describe the anticipated process technology required and review the progress of the Development Activities. The responsibilities of each Party’s development teams to accomplish the technology roadmap activities, and the establishment, validation! and prioritization of items on the technology roadmap, will be agreed upon by the Team.


3.     Staffing. In order to conduct the Development Activities, PSI will maintain an advanced technology group and will evaluate and install new process modules. PSI will be responsible for and will have sole discretion regarding staffing and personnel assignments required to complete PSI’s portion of the Development Activities. Allegro and Sanken may assign staff to these projects as agreed to by the Team, and may station employees at PSI to work on the Development Activities.

4.     Expense of Development Activities. Sanken and Allegro [XXX]. On an annual basis, the Parties will mutually agree upon (a) the fee to be paid to PSI by Sanken and Allegro for the ensuing fiscal year for these designated expenses (the “Annual Fee”); (b) the timing of payment of the Annual Fee; and (c) any applicable assumptions concerning the designated expenses or other items that are included or excluded with the Annual Fee. PSI will bear responsibility for any expense that exceeds the Annual Fee.

5.     Outside Party Involvement. The Parties may from time to time mutually decide to procure assistance or technology from unrelated parties in connection with the Development Activities. Any contracts with such unrelated parties, or any arrangements between the Parties concerning payments to such parties, shall have such terms as the Parties shall mutually agree and need not be attached as exhibits to this Agreement. Notwithstanding the foregoing, any Party may independently engage its own outside consultant concerning the Development Activities at its own expense.

6.     Manufacturing for Sanken or Allegro. PSI and Sanken or Allegro, as applicable, will agree upon reasonable prices and terms for products manufactured for Sanken or Allegro by PSI using the Technology. The Parties anticipate that such pricing will incorporate the benefits of yield improvements and cost reductions. Sanken or Allegro, as applicable, will provide good faith quarterly and long-range forecasts of products to be purchased from PSI, and PSI will reserve and/ or install such capacity for Sanken or Allegro.

7.     Transfer of Technology. While the intention of the Parties is that PSI will manufacture products based on the Technology, Sanken or Allegro may, in the following limited situations, transfer an applicable portion of the Technology to an alternative manufacturing site: (a) a Party’s reasonably projected purchase requirements exceeds PSI’s capacity and/ or allocations to such Party; (b) material quality or delivery nonperformance with respect to products based on the Technology, provided that some reasonable early warning triggers of material nonperformance will be developed by the Parties; (c) Sanken or Allegro requires a second source for security of supply or dual sourcing due to business conditions and/or customer contractual requirements, provided that a substantial volume of production shall continue to be purchased from PSI as negotiated with the applicable Party; or (d) transfer to a new owner of Sanken or Allegro.

 

2


8.     PSI Intellectual Property. Except as set forth in this Section 8, PSI will retain ownership of all intellectual property that PSI owned prior to the Development Activities. The exception is that Sanken and Allegro shall have a nonexclusive license for the applicable portion of so-called Polar 35 technology, which is a technology upon which some of the Technology will be developed pursuant to the Development Agreement. PSI acknowledges receipt of $[XXX] from each of Sanken and Allegro as compensation for such license. Such license shall continue for as long as Allegro and/ or Sanken use (either directly or by transfer permitted herein) any of the Technology developed pursuant to this Agreement.

9.     Ownership of the Technology. Sanken, Allegro and PSI shall jointly own the Technology developed pursuant to this Agreement subject to the following exceptions: (a) Allegro shall have sole ownership of all intellectual property related to the design and manufacture of magnetic sensors; and (b) Sanken and Allegro shall jointly own the SG5 technology and its derivatives. Neither Sanken, Allegro, nor PSI shall sell, assign or transfer any of the Technology to any other party without the written consent of any other Party who has joint ownership in the Technology or as expressly permitted under this Agreement. Sanken and Allegro shall have the right of access to the details of the Technology. Technology that is not subject to one of the exceptions set forth in subsection (a) or (b) above shall, unless otherwise agreed to in writing by the Team, be jointly owned by all three Parties.

10.     PSI Use of SG5 Technology. With respect to that portion of the Technology that is SG5 technology and its derivatives (which portion is jointly owned by Sanken and Allegro pursuant to Section 9), PSI may use individual unit processes within SG5 or its derivatives (such as devices, models, process design kit, process control module, electrical test code for process control module, characterization reports, qualification reports, application notes, etc.) in the conduct of its business and manufacturing for others. Such elements of the Technology may be ported by PSI across technology platforms in a modular way. However, PSI shall not use the Technology as a whole or use a combination of unit processes of the Technology so as to create a system or technology that competes with Sanken’s or Allegro’s business or technology for five years after PSI establishes its capability to manufacture products for Sanken and Allegro using the Technology based upon successful qualification thereof.

 

3


11.     Related Documentation. The Parties agree on the following procedures for documentation related to this Agreement:

(a)     The Annual Fee for each fiscal year shall be set forth in a document executed by an officer or designated representative of each Party. Upon execution, such Annual Fee shall be incorporated herein by reference.

(b)     The Development Activities shall be identified and agreed by the Team pursuant to such procedures as the Team may develop from time to time. It shall not be necessary for the Development Activities to be set forth in a document signed by each Party. The Development Activities may be documented in such manner as the Team determines in its discretion.

(c)     Prices and terms for products manufactured by PSI pursuant to Section 6 shall be determined by the applicable Parties in any manner they deem appropriate, including without limitation formal agreements, purchase orders and acknowledgements, e-mail communication or such other documentation as may be reasonable and customary for a supplier-customer relationship.

(d)     The documentation described in this Section 11 shall be maintained in an orderly fashion with the business records of the Parties. However, it shall not be necessary, nor shall it be the practice of the Parties, to attach such documentation as exhibits to this Agreement.

12.     Term. This Agreement shall continue in effect until such time as (a) the Parties mutually agree to its termination; (b) the Parties adopt a successor agreement; or (c) the Parties fail to agree upon the Annual Fee for a fiscal year within three months after the commencement of such fiscal year. Sections 7, 8, 9, and 10 herein shall survive the termination of this Agreement.

13.     Confidentiality. Neither Sanken nor Allegro shall disclose any element of the Technology to any third party, except for specifically identified Sanken or Allegro customers in commercial situations for marketing and qualification purposes. Neither Sanken nor Allegro will apply for any patent in any country in connection with any Technology without obtaining the permission of, and then only jointly with, the other Party that is a joint owner of the Technology. PSI shall not disclose any element of the Technology to any third party except as expressly permitted by this Agreement.

14.     Improvements. Simple improvements after the Technology has been qualified should be considered as part of continuous improvement activities, without charge to Sanken or Allegro. Examples of simple improvements are: modifications to unit processes to improve yields or performance; and qualification of new or improved tools for manufacturing.

15.     Scope of Agreement. This Agreement applies only to Technology developed pursuant to the Development Activities as defined in this Agreement. Two of the

 

4


Parties or all of the Parties may collaborate with respect to technology development that is separate from this Agreement. Unless otherwise agreed by the Parties, any technology development activities that are covered by the Annual Fee shall be deemed within the scope of this Agreement and other activities shall be presumed not to be within the scope of this Agreement.

16.     Miscellaneous Provisions.

16.1     Entire Agreement. This Agreement constitutes the entire understanding between the Parties and supersedes all prior understandings or agreements concerning the subject matter hereof, including without limitation a letter agreement between the Parties dated as of August 31, 2007; the Joint Technology Development Agreement between the Parties dated September 13, 2007; an SG5 Phase II Agreement between Sanken and Allegro executed in October 2007; a Memorandum of Understanding dated March 19, 2008; and a First Addendum to the Memorandum of Understanding dated August 26, 2008.

16.2     Amendments. No amendment or modification of this Agreement shall be effective unless set forth in writing and signed by a duly authorized representative of each Party.

16.3     Assignment. No Party shall assign any or all of its rights and obligations under this Agreement without the prior written consent of the other Parties.

16.4     Waiver. Any failure by a Party to exercise or enforce any right under this Agreement shall not be deemed a waiver of such Party’s right thereafter to enforce each and every term and condition of this Agreement.

16.5     Force Majeure. The obligations of a Party under this Agreement will be suspended during the period and to the extent that such Party is prevented or hindered from complying therewith by any cause beyond its reasonable control including (insofar as such cause is beyond such party’s control but without prejudice to the generality of the foregoing expression); strikes, lockouts, labor disputes, act of God, war, riot, civil commotion, malicious damage, compliance with any law or governmental order, rule, regulation or direction, accident, breakdown of plant or machinery, fire, flood or storm. In the event of either Party being so hindered or prevented such party will give notice of suspension as soon as reasonably possible to the other party stating the date and extent of such suspension and the cause thereof and the omission to give such notice will forfeit the rights of such Party to claim such suspension. Any Party whose obligations have been suspended as aforesaid will not be deemed to be in default of its contractual obligations nor will any penalties or damages be payable. Any such Party will resume the performance of such obligations as soon as reasonably possible after the removal of the cause and will so notify the other Parties. In the event that such cause continues for more than three (3) months either party may terminate this Agreement on fourteen (14) days written notice.

 

5


16.6     Language. This Agreement was drafted and executed in the English language.

16.7     Severability. The invalidity or unenforceability of any portion of this Agreement shall not affect the validity or enforceability of the remainder of this Agreement.

16.8     Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota.

16.9     Dispute Resolution. The Parties shall make best efforts to try to resolve any and all claims, controversies or difficulties between the Parties (“Claims”) by mutual discussions in good faith. Should the Parties be unable to reach resolution themselves, Claims shall be finally settled by arbitration held in Minneapolis, Minnesota, pursuant to the Commercial Arbitration Rules of the American Arbitration Association.

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date and year first written above.

 

POLAR SEMICONDUCTOR, INC.     ALLEGRO MICROSYSTEMS, INC.

/s/ Yoshihiro Suzuki

   

/s/ Dennis H. Fitzgerald

Yoshihiro Suzuki, President and CEO     Dennis H. Fitzgerald, President and CEO
SANKEN ELECTRIC CO., LTD.    

/s/ Masao Hoshino

   
Masao Hoshino, Vice President Sanken Electric Co. LTD

 

6

EX-10.10

[XXX] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

Exhibit 10.10

SG8 Collaboration Agreement

THIS SG8 COLLABORATION AGREEMENT (“Agreement”) is entered into as of July 5, 2014 between Sanken Electric Co., Ltd., located at 3-6-3 Kitano Niiza-Shi, Saitama-Ken, Japan 352-8666 (“Sanken”), Polar Semiconductor, LLC, located at 2800 East Old Shakopee Road, Bloomington, MN 55425 (“Polar”), and Allegro MicroSystems, LLC, located at 115 Northeast Cutoff, Worcester, MA 01615 (“Allegro”). Sanken, Polar, and Allegro may hereinafter be referred to individually as “Party” or collectively as “Parties”

WHEREAS, the Parties wish to collaborate for the development of a new technology known to them as SG8, and wish to set forth the terms of their collaboration;

WHEREAS, Allegro has entered into 0.18 µm BCD Development Addendum to UMC Foundry Agreement (the “Addendum”) with UMC Group (USA), providing for services by that company and its affiliate United Microelectronics Corporation (collectively, “UMC”), to assist Allegro with the development of SG8 technology; and

WHEREAS, a copy of the Addendum is attached as Exhibit A to this Agreement.

NOW, THEREFORE, Sanken and Allegro agree as follows:

1.    Allegro, Sanken, and Polar shall establish a joint technology development team for the purpose of the development of SG8.

2.    Allegro and Sanken shall be equally responsible for the costs of developing SG8, including, but not limited to:

 

  a)

the non-recurring engineering charge of $[XXX] and any other costs paid by Allegro to UMC, pursuant to the Addendum;

 

  b)

the cost of reticles and mask sets contemplated in Appendix A to the Addendum;

 

  c)

the costs associated with the development of high density, non-volatile memory (HD-NVM), including those costs associated with a third party engineering services agreement, if deemed necessary, and agreed upon in writing, by the Parties (“third party HD-NVM Development Agreement”) and the cost of reticles and mask sets associated with HD-NVM test chips; and

 

  d)

such other costs as may be incurred by Allegro in connection with development of SG8.

3.    Allegro will invoice Sanken for 50% of the incurred costs, and Sanken will make payment to Allegro with thirty (30) days of invoice in US Dollars.


4.    Intellectual property rights (“IP”) for the SG8 technology that: (a) Allegro acquires pursuant to the Addendum, or (b) acquired by Allegro and/or Sanken pursuant to a third party HD-NVM Development Agreement, or (c) pursuant to Allegro and/or Sanken and/or PSL efforts on the base process technology will be owned as follows:

 

  a)

IP relating to magnetic sensors will be solely owned by Allegro.

 

  b)

All other IP will be jointly owned by Sanken and Allegro.

PSL will have the nonexclusive right to manufacture the SG8 technology, including HD-NVM, solely for Allegro and Sanken.

5.    Any additional third-party work and resulting deliverables outside of the Addendum that are deemed necessary by a Party in order to refine or exploit SG8 will be the sole responsibility of that Party, unless the Parties agree to share the cost thereof.

6.    Allegro will assume responsibility for communications with UMC pursuant to the Addendum, and will work with Sanken to ensure that Sanken’s requirements are included in such communications.

7.    There shall be no liability by either Party to the other in the event that the development of SG8 is unsuccessful or the implementation of SG8 in commercial situations is unsuccessful.

8.    Allegro agrees not to terminate or materially alter the Addendum without consultation with and concurrence of Sanken.

9.    In the event that the teams working directly on the engagement cannot agree on a decision, the decision will be escalated to be agreed to Allegro’s Senior Vice President of Business Development and Sanken’s Vice President of Engineering or such equivalent positions.

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date set forth in the first paragraph above.

 

Sanken Electric Co., Ltd.     Allegro MicroSystems, LLC     Polar Semiconductor, LLC
By:  

/s/ [Illegible]

       By:  

/s/ [Illegible]

       By:  

/s/ [Illegible]

Title:   Director     Title:   SVP     Title:   COO
EX-10.15

Exhibit 10.15

[XXX] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

DISTRIBUTION AGREEMENT

JAPAN

THIS AGREEMENT (the “Agreement”) is made as of July 5, 2007 between Allegro MicroSystems, Inc., a Delaware corporation with its principal offices at 115 Northeast Cutoff, Worcester, Massachusetts 01615 (“Allegro”); and Sanken Electric Co., Ltd., a Japanese corporation with its principal offices at 3-6-3 Kitano, Niiza-shi, Saitama, Japan (“Sanken”).

WHEREAS, Allegro desires to sell its products in Japan and Sanken has the capability to market Allegro’s products in Japan; and

WHEREAS, Allegro and Sanken wish to stipulate the terms and conditions upon which Sanken will market Allegro’s products in Japan; and

WHEREAS, the patties wish to supersede all prior agreements or understandings conceming the distribution of Allegro products by Sanken in Japan, including without limitation that certain Purchase and Sale Agreement dated October 1, 1994.

NOW, THEREFORE, the parties hereby agree as follows:

 

1.

DEFINITIONS.

In this Agreement, the following terms shall have the meanings set forth below:

1.1     “Commencement Date” means July 20, 2007.

1.2     “Intellectual Property” means any patent, copyright, trademark or other industrial or intellectual property right of Allegro in respect of the Products.

1.3     “Products” means all products produced by Allegro during the term of this Agreement, except for any products excluded from the scope of this Agreement by written agreement of the parties.

