` UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): December 19, 2001
(December 16, 2001)
ALPHA INDUSTRIES, INC.
----------------------
(Exact name of registrant as specified in charter)
Delaware 1-5560 04-2302115
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(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
20 Sylvan Road, Woburn, MA 01801
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 935-5150
Item 5. Other Events.
On December 16, 2001, Alpha Industries, Inc. (the "Registrant")
entered into an Agreement and Plan of Reorganization dated as of December
16, 2001 (the "Merger Agreement") with Conexant Systems, Inc. ("Conexant")
and Washington Sub, Inc., a wholly-owned subsidiary of Conexant
("Washington"). Conexant and Washington also entered into a Contribution
and Distribution Agreement dated as of December 16, 2001 (the "Distribution
Agreement"). Pursuant to the Distribution Agreement, Conexant will
contribute to Washington the wireless communications business presently
conducted by Conexant, excluding certain assets and liabilities as set
forth in the Distribution Agreement, and will distribute all the
outstanding shares of Washington to Conexant's shareowners (the
"Spin-off"). Immediately thereafter, pursuant to the Merger Agreement,
Washington will merge with and into the Registrant, with the Registrant as
the surviving corporation (the "Merger"). The Merger is subject to, among
other things, regulatory approval, a ruling by the IRS that the Spin-off
qualifies as tax-free and approval by the Registrant's stockholders.
Upon completion of the Merger, the Registrant will purchase (i)
Conexant's semiconductor assembly, module manufacturing and test facility,
located in Mexicali, Mexico, pursuant to the Mexican Stock and Assset
Purchase Agreement dated as of December 16, 2001 between Conexant and the
Registrant (the "Mexicali Agreement") and (ii) Conexant's Package Design
Team that supports the Mexicali facility, pursuant to the U.S. Asset
Purchase Agreement dated as of December 16, 2001 between Conexant and the
Registrant (the "U.S. Assset Purchase Agreement").
The foregoing description of the Merger, the Merger Agreement,
the Distribution Agreement, the Mexicali Agreement and the U.S. Asset
Purchase Agreement is qualified in its entirety by reference to the Merger
Agreement, the Distribution Agreement, the Mexicali Agreement, the U.S.
Asset Purchase Agreement and the joint press release of the Registrant and
Conexant dated as of December 17, 2001, copies of which are filed herewith
as Exhibits 2.1, 2.2, 2.3, 2.4 and 99.1, respectively, and each of such
Exhibits is hereby incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit
Number Description
- ------ -----------
2.1 Agreement and Plan of Reorganization dated as of
December 16, 2001 by and among Conexant Systems, Inc.,
Washington Sub, Inc. and Alpha Industries, Inc.
(excluding exhibits).
2.2 Contribution and Distribution Agreement dated as of
December 16, 2001 by and between Conexant Systems, Inc.
and Washington Sub, Inc. (excluding exhibits).
2.3 Mexican Stock and Asset Purchase Agreement dated as of
December 16, 2001 by and between Conexant Systems, Inc.
and Alpha Industries Inc. (excluding exhibits).
2.4 U.S. Asset Purchase Agreement dated as of December 16, 2001
by and between Conexant Systems, Inc. and Alpha Industries,
Inc. (excluding exhibits).
99.1 Press release dated December 17, 2001.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
ALPHA INDUSTRIES, INC.
Date: December 19, 2001 By: /s/ Paul E. Vincent
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Paul E. Vincent
Chief Financial Officer and Secretary
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
2.1 Agreement and Plan of Reorganization dated as of
December 16, 2001 by and among Conexant Systems, Inc.,
Washington Sub, Inc. and Alpha Industries, Inc.
(excluding exhibits).
2.2 Contribution and Distribution Agreement dated as of
December 16, 2001 by and between Conexant Systems, Inc.
and Washington Sub, Inc. (excluding exhibits).
2.3 Mexican Stock and Asset Purchase Agreement dated as of
December 16, 2001 by and between Conexant Systems, Inc.
and Alpha Industries Inc. (excluding exhibits).
