Exhibit 2.2
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CONTRIBUTION AND DISTRIBUTION AGREEMENT
by and between
CONEXANT SYSTEMS, INC.
and
WASHINGTON SUB, INC.
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December 16, 2001
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS..........................................................................2
Section 1.01 General..............................................................................2
ARTICLE II THE CONTRIBUTION....................................................................21
Section 2.01 Intercorperate Reorganization.......................................................21
Section 2.02 Financial Instruments...............................................................25
Section 2.03 Intercompany Accounts and Arrangements..............................................25
Section 2.04 Cash Management.....................................................................26
Section 2.05 The Washington Board................................................................26
Section 2.06 Resignations; Transfer of Stock Held as Nominee.....................................26
Section 2.07 Washington Certificate of Incorporation and By-laws.................................27
Section 2.08 Consents............................................................................27
ARTICLE III THE DISTRIBUTION....................................................................28
Section 3.01 The Distribution....................................................................28
Section 3.02 Cooperation Prior to the Distribution...............................................29
Section 3.03 Conditions to the Distribution......................................................29
Section 3.04 Waiver of Conditions................................................................29
Section 3.05 Disclosure..........................................................................30
ARTICLE IV MUTUAL RELEASE; INDEMNIFICATION; EXPENSES...........................................30
Section 4.01 Mutual Release......................................................................30
Section 4.02 Indemnification by Conexant.........................................................31
Section 4.03 Indemnification by Washington.......................................................32
Section 4.04 Limitations on Indemnification Obligations..........................................32
Section 4.05 Procedures Relating to Indemnification..............................................33
Section 4.06 Remedies Cumulative.................................................................35
Section 4.07 Survival of Indemnities.............................................................35
Section 4.08 Exclusivity of Tax Allocation Agreement.............................................35
Section 4.09 Expenses............................................................................36
Section 4.10 Effect of Investigation.............................................................36
ARTICLE V CERTAIN OTHER MATTERS...............................................................36
Section 5.01 Insurance...........................................................................36
Section 5.02 Use of Names, Trademarks, etc.......................................................38
Section 5.03 License of Intellectual Property....................................................41
Section 5.04 Software and Other License Agreements...............................................47
Section 5.05 Non-Solicitation of Employees.......................................................47
ARTICLE VI ACCESS TO INFORMATION...............................................................48
Section 6.01 Provision of Corporate Records......................................................48
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Section 6.02 Access to Information...............................................................48
Section 6.03 Production of Witnesses.............................................................49
Section 6.04 Retention of Records................................................................50
Section 6.05 Confidentiality.....................................................................50
ARTICLE VII MISCELLANEOUS.......................................................................51
Section 7.01 Entire Agreement; Construction......................................................51
Section 7.02 Survival of Agreements..............................................................51
Section 7.03 Governing Law.......................................................................51
Section 7.04 Notices.............................................................................51
Section 7.05 Dispute Resolution..................................................................53
Section 7.06 Amendments..........................................................................53
Section 7.07 Assignment..........................................................................53
Section 7.08 Captions; Currency..................................................................54
Section 7.09 Severability........................................................................54
Section 7.10 Parties in Interest.................................................................54
Section 7.11 Schedules...........................................................................55
Section 7.12 Waivers; Remedies...................................................................55
Section 7.13 Further Assurances..................................................................55
Section 7.14 Counterparts........................................................................55
Section 7.15 Performance.........................................................................55
Section 7.16 Currency Calculations...............................................................55
Section 7.17 Interpretation......................................................................56
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SCHEDULES
Schedule 1.01(a) - Amended By-Laws
Schedule 1.01(b) - Washington Machinery and Equipment
Schedule 1.01(c) - Washington Patents and Trademarks
Schedule 1.01(d) - Conexant Former Businesses
Schedule 1.01(e) - Conexant Financial Instruments
Schedule 1.01(f) - Certain Conexant Assets
Schedule 1.01(g) - Restated Certificate of Incorporation
Schedule 1.01(h) - Washington Former Businesses
Schedule 1.01(i) - Washington Financial Instruments
Schedule 1.01(j) - Washington Actions
Schedule 1.01(k) - Washington Real Property
Schedule 1.01(l) - Washington Subsidiaries
Schedule 2.01(d) - Sufficiency Exceptions
Schedule 2.03(a) - Intercompany Accounts
Schedule 2.05 - Washington Directors
Schedule 2.06 - Continuing Directors and Officers
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CONTRIBUTION AND DISTRIBUTION AGREEMENT
CONTRIBUTION AND DISTRIBUTION AGREEMENT (this "Agreement"),
dated as of December 16, 2001, by and between CONEXANT SYSTEMS, INC., a
Delaware corporation ("Conexant"), and WASHINGTON SUB, INC., a Delaware
corporation and a wholly-owned subsidiary of Conexant ("Washington").
WHEREAS, Conexant, Washington and Alpha Industries, Inc., a
Delaware corporation ("Alpha"), have entered into an Agreement and Plan of
Reorganization, dated as of the date hereof (the "Merger Agreement"),
providing for, among other things, the merger of Washington with and into
Alpha, with Alpha being the surviving corporation (the "Merger");
WHEREAS, it is a condition to the Merger that, prior to the
Effective Time (as defined in the Merger Agreement), the Contribution (as
defined herein) and the Distribution (as defined herein) be completed;
WHEREAS, subject to the terms and conditions contained herein,
immediately prior to the Effective Time, the Conexant Board (as defined
herein) will cause Conexant to distribute to the holders of shares of
Common Stock, par value $1 per share, of Conexant ("Conexant Common Stock")
and Conexant Series B Preferred Stock (as defined herein), other than
shares held in the treasury of Conexant, on a pro rata basis as provided
for herein, all of the issued and outstanding shares of Common Stock, par
value $.01 per share, of Washington ("Washington Common Stock") (the
"Distribution");
WHEREAS, subject to the terms and conditions contained herein,
immediately prior to the Distribution, Conexant and the Conexant
Subsidiaries (as defined herein) will transfer the Washington Assets and
the Washington Subsidiaries (each as defined herein) to Washington or one
of the Washington Subsidiaries and Washington and the Washington
Subsidiaries will assume the Washington Liabilities (as defined herein),
all as more fully described in this Agreement (the "Contribution");
WHEREAS, Conexant and Washington have determined that it is
appropriate and desirable to set forth the principal corporate transactions
required to effect the Contribution and the Distribution and certain other
agreements that will govern certain matters relating to the Contribution
and the Distribution and the relationship of Conexant, Washington and the
respective members of the Conexant Group and the Washington Group (each as
defined herein) following the Contribution and the Distribution; and
WHEREAS, the parties to this Agreement intend that the
Contribution and the Distribution qualify under Sections 355 and 368 of the
Code (as defined herein) as a reorganization and that the Merger qualifies
under Section 368 of the Code as a reorganization.
NOW, THEREFORE, in consideration of the premises and of the
respective agreements and covenants contained in this Agreement, the
parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 GENERAL. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"1999 Indenture" means the Indenture dated as of May 12, 1999
between Conexant and The First National Bank of Chicago, as Trustee.
"2000 Indenture" means the Indenture dated as of February 1,
2000 between Conexant and Bank One Trust Company, National Association, as
Trustee.
"Accounts Receivable" means accounts, loans and notes
receivable (whether current or not current), including receivables due from
employees, and all proceeds thereof and rights to payment with respect
thereto.
"Action" means, with respect to any Person, any actual or
threatened or future action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Entity or any claims or other
legal matters that have been or may be asserted by or against, or otherwise
affect, such Person.
"Administrative Services" shall have the meaning set forth in
Section 5.03(e)(i)(A).
"Administrative Services Software" shall have the meaning set
forth in Section 5.03(e)(i)(B).
"Affiliate" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control
with, such specified Person; provided, however, that for purposes of the
Transaction Agreements, following the Time of Distribution, no member of
either Group shall be deemed to be an Affiliate of any member of the other
Group. For purposes of the immediately preceding sentence, the term
"control" (including, with correlative meanings, the terms "controlled by"
and "under common control with"), as used with respect to any Person, means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
ownership of voting securities, by contract or otherwise.
"Agreement" shall have the meaning set forth in the preamble.
"Alpha" shall have the meaning set forth in the recitals.
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"Ancillary Agreements" means, collectively, the Employee
Matters Agreement, the Tax Allocation Agreement, the Transition Agreement
and the Conveyance and Assumption Instruments.
"Asset/Liability Allocation Matter" shall have the meaning set
forth in Section 2.01(b).
"Assets" means any and all assets, properties and rights,
whether tangible or intangible, real, personal or mixed, fixed, contingent
or otherwise, and wherever located (other than ownership interests in
Subsidiaries), including the following:
(a) Real Property;
(b) Machinery and Equipment;
(c) Inventories;
(d) bank accounts;
(e) cash, cash on hand, cash equivalents, funds, certificates
of deposit, similar instruments and travelers checks;
(f) Accounts Receivable;
(g) advances, performance and surety bonds, and interests as
beneficiary under letters of credit and other similar instruments and
all proceeds thereof;
(h) Securities;
(i) Hedging Arrangements;
(j) Data and Records;
(k) Patents and Trademarks;
(l) Trade Secrets;
(m) Contracts;
(n) credits, prepayments, prepaid expenses, deposits and
retentions held by third parties;
(o) claims, causes of action, choses in action, rights under
express or implied warranties, guarantees and indemnities and similar
rights, rights of recovery, rights of set-off, rights of subrogation
and all other rights of any kind (including the right to receive mail
and other communications);
(p) Permits;
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(q) goodwill and going concern value; and
(r) other intangible assets not otherwise included in clauses
(a) through (q) of this definition.
"Assigning Party" shall have the meaning set forth in Section 2.08.
"Audited Balance Sheet" means the combined balance sheet of the
Washington Business as of September 30, 2001, together with the notes
thereto, audited by Deloitte & Touche LLP, prepared in accordance with U.S.
generally accepted accounting principles.
"By-laws" means Washington's amended by-laws in the form
attached hereto as Schedule 1.01(a).
"Cash" means all cash, cash on hand, cash equivalents, funds,
certificates of deposit, similar instruments and travelers checks held by
Conexant or any of its Subsidiaries and Affiliates (including members of
the Washington Group) immediately prior to the Time of Distribution.
"Certificate of Incorporation" means Washington's restated
certificate of incorporation in the form attached hereto as Schedule
1.01(g).
"Claims Administration" means the processing of claims made
under Policies, including the reporting of claims to the insurance carrier,
management and defense of claims, and providing for appropriate releases
upon settlement of claims.
"Claims Made Policies" shall have the meaning set forth in
Section 5.01(b).
"Code" means the Internal Revenue Code of 1986, as amended, or
any successor legislation.
"Combined Company" shall have the meaning set forth in the
Merger Agreement.
"Conexant" shall have the meaning set forth in the preamble.
"Conexant Assets" means the following:
(a) all rights of any member of the Conexant Group under any
Transaction Agreement to which it is or becomes a party;
(b) all Assets which are expressly allocated to any member of
the Conexant Group pursuant to any Ancillary Agreement;
(c) the following specifically enumerated Assets which
immediately prior to the Time of Distribution are owned by Conexant or
any of its Subsidiaries
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(including members of the Washington Group), in each case whether or not
such Assets are used in or relate to the Conexant Business or the
Washington Business:
(i) (A) all Conexant Bank Accounts and (B) all Cash
(including all Cash contained in the Conexant Bank Accounts);
(ii) all Machinery and Equipment other than that set
forth on Schedule 1.01(b);
(iii) all Securities;
(iv) all Hedging Arrangements;
(v) all Patents and Trademarks other than those set forth
on Schedule 1.01(c);
(vi) all Accounts Receivable;
(vii) all Policies and all rights, benefits and
privileges thereunder and related thereto (including the right to
receive any and all return premiums with respect thereto), other
than rights with respect to Policies to the extent provided in
Sections 5.01(b) and 5.01(c);
(viii) other than as provided for in Section 5.02, all
rights in, and to the
use of, the Conexant Marks;
(ix) all rights in, and to the use of, the names,
trademarks, trade names, domain names and service marks
"Mindspeed", "Mindspeed Technologies" and "Mindspeed
Technologies, Inc." and all corporate symbols and logos related
thereto and all names, trademarks, trade names, domain names and
service marks which include the words "Mindspeed", "Mindspeed
Technologies" or "Mindspeed Technologies, Inc." or any derivative
thereof;
(x) all Real Property (including the wafer fabrication
and other manufacturing, assembly and test facilities and other
facilities located at Newport Beach, California, San Diego,
California, Mexicali, Mexico and El Paso, Texas and the real
property and fixtures associated therewith) other than the
Washington Real Property;
(xi) all Inventories other than Washington Inventories;
(xii) all Assets, including the stock and assets of
Maquiladora (as defined in the Facility Sale Agreement), subject
to the Facility Sale Agreement and the U.S. Asset Purchase
Agreement;
(xiii) all Assets set forth on Schedule 1.01(f); and
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(xiv) the Conexant Bluetooth Baseband Solution;
(d) all other Assets which immediately prior to the Time of
Distribution are owned by Conexant or any of its Subsidiaries
(including members of the Washington Group) that are not Washington
Assets; and
(e) all rights, choses in action, causes of action and claims
of Conexant or any of its Subsidiaries (including members of the
Washington Group) to the extent relating to any asset described in
clauses (a) through (d) above.
Anything contained herein to the contrary notwithstanding,
assets described in paragraphs (b) and (c) of the definition of "Washington
Assets" will not be included in Conexant Assets.
"Conexant Bank Accounts" means all bank accounts of Conexant or
any of its Subsidiaries (including members of the Washington Group)
immediately prior to the Time of Distribution.
"Conexant Bluetooth Baseband Solution" means the Bluetooth
baseband solution known internally at Conexant as "Xxxxxx" and "Cobalt",
the ownership of which is retained by Conexant at the Time of Distribution.
"Conexant Board" means the Board of Directors of Conexant or a
duly authorized committee thereof.
"Conexant Business" means (a) the businesses and operations
engaged in prior to the Time of Distribution by the members of the
Pre-Distribution Group (but with respect to each such member who has ceased
to be an Affiliate of Conexant or its predecessors, only businesses engaged
in prior to the time that such member of the Pre-Distribution Group ceased
to be an Affiliate of Conexant or its predecessors) of researching,
developing, designing, engineering, manufacturing, having manufactured,
assembling, having assembled, selling, distributing, installing, modifying,
repairing, servicing and supporting semiconductor products and systems for
communications electronics markets such as personal computers, personal
imaging devices, wireless communications products, network access products,
digital information and entertainment products, and activities related
thereto, (b) Former Businesses related to any of the foregoing, including
Former Businesses set forth on Schedule 1.01(d), and (c) activities related
to the foregoing, in the case of each of the foregoing clauses (a), (b) and
(c), other than any businesses, operations or activities included in the
Washington Business. The parties acknowledge that businesses contained in
the Conexant Business have in the past operated under the names Mindspeed
Technologies, Network Access Division, Digital Infotainment Division,
Personal Imaging Division and Personal Computing Division.
"Conexant Common Stock" shall have the meaning set forth in the
recitals.
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"Conexant Expenses" means the following out-of-pocket fees,
costs and expenses of Conexant or any of its Subsidiaries (including
members of the Washington Group), whether incurred and/or paid before, at
or after the Time of Distribution:
(a) all out-of-pocket fees, costs and expenses incurred
in connection with the preparation, execution and delivery of the
Facility Sale Agreement, the U.S. Asset Purchase Agreement and the
Facility Services Agreement; and
(b) all out-of-pocket fees, costs and expenses relating
to the Contribution, the Distribution and/or the Merger to the
extent the same relate to operations of the Conexant Business
after the Time of Distribution.
"Conexant Financial Instruments" means those credit facilities,
guaranties, foreign currency forward exchange contracts, comfort letters,
letters of credit and similar instruments related to the Conexant Business
under which any member of the Washington Group has any primary, secondary,
contingent, joint, several or other Liability after the Time of
Distribution (a) set forth on Schedule 1.01(e) or (b) entered into between
the date hereof and the Time of Distribution in the ordinary course of
business.
"Conexant Group" means Conexant and the Conexant Subsidiaries.
"Conexant Indemnitees" means each member of the Conexant Group
and each of their respective Representatives and Affiliates and each of the
heirs, executors, successors and assigns of any of the foregoing.
"Conexant Liabilities" means the following:
(a) all Liabilities of any member of the Conexant Group under
any Transaction Agreement to which it is or becomes a party;
(b) all Liabilities for which any member of the Conexant Group
is expressly made responsible pursuant to any Ancillary Agreement;
(c) the following specifically enumerated Liabilities of
Conexant or any of its Subsidiaries (including members of the
Washington Group), in each case whether or not such Liabilities relate
to the Conexant Business, the Conexant Assets, the Washington Business
or the Washington Assets:
(i) all Liabilities in respect of the Convertible Notes;
(ii) all accounts payable accrued in the accounts payable
account on the books of Conexant and its Subsidiaries (including
members of the Washington Group) immediately prior to the Time of
Distribution (subject to Section 4.09); and
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(iii) all Liabilities specified in writing by Conexant to
Washington pursuant to Section 2.01(d)(ii), if and to the extent
required by Section 2.01(d)(ii); and
(d) all other Liabilities of Conexant or any of its
Subsidiaries (including members of the Washington Group) in respect of
operations engaged in prior to the Time of Distribution that are not
Washington Liabilities.
