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Exhibit 10.3
EMPLOYEE MATTERS AGREEMENT
by and between
ROCKWELL INTERNATIONAL CORPORATION
and
[ROCKWELL SEMICONDUCTOR SYSTEMS, INC.]
[ ], 1998
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.............................................................................. 1
Section 1.01 General .................................................................... 1
ARTICLE II EMPLOYEES............................................................................... 7
Section 2.01 Employees................................................................... 7
Section 2.02 Collective Bargaining Agreements............................................ 8
ARTICLE III PENSION PLANS.......................................................................... 10
Section 3.01 Rockwell Pension Plan....................................................... 10
Section 3.02 Semiconductor Newport Beach Pension Plan.................................... 11
Section 3.03 U.S. Nonqualified Pension Plans............................................. 12
Section 3.04 Semiconductor VERP.......................................................... 12
Section 3.05 U.K. Pension Plan........................................................... 13
Section 3.06 German Stand-Alone Pension Plan............................................. 14
ARTICLE IV SAVINGS PLANS........................................................................... 14
Section 4.01 U.S. Savings Plan........................................................... 14
Section 4.02 Newport Beach Savings Plan.................................................. 16
Section 4.03 Rockwell El Paso Savings Sub-Plan........................................... 17
Section 4.04 Nonqualified Savings Plans.................................................. 17
ARTICLE V STOCK PLANS.............................................................................. 18
Section 5.01 Stock Plans................................................................. 18
ARTICLE VI OTHER EMPLOYEE PLANS AND MATTERS........................................................ 20
Section 6.01 Welfare Plans .............................................................. 20
Section 6.02 Long-Term Incentive Plan and Incentive Compensation Plans................... 22
Section 6.03 Deferred Compensation Plans................................................. 23
Section 6.04 Severance Pay .............................................................. 24
Section 6.05 Employment, Consulting and Other Employee Related Agreements................ 25
Section 6.06 Rockwell VEBA and CLIR Fund................................................. 25
Section 6.07 Other Liabilities........................................................... 25
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ARTICLE VII MISCELLANEOUS.......................................................................... 26
Section 7.01 Indemnification............................................................. 26
Section 7.02 Sharing of Information...................................................... 26
Section 7.03 Entire Agreement; Construction.............................................. 27
Section 7.04 Survival of Agreements...................................................... 27
Section 7.05 Governing Law .............................................................. 27
Section 7.06 Notices .................................................................... 27
Section 7.07 Amendments.................................................................. 28
Section 7.08 Assignment.................................................................. 28
Section 7.09 Captions; Currency.......................................................... 28
Section 7.10 Severability................................................................ 28
Section 7.11 Parties in Interest......................................................... 28
Section 7.12 Schedules................................................................... 29
Section 7.13 Termination................................................................. 29
Section 7.14 Change of Name.............................................................. 29
Section 7.15 Waivers; Remedies........................................................... 29
Section 7.16 Counterparts................................................................ 30
Section 7.17 Performance................................................................. 30
SCHEDULES
Schedule 2.01 - Certain Semiconductor Employees
Schedule 2.02(a) - Semiconductor Collective Bargaining
Agreements
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EMPLOYEE MATTERS AGREEMENT
EMPLOYEE MATTERS AGREEMENT (this "Agreement"), dated as of
[ ], 1998, by and between ROCKWELL INTERNATIONAL CORPORATION, a Delaware
corporation ("Rockwell"), and [ROCKWELL SEMICONDUCTOR SYSTEMS, INC.], a Delaware
corporation and, as of the date hereof, a wholly-owned subsidiary of Rockwell
(the "Company").
WHEREAS, the Rockwell Board has determined that it is
appropriate and desirable to distribute all outstanding shares of Semiconductor
Common Stock on a pro rata basis to the holders of Rockwell Common Stock (the
"Distribution"); and
WHEREAS, Rockwell and the Company are entering into a
Distribution Agreement dated as of the date hereof (the "Distribution
Agreement") which, among other things, sets forth the principal corporate
transactions required to effect the Distribution and certain other agreements
that will govern certain matters relating to the Distribution; and
WHEREAS, in connection with the Distribution, Rockwell and the
Company have determined that it is appropriate and desirable to provide for the
allocation of certain assets and liabilities and certain other matters relating
to employees, employee benefit plans and compensation arrangements;
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. Capitalized terms used in this Agreement
but not defined herein (other than the names of employee benefit plans) shall
have the meanings ascribed to such terms in the Distribution Agreement. 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):
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"Average Price of Semiconductor Common Stock" means the
average of the daily closing prices per share of Semiconductor Common
Stock as reported on Nasdaq for the five consecutive Nasdaq trading
days ending on and including the Distribution Date (the "Nasdaq
Pre-Distribution Period"), assuming that "when-issued" trading in
Semiconductor Common Stock occurs during the Nasdaq Pre-Distribution
Period in daily volume of not less than 10,000 shares (and if on any
day (a "Semiconductor Excluded Day") during the Nasdaq Pre-Distribution
Period such trading does not occur in such volume, then for purposes of
this definition trading on each Semiconductor Excluded Day shall not be
considered and trading on up to five Nasdaq trading days immediately
following the Distribution Date shall be included so that a total of
five trading days are included in the averaging period); provided, that
if a committee appointed by the Board of Directors of Rockwell shall
determine on or before 12:00 noon (New York City time) on the first
Nasdaq trading day following the Distribution Date that,
notwithstanding satisfaction of the 10,000 share per day minimum
trading volume requirement, "when-issued" trading on one or more days
during the Nasdaq Pre-Distribution Period does not fairly represent the
value of Semiconductor Common Stock, then for purposes of this
definition, each such day so determined shall be treated as a
Semiconductor Excluded Day, trading on each Semiconductor Excluded Day
shall not be considered and trading on up to five Nasdaq trading days
(as determined by such committee) immediately following the
Distribution Date shall be included so that a total of five trading
days are included in the averaging period.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor legislation.
"Ex-Distribution Average Price of Rockwell Common Stock" means
the average of the daily closing prices per share of Rockwell Common
Stock trading on an "ex-distribution when-issued" basis as reported on
the NYSE Composite Transactions reporting system for the five
consecutive NYSE trading days ending on and including the Distribution
Date (the "NYSE Pre-Distribution Period"), assuming that
"ex-distribution when-issued" trading in Rockwell Common Stock occurs
during the NYSE Pre-Distribution Period in daily volume of not less
than 10,000 shares (and if on any day (a "Rockwell
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Excluded Day") during the NYSE Pre-Distribution Period such trading
does not occur in such volume, then for purposes of this definition
trading on each Rockwell Excluded Day shall not be considered and
trading on up to five NYSE trading days immediately following the
Distribution Date shall be included so that a total of five trading
days are included in the averaging period); provided, that if a
committee appointed by the Board of Directors of Rockwell shall
determine on or before 12:00 noon (New York City time) on the first
NYSE trading day following the Distribution Date that, notwithstanding
satisfaction of the 10,000 share per day minimum trading volume
requirement, "ex-distribution when-issued" trading on one or more days
during the NYSE Pre-Distribution Period does not fairly represent the
value of Rockwell Common Stock (excluding the value of the
Semiconductor Common Stock to be distributed in respect thereof), then
for purposes of this definition, each such day so determined shall be
treated as a Rockwell Excluded Day, trading on each Rockwell Excluded
Day shall not be considered and trading on up to five NYSE trading days
(as determined by such committee) immediately following the
Distribution Date shall be included so that a total of five trading
days are included in the averaging period.