2.4 U.S. Asset Purchase Agreement dated as of December 16, 2001
by and between Conexant Systems, Inc. and Alpha Industries,
Inc. (excluding exhibits).
99.1 Press release dated December 17, 2001.
Exhibit 2.1
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AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF DECEMBER 16, 2001
BY AND AMONG
CONEXANT SYSTEMS, INC.,
WASHINGTON SUB, INC.
AND
ALPHA INDUSTRIES, INC.
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TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER....................................................................2
SECTION 1.1 The Merger....................................................................2
SECTION 1.2 Closing; Effective Time.......................................................2
SECTION 1.3 Effects of the Merger.........................................................3
SECTION 1.4 Conversion of Washington Common Stock.........................................3
SECTION 1.5 Alpha Common Stock............................................................4
SECTION 1.6 Certificate of Incorporation..................................................4
SECTION 1.7 By-Laws.......................................................................4
SECTION 1.8 Officers......................................................................4
SECTION 1.9 Board of Directors............................................................4
SECTION 1.10 Name; Corporate Offices.......................................................5
SECTION 1.11 Fiscal Year...................................................................5
ARTICLE II OPTIONS.......................................................................5
SECTION 2.1 Option Conversion.............................................................5
SECTION 2.2 Incentive Stock Options.......................................................6
SECTION 2.3 Shares Reserved; Registration.................................................6
ARTICLE III EXCHANGE OF SHARES............................................................6
SECTION 3.1 Alpha to Make Shares Available................................................6
SECTION 3.2 Exchange of Shares............................................................7
SECTION 3.3 Affiliates....................................................................9
ARTICLE IV CERTAIN PRE-MERGER TRANSACTIONS...............................................9
SECTION 4.1 Ancillary Agreements..........................................................9
SECTION 4.2 Contribution.................................................................10
SECTION 4.3 Distribution.................................................................10
ARTICLE V REPRESENTATIONS AND WARRANTIES...............................................10
SECTION 5.1 Representations and Warranties of Alpha......................................10
SECTION 5.2 Representations and Warranties of Conexant...................................22
ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS....................................36
SECTION 6.1 Covenants of Alpha...........................................................36
SECTION 6.2 Covenants of Conexant and Washington.........................................39
SECTION 6.3 Reports; SEC Reports.........................................................44
SECTION 6.4 Control of Other Party's Business............................................44
ARTICLE VII ADDITIONAL AGREEMENTS........................................................45
SECTION 7.1 Preparation of Proxy Statement; Stockholders Meeting.........................45
SECTION 7.2 Combined Company Board of Directors and Management...........................46
SECTION 7.3 Access to Information........................................................46
SECTION 7.4 Reasonable Best Efforts......................................................47
SECTION 7.5 Acquisition Proposals........................................................49
SECTION 7.6 Employee Benefits Matters....................................................52
SECTION 7.7 Fees and Expenses............................................................53
SECTION 7.8 Directors' and Officers' Indemnification and Insurance.......................54
SECTION 7.9 Public Announcements.........................................................55
SECTION 7.10 Accounting Matters...........................................................55
SECTION 7.11 Listing of Shares of Alpha Common Stock......................................56
SECTION 7.12 Affiliates...................................................................56
SECTION 7.13 Section 16 Matters...........................................................56
SECTION 7.14 Takeover Statutes............................................................56
SECTION 7.15 Advice of Changes............................................................56
SECTION 7.16 Shareholders Agreement.......................................................57
SECTION 7.17 Tax Ruling...................................................................57
SECTION 7.18 Option Acceleration..........................................................57
SECTION 7.19 Employment and Severance Arrangements........................................58
SECTION 7.20 Transition Services Agreement................................................58
ARTICLE VIII CONDITIONS PRECEDENT.........................................................58
SECTION 8.1 Conditions to Each Party's Obligation to Effect the Merger...................58
SECTION 8.2 Additional Conditions to Obligations of Alpha................................60
SECTION 8.3 Additional Conditions to Obligations of Washington...........................61