Anything contained herein to the contrary notwithstanding,
Liabilities described in paragraphs (b) and (c) of the definition of
"Washington Liabilities" will not be included in Conexant Liabilities.
"Conexant License Agreement" shall have the meaning set forth
in Section 5.04.
"Conexant Marks" means the names, trademarks, trade names,
domain names and service marks "Conexant", "Conexant Systems" and "Conexant
Systems, Inc." and all corporate symbols and logos related thereto and all
names, trademarks, trade names, domain names and service marks which
include the words "Conexant", "Conexant Systems" or "Conexant Systems,
Inc." or any derivative thereof.
"Conexant Series B Preferred Stock" means the Series B Voting
Preferred Stock, without par value, of Conexant, one share of which is
issued and outstanding as of the date hereof.
"Conexant Spin-Off" shall have the meaning set forth in Section
5.03(b)(iii).
"Conexant Subsidiary" means each Subsidiary of Conexant other
than Washington and the Washington Subsidiaries.
"Consents" means consents, approvals, waivers, clearances,
exemptions, allowances, novations, authorizations, filings, registrations
and notifications.
"Contracts" means all agreements, real estate and other leases,
contracts (including employee contracts), licenses, memoranda of
understanding, letters of intent, sales orders, purchase orders, open bids
and other commitments, including in each case, all amendments,
modifications and supplements thereto and waivers and consents thereunder.
"Contribution" shall have the meaning set forth in the recitals.
"Convertible Notes" means Conexant's (a) 4-1/4% convertible
subordinated notes due May 1, 2006 issued under the 0000 Xxxxxxxxx and (b)
4% convertible subordinated notes due February 1, 2007 issued under the
2000 Indenture.
"Conveyance and Assumption Instruments" means, collectively,
the various agreements, deeds (including transfer deeds for Real Property),
bills of sale, stock powers, certificates of title, instruments of
conveyance and assignment, instruments of assumption and
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other instruments and documents which are, in the reasonable opinion of
Conexant, Washington and Alpha, necessary or desirable to effect the transfer of
Assets and Subsidiaries and the assumption of Liabilities contemplated by the
transactions described in Section 2.01.
"Data and Records" means financial, accounting, corporate,
operating, design, manufacturing, test and other data and records (in each
case, in whatever form or medium, including electronic media), including
books, records, notes, sales and sales promotional material and data,
advertising materials, credit information, cost and pricing information,
customer, supplier and agent lists, other records pertaining to customers,
business plans, reference catalogs, payroll and personnel records and
procedures, blue-prints, research and development files, data and
laboratory books, sales order files, litigation files, minute books, stock
ledgers, stock transfer records and other similar data and records.
"Dispute" shall have the meaning set forth in Section 7.05.
"Distribution" shall have the meaning set forth in the recitals.
"Distribution Agent" means the distribution agent selected by
Conexant to distribute Washington Common Stock in connection with the
Distribution.
"Distribution Date" means the date determined by the Conexant
Board in accordance with Section 3.01 as the date as of which the
Distribution will be effected.
"Effective Time" shall have the meaning set forth in the Merger
Agreement.
"Employee Matters Agreement" means the Employee Matters
Agreement to be entered into among Conexant, Washington and Alpha prior to
the Time of Distribution.
"Facility Sale Agreement" shall have the meaning set forth in
the Merger Agreement.
"Facility Services Agreement" shall have the meaning set forth
in the Merger Agreement.
"Former Business" means any corporation, partnership, entity,
division, business unit, business, assets, plants, product line, operations
or contract (including any assets and liabilities comprising the same) that
has been sold, conveyed, assigned, transferred or otherwise disposed of or
divested (in whole or in part) by any member of the Pre-Distribution Group
or the operations, activities or production of which has been discontinued,
abandoned, completed or otherwise terminated (in whole or in part) by any
member of the Pre-Distribution Group.
"Governmental Entity" means any government or any court,
arbitral tribunal, administrative agency or commission or other
governmental or regulatory authority or agency, federal, state, local,
domestic, foreign or international.
"Group" means the Conexant Group or the Washington Group, as
applicable.
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"Hedging Arrangements" means swaps, collars, caps and other
hedging arrangements of any kind.
"Indemnifiable Losses" means any and all losses, Liabilities,
claims, damages, deficiencies, obligations, fines, payments, Taxes, Liens,
costs and expenses, matured or unmatured, absolute or contingent, accrued
or unaccrued, liquidated or unliquidated, known or unknown, whenever
arising and whether or not resulting from Third Party Claims (including the
costs and expenses of any and all Actions; all amounts paid in connection
with any demands, assessments, judgments, settlements and compromises
relating thereto; interest and penalties with respect thereto;
out-of-pocket expenses and reasonable attorneys', accountants' and other
experts' fees and expenses reasonably incurred in investigating, preparing
for or defending against any such Actions or in asserting, preserving or
enforcing an Indemnitee's rights hereunder; and any losses that may result
from the granting of injunctive relief as a result of any such Actions).
"Indemnifying Party" shall have the meaning set forth in
Section 4.04(a).
"Indemnitee" means any of the Conexant Indemnitees or the
Washington Indemnitees who or which is entitled to seek indemnification
under this Agreement.
"Indemnity Reduction Amounts" shall have the meaning set forth
in Section 4.04(a).
"Information" means all records, books, contracts, instruments,
computer data and other data and information (in each case, in whatever
form or medium, including electronic media).
"Information Statement" means the information statement with
respect to Washington sent to holders of Conexant Common Stock and Conexant
Series B Preferred Stock in connection with the Distribution.
"Insurance Proceeds" means monies (a) received by an insured
from an insurance carrier, (b) paid by an insurance carrier on behalf of an
insured or (c) received from any third party in the nature of insurance,
contribution or indemnification in respect of any Liability.
"Intellectual Property" shall have the meaning set forth in
Section 5.03(a)(i).
"Inventories" means inventories, including raw materials,
work-in-process, materials, components, finished goods, parts, accessories
and supplies.
"IRS" means the Internal Revenue Service.
"Liabilities" means any and all claims, debts, liabilities,
commitments and obligations of whatever nature, whether fixed, contingent
or absolute, matured or unmatured, liquidated or unliquidated, accrued or
not accrued, known or unknown, due or to become due, whenever or however
arising and whether or not the same would be required by generally
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accepted accounting principles to be reflected as a liability in financial
statements or disclosed in the notes thereto, including all costs and expenses
relating thereto and those claims, debts, liabilities, commitments and
obligations:
(a) based upon, arising out of or relating to any law, statute,
rule, regulation, judgment, order, decision or consent decree of any
Governmental Entity or any noncompliance therewith or breach or
violation of any thereof;
(b) in respect of accounts payable;
(c) in respect of outstanding checks;
(d) based upon, arising out of or relating to workers'
compensation, automobile liability, general liability, product
liability, intellectual property liability and other claims and
matters (whether direct or for indemnification of any Person or
otherwise, and whether insured or uninsured);
(e) based upon, arising out of or relating to Actions or any
award of any arbitrator of any kind;
(f) in respect of salary, bonuses, incentive payments,
severance payments and other compensation payments and all Taxes and
withholdings related thereto;
(g) in respect of employee welfare and fringe benefits
(including claims for medical and disability benefits);
(h) based upon, arising out of or relating to environmental
matters (including the presence, release or threatened release of
hazardous materials or any other environmental conditions or the
violation of any environmental laws), including all removal,
remediation and cleanup costs, investigatory costs, settlement costs,
governmental response costs, natural resources damages, property
damages, personal injury damages and all other costs and damages;
(i) based upon, arising out of or relating to Contracts;
(j) based upon, arising out of or relating to torts (whether
based on negligence, strict liability or otherwise) or infringements;
and
(k) in respect of products and services, including warranty
liabilities, deferred revenues, product liability claims and
liabilities in respect of the return, repair or replacement of
products.
"Lien" means any lien, security interest, pledge, mortgage,
charge, restriction, retention of title agreement or other encumbrance of
whatever nature.
"Lucent License Agreement" means the license agreement
effective October 1, 1999 between Conexant and Lucent Technologies GRL
Corporation.
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"Machinery and Equipment" means machinery, equipment, tooling,
vehicles, furniture and fixtures, leasehold improvements, repair parts,
tools, plant, laboratory and office equipment and supplies, computer
hardware and software, computer networking equipment, engineering and
design equipment, test equipment and other tangible personal property
(other than tangible personal property included in other categories of
assets in the definition of "Assets"), together with any rights or claims
arising out of maintenance or service contracts relating thereto or the
breach of any express or implied warranty by the manufacturers or sellers
of any of such assets or any component part thereof.
"Material Adverse Effect" shall have the meaning set forth in
the Merger Agreement.
"Merger" shall have the meaning set forth in the recitals.
"Merger Agreement" shall have the meaning set forth in the
recitals.
"Net Asset Deficiency" shall have the meaning set forth in
Section 2.01(d)(ii).
"Occurrence Basis Policies" shall have the meaning set forth in
Section 5.01(b).
"Patents and Trademarks" means (a) all patents (including
utility and design patents, industrial designs and utility models), patent
applications and patent and invention disclosures, together with all
reissuances, continuations, continuations-in-part, divisions, revisions,
supplementary protection certificates, extensions and re-examinations
thereof, and any other U.S. or foreign patent rights entitled to the same
priority claim (in whole or in part) as any of the foregoing, (b)
trademarks, service marks, trade names, trade dress, logos, Internet domain
names, business and product names and slogans and all registrations and
applications for registration of any of the foregoing, (c) copyrights and
all applications, registrations and renewals in connection therewith and
(d) mask work and semiconductor chip right applications, registrations and
renewals in connection therewith.
"Permits" means licenses, permits, authorizations, consents,
certificates, registrations, variances, franchises and other approvals from
any Governmental Entity, including those relating to environmental matters.
"Person" means any individual, partnership, joint venture,
corporation, limited liability entity, trust, unincorporated organization
or other entity (including a Governmental Entity).
"Policies" means all insurance policies, insurance contracts
and claim administration contracts of any kind of Conexant and its
Subsidiaries (including members of the Washington Group) and their
predecessors which were or are in effect at any time at or prior to the
Time of Distribution (other than insurance policies, insurance contracts
and claim administration contracts established in contemplation of the
Distribution and the Merger to cover only Washington and its Subsidiaries
after the Time of Distribution), including primary, excess and umbrella,
commercial general liability, fiduciary liability, product liability,
12
automobile, aircraft, property and casualty, business interruption,
directors and officers liability, employment practices liability, workers'
compensation, crime, errors and omissions, special accident, cargo and
employee dishonesty insurance policies and captive insurance company
arrangements, together with all rights, benefits and privileges thereunder.
"Pre-Distribution Group" means (a) each of Conexant, the
Subsidiaries of Conexant existing immediately prior to the Time of
Distribution (including members of the Washington Group) and Persons that
have ceased to be Subsidiaries of Conexant prior to the Time of
Distribution, (b) each of the predecessors of each of the foregoing
(including Rockwell) and (c) each of the Persons that have ceased to be
Subsidiaries and other Affiliates of each of the foregoing and their
predecessors prior to the Time of Distribution. Notwithstanding the
foregoing, (i) Boeing North American, Inc. and Persons who are Affiliates
of Boeing North American, Inc. after December 6, 1996 will not constitute
members of the Pre-Distribution Group for periods after December 6, 1996
and (ii) Rockwell and Persons who are Affiliates of Rockwell after December
31, 1998 will not constitute members of the Pre-Distribution Group for
periods after December 31, 1998.
"Privileged Information" means, with respect to a Group,
Information regarding a member of such Group, or any of its operations,
employees, Assets or Liabilities (whether in documents or stored in any
other form or known to its employees or agents) that is or may be protected
from disclosure pursuant to the attorney-client privilege, the work product
doctrine or other applicable privileges, that a member of the other Group
has or may come into possession of or has obtained or may obtain access to
pursuant to this Agreement or otherwise.
"Real Property" means real property (including land, plants,
buildings, fixtures and improvements) and real property interests
(including real property leases).
"Recipient Party" shall have the meaning set forth in Section 2.08.
"Record Date" means 11:57 p.m. Eastern Time on the Distribution
Date.
"Reorganization Agreements" shall have the meaning set forth in
the Merger Agreement.
"Representative" means, with respect to any Person, any of such
Person's directors, officers, employees, agents, consultants, advisors,
accountants, attorneys and representatives.
"Rockwell" means Rockwell International Corporation, a Delaware
corporation.
"Rockwell Distribution Agreement" means the Distribution
Agreement dated as of December 31, 1998 between Conexant and Rockwell.
"Securities" means short-term and long-term investments,
banker's acceptances, shares of stock, notes, bonds, debentures, evidences
of indebtedness, certificates
13
of interest or participation in profit-sharing agreements, collateral-trust
certificates, preorganization certificates or subscriptions, transferable
shares, puts, calls, straddles, options, investment contracts, voting trusts and
certificates and other securities of any kind (other than ownership interests in
Subsidiaries).
"Special Purpose Statement of Tangible Net Assets" means the
special purpose statement as of September 30, 2001 of tangible assets and
liabilities to be contributed by Conexant and its Subsidiaries to the
Washington Group, which will be derived from the Audited Balance Sheet,
will contain only those line items contained in the Unaudited Special
Purpose Statement of Tangible Net Assets (which line items will be in the
same amounts as the corresponding line items in the Audited Balance Sheet,
unless otherwise provided in the methodology set forth in the notes to the
Unaudited Special Purpose Statement of Tangible Net Assets) and will be
prepared using the same methodology set forth in the notes to the Unaudited
Special Purpose Statement of Tangible Net Assets.
"Subsidiary" means, with respect to any Person, any corporation
or other organization, whether incorporated or unincorporated, of which
such Person or any Subsidiaries of such Person controls or owns, directly
or indirectly, more than 50% of the stock or other equity interest, or more
than 50% of the voting power entitled to vote on the election of members to
the board of directors or similar governing body; provided, however, that
(except as specifically noted herein) for purposes of this Agreement, none
of Washington or the Washington Subsidiaries shall be deemed to be a
Conexant Subsidiary.
"Tax" and "Taxes" shall have the meaning set forth in the Tax
Allocation Agreement.
"Tax Allocation Agreement" means the Tax Allocation Agreement
to be entered into among Conexant, Washington and Alpha prior to the Time
of Distribution. "Third Party Claim" shall have the meaning set forth in
Section 4.05(a).
"Time of Distribution" means 11:58 p.m. Eastern Time on the
Distribution Date.
"Trade Secrets" means (a) trade secrets and confidential
business and technical information (including ideas, research and
development, know-how, formulas, technology, compositions, manufacturing
and production processes and techniques, technical data, engineering,
production and other designs, drawings, engineering notebooks, industrial
models, mask works, semiconductor chip topographies, software and
specifications and any other information meeting the definition of a trade
secret under the Uniform Trade Secrets Act); (b) computer and electronic
data processing programs and software, both source code and object code
(including data and related documentation, flow charts, diagrams,
descriptive texts and programs, computer print-outs, underlying tapes,
computer databases and similar items), computer applications and operating
programs; and (c) all copies and tangible embodiments of any or all of the
foregoing (in whatever form or medium, including electronic media).
14
"Transaction Agreements" means, collectively, this Agreement
and each Ancillary Agreement.
"Transition Agreement" means the Transition Services Agreement
to be entered into among Conexant, Washington and Alpha prior to the Time
of Distribution, among other things, providing for various service and
other relationships between Conexant and Alpha following the Distribution
Date.
"Unaudited Special Purpose Statement of Tangible Net Assets"
shall have the meaning set forth in the Merger Agreement.
"U.S. Asset Purchase Agreement" shall have the meaning set
forth in the Merger Agreement.
"Washington" shall have the meaning set forth in the preamble.