1.4      “Territory” means Japan.

 

2.

EXCLUSIVE DISTRIBUTORSHIP.

2.1    Appointment and Acceptance. Allegro hereby appoints Sanken as its exclusive distributor for the sale of Products in the Territory and Sanken accepts such appointment, subject to the terms and conditions of this Agreement. It is agreed that Sanken may sell Products to customers through sub-distributors in the Territory.

 

1


2.2     Scope of Appointment. Sanken shall not knowingly sell Products to purchasers in the Territory who intend to sell the Products outside of the Territory.

2.3     Designed In Products Compensation. Sanken may work with customers in the Territory to design into the products of such customers Products that will be shipped by Allegro to customer locations outside the Territory for assembly into such customers’ products (such activities by Sanken being referred to herein as “design in efforts and support”). Sanken will exert reasonable efforts to secure such work within the Territory. As compensation for Sanken’s design in efforts and support, Sanken shall receive from Allegro a commission as specified on Exhibit A, Section B, to this Agreement.

2.4     Relationship. The relationship between Allegro and Sanken pursuant to this Agreement is (a) in the case of all provisions other than Section 2.3 and Exhibit A, Section B that of Allegro as seller and Sanken as purchaser, and not Allegro as principal and Sanken as agent, and (b) in the case of Section 2.3 and Exhibit A, Section B with respect to design in efforts and support, the relationship shall be that of Allegro as principal and Sanken as representative. Neither Allegro (as seller or principal, as applicable) nor Sanken (as purchaser or representative, as applicable) shall have the right or authority to incur or create any warranty, liability or obligation of any kind on behalf of the other party.

 

3.

SANKEN’S OBLIGATIONS.

Sanken shall, during the term of this Agreement:

3.1     Exert commercially reasonable efforts to promote the sale of Products in the Territory through a qualified sales organization.

3.2     Maintain an effective system for shipping inventory of Products on a first in-first out basis, and maintain all inventories of Products in accordance with Allegro’s warehouse requirements.

3.3     In respect of each calendar month during the term of this Agreement, submit a monthly point of sale report to Allegro, in such format and within such time period as reasonably required by Allegro, concerning Products sold by Sanken during each such month.

3.4     Keep Allegro informed of developments in the market for Products in the Territory, including changes in applicable regulatory requirements in the Territory, and submit such other information relating to the sale and service of Products by Sanken as Allegro may reasonably require from time to time.

3.5     If Sanken elects to advertise the Products in the Territory, Allegro shall be given the opportunity to review and approve advertising materials reasonably in advance.

 

2


3.6     Not knowingly sell any Product for use in any life-support device or system if a failure of such Product can reasonably be expected to cause a failure of that life-support device or system or to affect the safety or effectiveness of that device or system.

3.7     Promptly notify Allegro of any material issue concerning Products that could result in a monetary claim against Sanken or Allegro or any material issue that could negatively impact future sales of Products to any customer in the Territory.

3.8     Maintain complete and accurate records of all sales and service by Sanken of Products in the Territory.

3.9     Comply with all laws and regulations relating to the import of Products into the Territory applicable to Sanken in its capacity as the purchaser and importer of such Products, including, without limitation, licensing and documentation requirements in the Territory and such other jurisdictions with jurisdiction over Sanken and such purchase and import activities.

3.10     If requested by Allegro, and at Allegro’s expense, either at the premises of Allegro or at Sanken’s premises, make its employees available for instruction by Allegro in the use, sale, maintenance and application of the Products.

 

4.

ALLEGRO’S OBLIGATIONS.

Allegro shall, during the term of this Agreement:

4.1     Provide adequate training for Sanken employees and reasonable field sales support.

4.2     Provide such information and support as may reasonably be requested by Sanken with respect to the Products, including then existing marketing materials, brochures and other information regarding the Products.

4.3     As mutually agreed with Sanken, participate with Sanken in fairs and exhibitions in the Territory.

4.4     Comply with all laws and regulations relating to the export of Products from the place of their manufacture or assembly into the Territory applicable to Allegro in its capacity as the seller and exporter of such Products, including, without limitation, licensing and documentation requirements in such jurisdictions with jurisdiction over Allegro and such sale and export activities.

Notwithstanding the foregoing, Allegro reserves the right to withdraw its support for previously sold Products if Allegro determines that any customer’s use of the Products is not suitable for such customer’s application.

 

3


5.

PAYMENT TERMS, ORDERS AND DELIVERY.

5.1     Prices and Payment Terms. The prices of the Products and the terms of payment shall be as set forth on Exhibit A to this Agreement.

5.2     Governing Terms. The terms of this Agreement shall be controlling in the event of any conflict or inconsistency between this Agreement and the terms of any purchase order, quotation, acknowledgment or other form or correspondence between the parties conceming the subject matter of this Agreement.

5.3     Orders. Sanken shall place orders for Products according to procedures indicated by Allegro from time to time. Allegro reserves the right to reject any order at its sole discretion, provided that Allegro shall make commercially reasonable efforts to accept Sanken’s orders.

5.4     Cancellation and Rescheduling. Allegro will accept cancellations or rescheduling of orders for Products at no cost to Sanken, if Sanken provides written notice to Allegro at least [XXX] days prior to the original scheduled delivery date. For the purposes of this Section 5.4, the original scheduled delivery date means the delivery date specified in Allegro’s original order acknowledgement, and does not mean any rescheduled delivery date. Unless otherwise instructed by Allegro, Sanken shall send such notice to the attention of the tactical marketing manager for the applicable Allegro business unit.

5.5     Shipment. Allegro shall designate the freight carrier for shipments. In the event of expedited delivery requests accepted by Allegro, the parties shall negotiate reasonable charges above the customary shipment costs.

5.6     Delivery Dates. Delivery dates requested by Sanken, even though accepted by Allegro, shall be understood by Sanken only as best estimates. Allegro shall attempt to meet all delivery dates requested by Sanken but shall not be liable for damages arising from any delay in delivery.

5.7    Title. Title to the Products and risk of loss shall pass to Sanken upon delivery of Products by Allegro to the freight carrier.

5.8     Order Termination. Allegro reserves the right to terminate the balance of any accepted customer order if Allegro learns that the customer’s use of the Products is not suitable for such customer’s application, or if the customer intends to use the Products for any use described in Section 3.6 of this Agreement.

 

6.

WARRANTY.

6.1     Product Warranty. Allegro warrants to Sanken that Products delivered pursuant to this Agreement will, at the time of delivery to the freight carrier and for a period of [XXX] thereafter, be free from defects in materials or workmanship and meet any applicable specifications set forth in any purchase order accepted by Allegro.

 

4


6.2     Remedy for Breach. In the event of any breach of Allegro’s warranty set forth in Section 6.1, Allegro shall either repair or replace the defective Products or, at the election of either Allegro or Sanken, Allegro shall refund the amount paid for such Products, provided that (a) Sanken promptly notifies Allegro of the defects in such Products and in any event within [XXX] after delivery thereof; (b) such defects are not caused by wear and tear, neglect, abnormal conditions or misuse; and (c) such defective Products have not been repaired or altered by a party other than Allegro.

6.3     Warranty Limitation. The warranty set forth in Section 6.1 is the exclusive warranty with respect to Products sold by Allegro to Sanken under this Agreement. ALL OTHER WARRANTIES, WHETHER STATUTORY, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ARE HEREBY EXCLUDED.

 

7.

INTELLECTUAL PROPERTY.

7.1     License Grant. During the term of this Agreement, Allegro hereby grants to Sanken a license and privilege to use the trademarks included within the Intellectual Property in the Territory for the specific purposes of this Agreement. Allegro warrants that it owns the rights to the Intellectual Property in the Territory, or has a valid license to such rights. Allegro shall retain ownership of its Intellectual Property; and Sanken shall not by operation of this Agreement acquire or retain any ownership interest therein other than such interests that Sanken has been granted or has otherwise retained under other agreements to which Allegro and Sanken are parties and which are in force and effect during the term of this Agreement.

7.2     Protection of Intellectual Property. Sanken will not modify Products, alter or remove trademarks from Products, or use any trademarks or trade names in the Territory that are likely to cause confusion with the trademarks or trade names of Allegro. Following the receipt of notice or other knowledge of any actual, threatened or suspected infringement in the Territory of any Intellectual Property or any claim of a third patty that the sale of Products in the Territory infringes such party’s intellectual property rights, Sanken will promptly notify Allegro thereof. Sanken will assist Allegro, at Allegro’s expense, in maintaining Allegro’s ownership rights to the Intellectual Property in the Territory, including any action against infringement of the Intellectual Property in the Territory, or negotiation of any permit or license.

7.3     Infringement Indemnification. Allegro shall defend and hold Sanken and its customers harmless from and against any and all claims, damages, suits, causes of action, liabilities or expenses (including, without limitation, reasonable attorneys’ fees) arising from any allegation or claim that the sale of the Products in the Territory infringes the intellectual property rights of any third party. Sanken shall cooperate with Allegro in connection with its defense efforts.

 

5


8.

TERM AND TERMINATION.

8.1    Term. This Agreement shall take effect on the Commencement Date and shall remain in effect until March 31, 2010. This Agreement may be terminated as of March 31, 2010 by either party upon twelve (12) months prior written notice to the other party. If neither party gives such notice of termination, this Agreement shall be renewed until March 31, 2013. Thereafter, this Agreement shall automatically renew for successive three year periods until either party gives notice of termination at least twelve (12) months prior to the expiration of any renewal term.

8.2    Termination. Either party hereto may immediately terminate this Agreement as follows: (a) if proceedings in bankruptcy or insolvency are instituted by or against the other party, a receiver or trustee is appointed, or such party makes an assignment for the benefit of its creditors or enters into any voluntary arrangement with creditors, or a substantial part of the assets of such party is the subject of attachment; or (b) upon default by the other party in the performance of its obligations under this Agreement, whereby such default is not cured within sixty (60) days after the receipt by the defaulting party of written notice of the default.

8.3    Effect of Termination. Upon the termination or expiration of this Agreement for any reason:

8.3.1    Sanken will promptly return to Allegro, or otherwise dispose of as Allegro may instruct, all Confidential Information (as defined in Section 9.1), technical instruction manuals, sales promotion materials, specifications, or other documents relating to any of the Products.

8.3.2    Sanken will immediately cease to advertise the Products in the Territory; provided that Sanken may complete the sale of any Products subject to any orders that had been accepted by Allegro prior to such termination.

8.3.3    Allegro shall satisfy all orders for Products placed by Sanken and accepted by Allegro prior to the date of termination; provided that any rights that Allegro would otherwise have with respect to such orders in accordance with the provisions of this Agreement shall remain in full force and effect.

8.3.4    Sanken may return to Allegro any undamaged Products in Sanken’s inventory, free and clear of liens and encumbrances, to the extent that Allegro deems the Products saleable, at Allegro’s discretion, and further, provided that the Products are less than two years old as indicated on the date code marked on the Product or its package. Sanken shall comply with Allegro’s reasonable return authorization procedures within sixty (60) days following the date of termination or expiration. Allegro will pay Sanken an amount equal to the original purchase price paid by Sanken for Products accepted for return by Allegro. The cost of returning the Products shall be borne by Sanken.

8.3.5    Except for commissions due under Section 2.3 for actions taken prior to termination, Sanken shall not be entitled to a commission or other compensation following termination.

 

6


9.

CONFIDENTIALITY.

9.1    Confidential Information. Except as provided in Section 9.2, neither party shall disclose to any third party, nor use for any purpose other than the purchase or sale of Products under this Agreement, any Confidential Information of the other party without the other party’s prior written consent. As used in this Agreement, “Confidential Information” shall include but not be limited to all information regarding current or future Products, designs, marketing plans, processes, inventions, formulae, pricing and cost information, specifications, drawings, samples or other confidential or proprietary information or data furnished by one party to the other. “Confidential Information” shall not include any information that is publicly known through no fault of the receiving party, was previously known to or developed by the receiving party or an employee of the receiving party who has not had access to any Confidential Information of the disclosing party, or was received from a third party without breach of any confidentiality obligation imposed on that third party.

9.2    Permitted Disclosures. A party may disclose Confidential Information (i) to the extent required by law or by court order or other governmental action, but only to the extent so ordered; or (ii) to the extent necessary to implement this Agreement, to the party’s employees, agents or subcontractors as reasonably necessary or appropriate, provided that before disclosure such recipients are informed of the confidentiality requirements of this Agreement. The disclosing party shall ensure compliance by its employees, agents or subcontractors with the confidentiality provisions of this Agreement.

9.3    Governmental Filings. Each party shall determine in its sole discretion whether such party is required to file or otherwise submit this Agreement and/or any description hereof with or to any governmental authorities or securities exchanges, including, without limitation, the U.S. Securities and Exchange Commission, NASDAQ, the Japanese Securities and Exchange Surveillance Commission or the Tokyo Stock Exchange. If a party (as the Submitting Party) determines that it is required to file or otherwise submit this Agreement and/or any description hereof with or to any such governmental authority or securities exchange, as applicable, then such Submitting Party shall with respect to such proposed filing or submission: (i) provide a copy of such filing or submission to the other party (as the Non-Submitting Party) reasonably prior to its filing or submission, and (ii) to the extent that the Submitting Party intends to request confidential treatment for any portion or portions of this Agreement, the Submitting Party will (A) provide a reasonable amount of time for the Non-Submitting Party’s review of such confidentiality request and any redactions comprising such intended request and (B) give good faith consideration to the Non-Submitting Party’s comments and requests for any additional or different redactions.

 

10.

RECORDS; AUDIT.

10.1    Records. Sanken shall maintain all books and records relating to its activities in connection with this Agreement for a minimum of three years from the date of generation thereof. Such obligation shall survive the termination of this Agreement.

 

7


10.2    Audit Rights. Allegro may engage a reputable certified public accountant to examine and audit Sanken’s books and records relating to its activities under this Agreement, provided that Sanken shall be given not less than fifteen (15) days advance notice and no more than one audit may be conducted during any calendar year. Any claims resulting from any such audit, in favor of either party, shall be limited to transactions occurring within three (3) years immediately preceding the audit. Any such audit shall be at Allegro’s expense unless such audit reveals an underpayment of the amounts due from Sanken to Allegro under this Agreement of five per cent (5%) or more, in which case Sanken shall reimburse Allegro for the expense of the certified public accountant.

 

11.

MISCELLANEOUS PROVISIONS.

11.1    Entire Agreement. This Agreement, and the attached Exhibits, constitutes the entire understanding between the parties with respect to the distribution or design in of Allegro products by Sanken in Japan, and supersedes all prior agreements, negotiations and discussions between the parties regarding such subject matter, including without limitation that certain Purchase and Sale Agreement between the parties dated October 1, 1994.

11.2    Amendments. No amendment or modification of this Agreement shall be effective unless set forth in writing and signed by a duly authorized representative of each party.

11.3    Assignment. Neither party shall assign any or all of its rights and obligations under this Agreement without the prior written consent of the other party.

11.4    Waiver. Any failure by a party to exercise or enforce any right under this Agreement shall not be deemed a waiver of such party’s right thereafter to enforce each and every term and condition of this Agreement.