"Ex-Distribution Rockwell Option Spread" means, with respect
to any Rockwell Split Option (after its being adjusted pursuant to
Section 5.01(b)), the Ex-Distribution Average Price of Rockwell Common
Stock, minus the per-share exercise price of such adjusted Rockwell
Split Option.
"German Stand-Alone Pension Plan" shall have the meaning
ascribed thereto in Section 3.06.
"Incentive Compensation Plan" means the Rockwell International
Corporation Incentive Compensation Plan, as amended through the
Distribution Date.
"LTIP" shall have the meaning ascribed thereto in Section
6.02.
"Nasdaq" means the Nasdaq Stock Market, Inc. National Market
System.
"NYSE" means the New York Stock Exchange.
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"Pre-Distribution Average Price of Rockwell Common Stock"
means the average of the daily closing prices per share of Rockwell
Common Stock trading on a "regular way" basis (i.e., including the
value of the Semiconductor Common Stock to be distributed in respect
thereof) as reported on the NYSE Composite Transactions reporting
system for the NYSE Pre-Distribution Period.
"Pre-Distribution Rockwell Option Spread" means, with respect
to any Rockwell Split Option (prior to its being adjusted pursuant to
Section 5.01(b)), the Pre-Distribution Average Price of Rockwell Common
Stock, minus the per-share exercise price of such unadjusted Rockwell
Split Option.
"Rockwell CLIR Fund" shall have the meaning ascribed thereto
in Section 6.07(a).
"Rockwell Deferred Compensation Plan" shall have the meaning
ascribed thereto in Section 6.03.
"Rockwell El Paso Savings Sub-Plan" means Sub-Plan 153; El
Paso Employees of the Rockwell Retirement Savings Plan - Plan No. 133,
as amended through the Distribution Date.
"Rockwell Employee" means any individual who will be employed
by a member of the Rockwell Group as of the Time of Distribution
pursuant to Section 2.01.
"Rockwell Former Employee" means any individual who was, at
any time prior to the Time of Distribution, employed by any member of
the Pre-Distribution Group, who is not as of the Time of Distribution a
Rockwell Employee or a Semiconductor Employee, and whose most recent
active employment with a member of the Pre-Distribution Group was with
a business other than the Semiconductor Business.
"Rockwell Newport Beach Pension Sub-Plan" means the Retirement
Plan for Production Employees - IBEW Newport Beach Local 2125 sub-plan
of the Rockwell Pension Plan, as amended through the Distribution Date.
"Rockwell Newport Beach Savings Sub-Plan" means Sub-Plan 150;
International Brotherhood of Electrical Workers, Local 2125 of the
Rockwell Retirement Savings Plan - Plan No. 133, as amended through the
Distribution Date.
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"Rockwell Nonqualified Pension Plans" shall have the meaning
ascribed thereto in Section 3.04.
"Rockwell Nonqualified Savings Plans" shall have the meaning
ascribed thereto in Section 4.04.
"Rockwell Option" means an option to purchase from Rockwell
shares of Rockwell Common Stock granted pursuant to one of the Rockwell
Stock Plans.
"Rockwell Option Ratio" means the amount obtained by dividing
(i) the Ex-Distribution Average Price of Rockwell Common Stock by (ii)
the Pre-Distribution Average Price of Rockwell Common Stock.
"Rockwell Participants" means Rockwell Employees, Rockwell
Former Employees and their respective beneficiaries.
"Rockwell Pension Plan" means the Rockwell International
Corporation Retirement Plan for Eligible Employees, as amended through
the Distribution Date. The Rockwell Pension Plan shall include, without
limitation, each of the following subplans thereof, in each case, as
amended through the Distribution Date: (i) the Retirement Plan for
Hourly Employees, El Paso Facility, (ii) the Retirement Income Plan for
Certain Salaried Employees, (iii) the Salaried Employees' Retirement
Plan - Electronic Operations and (iv) the Rockwell Newport Beach
Pension Sub-Plan.
"Rockwell Savings Plan" means the Rockwell International
Corporation Savings Plan, as amended through the Distribution Date.
"Rockwell Split Option" means a Rockwell Option granted
between January 1, 1990 and August 31, 1998.
"Rockwell Stock Plans" means, collectively, the Rockwell 1995
Long-Term Incentives Plan and the Rockwell 1988 Long-Term Incentives
Plan, in each case, as amended through the Distribution Date.
"Rockwell U.K. Pension Plan" means, collectively, the Rockwell
▇▇▇▇▇▇▇ U.K. Pension Scheme and the Rockwell U.K. Executive Plan, in
each case, as amended through the Distribution Date.
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"Rockwell Welfare Plans" shall have the meaning ascribed
thereto in Section 6.01(a).
"Semiconductor CLIR Fund" shall have the meaning ascribed
thereto in Section 6.07(a).
"Semiconductor Employee" means any individual who will be
employed by a member of the Company Group as of the Time of
Distribution pursuant to Section 2.01.
"Semiconductor Former Employee" means any individual who was,
at any time prior to the Time of Distribution, employed by any member
of the Pre-Distribution Group, who is not as of the Time of
Distribution a Rockwell Employee or a Semiconductor Employee, and whose
most recent active employment with such member of the Pre-Distribution
Group was with the Semiconductor Business.
"Semiconductor Newport Beach Pension Plan" shall have the
meaning ascribed thereto in Section 3.02(a).
"Semiconductor Newport Beach Savings Plan" shall have the
meaning ascribed thereto in Section 4.02(a).
"Semiconductor Option" means an option to purchase from the
Company shares of Semiconductor Common Stock provided to a holder of a
Rockwell Option pursuant to Section 5.01.
"Semiconductor Option Ratio" means the amount obtained by
dividing (i) the Average Price of Semiconductor Common Stock by (ii)
the Pre-Distribution Average Price of Rockwell Common Stock.
"Semiconductor Option Spread" means, with respect to any
Semiconductor Option received by a holder of a Rockwell Split Option
pursuant to Section 5.01(b), the Pre-Distribution Rockwell Option
Spread of the corresponding Rockwell Split Option, minus the
Ex-Distribution Rockwell Option Spread of such Rockwell Split Option.
"Semiconductor Participants" means Semiconductor Employees,
Semiconductor Former Employees and their respective beneficiaries.
"Semiconductor Savings Plan" shall have the meaning ascribed
thereto in Section 4.01(a).
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"Semiconductor VERP" means a voluntary early retirement
program in the form of a nonqualified defined benefit pension plan
established by the Company at or prior to the Time of Distribution
which covers Semiconductor Employees who (i) receive a written offer to
retire early from employment with the Company and (ii) accept such
offer to retire early from employment with the Company. The parties
acknowledge that the benefit to be provided to each Semiconductor
Employee covered by the Semiconductor VERP will equal the difference
between (a) the pension benefit which such Semiconductor Employee would
be entitled to receive under the Rockwell Pension Plan, calculated
under the benefit formula provided for under the Rockwell Pension Plan
as if such Semiconductor Employee had an additional five years of age
and an additional five years of service on December 15, 1998, minus (b)
the pension benefit which such Semiconductor Employee is entitled to
receive under the Rockwell Pension Plan (as determined under Section
3.01).