"Washington Assets" means the following:
(a) all rights of any member of the Washington Group under any
Transaction Agreement to which it is or becomes a party;
(b) all Assets which are expressly allocated to any member of
the Washington Group pursuant to any Ancillary Agreement;
(c) the following specifically enumerated Assets which
immediately prior to the Time of Distribution are owned by Conexant or
any of its Subsidiaries (including members of the Washington Group),
in each case whether or not such Assets are used in or relate to the
Conexant Business or the Washington Business:
(i) the Washington Real Property;
(ii) Machinery and Equipment set forth on Schedule 1.01(b);
(iii) the Washington Inventories;
(iv) the trademarks and trademark registrations and
applications for registrations thereof and issued patents, patent
applications and patent and invention disclosures (including any
foreign counterparts) set forth on Schedule 1.01(c);
(v) rights to the extent relating to the Washington
Business to receive indemnification from Rockwell pursuant to the
Rockwell Distribution Agreement;
(vi) all Assets set forth in the Special Purpose
Statement of Tangible Net Assets, other than those sold or
otherwise disposed of in the ordinary
15
course of business prior to the Time of Distribution consistent with
the terms of the Merger Agreement;
(vii) except as otherwise specifically provided herein,
all Assets of the kind that appear on the Special Purpose
Statement of Tangible Net Assets as would appear on a balance
sheet of Washington if prepared as of the Time of Distribution,
including all reserves and accruals maintained by Conexant (but
excluding Assets described in clauses (b) and (c) of the
definition of "Conexant Assets");
(viii) all Assets specified in writing by Conexant to
Washington pursuant to Section 2.01(d)(ii), if and to the extent
required by Section 2.01(d)(ii); and
(ix) the Washington Bluetooth RF Solution.
(d) the following Assets (other than those described in
paragraphs (b) and (c) of the definition of "Conexant Assets") which
immediately prior to the Time of Distribution are owned by Conexant or
any of its Subsidiaries (including members of the Washington Group)
and which are used primarily in or relate primarily to the Washington
Business, as the same shall exist as of such time:
(i) Contracts (other than real property leases);
(ii) advances, performance and surety bonds, and
interests as beneficiary under letters of credit and other
similar instruments and all proceeds thereof;
(iii) Data and Records;
(iv) Permits;
(v) Trade Secrets;
(vi) credits, prepayments, prepaid expenses, deposits and
retentions held by third parties;
(vii) claims, causes of action, choses in action, rights
under express or implied warranties, guarantees and indemnities
and similar rights, rights of recovery, rights of set-off, rights
of subrogation and all other rights of any kind (including the
right to receive mail and other communications) (other than, in
each such case, those relating to the Conexant Assets described
in clauses (b) or (c) of the definition thereof); and
(viii) goodwill, going concern value and other intangible
assets not otherwise included in clauses (a) through (q) of the
definition of "Assets"; and
16
(e) all rights, choses in action, causes of action and claims
of Conexant or any of its Subsidiaries (including members of the
Washington Group) to the extent relating to any asset described in
clauses (a) through (d) above.
Anything contained herein to the contrary notwithstanding,
assets described in paragraphs (b) and (c) of the definition of "Conexant
Assets" will not be included in Washington Assets.
"Washington Bluetooth RF Solution" means the Bluetooth RF
solutions known internally at Conexant as "Blue RF", "Blue Q" and "ULV Blue
RF", the ownership of which will be transferred to Washington at the Time
of Distribution.
"Washington Board" means the Board of Directors of Washington.
"Washington Business" means (a) the business and operations
engaged in prior to the Time of Distribution by the members of the
Pre-Distribution Group (but with respect to each such member who has ceased
to be an Affiliate of Conexant or its predecessors, only businesses engaged
in prior to the time that such member of the Pre-Distribution Group ceased
to be an Affiliate of Conexant or its predecessors) of researching,
developing, designing, engineering, manufacturing, having manufactured,
assembling, having assembled, selling, distributing, installing, modifying,
repairing, servicing and supporting semiconductor products and systems,
including components, subsystems and systems, for wireless voice and data
communications applications, including digital cellular handsets and base
stations, as well as advanced mobile terminals that support next-generation
multimedia and high-speed web browsing, for communications electronics
markets as conducted by Conexant's Wireless Communications Division, other
than the Washington Data Business Unit, and activities related thereto, (b)
Former Businesses related to any of the foregoing, including the Former
Businesses set forth on Schedule 1.01(h) and (c) activities related to the
foregoing. Notwithstanding anything contained herein to the contrary, the
term "Washington Business" shall not include any of Conexant's Mindspeed
Technologies or Broadband access businesses, the Washington Data Business
Unit and activities related thereto.
"Washington Common Stock" shall have the meaning set forth in
the recitals.
"Washington Data Business Unit" means the business and
operations engaged in by Conexant's Wireless Communications Division prior
to the Time of Distribution of researching, developing, designing,
engineering, manufacturing, having manufactured, assembling, having
assembled, selling, distributing, installing, modifying, repairing,
servicing and supporting the PHS, DSS, standalone GPS and Bluetooth
baseband hardware and software product lines and the Bluetooth baseband
hardware and software development efforts and the support and development
of Bluetooth radio frequency products associated with such Bluetooth
baseband hardware and software.
"Washington Expenses" means the following out-of-pocket fees,
costs and expenses of Conexant or any of its Subsidiaries (including
members of the Washington
17
Group), in each case, whether incurred and/or paid before, at or after the Time
of Distribution and whether or not they constitute accounts payable:
(a) all out-of-pocket fees, costs and expenses incurred in
connection with the Contribution, the Distribution and/or the Merger,
including any and all:
(i) transfer taxes;
(ii) out-of-pocket fees, costs and expenses incurred in
connection with any notices to customers or suppliers of the
Washington Business or other third parties that are party to
Contracts that constitute Washington Assets or relate to
Washington Liabilities regarding the Contribution, the
Distribution and/or the Merger;
(iii) out-of-pocket fees, costs and expenses incurred in
connection with the transfer of any Permits from Conexant or any
Conexant Subsidiary to Washington or any Washington Subsidiary or
the obtaining of any new (or the re-issuance of any existing)
Permits in the name of Washington or a Washington Subsidiary;
(iv) out-of-pocket fees, costs and expenses incurred in
connection with the assignment or transfer of any Contracts,
Patents and Trademarks or Trade Secrets from Conexant or any
Conexant Subsidiary to Washington or any Washington Subsidiary,
including legal fees, costs and expenses associated with such
assignments or transfers;
(v) accounting, legal, investment banking and other
outside consultants' fees, costs and expenses in an amount not to
exceed Twenty-Seven Million Five Hundred Thousand dollars
($27,500,000); and
(vi) out-of-pocket fees, costs and expenses in connection
with the preparation, execution and delivery of the Transaction
Agreements and the Reorganization Agreements;
provided, however, that Washington Expenses will not include (A) any
such out-of-pocket fees, costs and expenses described in the
definition of "Conexant Expenses" and (B) any such out-of-pocket fees,
costs and expenses incurred in connection with any modification of or
dispute with respect to the Transaction Agreements or the transactions
contemplated thereby after the Distribution Date or any claim under
Article IV; and
(b) all out-of-pocket fees, costs and expenses relating to the
Contribution, the Distribution and/or the Merger to the extent the
same relate to operations of the Washington Business after the Time of
Distribution.
"Washington Financial Instruments" means those credit
facilities, guaranties, foreign currency forward exchange contracts,
comfort letters, letters of credit and
18
similar instruments related to the Washington Business under which any member of
the Conexant Group has any primary, secondary, contingent, joint, several or
other Liability, after the Time of Distribution (a) set forth on Schedule
1.01(i) or (b) entered into between the date hereof and the Time of Distribution
in the ordinary course of business.
"Washington Group" means Washington and the Washington Subsidiaries.
"Washington Indemnitees" means each member of the Washington
Group and each of their respective Representatives and Affiliates and each
of the heirs, executors, successors and assigns of any of the foregoing.
"Washington Inventories" means the following Inventories of
products of the Washington Business owned by Conexant and its Subsidiaries
(including members of the Washington Group) immediately prior to the Time
of Distribution:
(a) the following raw materials: (i) 100mm GaAs Combined
Microwave Digital wafer substrates; (ii) 100mm GaAs epitaxial HBT
wafer substrates; and (iii) assembly materials at Conexant's Mexicali
assembly and test facility which are specific to the Washington
Business;
(b) the following work-in-process:
(i) unprobed finished wafers at internal or external
locations awaiting the probe process;
(ii) probed wafer finish inventories;
(iii) die bank inventories at internal or external
locations awaiting assembly, packaging and test processes;
(iv) wafer fabrication and other work-in-process at
Conexant's Newbury Park wafer fabrication facility; and
(v) work-in-process at Conexant's Mexicali assembly and
test facility which are specific to the Washington Business; and
(c) finished goods.
"Washington Liabilities" means the following:
(a) all Liabilities of any member of the Washington Group under
any Transaction Agreement to which it is or becomes a party;
(b) all Liabilities for which any member of the Washington
Group is expressly made responsible pursuant to any Ancillary
Agreement;
19
(c) the following specifically enumerated Liabilities of
Conexant or any of its Subsidiaries (including members of the
Washington Group), in each case whether or not such Liabilities relate
to the Conexant Business, the Conexant Assets, the Washington Business
or the Washington Assets:
(i) all Liabilities based upon, arising out of or
relating to the Actions set forth on Schedule 1.01(j); and
(ii) all Liabilities to the extent set forth in the
Special Purpose Statement of Tangible Net Assets, other than
those satisfied in the ordinary course of business prior to the
Time of Distribution; and
(d) all Liabilities (other than those described in paragraphs
(b) and (c) of the definition of "Conexant Liabilities") of Conexant
or any of its Subsidiaries (including members of the Washington Group)
to the extent based upon, arising out of or relating to the Washington
Assets or the Washington Business, including:
(i) all Liabilities (including Liabilities arising out of
any breaches or violations) to the extent relating to the
Washington Business based upon, arising out of or relating to
Contracts (whether or not such Contracts constitute Washington
Assets) (including any primary, secondary, contingent or other
obligations, such as under guaranties or indemnities, in respect
of such Contracts); and
(ii) all Liabilities to the extent relating to the
Washington Assets or the Washington Business for which Conexant
has agreed to indemnify Rockwell and certain other Persons
pursuant to the Rockwell Distribution Agreement.
Anything contained herein to the contrary notwithstanding,
Liabilities described in paragraphs (b) and (c) of the definition of
"Conexant Liabilities" will not be included in Washington Liabilities.
"Washington Real Property" means the Real Property set forth on
Schedule 1.01(k).
"Washington Spin-Off" shall have the meaning set forth in
Section 5.03(a)(iii).
"Washington Subsidiary" means each Person listed on Schedule
1.01(l).
20
ARTICLE II
THE CONTRIBUTION
Section 2.01 INTERCORPERATE REORGANIZATION. (a) Prior to the
Time of Distribution, Conexant and Washington will take all actions
necessary to increase the outstanding shares of Washington Common Stock so
that, immediately prior to the Distribution, Conexant will hold a number of
shares of Washington Common Stock equal to the aggregate number of shares
of Conexant Common Stock and Conexant Series B Preferred Stock issued and
outstanding as of the Record Date (excluding treasury shares held by
Conexant).
(b) Subject to Section 2.08, prior to the Time of Distribution:
(i) Conexant and each Conexant Subsidiary shall convey,
assign and transfer, or cause to be conveyed, assigned and
transferred, to Washington or a Washington Subsidiary, as
appropriate, any and all right, title and interest of Conexant
and each of the Conexant Subsidiaries in the Washington
Subsidiaries;
(ii) Washington and each Washington Subsidiary shall
convey, assign and transfer, or cause to be conveyed, assigned
and transferred, to Conexant or a Conexant Subsidiary, as
appropriate, any and all right, title and interest of Washington
and each of the Washington Subsidiaries in the Conexant
Subsidiaries;
(iii) Conexant and each Conexant Subsidiary shall convey,
assign and transfer, or cause to be conveyed, assigned and
transferred, to Washington or a Washington Subsidiary, as
appropriate, any and all right, title and interest of Conexant
and each of the Conexant Subsidiaries in the Washington Assets;
(iv) Washington and each Washington Subsidiary shall
convey, assign and transfer, or cause to be conveyed, assigned
and transferred, to Conexant or a Conexant Subsidiary, as
appropriate, any and all right, title and interest of Washington
and each of the Washington Subsidiaries in the Conexant Assets;
(v) Conexant or a Conexant Subsidiary, as appropriate,
shall unconditionally assume and undertake to pay, perform and
discharge, in a timely manner and in accordance with the terms
thereof, all Conexant Liabilities; and
(vi) Washington or a Washington Subsidiary, as
appropriate, shall unconditionally assume and undertake to pay,
perform and discharge, in a timely manner and in accordance with
the terms thereof, all Washington Liabilities.
In the event that at any time or from time to time (whether
prior to, at or after the Time of Distribution) any member of the Conexant
Group shall receive or otherwise possess any Washington Asset or interest
in a Washington Subsidiary, such member will promptly convey, assign and
transfer, or cause to be conveyed, assigned and transferred, such
21
Washington Asset or interest in a Washington Subsidiary to Washington. In
the event that at any time or from time to time (whether prior to, at or
after the Time of Distribution) any member of the Washington Group shall
receive or otherwise possess any Conexant Asset or interest in a Conexant
Subsidiary, such member will promptly convey, assign and transfer, or cause
to be conveyed, assigned and transferred, such Conexant Asset or interest
in a Conexant Subsidiary to Conexant. Prior to any such transfer, the
Person receiving or possessing such Asset or interest in a Subsidiary will
hold such Asset or interest in a Subsidiary in trust for the benefit of the
Person entitled thereto (at the expense of the Person entitled thereto).
Without limiting the foregoing, in the event that after the
Time of Distribution (x) Conexant or any Conexant Subsidiary possesses
product intellectual property, human resources or other data bases that are
comprised in whole or in part of Information that constitutes Washington
Assets, Conexant will, and will cause each Conexant Subsidiary to, afford
Washington and its Representatives (at Washington's expense) reasonable
access, during normal business hours and upon reasonable advance notice, to
the portion of such data bases containing Information that constitutes
Washington Assets in order to retrieve such Information and effect the
transfer of such Information to Washington and (y) Washington or any
Washington Subsidiary possesses product intellectual property, human
resources or other data bases that are comprised in whole or in part of
Information that constitutes Conexant Assets, Washington will, and will
cause each Washington Subsidiary to, afford Conexant and its
Representatives (at Conexant's expense) reasonable access, during normal
business hours and upon reasonable advance notice, to the portion of such
data bases containing Information that constitutes Conexant Assets in order
to retrieve such Information and effect the transfer of such Information to
Conexant.
In the event that at any time or from time to time (whether
prior to, at or after the Time of Distribution) either Conexant or
Washington determines that the other party (or any member of such other
party's respective Group) shall not have unconditionally assumed any
Liabilities that are allocated to such other party (or a member of such
other party's respective Group) pursuant to this Agreement or any Ancillary
Agreement, such other party will promptly execute and deliver, or cause to
be executed and delivered, all such documents and instruments and will
take, or cause to be taken, all such actions as the requesting party may
reasonably request to unconditionally assume, or cause to be
unconditionally assumed, such Liabilities.
Solely for purposes of implementing the terms of this
Agreement, during the period beginning on the date of this Agreement and
ending six months after the Distribution Date, Conexant and Alpha agree to
discuss the allocation of any Asset or Liability of Conexant and its
Subsidiaries (including members of the Washington Group) that either of
them reasonably believes should be or should have been allocated
differently than pursuant to the terms of this Agreement (an
"Asset/Liability Allocation Matter"). The Conexant Chief Executive Officer
will designate an employee of the Conexant Business and the Alpha Chief
Executive Officer will designate an employee of Alpha who will discuss an
appropriate resolution of any Asset/Liability Allocation Matter. If within
thirty days of the receipt of the notification of an Asset/Liability
Allocation Matter by either Conexant or Alpha pursuant to this paragraph,
or such other time as Conexant and Alpha may agree, the designees have not
22
reached a mutually acceptable resolution of the Asset/Liability Allocation
Matter, the matter will be referred for discussion to the Conexant Chief
Executive Officer and the Alpha Chief Executive Officer. Should a mutually
acceptable resolution of the Asset/Liability Allocation Matter not be
reached within thirty days following the referral to them, the terms and
conditions of this Agreement shall remain in full force and effect,
unamended, unmodified and unsupplemented. Notwithstanding the foregoing, in
no event shall the terms and conditions of this Agreement be amended,
modified or supplemented other than in accordance with the provisions of
Section 7.06. Nothing in this paragraph shall affect the right of any party
to resort to the dispute resolution provisions of Section 7.05 in respect
of any dispute, claim or controversy arising out of an alleged breach of
any provision of this Agreement.
(c) In connection with the transfers of Subsidiaries and Assets
and the assumptions of Liabilities contemplated by Section 2.01(b),
Conexant and Washington will execute or cause to be executed by the
appropriate entities the Conveyance and Assumption Instruments in a form
reasonably acceptable to Conexant, Washington and Alpha. The transfer of
capital stock contemplated by Section 2.01(b) will be effected, prior to
the Time of Distribution, by means of delivery of stock certificates duly
endorsed or accompanied by duly executed stock powers and notation on the
stock record books of the corporation or other legal entities involved and,
to the extent required by applicable law, by notation on appropriate
registries.