11.5    Force Majeure. The obligations of a party under this Agreement will be suspended during the period and to the extent that such party is prevented or hindered from complying therewith by any cause beyond its reasonable control including (insofar as such cause is beyond such party’s control but without prejudice to the generality of the foregoing expression): strikes, lockouts, labor disputes, act of God, war, riot, civil commotion, malicious damage, compliance with any law or governmental order, rule, regulation or direction, accident, breakdown of plant or machinery, fire, flood or storm. In the event of either party being so hindered or prevented such party will give notice of suspension as soon as reasonably possible to the other party stating the date and extent of such suspension and the cause thereof and the omission to give such notice will forfeit the rights of such party to claim such suspension. Any patty whose obligations have been suspended as aforesaid will not be deemed to be in default of its contractual obligations nor will any penalties or damages be payable. Any such party will resume the performance of such obligations as soon as reasonably possible after the removal of the cause and will so notify the other party. In the event that such cause continues for more than three months either party may terminate this Agreement on fourteen (14) days written notice.

11.6    Indemnification. Each patty shall fully indemnify the other party against all actions, claims, demands, costs, charges, expenses or liabilities arising form or in connection

 

8


with any breach of its obligations under this Agreement. NEITHER PARTY SHALL BE LIABLE TO THE OTHER (OR TO ANYONE ASSERTING A CLAIM ON A PARTY’S BEHALF) FOR CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES OF ANY NATURE, INCLUDING WITHOUT LIMITATION LOST PROFITS OR REVENUES. The obligation of Allegro to so indemnify Sanken under this Section 11.6 is in addition to any indemnity provided by Allegro to Sanken under Section 7.3. [XXX].

11.7    Language. This Agreement was drafted and executed in the English language.

11.8    Notices. Notices under this Agreement may be sent by e-mail or courier service. Notice shall be sent to the address set forth on the first page of this Agreement or to such other address and contact person as a party may designate, or to the email address of any such designated contact person.

11.9    Severability. The invalidity or unenforceability of any portion of this Agreement shall not affect the validity or enforceability of the remainder of this Agreement.

11.10    Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Massachusetts. The parties opt out of the United Nations Convention on Contracts for the International Sale of Goods, which shall have no application to Products or the performance of the parties under this Agreement.

11.11    Dispute Resolution. The parties shall make best efforts to try to resolve any and all claims, controversies or difficulties between the parties (“Claims”) by mutual discussions in good faith. Should the parties be unable to reach resolution themselves, Claims shall be finally settled by arbitration as follows: if Allegro initiates the arbitration proceedings, arbitration will be held in Tokyo, Japan in accordance with the Commercial Arbitration Rules of the Japan Commercial Arbitration Association; and if Sanken initiates the arbitration proceedings, arbitration will be held in the State of Massachusetts in accordance with the Commercial Arbitration Rules of the American Arbitration Association.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first written above.

 

ALLEGRO MICROSYSTEMS, INC.     SANKEN ELECTRIC CO., LTD.
By:  

/s/ Daniel Demingware

    By:  

/s/ Hirohito Sekine

  Mr. Daniel Demingware       Mr. Hirohito Sekine
  Vice President Sales.       General Manager, Sales Headquarters

 

9


EXHIBIT A

Pricing and Payment Terms

 

A.

The following terms shall apply to purchases of Products by Sanken:

 

  1.

Prices.

Unless otherwise agreed to by Sanken and Allegro in writing, the price of Products sold by Allegro to Sanken, for distribution within the Territory, shall be equal to [XXX]% of the selling price to Sanken’s end customer (not the intermediary price(s) between Sanken and Sanken’s representative or distributor) at the time Sanken places the order to Allegro. Prices shall be converted from Yen to U.S. Dollars pursuant to #3 below. For the avoidance of doubt, this Section A. I does not apply to Products covered under Section 2.3 herein.

 

  2.

Payment in Dollars.

All payments shall be made to Allegro in U.S. Dollars.

 

  3.

Exchange Rate.

Sales prices shall be converted from Yen into Dollars on a monthly basis pursuant to procedures established by the parties from time to time.

 

  4.

Freight Terms.

C.I.P. (carriage and insurance paid to port of entry in Japan).

 

  5.

Payment Terms.

Unless otherwise agreed to by Allegro, Sanken will pay all Allegro invoices by the end of the calendar month following the month in which the invoices are received by Sanken.

 

B.

The following terms shall apply to commissions paid by Allegro to Sanken pursuant to Section 2.3:

 

  1.

Commission.

Unless otherwise agreed between Sanken and Allegro in writing, Sanken shall be entitled to a commission [XXX] percent (XXX%) of the “Net Sales” of designed in Products. The term “Net Sales” shall mean the total revenues for applicable Products shipped during a month less returns and less the amount of any revenues previously included in net sales that Allegro determines during such month to be uncollectible.

 

10


  2.

Payment in Dollars.

Payments shall be made to Sanken in U.S. Dollars.

 

  3.

Exchange Rate.

Commissions shall be converted from local currency into U.S. Dollars on a monthly basis pursuant to procedures established by the parties from time to time.

 

  4.

Payment Terms.

Payments shall be made to Sanken by the end of the month following the month for which Net Sales are calculated.

 

11

EX-10.17

Exhibit 10.17

[XXX] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

SALES REPRESENTATIVE AGREEMENT

THIS AGREEMENT (the “Agreement”) is made as of July 5, 2007 between Sanken Electric Co., Ltd., a Japanese corporation with its principal offices at 3-6-3 Kitano, Niiza-shi, Saitama, Japan (“Sanken”); and Allegro MicroSystems, Inc., a Delaware corporation with its principal offices at 115 Northeast Cutoff, Worcester, Massachusetts 01615 (“Allegro”).

WHEREAS, Sanken desires that Allegro act as a sales representative for certain Sanken products in the continents of North and South America, and Allegro is willing to act in such capacity; and

WHEREAS, Sanken and Allegro wish to stipulate the terms and conditions of such activity and supersede that certain Representative Agreement between the parties dated October 1, 1997.

NOW, THEREFORE, the parties hereby agree as follows:

 

1.

DEFINITIONS.

In this Agreement, the following terms shall have the meanings set forth below:

1.1    “Commencement Date” means July 20, 2007.

1.2     “Intellectual Property” means any patent, copyright, trademark or other industrial or intellectual property right of Sanken in respect of the Products.

1.3    “Products” means those Sanken products that are listed on Exhibit A to this Agreement.

1.4    “Territory” means North and South America, including Puerto Rico.

 

2.

APPOINTMENT AND ACCEPTANCE.

2.1    Non-Exclusive Representative. Sanken hereby appoints Allegro as its non-exclusive sales representative for the Products in the Territory and Allegro accepts such appointment, subject to the terms of this Agreement. It is agreed that Allegro may solicit orders through sub-representatives in the Territory.

2.2    Scope of Appointment. Allegro shall not knowingly solicit orders from customers who intend to sell the Products outside of the Territory.

2.3    Product Modification or Discontinuance. Sanken may modify Products or discontinue the production of any or all of the Products at any time at its sole discretion. Sanken shall provide reasonable notice of such changes to Allegro and Sanken shall be responsible for resolving any customer issues resulting from its modification or discontinuation of its Products.


2.4    Relationship. Allegro is a representative of Sanken for the purpose of procuring orders from customers for Products. The parties are not principal and agent. Neither party shall have the right or authority to incur or create any warranty, liability or obligation of any kind on behalf of the other party.

 

3.

ALLEGRO’S OBLIGATIONS.

Allegro shall, during the term of this Agreement:

3.1    Use commercially reasonable efforts to promote the sale of Products in the Territory through a qualified sales organization.

3.2    Ensure that its sales personnel participate in sales training programs that Sanken may conduct, and conduct its own internal training to instill in its personnel, effective sales methods for the Products.

3.3    Keep Sanken reasonably informed of developments in the market for Products in the Territory, including changes in applicable regulatory requirements, and provide Sanken such other information relating to the sale and service of Products as Sanken may reasonably require from time to time.

3.4    Refrain from advertising the Products in the Territory, unless Sanken has been given the opportunity to review and approve advertising materials in advance.

3.5    If requested by Sanken and at Sanken’s expense, either at the premises of Allegro or at Sanken’s premises, make its employees available for instruction by Sanken Allegro in the use, sale, maintenance and application of Products.

3.6    Refrain from becoming a representative or distributor of products manufactured by a third party that compete with the Products.

3.7    Bear all expenses associated with selling the Products, such as those for communication, travel and other sales associated disbursements, incurred in connection with its activities under this Agreement, unless otherwise agreed by the parties in writing.

3.8    Comply with all applicable laws and regulations relating to the import of Products into the Territory, including, without limitation, licensing and documentation requirements in the Territory and such other jurisdictions with jurisdiction over Allegro and such import activities.


4.

SANKEN’S OBLIGATIONS.

Sanken shall, during the term of this Agreement:

4.1    Provide adequate training for Allegro employees and reasonable field sales support.

4.2    Provide such information and support as may reasonably be requested by Allegro with respect to Products, including then existing marketing materials, brochures and other information regarding Products.

4.3    As mutually agreed with Allegro, participate with Allegro in fairs and exhibitions in the Territory.

4.4    Comply with all applicable laws and regulations relating to the export of Products from their place of manufacture or assembly into the Territory, including, without limitation, licensing and documentation requirements in the Territory and such other jurisdictions with jurisdiction over Sanken and such export activities.

 

5.

ORDERS, TERMS AND COMMISSIONS.

5.1    Orders. Orders for Products shall be submitted in accordance with procedures indicated by Sanken from time to time. Sanken reserves the right to reject any order at its sole discretion.

5.2    Terms and Conditions of Sale. Sanken’s terms and conditions of sale shall apply to all sales of Products. No deviation from Sanken’s terms and conditions shall be binding unless accepted in writing by Sanken.

5.3    Prices. Sanken reserves the right to change Product prices at any time. Orders accepted by Sanken prior to a price increase will be invoiced at the price in effect at the time of acceptance. Orders based upon a prior quotation will be accepted at prices in effect on the date of the quotation if the order is received by Sanken within thirty (30) days after the date of the quotation.

5.4    Commissions. Allegro shall be entitled to receive commissions as specified on Exhibit B to this Agreement.

5.5    Order Termination. Sanken reserves the right to terminate the balance of any accepted customer order if Sanken learns that the customer’s use of the Products is not suitable for such customer’s application, or if the customer intends to use the Products in any life-support device or system if a failure of such Product can reasonably be expected to cause a failure of that life-support device or system or to effect the safety or effectiveness of that device or system.

 

6.

INTELLECTUAL PROPERTY.

6.1    License Grant. During the term of this Agreement, Sanken hereby grants to Allegro a license and privilege to use the trademarks included within the Intellectual Property in the Territory for the specific purposes of this Agreement. Sanken warrants that it owns the rights to the Intellectual Property in the Territory, or has a valid license to such rights. Sanken shall retain ownership of its Intellectual Property and Allegro shall not by operation of this Agreement acquire any ownership interest therein.


6.2    Protection of Intellectual Property. Allegro will not use any trademarks or trade names in the Territory that are likely to cause confusion with the trademarks or trade names of Sanken. Following the receipt of notice or other knowledge of any actual, threatened or suspected infringement in the Territory of any Intellectual Property or any claim of a third party that the sale of Products in the Territory infringes such party’s intellectual property rights, Allegro will promptly notify Sanken thereof. Allegro will assist Sanken, at Sanken’s expense, in maintaining Sanken’s ownership rights to the Intellectual Property in the Territory, including any action against infringement of the Intellectual Property in the Territory, or negotiation of any permit or license.

6.3    Infringement Indemnification. Sanken shall defend and hold Allegro harmless from and against any and all claims, damages, suits, causes of action, liabilities or expenses (including without limitation reasonable attorneys’ fees) arising from any allegation or claim that the sale of Products in the Territory infringes the intellectual property rights of any third party.

 

7.

TERM AND TERMINATION.

7.1    Term. This Agreement shall take effect on the Commencement Date and shall remain in effect for a period of one year. This Agreement may be terminated as of the one year anniversary of the Commencement Date by either patty upon three (3) months prior written notice to the other patty. If neither party gives such notice of termination, this Agreement shall be renewed for one additional year. Thereafter, this Agreement shall automatically renew for a successive one year periods until either party gives notice of termination at least three (3) months prior to the expiration of any renewal term.

7.2    Termination. Either patty hereto may immediately terminate this Agreement as follows: (a) if proceedings in bankruptcy or insolvency arc instituted by or against the other party, a receiver or trustee is appointed, or such patty makes an assignment for the benefit of its creditors or enters into any voluntary arrangement with creditors, or a substantial part of the assets of such patty is the subject of attachment; or (b) upon default by the other party in the performance of its obligations under this Agreement, whereby such default is not cured within sixty (60) days after receipt by the defaulting patty of written notice of the default.

7.3    Effect of Termination. Upon the termination or expiration of this Agreement for any reason:

7.3.1    Allegro will promptly return to Sanken, or otherwise dispose of as Sanken may instruct, all Confidential Information (as defined in Section 8.1), technical instruction manuals, sales promotion materials, specifications or other documents relating to any of the Products.

7.3.2    Allegro will immediately cease to market or advertise the Products in the Territory.

7.3.3    Sanken shall satisfy all orders for Products accepted from any customer by Sanken prior to such termination if the customer order was procured, at least in part, through the efforts of Allegro.


7.4    Effect of Non-Completion. Sanken may withhold the payment of commissions due after the termination or expiration of this Agreement until all obligations owed by Allegro have been completed.

 

8.

CONFIDENTIALITY.

8.1    Confidential Information. Except as provided in Section 8.2, neither party shall disclose to any third party, nor use for any purpose other than the purchase or sale of Products under this Agreement, any Confidential Information of the other party without the other party’s prior written consent. As used in this Agreement, “Confidential Information” shall include but not be limited to all information regarding current or future Products, designs, marketing plans, processes, inventions, formulae, pricing and cost information, specifications, drawings, samples or other confidential or proprietary information or data furnished by one party to the other. “Confidential Information” shall not include any information that is publicly known through no fault of the receiving party, was previously known to or developed by the receiving party or an employee of the receiving party who has not had access to any Confidential Information of the disclosing party, or was received from a third party without breach of any confidentiality obligation imposed on that third party.

8.2    Permitted Disclosures. A party may disclose Confidential Information (i) to the extent required by law or by court order or other governmental action, but only to the extent so ordered; or (ii) to the extent necessary to implement this Agreement, to the party’s employees, agents or subcontractors as reasonably necessary or appropriate, provided that before disclosure such recipients are informed of the confidentiality requirements of this Agreement. The disclosing party shall ensure compliance by its employees, agents or subcontractors with the confidentiality provisions of this Agreement.

8.3    Governmental Filings. Each party shall determine in its sole discretion whether such party is required to file or otherwise submit this Agreement and/or any description hereof with or to any governmental authorities or securities exchanges, including, without limitation, the U.S. Securities and Exchange Commission, NASDAQ, the Japanese Securities and Exchange Surveillance Commission or the Tokyo Stock Exchange. If a party (as the Submitting Party) determines that it is required to file or otherwise submit this Agreement and/or any description hereof with or to any such governmental authority or securities exchange, as applicable, then such Submitting Party shall with respect to such proposed filing or submission: (i) provide a copy of such filing or submission to the other party (as the Non-Submitting Party) reasonably prior to its filing or submission, and (ii) to the extent that the Submitting Party intends to request confidential treatment for any portion or portions of this Agreement, the Submitting Party will (A) provide a reasonable amount of time for the Non-Submitting Party’s review of such confidentiality request and any redactions comprising such intended request and (B) give good faith consideration to the Non-Submitting Party’s comments and requests for any additional or different redactions.