"Semiconductor Welfare Plans" shall have the meaning ascribed
thereto in Section 6.01(a).
"Welfare Plan" means an employee welfare benefit plan as
defined in Section 3(1) of ERISA, including, without limitation,
medical, vision, dental and other health plans, retiree health plans,
life insurance plans, retiree life insurance plans, accidental death
and dismemberment plans, long-term disability plans and severance pay
plans.
ARTICLE II
EMPLOYEES
Section 2.01 Employees. (a) Each individual (other than those
engaged primarily in the businesses of Rockwell and its Subsidiaries (including
Rockwell's Electronic Commerce Division and Rockwell Science Center) other than
the Semiconductor Business) who is employed by any member of the Company Group
immediately prior to the Time of Distribution (including, without limitation,
those who are actively employed or on lay-off, leave, short-term or long-term
disability or other permitted absence from employment) will continue to be
employed by such member of the Company Group as of the Time of Distribution and
will be a Semiconductor Employee. In addition, each individual who
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is employed by Rockwell or any of its Subsidiaries (other than by members of the
Company Group) immediately prior to the Time of Distribution and (x) who is
engaged primarily in the Semiconductor Business or (y) who Rockwell consents to
becoming a Semiconductor Employee, it being understood that Rockwell has granted
such consent in respect of individuals identified on the attached Schedule 2.01
(including, in the case of both clauses (x) and (y), those who are actively
employed or on lay-off, leave, short-term or long-term disability or other
permitted absence from employment) will be employed by a member of the Company
Group as of the Time of Distribution and will be a Semiconductor Employee.
(b) Each individual (other than those engaged primarily in the
Semiconductor Business and those who Rockwell consents to becoming a
Semiconductor Employee) who is employed by any member of the Rockwell Group
immediately prior to the Time of Distribution (including, without limitation,
those who are actively employed or on lay-off, leave, short-term or long-term
disability or other permitted absence from employment) will continue to be
employed by a member of the Rockwell Group as of the Time of Distribution and
will be a Rockwell Employee. In addition, each individual who is employed by any
member of the Company Group immediately prior to the Time of Distribution and
who is engaged primarily in businesses of Rockwell and its Subsidiaries
(including Rockwell's Electronic Commerce Division and Rockwell Science Center)
other than the Semiconductor Business (including those who are actively employed
or on lay-off, leave, short-term or long-term disability or other permitted
absence from employment) will be employed by a member of the Rockwell Group as
of the Time of Distribution and will be a Rockwell Employee.
(c) Nothing contained in this Section 2.01 is intended to
confer upon any employee of the Rockwell Group or the Company Group any right to
continued employment after the Distribution Date.
Section 2.02 Collective Bargaining Agreements. (a) Effective
as of the Time of Distribution, the Company will, or will cause one or more
Company Subsidiaries to, unconditionally assume or retain (as applicable) all
Liabilities (including, without limitation, those relating to wages, hours or
other terms and conditions of employment) relating to Semiconductor Participants
under each of the collective bargaining agreements of the Pre-Distribution Group
relating to the Semiconductor Business and collateral agreements related
thereto, including, without limitation,
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those listed on Schedule 2.02(a). From and after the Time of Distribution, none
of Rockwell, the Rockwell Subsidiaries or their Affiliates will have any
Liabilities with respect to Semiconductor Participants under collective
bargaining agreements relating to the Semiconductor Business or collateral
agreements relating thereto. Rockwell and the Company will take, or cause to be
taken, all such action as may be necessary or appropriate to establish,
effective as of the Time of Distribution, the Company or one or more Company
Subsidiaries as successors to Rockwell and the Rockwell Subsidiaries as to all
rights, duties and Liabilities under, or with respect to, such collective
bargaining agreements and collateral agreements.
(b) Effective as of the Time of Distribution, Rockwell will,
or will cause one or more Rockwell Subsidiaries to, unconditionally assume or
retain (as applicable) all Liabilities (including, without limitation, those
relating to wages, hours or other terms and conditions of employment) relating
to Rockwell Participants under each of the collective bargaining agreements of
the Pre-Distribution Group relating to businesses of Rockwell and its
Subsidiaries other than the Semiconductor Business and collateral agreements
related thereto. From and after the Time of Distribution, none of the Company,
the Company Subsidiaries or their Affiliates will have any Liabilities with
respect to Rockwell Participants under collective bargaining agreements relating
to businesses of Rockwell and its Subsidiaries other than the Semiconductor
Business or collateral agreements relating thereto. Rockwell and the Company
will take, or cause to be taken, all such action as may be necessary or
appropriate to establish, effective as of the Time of Distribution, Rockwell or
one or more Rockwell Subsidiaries as successors to members of the Company Group
as to all rights, duties and Liabilities under, or with respect to, such
collective bargaining agreements and collateral agreements.
(c) Rockwell and the Company will cooperate in engaging in all
appropriate negotiations, implementing all appropriate communications,
transferring appropriate records and taking all other actions as may be
necessary or appropriate to implement the provisions of this Section 2.02.
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ARTICLE III
PENSION PLANS
Section 3.01 Rockwell Pension Plan. (a) Effective as of the
Time of Distribution, the Semiconductor Employees who participated in the
Rockwell Pension Plan immediately prior to the Time of Distribution will cease
to accrue service credits for benefit, benefit eligibility, vesting, and all
other purposes under the Rockwell Pension Plan and will have the right to
receive such Semiconductor Employee's benefit, if any, payable at normal
retirement age under the Rockwell Pension Plan accrued as of the Time of
Distribution in accordance with the terms of the Rockwell Pension Plan;
provided, however, that, effective as of the Time of Distribution, Semiconductor
Employees who participated in the Rockwell Pension Plan immediately prior to the
Time of Distribution will have a nonforfeitable right to such benefit, if any,
under the Rockwell Pension Plan. Notwithstanding anything to the contrary
contained herein, no provision of this Agreement shall be construed to provide
any Semiconductor Employee additional credit for purposes of determining
eligibility for any early retirement benefit under the Rockwell Pension Plan.
None of the Company or the Company Subsidiaries or the Affiliates of any thereof
will have or acquire any interest in or right to any of the assets of the
Rockwell Pension Plan, and Rockwell will retain full power and authority with
respect to the amendment and termination of the Rockwell Pension Plan and the
investment and disposition of assets held in the Rockwell Pension Plan to the
extent permitted by law. From and after the Time of Distribution, none of
Rockwell or the Rockwell Subsidiaries, the Affiliates of any thereof, the
Rockwell Pension Plan or the trust thereunder will have any Liabilities with
respect to benefits and entitlements of Semiconductor Participants under the
Rockwell Pension Plan, except with respect to benefits accrued under the
Rockwell Pension Plan prior to the Time of Distribution.
(b) Semiconductor and Rockwell will cooperate in making all
appropriate filings required under the Code or ERISA, the regulations thereunder
and any other applicable laws, implementing all appropriate communications with
participants, exchanging and sharing appropriate records and taking such other
actions as may be necessary or appropriate to implement the provisions of this
Section 3.01.