(d) (i) Conexant hereby represents and warrants to Washington
that after giving effect to the Contribution and the Distribution (but not
considering any assets or rights held by Alpha or its Subsidiaries prior to
the Effective Time and after taking into account any services to be
provided to Alpha pursuant to the Transition Agreement, except for the
matters set forth on Schedule 2.01(d), immediately after the Time of
Distribution, the assets and rights held by the Washington Group will
constitute all of the material assets and rights of Conexant and its
Subsidiaries (including members of the Washington Group) immediately prior
to the Time of Distribution that are necessary to conduct the Washington
Business substantially as conducted on the date hereof. The representation
and warranty of Conexant set forth in this Section 2.01(d)(i) will survive
the execution and delivery of this Agreement and the Distribution Date and
will continue in full force and effect solely for purposes of Section
4.02(d) until six months after the Distribution Date and shall then
terminate and expire.
(ii) Within 60 days after the date of this Agreement, Conexant
will cause to be delivered to Alpha the Audited Balance Sheet with the
report of Deloitte & Touche LLP thereon. Conexant will provide Alpha with
reasonable access to the relevant work papers used to prepare the Audited
Balance Sheet and will consider in good faith any comments of Alpha thereon
delivered to Conexant within 10 days after receipt of the Audited Balance
Sheet. Within 20 days after Deloitte & Touche LLP has delivered its report
on the Audited Balance Sheet, Conexant will prepare and deliver to Alpha
the Special Purpose Statement of Tangible Net Assets. Conexant will provide
Alpha with reasonable access to the relevant work papers used to prepare
the Special Purpose Statement of Tangible Net Assets and will consider in
good faith any comments of Alpha thereon delivered to Conexant within 10
days after receipt of the Special Purpose Statement of Tangible Net Assets.
If and to the extent the
23
total value of the tangible net assets set forth on the Unaudited Special
Purpose Statement of Tangible Net Assets exceeds the total value of the tangible
net assets set forth on the Special Purpose Statement of Tangible Net Assets (a
"Net Asset Deficiency"), notwithstanding anything to the contrary set forth in
this Agreement, Conexant will cause either (A) the Washington Assets to include
such additional Assets (which shall be Cash, like kind Assets other than Cash
that are usable in the Washington Business and reasonably acceptable to Alpha,
or any combination thereof) as are specified by Conexant to Washington in
writing or (B) the Washington Liabilities to exclude such Liabilities as are
specified by Conexant to Washington in writing and reasonably acceptable to
Alpha (which will be retained by Conexant and constitute Conexant Liabilities),
or any combination of (A) and (B) as Conexant shall elect in its sole
discretion, such that the sum of (x) the value of such Assets, if any, plus (y)
the value of such Liabilities (expressed as a positive number), if any, shall
equal the excess, if any, of the Net Asset Deficiency over One Million dollars
($1,000,000).
(iii) Each of Conexant (on behalf of itself and each other
member of the Conexant Group) and Washington (on behalf of itself and each
other member of the Washington Group) understands and agrees that, except
as expressly set forth in any Transaction Agreement, no party to any
Transaction Agreement or any other agreement or document contemplated by
any Transaction Agreement either has or is, in such agreement or otherwise,
representing or warranting in any way as to the Assets, Subsidiaries,
businesses or Liabilities retained, conveyed, assigned, transferred or
assumed as contemplated thereby, as to any consents or approvals required
in connection with the transactions contemplated by the Transaction
Agreements, as to the value or freedom from any Lien of, or any other
matter concerning, any Assets, Liabilities or Subsidiaries of such party,
or as to the absence of any defenses or rights of setoff or freedom from
counterclaim with respect to any claim or other Assets or Subsidiaries of
any party, or as to the legal sufficiency of any assignment, document or
instrument delivered thereunder to convey title to any Asset or Subsidiary
or thing of value upon the execution, delivery or filing thereof. Except as
may expressly be set forth in any Transaction Agreement, all Assets and
Subsidiaries being transferred or retained as contemplated by any
Transaction Agreement or any other agreement or document contemplated by
any Transaction Agreement are being transferred, or are being retained, on
an "as is", "where is" basis (and, in the case of the transfer of any real
property, by means of a quitclaim or similar form deed or conveyance) and
the respective transferees shall bear the economic and legal risks that any
conveyance shall prove to be insufficient or that the title to any Asset or
Subsidiary shall be other than good and marketable and free and clear of
any Lien.
(e) It is the intention of the parties that payments made by
the parties to each other after the Time of Distribution pursuant to this
Agreement, the Employee Matters Agreement or the Tax Allocation Agreement
are to be treated as relating back to the transactions occurring prior to
the Time of Distribution pursuant to this Section 2.01 as an adjustment to
the transfers of Assets, Subsidiaries and Liabilities contemplated by this
Section 2.01, and Conexant and Washington will, and will cause the Conexant
Subsidiaries and the Washington Subsidiaries, respectively, to, take
positions consistent with such intention with any Tax authority, unless
with respect to any payment any party receives an
24
opinion of counsel reasonably acceptable to the other party to the effect that
there is no substantial authority for such a position.
Section 2.02 FINANCIAL INSTRUMENTS. (a) (i) Washington will, at
its expense, take or cause to be taken all actions, and enter into (or
cause the Washington Subsidiaries to enter into) such agreements and
arrangements, as shall be necessary to effect the release of and
substitution for each member of the Conexant Group, as of the Time of
Distribution, from all primary, secondary, contingent, joint, several and
other Liabilities in respect of Washington Financial Instruments (it being
understood that all Liabilities in respect of Washington Financial
Instruments are Washington Liabilities).
(ii) Washington's obligations under this Section 2.02(a) will
continue to be applicable to all Washington Financial Instruments after the
Time of Distribution.
(b) (i) Conexant will, at its expense, take or cause to be
taken all actions, and enter into (or cause the Conexant Subsidiaries to
enter into) such agreements and arrangements, as shall be necessary to
effect the release of and substitution for each member of the Washington
Group, as of the Time of Distribution, from all primary, secondary,
contingent, joint, several and other Liabilities in respect of Conexant
Financial Instruments (it being understood that all Liabilities in respect
of Conexant Financial Instruments are Conexant Liabilities).
(ii) Conexant's obligations under this Section 2.02(b) will
continue to be applicable to all Conexant Financial Instruments after the
Time of Distribution.
Section 2.03 INTERCOMPANY ACCOUNTS AND ARRANGEMENTS.
(a) Elimination of Intercompany Accounts.
(i) Except as set forth in Section 2.03(a)(ii) or on
Schedule 2.03(a), Conexant, on behalf of itself and each other
member of the Conexant Group, on the one hand, and Washington, on
behalf of itself and each other member of the Washington Group,
on the other hand, hereby settle and eliminate, by cancellation
or transfer to a member of the other Group (whether to cancel or
transfer and the manner thereof will be determined by Conexant),
effective as of the Time of Distribution, all intercompany
receivables, payables and other balances existing immediately
prior to the Time of Distribution between Conexant and/or any
Conexant Subsidiary, on the one hand, and Washington and/or any
Washington Subsidiary, on the other hand.
(ii) The provisions of Section 2.03(a)(i) will not apply
to any intercompany receivables, payables and other balances
arising under any Transaction Agreement, including those incurred
in connection with the payment by any party of any expenses which
are required to be paid or reimbursed by the other party pursuant
to Section 4.09.
25
Section 2.04 CASH MANAGEMENT.
(a) Cash Management Operations.
(i) Effective as of the Time of Distribution, the cash
management operations of the Washington Group will be segregated
from the cash management operations of the Conexant Group.
(ii) Washington will, and will cause the Washington
Subsidiaries to, forward to Conexant (for the account of Conexant
or the applicable Conexant Subsidiary) any customer payments in
respect of Accounts Receivable to the extent they constitute
Conexant Assets received by Washington or any of the Washington
Subsidiaries after the Time of Distribution, whether received in
lock boxes, via wire transfer or otherwise, by the first business
day of the week after the week during which such payment is
received. Such amounts will be forwarded by wire transfer (to
Conexant's bank account at Bank One, N.A., Account No. 51-52283,
A.B.A. Routing Number 000000000) in the case of customer payments
received within sixty days after the Distribution Date and by
check sent by reputable overnight courier service to Conexant in
the case of customer payments received thereafter.
(b) Certain Payments after the Distribution Date. Washington
will pay to Conexant (by wire transfer to Conexant's bank account at Bank
One, N.A., Account No. 51-52283, A.B.A. Routing Number 000000000), within
three business days after the Distribution Date, (x) the amount of all
balances contained immediately prior to the Time of Distribution in xxxxx
cash accounts at locations of the Washington Business, (y) the dollar value
of travelers checks immediately prior to the Time of Distribution at
locations of the Washington Business and (z) the dollar value of all other
cash immediately prior to the Time of Distribution at locations of the
Washington Business.
Section 2.05 THE WASHINGTON BOARD. Prior to the Time of
Distribution, Washington and Conexant will take all actions which may be
required to elect or otherwise appoint as directors of Washington the
persons named on Schedule 2.05 to constitute the board of directors of
Washington at the Time of Distribution.
Section 2.06 RESIGNATIONS; TRANSFER OF STOCK HELD AS NOMINEE.
(a) Conexant will cause all of its employees and directors and all of the
employees and directors of each other member of the Conexant Group to
resign, effective not later than the Time of Distribution, from all boards
of directors or similar governing bodies of Washington or any other member
of the Washington Group on which they serve, and from all positions as
officers of Washington or any other member of the Washington Group in which
they serve, except as otherwise specified on Schedule 2.06. Washington will
cause all of its employees and directors and all of the employees and
directors of each other member of the Washington Group to resign, effective
not later than the Time of Distribution, from all boards of directors or
similar governing bodies of Conexant or any other member of the Conexant
Group on which they serve, and from all positions as officers of Conexant
or any other member of the Conexant Group in which they serve, except as
otherwise specified on Schedule 2.06.
26
(b) Conexant will cause each of its employees, and each of the
employees of the other members of the Conexant Group, who holds stock or
similar evidence of ownership of any Washington Group entity as nominee for
such entity pursuant to the laws of the country in which such entity is
located to transfer such stock or similar evidence of ownership to the
Person so designated by Washington to be such nominee as of and after the
Time of Distribution. Washington will cause each of its employees, and each
of the employees of the other members of the Washington Group, who holds
stock or similar evidence of ownership of any Conexant Group entity as
nominee for such entity pursuant to the laws of the country in which such
entity is located to transfer such stock or similar evidence of ownership
to the Person so designated by Conexant to be such nominee as of and after
the Time of Distribution.
(c) Conexant will cause each of its employees and each of the
employees of the other members of the Conexant Group to revoke or withdraw
their express written authority, if any, to act on behalf of any Washington
Group entity as an agent or representative therefor after the Time of
Distribution. Washington will cause each of its employees and each of the
employees of the other members of the Washington Group to revoke or
withdraw their express written authority, if any, to act on behalf of any
Conexant Group entity as an agent or representative therefor after the Time
of Distribution.
Section 2.07 WASHINGTON CERTIFICATE OF INCORPORATION AND
BY-LAWS. Prior to the Time of Distribution, (a) the Washington Board will
(i) approve the Certificate of Incorporation and will cause the same to be
filed with the Secretary of State of the State of Delaware and (ii) adopt
the By-laws, and (b) Conexant, as sole stockholder of Washington, will
approve the Certificate of Incorporation.
Section 2.08 CONSENTS. Prior to and after the Time of
Distribution, Conexant and Washington will, and will cause the Conexant
Subsidiaries and the Washington Subsidiaries, respectively, to, use their
commercially reasonable efforts (as requested by the other party) to
obtain, or to cause to be obtained, all Consents necessary for the transfer
of all Assets, Subsidiaries and Liabilities contemplated to be transferred
pursuant to this Article II; provided, however, that none of Conexant (or
any of the Conexant Subsidiaries) or Washington (or any of the Washington
Subsidiaries) shall be obligated to pay any consideration or offer or grant
any financial accommodation in connection therewith. Anything contained
herein to the contrary notwithstanding, this Agreement shall not constitute
an agreement to assign any Contract or Permit if an assignment or attempted
assignment of the same without the Consent of any other party or parties
thereto or other required Consent would constitute a breach thereof or of
any applicable law or in any way impair the rights of any member of the
Conexant Group or the Washington Group thereunder. If any such Consent is
not obtained or if an attempted assignment would be ineffective or would
impair any rights of either Group under any such Contract or Permit so that
the contemplated assignee hereunder (the "Recipient Party") would not
receive all such rights, then (x) the party contemplated hereunder to
assign such Contract or Permit (the "Assigning Party") will use
commercially reasonable efforts (it being understood that such efforts
shall not include any requirement of the Assigning Party to pay any
consideration or offer or grant any financial accommodation) to provide or
cause to be provided to the Recipient Party the
27
benefits of any such Contract or Permit and the Assigning Party will promptly
pay or cause to be paid to the Recipient Party when received all moneys and
properties received by the Assigning Party with respect to any such Contract or
Permit and (y) to the extent that the Recipient Party receives the benefits of
such Contract or Permit, the Recipient Party will pay, perform and discharge on
behalf of the Assigning Party all of the Assigning Party's Liabilities
thereunder in a timely manner and in accordance with the terms thereof. If and
when such Consents are obtained, the transfer of the applicable Contract or
Permit shall be effected as promptly following the Time of Distribution as shall
be practicable in accordance with the terms of this Agreement. To the extent
that any transfers and assumptions contemplated by this Article II shall not
have been consummated on or prior to the Time of Distribution, the parties shall
cooperate to effect such transfers as promptly following the Time of
Distribution as shall be practicable.
ARTICLE III
THE DISTRIBUTION
Section 3.01 THE DISTRIBUTION. (a) Subject to Section 3.03, the
Conexant Board will establish the Record Date and the Distribution Date and
authorize Conexant to pay the Distribution immediately prior to the
Effective Time by delivery to the Distribution Agent, for the benefit of
holders of record of Conexant Common Stock and Conexant Series B Preferred
Stock as of the Record Date, of a number of shares of Washington Common
Stock equal to the aggregate number of shares of Conexant Common Stock and
Conexant Series B Preferred Stock issued and outstanding as of the Record
Date (excluding treasury shares held by Conexant), and Conexant will
instruct the Distribution Agent to make book-entry credits on the
Distribution Date or as soon thereafter as practicable for each holder of
record of Conexant Common Stock and Conexant Series B Preferred Stock as of
the Record Date for a number of shares of Washington Common Stock equal to
the number of shares of Conexant Common Stock or Conexant Series B
Preferred Stock so held by such holder of record as of the Record Date
(excluding treasury shares held by Conexant). Prior to the Effective Time,
the shares of Washington Common Stock shall not be transferable and the
transfer agent for the Washington Common Stock shall not transfer any
shares of Washington Common Stock, except that the Distribution Agent, on
behalf of the holders of Washington Common Stock, may exchange such shares
for shares of Alpha Common Stock as provided by Section 3.2 of the Merger
Agreement in connection with the Merger. The Distribution will be deemed to
be effective as of the Time of Distribution upon written authorization from
Conexant to the Distribution Agent to proceed as set forth in this Section
3.01(a).
(b) Conexant and Washington each will provide to the
Distribution Agent all information (including information necessary to make
appropriate book-entry credits) and share certificates, in each case, as
may be required in order to complete the Distribution on the basis of one
share of Washington Common Stock for each share of Conexant Common Stock
and Conexant Series B Preferred Stock issued and outstanding as of the
Record Date (excluding treasury shares held by Conexant).
28
Section 3.02 COOPERATION PRIOR TO THE DISTRIBUTION. Prior to
the Distribution:
(a) Conexant and Washington will prepare the Information
Statement which will include appropriate disclosure concerning Washington,
its business, operations and management, the Contribution, the Distribution
and such other matters as Conexant and Washington may determine and as may
be required by law. Conexant will mail to the holders of Conexant Common
Stock and the Conexant Series B Preferred Stock the Information Statement
prior to the Distribution.
(b) Conexant and Washington will take all such action as may be
necessary or appropriate under the securities or "blue sky" laws of the
states or other political subdivisions of the United States and the
securities laws of any applicable foreign countries or other political
subdivisions thereof in connection with the transactions contemplated by
this Agreement.
Section 3.03 CONDITIONS TO THE DISTRIBUTION. In no event will
the Distribution occur prior to such time as each of the following
conditions shall have been satisfied or shall have been waived by the
Conexant Board:
(a) the Conexant Board shall be reasonably satisfied that,
after giving effect to the Contribution, (i) Conexant will not be
insolvent and will not have unreasonably small capital with which to
engage in its businesses and (ii) Conexant's surplus would be
sufficient to permit, without violation of Section 170 of the Delaware
General Corporation Law, the Distribution;
(b) no order, ruling, injunction or decree issued by any court
of competent jurisdiction or other Governmental Entity or other legal
restraint or prohibition preventing consummation of the Contribution
or the Distribution shall be in effect;
(c) no suit, action or proceeding by or before any court of
competent jurisdiction or other Governmental Entity shall have been
commenced and be pending to restrain or challenge the Contribution or
the Distribution; and
(d) each condition to the closing of the Merger Agreement set
forth in Article VIII thereof, other than the condition set forth in
Section 8.1(i) thereof as to the consummation of the Contribution and
the Distribution, shall have been fulfilled or waived by the party for
whose benefit such condition exists.