9.

MISCELLANEOUS PROVISIONS.

9.1     Entire Agreement. This Agreement, and the attached Exhibits, constitutes the entire understanding between the parties with respect to Allegro’s status as a sales representative for the Products in the Territory, and supersedes all prior agreements, negotiations and discussions between the parties regarding such subject matter, including without limitation that certain Representative Agreement between the parties dated October 1, 1997.

9.2     Amendments. No amendment or modification of this Agreement shall be effective unless set forth in writing and signed by a duly authorized representative of each party.

9.3     Assignment. Neither party shall assign any or all of its rights and obligations under this Agreement without the prior written consent of the other party.

9.4     Waiver. Any failure by any party to exercise or enforce any right under this Agreement shall not be deemed a waiver of such party’s right thereafter to enforce each and every term and condition of this Agreement.

9.5     Force Majeure. The obligations of a party under this Agreement will be suspended during the period and to the extent that such party is prevented or hindered from complying therewith by any cause beyond its reasonable control including (insofar as such cause is beyond such party’s control but without prejudice to the generality of the foregoing expression): strikes, lockouts, labor disputes, act of God, war, riot, civil commotion, malicious damage, compliance with any law or governmental order, rule, regulation or direction, accident, breakdown of plant or machinery, fire, flood or storm. In the event of either party being so hindered or prevented such party will give notice of suspension as soon as reasonably possible to the other party stating the date and extent of such suspension and the cause thereof and the omission to give such notice will forfeit the rights of such party to claim such suspension. Any party whose obligations have been suspended as aforesaid will not be deemed to be in default of its contractual obligations nor will any penalties or damages be payable. Any such party will resume the performance of such obligations as soon as reasonably possible after the removal of the cause and will so notify the other party. In the event that such cause continues for more than three months either party may terminate this Agreement on fourteen (14) days written notice.

9.6     Indemnification. Each party shall fully indemnify the other party against all actions, claims, demands, costs, charges, expenses or liabilities arising from or in connection with any breach of its obligations under this Agreement. NEITHER PARTY SHALL BE LIABLE TO THE OTHER (OR TO ANYONE ASSERTING A CLAIM ON A PARTY’S BEHALF) FOR INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES OF ANY NATURE, INCLUDING WITHOUT LIMITATION LOST PROFITS OR REVENUES. The obligation of Sanken to so indemnify Allegro under this Section 9.6 is in addition to any indemnity provided by Sanken to Allegro under Section 6.3.

9.7     Language. This Agreement was drafted and executed in the English language.

9.8     Notices. Notices under this Agreement may be sent by e-mail or courier service. Notice shall be sent to the address set forth on the first page of this Agreement or to such other address and contact person as a party may designate, or to the email address of any such designated contact person.


9.9     Severability. The invalidity or unenforceability of any portion of this Agreement shall not affect the validity or enforceability of the remainder of this Agreement.

9.10     Governing Law. This Agreement shall be governed by and construed in accordance with the laws of Japan.

9.11     Dispute Resolution. The parties shall make best efforts to try to resolve any and all claims, controversies or difficulties between the parties (“Claims”) by mutual discussions in good faith. Should the parties be unable to reach resolution themselves, Claims shall be finally settled by arbitration as follows: if Allegro initiates the arbitration proceedings , arbitration will be held in Tokyo, Japan in accordance with the Commercial Arbitration Rules of the Japan Commercial Arbitration Association; and if Sanken initiates the arbitration proceedings, arbitration will be held in the State of Massachusetts in accordance with the Commercial Arbitration Rules of the American Arbitration Association.

IN WITNESS WHEREOF, the patties have executed this Agreement as of the date and year first written above.

 

SANKEN ELECTRIC CO., LTD.     ALLEGRO MICROSYSTEMS, INC.
By:  

/s/ Hirohito Sekine

    By:  

/s/ Daniel Demingware

  Mr. Hirohito Sekine       Mr. Daniel Demingware
  General Manager, Sales Headquarters       Vice President Sales


EXHIBIT A

Products

AC adapters

Switching mode power supplies

Transformers


EXHIBIT B

Commissions

The following terms shall apply to sales representative commissions payable to Allegro pursuant to Section 5.4:

 

  1.

Commission.

Allegro shall be entitled to a commission of [XXX] percent ([XXX]%) of the “Net Sales” of Products. The term “Net Sales” shall mean the total revenues for Products shipped during a three-month quarter less returns and less the amount of any revenues previously included in net sales that Sanken determines during such month to be uncollectible.

 

  2.

Payment in Dollars.

Payments shall be made to Allegro in U.S. Dollars.

 

  3.

Exchange Rate.

Commissions shall be converted from local currency into U.S. Dollars on a quarterly basis pursuant to procedures established by the parties from time to time.

 

  4.

Payment Terms.

Payments shall be made to Allegro by the end of the month following the quarter for which quarterly Net Sales are calculated.

EX-10.18

[XXX] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

Exhibit 10.18

ROYALTY SHARING AGREEMENT

This Royalty Sharing Agreement (“Agreement”) is entered into between Sanken Electric Co., Ltd. “(Sanken”) and Allegro MicroSystems, LLC (“Allegro”) as of September 3, 2013 (“Effective Date”) (collectively “Parties” and singularly “Party”).

Recitals

WHEREAS, Sanken and Texas Instruments Incorporated (“TI”) entered into a Patent Portfolio Cross-License Agreement (“License”) dated September 3,2013; and

WHEREAS, Allegro has certain rights pertaining to TI’s patents as set forth in the License; and

WHEREAS, the Parties desire to share the royalty amounts payable to TI between their respective companies.

NOW, THEREFORE, the Parties hereby agree as follows:

 

  1.

Pursuant to the License, Sanken will pay TI twenty (20) equal semi-annual payments in the amount of [XXX] U.S. dollars ($[XXX]) with the final payment being made to TI on or before September 30th of 2022.

 

  2.

Sanken will pay [XXX]% (U.S. $[XXX]) and Allegro will pay [XXX]% (U.S. $500,500) of the royalty amounts payable to II.

 

  3.

On or before January 31, 2014, Allegro will pay Sanken one million and one thousand U.S. dollars (U.S. $1,001,000) as Allegro’s royalty sharing payment for the initial royalty payment and the first semi-annual payment paid by Sanken to TI on September 30, 2013 and October 3, 2013 respectively. Thereafter, Allegro’s remaining eighteen (18) semi-annual payments in the amount of five hundred thousand five hundred U.S. dollars (U.S. $500,500) will be paid to Sanken no later than March 31st and September 30th of each year unless otherwise agreed to by the Parties. Allegro shall pay any bank fees associated with its royalty sharing payments to Sanken.


  4.

Allegro’s obligation to pay any TI royalty sharing payments to Sanken shall end and this Agreement shall terminate in the event that Sanken ceases to own, directly or indirectly, more than fifty percent (50%) of the outstanding shares or stock or ownership interest in Allegro.

 

  5.

No provision of this Agreement shall be deemed waived, amended or modified unless set forth in a written instrument signed by an authorized officer of the Party against whom the waiver, amendment or modification is asserted.

 

  6.

All matters regarding this Agreement shall be interpreted in accordance with the laws of the Commonwealth of Massachusetts.

 

  7.

This Agreement sets forth the entire agreement and understanding between the Parties with respect to the specific subject matter hereof, superseding any prior agreements, understandings or communications between the Parties concerning such specific subject matter.

IN WITNESS WHEREOF, the Parties have entered into this Agreement as of the Effective Date set forth above.

 

Sanken Electric Co., Ltd.     Allegro MicroSystems, LLC
By:  

/s/ Akira Ota

    By:  

/s/ Dennis H. Fitzgerald

  Akira Ota       Dennis H. Fitzgerald
Title:   Director and Senior Vice President     Title:   President and CEO
EX-10.27

Exhibit 10.27

SANKEN NORTH AMERICA, INC.

CLASS A RESTRICTED STOCK AWARD AGREEMENT

This CLASS A RESTRICTED STOCK AWARD AGREEMENT (this “Agreement”) is made as of ________, by and among Sanken North America, Inc., a Delaware corporation (the “Company”), ________ (the “Stockholder”), and James M. Coonan in his capacity as the Secretary of the Company and escrow holder hereunder (the “Escrow Holder”).

WHEREAS, the Stockholder is an executive or employee of the Company and/or any of its subsidiaries; and

WHEREAS, the Company desires to grant and issue to the Stockholder, and the Stockholder desires to acquire from the Company, _________(___) shares of the Company’s Class A common stock, par value $0.01 per share (the “Class A Common Stock”), subject to, and in accordance with, the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the promises and mutual covenants herein set forth, and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto hereby mutually covenant and agree as follows:

1. Definitions. For purposes of this Agreement, the following terms shall have the meanings provided therefor below in this Section 1 or elsewhere as referred to below in this Section 1:

Beneficial Ownership” shall have the meaning ascribed to such term under Rule 13d-3 promulgated under the Exchange Act.

Board” shall mean the Board of Directors of the Company.

Cause” shall mean a good faith determination by the Board of Directors of the Company of any one or more of the following: (a) Stockholder’s (x) continued or repeated failure or refusal (after prior written notice thereof from the Board of Directors of the Company and Stockholder’s failure to cure such failure or refusal (if curable) within ten calendar days of such written notice, and other than due to Stockholder’s disability) to substantially perform the duties required by Stockholder’s position with the Company or any of its subsidiaries (it being understood that Stockholder’s failure to attain performance goals or targets or to otherwise fail to substantially perform the duties required by Stockholder’s position with the Company or any of its subsidiaries shall not constitute “Cause” hereunder if such failure is as a result of actions taken or not taken in good faith and with reasonable belief that such actions or omissions were in the best interests of the Company and its subsidiaries) or (y) failure or refusal to follow lawful directives of the Board of Directors of the Company; (b) gross negligence or willful misconduct (including unauthorized disclosure of material proprietary information) by Stockholder which results in a material detriment to the Company or any of its subsidiaries; (c) Stockholder’s conviction (by a court of competent jurisdiction, not subject to further appeal) of, or pleading guilty to, a felony that involves fraud or moral turpitude or that is perpetrated against the Company or any of its subsidiaries,


their respective businesses, or any of their respective assets, properties or personnel; or (iv) a material breach by Stockholder of this Agreement or any other written agreement with the Company or any of its subsidiaries to which Stockholder is a party.

Change in Control” shall mean:

(i) the acquisition by any Person of Beneficial Ownership of more than fifty percent (50%) of either (A) the outstanding shares of Class A Common Stock of the Company (the “Outstanding Class A Stock”) or (B) the combined voting power of the outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”) (the Beneficial Ownership referred under either of the foregoing clause (A) or clause (B) hereinafter being referred to as a “Controlling Interest”); provided, however, that for purposes of this definition, the following acquisitions shall not constitute or result in a Change in Control: (1) any acquisition directly from the Company; (2) any acquisition by any Person that owns, or by any Person that collectively with such Person’s affiliates own, Beneficial Ownership of a Controlling Interest on the date of this Agreement; (3) any acquisition by OEP or any of its affiliates of Beneficial Ownership of outstanding shares of Class A Common Stock of the Company (or any other voting securities of the Company entitled to vote generally in the election of directors) owned or held by Sanken or any of its affiliates; (4) any acquisition by the Company or any of its subsidiaries of outstanding shares of Class A Common Stock of the Company (or any other voting securities of the Company entitled to vote generally in the election of directors) owned or held by Sanken or any of its affiliates, provided that neither such acquisition nor any series of related acquisitions also include or involve outstanding shares of Class A Common Stock of the Company (or any other voting securities of the Company entitled to vote generally in the election of directors) owned or held by OEP or any of its affiliates; (5) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary of the Company; or (6) any acquisition by any corporation or other Person pursuant to a transaction which complies with clauses (A) and (B) of subsection (ii) below of this definition; or

(ii) the consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, or the acquisition of assets or stock or equity interests of another Person or entity by the Company or any of its subsidiaries (each a “Business Combination”), in each case, unless (A) immediately following such Business Combination, (1) all or substantially all of the Persons who were the Beneficial Owners, respectively, of the Outstanding Class A Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the outstanding voting securities entitled to vote generally in the election of directors (or equivalent persons) of the corporation or other Person resulting from such

 

-2-


Business Combination (including, without limitation, a corporation or other Person which as a result of such transaction owns the Company or all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, either directly or through one or more subsidiaries) (such resulting or acquiring corporation or other Person is referred to herein as the “Acquiring Person”) in substantially the same proportions as their Beneficial Ownership, immediately prior to such Business Combination, of the combined voting power of the Outstanding Company Voting Securities, and (2) at least a majority of the members of the Board of Directors or equivalent body of the corporation or other Person resulting from such Business Combination were members of the incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination, or (B) any such Business Combination consists of any acquisition by the Company or any of its subsidiaries of outstanding shares of Class A Common Stock of the Company (or any other voting securities of the Company entitled to vote generally in the election of directors) owned or held by Sanken or any of its affiliates, provided that neither such acquisition nor any series of related acquisitions also include or involve outstanding shares of Class A Common Stock of the Company (or any other voting securities of the Company entitled to vote generally in the election of directors) owned or held by OEP or any of its affiliates; or

(iii) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

Disability” shall mean Stockholder’s inability to perform the essential functions of his position as an executive or employee of the Company and/or any of its subsidiaries, with or without reasonable accommodation, for any period of ninety (90) consecutive days, or for one-hundred and eighty (180) days in the aggregate, during any twelve (12) month period, provided that such inability is determined and certified in writing by a licensed physician of Stockholder and, at the election of the Company, by a licensed physician selected by the Company (and in the even that any such physician of Stockholder and any such licensed physician selected by the Company disagree on the question of such inability, then such inability shall be determined by a third licensed physician selected by mutual agreement of such physician of Stockholder and any such licensed physician selected by the Company, which third licensed physician must be independent and not have any actual or potential conflicts of interest arising from any past or present relationship with, or any interest related to, Stockholder, the Company and its subsidiaries or either of the licensed physicians that selected such third licensed physician). This definition shall be interpreted and applied consistent with the Americans with Disabilities Act, the Family and Medical Leave Act, and other applicable law.

Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

Good Reason” shall mean the occurrence of any of the following without Stockholder’s prior written consent: (a) a reduction in Stockholder’s base salary paid or payable by the Company and/or any of its subsidiaries; or (b) a reduction in the target bonus of Stockholder for any fiscal year of the Company to a target bonus

 

-3-


that is more than ten percent (10%) below the target bonus of Stockholder for the 2017 fiscal year of the Company; or (c) a material diminution in Stockholder’s authority, duties, responsibilities, or reporting relationship in connection with Stockholder’s employment with the Company or any of its subsidiaries; (d) the relocation of Stockholder’s principal work location in connection with his employment by the Company or any of its subsidiaries to a facility or location more than thirty-five (35) miles from Stockholder’s then present principal work location, provided that, notwithstanding the foregoing provisions of this clause (d), from and after the currently contemplated and anticipated relocation of the Company’s principal executive offices to the greater Manchester, New Hampshire area, relocation of Stockholder’s principal work location to such principal executive offices of the Company in the greater Manchester, New Hampshire area or to a facility or location within thirty-five (35) miles of such principal executive offices of the Company in the greater Manchester, New Hampshire area, shall not constitute Good Reason; or (e) a material breach by the Company of this Agreement or a material breach by the Company or any of its subsidiaries of any other written agreement with the Stockholder to which the Company or any such subsidiary is a party.