ARTICLE IX TERMINATION AND AMENDMENT....................................................62
SECTION 9.1 Termination..................................................................62
SECTION 9.2 Effect of Termination........................................................64
SECTION 9.3 Amendment....................................................................65
SECTION 9.4 Extension; Waiver............................................................65
ARTICLE X GENERAL PROVISIONS...........................................................66
SECTION 10.1 Non-Survival of Representations, Warranties, Covenants and Agreements........66
SECTION 10.2 Notices......................................................................66
SECTION 10.3 Interpretation...............................................................67
SECTION 10.4 Counterparts.................................................................67
SECTION 10.5 Entire Agreement; No Third Party Beneficiaries...............................67
SECTION 10.6 Governing Law................................................................68
SECTION 10.7 Severability.................................................................68
SECTION 10.8 Assignment...................................................................68
SECTION 10.9 Submission to Jurisdiction; Waivers..........................................68
SECTION 10.10 Enforcement..................................................................69
SECTION 10.11 Definitions..................................................................69
SECTION 10.12 Disclosure Schedule..........................................................75
EXHIBITS
Exhibit A - Form of Contribution and Distribution Agreement
Exhibit B - Form of Amended and Restated Certificate
Exhibit C - Form of By-Laws
Exhibit D - Form of Certificate of Merger
Exhibit E - Certain Alpha Agreements
Exhibit F - Form of Tax Allocation Agreement
Exhibit G - Form of Employee Matters Agreement
Exhibit H - Form of Affiliate Agreement
Exhibit I - Parties to Shareholder Agreement
Exhibit J - Form of Shareholder Agreement
Exhibit K - Terms of Newport Supply Agreement
Exhibit L - Terms of Newbury Supply Agreement
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of December 16, 2001
(this "Agreement"), by and among CONEXANT SYSTEMS, INC., a Delaware
corporation ("Conexant"), WASHINGTON SUB, INC., a Delaware corporation and
a wholly-owned subsidiary of Conexant ("Washington"), and ALPHA INDUSTRIES,
INC., a Delaware corporation ("Alpha").
W I T N E S S E T H :
WHEREAS, simultaneously with the execution and delivery of this
Agreement, Conexant and Washington are entering into a contribution and
distribution agreement in the form attached hereto as Exhibit A (the
"Distribution Agreement") pursuant to which (a) all the Washington Assets
(as defined in the Distribution Agreement) will be assigned to Washington
and/or to one or more of the Washington Subsidiaries (as defined in the
Distribution Agreement) and all of the Washington Liabilities (as defined
in the Distribution Agreement) will be assumed by Washington and/or by one
or more of the Washington Subsidiaries, all as provided in the Distribution
Agreement (the "Contribution") and (b) all of the issued and outstanding
shares of common stock, par value $.01 per share, of Washington (the
"Washington Common Stock") will be distributed on a pro rata basis to
Conexant's stockholders as provided in the Distribution Agreement (the
"Distribution");
WHEREAS, the Boards of Directors of Conexant, Washington and
Alpha deem it advisable and in the best interests of each corporation and
its respective stockholders that Washington and Alpha enter into a merger
transaction in order to advance the long-term strategic business interests
of Conexant, Washington and Alpha;
WHEREAS, the Boards of Directors of Conexant, Washington and
Alpha have determined to consummate such merger transaction by means of the
business combination transaction provided for herein in which, immediately
following the Distribution Washington will, subject to the terms and
conditions set forth herein, merge with and into Alpha (the "Merger"), with
Alpha being the surviving corporation (hereinafter sometimes referred to in
such capacity as the "Combined Company") in the Merger;
WHEREAS, the parties to this Agreement intend that the
Contribution and the Distribution qualify under Sections 355 and 368 of the
Internal Revenue Code of 1986, as amended (the "Code"), as a
reorganization, that the Merger qualify under Section 368 of the Code as a
reorganization and that this Agreement shall constitute a "plan of
reorganization" for purposes of Sections 354 and 361 of the Code;
WHEREAS, the parties desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also
to prescribe certain conditions to the Merger; and
WHEREAS, capitalized terms used in this Agreement will have the
respective meanings set forth (i) in Section 10.11 or (ii) in the Sections
of this Agreement or in the relevant Reorganization Agreement (as defined
in Section 10.11) set forth opposite such terms in Section 10.11.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
in this Agreement, and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. Upon the terms and conditions of this
Agreement, and in accordance with the General Corporation Law of the State
of Delaware (the "DGCL"), at the Effective Time (as defined in Section
1.2(b)), Washington shall merge with and into Alpha. Alpha shall be the
surviving corporation in the Merger and shall continue its corporate
existence under the laws of the State of Delaware. Upon consummation of the
Merger, the separate corporate existence of Washington shall terminate.