Subject to the terms and conditions of this Agreement, each
party will use its reasonable best efforts to cause the conditions set
forth in this Section 3.03 to be satisfied as promptly as reasonably
practicable; provided that no party will be required to waive any
condition.
Section 3.04 WAIVER OF CONDITIONS. Any or all of the conditions
set forth in Section 3.03 may be waived, in whole or in part, in the sole
discretion of the Conexant Board. The conditions set forth in Section 3.03
are for the sole benefit of Conexant and shall not give
29
rise to or create any duty on the part of Conexant or the Conexant Board to
waive or not waive any such conditions.
Section 3.05 DISCLOSURE. If at any time after the date hereof
either of the parties shall become aware of any circumstances that will or
could reasonably be expected to prevent any or all of the conditions
contained in Section 3.03 from being satisfied, it will promptly give to
the other party written notice of those circumstances.
ARTICLE IV
MUTUAL RELEASE; INDEMNIFICATION; EXPENSES
Section 4.01 MUTUAL RELEASE. Effective as of the Time of
Distribution and except as otherwise specifically set forth in the
Transaction Agreements, each of Conexant, on behalf of itself and each of
the Conexant Subsidiaries, on the one hand, and Washington, on behalf of
itself and each of the Washington Subsidiaries, on the other hand, hereby
releases and forever discharges the other party and its Subsidiaries, and
its and their respective officers, directors, agents, record and beneficial
security holders (including trustees and beneficiaries of trusts holding
such securities), advisors and Representatives (in each case, in their
respective capacities as such) and their respective heirs, executors,
administrators, successors and assigns, of and from all debts, demands,
actions, causes of action, suits, accounts, covenants, contracts,
agreements, damages, claims and Liabilities whatsoever of every name and
nature, both in law and in equity, which the releasing party has or ever
had or ever will have, which arise out of or relate to events,
circumstances or actions taken by such other party occurring or failing to
occur or any conditions existing at or prior to the Time of Distribution;
provided, however, that the foregoing general release shall not apply to
(i) any Liabilities or other obligations (including Liabilities with
respect to payment, reimbursement, indemnification or contribution) under
the Transaction Agreements or assumed, transferred, assigned, allocated or
arising under any of the Transaction Agreements (including any Liability
that the parties may have with respect to payment, performance,
reimbursement, indemnification or contribution pursuant to any Transaction
Agreement for claims brought against the parties by third Persons or any
Indemnitee), and the foregoing release will not affect any party's right to
enforce the Transaction Agreements in accordance with their terms or (ii)
any Liability the release of which would result in the release of any
Person other than a Person released pursuant to this Section 4.01
(provided, that the parties agree not to bring suit or permit any of their
Subsidiaries to bring suit against any member of the other Group with
respect to any Liability to the extent such member of the other Group would
be released with respect to such Liability by this Section 4.01 but for
this clause (ii)).
Each of Conexant and Washington acknowledges that it has been
advised by its legal counsel and is familiar with the provisions of
California Civil Code Section 1542, which provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT
30
TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR."
Being aware of said Code section, each of Conexant, on behalf of itself and
the Conexant Subsidiaries, and Washington, on behalf of itself and the
Washington Subsidiaries, hereby expressly waives any rights it may have
under California Civil Code Section 1542, as well as any other statutes or
common law principles of similar effect.
Section 4.02 INDEMNIFICATION BY CONEXANT. Subject to the
provisions of this Article IV, Conexant shall indemnify, defend and hold
harmless the Washington Indemnitees from and against, and pay or reimburse,
as the case may be, the Washington Indemnitees for, all Indemnifiable
Losses, as incurred, suffered by any Washington Indemnitee to the extent
based upon, arising out of or relating to the following:
(a) the Conexant Liabilities (including the failure by Conexant
or any other member of the Conexant Group to pay, perform or otherwise
discharge the Conexant Liabilities in accordance with their terms),
whether such Indemnifiable Losses are based upon, arise out of or
relate to events, occurrences, actions, omissions, facts,
circumstances or conditions occurring, existing or asserted before, at
or after the Time of Distribution;
(b) the breach by any member of the Conexant Group of any
agreement or covenant contained in a Transaction Agreement which does
not by its express terms expire at the Time of Distribution;
(c) the use by members of the Conexant Group or their
respective sublicensees of any intellectual property licensed by
Washington and the Washington Subsidiaries pursuant to Section 5.03
other than in accordance with the terms of such provision;
(d) the breach of the representation and warranty of Conexant
contained in Section 2.01(d)(i); or
(e) the enforcement by the Washington Indemnitees of their
rights to be indemnified, defended and held harmless under this
Section 4.02.
Notwithstanding anything to the contrary contained herein, in the event it
is determined that Conexant shall have breached its representation and
warranty contained in Section 2.01(d)(i), Conexant shall have the right, in
its sole discretion, to transfer any Asset to Washington necessary to cure
such breach, in which event Conexant's indemnification obligation in
respect of such breach shall be satisfied in full, except with respect to
any Indemnifiable Losses arising from such breach during the period from
the Time of Distribution to the time of such transfer.
31
Section 4.03 INDEMNIFICATION BY WASHINGTON. Subject to the
provisions of this Article IV, Washington shall indemnify, defend and hold
harmless the Conexant Indemnitees from and against, and pay or reimburse,
as the case may be, the Conexant Indemnitees for, all Indemnifiable Losses,
as incurred, suffered by any Conexant Indemnitee to the extent based upon,
arising out of or relating to the following:
(a) the Washington Liabilities (including the failure by
Washington or any other member of the Washington Group to pay, perform
or otherwise discharge the Washington Liabilities in accordance with
their terms), whether such Indemnifiable Losses are based upon, arise
out of or relate to events, occurrences, actions, omissions, facts,
circumstances or conditions occurring, existing or asserted before, at
or after the Time of Distribution;
(b) the breach by any member of the Washington Group of any
agreement or covenant contained in a Transaction Agreement which does
not by its express terms expire at the Time of Distribution;
(c) the use by members of the Washington Group (or, in the case
of intellectual property licensed by Conexant and the Conexant
Subsidiaries pursuant to Section 5.03, members of the Washington Group
or their respective sublicensees) of any names, trademarks, trade
names, domain names, service marks or corporate symbols or logos
pursuant to Section 5.02 or intellectual property licensed by Conexant
and the Conexant Subsidiaries pursuant to Section 5.03 other than in
accordance with the terms of such provisions; or
(d) the enforcement by the Conexant Indemnitees of their rights
to be indemnified, defended and held harmless under this Section 4.03.
Section 4.04 LIMITATIONS ON INDEMNIFICATION OBLIGATIONS. (a)
The amount which any party (an "Indemnifying Party") is or may be required
to pay to an Indemnitee in respect of Indemnifiable Losses or other
Liability for which indemnification is provided under this Agreement shall
be reduced by any amounts actually received (including Insurance Proceeds
actually received) by or on behalf of such Indemnitee (net of increased
insurance premiums and charges to the extent related to Indemnifiable
Losses and costs and expenses (including reasonable legal fees and
expenses) incurred by such Indemnitee in connection with seeking to collect
and collecting such amounts) in respect of such Indemnifiable Losses or
other Liability (such net amounts are referred to herein as "Indemnity
Reduction Amounts"). If any Indemnitee receives any Indemnity Reduction
Amounts in respect of an Indemnifiable Loss for which indemnification is
provided under this Agreement after the full amount of such Indemnifiable
Loss has been paid by an Indemnifying Party or after an Indemnifying Party
has made a partial payment of such Indemnifiable Loss and such Indemnity
Reduction Amounts exceed the remaining unpaid balance of such Indemnifiable
Loss, then the Indemnitee shall promptly remit to the Indemnifying Party an
amount equal to the excess (if any) of (A) the amount theretofore paid by
the Indemnifying Party in respect of such Indemnifiable Loss, less (B) the
amount of the indemnity payment that would have been
32
due if such Indemnity Reduction Amounts in respect thereof had been received
before the indemnity payment was made.
(b) In determining the amount of any Indemnifiable Losses, such
amount shall be (i) reduced to take into account any net Tax benefit
realized by the Indemnitee arising from the incurrence or payment by the
Indemnitee of such Indemnifiable Losses and (ii) increased to take into
account any net Tax cost incurred by the Indemnitee as a result of the
receipt or accrual of payments hereunder (grossed-up for such increase), in
each case determined by treating the Indemnitee as recognizing all other
items of income, gain, loss, deduction or credit before recognizing any
item arising from such Indemnifiable Losses. In determining the amount of
any such Tax benefit or Tax cost, the Washington Indemnitees or the
California Indemnitees, as applicable, shall be deemed to be subject to Tax
as follows: (A) U.S. federal income Taxes and foreign income Taxes at the
maximum statutory rate then in effect and (B) U.S. state and local income
Taxes at an assumed rate of five percent net of U.S. federal income Tax
benefits. It is the intention of the parties to this Agreement that
indemnity payments made pursuant to this Agreement are to be treated as
relating back to the Distribution as an adjustment to capital (i.e.,
capital contribution or distribution), and the parties shall not take any
position inconsistent with such intention before any Tax Authority (as
defined in the Tax Allocation Agreement), except to the extent that a final
determination (as defined in Section 1313 of the Code) with respect to the
recipient party causes any such payment not to be so treated.
(c) No monetary amount will be payable by Conexant to any
Washington Indemnitee with respect to the indemnification of any claims
pursuant to Section 4.02(d) until the aggregate amount of Indemnifiable
Losses actually incurred by the Washington Indemnitees with respect to such
claims shall exceed on a cumulative basis an amount equal to One Million
Five Hundred Thousand dollars ($1,500,000), in which event Conexant shall
be responsible only for the amount of such Indemnifiable Losses in excess
of One Million Five Hundred Thousand dollars ($1,500,000).
(d) No monetary amount will be payable by Conexant to any
Washington Indemnitee with respect to the indemnification of any claims
pursuant to Section 4.02(d) after the aggregate amount of Indemnifiable
Losses actually paid by Conexant with respect to such claims shall equal on
a cumulative basis an amount equal to Fifteen Million dollars
($15,000,000).
Section 4.05 PROCEDURES RELATING TO INDEMNIFICATION. (a) If a
claim or demand is made against an Indemnitee, or an Indemnitee shall
otherwise learn of an assertion, by any Person who is not a party to this
Agreement (or an Affiliate thereof) as to which an Indemnifying Party may
be obligated to provide indemnification pursuant to this Agreement (a
"Third Party Claim"), such Indemnitee will notify the Indemnifying Party in
writing, and in reasonable detail, of the Third Party Claim reasonably
promptly after becoming aware of such Third Party Claim; provided, however,
that failure to give such notification will not affect the indemnification
provided hereunder except to the extent the Indemnifying Party shall have
been actually prejudiced as a result of such failure. Thereafter, the
Indemnitee will deliver to the Indemnifying Party, promptly after the
Indemnitee's receipt thereof, copies of all material
33
notices and documents (including court papers) received or transmitted by the
Indemnitee relating to the Third Party Claim.
(b) If a Third Party Claim is made against an Indemnitee, the
Indemnifying Party will be entitled to participate in or to assume the
defense thereof (in either case, at the expense of the Indemnifying Party)
with counsel selected by the Indemnifying Party and reasonably satisfactory
to the Indemnitee. Should the Indemnifying Party so elect to assume the
defense of a Third Party Claim, the Indemnifying Party will not be liable
to the Indemnitee for any legal or other expenses subsequently incurred by
the Indemnitee in connection with the defense thereof; provided, that if in
the Indemnitee's reasonable judgment a conflict of interest exists in
respect of such claim or if the Indemnifying Party shall have assumed
responsibility for such claim with any reservations or exceptions, such
Indemnitee will have the right to employ separate counsel reasonably
satisfactory to the Indemnifying Party to represent such Indemnitee and in
that event the reasonable fees and expenses of such separate counsel (but
not more than one separate counsel for all Indemnitees similarly situated)
shall be paid by such Indemnifying Party. If the Indemnifying Party assumes
the defense of any Third Party Claim, the Indemnitee will have the right to
participate in the defense thereof and to employ counsel, at its own
expense, separate from the counsel employed by the Indemnifying Party, it
being understood that the Indemnifying Party will control such defense. The
Indemnifying Party will be liable for the fees and expenses of counsel
employed by the Indemnitee for any period during which the Indemnifying
Party has failed to assume the defense thereof. If the Indemnifying Party
assumes the defense of any Third Party Claim, the Indemnifying Party will
promptly supply to the Indemnitee copies of all material correspondence and
documents relating to or in connection with such Third Party Claim and keep
the Indemnitee fully informed of all material developments relating to or
in connection with such Third Party Claim (including providing to the
Indemnitee on request updates and summaries as to the status thereof). If
the Indemnifying Party chooses to defend a Third Party Claim, the parties
hereto will cooperate in the defense thereof (such cooperation to be at the
expense, including reasonable legal fees and expenses, of the Indemnifying
Party), which cooperation shall include the retention in accordance with
this Agreement and (upon the Indemnifying Party's request) the provision to
the Indemnifying Party of records and information which are reasonably
relevant to such Third Party Claim, and making employees available on a
mutually convenient basis to provide additional information and explanation
of any material provided hereunder.
(c) No Indemnifying Party will consent to any settlement,
compromise or discharge (including the consent to entry of any judgment) of
any Third Party Claim without the Indemnitee's prior written consent (which
consent will not be unreasonably withheld); provided, that if the
Indemnifying Party assumes the defense of any Third Party Claim, the
Indemnitee will agree to any settlement, compromise or discharge of such
Third Party Claim which the Indemnifying Party may recommend and which by
its terms obligates the Indemnifying Party to pay the full amount of
Indemnifiable Losses in connection with such Third Party Claim and
unconditionally and irrevocably releases the Indemnitee and its Affiliates
completely from all Liability in connection with such Third Party Claim;
provided, however, that the Indemnitee may refuse to agree to any such
settlement, compromise or discharge (x) that provides for injunctive or
other nonmonetary relief affecting the Indemnitee
34
or any of its Affiliates or (y) that, in the reasonable opinion of the
Indemnitee, would otherwise materially adversely affect the Indemnitee or any of
its Affiliates. Whether or not the Indemnifying Party shall have assumed the
defense of a Third Party Claim, the Indemnitee will not (unless required by law)
admit any liability with respect to, or settle, compromise or discharge, such
Third Party Claim without the Indemnifying Party's prior written consent (which
consent will not be unreasonably withheld).
(d) Any claim on account of Indemnifiable Losses which does not
involve a Third Party Claim will be asserted by reasonably prompt written
notice given by the Indemnitee to the Indemnifying Party from whom such
indemnification is sought. The failure by any Indemnitee so to notify the
Indemnifying Party will not relieve the Indemnifying Party from any
liability which it may have to such Indemnitee under this Agreement, except
to the extent that the Indemnifying Party shall have been actually
prejudiced by such failure.
(e) In the event of payment in full by an Indemnifying Party to
any Indemnitee in connection with any Third Party Claim, such Indemnifying
Party will be subrogated to and shall stand in the place of such Indemnitee
as to any events or circumstances in respect of which such Indemnitee may
have any right or claim relating to such Third Party Claim against any
claimant or plaintiff asserting such Third Party Claim or against any other
Person. Such Indemnitee will cooperate with such Indemnifying Party in a
reasonable manner, and at the cost and expense of such Indemnifying Party,
in prosecuting any subrogated right or claim.
Section 4.06 REMEDIES CUMULATIVE. Subject to the provisions of
Section 7.05, the remedies provided in this Article IV shall be cumulative
and shall not preclude assertion by any Indemnitee of any other rights or
the seeking of any and all other remedies against any Indemnifying Party,
except that the indemnity contained in Section 4.02(d) shall be the sole
and exclusive remedy of the parties hereto, their Affiliates, successors
and assigns with respect to any and all claims arising out of or relating
to the breach of the representation and warranty of Conexant contained in
Section 2.01(d)(i).
Section 4.07 SURVIVAL OF INDEMNITIES. Except as set forth in
the following sentence, the obligations of each of Conexant and Washington
under this Article IV will not terminate at any time and will survive the
sale or other transfer by any party of any assets or businesses or the
assignment by any party of any Liabilities. Notwithstanding anything to the
contrary contained herein, the obligation of Conexant to indemnify, defend
and hold harmless the Washington Indemnitees pursuant to Section 4.02(d)
will terminate upon the expiration of the representation and warranty set
forth in Section 2.01(d)(i); provided, however, that such obligation to
indemnify, defend and hold harmless will not terminate with respect to any
individual claim as to which an Indemnitee shall have, before such
expiration of such representation and warranty, previously delivered a
notice (stating in reasonable detail the basis of such claim) to Conexant.
Section 4.08 EXCLUSIVITY OF TAX ALLOCATION AGREEMENT.
Notwithstanding anything in this Agreement to the contrary, the Tax
Allocation Agreement will be the
35
exclusive agreement among the parties with respect to all Tax matters, including
indemnification in respect of Tax matters.