Granted Shares” shall have the meaning ascribed to such term in Section 2 below.

OEP” shall mean OEP SKNA, L.P., a Cayman Islands exempted limited partnership.

Other Subject Securities” shall mean, collectively, any and all classes or series of capital stock of the Company that, at any time after the date of this Agreement, become subject to the provisions of this Agreement by virtue of the application of any of the provisions of Section 8(a) hereof. The term “Other Subject Security” shall mean any of the Other Subject Securities.

Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof.

Related Other Property” shall mean, with respect to any Shares, (i) any securities (other than Shares) and/or (ii) any other property or assets (other than cash dividends or other cash distributions), that are distributed in respect of, or that are exchanged for, such Shares.

Retirement” shall mean any voluntary termination by Stockholder of Stockholder’s employment with the Company and/or any of its subsidiaries after reaching age sixty-two (62) and completing at least sixty (60) full months of continuous employment with the Company and/or any of its subsidiaries.

Sanken” shall mean Sanken Electric Co., Ltd.

Section 4(a) Notice” shall have the meaning ascribed to such term in Section 4(a) hereof.

 

-4-


Section 4(c) Notice” shall have the meaning ascribed to such term in Section 4(c) hereof.

Severance Agreement” shall mean the Severance Agreement, dated of even date herewith, by and between the Company and the Stockholder, as amended or modified and in effect from time to time.

Shares” shall mean the Granted Shares, subject to adjustment pursuant to Section 8 hereof.

Stockholders’ Agreement” shall mean that certain Stockholders’ Agreement, dated of even date herewith, by and between the Company, Sanken, OEP and certain other shareholders of the Company, as amended and in effect from time to time.

Unvested Shares” shall mean, at the relevant time of reference thereto, those Shares that are then issued and outstanding and that are not Vested Shares at such time.

Vested Shares” shall mean, at the relevant time of reference thereto, those Shares that are then outstanding and that the Company shall no longer have the right to repurchase under Section 4(a) hereof in accordance with the provisions of Section 4(b) hereof.

2. Granted Shares.

(a) Subject to and upon the terms and conditions of this Agreement, the Company hereby grants and issues to the Stockholder, and the Stockholder hereby acquires from the Company, ________(___) shares of Class A Common Stock (the “Granted Shares”). The grant and issuance by the Company of the Granted Shares to the Stockholder shall be for and in consideration of past services that Stockholder has rendered to the Company and/or any of its subsidiaries and future services that Stockholder shall provide to the Company and/or any of its subsidiaries in the course of Stockholder’s continued employment with the Company and/or any of its subsidiaries. The Stockholder shall not be required to make payment to the Company of any cash or property for the Shares.

(b) If and to the extent that the Granted Shares are certificated (as determined by the Company), the Company shall prepare and duly execute one or more stock certificates, registered in the name of the Stockholder, representing the Granted Shares. Such stock certificate or stock certificates is or are endorsed with the legends set forth in Section 7(b) hereof. Together with such stock certificates (if any), the Stockholder shall duly execute and deliver to the Escrow Holder, to be held in escrow pursuant to the provisions of Section 5 hereof, stock powers or other appropriate instruments of assignment duly executed in blank by the Stockholder. Simultaneously with the execution and delivery of this Agreement by the parties hereto, the Stockholder is entering into and becoming a party to the Stockholders’ Agreement.

 

-5-


3. Risk of Forfeiture and Vesting of Shares.

(a) Risk of Forfeiture; Vesting; Additional Repurchase Right. The Shares are on the date hereof, and (to the extent they remain issued and outstanding) shall continue to be after the date hereof, subject to risk of forfeiture by virtue of the Company’s right to repurchase any or all of the Shares pursuant to, and in accordance with, the provisions of Section 4(a) hereof, unless and to the extent that such repurchase right of the Company lapses unexercised in accordance with the provisions of Section 4(b) hereof. Accordingly, all of the Shares are on the date hereof, and (to the extent they remain issued and outstanding) shall continue to be after the date hereof, Unvested Shares, unless and to the extent the repurchase right of the Company under Section 4(a) hereof lapses unexercised at any time after the date of this Agreement in accordance with the provisions of Section 4(b), in which case those Unvested Shares that are then issued and outstanding and with respect to which such repurchase right of the Company lapses unexercised shall automatically become fully vested and treated as Vested Shares for all purposes of this Agreement. In addition to the Company’s right to repurchase any or all of the Shares pursuant to Section 4(a) hereof, the Company shall also have the right to repurchase any or all of the Shares subject to, and upon, the terms and conditions of Section 4(c) and Section 4(d) hereof.

(b) Escrow of Unvested Shares. All Unvested Shares shall be held in escrow pursuant to Section 5 below. In addition to the restrictions on transfer and other provisions of this Agreement, Unvested Shares shall also be subject to the restrictions on transfer and other provisions of the Stockholders’ Agreement.

(c) Delivery of Vested Shares. Vested Shares shall, at the request of the Stockholder, be released from the escrow provided for in Section 5 hereof and shall be delivered to the Stockholder. Vested Shares may be subject to the restrictions on transfer and other provisions of the Stockholders’ Agreement.

(d) Vesting and Treatment of Related Other Property. All Related Other Property pertaining to Vested Shares shall be fully vested for all purposes of this Agreement. Subject to the provisions set forth below in this Section 3(d), all Related Other Property pertaining to Unvested Shares shall not be vested for any and all purposes of this Agreement and shall be held in escrow pursuant to Section 5 below. All Related Other Property pertaining to Unvested Shares shall automatically vest at such time as the Unvested Shares to which such Related Other Property pertains vest and become Vested Shares in accordance with the provisions of this Agreement. For clarity, any cash dividends or other cash distributions declared, paid or payable in respect of the Shares shall not be held in escrow pursuant to Section 5 below but shall be distributed or paid directly to the Stockholder and shall be deemed and treated as fully vested for any and all purposes of this Agreement.

4. Repurchase Rights.

(a) In the event that (A) a Change in Control has not occurred on or prior to the seventh (7th) anniversary of the date of this Agreement and (B) the Company has not consummated an initial public offering on or prior to the seventh (7th) anniversary of the date of this Agreement, then, subject to the provisions of Section 4(b) below, the Company shall have the right (but not the obligation) to repurchase from the Stockholder or his executor or personal representative any or all of the Shares pursuant to, and in accordance with, the provisions of this Section 4(a). The price payable by the Company for any Shares repurchased by the Company

 

-6-


pursuant to this Section 4(a) shall be equal to $0.0001 per share (subject to equitable and proportionate adjustment upon any stock split, stock dividend, reverse stock split or similar transactions with respect to the Class A Common Stock), payable in cash. In order to exercise its right to repurchase any Shares pursuant to this Section 4(a), (i) the Company must provide written notice (the “Section 4(a) Notice”) to Stockholder or his executor or personal representative within sixty (60) days after the seventh (7th) anniversary of the date of this Agreement stating that the Company is exercising its repurchase right under this Section 4(a) and specifying the number of Shares that the Company is going to repurchase pursuant to this Section 4(a) and (ii) the Company must tender to Stockholder or his executor or personal representative the purchase price payable by the Company in connection with such repurchase within thirty (30) days after the date that Company provides to Stockholder or his executor or personal representative such Section 4(a) Notice. The closing of the repurchase by the Company of the number of Shares specified in such Section 4(a) Notice shall take place at the offices of the Company at such time and on such date as specified in such Section 4(a) Notice, but in no event later than sixty (60) days after the date of such Section 4(a) Notice. At such closing, the Stockholder (or his or her estate, executor or legal representatives) shall deliver to the Company, or shall cause the Escrow Holder to deliver to the Company, duly executed stock powers with respect to the Shares to be repurchased pursuant to this Section 4(a), together with stock certificates (if any) evidencing such Shares, against payment by the Company of the purchase price therefor in accordance with the terms of this Section 4(a). At such closing, the Company shall also purchase and acquire from the Stockholder (or his or her estate, executor or legal representatives), and the Stockholder (or his or her estate, executor or legal representatives) shall also sell, assign and transfer to the Company, all of the Stockholder’s right, title and interest in and to the Related Other Property pertaining to the Shares being repurchased by the Company pursuant to this Section 4(a) at such closing. Other than payment by the Company to the Stockholder (or his or her estate, executor or legal representatives) of the purchase price for the Shares to be repurchased pursuant to this Section 4(a) at such closing, no consideration shall be payable by the Company to the Stockholder (or his or her estate, executor or legal representatives) for or in connection with the Related Other Property to be sold and transferred to the Company pursuant to this Section 4(a) at such closing. At such closing, the Stockholder (or his or her estate, executor or legal representatives) shall deliver to the Company, or shall cause the Escrow Holder to deliver to the Company, the Related Other Property being sold and transferred to the Company pursuant to this Section 4(a) at such closing and all instruments of transfer or assignment, duly executed, necessary to effect the sale and transfer to the Company of such Related Other Property.

(b) All of the Shares, to the extent they remain issued and outstanding, shall immediately and automatically become free from the Company’s repurchase rights under Section 4(a) above on the earlier to occur of (i) the time immediately prior to consummation of a Change in Control if such Change in Control is consummated on or prior to the seventh (7th) anniversary of the date of this Agreement and (ii) the closing of the Company’s initial public offering if such initial public offering is consummated on or prior to the seventh (7th) anniversary of the date of this Agreement. In addition, (x) in the event that the Stockholder exercises any tag-along or co-sale rights that Stockholder may have to sell or otherwise transfer any Shares pursuant to, or in connection with, the sale by any other stockholder of the Company of shares of capital stock of the Company owned by any such other stockholder of the Company (including, without limitation, any such tag-along or co-sale rights of the Stockholder under the Stockholders’

 

-7-


Agreement), such Shares, to the extent they previously have not otherwise become free from the Company’s repurchase rights under Section 4(a) hereof, shall automatically become free from the Company’s repurchase rights under Section 4(a) hereof immediately prior to the sale or other transfer of such Shares by the Stockholder pursuant to the exercise of any such tag-along or co-sale rights by the Stockholder, and (y) any Shares that the Company has the right to repurchase pursuant to Section 4(a) hereof shall automatically become free from the Company’s repurchase rights under Section 4(a) hereof if the Company does not deliver to the Stockholder (or his or her estate, executor or legal representatives) a Section 4(a) Notice with respect to such Shares on a timely basis as required under Section 4(a) hereof or if the Company fails to take any other action on a timely basis that the Company is required to take under Section 4(a) hereof in order to properly exercise the Company’s right to repurchase such Shares pursuant to Section 4(a) hereof.

(c) In the event that Stockholder voluntarily terminates his employment with the Company and/or any of its subsidiaries for any reason other than Good Reason, or in the event that the Company terminates Stockholder’s employment with the Company and/or any of its subsidiaries for Cause or for Stockholder’s Disability, or in the event of the termination of Stockholder’s employment with the Company and/or any of its subsidiaries by virtue of Stockholder’s death, then the Company shall have the right (but not the obligation) to repurchase from the Stockholder any or all of those of the Shares that have not, in accordance with the provisions set forth in Section 4(d) below, become free from the Company’s repurchase right under this Section 4(c), such repurchase to be pursuant to, and in accordance with, the provisions of this Section 4(c). The price payable by the Company for any Shares repurchased by the Company pursuant to this Section 4(c) shall be equal to $0.0001 per share (subject to equitable and proportionate adjustment upon any stock split, stock dividend, reverse stock split or similar transactions with respect to the Class A Common Stock), payable in cash. In order to exercise its right to repurchase any Shares pursuant to this Section 4(c), (i) the Company must provide written notice (the “Section 4(c) Notice”) to Stockholder or his executor or personal representative within sixty (60) days after any such termination of employment stating that Company is exercising its repurchase right under this Section 4(c) and specifying the number of Shares that the Company is going to repurchase pursuant to this 4(c), and (ii) the Company must tender to the Stockholder or his executor or personal representative the purchase price payable by the Company in connection with such repurchase within thirty (30) days after the date that Company provides to Stockholder or his executor or personal representative such Section 4(c) Notice. For clarity, if the Stockholder’s employment with the Company and/or any of its subsidiaries is terminated by the Stockholder by reason of Stockholder’s Retirement, if the Stockholder’s employment with the Company and/or any of its subsidiaries is terminated by reason of Stockholder’s death or if Stockholder’s employment with the Company and/or any of its subsidiaries is terminated by the Stockholder or by the Company or any of its subsidiaries by reason of Disability, the Company’s repurchase right under this 4(c) shall be applicable in the case of any such termination of employment but only with respect to those Shares that have not become free, pursuant to Section 4(d) below, from the Company’s repurchase rights under this 4(c) immediately after the effective time of any such termination of the Stockholder’s employment with the Company and/or any of its subsidiaries. The closing of the repurchase by the Company of the number of Shares specified in such Section 4(c) Notice shall take place at the offices of the Company at such time and on such date as specified in such Section 4(c) Notice, but in no event later than sixty (60) days after the date of such Section 4(c) Notice. At such closing, the Stockholder (or his or her estate,

 

-8-


executor or legal representatives) shall deliver to the Company, or shall cause the Escrow Holder to deliver to the Company, duly executed stock powers with respect to the Shares to be repurchased pursuant to this Section 4(c), together with stock certificates (if any) evidencing such Shares, against payment by the Company of the purchase price therefor in accordance with the terms of this Section 4(c). At such closing, the Company shall also purchase and acquire from the Stockholder (or his or her estate, executor or legal representatives), and the Stockholder (or his or her estate, executor or legal representatives) shall also sell, assign and transfer to the Company, all of the Stockholder’s right, title and interest in and to the Related Other Property pertaining to the Shares being repurchased by the Company pursuant to this Section 4(c) at such closing. Other than payment by the Company to the Stockholder (or his or her estate, executor or legal representatives) of the purchase price for the Shares to be repurchased pursuant to this Section 4(c) at such closing, no consideration shall be payable by the Company to the Stockholder (or his or her estate, executor or legal representatives) for or in connection with the Related Other Property to be sold and transferred to the Company pursuant to this Section 4(c) at such closing. At such closing, the Stockholder (or his or her estate, executor or legal representatives) shall deliver to the Company, or shall cause the Escrow Holder to deliver to the Company, the Related Other Property being sold and transferred to the Company pursuant to this Section 4(c) at such closing and all instruments of transfer or assignment, duly executed, necessary to effect the sale and transfer to the Company of such Related Other Property.