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Section 3.02 Semiconductor Newport Beach Pension Plan. (a) As
of the Time of Distribution, the Company will have established, and will cover
Semiconductor Employees who participated in the Rockwell Newport Beach Pension
Sub-Plan immediately prior to the Time of Distribution under, a defined benefit
pension plan (the "Semiconductor Newport Beach Pension Plan"), which will be
qualified under Section 401(a) of the Code, and will have established a related
trust which will be exempt from taxation under Section 501(a) of the Code. The
Semiconductor Newport Beach Pension Plan will be substantially similar in all
material respects to the Rockwell Newport Beach Pension Sub-Plan as of the Time
of Distribution, and will provide a benefit formula for Semiconductor Employees
which will be substantially similar in all material respects to the benefit
formula that the Rockwell Newport Beach Pension Sub-Plan provides as of the Time
of Distribution. The Semiconductor Newport Beach Pension Plan will credit each
Semiconductor Employee for purposes of eligibility to participate, vesting,
benefit accruals and all other plan purposes with all service which had been
credited to such Semiconductor Employee for such purposes under the Rockwell
Newport Beach Pension Sub-Plan immediately prior to the Time of Distribution
(excluding any such service which was not counted under the Rockwell Newport
Beach Pension Sub-Plan by operation of its "break in service" rules).
Notwithstanding the above, the Semiconductor Newport Beach Pension Plan will
provide that the benefit of each Semiconductor Employee under the Semiconductor
Newport Beach Pension Plan will be reduced by the amount of the benefit to which
the Semiconductor Employee would be entitled under the Rockwell Newport Beach
Pension Sub-Plan if the Semiconductor Employee commenced receipt of benefits
from the Rockwell Newport Beach Pension Sub-Plan at the same time as from the
Semiconductor Newport Beach Pension Plan, based on the Semiconductor Employee's
service and salary history under the Rockwell Newport Beach Pension Sub-Plan at
the Time of Distribution. Within 180 days after the Time of Distribution,
Rockwell will provide the Company with the following information for each
Semiconductor Employee who was an active participant in the Rockwell Newport
Beach Pension Sub-Plan at the Time of Distribution: (i) the amount of the
accrued vested benefit payable at normal retirement age from the Rockwell
Newport Beach Pension Sub-Plan as of the Time of Distribution and (ii) the years
of credited service and vesting service as of the Time of Distribution.
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(b) The parties acknowledge and agree that the provisions of
Section 3.01 are applicable to all Semiconductor Employees who participated in
the Rockwell Newport Beach Pension Sub-Plan immediately prior to the Time of
Distribution.
(c) The Company and Rockwell will cooperate in making all
appropriate filings required under the Code or ERISA, the regulations thereunder
and any other applicable laws, implementing all appropriate communications with
participants, exchanging and sharing appropriate records and taking such other
actions as may be necessary or appropriate to implement the provisions of this
Section 3.02.
Section 3.03 U.S. Nonqualified Pension Plans. Rockwell will
retain all Liabilities for and will pay when due all benefits accrued as of the
Time of Distribution by, and attributable to, Semiconductor Employees under the
Rockwell International Corporation Supplemental Retirement Plan for Highly
Compensated Employees and the Rockwell International Corporation Excess Benefit
Retirement Plan, in each case, as amended through the Time of Distribution
(collectively, the "Rockwell Nonqualified Pension Plans"). Effective as of the
Time of Distribution, the Semiconductor Employees who participated in the
Rockwell Nonqualified Pension Plans immediately prior to the Time of
Distribution will cease to accrue service credits for benefit, benefit
eligibility and all other purposes under the Rockwell Nonqualified Pension Plans
and will have the right to receive such Semiconductor Employee's benefit, if
any, payable at normal retirement age under the Rockwell Nonqualified Pension
Plans accrued as of the Time of Distribution in accordance with the terms of the
Rockwell Nonqualified Pension Plans. Rockwell will retain full power and
authority with respect to the amendment and termination of the Rockwell
Nonqualified Pension Plans to the extent permitted by law. From and after the
Time of Distribution, none of Rockwell or the Rockwell Subsidiaries, the
Affiliates of any thereof or the Rockwell Nonqualified Pension Plans will have
any Liabilities with respect to benefits and entitlements of Semiconductor
Participants under the Rockwell Nonqualified Pension Plans, except with respect
to benefits accrued under the Rockwell Nonqualified Pension Plans prior to the
Time of Distribution.
Section 3.04 Semiconductor VERP. Effective as of the Time of
Distribution, the Company will or will cause one or more Company Subsidiaries to
(i) assume and adopt sponsorship of the Semiconductor VERP, and all Liabilities
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related thereto, and (ii) agree to fully perform, pay and discharge all of the
Pre-Distribution Group's Liabilities with respect to the Semiconductor VERP.
Rockwell and the Company will take, or cause to be taken, all such action as may
be necessary or appropriate to establish, effective as of the Time of
Distribution, the Company and the Company Subsidiaries as successors to Rockwell
and the Rockwell Subsidiaries as to all rights, assets, duties and Liabilities
under, or with respect to, the Semiconductor VERP. From and after the Time of
Distribution, none of Rockwell or the Rockwell Subsidiaries or their Affiliates
will have any Liabilities with respect to the Semiconductor VERP. Rockwell and
the Company will cooperate in making all appropriate filings required by law,
implementing all appropriate communications with participants, transferring
appropriate records and taking all other actions as may be necessary or
appropriate to implement the provisions of this Section 3.04.
Section 3.05 U.K. Pension Plan. (a) Effective as of the Time
of Distribution, the Semiconductor Employees who participated in the Rockwell
U.K. Pension Plan immediately prior to the Time of Distribution will cease to
accrue service credits for benefit, benefit eligibility, vesting, and all other
purposes under the Rockwell U.K. Pension Plan and will have the right to receive
such Semiconductor Employee's benefit, if any, payable at normal retirement age
under the Rockwell U.K. Pension Plan accrued as of the Time of Distribution in
accordance with the terms of the Rockwell U.K. Pension Plan; provided, however,
that, effective as of the Time of Distribution, Semiconductor Employees who
participated in the Rockwell U.K. Pension Plan immediately prior to the Time of
Distribution will have a nonforfeitable right to such benefit, if any, under the
Rockwell U.K. Pension Plan. Notwithstanding anything to the contrary contained
herein, no provision of this Agreement shall be construed to provide any
Semiconductor Employee additional credit for purposes of determining eligibility
for any early retirement benefit under the Rockwell U.K. Pension Plan. None of
the Company or the Company Subsidiaries, or the Affiliates of any thereof will
have or acquire any interest in or right to any of the assets of the Rockwell
U.K. Pension Plan, and Rockwell will retain full power and authority with
respect to the amendment and termination of the Rockwell U.K. Pension Plan and
the investment and disposition of assets held in the Rockwell U.K. Pension Plan
to the extent permitted by law. From and after the Time of Distribution, none of
Rockwell or the Rockwell Subsidiaries, the Affiliates of any thereof, the
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Rockwell U.K. Pension Plan or the trust thereunder will have any Liabilities
with respect to benefits and entitlements of Semiconductor Participants under
the Rockwell U.K. Pension Plan, except with respect to benefits accrued under
the Rockwell U.K. Pension Plan prior to the Time of Distribution.
(b) The Company and Rockwell will cooperate in making all
appropriate filings required under applicable laws, implementing all appropriate
communications with participants, exchanging and sharing appropriate records and
taking such other actions as may be necessary or appropriate to implement the
provisions of this Section 3.05.