Section 4.09 EXPENSES. (a) Except as otherwise set forth in any
Transaction Agreement, (i) all Conexant Expenses will be charged to and
paid by Conexant and (ii) all Washington Expenses will be charged to and
paid by Washington.
(b) Within twenty business days after the Distribution Date,
Washington will reimburse Conexant (by wire transfer to Conexant's bank
account at Bank One, N.A., Account No. 51-52283, A.B.A. Routing Number
000000000) for all amounts in respect of Washington Expenses paid by
Conexant or any of its Subsidiaries (including members of the Washington
Group) before or at the Time of Distribution (including Washington Expenses
that would otherwise constitute accounts payable); provided that, within
ten business days after the Distribution Date, Conexant has notified
Washington in writing of such Washington Expenses and provided Washington
with appropriate supporting documentation for such Washington Expenses.
Promptly after Conexant's request therefor and upon production to
Washington of appropriate supporting documentation, Washington will
reimburse Conexant (by wire transfer to the same bank account referred to
in the preceding sentence) for all Washington Expenses paid by Conexant or
any of its Subsidiaries before, at or after the Time of Distribution
(including Washington Expenses that would otherwise constitute accounts
payable), other than as previously reimbursed by Washington pursuant to the
preceding sentence.
Section 4.10 EFFECT OF INVESTIGATION. The right to
indemnification pursuant to Section 4.02(d) shall not be affected by any
investigation conducted with respect to, or any knowledge acquired (or
capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Distribution Date, with
respect to the representation and warranty contained in Section 2.01(d)(i).
ARTICLE V
CERTAIN OTHER MATTERS
Section 5.01 INSURANCE.
(a) Coverage. Subject to the provisions of this Section 5.01,
coverage of Washington and the Washington Subsidiaries under all Policies
shall cease as of the Time of Distribution. From and after the Time of
Distribution, Washington and the Washington Subsidiaries will be
responsible for obtaining and maintaining all insurance coverages in their
own right. All Policies will constitute Conexant Assets and will be
retained by Conexant and the Conexant Subsidiaries, together with all
rights, benefits and privileges thereunder (including the right to receive
any and all return premiums with respect thereto), except that Washington
will have the rights in respect of Policies to the extent described in
Section 5.01(b).
36
(b) Rights Under Policies. From and after the Time of
Distribution, Washington and the Washington Subsidiaries will have no
rights with respect to any Policies, except that (i) Washington will have
the right to assert claims (and Conexant will use commercially reasonable
efforts to assist Washington in asserting claims) for any loss, liability
or damage with respect to the Washington Assets or Washington Liabilities
under Policies with third-party insurers which are "occurrence basis"
insurance policies ("Occurrence Basis Policies") arising out of insured
incidents occurring from the date coverage thereunder first commenced until
the Time of Distribution to the extent that the terms and conditions of any
such Occurrence Basis Policies and agreements relating thereto so allow and
(ii) Washington will have the right to continue to prosecute claims with
respect to Washington Assets or Washington Liabilities properly asserted
with an insurer prior to the Time of Distribution (and Conexant will use
commercially reasonable efforts to assist Washington in connection
therewith) under Policies with third-party insurers which are insurance
policies written on a "claims made" basis ("Claims Made Policies") arising
out of insured incidents occurring from the date coverage thereunder first
commenced until the Time of Distribution to the extent that the terms and
conditions of any such Claims Made Policies and agreements relating thereto
so allow, provided, that in the case of both clauses (i) and (ii) above,
(A) all of Conexant's and each Conexant Subsidiary's reasonable
out-of-pocket costs and expenses incurred in connection with the foregoing
are promptly paid by Washington, (B) Conexant and the Conexant Subsidiaries
may, at any time, without liability or obligation to Washington or any
Washington Subsidiary (other than as set forth in Section 5.01(c)), amend,
commute, terminate, buy-out, extinguish liability under or otherwise modify
any Occurrence Basis Policies or Claims Made Policies (and such claims
shall be subject to any such amendments, commutations, terminations,
buy-outs, extinguishments and modifications), (C) such claims will be
subject to (and recovery thereon will be reduced by the amount of) any
applicable deductibles, retentions or self-insurance provisions, (D) such
claims will be subject to (and recovery thereon will be reduced by the
amount of) any payment or reimbursement obligations of Conexant, any
Conexant Subsidiary or any Affiliate of Conexant or any Conexant Subsidiary
in respect thereof and (E) such claims will be subject to exhaustion of
existing aggregate limits. Conexant's obligation to use commercially
reasonable efforts to assist Washington in asserting claims under
applicable Policies will include using commercially reasonable efforts in
assisting Washington to establish its right to coverage under such Policies
(so long as all of Conexant's reasonable out-of-pocket costs and expenses
in connection therewith are promptly paid by Washington). None of Conexant
or the Conexant Subsidiaries will bear any Liability for the failure of an
insurer to pay any claim under any Policy. It is understood that any Claims
Made Policies will not provide any coverage to Washington and the
Washington Subsidiaries for incidents occurring prior to the Time of
Distribution but which are asserted with the insurance carrier after the
Time of Distribution.
(c) Conexant Actions. In the event that after the Time of
Distribution Conexant or any Conexant Subsidiary proposes to amend,
commute, terminate, buy-out, extinguish liability under or otherwise modify
any Policies under which Washington has rights to assert claims pursuant to
Section 5.01(b) in a manner that would adversely affect any such rights of
Washington, (i) Conexant will give Washington prior notice thereof and
consult with Washington with respect to such action (it being understood
that the decision to take any
37
such action will be in the sole discretion of Conexant) and (ii) Conexant will
pay to Washington its equitable share (which shall be determined by Conexant in
good faith based on the amount of premiums paid by or allocated to the
Washington Business in respect of the applicable Policy) of any net proceeds
actually received by Conexant from the insurer under the applicable Policy as a
result of such action by Conexant (after deducting Conexant's reasonable costs
and expenses incurred in connection with such action).
(d) Administration. From and after the Time of Distribution:
(i) Conexant or a Conexant Subsidiary, as appropriate,
will be responsible for the Claims Administration with respect to
claims of Conexant and the Conexant Subsidiaries under Policies;
and
(ii) Washington or a Washington Subsidiary, as
appropriate, will be responsible for the Claims Administration
with respect to claims of Washington and the Washington
Subsidiaries under Policies.
(e) Insurance Premiums. From and after the Time of
Distribution, Conexant will pay all premiums (retrospectively-rated or
otherwise) as required under the terms and conditions of the respective
Policies in respect of periods prior to the Time of Distribution, whereupon
Washington will upon the request of Conexant, forthwith reimburse Conexant
for that portion of such premiums paid by Conexant as are reasonably
determined by Conexant to be attributable to the Washington Business.
(f) Agreement for Waiver of Conflict and Shared Defense. In the
event that a Policy provides coverage for both Conexant and/or a Conexant
Subsidiary, on the one hand, and Washington and/or a Washington Subsidiary,
on the other hand, relating to the same occurrence, Conexant and Washington
agree to defend jointly and to waive any conflict of interest necessary to
the conduct of that joint defense. Nothing in this Section 5.01(f) will be
construed to limit or otherwise alter in any way the indemnity obligations
of the parties to this Agreement, including those created by this
Agreement, by operation of law or otherwise.
Section 5.02 USE OF NAMES, TRADEMARKS, ETC. (a) From and after
the Time of Distribution, subject to Section 5.02(b), Conexant will own all
rights of Conexant or any of its Subsidiaries (including members of the
Washington Group) in, and to the use of, the Conexant Marks. Prior to or
promptly after the Time of Distribution (but in no event later than 90 days
after the Time of Distribution in the case of United States Persons and 180
days after the Time of Distribution in the case of non-United States
Persons), Washington will change the name of any Washington Subsidiary or
other Person under its control to eliminate therefrom the names "Conexant",
"Conexant Systems" and "Conexant Systems, Inc." and all derivatives
thereof.
(b) From and after the Time of Distribution, except as
permitted in this Section 5.02(b), the Washington Group will not use or
have any rights to the Conexant Marks or any name, xxxx or symbol
confusingly similar thereto, or any special script, type font, form, style,
logo, design, device, trade dress or symbol which contains, represents or
evokes
38
the Conexant Marks or any name or xxxx confusingly similar thereto. From and
after the Time of Distribution, the Washington Group will not hold itself out as
having any affiliation with the Conexant Group. However, Conexant hereby grants
to Washington a non-exclusive, non-transferable (other than by way of
sublicenses to members of the Washington Group) license to utilize without
obligation to pay royalties to Conexant the names, trademarks, trade names and
service marks "Conexant", "Conexant Systems" and "Conexant Systems, Inc." and
any corporate symbol or logo related thereto in connection with stationery,
supplies, labels, catalogs, vehicles, signs, packaging and products of the
Washington Business, but only as described in paragraphs (i) through (vi) of
this Section 5.02(b), subject to the terms and conditions of this Section
5.02(b) and Section 5.02(c), in each case in the same manner and to the same
extent as such names, trademarks, trade names, service marks, corporate symbols
or logos were used by the Washington Business at any time within the two year
period preceding the Time of Distribution:
(i) All documents constituting Washington Assets as of
the Time of Distribution within the following categories may be
used for the duration of the periods following the Time of
Distribution indicated below or until the supply is exhausted,
whichever is the first to occur:
Maximum Period
of Permitted Use
Following the
Category of Documents Time of Distribution
--------------------- --------------------
A. Stationery 3 months
B. Invoices, purchase orders, debit and credit memos and other
similar documents of a transactional nature 3 months
C. Business cards 3 months
D. Other outside forms such as packing lists, labels, packing
materials and cartons, etc. 6 months
E. Forms for internal use only 6 months
F. Product literature 6 months;
provided, however, that Washington will cause each document
within any of the above categories A, B or F used for any purpose
within the stated period to clearly and prominently display a
statement, the form of which is approved by Conexant, to the
effect that the Washington Group was formerly affiliated with
Conexant.
(ii) All vehicles constituting Washington Assets as of
the Time of Distribution may continue to be used without
re-marking (except as to legally required
39
permit numbers, license numbers, etc.) for a period not to exceed
three months following the Time of Distribution or the date of
disposition of the vehicle, whichever is the first to occur.
Washington will cause all markings on such vehicles to be removed or
permanently obscured prior to the disposition of such vehicles.
(iii) Within three months following the Time of
Distribution, Washington will remove or cause to be removed from
display all signs and displays which contain the Conexant Marks.
(iv) Products of the Washington Business may have applied
thereto the names, trademarks, trade names or service marks
"Conexant", "Conexant Systems" or "Conexant Systems, Inc." or any
Conexant corporate symbol or logo related thereto for a period of
three months after the Time of Distribution.
(v) Products of the Washington Business in finished goods
inventory and work in process (to the extent the same bear the
name, trademark, trade name or service xxxx "Conexant", "Conexant
Systems" or "Conexant Systems, Inc." or any Conexant corporate
symbol or logo related thereto as of the Time of Distribution or
have any such name, trademark, trade name, service xxxx,
corporate symbol or logo applied to them in accordance with
paragraph (iv) above) may be disposed of without re-marking.
(vi) All documents of the Washington Business of the type
described in paragraph (i) above and displays and signs of the
Washington Business may, for a period not to exceed one year
after the Distribution Date (or such longer period as shall be
approved by Conexant), contain the statement "A Heritage of
Conexant Technology" (or other similar phrase, the form of which
is approved by Conexant) in conjunction with the name of
Washington or any Subsidiary thereof so long as such statement is
of a type no more prominent than such name of Washington or such
Subsidiary thereof.
(c) (i) Apart from the rights granted under Section 5.02(b), no
member of the Washington Group shall have any right, title or interest in
or to the use of the Conexant Marks, either alone or in combination with
any other word, name, symbol, device, trademarks, or any combination
thereof. Anything contained herein to the contrary notwithstanding, except
as expressly permitted by Section 5.02(b), in no event will any member of
the Washington Group utilize the Conexant Marks as a component of a company
or trade name. Washington will not, and will cause each other member of the
Washington Group not to, challenge or contest the validity of the Conexant
Marks, the registration thereof or the ownership thereof by the Conexant
Group. Washington will not, and will cause each other member of the
Washington Group not to, apply anywhere at any time for any registration as
owner or exclusive licensee of the Conexant Marks. If, notwithstanding the
foregoing, any member of the Washington Group develops, adopts or acquires,
directly or indirectly, any right, title or interest in, or to the use of,
any Conexant Marks in any jurisdiction, or any goodwill incident thereto,
Washington will, upon the request of Conexant, and for a nominal
consideration of one dollar, assign or cause to be assigned to Conexant or
40
any designee of Conexant, all right, title and interest in, and to the use
of, such Conexant Marks in any and all jurisdictions, together with any
goodwill incident thereto.
(ii) If the laws of any country require that any xxxx subject
to Section 5.02(b) or the right of any member of the Washington Group to
use any xxxx as permitted by Section 5.02(b) be registered in order to
fully protect the Conexant Group, Conexant and Washington will cooperate in
constituting such member of the Washington Group as a registered user (or
its equivalent) in each of the countries in which such registration is
necessary. If any such laws of any country require that any such xxxx or
the use by any member of the Washington Group of any such xxxx be
registered prior to use in order to protect fully the Conexant Group, the
license granted pursuant to Section 5.02(b) will not extend to such country
until such registration has been effected to the reasonable satisfaction of
Conexant. Any expenses for registering such xxxx or constituting such
member of the Washington Group as a registered user in any country shall be
borne by Washington. Any registration of such member of the Washington
Group as a registered user of any xxxx hereunder shall be expunged on
termination of the period of permitted use under this Agreement or upon a
breach or threatened breach by any member of the Washington Group of the
terms of this Section 5.02 and Washington will, upon request of Conexant,
take all necessary steps to cause such registration to be so expunged upon
such termination or breach or threatened breach. In addition, Washington
hereby constitutes and appoints Conexant the true and lawful attorney of
Washington, with full power of substitution, in the name and on behalf of
Washington (and at the cost of Washington) to take all necessary steps to
cause such registration to be so expunged upon such termination or breach
or threatened breach.
(iii) Washington will cause each member of the Washington Group
to comply with the provisions of this Section 5.02. Nothing in this Section
5.02 will prevent any member of the Conexant Group from enforcing the
provisions of this Section 5.02 against any member of the Washington Group.
(iv) Conexant will have the right to terminate the license
granted in Section 5.02(b) upon 30 days written notice to Washington for
any material failure by any member of the Washington Group to observe the
terms of Section 5.02(b) or this Section 5.02(c), provided that such
failure is not remedied (where commercially feasible) prior to the
effectiveness of the termination.
Section 5.03 LICENSE OF INTELLECTUAL PROPERTY.
(a) License of Conexant Intellectual Property to Washington.
(i) Subject to Sections 5.03(a)(iv) and 5.03(d), effective as
of the Time of Distribution, Conexant, on behalf of itself and the Conexant
Subsidiaries, hereby grants to the Washington Group a non-exclusive,
world-wide, irrevocable, royalty-free license, without the right to assign
or grant sublicenses, except as provided in Sections 5.03(a)(ii) and (iii),
under all Patents and Trademarks, Trade Secrets and other intellectual
property rights existing as of the Time of Distribution (collectively,
"Intellectual Property") that constitute Conexant Assets
41
(excluding trademarks, trade names, domain names, service marks, trade dress and
any other form of trade identity) that the Conexant Group has a right to license
without the payment of royalties to a third party, (A) with respect to any
copyrighted work included in such Intellectual Property, to reproduce, display,
distribute and prepare derivative works of such copyrighted work; and (B) to
make, have made (including by third-party contract manufacturers), use, sell,
offer for sale, import, or otherwise dispose of products in the conduct of the
Washington Business as it is being conducted immediately prior to the Time of
Distribution and any related extensions or expansions thereof, and to practice
any process involved in the use or manufacture thereof; provided, that in
connection with the Merger, this license will also extend to products in the
conduct of Alpha's business as it is being conducted immediately prior to the
Effective Time and any related extensions or expansions thereof.
(ii) The license granted under Section 5.03(a)(i) is
non-assignable and non-transferable (in insolvency proceedings, by reason
of corporate merger, by acquisition or other change of control or
otherwise) by the Washington Group, except that a one-time assignment may
be made to Alpha and its Subsidiaries in connection with the Merger.
(iii) The license granted under Section 5.03(a)(i) does not
include the right to grant sublicenses, except that the Washington Group
(or, following the Effective Time, Alpha and its Subsidiaries) may grant a
sublicense (within the scope of such license) to any entity or business
that is a spin-off or other similar divestiture of all or any part of the
Washington Group's businesses (or, following the Effective Time, the
Combined Company's businesses) (a "Washington Spin-Off") and to any
subsequent entity or business that is a spin-off or other similar
divestiture of all or any part of a Washington Spin-Off; provided, however,
that any such sublicense shall be subject to the same restrictions on
assignment and transfer as the original license granted in this Section
5.03(a).