(d) All of the Shares, to the extent they remain issued and outstanding and subject to the Company’s repurchase rights under Section 4(c) hereof, shall immediately and automatically become free from the Company’s repurchase rights under Section 4(c) hereof on the earlier to occur of (1) the fifth (5th) anniversary of the date of this Agreement, (2) the time when the Shares become free from the Company’s repurchase rights under Section 4(a) hereof, (3) the termination by the Company and/or any of its subsidiaries of Stockholder’s employment with the Company and/or any of its subsidiaries for any reason other than Cause or Disability and (4) the termination by the Stockholder of Stockholder’s employment with the Company and/or any of its subsidiaries for Good Reason. In the event that, at any time prior to the earlier to occur of (i) the fifth (5th) anniversary of the date of this Agreement and (ii) the time when the Shares become free from the Company’s repurchase rights under Section 4(a) hereof, the Stockholder’s employment with the Company and/or any of its subsidiaries is terminated on account of the Stockholder’s death, Retirement or Disability (in the case of Disability, regardless of whether any such termination is by the Company or by the Stockholder), that portion of the Shares then issued and outstanding that is equal to the product of (x) the total number of Shares then issued and outstanding and (y) a fraction, the numerator of which is the number of calendar months that have elapsed during the period commencing on the date of this Agreement and ending on the effective date of such termination of employment (and, for clarity, including the calendar month in which the date of this Agreement and the effective date of such termination of employment occur), and the denominator of which is 36, shall immediately and automatically become free from the Company’s repurchase rights under Section 4(c) hereof at the effective time of any such termination of the Stockholder’s employment with the Company and/or any of its subsidiaries; provided, that, in no event shall the application of this sentence result in vesting of a greater number of Shares than the Shares then owned or held by the Stockholder. In addition, any Shares that the Company has the right to repurchase pursuant to Section 4(c) hereof shall automatically become free from the Company’s repurchase rights under Section 4(c) hereof if the Company

 

-9-


does not deliver to the Stockholder (or his or her estate, executor or legal representatives) a Section 4(c) Notice with respect to such Shares on a timely basis as required under Section 4(c) hereof or if the Company fails to take any other action on a timely basis that the Company is required to take under Section 4(c) hereof in order to properly exercise the Company’s right to repurchase such Shares pursuant to Section 4(c) hereof.    

5. Escrow.

(a) Escrow Deposit. The Stockholder shall deliver or cause to be delivered to the Escrow Holder a stock power, in the form attached hereto as Exhibit A, executed in blank by the Stockholder with respect to the Unvested Shares, together with a stock certificate or stock certificates (if any) representing the Unvested Shares. From time to time during the term of this Agreement, the Stockholder shall also deliver or cause to be delivered to the Escrow Holder all Related Other Property that pertains to any Unvested Shares, together with such instruments of assignment or transfer reasonably requested by the Company or the Escrow Holder executed in blank by the Stockholder. The Escrow Holder shall hold in escrow pursuant to this Section 5 any and all of such stock power, instruments of assignment and, if any, stock certificates that are so delivered to the Escrow Holder, until all of such Unvested Shares become Vested Shares pursuant to, and in accordance with, the provisions of Section 4 hereof or until all of such Unvested Shares are repurchased by the Company pursuant to, and in accordance with, the provisions of Section 4 hereof, whichever occurs earlier. The Escrow Holder shall also hold in escrow pursuant to this Section 5 all Related Other Property that is so delivered to the Escrow Holder, until the Unvested Shares to which such Related Other Property pertains become Vested Shares pursuant to, and in accordance with, the provisions of Section 4 hereof or until all of such Unvested Shares are repurchased by the Company pursuant to, and in accordance with, the provisions of Section 4 hereof, whichever occurs earlier.

(b) Rights of Stockholder with respect to Unvested Shares held in Escrow. The Stockholder shall have all the rights of a stockholder with respect to the Unvested Shares while they are held in escrow, including without limitation, the right to vote such Unvested Shares and the right to receive dividends with respect to such Unvested Shares.

(c) Obligations and Liabilities of the Escrow Holder. The Escrow Holder shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by the Escrow Holder to be genuine and to have been signed or presented by the proper party or parties. The Escrow Holder shall not be personally liable for any act the Escrow Holder may do or refrain from doing hereunder as Escrow Holder or as attorney-in-fact for the Stockholder, provided that the Escrow Holder acts or refrains from acting in good faith and in the exercise of his own good judgment, and any act that he does or refrains from doing pursuant to the advice of counsel (which may be counsel to the Company) shall be conclusive evidence of such good faith.

 

-10-


(d) Duties of the Escrow Holder.

(i) In the event of any repurchase of Unvested Shares pursuant to, and in accordance with, the provisions of Section 4 hereof, the Escrow Holder shall take all steps necessary to consummate such repurchase, including, but not limited to, (A) presentment to the Company or its transfer agent of stock powers executed by or in the name of the Stockholder appropriately completed by the Escrow Holder, together with stock certificates (if any) representing the Unvested Shares subject to such repurchase and irrevocable instructions to register the transfer of such Unvested Shares into the name of the Company or its designee, and (B) delivery to the Company of the Related Other Property pertaining to such Unvested Shares, together with appropriate instruments of transfer or assignment executed by or in the name of Stockholder appropriately completed by the Escrow Holder for purposes of conveying title to such Related Other Property to the Company. The Stockholder hereby appoints the Escrow Holder his irrevocable attorney-in-fact to execute in his name, acknowledge and deliver all stock powers and other instruments as may be necessary or desirable with respect to the repurchase of any Unvested Shares and the purchase of the Related Other Property pertaining to such Unvested Shares, in each case pursuant to, and in accordance with, the provisions of Section 4 hereof.

(ii) Upon any Unvested Shares becoming Vested Shares in accordance with the provisions of this Agreement, the Escrow Holder shall, at the request of the Stockholder, either promptly cause a new certificate endorsed with the appropriate legends to be issued for such Unvested Shares that have become Vested Shares and shall deliver such certificate to the Stockholder. Upon any Unvested Shares becoming Vested Shares, the Escrow Holder shall also, at the request of the Stockholder, promptly deliver to Stockholder all Related Other Property that pertains to such Unvested Shares that became Vested Shares.

(iii) The Escrow Holder may, but need not, submit a memorandum to the Stockholder and to the Company setting forth action the Escrow Holder intends to take with respect to the escrow of the Unvested Shares and the Related Other Property pertaining to Unvested Shares and requesting the parties to acknowledge the propriety of the intended action. If, in any such case, either party fails or refuses to acknowledge the propriety of the intended action, the Escrow Holder may seek the advice of counsel, who may be counsel to the Company, and any action taken in accordance with the written advice of such counsel shall be full protection to the Escrow Holder in respect thereto against any person. It is agreed that in any event the Escrow Holder shall not be liable for any action or failure to act taken in good faith, and that his liability shall be limited to actions or inaction constituting gross negligence or willful misconduct.

(iv) It is understood and agreed that should any dispute arise with respect to the delivery, ownership or right of possession of the Unvested Shares or any Related Other Property pertaining to the Unvested Shares, the Escrow Holder is authorized and directed to retain in his possession without liability to anyone all or any part of said Unvested Shares or Related Other Property until such dispute shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but he shall be under no duty whatsoever to institute or defend any such proceedings.

(v) The Escrow Holder is hereby expressly authorized to comply with and obey orders, judgments or decrees of any court. In case the Escrow Holder obeys or complies with any such order, judgment or decree, he shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such compliance, notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction.

 

-11-


(vi) The parties hereto understand that the Escrow Holder is the Secretary of the Company and is legal counsel to the Company, and that the Escrow Holder may continue to act as the Secretary of the Company and as legal counsel to the Company in the event of any dispute in connection with this Agreement or any other transaction contemplated herein or affected hereby.

(vii) By signing this Agreement, the Escrow Holder becomes a party to this Agreement only for the purposes of this Section 5.

(e) Change of Duties. The Escrow Holder’s duties hereunder may be altered, amended, modified, or revoked only by a writing signed by all of the parties hereto; provided, however, that the Company may at any time, at its option, elect to terminate this escrow by notice to the Stockholder and the Escrow Holder.

(f) Costs and Fees. All reasonable costs, fees and disbursements incurred by the Escrow Holder in connection with the performance of his duties hereunder shall be borne by the Company.

(g) Resignation. The Escrow Holder reserves the right, upon notice to the Company and the Stockholder, to resign from his duties as Escrow Holder and to appoint a substitute Escrow Holder.

6. Investment Representations and Warranties. The Stockholder hereby represents and warrants to the Company as follows:

(a) Investment Intent. The Shares are being acquired as the Stockholder’s own property for investment for an indefinite period for his own account, not as a nominee or agent, and not with a view to the sale or distribution of any part thereof. The Stockholder has no present intention of selling, granting participation in, or otherwise distributing the same.

(b) Securities Laws. The Stockholder understands (i) that the Shares are not registered under the Securities Act 1933, as amended (the “Securities Act”), or qualified under any state’s securities laws, and (ii) that the Shares are being issued to the Stockholder on the ground that the issuance provided for in this Agreement is exempt from registration under the Securities Act and exempt from qualification and/or registration under any applicable state’s securities laws.

(c) Restricted Securities. The Stockholder understands that the Shares are restricted securities under the Securities Act and may not be resold or transferred unless the Shares are first registered under the Federal securities laws or unless an exemption from such registration is available. In addition, the Stockholder understands that any resale or transfer must comply with applicable state securities laws. Accordingly, the Stockholder hereby acknowledges that the Stockholder is prepared to hold the Shares for an indefinite period, until resale is permitted under applicable law.

 

-12-


(d) Residence. The Stockholder’s principal place of residence is at the Stockholder’s address set forth in Section 10(c) hereof.

(f) Investment Experience. Stockholder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of acquiring and holding the Shares, has the ability to bear the economic risks of acquiring and holding the Shares and has been furnished with and has had access to all of the information the Stockholder considers necessary or appropriate to evaluate the risks and merits of acquiring and holding the Shares, and has had an opportunity to discuss the Company’s business, management and financial affairs with other members of the Company’s management.

7. Restrictions on Transfer.

(a) No Transfers. Except for (i) the escrow described in Section 5 above, (ii) the transfer of any Unvested Shares and the Related Other Property pertaining to such Unvested Shares to the Company as contemplated by this Agreement, (iii) the transfer of any Unvested Shares or of any Related Other Property pertaining to Unvested Shares with the prior written consent of the Company or (iv) any transfer of any Unvested Shares that is expressly permitted under the Stockholders’ Agreement, none of the Unvested Shares, any Related Other Property pertaining to such Unvested Shares or any beneficial interest in Unvested Shares or the Related Other Property pertaining to such Unvested Shares shall be transferred, encumbered or otherwise disposed of in any way until such Unvested Shares have become Vested Shares pursuant to, and in accordance with, the provisions of Section 4 hereof. Any transfer of Unvested Shares that is permitted in accordance with the foregoing provisions of this Section 7(a) must nevertheless also be permitted under, and comply with, all applicable restrictions on transfer and other provisions of the Stockholders’ Agreement.

(b) Legend for Unvested Shares. The Shares, as well as any instruments, documents or certificates evidencing any of the Shares, shall be endorsed with a legend, in addition to any other legend required by the Stockholders’ Agreement, substantially as follows:

“THE SHARES ARE SUBJECT TO A CLASS A RESTRICTED STOCK AWARD AGREEMENT DATED AS OF ________, AS AMENDED AND IN EFFECT FROM TIME TO TIME, AND TO THE RESTRICTIONS UPON TRANSFER CONTAINED THEREIN. A COPY OF SUCH CLASS A RESTRICTED STOCK AWARD AGREEMENT WILL BE FURNISHED TO ANY INTERESTED PARTY UPON WRITTEN REQUEST FREE OF CHARGE.”

(c) Additional Restrictions on Transfer. The Stockholder hereby acknowledges that the Shares and the Stockholder’s beneficial interest in the Shares shall also be subject to all applicable restrictions on transfer and other provisions set forth in the Stockholders’ Agreement.

 

-13-


8. Adjustment for Stock Splits, etc.

(a) In the event that at any time after the date of this Agreement the Company implements any stock dividend, reclassification, recapitalization or other change in or with respect to the Class A Common Stock or Other Subject Securities resulting in shares of any class or series of capital stock of the Company being distributed in respect of, or being exchanged for, the Shares, then, from and after the effectiveness of such stock dividend, reclassification, recapitalization or other change, (i) the term “Shares” shall include or mean, as applicable, all of such shares of such class or series of capital stock of the Company, and (ii) all of such shares of such class or series of capital stock of the Company shall be held subject to all of the terms and conditions of this Agreement to the same extent as the Shares were subject to immediately prior to the effectiveness of such stock dividend, reclassification, recapitalization or other change. The provisions of this Section 8(a) shall not apply with respect to any stock dividend in respect of which an adjustment is provided for pursuant to the provisions of Section 8(b) below.

(b) In the event that at any time after the date of this Agreement the Company implements any stock split, stock dividend or reverse stock split in or with respect to the Class A Common Stock or any Other Subject Security resulting in an increase or decrease in the outstanding shares of Class A Common Stock or in the outstanding number of such Other Subject Security, then all references in this Agreement to any number of Shares shall be appropriately adjusted to reflect any such stock split, stock dividend, or reverse stock split.

(c) In the event that at any time after the date of this Agreement the Company implements any stock split, stock dividend, reverse stock split, reclassification, recapitalization or other change in or with respect to the Class A Common Stock or any of the Other Subject Securities, then all references in this Agreement to the purchase price per share for any of the Shares shall be appropriately adjusted to take into account any such stock split, stock dividend, reverse stock split, reclassification, recapitalization or other change.

(d) The foregoing provisions of this Section 8 shall apply successively to one or more stock splits, stock dividends, reverse stock splits, reclassifications, recapitalizations or other changes in or with respect to the Class A Common Stock or any of the Other Subject Securities.

9. Tax Representations.

(a) Stockholder understands that Stockholder may suffer adverse tax consequences as a result of Stockholder’s acquisition, holding (including upon lapse of applicable repurchase rights) and/or disposition of the Shares. Stockholder represents that Stockholder has consulted with any tax consultants Stockholder deems advisable in connection with the grant or disposition of the Shares and that no action or representation by the Company shall be construed as the giving of tax advice and Stockholder is not relying on the Company for any tax advice.

(b) STOCKHOLDER ACKNOWLEDGES AND UNDERSTANDS THAT STOCKHOLDER SHALL BE REQUIRED TO SATISFY, AND SHALL BE SOLELY LIABLE FOR, ALL APPLICABLE FEDERAL, STATE, LOCAL AND FOREIGN TAX WITHHOLDING OBLIGATIONS ASSOCIATED WITH THE SHARES, AND

 

-14-


STOCKHOLDER HEREBY AGREES TO PAY SUCH WITHHOLDING AMOUNTS TO THE COMPANY AT SUCH TIMES AND IN SUCH FORM AS COMPANY SHALL REQUIRE FOR PURPOSES OF TIMELY SATISFYING SUCH WITHHOLDING OBLIGATIONS.

10. General Provisions.

(a) Governing Law. This Agreement shall be governed by the internal substantive laws of the Commonwealth of Massachusetts, without reference to any conflict of laws provisions thereof that would implicate the substantive or procedural laws of any other jurisdiction.

(b) Entire Agreement; Amendments. This Agreement represents the entire agreement between the parties with respect to the subject matter of this Agreement and supersedes all prior written and oral agreements and understandings between the parties to the extent that such prior written and oral agreements relate or pertain to the subject matter of this Agreement. This Agreement may only be modified or amended pursuant to a written agreement or instrument signed by the Company and the Stockholder or, with respect to Section 5, the Company, the Stockholder and the Escrow Holder.

(c) Notices. Any notice, demand, request or other communication hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or duly sent by first class registered, certified or overnight mail, postage prepaid, or telecopied with a confirmation copy by regular, certified or overnight mail, postage prepaid, or delivered via pdf to such party at the address or telecopier number or e-mail address, as the case may be, set forth below or such other address or telecopier number or e-mail address, as the case may be, as may hereafter be designated in writing by the addressee to the addressor listing all parties:

if to the Company, to:

Sanken North America, Inc.

c/o Allegro MicroSystems, LLC

115 Northeast Cutoff

Worcester, MA 01606

Attention: Ravi Vig, President and Chief Operating Officer

                  Richard Kneeland, Vice President, General Counsel

E-mail: [***]

            [***]

with a copy to:

Morgan, Lewis & Bockius LLP

One Federal Street

Boston, MA 02110

Attention: ________

Facsimile: ________

E-mail: ________

 

-15-


if to the Stockholder, to:

________

________

________

E-mail: ________

if to the Escrow Holder, to:

James M. Coonan

Coonan & Associates, P.C.