Section 3.06 German Stand-Alone Pension Plan. Effective as of
the Time of Distribution, the Company will or will cause one or more Company
Subsidiaries to (i) assume and adopt sponsorship of the Rockwell International
GmbH, Martinsried-Munchen, as amended through the Time of Distribution (the
"German Stand-Alone Pension Plan"), and all Liabilities related thereto, and
(ii) fully perform, pay and discharge all of the Pre-Distribution Group's
Liabilities with respect to the German Stand-Alone Pension Plan. From and after
the Time of Distribution, none of Rockwell or the Rockwell Subsidiaries or their
Affiliates will have any Liabilities with respect to the German Stand-Alone
Pension Plan. Rockwell and the Company will take, or cause to be taken, all such
action as may be necessary or appropriate to establish, effective as of the Time
of Distribution, the Company and the Company Subsidiaries as successors to
Rockwell and the Rockwell Subsidiaries as to all rights, duties and Liabilities
under, or with respect to, the German Stand-Alone Pension Plan. Rockwell and the
Company will cooperate in making all appropriate filings required by law,
implementing all appropriate communications with participants, transferring
appropriate records, replacing any trustees under the German Stand-Alone Pension
Plan with trustees designated by the Company and taking all other actions as may
be necessary or appropriate to implement the provisions of this Section 3.06.
ARTICLE IV
SAVINGS PLANS
Section 4.01 U.S. Savings Plan. (a) As of the Time of
Distribution, the Company will have established, and will cover the
Semiconductor Employees who participated in
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the Rockwell Savings Plan immediately prior to the Time of Distribution under, a
defined contribution plan (the "Semiconductor Savings Plan"), which will be
qualified pursuant to Sections 401(a) and 401(k) of the Code, and will have
established a related trust which shall be exempt from taxation under Section
501(a) of the Code. The Semiconductor Savings Plan will credit each
Semiconductor Employee for purposes of vesting and eligibility with all service
which had been credited to such Semiconductor Employee for such purposes under
the Rockwell Savings Plan immediately prior to the Time of Distribution
(excluding any such service which was not counted under the Rockwell Savings
Plan by operation of its "break in service" rules).
(b) Effective as of the Time of Distribution, Semiconductor
Employees who participated in the Rockwell Savings Plan immediately prior to the
Time of Distribution will be treated as terminated, fully vested participants
under the Rockwell Savings Plan, except that they will not be treated as having
terminated employment for purposes of entitlement to distributions or the
repayment of outstanding loans solely as a result of becoming Semiconductor
Employees. Effective as of the Time of Distribution, Semiconductor Employees
will cease to be eligible to contribute to, or receive contributions in respect
of, their Rockwell Savings Plan accounts. None of the Company or the Company
Subsidiaries, the Affiliates of any thereof, the Semiconductor Savings Plan or
the trust thereunder will have or acquire any interest in or right to any of the
assets of the Rockwell Savings Plan, and Rockwell will retain full power and
authority with respect to the amendment and termination of the Rockwell Savings
Plan and the investment and disposition of assets held in the Rockwell Savings
Plan to the extent permitted by law. From and after the Time of Distribution,
none of Rockwell or the Rockwell Subsidiaries, the Affiliates of any thereof,
the Rockwell Savings Plan or the trust thereunder will have any Liabilities with
respect to benefits and entitlements of Semiconductor Participants under the
Rockwell Savings Plan, except with respect to benefits accrued under the
Rockwell Savings Plan prior to the Time of Distribution.
(c) The Company and Rockwell will cooperate in making all
appropriate filings required under the Code or ERISA, the regulations thereunder
and any other applicable laws, implementing all appropriate communications with
participants, exchanging and sharing appropriate records and taking all other
actions as may be necessary or appropriate to implement the provisions of this
Section 4.01.
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Section 4.02 Newport Beach Savings Plan.
(a) Effective as of the Time of Distribution, Rockwell will
cause each Semiconductor Participant who participated in the Rockwell Newport
Beach Savings Sub-Plan immediately prior to the Time of Distribution to have a
fully nonforfeitable right to such person's account balances, if any, under the
Rockwell Newport Beach Savings Sub-Plan. As of the Time of Distribution, the
Company will extend coverage under a new defined contribution plan (the
"Semiconductor Newport Beach Savings Plan") to the Semiconductor Participants
who have account balances under the Rockwell Newport Beach Savings Sub-Plan as
of the Time of Distribution. The Semiconductor Newport Beach Savings Plan will
credit each Semiconductor Participant for purposes of vesting and eligibility
with all service which had been credited to such Semiconductor Participant for
such purposes under the Rockwell Newport Beach Savings Sub-Plan immediately
prior to the Time of Distribution (excluding any such service which was not
counted under the Rockwell Newport Beach Savings Sub-Plan by operation of its
"break in service" rules). As soon as practicable following (i) the Time of
Distribution, (ii) the establishment of the Semiconductor Newport Beach Savings
Plan and (iii) the receipt by the Company of a favorable determination letter
issued by the Internal Revenue Service for the Semiconductor Newport Beach
Savings Plan or an opinion of counsel of the Company reasonably satisfactory to
Rockwell opining that the Semiconductor Newport Beach Savings Plan is qualified
under Section 401(a) of the Code, Rockwell shall cause to be transferred from
the trust for the Rockwell Newport Beach Savings Sub-Plan to the trust for the
Semiconductor Newport Beach Savings Plan an amount in cash or in kind (as
determined by Rockwell) equal to the aggregate account balances of Semiconductor
Participants who have account balances under the Rockwell Newport Beach Savings
Sub-Plan at the Time of Distribution determined in accordance with the
procedures and methods of valuation set forth in the Rockwell Newport Beach
Savings Sub-Plan; provided, that to the extent (A) any Semiconductor
Participant's accounts under the Rockwell Newport Beach Savings Sub-Plan are
invested in shares of Rockwell Common Stock, an in-kind transfer of such stock
shall be made in lieu of a transfer of cash and (B) any Semiconductor
Participant owes any amount to the Rockwell Newport Beach Savings Sub-Plan
pursuant to the terms of a loan from the Rockwell Newport Beach Savings Sub-Plan
to such Semiconductor Participant, an in-kind transfer of such loan shall be
made in lieu of a transfer of cash. From and after the date of such transfer,
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the Company shall cause the Semiconductor Newport Beach Savings Plan to assume
the obligations of the Rockwell Newport Beach Savings Sub-Plan with respect to
the benefits so transferred. Rockwell shall cause the transfers contemplated
pursuant to this Section 4.02 to be made in compliance with the provisions of
the Rockwell Newport Beach Savings Sub-Plan and applicable law (including,
without limitation, Treasury Regulation 1.411(d)-4).
(b) The Company and Rockwell will cooperate in making all
appropriate filings required under the Code or ERISA, the regulations thereunder
and any other applicable laws, implementing all appropriate communications with
participants, exchanging and sharing appropriate records and taking all other
actions as may be necessary or appropriate to implement the provisions of this
Section 4.02.
Section 4.03 Rockwell El Paso Savings Sub-Plan.
(a) Effective as of the Time of Distribution, Rockwell will
cause each Semiconductor Participant who participated in the Rockwell El Paso
Savings Sub-Plan immediately prior to the Time of Distribution to have a fully
nonforfeitable right to such person's account balances, if any, under the
Rockwell El Paso Savings Sub-Plan. As of the Time of Distribution, the Company
will extend coverage under the Semiconductor Savings Plan to the Semiconductor
Participants who are eligible to participate under the Rockwell El Paso Savings
Sub-Plan as of the Time of Distribution. The Semiconductor Savings Plan will
credit each Semiconductor Participant for purposes of vesting and eligibility
with all service which had been credited to such Semiconductor Participant for
such purposes under the Rockwell El Paso Savings Sub-Plan immediately prior to
the Time of Distribution (excluding any such service which was not counted under
the Rockwell El Paso Savings Sub-Plan by operation of its "break in service"
rules).