(iv) In the event that following the Effective Time, the
Combined Company or a Washington Spin-Off becomes insolvent or is acquired
by or merges with a third party, such license or sublicense shall
immediately and automatically terminate with respect to such Person and its
Affiliates effective as of the date of such insolvency, acquisition or
merger, unless Conexant and the Combined Company otherwise agree; provided,
that such termination of such license or sublicense shall not necessarily
affect any other license or sublicense.
(v) Without limiting the foregoing, Conexant and Alpha shall
confer in good faith to determine whether and on what terms Conexant's
rights under the Lucent License Agreement may be sublicensed to Washington
and/or the Combined Company, and, if mutually agreed by Conexant and Alpha,
Conexant shall grant a sublicense as Conexant and Alpha may mutually
determine may be granted, subject to the terms and conditions of the Lucent
License Agreement; provided, however, that nothing in this Section
5.03(a)(v) shall require that Conexant pay any additional fees or royalties
under the Lucent License Agreement or grant any sublicense to Washington
and/or the Combined Company if Conexant in good faith determines such
sublicense would jeopardize any rights of Conexant under the Lucent License
Agreement.
42
(b) License of Alpha Intellectual Property to Conexant
(i) Subject to Section 5.03(b)(iv), effective immediately
prior to the Effective Time, Alpha, on behalf of itself and its
Subsidiaries, hereby grants to the Conexant Group a non-exclusive,
world-wide, irrevocable royalty-free license, without the right to assign
or grant sublicenses, except as provided in Sections 5.03(b)(ii) and (iii),
under all Intellectual Property owned by Alpha and its Subsidiaries
(excluding trademarks, trade names, domain names, service marks, trade
dress and any other form of trade identity) that Alpha and its Subsidiaries
have a right to license without the payment of royalties to a third party,
(A) with respect to any copyrighted work included in such Intellectual
Property, to reproduce, display, distribute and prepare derivative works of
such copyrighted work; and (B) to make, have made (including by third-party
contract manufacturers), use, sell, offer for sale, import, or otherwise
dispose of products in the conduct of the Conexant Business as it is being
conducted immediately prior to the Time of Distribution and any related
extensions or expansions thereof, and to practice any process involved in
the use or manufacture thereof.
(ii) The license granted under Section 5.03(b)(i) is
non-assignable and non-transferable (in insolvency proceedings, by reason
of corporate merger, by acquisition or other change in control or
otherwise) by the Conexant Group.
(iii) The license granted under Section 5.03(b)(i) does not
include the right to grant sublicenses, except that the Conexant Group may
grant a sublicense (within the scope of such license) to any entity or
business that is a spin-off or other similar divestiture of all or any part
of the Conexant Group's businesses (a "Conexant Spin-Off") and to any
subsequent entity or business that is a spin-off or other similar
divestiture of all or any part of a Conexant Spin-Off; provided, however,
that any such sublicense shall be subject to the same restrictions on
assignment and transfer as the original license granted in this Section
5.03(b).
(iv) In the event that following the Effective Time, Conexant
or a Conexant Spin-Off becomes insolvent or is acquired by or merges with a
third party, such license or sublicense shall immediately and automatically
terminate with respect to such Person and its Affiliates effective as of
the date of such insolvency, acquisition or merger, unless Conexant and the
Combined Company otherwise agree; provided, that such termination of such
license or sublicense shall not necessarily affect any other license or
sublicense.
(c) License of Washington Intellectual Property to Conexant
(i) Subject to in Sections 5.03(c)(iv) and 5.03(d), effective
as of the Time of Distribution, Washington, on behalf of itself and the
Washington Subsidiaries, hereby grants to the Conexant Group a
non-exclusive, world-wide, irrevocable, royalty-free license, without the
right to assign or grant sublicenses, except as provided in Sections
5.03(c)(ii) and (iii), under all Intellectual Property that constitute
Washington Assets (excluding trademarks, trade names, domain names, service
marks, trade dress and any other form of trade identity) that the
Washington Group has a right to license without the payment of royalties to
a third party, (A) with respect to any copyrighted work included in such
Intellectual Property, to reproduce, display, distribute and prepare
derivative works of such copyrighted work; and (B)
43
to make, have made (including by third-party contract manufacturers), use, sell,
offer for sale, import, or otherwise dispose of products in the conduct of the
Conexant Business as it is being conducted immediately prior to the Time of
Distribution and any related extensions or expansions thereof, and to practice
any process involved in the use or manufacture thereof.
(ii) The license granted under Section 5.03(c)(i) is not
assignable and non-transferable (in insolvency proceedings, by reason of
corporate mergers, by acquisition or other change of control or otherwise)
by the Conexant Group.
(iii) The license granted under Section 5.03(c)(i) does not
include the right to grant sublicenses, except that the Conexant Group may
grant a sublicense (within the scope of such license) to any Conexant
Spin-Off and to any subsequent entity or business that is a spin-off or
other similar divestiture of all or any part of a Conexant Spin-Off;
provided, however, that any such sublicense shall be subject to the same
restrictions on assignment and transfer as the original license granted in
this Section 5.03(c).
(iv) In the event that following the Effective Time, Conexant
or a Conexant Spin-Off becomes insolvent or is acquired by or merges with a
third party, such license or sublicense shall immediately and automatically
terminate with respect to such Person and its Affiliates effective as of
the date of such insolvency, acquisition or merger, unless Conexant and the
Combined Company otherwise agree; provided, that such termination of such
license or sublicense shall not necessarily affect any other license or
sublicense.
(d) Field of Use Restrictions on Bluetooth Technology
(i) Notwithstanding anything to the contrary contained in this
Agreement, effective immediately after the Time of Distribution and
continuing for a term of eighteen months, Conexant agrees that no member of
the Conexant Group shall sell or offer for sale the Washington Bluetooth RF
Solution on a stand-alone basis into any market, and that no member of the
Conexant Group shall sell or offer for sale the combination of the
Washington Bluetooth RF Solution with the Conexant Bluetooth Baseband
Solution into the cellular handset market; provided, however, that nothing
in this Section 5.03(d)(i) shall prohibit any member of the Conexant Group
from selling the Conexant Bluetooth Baseband Solution, a third-party
Bluetooth RF solution or any other Bluetooth RF solution that is not
substantially based on the Washington Bluetooth RF Solution into any
market.
(ii) Notwithstanding anything to the contrary contained in this
Agreement, effective immediately after the Time of Distribution and
continuing for a term of eighteen months, Washington agrees that no member
of the Washington Group (and, following the Effective Time, Alpha agrees
that neither it nor any of its Subsidiaries) shall sell or offer for sale
the Conexant Bluetooth Baseband Solution into any market outside the
cellular handset market, whether on a stand-alone basis or in combination
with the Washington Bluetooth RF Solution, unless the Conexant Bluetooth
Baseband Solution is sold in combination with the Washington Group's
cellular chipset solution; provided, however, that nothing in this Section
5.03(d)(ii) shall prohibit any member of the Washington Group (or,
following the Effective Time, Alpha and its Subsidiaries) from selling the
Washington Bluetooth RF
44
Solution, a third-party Bluetooth baseband solution or any other Bluetooth
baseband solution that is not substantially based on the Conexant Bluetooth
Baseband Solution into any market.
(e) Administrative Services Software.
(i) For purposes of this Section 5.03(e), the following
terms will have the following definitions:
(A) "Administrative Services" means services pertaining
to personnel, payroll, property management, benefits, human
resource management, financial planning, case docketing and
management, contract and subcontract management, facilities
management, proposal activities, supply chain planning for
production, product distribution, material requirements planning,
inventory management, engineering documentation control, workflow
and e-mail management, networks and computer systems management
and other similar services.
(B) "Administrative Services Software" means software
originated internally and owned by Conexant or any of its
Subsidiaries (including members of the Washington Group) prior to
the Time of Distribution and relating to the provision of
Administrative Services to the Conexant Business or the Washington
Business immediately prior to the Time of Distribution, regardless
of where ownership of such software vests after the Time of
Distribution. Administrative Services Software also shall include
materials and documentation supplied by one party to the other
pursuant to clause (iv) of this Section 5.03(e).
(ii) Anything contained herein to the contrary
notwithstanding, the following licenses shall govern the licensing of
Administrative Services Software:
(A) Effective as of the Time of Distribution, Conexant,
on behalf of itself and the Conexant Subsidiaries, hereby grants
to Washington a royalty-free, world-wide, irrevocable,
non-exclusive license to use Administrative Services Software
which constitutes Conexant Assets and which immediately after the
Time of Distribution is either owned by the Conexant Group or
under which the Conexant Group has a right to license without the
payment of royalties to a third party, but only for the internal
business purposes of the Washington Group, including the right to
sublicense only to (x) members of the Washington Group and (y)
service providers and similar third parties to use the
Administrative Services Software only for or on behalf of the
Washington Group.
(B) Effective as of the Time of Distribution, Washington,
on behalf of itself and the Washington Subsidiaries, hereby grants
to Conexant a royalty-free, world-wide, irrevocable, non-exclusive
license to use Administrative Services Software which constitutes
Washington Assets and which immediately after the Time of
Distribution is either owned by the Washington Group or under
which the Washington Group has a right to license without the
payment of royalties to a third party, but only for the internal
business purposes of the Conexant Group, including the
45
right to sublicense only to (x) members of the Conexant Group and (y)
service providers and similar third parties to use the
Administrative Services Software only for or on behalf of the
Conexant Group.
(C) Except as set forth in this paragraph (e)(ii), the
licenses granted pursuant to this Section 5.03(e) do not include
the right to sublicense.
(iii) Each party shall have the right to use, disclose,
perform, display, copy, distribute and make derivative works of
Administrative Services Software within the scope of the licenses
granted herein. Title to Administrative Services Software and all
rights therein, including all rights in patents, copyrights and trade
secrets and any other intellectual property rights applicable thereto,
shall remain vested in the party to which ownership is allocated
pursuant to this Agreement. Notwithstanding anything to the contrary
contained herein, each licensed party agrees that it will not use,
copy, disclose, sell, assign or sublicense, or otherwise transfer
Administrative Services Software licensed to it under this Section
5.03(e) or any derivative works thereof, except as expressly provided
in this Section 5.03(e) and Section 7.07.
(iv) To the extent that a licensed party does not have
copies of any Administrative Services Software or materials and
documentation (such as source code listings, flow charts, user guides
and programmer's guides) relating to the operation and maintenance of
such Administrative Services Software to which the other party has
ownership, such owning party shall, as soon as practicable after
request of the licensed party, supply to the licensed party copies of
such Administrative Services Software and any related operating and
maintenance materials or documentation existing as of the Time of
Distribution.
(v) In the event that Administrative Services Software is
used by the owner in the ordinary course of its business either
associated or bundled with software owned or controlled by a third
party (e.g., as a suite of software), without which the Administrative
Services Software would be wholly or partly inoperable or otherwise
unfit for its intended purposes, the grant of the licenses under the
provisions of this Section 5.03(e) shall not be construed as an
implied license to use the software of such a third party or as an
undertaking on the part of the owner of the Administrative Services
Software to obtain a license to permit the use of such third party
software.
(f) (i) Conexant makes no representations or warranties of any
kind with respect to the validity, scope or enforceability of any
intellectual property rights licensed by Conexant or the Conexant
Subsidiaries pursuant to this Section 5.03 and none of Conexant or the
Conexant Subsidiaries has any obligation to file or prosecute any patent
applications or maintain any patents in force in connection therewith.
Notwithstanding anything contained herein to the contrary, this Section
5.03 will not be applicable to any rights in, or to the use of, the
Conexant Marks (which are the subject of Section 5.02).
(ii) Washington makes no representations or warranties of any
kind with respect to the validity, scope or enforceability of any
intellectual property rights licensed by Washington or the Washington
Subsidiaries pursuant to this Section 5.03 and none of
46
Washington or the Washington Subsidiaries has any obligation to file or
prosecute any patent applications or maintain any patents in force in connection
therewith.
Section 5.04 SOFTWARE AND OTHER LICENSE AGREEMENTS. If after
the Time of Distribution, Washington (or any member of the Washington
Group) no longer has licensee rights under any software or other license
agreement of Conexant (or any member of the Conexant Group) (a "Conexant
License Agreement") that, prior to the Time of Distribution, was used in
the conduct of the Washington Business (i) because such license agreement
does not constitute a Washington Asset; (ii) because the transfer of, or
sublicense under, such Conexant License Agreement required the consent of a
third party and such consent was not obtained or (iii) for any other
reason, then Washington shall be responsible for all costs and expenses
incurred in connection with the procurement of new license agreements to
replace any such Conexant License Agreements. Conexant will use
commercially reasonable efforts to assist Washington in the procurement of
such new license agreements; provided that all of Conexant's costs and
expenses incurred in connection therewith shall be paid by Washington.
Section 5.05 NON-SOLICITATION OF EMPLOYEES. Without the express
written agreement of either (a) both the Chief Executive Officer of
Conexant and the Chief Executive Officer of Alpha or (b) both the Senior
Vice President, Human Resources of Conexant and the Vice President,
Treasurer, Chief Financial Officer and Secretary of Alpha:
(a) Conexant agrees not to (and to cause the other
members of the Conexant Group not to) solicit, recruit or hire any
employee of, or individuals providing contracting services to,
Washington or any other member of the Washington Group for a period of
six months following the Distribution Date or until six months after
such employee's employment with, or such individual's provision of
contracting services to, Washington or any other member of the
Washington Group terminates, whichever occurs first;
(b) Washington agrees not to (and to cause the other
members of the Washington Group, Alpha and all Subsidiaries and
Affiliates of Alpha not to) solicit, recruit or hire any employee of,
or individuals providing contracting services to, Conexant or any
other member of the Conexant Group for a period of six months
following the Distribution Date or until six months after such
employee's employment with, or such individual's provision of
contracting services to, Conexant or any other member of the Conexant
Group terminates, whichever occurs first; and
(c) Notwithstanding the foregoing (but subject to the
restriction on hiring), such prohibitions on solicitation do not
restrict general recruitment efforts carried out through a public or
general solicitation.
47
ARTICLE VI
ACCESS TO INFORMATION
Section 6.01 PROVISION OF CORPORATE RECORDS. Prior to or as
promptly as practicable after the Time of Distribution, Conexant shall
deliver to Washington all minute books and other records of meetings of the
Board of Directors, committees of the Board of Directors and stockholders
of the Washington Group, all corporate books and records of the Washington
Group in its possession and the relevant portions (or copies thereof) of
all corporate books and records of the Conexant Group relating directly and
primarily to the Washington Assets, the Washington Business or the
Washington Liabilities, including, in each case, all active agreements and
active litigation files. From and after the Time of Distribution, all such
books, records and copies shall be the property of Washington. Prior to or
as promptly as practicable after the Time of Distribution, Washington shall
deliver to Conexant all corporate books and records of the Conexant Group
in Washington's possession (other than the books, records and copies
described in the first sentence of this Section 6.01) and the relevant
portions (or copies thereof) of all corporate books and records of the
Washington Group relating directly and primarily to the Conexant Assets,
the Conexant Business or the Conexant Liabilities, including, in each case,
all active agreements and active litigation files. From and after the Time
of Distribution, all such books, records and copies shall be the property
of Conexant.
Section 6.02 ACCESS TO INFORMATION. (a) From and after the Time
of Distribution, Conexant will, and will cause each Conexant Subsidiary to,
afford to Washington and its Representatives (at Washington's expense)
reasonable access and duplicating rights during normal business hours and
upon reasonable advance notice to all pre-Distribution Information within
the Conexant Group's possession or control relating to Washington, any
Washington Subsidiary, any Washington Asset, any Washington Liability or
the Washington Business, insofar as such access is reasonably required by
Washington or any Washington Subsidiary, subject to the provisions below
regarding Privileged Information.
(b) From and after the Time of Distribution, Washington will,
and will cause each Washington Subsidiary to, afford to Conexant and its
Representatives (at Conexant's expense) reasonable access and duplicating
rights during normal business hours and upon reasonable advance notice to
all pre-Distribution Information within the Washington Group's possession
or control relating to Conexant, any Conexant Subsidiary, any Conexant
Asset, any Conexant Liability or the Conexant Business, insofar as such
access is reasonably required by Conexant or any Conexant Subsidiary,
subject to the provisions below regarding Privileged Information.
(c) Without limiting the foregoing, Information may be
requested under this Article VI for audit (including in respect of any
audit of the Washington Business after the Time of Distribution),
accounting, claims, litigation, insurance, environmental and safety and tax
purposes, as well as for purposes of fulfilling disclosure and reporting
obligations and for performing this Agreement and the transactions
contemplated hereby.
48
In furtherance of the foregoing:
(i) Each party acknowledges that (A) each of Conexant and
Washington (and the members of the Conexant Group and the Washington
Group, respectively) has or may obtain Privileged Information; (B)
there are or may be a number of Actions affecting one or more of the
members of the Conexant Group and the Washington Group; (C) the
parties may have a common legal interest in Actions, in the Privileged
Information, and in the preservation of the confidential status of the
Privileged Information; and (D) each of Conexant and Washington
intends that the transactions contemplated by the Transaction
Agreements and any transfer of Privileged Information in connection
therewith shall not operate as a waiver of any potentially applicable
privilege.