26 S. Third Street, #520

Geneva, IL 60134

E-mail: [***]

All such notices, requests and other communications shall be deemed to have been received: (i) in the case of personal delivery, on the date of such delivery; (ii) in the case of mail, on the third day following deposit into the mail; (iii) in the case of facsimile transmission, when confirmed by facsimile machine report; and (iv) in the case of e-mail, upon delivery of such e-mail.

(d) Binding Effect. This Agreement shall inure to the benefit of, and be binding upon, the heirs, personal representatives, executors, administrators, successors and/or permitted assigns of the parties. This Agreement shall also inure to the benefit of, and be binding upon, any transferee of the Shares.

(e) Assignment. The rights and benefits of the Company under this Agreement shall be transferable to any one or more persons or entities, and all covenants and agreements hereunder shall inure to the benefit of, and be enforceable by, the Company’s successors and assigns. Except to the extent otherwise provided in Section 10(d) above or in Section 10(l) below, the Stockholder may not assign any of its rights or obligations under this Agreement without the Company’s prior written consent.

(f) No Waiver. Either party’s failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any such provision or provisions, nor prevent the party thereafter from enforcing each and every other provision of this Agreement. The rights granted both parties herein are cumulative and shall not constitute a waiver of either party’s right to assert all other legal remedies available to it under the circumstances.

(g) Severability. If any provision of this Agreement shall be held illegal, invalid or unenforceable, such illegality, invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render illegal, invalid or unenforceable any other severable provisions of this Agreement.

(h) Headings. Headings are for convenience only and are not deemed to be part of this Agreement.

 

-16-


(i) Further Assurances. The Stockholder agrees upon request to execute any further documents or instruments necessary or desirable to carry out the purposes or intent of this Agreement.

(j) Counterparts. This Agreement may be executed in counterparts, all of which together shall for all purposes constitute one agreement, binding on each of the parties hereto notwithstanding that each such party shall not have signed the same counterpart.

(k) Relationship with Stockholder. The Company is not by reason of this Agreement or the issuance of any Shares obligated to continue the Stockholder’s association with the Company as an officer, director, employee, consultant, or in any other capacity.

(l) Death or Incapacity of Stockholder. In the event of the death or incapacity of the Stockholder, the rights and obligations of the Stockholder under this Agreement shall be exercised, enforced and performed by the Stockholder’s estate, executors or legal representatives, as applicable.

(m) Consent to Jurisdiction. In case of any dispute hereunder, the parties will submit to the exclusive jurisdiction and venue of any court of competent jurisdiction sitting in the Commonwealth of Massachusetts, and will comply with all requirements necessary to give such court jurisdiction over the parties and the controversy.

(n) Stockholder’s Acknowledgements. The Stockholder acknowledges that he: (i) has read this Agreement; (ii) has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of the Stockholder’s own choice or has voluntarily declined to seek such counsel; (iii) understands the terms and consequences of this Agreement; (iv) is fully aware of the legal and binding effect of this Agreement; and (v) understands that the law firm of Morgan, Lewis & Bockius LLP is acting as counsel to the Company in connection with the transactions contemplated by the Agreement, and is not acting as counsel for the Stockholder.

 

-17-


IN WITNESS WHEREOF, the parties have duly executed this Agreement under seal as of the day and year first above written.

 

STOCKHOLDER

 

Name:              

SANKEN NORTH AMERICA, INC.
By:  

 

Name:             
Title:              
ESCROW HOLDER

 

James M. Coonan

[Signature Page to Restricted Stock Award Agreement]


Exhibit A

STOCK POWER

For Value Received, and subject to the escrow provisions in Section 5 of that certain Restricted Stock Award Agreement, dated as of _____________, among Sanken North America, Inc. (the “Company”), ________ (the “Stockholder”), and James M. Coonan, in his capacity as Escrow Holder, with full power of substitution in the premises, the Stockholder has bargained, sold, assigned and transferred, and by these presents does bargain, sell, assign and transfer unto the Company, __________(____) shares of the Company’s Class A Common Stock, par value $0.01 per share, standing in his name on the books of the Company.

And does hereby constitute and appoint James M. Coonan his true and lawful attorney, IRREVOCABLY, for himself and in his name and stead, to sell, assign, transfer, and make over, all or any part of the said stock, and for that purpose to make and execute all necessary acts of assignment and transfer thereof, and to substitute one or more persons with like full power, hereby ratifying and confirming all that said Attorney or substitute or substitutes shall lawfully do by virtue hereof.

[The remainder of this page is intentionally left blank; signature page to follow.]


 

Name:

 

Date:

[Signature Page to Stock Power (Class A)]

EX-10.28

Exhibit 10.28

ALLEGRO MICROSYSTEMS, INC.

AMENDMENT TO

CLASS A RESTRICTED STOCK AWARD AGREEMENTS

June 18, 2019

This AMENDMENT (this “Amendment”) to the each of the CLASS A RESTRICTED STOCK AWARD AGREEMENTS (the “Agreements”) identified on Exhibit A hereto by and among Allegro MicroSystems, Inc. (formerly known as Sanken North America, Inc.), a Delaware corporation (the “Company”), and each of the undersigned stockholders of the Company (each a “Stockholder” and collectively, the “Stockholders”) is made as of June 18, 2019. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in each Agreement.

WHEREAS, each Stockholder is an executive or employee of the Company and/or any of its subsidiaries; and

WHEREAS, each of the undersigned Stockholders entered into one or more individual Agreements with the Company pursuant to which the Company issued to the Stockholder shares of the Company’s Class A common stock, par value $0.01 per share, subject to the restrictions and other terms and conditions of the applicable Agreement; and

WHEREAS, each Agreement may only be modified or amended pursuant to a written agreement or instrument signed by the Company and such Stockholder;

NOW, THEREFORE, in consideration of the promises and mutual covenants herein set forth, and other good and valuable consideration, receipt of which is hereby acknowledged, each individual Stockholder hereto and the Company hereby mutually covenant and agree as follows:

1. Amendment. Effective upon the date hereof, each individual Agreement is hereby amended as set forth below in this Section 1 for purposes of reaffirming the understanding of the Company and the Stockholder party thereto with respect to the definition of “Change in Control” set forth in such individual Agreement:

1.1 The definition of “Beneficial Ownership” set forth in Section 1 of each individual Agreement is hereby deleted in its entirety; and

1.2 The definition of “Change in Control” set forth in Section 1 of each individual Agreement is hereby deleted in its entirety and replaced with the following:

Change in Control” shall mean:

(i) the acquisition by any Person of more than fifty percent (50%) of the outstanding shares of Class A Common Stock of the Company (the “Controlling Interest”); provided, however, that for purposes of this definition, the following acquisitions shall not constitute or result in a Change in Control: (1) any acquisition directly from the Company; (2) any acquisition by any Person that


owns, or by any Person that collectively with such Person’s affiliates own, a Controlling Interest on the date of this Agreement; (3) any acquisition by OEP or any of its affiliates of outstanding shares of Class A Common Stock of the Company owned or held by Sanken or any of its affiliates; (4) any acquisition by the Company or any of its subsidiaries of outstanding shares of Class A Common Stock of the Company owned or held by Sanken or any of its affiliates, provided that neither such acquisition nor any series of related acquisitions also include or involve outstanding shares of Class A Common Stock of the Company owned or held by OEP or any of its affiliates; (5) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary of the Company; or (6) any acquisition by any corporation or other Person pursuant to a transaction which complies with clauses (A) and (B) of subsection (ii) below of this definition; or

(ii) the consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, or the acquisition of assets or stock or equity interests of another Person or entity by the Company or any of its subsidiaries (each a “Business Combination”), in each case, unless (A) immediately following such Business Combination, (1) all or substantially all of the Persons who were the owners or holders of the Controlling Interest immediately prior to such Business Combination own or hold, directly or indirectly, more than fifty percent (50%) of the combined voting power of the outstanding voting securities entitled to vote generally in the election of directors (or equivalent persons) of the corporation or other Person resulting from such Business Combination (including, without limitation, a corporation or other Person which as a result of such transaction owns the Company or all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, either directly or through one or more subsidiaries) (such resulting or acquiring corporation or other Person is referred to herein as the “Acquiring Person”) in substantially the same proportions as their ownership or holding, immediately prior to such Business Combination, of the Controlling Interest, and (2) at least a majority of the members of the Board of Directors or equivalent body of the corporation or other Person resulting from such Business Combination were members of the incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination, or (B) any such Business Combination consists of any acquisition by the Company or any of its subsidiaries of outstanding shares of Class A Common Stock of the Company owned or held by Sanken or any of its affiliates, provided that neither such acquisition nor any series of related acquisitions also include or involve outstanding shares of Class A Common Stock of the Company owned or held by OEP or any of its affiliates; or

(iii) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

 

-2-


2. Remaining Provisions. All of the provisions of each Agreement, as modified hereby, remain in full force and effect. On and after the date hereof, the term Agreement, as used throughout each Agreement, shall be deemed to refer to the Agreement as modified by this Amendment.

3. General.

(a) Captions. Titles or captions of sections contained in this Amendment are inserted only as a matter of convenience and for reference, and in no way define, limit, extend or describe the scope of this Amendment or the intent of any provision hereof.

(b) Counterparts. For the purpose of facilitating proving this Amendment, and for other purposes, this Amendment may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument.

[The remainder of this page is intentionally left blank.]

 

-3-


IN WITNESS WHEREOF, the parties have duly executed this agreement under seal as of the day and year first above written.

 

ALLEGRO MICROSYSTEMS, INC.
By:  

/s/ Ravi Vig

Name: Ravi Vig
Title: President and CEO

[Signature Page to Amendment of Class A Restricted Stock Award Agreement]


EXHIBIT A

 

Name

 

Date(s) of Agreements

   
Executives:    
Ravi Vig   October 3, 2017
Paul Walsh   October 3, 2017
Daniel Demingware   October 3, 2017
Thomas Teebagy   October 3, 2017
Michael Doogue   October 3, 2017
Sean Burke   October 3, 2017
Vijay Mangtani   October 3, 2017
Robert Fortin   October 3, 2017
Richard Kneeland   October 3, 2017
James Beuerle   October 3, 2017
Kurt Walter   October 3, 2017
Harianto Wong   October 3, 2017
Philip Stathas   October 3, 2017
   
Sr. Managers:    
Jamie Haas   October 3, 2017
Robert Stoddard   October 3, 2017
Peter Wells   October 3, 2017
Scott Miline   October 3, 2017
James Judkins   October 3, 2017
John Vigars   October 3, 2017
James Moore   October 3, 2017


STOCKHOLDER

 

Print Name:

[Signature Page to Amendment of Class A Restricted Stock Award Agreement]

EX-10.29

Exhibit 10.29

SANKEN NORTH AMERICA, INC.

CLASS L COMMON STOCK GRANT AGREEMENT

THIS CLASS L COMMON STOCK GRANT AGREEMENT (this “Agreement”) is made as of _________ (the “Effective Date”) by and between Sanken North America, Inc., a Delaware corporation (the “Company”), and _________ (“Holder”).

WHEREAS, Holder desires to acquire and the Company desires to issue to Holder shares of its Class L Common Stock (as defined in the Amended and Restated Certificate of Incorporation of the Company (as the same may be further amended or restated from time to time) (the “Certificate of Incorporation”)) on the terms set forth herein. Terms used but not otherwise defined herein shall have the meanings ascribed to them in the Stockholders’ Agreement (as defined below).

NOW, THEREFORE, IT IS AGREED between the parties as follows:

1. Issuance of Stock. Effective as of the Effective Date, the Company hereby issues to Holder, in respect of services provided by Holder and to be provided by Holder to the Company, an aggregate of _________(___) shares of Class L Common Stock, subject to the restrictions and the terms and conditions set forth herein and in the Stockholders’ Agreement (as defined below) (such restricted shares of Class L Common Stock, the “Restricted Shares”).

2. Delivery of Certificates; Assignment; Spousal Consent. If and to the extent that the Restricted Shares are certificated (as determined by the Company), any certificates representing the Restricted Shares hereunder shall be held in escrow by the Company as provided in Section 10 hereof. Holder shall deliver to the Secretary of the Company, concurrently with the execution of this Agreement, (a) a duly executed blank Assignment Separate from Certificate (in the form attached hereto as Exhibit A), and (b) a Spousal Consent form (in the form attached hereto as Exhibit B) duly executed by Holder’s spouse or registered domestic partner (if married or registered as a domestic partner as of the Effective Date) or by Holder (if unmarried and not registered as a domestic partner as of the Effective Date).

3. Stockholders’ Agreement; Stockholder Rights. As a condition to the grant of the Restricted Shares hereunder, concurrently with the entry into this Agreement, Holder shall, in accordance with Section 14 below, enter into the stockholders’ agreement prescribed by the Company to be entered into by the Company, Holder and the other stockholders of the Company (the “Stockholders’ Agreement”). Subject to the terms and conditions hereof, including but not limited to Section 4 hereof, and the terms and conditions of the Company’s Certificate of Incorporation and the Stockholders’ Agreement, Holder (or its successor in interest) shall have all the rights of a stockholder of Class L Common Stock of the Company with respect to each Restricted Share (including voting and dividend rights); provided, however, that Holder shall not be entitled to receive any dividends or distributions prior to the date on which the Restricted Share to which any such dividend or distribution relates becomes vested (and any distributions or dividends held back in accordance with the foregoing shall instead be paid to Holder as soon as reasonably practicable following the vesting of the Restricted Share to which such distribution or dividend relates (if such Restricted Share vests in accordance herewith)).


4. Vesting.

(a) Subject to and conditioned upon Holder’s continued employment with and/or service to (in the case of a director) the Company or a Subsidiary of the Company, in any case, through the applicable vesting date, the Restricted Shares shall vest as to one-quarter (14) of the total Restricted Shares awarded hereunder on each anniversary of the Effective Date (rounded down to the nearest whole share until the final vesting date), for a total vesting period of four years from the Effective Date. In addition, (i) the Restricted Shares shall vest in full immediately prior to the earliest to occur of the consummation of a Change of Control Transaction (as defined in the Certificate of Incorporation) or the Final OEP Exit Date (as defined below), in each case, subject to Holder’s continued employment with and/or service to (in the case of a director) the Company and its Subsidiaries through immediately prior to the applicable event, and (ii) in the event of the consummation of an initial Public Offering while any Restricted Shares remain unvested, up to an additional one quarter (14) of the total Restricted Shares subject hereto shall vest immediately prior to the occurrence of such initial Public Offering, subject to Holder’s continued employment with and/or service to (in the case of a director) the Company and its Subsidiaries through such initial Public Offering. Notwithstanding the foregoing or anything herein to the contrary, in the event that Holder’s employment is terminated by the Company or any of its Subsidiaries for Cause, Holder shall forfeit all Restricted Shares upon such termination, whether or not such shares would otherwise have vested in accordance with this Section 4(a).