(b) The Company and Rockwell will cooperate in making all
appropriate filings required under the Code or ERISA, the regulations thereunder
and any other applicable laws, implementing all appropriate communications with
participants, exchanging and sharing appropriate records and taking all other
actions as may be necessary or appropriate to implement the provisions of this
Section 4.03.
Section 4.04 Nonqualified Savings Plans. Rockwell will retain
all Liabilities for and will pay when due all benefits accrued as of the Time of
Distribution by,
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and attributable to, Semiconductor Employees under the Rockwell International
Corporation Supplemental Savings Plan for Highly Compensated Employees and the
Rockwell International Corporation Excess Benefit Savings Plan, in each case as
amended through the Time of Distribution (collectively, the "Rockwell
Nonqualified Savings Plans"). From and after the Time of Distribution, none of
Rockwell or the Rockwell Subsidiaries, the Affiliates of any thereof or the
Rockwell Nonqualified Savings Plans will have any Liabilities with respect to
benefits and entitlements of Semiconductor Employees under the Rockwell
Nonqualified Savings Plans, except with respect to benefits accrued (including
earnings thereon) under the Rockwell Nonqualified Savings Plans prior to the
Time of Distribution. Rockwell will retain full power and authority with respect
to the amendment and termination of the Rockwell Nonqualified Savings Plans to
the extent permitted by law.
ARTICLE V
STOCK PLANS
Section 5.01 Stock Plans.
(a) Rockwell and the Company will take all action necessary or
appropriate so that each Rockwell Option held by a Semiconductor Employee that
is outstanding as of the Time of Distribution will be and become a Semiconductor
Option pursuant to the equitable adjustment provisions of the applicable
Rockwell Stock Plan under which such Rockwell Option was granted. The number of
shares of Semiconductor Common Stock subject to the Semiconductor Option will
equal the number of shares subject to such Rockwell Option being replaced
immediately prior to the Time of Distribution, multiplied by the reciprocal of
the Semiconductor Option Ratio, and then, if any resultant fractional share of
Semiconductor Common Stock exists, rounded down to the nearest whole share. The
Semiconductor Option shall have a per-share exercise price equal to the
per-share exercise price of such Rockwell Option being replaced immediately
prior to the Time of Distribution, multiplied by the Semiconductor Option Ratio.
Such Semiconductor Option will otherwise have substantially the same terms and
conditions as the corresponding Rockwell Option being replaced, except that
references to Rockwell will be changed to refer to the Company.
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(b) Rockwell and the Company will take all action necessary or
appropriate so that each Rockwell Split Option held by any person (other than a
Semiconductor Employee) that is outstanding as of the Time of Distribution is
adjusted pursuant to the equitable adjustment provisions of the applicable
Rockwell Stock Plan under which such Rockwell Split Option was granted so that
the per-share exercise price of such Rockwell Split Option will equal the
per-share exercise price of such Rockwell Split Option immediately prior the
Time of Distribution and prior to such adjustment, multiplied by the Rockwell
Option Ratio, subject to the provisions of Section 5.01(c). The number of shares
subject to the adjusted Rockwell Split Option will equal the number of shares
subject to such Rockwell Split Option immediately prior to the Time of
Distribution. Such adjusted Rockwell Split Option will otherwise have the same
terms and conditions as those in effect prior to the adjustment. In addition,
each person (other than a Semiconductor Employee) holding a Rockwell Split
Option will receive a Semiconductor Option pursuant to the equitable adjustment
provisions of the applicable Rockwell Stock Plan under which such Rockwell Split
Option was granted. The number of shares of Semiconductor Common Stock subject
to such Semiconductor Option will equal [ ] of the number of shares subject to
such Rockwell Split Option, and then rounded down to the nearest whole share.
Subject to the provisions of Section 5.01(c), the Semiconductor Option will have
a per-share exercise price equal to (i) the Average Price of Semiconductor
Common Stock, minus (ii) the amount obtained by multiplying the Semiconductor
Option Spread of such Semiconductor Option by [ ]. Such Semiconductor Option
will otherwise have substantially the same terms and conditions as the
corresponding Rockwell Split Option being adjusted, except that references to
Rockwell will be changed to refer to the Company.
(c) Notwithstanding anything to the contrary contained herein,
if the per-share exercise price of the Semiconductor Option determined in
accordance with Section 5.01(b) results in a number less than zero, the
per-share exercise price of such Semiconductor Option shall be deemed to be
$1.00 and the per-share exercise price of the corresponding Rockwell Split
Option shall be determined in accordance with this Section 5.01(c). In such
case, the per-share exercise price of the Rockwell Split Option will be adjusted
to equal the sum of (i) the remainder of the Ex-Distribution Average Price of
Rockwell Common Stock, minus the Pre-Distribution Rockwell Option Spread of the
Rockwell Split Option, plus (ii) an amount equal to [ ] the
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remainder of the Average Price of Semiconductor Common Stock, minus $1.00.
ARTICLE VI
OTHER EMPLOYEE PLANS AND MATTERS
Section 6.01 Welfare Plans. (a) As of the Time of
Distribution, the Company and the Company Subsidiaries will have established or
assumed, and will cover Semiconductor Participants under, Welfare Plans and
other employee welfare benefit and fringe benefit arrangements (collectively,
"Semiconductor Welfare Plans") that are comparable in the aggregate to the
Welfare Plans and other employee welfare benefit and fringe benefit arrangements
maintained by Rockwell and its Subsidiaries (including members of the Company
Group) immediately prior to the Time of Distribution ("Rockwell Welfare Plans")
for the benefit of Semiconductor Participants, with such changes or amendments
thereto as the Company may deem appropriate.
(b) The Semiconductor Welfare Plans will provide for the
immediate participation of those Semiconductor Participants who participated in
the Rockwell Welfare Plans immediately prior to the Time of Distribution. The
Semiconductor Welfare Plans will credit each Semiconductor Participant for all
Semiconductor Welfare Plan purposes with all service and any other item which
had been credited to or otherwise accumulated for the benefit of such
Semiconductor Participant under the Rockwell Welfare Benefit Plans immediately
prior to the Time of Distribution, including service credited toward any waiting
periods and amounts credited toward any medical or health insurance deductible
or co-payment. Without limiting the generality of the foregoing, each
Semiconductor Welfare Plan, to the extent applicable: (i) will recognize all
amounts applied to deductibles, co-payments, out-of-pocket maximums and lifetime
maximum benefits with respect to Semiconductor Participants under the
corresponding Rockwell Welfare Plan for the plan year that includes the Time of
Distribution and for prior periods (if applicable); (ii) will recognize all
service credited to waiting periods with respect to Semiconductor Participants
under the corresponding Rockwell Welfare Plan; (iii) will not impose any
limitations on coverage of pre-existing conditions of Semiconductor Participants
except to the extent such limitations applied to such Semiconductor Participants
under the corresponding Rockwell Welfare Plan immediately before such
Semiconductor
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Welfare Plan became effective; and (iv) will not impose any other conditions
(such as proof of good health, evidence of insurability or a requirement of a
physical examination) upon the participation by Semiconductor Participants who
were participating in the corresponding Rockwell Welfare Plan immediately before
such Semiconductor Welfare Plan became effective.