SECTION 1.2 CLOSING; EFFECTIVE TIME.
(a) The closing of the Merger (the "Closing") will take place
as soon as practicable, but in any event within three Business Days, after
the satisfaction or waiver (subject to Applicable Laws) of the conditions
(excluding conditions that, by their nature, cannot be satisfied until the
Closing Date (as defined below)) set forth in Article VIII, unless this
Agreement has been theretofore terminated pursuant to its terms or unless
another time or date is agreed to in writing by the parties hereto (the
actual time and date of the Closing being referred to herein as the
"Closing Date"). The Closing shall be held at the offices of Chadbourne &
Parke LLP, 30 Rockefeller Plaza, New York, New York, unless another place
is agreed to in writing by the parties hereto.
(b) The Merger shall become effective as set forth in the
certificate of merger relating thereto substantially in the form attached
hereto as Exhibit D that shall be filed with the Secretary of State of the
State of Delaware (the "Delaware Secretary") on the Closing Date (the
"Certificate of Merger"). The term "Effective Time" shall be the date and
time when the Merger becomes effective, as set forth in the Certificate of
Merger. The Effective Time shall occur immediately after the Time of
Distribution (as defined in the Distribution Agreement).
SECTION 1.3 EFFECTS OF THE MERGER. At and after the Effective
Time, the Merger shall have the effects set forth in the DGCL. Without
limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all of the properties, rights, privileges, powers and
franchises of Washington shall vest in Alpha, and all debts, liabilities
and duties of Washington shall become the debts, liabilities and duties of
Alpha.
SECTION 1.4 CONVERSION OF WASHINGTON COMMON STOCK. At the
Effective Time, by virtue of the Merger and without any action on the part
of Washington, Alpha or the holders of any capital stock of Washington or
Alpha:
(a) Subject to Section 3.2(d), each share of Washington Common
Stock issued and outstanding immediately prior to the Effective Time (after
giving effect to the Distribution), other than shares of Washington Common
Stock held in Washington's treasury or owned by Alpha or any wholly-owned
Subsidiary of Washington or Alpha, shall automatically be converted into
the right to receive 0.342 shares (the "Exchange Ratio") of common stock,
par value $.25 per share, of Alpha (including the associated preferred
share purchase rights, the "Alpha Common Stock"). If (i) between the date
hereof and the Effective Time, the outstanding shares of Alpha Common
Stock, (ii) between the date hereof and the Time of Distribution, the
outstanding shares of Conexant Common Stock (as defined in Section
5.2(b)(i)) or (iii) following the Time of Distribution and prior to the
Effective Time, the outstanding shares of Washington Common Stock, shall
have been increased, decreased, changed into or exchanged for a different
number or kind of shares or securities (or a record date within any such
period shall have been established for any of the foregoing) as a result of
a reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar change in capitalization (other
than solely as a result of the Distribution or the Merger, but including
any increase or decrease in the outstanding shares of Conexant Common Stock
as a result of the issuance of any security in accordance with the Conexant
Rights Agreement (as defined in Section 5.2(b)(i)), an appropriate and
proportionate adjustment shall be made to the Exchange Ratio to the extent
necessary to reflect such reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or
similar change in capitalization.
(b) All shares of Washington Common Stock converted into the
right to receive Alpha Common Stock pursuant to this Article I shall no
longer be outstanding and shall automatically be canceled and shall cease
to exist, and each certificate or book-entry credit previously evidencing
any such shares of Washington Common Stock (a "Washington Certificate")
shall thereafter evidence only the right to receive (i) the number of whole
shares of Alpha Common Stock (which shall be in uncertificated book-entry
form unless a physical certificate is requested) and (ii) cash in lieu of
fractional shares of Alpha Common Stock into which the shares of Washington
Common Stock formerly evidenced by such Washington Certificate have been
converted pursuant to this Section 1.4 and Section 3.2(d), without any
interest thereon.