(b) For purposes of this Agreement, the following terms shall have the following meanings:

(i) “Cause” shall mean a good faith determination by the Board of Directors of the Company of any one or more of the following: (a) Holder’s (x) continued or repeated failure or refusal (after prior written notice thereof from the Board of Directors of the Company and Executive’s failure to cure such failure or refusal (if curable) within ten calendar days of such written notice, and other than due to Holder’s disability) to substantially perform the duties required by Holder’s position with the Company or any of its Subsidiaries (it being understood that Holder’s failure to attain performance goals or targets or to otherwise fail to substantially perform the duties required by Holder’s position shall not constitute “Cause” hereunder if such failure is as a result of actions taken or not taken in good faith and with reasonable belief that such actions or omissions were in the best interests of the Company and its Subsidiaries) or (y) failure or refusal to follow lawful directives of the Board of Directors of the Company; (b) gross negligence or willful misconduct (including unauthorized disclosure of material proprietary information) by Holder which results in a material detriment to the Company or any of its Subsidiaries; (c) Holder’s conviction (by a court of competent jurisdiction, not subject to further appeal) of, or pleading guilty to, a felony that involves fraud or moral turpitude or that is perpetrated against the Company or any of its Subsidiaries, their respective businesses or any of their respective assets, properties or personnel; or (iv) a material breach of this Agreement (which shall include any breach of the provisions set forth in Section 15 of this Agreement) or any other written agreement with the Company or any of its Subsidiaries to which Holder is a party.

 

2


(ii) “Final OEP Exit Date” shall mean the consummation of a Transfer by OEP SKNA, L.P., a Cayman Islands exempted limited partnership (“OEP”) or any of its Affiliates of shares of capital stock of the Company held by OEP or any of its Affiliates to any Person (as defined in the Certificate of Incorporation) if, immediately after such Transfer, OEP and its Affiliates do not own or hold capital stock of the Company. Notwithstanding the foregoing, the consummation of a Transfer by OEP and its Affiliates of all of the shares of capital stock of the Company held by OEP and its Affiliates as of the Effective Date to (i) an Affiliate of OEP, (ii) Sanken Electric Co., Ltd. (“Sanken”), or (iii) an Affiliate of Sanken, shall not be deemed or treated as a Final OEP Exit Date for purposes of this Agreement.

5. Forfeiture of Restricted Shares. In the event of a termination of Holder’s employment with the Company and its Subsidiaries for any reason (the date of such termination, the “Date of Termination”), (i) any Restricted Shares that have not vested as of such Date of Termination shall be forfeited and Holder (and any Permitted Transferee(s), if any) shall have no further right or interest in such forfeited Restricted Shares, and (ii) any Restricted Shares that have vested as of such Date of Termination shall remain outstanding, subject to the terms and conditions of this Agreement, the Certificate of Incorporation and the Stockholders’ Agreement. Notwithstanding the foregoing, in the event of a Holder’s termination of employment with the Company and its Subsidiaries (as applicable) for Cause, Holder (and any Permitted Transferee(s), if any) shall forfeit all Restricted Shares, whether vested or unvested, without consideration therefor.

6. Call Right.

(a) In the event of Holder’s termination of employment with the Company and its Subsidiaries (as applicable) for any reason (other than a termination for Cause, in which case Holder (and any Permitted Transferee(s), if any) shall forfeit all Restricted Shares), then, the Company may, at the Company’s option (but not obligation) exercisable in the sole discretion of the Company within ninety (90) days of any such termination, elect to repurchase any or all vested Restricted Shares from Holder (or any Permitted Transferee(s), if any) (the “Call Right”). Notwithstanding the foregoing, if the Company is unable to exercise the Call Right in accordance with the terms and conditions of this Section 6 during the applicable repurchase period set forth above due to restrictions under applicable law and/or under any loan agreement, indenture, credit facility, or other financing instrument (each, a “Call Restriction”), the period during which the Company may exercise the Call Right shall be tolled for so long as such Call Restriction remains applicable, and shall be extended accordingly thereafter; provided, that the Company shall use good faith efforts to cure the applicable Call Restriction(s). The Call Right shall terminate as to all Restricted Shares immediately prior to an initial Public Offering.

(b) The purchase price for any Restricted Shares acquired by the Company pursuant to the Call Right shall be the fair market value, as determined by the Board of Directors of the Company in good faith, of such Restricted Shares on the date that notice of the Call Right is provided to Holder in accordance herewith.

 

3


(c) If (a) a Change of Control Transaction or a Revaluation Event (as defined below) is consummated within twelve (12) months following the exercise by the Company of the Call Right and (b) the implied value of a Restricted Share in connection with such Change of Control Transaction or Revaluation Event, based on the amount that the Holder would have been entitled to pursuant to the Certificate of Incorporation upon a distribution following the hypothetical liquidation of the Company (based on the equity value of the Company as a whole implied by such Change of Control Transaction or Revaluation Event) as though the Holder had continued to hold such Restricted Share as of the date of such Change of Control Transaction or Revaluation Event (but had ceased to be an employee prior to such Change of Control Transaction or Revaluation Event) (the “Corporate Event Value”) is greater than the Call Price paid to such Holder, then, upon the consummation of such Change of Control Transaction or such Revaluation Event, Holder shall be entitled to receive an additional cash payment equal to (i) the number of Restricted Shares subject to the Call Right, multiplied by (ii) the excess of (x) the Corporate Event Value over (y) the Call Price. Such additional payment shall be made to Holder within sixty (60) days following the consummation of such Change in Control Transaction or Revaluation Event using the methods set forth in Section 6(f) and shall represent additional purchase price paid for the Restricted Shares subject to the exercised Call Right. For purposes of this Agreement, “Revaluation Event” means the consummation of a bona fide equity financing or other equity issuance (which shall include, for the avoidance of doubt, any merger, consolidation or similar transaction with an unaffiliated third party in which equity or quasi-equity securities of the Company are issued as consideration), as a result of which an equity value is implied to the Company as a whole (and not, for the avoidance of doubt, to the equity or quasi-equity security issued in connection with such equity financing or other equity issuance), other than a Change of Control Transaction.

(d) If the Company elects, in its sole discretion, to exercise its Call Right, such exercise shall be effected by the Company’s delivery to Holder (or any Permitted Transferee(s), if any) or, in the event of Holder’s death, to Holder’s executor, of a written notice, delivered in accordance with Section 16(c) hereof, of the Company’s exercise of its Call Right, indicating the Company’s intention to exercise the Call Right and setting forth the number of vested Restricted Shares to be sold to the Company in connection with such exercise of the Call Right (the “Call Notice”).

(e) The Company shall purchase any such Restricted Shares subject to a valid Call Right on a closing date determined by the Company, but in any event within ninety (90) days after the Call Notice is delivered to Holder (or any Permitted Transferee(s), if any) (the “Call Closing Date”). The Company will, in connection with such repurchase, be entitled to receive customary representations and warranties from Holder (or any Permitted Transferee(s), if any) regarding such sale, as determined by the Company. The scope of such representations and warranties from Holder (or any Permitted Transferee(s), if any) shall not be greater than the representations and warranties that Holder (or any Permitted Transferee(s), if any) would be required to give pursuant to the Stockholders’ Agreement if the purchase by the Company of any such Restricted Shares were deemed or treated as a Drag-Along Transaction under the Stockholders’ Agreement and Holder (or any Permitted Transferee(s), if any) were a Dragged Stockholder in connection with such Drag-Along Transaction.

(f) The Company shall, if and to the extent it exercises the Call Right, purchase the Restricted Shares subject to such Call Right in accordance with this Section 6 by delivery of (i) with respect to all amounts payable in respect of such Call Right exercise up to $250,000, cash or a check, and (ii) with respect to the remainder of the Call Price of such Restricted Shares being

 

4


repurchased (if so elected by the Company), the execution and delivery by the Company to Holder of a subordinated promissory note bearing simple interest at the then-applicable United States Prime Rate (as reported in the Wall Street Journal), payable as to forty-five percent (45%) of the principal and interest due pursuant to such promissory note on the first anniversary of the Call Closing Date and as to one-half (1/2) of the remaining balance of the principal and interest due pursuant to such promissory note on each of the second and third anniversaries of the Call Closing Date. In the event that Holder is not permitted under applicable law to elect installment sale treatment for United States federal income tax purposes of the amounts to be paid by the Company to Holder under such promissory note, then, in lieu of the foregoing payment terms in respect of such Call Right, forty five percent (45%) of the amounts payable by the Company to Holder in respect of such Call Right shall be payable in cash or by check and the remainder shall be paid by the execution and delivery by the Company to Holder of a subordinated promissory note bearing simple interest at the then-applicable United States Prime Rate (as reported in the Wall Street Journal), payable as to one-third (1/3) of the principal and interest due pursuant to such promissory note on each of the first three anniversaries of the Call Closing Date. For the avoidance of doubt, the subordinated character of the promissory notes described in this Section 6(f) shall in no event affect the terms or the duration of the respective promissory notes or be construed or treated as (i) allowing or permitting the Company to avoid, postpone or delay making any payment of principal or interest (or any other payment) when due in accordance with the terms of such promissory notes or (ii) require the holder of any of such promissory notes to refrain or delay from exercising any of such holder’s rights or remedies under any such promissory note, including, without limitation, the right to bring a lawsuit to enforce the obligation of the Company to pay principal or interest (or any other payment) when due in accordance with the terms of such promissory notes. Notwithstanding anything in this Section 6(f) to the contrary, the Company shall be entitled to elect in its sole discretion to pay all of the purchase price for any Restricted Shares acquired by the Company pursuant to the Call Right by delivery of cash, check or by wire transfer of immediately available funds.

(g) To the extent any certificates have previously been delivered out of escrow to Holder (if certificated), then Holder shall, prior to the close of business on the Call Closing Date, deliver to the Secretary of the Company the certificate(s) representing such Restricted Shares, each certificate to be properly endorsed for transfer. Upon the Company’s delivery of notice and payment of the aggregate Call Price in accordance herewith, the Company shall become the legal and beneficial owner of the Restricted Shares so called, and all rights and interests therein or relating thereto, and the Company shall have the right to retain and transfer to its own name the number of Restricted Shares so called by the Company, without further action by Holder (or any Permitted Transferee(s), if any).

7. Restrictions on Transfer.

(a) Without limiting any provisions of the Certificate of Incorporation or the Stockholders’ Agreement, subject to Section 7(b) below, Holder shall not Transfer any Restricted Shares prior to the vesting of such Restricted Shares. Furthermore, Holder shall not Transfer any Restricted Shares subsequent to their vesting except in compliance with the terms of this Agreement, the Stockholders’ Agreement and the Certificate of Incorporation, and all applicable securities laws. The Company shall not be required (i) to record on its books the Transfer of any Restricted Shares purported to have been sold or otherwise Transferred in violation of any of the

 

5


provisions of this Agreement, the Stockholders’ Agreement or the Certificate of Incorporation or (ii) to treat as the owner of such Restricted Shares or to accord the right to vote or receive dividends to any purchaser or other transferee to whom such Restricted Shares shall purportedly have been Transferred, and any such Transfer in violation of the foregoing shall be void ab initio.

(b) Notwithstanding anything to the contrary contained in Section 7(a) above, the Transfer of any or all of the Restricted Shares during Holder’s lifetime or upon Holder’s death by will or intestacy to any Family Member(s) of Holder shall be exempt from the restrictions on Transfer set forth in Section 7(a) above. As used herein, “Family Member” shall have the meaning provided in Rule 701 of the Securities Act, as may be amended from time to time. In such case, (i) the transferee or other recipient shall receive and hold the Restricted Shares so transferred subject to the provisions of this Agreement, the Stockholders’ Agreement and the Certificate of Incorporation, as applicable, and (ii) the transferee shall, as a condition to the Transfer of the Restricted Shares, execute and deliver to the Company such forms and agreements as the Company shall reasonably request, including without limitation, an Assignment Separate from Certificate, a Spousal Consent and/or Joint Escrow Instructions, and there shall be no further transfer of such Restricted Shares except in accordance with the terms of this Section 7, the Stockholders’ Agreement and the Certificate of Incorporation.

8. Investment Representations. In connection with the grant of the Restricted Shares, Holder represents to the Company the following:

(a) Holder is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Restricted Shares. Holder is acquiring these Restricted Shares for investment for Holder’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act.

(b) Holder acknowledges and understands that the Restricted Shares constitute “restricted securities” under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Holder’s investment intent as expressed herein. Holder further understands that the Restricted Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Holder understands that, in the view of the Securities and Exchange Commission, the statutory basis for such exemption may be unavailable if Holder’s representation was predicated solely upon a present intention to hold these Restricted Shares for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Restricted Shares, or for a period of one year or any other fixed period in the future. Holder further acknowledges and understands that the Company is under no obligation to register the Restricted Shares. Holder understands that the certificate evidencing the Restricted Shares may be imprinted with a legend which prohibits the transfer of the Restricted Shares unless they are registered or such registration is not required in the opinion of counsel satisfactory to the Company and any other legend required under applicable securities laws or agreements.

 

6


(c) Holder is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Restricted Shares to the Executive, the issuance will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Restricted Shares exempt under Rule 701 may under present law be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including, in the case of an Affiliate, (i) the resale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined under the Exchange Act), (ii) the availability of certain public information about the Company, (iii) the amount of Restricted Shares being sold during any three (3) month period not exceeding the limitations specified in Rule 144(e), and (iv) the timely filing of a Form 144, if applicable.

(d) In the event that the Company does not qualify under Rule 701 at the time of grant of the Restricted Shares, then the Restricted Shares may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than six months, or, in the event the Company is not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, not less than one year, after the later of the date the Restricted Shares were sold by the Company or the date the Restricted Shares were sold by an Affiliate of the Company, within the meaning of Rule 144 and the availability of certain public information about the Company (subject to certain exceptions); and, in the case of a sale of the Restricted Shares by an Affiliate, the satisfaction of the conditions set forth in clauses (i), (ii), (iii) and (iv) of the paragraph immediately above or, in the case of a non-Affiliate who subsequently holds the Restricted Shares less than one year, the satisfaction of the conditions set forth in section (i) of the paragraph immediately above.

(e) Holder further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Holder understands that no assurances can be given that any such other registration exemption will be available in such event.

(f) Holder understands and acknowledges that the Company will rely upon the accuracy and truth of the foregoing representations and Holder hereby consents to such reliance.

9. Legends. If the Restricted Shares are certificated, as determined in the sole discretion of the Company, the certificate(s) evidencing the Restricted Shares issued hereunder shall be endorsed with the following legends (in addition to any other legends mandated by applicable law or deemed appropriate by the Company):

 

7


THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT AND SUCH LAWS OR, IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN CALL RIGHTS, DRAG-ALONG RIGHTS, FORFEITURE PROVISIONS AND TRANSFER RESTRICTIONS HELD BY THE ISSUER OR ITS ASSIGNEE(S) OR CERTAIN OTHER STOCKHOLDERS OF ISSUER, AS SET FORTH IN A STOCK GRANT AGREEMENT AND AN APPLICABLE STOCKHOLDERS’ AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES. SUCH FORFEITURE PROVISIONS, TRANSFER RESTRICTIONS, CALL RIGHTS AND DRAG-ALONG RIGHTS ARE BINDING ON TRANSFEREES OF THESE SHARES.

10. Escrow of Unvested Restricted Shares. For purposes of facilitating the enforcement of the provisions of this Agreement (including the provisions of Section 7 above), Holder agrees that,