(ii) Each of Conexant and Washington agrees, on behalf of
itself and each member of the Group of which it is a member, not to
disclose or otherwise waive any privilege attaching to any Privileged
Information relating to the pre-Distribution business of the other
Group or relating to or arising in connection with the relationship
between the Groups on or prior to the Time of Distribution, without
providing prompt written notice to and obtaining the prior written
consent of the other, which consent will not be unreasonably withheld.
In the event of a disagreement between any member of the Conexant
Group and/or any member of the Washington Group concerning the
reasonableness of withholding such consent, no disclosure will be made
prior to a final, nonappealable resolution of such disagreement by a
court of competent jurisdiction.
(iii) Upon any member of the Conexant Group or any member
of the Washington Group receiving any subpoena or other compulsory
disclosure notice from a court, other Governmental Entity or otherwise
which requests disclosure of Privileged Information, in each case
relating to the pre-Distribution business of the other Group or
relating to or arising in connection with the relationship between the
Groups on or prior to the Time of Distribution, the recipient of the
notice will promptly provide to the other party (following the notice
provisions set forth herein) a copy of such notice, the intended
response, and a description of all materials or information relating
to the other Group that might be disclosed. In the event of a
disagreement as to the intended response or disclosure, unless and
until the disagreement is resolved as provided in Section 6.02(c)(ii),
the parties will cooperate to assert all defenses to disclosure
claimed by either Group, at the cost and expense of the Group claiming
such defense to disclosure, and shall not disclose any disputed
documents or information until all legal defenses and claims of
privilege have been finally determined.
Section 6.03 PRODUCTION OF WITNESSES. Subject to Section 6.02,
after the Time of Distribution, each of Conexant and Washington will, and
will cause each member of the Conexant Group and the Washington Group,
respectively, to, make available to the other party and members of such
other party's Group, upon written request and at the cost and expense of
the party so requesting, its directors, officers, employees and agents as
witnesses
49
to the extent that any such Person may reasonably be required (giving
consideration to business demands of such directors, officers, employees and
agents) in connection with any Actions, administrative or other proceedings in
which the requesting party may from time to time be involved and relating to the
pre-Distribution business of either Group or relating to or arising in
connection with the relationship between the Groups on or prior to the Time of
Distribution, provided that the same shall not unreasonably interfere with the
conduct of business by the Group of which the request is made.
Section 6.04 RETENTION OF RECORDS. Except as otherwise required
by law or agreed to by the parties in writing, if any Information relating
to the pre-Distribution business, Assets or Liabilities of a member of a
Group is retained by a member of the other Group, each of Conexant and
Washington will, and will cause the members of the Group of which it is a
member to, retain for the period required by the applicable Conexant
records retention policy in effect immediately prior to the Time of
Distribution all such Information in such Group's possession or under its
control. In addition, after the expiration of such required retention
period, if any member of either Group wishes to destroy or dispose of any
such Information, prior to destroying or disposing of any of such
Information, (i) Conexant or Washington, on behalf of the member of its
Group that is proposing to destroy or dispose of any such Information, will
provide no less than 30 days' prior written notice to the other party,
specifying in reasonable detail the Information proposed to be destroyed or
disposed of, and (ii) if, prior to the scheduled date for such destruction
or disposal, the recipient of such notice requests in writing that any of
the Information proposed to be destroyed or disposed of be delivered to
such requesting party, the party whose Group is proposing to destroy or
dispose of such Information promptly will arrange for the delivery of the
requested Information to a location specified by, and at the expense of,
the requesting party.
Section 6.05 CONFIDENTIALITY. Subject to the provisions of
Section 6.02, which shall govern Privileged Information, from and after the
Time of Distribution, each of Conexant and Washington shall hold, and shall
use reasonable efforts to cause members of its Group and its and their
Affiliates and Representatives to hold, in strict confidence all
Information concerning the other party's Group in its possession or control
prior to the Time of Distribution or furnished to it by such other party's
Group pursuant to the Transaction Agreements or the transactions
contemplated thereby and will not release or disclose such Information to
any other Person, except members of its Group and its and their
Representatives, who will be bound by the provisions of this Section 6.05;
provided, however, that any member of the Conexant Group or the Washington
Group may disclose such Information to the extent that (a) disclosure is
compelled by judicial or administrative process or, in the opinion of such
Person's counsel, by other requirements of law (in which case the party
required to make such disclosure will notify the other party as soon as
practicable of such obligation or requirement and cooperate with the other
party to limit the Information required to be disclosed and to obtain a
protective order or other appropriate remedy with respect to the
Information ultimately disclosed) or (b) such Person can show that such
Information was (i) available to such Person on a nonconfidential basis
(other than from a member of the other party's Group) prior to its
disclosure by such Person, (ii) in the public domain through no fault of
such Person or (iii) lawfully acquired by such Person from another source
after the time that it was furnished to such Person by the other party's
Group, and not
50
acquired from such source subject to any confidentiality obligation on the part
of such source known to the acquiror, or on the part of the acquiror. Each party
acknowledges that it will be liable for any breach of this Section 6.05 by its
Affiliates, Representatives and Subsidiaries. Notwithstanding the foregoing,
each of Conexant and Washington will be deemed to have satisfied its obligations
under this Section 6.05 with respect to any Information (other than Privileged
Information) if it exercises the same care with regard to such Information as it
takes to preserve confidentiality for its own similar Information.
ARTICLE VII
MISCELLANEOUS
Section 7.01 ENTIRE AGREEMENT; CONSTRUCTION. This Agreement and
the Ancillary Agreements, including any annexes, schedules and exhibits
hereto or thereto, and other agreements and documents referred to herein
and therein, will together constitute the entire agreement between the
parties with respect to the subject matter hereof and thereof and will
supersede all prior negotiations, agreements and understandings of the
parties of any nature, whether oral or written, with respect to such
subject matter. Notwithstanding any other provisions in the Transaction
Agreements to the contrary, (i) in the event and to the extent that there
is a conflict between the provisions of this Agreement and the provisions
of the Employee Matters Agreement or the Tax Allocation Agreement, the
provisions of the Employee Matters Agreement or the Tax Allocation
Agreement, as appropriate, will control and (ii) in the event and to the
extent that there is a conflict between the provisions of this Agreement
and the provisions of any Conveyance and Assumption Instruments, the
provisions of this Agreement will control.
Section 7.02 SURVIVAL OF AGREEMENTS. Except as otherwise
contemplated by the Transaction Agreements, all covenants and agreements of
the parties contained in the Transaction Agreements will remain in full
force and effect and survive the Time of Distribution.
Section 7.03 GOVERNING LAW. This Agreement will be governed by
and construed in accordance with the internal laws of the State of Delaware
applicable to contracts made and to be performed entirely within such
State, without regard to the conflicts of law principles of such State.
Section 7.04 NOTICES. All notices, requests, claims, demands
and other communications required or permitted to be given hereunder will
be in writing and will be delivered by hand or telecopied, e-mailed or
sent, postage prepaid, by registered, certified or express mail or
reputable overnight courier service and will be deemed given when so
delivered by hand or telecopied, when e-mail confirmation is received if
delivered by e-mail, or three business days after being so mailed (one
business day in the case of express mail or overnight courier service). All
such notices, requests, claims, demands and other communications will be
addressed as set forth below, or pursuant to such other instructions as may
be designated in writing by the party to receive such notice:
51
(a) If to Conexant:
Conexant Systems, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx
Chairman of the Board and Chief Executive Officer
Telecopy: (000) 000-0000
E-mail: xxxxxx.xxxxxx@xxxxxxxx.xxx
with a copy to:
Conexant Systems, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. X'Xxxxxx, Esq.
Senior Vice President, General Counsel
and Secretary
Telecopy: (000) 000-0000
E-mail: xxxxxx.x'xxxxxx@xxxxxxxx.xxx
(b) If to Washington after the Effective Time:
Washington Sub, Inc.
c/o Alpha Industries, Inc.
00 Xxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Chief Financial Officer
Telecopy: (000) 000-0000
E-mail: xxxxxxxx@xxxxxxxx.xxx
52
with a copy to:
Alpha Industries, Inc.
00 Xxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
General Counsel
Telecopy: (000) 000-0000
E-mail: xxxxxxx@xxxxxxxx.xxx
Section 7.05 DISPUTE RESOLUTION. In the event that from and
after the Time of Distribution any dispute, claim or controversy
(collectively, a "Dispute") arises out of or relates to any provision of
any Transaction Agreement or the breach, performance, enforcement or
validity or invalidity thereof, the designees of the Conexant Chief
Executive Officer and the Alpha Chief Executive Officer will attempt a good
faith resolution of the Dispute within thirty days after either party
notifies the other party in writing of the Dispute. If the Dispute is not
resolved within thirty days of the receipt of the notification, or within
such other time as they may agree, the Dispute will be referred for
resolution to the Conexant Chief Executive Officer and the Alpha Chief
Executive Officer. Should they be unable to resolve the Dispute within
thirty days following the referral to them, or within such other time as
they may agree, Conexant and Washington will then attempt in good faith to
resolve such Dispute by mediation in accordance with the then-existing CPR
Mediation Procedures promulgated by the CPR Institute for Dispute
Resolution, New York City. If such mediation is unsuccessful within thirty
days (or such other period as the parties may mutually agree) after the
commencement thereof, such Dispute shall be submitted by the parties to
binding arbitration, initiated and conducted in accordance with the
then-existing American Arbitration Association Commercial Arbitration
Rules, before a single arbitrator selected jointly by Conexant and Alpha,
who shall not be the same person as the mediator appointed pursuant to the
preceding sentence. If Conexant and Alpha cannot agree upon the identity of
an arbitrator within ten days after the arbitration process is initiated,
then the arbitration will be conducted before three arbitrators, one
selected by Conexant, one selected by Alpha and the third selected by the
first two. The arbitration shall be conducted in San Francisco, California
and shall be governed by the United States Arbitration Act, 9 U.S.C.
Sections 1-16, and judgment upon the award may be entered by any court
having jurisdiction thereof. The arbitrators shall have case management
authority and shall resolve the Dispute in a final award within one hundred
eighty days from the commencement of the arbitration action, subject to any
extension of time thereof allowed by the arbitrators upon good cause shown.
Section 7.06 AMENDMENTS. This Agreement cannot be amended,
modified or supplemented except by a written agreement executed by Conexant
and Washington that is consented to in writing by Alpha.
Section 7.07 ASSIGNMENT. Except as otherwise provided herein,
neither party to this Agreement will convey, assign or otherwise transfer
any of its rights or obligations
53
under this Agreement without the prior written consent of the other party and
Alpha in its sole and absolute discretion. Notwithstanding the foregoing, either
party may (without obtaining any consent) assign, delegate or sublicense all or
any portion of its rights and obligations hereunder to (i) the surviving entity
resulting from a merger or consolidation involving such party, (ii) the
acquiring entity in a sale or other disposition of all or substantially all of
the assets of such party as a whole or of any line of business or division of
such party, or (iii) any other Person that is created as a result of a spin-off
from, or similar reorganization transaction of, such party or any line of
business or division of such party. In the event of an assignment pursuant to
(ii) or (iii) above, the nonassigning party shall, at the assigning party's
request, use good faith commercially reasonable efforts to enter into separate
agreements with each of the resulting entities and take such further actions as
may be reasonably required to assure that the rights and obligations under this
Agreement are preserved, in the aggregate, and divided equitably between such
resulting entities. Any conveyance, assignment or transfer requiring the prior
written consent of another party pursuant to this Section 7.07 which is made
without such consent will be void ab initio. No assignment of this Agreement
will relieve the assigning party of its obligations hereunder.
Section 7.08 CAPTIONS; CURRENCY. The article, section and
paragraph captions herein and the table of contents hereto are for
convenience of reference only, do not constitute part of this Agreement and
will not be deemed to limit or otherwise affect any of the provisions
hereof. Unless otherwise specified, all references herein to numbered
articles or sections are to articles and sections of this Agreement and all
references herein to schedules are to schedules to this Agreement. Unless
otherwise specified, all references contained in this Agreement, in any
schedule referred to herein or in any instrument or document delivered
pursuant hereto to dollars or "$" shall mean United States Dollars.
Section 7.09 SEVERABILITY. If any provision of this Agreement
or the application thereof to any Person or circumstance is determined by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof, or the application of such provision to
Persons or circumstances other than those as to which it has been held
invalid or unenforceable, will remain in full force and effect and will in
no way be affected, impaired or invalidated thereby. If the economic or
legal substance of the transactions contemplated hereby is affected in any
manner adverse to any party as a result thereof, the parties will negotiate
in good faith in an effort to agree upon a suitable and equitable
substitute provision to effect the original intent of the parties.
Section 7.10 PARTIES IN INTEREST. This Agreement is binding
upon and is for the benefit of the parties hereto and their respective
successors and permitted assigns. This Agreement is not made for the
benefit of any Person not a party hereto, and no Person other than the
parties hereto or their respective successors and permitted assigns will
acquire or have any benefit, right, remedy or claim under or by reason of
this Agreement, except that (i) the provisions of Sections 4.02 and 4.03
shall inure to the benefit of and shall be enforceable by the Persons
referred to therein and (ii) the provisions of Sections 2.01, 3.01, 5.03,
7.06, 7.07 and 7.10 and the last sentence of Section 7.12 shall inure to
the benefit of and shall be enforceable by Alpha.
54
Section 7.11 SCHEDULES. All schedules attached hereto are
hereby incorporated in and made a part of this Agreement as if set forth in
full herein. Capitalized terms used in the schedules hereto but not
otherwise defined therein will have the respective meanings assigned to
such terms in this Agreement.
Section 7.12 WAIVERS; REMEDIES. No failure or delay on the part
of either Conexant or Washington in exercising any right, power or
privilege hereunder will operate as a waiver thereof, nor will any waiver
on the part of either Conexant or Washington of any right, power or
privilege hereunder operate as a waiver of any other right, power or
privilege hereunder, nor will any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege hereunder. Subject
to Section 7.05, except as otherwise provided herein, the rights and
remedies herein provided are cumulative and are not exclusive of any rights
or remedies which the parties may otherwise have at law or in equity.
Notwithstanding the foregoing, Washington will not waive any right, power
or privilege hereunder in any material respect without the prior written
consent of Alpha.
Section 7.13 FURTHER ASSURANCES. From time to time after the
Time of Distribution, as and when requested by either party hereto, the
other party shall execute and deliver, or cause to be executed and
delivered, all such documents and instruments and shall take, or cause to
be taken, all such actions as the requesting party may reasonably request
to consummate the transactions contemplated by the Transaction Agreements.
Section 7.14 COUNTERPARTS. This Agreement may be executed in
separate counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts will together constitute the same
agreement. This Agreement may be executed and delivered by telecopier with
the same force and effect as if it were a manually executed and delivered
counterpart.
Section 7.15 PERFORMANCE. Conexant will cause to be performed
and hereby guarantees the performance of all actions, agreements and
obligations set forth herein to be performed by any Conexant Subsidiary.
Washington will cause to be performed and hereby guarantees the performance
of all actions, agreements and obligations set forth herein to be performed
by any Washington Subsidiary.
Section 7.16 CURRENCY CALCULATIONS. Following the Distribution
Date, for purposes of calculating the United States Dollar equivalent of
any amount payable under any Transaction Agreement which is denominated in
a currency other than United States Dollars, the New York foreign exchange
selling rate applicable to such currency will be used, as published in the
Wall Street Journal, New York Edition, for the second business day
preceding the earlier of the date such payment is due or the date such
payment is made (it being understood that this Section 7.16 shall not apply
to the conversion of foreign currency balances made as of the Distribution
Date in accordance with standard Conexant accounting practices and
procedures).
55
Section 7.17 INTERPRETATION. Any reference herein to any
federal, state, local, or foreign law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise. For the purposes of this Agreement, (a) words in the singular
shall be held to include the plural and vice versa and words of one gender
shall be held to include the other gender as the context requires, (b) the
terms "hereof", "herein", and "herewith" and words of similar import shall,
unless otherwise stated, be construed to refer to this Agreement as a whole
and not to any particular provision of this Agreement and (c) the word
"including" and words of similar import when used in this Agreement shall
mean "including, without limitation".
[REMAINDER of page intentionally left blank.]
56
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties as of the date
first hereinabove written.
CONEXANT SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx
Chairman of the Board and
Chief Executive Officer
WASHINGTON SUB, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx
Chairman of the Board and
Chief Executive Officer
Alpha acknowledges that from and after the Effective Time (as
defined in the Merger Agreement), Alpha will succeed to all rights,
obligations and Liabilities of Washington under this Agreement. In
addition, Alpha hereby agrees to be bound by, and to cause its Subsidiaries
to be bound by, the provisions of Section 5.03 and 7.05 that are applicable
to Alpha and its Subsidiaries.
ALPHA INDUSTRIES, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
President and Chief Executive Officer
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