(c) All shares of Washington Common Stock held in Washington's
treasury or owned by Alpha, or any wholly-owned Subsidiary of Washington or
Alpha shall be canceled and shall cease to exist and no shares of Alpha
Common Stock or other consideration shall be delivered in exchange
therefor.
SECTION 1.5 ALPHA COMMON STOCK. At and after the Effective
Time, each share of Alpha Common Stock issued and outstanding immediately
prior to the Effective Time shall remain an issued and outstanding share of
common stock of the Combined Company and shall not be affected by the
Merger.
SECTION 1.6 CERTIFICATE OF INCORPORATION. At the Effective
Time, the certificate of incorporation of the Combined Company shall be in
the form attached hereto as Exhibit B, with such changes thereto as shall
be mutually agreed upon by Conexant and Alpha (the "Restated Certificate"),
until thereafter amended in accordance with the terms thereof and
Applicable Laws (as defined in Section 10.11).
SECTION 1.7 BY-LAWS. At the Effective Time, the by-laws of the
Combined Company shall be in the form attached hereto as Exhibit C, with
such changes as may be mutually agreed upon by Conexant and Alpha (the
"By-Laws"), until thereafter amended in accordance with the terms thereof,
the Restated Certificate and Applicable Laws.
SECTION 1.8 OFFICERS. At the Effective Time, David J. Aldrich
shall be Chief Executive Officer of the Combined Company and Moiz M.
Beguwala shall be President of the Combined Company and otherwise the
initial officers of the Combined Company shall be as Conexant and Alpha
shall agree prior to the Effective Time, and such officers shall hold
office until their respective successors are duly appointed and qualified,
or their earlier death, resignation or removal.
SECTION 1.9 BOARD OF DIRECTORS. At the Effective Time, until
duly changed in compliance with the Restated Certificate, the By-Laws and
Applicable Laws, the Board of Directors of the Combined Company shall
consist of either nine or eleven persons (as agreed by Conexant and Alpha
prior to the Effective Time), including (a) four (in the case of a
nine-person Board of Directors) or five (in the case of an eleven-person
Board of Directors) persons (one of whom shall be Chairman of the Board of
the Combined Company) to be named by the Board of Directors of Conexant,
(b) four (in the case of a nine-person Board of Directors) or five (in the
case of an eleven-person Board of Directors) persons to be named by the
Board of Directors of Alpha and (c) one person to be jointly named by the
Boards of Directors of Conexant and Alpha. The directors named by Conexant
and Alpha shall be allocated proportionately among the classes of the Board
of Directors of the Combined Company as shall be agreed between Conexant
and Alpha prior to the Effective Time.
SECTION 1.10 NAME; CORPORATE OFFICES.
(a) At the Effective Time, the name of the Combined Company
shall be as agreed by Conexant and Alpha prior to the Effective Time.
(b) At the Effective Time, the Combined Company shall have
joint headquarters located in Newport Beach, California and Woburn,
Massachusetts.
SECTION 1.11 FISCAL YEAR. The fiscal year of the Combined
Company will initially end on September 30 of each year.
ARTICLE II
OPTIONS
SECTION 2.1 OPTION CONVERSION. At or prior to the Effective
Time, Washington and Alpha will take all action necessary such that each
Washington Option (as defined in the Employee Matters Agreement) that is
outstanding and unexercised immediately prior thereto (after giving effect
to the adjustments to Conexant Stock Options (as defined in Section
5.2(b)(i)) to be effected in connection with the Distribution as provided
for in the Employee Matters Agreement) shall cease to represent a right to
acquire shares of Washington Common Stock and shall, as of the Effective
Time, automatically be converted into a Converted Option exercisable for a
number of shares of Alpha Common Stock and at an exercise price determined
as provided below (and otherwise subject to the terms of the appropriate
Washington Stock Plan (as defined in the Employee Matters Agreement)
governing such option and the agreements evidencing grants thereunder):
(i) The number of shares of Alpha Common Stock to be
subject to the Converted Option shall be equal to the product of the
number of shares of Washington Common Stock subject to the
unexercised portion of the Washington Option (as adjusted in
connection with the Distribution) multiplied by the Exchange Ratio,
provided that any fractional shares of Alpha Common Stock resulting
from such multiplication shall be rounded down to the nearest whole
share; and
(ii) The exercise price per share of Alpha Common Stock
under the Converted Option shall be equal to the exercise price per
share of Washington Common Stock under the Washington Option (as
adjusted in connection with the Distribution) divided by the Exchange
Ratio, provided that such exercise price shall be rounded up to the
nearest whole cent.