(c) The Company and the Company Subsidiaries will credit each
Semiconductor Employee with the unused vacation days and personal and sickness
days accrued in accordance with the vacation and personnel policies and labor
agreements of Rockwell and its Subsidiaries (including members of the Company
Group) applicable to such employees in effect immediately prior to the Time of
Distribution.
(d) From and after the Time of Distribution, except as
specifically set forth in this Agreement, the Company and the Company
Subsidiaries will assume or retain, as the case may be, and will be solely
responsible for and will fully perform, pay and discharge, all Liabilities in
respect of Semiconductor Participants (and claims by or relating to
Semiconductor Participants) with respect to employee welfare and fringe benefits
(including, without limitation, medical, dental, life, travel, accident, short-
and long-term disability, hospitalization, workers' compensation and other
insurance benefits), whether under the Rockwell Welfare Plans, the Semiconductor
Welfare Plans or otherwise, whether incurred, or arising in connection with
incidents occurring, before, at or after the Time of Distribution and whether
any claim is made with respect thereto before, at or after the Time of
Distribution. Without limiting the generality of the foregoing, from and after
the Time of Distribution, the Company and the Company Subsidiaries (or where
appropriate, the Semiconductor Welfare Plans) will assume, will be solely
responsible for and will fully perform, pay and discharge all Liabilities in
respect of Semiconductor Participants (and claims by or relating to
Semiconductor Participants) with respect to retiree health benefits and retiree
life insurance benefits, whether under the Rockwell Welfare Plans, the
Semiconductor Welfare Plans or otherwise, whether incurred, or arising in
connection with incidents occurring, before, at or after the Time of
Distribution and whether any claim is made with respect thereto before, at or
after the Time of Distribution.
(e) From and after the Time of Distribution, except as
specifically set forth in this Agreement, Rockwell
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and the Rockwell Subsidiaries will assume or retain, as the case may be, and
will be solely responsible for and will fully perform, pay and discharge, all
Liabilities in respect of Rockwell Participants (and claims by or relating to
Rockwell Participants) with respect to employee welfare and fringe benefits
(including, without limitation, medical, dental, life, travel, accident, short-
and long-term disability, hospitalization, workers' compensation and other
insurance benefits), whether under the Rockwell Welfare Plans or otherwise,
whether incurred, or arising in connection with incidents occurring, before, at
or after the Time of Distribution and whether any claim is made with respect
thereto before, at or after the Time of Distribution. Without limiting the
generality of the foregoing, from and after the Time of Distribution, Rockwell
and the Rockwell Subsidiaries (or where appropriate, the Rockwell Welfare Plans)
will assume or retain, as the case may be, will be solely responsible for and
will fully perform, pay and discharge all Liabilities in respect of Rockwell
Participants (and claims by or relating to Rockwell Participants) with respect
to retiree health benefits and retiree life insurance benefits, whether under
the Rockwell Welfare Plans or otherwise, whether incurred before, at or after
the Time of Distribution and whether any claim is made with respect thereto
before, at or after the Time of Distribution.
(f) The Company and Rockwell will cooperate in making all
appropriate filings required by law, implementing all appropriate communications
with participants, exchanging and sharing appropriate records and taking such
other actions as may be necessary or appropriate to implement the provisions of
this Section 6.01.
Section 6.02 Long-Term Incentive Plan and Incentive
Compensation Plans. Effective as of the Time of Distribution, the Company hereby
assumes and agrees to fully perform, pay and discharge all Liabilities
(including, but not limited to, liability for earned but unpaid incentive
payments) for, due to and/or attributable to Semiconductor Participants under
the Rockwell International Business Unit Long-Term Incentive Plan (the "LTIP"),
the Incentive Compensation Plan and all other long-term and annual incentive
compensation plans of Rockwell and its Subsidiaries (including members of the
Company Group) in effect at or prior to the Time of Distribution. Rockwell and
the Company will cooperate in taking all actions necessary or appropriate to
adjust the performance goals and other terms and conditions of awards under the
LTIP and such
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other incentive compensation plans for performance periods that begin before and
end after the Distribution Date as appropriate to reflect the Distribution. From
and after the Time of Distribution, none of Rockwell or the Rockwell
Subsidiaries or their Affiliates will have any Liabilities with respect to
benefits of Semiconductor Participants under the LTIP, the Incentive
Compensation Plan and such other incentive compensation plans. Rockwell and the
Company will cooperate in making all appropriate filings required by law,
implementing all appropriate communications with participants, exchanging and
sharing appropriate records and taking all other actions as may be necessary or
appropriate to implement the provisions of this Section 6.02.
Section 6.03 Deferred Compensation Plans. Effective as of the
Time of Distribution, the Company hereby assumes and agrees to fully perform,
pay and discharge all Liabilities (including but not limited to the obligation
to pay when due all benefits accrued and not paid as of the Time of
Distribution) for, due to and/or attributable to Semiconductor Participants
under the Rockwell International Corporation Deferred Compensation Plan (the
"Rockwell Deferred Compensation Plan"), as in effect immediately prior to the
Time of Distribution. From and after the Time of Distribution, none of Rockwell
or the Rockwell Subsidiaries or their Affiliates will have any Liabilities with
respect to benefits of Semiconductor Participants under the Rockwell Deferred
Compensation Plan. Rockwell and the Company will cooperate in making all
appropriate filings required by law, implementing all appropriate communications
with participants, exchanging and sharing appropriate records and taking all
other actions as may be necessary or appropriate to implement the provisions of
this Section 6.03.
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Section 6.04 Severance Pay. (a) Rockwell and the Company
acknowledge and agree that the transactions contemplated by the Transaction
Agreements will not constitute a severance of employment of any Semiconductor
Employee or Rockwell Employee prior to or as a result of the transactions
contemplated thereby, and that individuals who, in connection with the
Distribution, become Semiconductor Employees or Rockwell Employees pursuant to
this Agreement will not be deemed to have experienced a termination, layoff or
severance of employment from Rockwell and its Subsidiaries (including members of
the Company Group), in each case for purposes of any policy, plan, program or
agreement of Rockwell or any of its Subsidiaries (including members of the
Company Group) that provides for the payment of severance, salary continuation
or similar benefits.
(b) The Company and the Company Subsidiaries will assume or
retain (as applicable) and be solely responsible for, and will fully perform,
pay and discharge, all Liabilities in connection with claims made by or on
behalf of Semiconductor Participants in respect of severance pay, salary
continuation and similar obligations relating to the termination or alleged
termination (whether voluntary or involuntary) of any such person's employment,
whether such termination or alleged termination occurred before, at or after the
Time of Distribution and whether any claim is made with respect thereto before,
at or after the Time of Distribution (whether or not such claim is based on any
severance policy, agreement, arrangement or program which may exist or arise
under any contract, employment agreement or collective bargaining agreement or
under any Federal, state, local, provincial or foreign law).
(c) Rockwell and the Rockwell Subsidiaries will assume or
retain (as applicable) and be solely responsible for, and will fully perform,
pay and discharge, all Liabilities in connection with claims made by or on
behalf of Rockwell Participants in respect of severance pay, salary continuation
and similar obligations relating to the termination or alleged termination
(whether voluntary or involuntary) of any such person's employment, whether such
termination or alleged termination occurred before, at or after the Time of
Distribution and whether any claim is made with respect thereto before, at or
after the Time of Distribution (whether or not such claim is based on any
severance policy, agreement, arrangement or program which may exist or arise
under any contract, employment agreement or collective bargaining agreement or
under any Federal, state, local, provincial or foreign law).
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Section 6.05 Employment, Consulting and Other Employee Related
Agreements. Effective as of the Time of Distribution, the Company will or will
cause one or more Company Subsidiaries to assume or retain (as applicable) all
Liabilities relating to Semiconductor Participants under their respective
employment, consulting, separation, agreements to arbitrate, and other employee
related agreements with any member of the Pre-Distribution Group, as the same
are in effect immediately prior to the Time of Distribution. Effective as of the
Time of Distribution, Rockwell will or will cause one or more Rockwell
Subsidiaries to assume or retain (as applicable) all Liabilities relating to
Rockwell Participants under their respective employment, consulting, separation,
agreements to arbitrate, and other employee related agreements with any member
of the Pre-Distribution Group, as the same are in effect immediately prior to
the Time of Distribution.
Section 6.06 Rockwell VEBA and CLIR Fund. As of and after the
Time of Distribution, Rockwell will retain all assets of and related to (i) the
Trust for Employee Welfare Benefit Programs of Rockwell International
Corporation and (ii) the Rockwell Continued Life Insurance Reserve Fund.
Section 6.07 Other Liabilities. (a) From and after the Time of
Distribution, except as specifically set forth in this Agreement, the Company
and the Company Subsidiaries will assume or retain, as the case may be, and be
solely responsible for, and will fully perform, pay and discharge, all
Liabilities in respect of Semiconductor Participants arising out of or relating
to employment by any member of the Pre-Distribution Group, whether pursuant to
benefit plans or otherwise and whether such Liabilities arose before, at or
after the Time of Distribution or any claim is made with respect thereto before,
at or after the Time of Distribution. From and after the Time of Distribution,
except as specifically set forth in this Agreement, Rockwell and the Rockwell
Subsidiaries will assume or retain, as the case may be, and be solely
responsible for, and will fully perform, pay and discharge, all Liabilities in
respect of Rockwell Participants arising out of or relating to employment by any
member of the Pre-Distribution Group, whether pursuant to benefit plans or
otherwise and whether such Liabilities arose before, at or after the Time of
Distribution or any claim is made with respect thereto before, at or after the
Time of Distribution.
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(b) The Company shall be solely responsible for and shall pay
when due any and all direct or indirect Liabilities based upon, arising out of,
relating to or otherwise in connection with any differences between employee
benefits provided to Semiconductor Participants by any member of the
Pre-Distribution Group prior to the Time of Distribution and employee benefits
provided to Semiconductor Participants by any member of the Company Group after
the Time of Distribution, including, without limitation, all Liabilities arising
out of claims made by any Semiconductor Participant based upon, arising out of,
relating to or otherwise in connection with a change in benefits provided to
such Semiconductor Participant after the Time of Distribution, whether or not
such Liabilities are asserted against, imposed on or incurred by any member of
the Company Group or any member of the Rockwell Group.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Indemnification. All Liabilities retained or
assumed by or allocated to the Company or any Company Subsidiary pursuant to
this Agreement will be deemed to be Semiconductor Liabilities (as defined in the
Distribution Agreement), and all Liabilities retained or assumed by or allocated
to Rockwell or any Rockwell Subsidiary pursuant to this Agreement will be deemed
to be Liabilities of Rockwell which do not constitute such Semiconductor
Liabilities, and, in each case, will be subject to the indemnification
provisions set forth in Article IV of the Distribution Agreement.
Section 7.02 Sharing of Information. Each of Rockwell and the
Company will, and will cause each of their respective Subsidiaries to, provide
to the other all such Information in its possession as the other may reasonably
request to enable the requesting party to administer its employee benefit plans
and programs, and to determine the scope of, and fulfill, its obligations under
this Agreement. Such Information will, to the extent reasonably practicable, be
provided in the format and at the times and places requested, but in no event
will the party providing such Information be obligated to incur any direct
expense not reimbursed by the party making such request, nor to make such
Information available outside its normal business hours and premises. The right
of the parties to receive Information hereunder will, without limiting the
generality
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of the foregoing, extend to any and all reports, and the data underlying such
reports. Any Information shared or exchanged pursuant to this Agreement will be
subject to the same confidentiality requirements set forth in the Distribution
Agreement.
Section 7.03 Entire Agreement; Construction. This Agreement,
the Distribution Agreement and the other 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 this Agreement to the
contrary, in the event and to the extent that there is a conflict between the
provisions of this Agreement and the provisions of the Distribution Agreement,
the provisions of this Agreement will control.
Section 7.04 Survival of Agreements. Except as otherwise
contemplated by this Agreement, all covenants and agreements of the parties
contained in this Agreement will remain in full force and effect and survive the
Time of Distribution.
Section 7.05 Governing Law. This Agreement will be governed by
and construed in accordance with the internal laws of the State of New York
applicable to contracts made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.
Section 7.06 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 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, 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 in Section 6.05 of the
Distribution Agreement, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice.
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Section 7.07 Amendments. This Agreement cannot be amended,
modified or supplemented except by a written agreement executed by Rockwell and
the Company.
Section 7.08 Assignment. Neither party to this Agreement will
convey, assign or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of the other party in its sole and
absolute discretion, except that any party may (without obtaining any consent)
assign any of its rights hereunder to a successor to all or any part of its
business. Any such conveyance, assignment or transfer requiring the prior
written consent of another party 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 7.09 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 will mean United
States Dollars.
Section 7.10 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 7.11 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
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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. No provision of this Agreement will be construed
(a) to limit the right of Rockwell, any Rockwell Subsidiary, the Company or any
Company Subsidiary to amend any plan or terminate any plan, or (b) to create any
right or entitlement whatsoever in any employee, former employee or beneficiary
including, without limitation, a right to continued employment or to any benefit
under a plan or any other benefit or compensation.
Section 7.12 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 7.13 Termination. This Agreement may be terminated and
the Distribution abandoned at any time prior to the Time of Distribution by and
in the sole discretion of the Rockwell Board without the approval of the Company
or of Rockwell's shareowners. In the event of such termination, no party will
have any liability of any kind to any other party on account of such
termination.
Section 7.14 Change of Name. On or promptly after the
Distribution Date, the Company will take such actions as may be required to
change the names of all employee benefit plans sponsored or maintained by it or
its Affiliates to eliminate therefrom any reference to "Rockwell", "Rockwell
International", "▇▇▇▇▇▇▇" or any derivative thereof.
Section 7.15 Waivers; Remedies. No failure or delay on the
part of either Rockwell or the Company in exercising any right, power or
privilege hereunder will operate as a waiver thereof, nor will any waiver on the
part of either Rockwell or the Company 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. 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.
Section 7.16 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.
Section 7.17 Performance. Each party will cause to be
performed and hereby guarantees the performance of all actions, agreements and
obligations set forth herein to be performed by any Subsidiary or Affiliate of
such party.
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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.
ROCKWELL INTERNATIONAL
CORPORATION
By:
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[ ]
[ROCKWELL SEMICONDUCTOR
SYSTEMS, INC.]
By:
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[ ]
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