SECTION 2.2 INCENTIVE STOCK OPTIONS. The adjustment provided
herein with respect to any options that are "incentive stock options" (as
defined in Section 422 of the Code) shall be and is intended to be effected
in a manner that is consistent with Section 424(a) of the Code. Except as
set forth in this Section 2.2, the duration and other terms of such
Converted Option shall be the same as the Washington Option, except that
all references to Washington shall be deemed to be references to the
Combined Company (but taking into account any changes thereto provided for
in the Washington Stock Plans by reason of this Agreement or the
transactions contemplated hereby).
SECTION 2.3 SHARES RESERVED; REGISTRATION. Following the
Effective Time, the Combined Company shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of Alpha
Common Stock for delivery upon exercise of the Converted Options pursuant
to the terms set forth in this Article II. As soon as practicable but in
any event not later than five days following the Effective Time, the shares
of Alpha Common Stock subject to the Converted Options will be covered by
an effective registration statement on Form S-8 (or any successor form) or
another appropriate form and the Combined Company shall use its reasonable
best efforts to maintain the effectiveness of such registration statement
for so long as the Converted Options remain outstanding.
ARTICLE III
EXCHANGE OF SHARES
SECTION 3.1 ALPHA TO MAKE SHARES AVAILABLE. From time to time,
prior to, at or after the Effective Time, Alpha shall deposit, or shall
cause to be deposited, with a bank or trust company appointed by Conexant
and reasonably acceptable to Alpha (the "Exchange Agent"), for the benefit
of the holders of the Washington Certificates, for exchange in accordance
with this Article III, the shares of Alpha Common Stock to be issued
pursuant to Section 1.4 and delivered pursuant to Section 3.2(a) in
exchange for Washington Certificates (such shares of Alpha Common Stock,
together with any dividends or distributions with respect thereto, the
"Exchange Fund").
SECTION 3.2 EXCHANGE OF SHARES.
(a) As soon as reasonably practicable after the Effective Time,
the Exchange Agent shall make book-entry credits as of the Closing Date for
each holder of record of Washington Common Stock immediately prior to the
Effective Time for that number of whole shares of Alpha Common Stock into
which the shares of Washington Common Stock formerly evidenced by such
holder's Washington Certificate shall have been converted pursuant to this
Agreement and shall deliver to each such holder (x) an account statement
indicating the number of whole shares of Alpha Common Stock that such
holder owns of record as of the Effective Time and (y) a check representing
the amount of any cash in lieu of fractional shares that such holder has
the right to receive pursuant to Section 3.2(d) in respect of such holder's
Washington Certificate. No interest will be paid or accrued on any cash in
lieu of fractional shares or on any unpaid dividends and distributions
payable to holders of Washington Certificates.
(b) If any certificate or book-entry credit evidencing shares
of Alpha Common Stock is to be registered in a name other than that in
which the Washington Certificate is registered, it shall be a condition of
the issuance thereof that an appropriate instrument of transfer of
Washington Certificates be delivered and that the person requesting such
exchange will have paid to the Exchange Agent in advance any transfer or
other taxes required by reason of the issuance of a certificate or
book-entry credit evidencing shares of Alpha Common Stock in any name other
than that of the registered holder of the Washington Certificate formerly
held, or required for any other reason, or shall have established to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(c) After the Effective Time, there shall be no transfers on
the stock transfer books of Washington of the shares of Washington Common
Stock that were issued and outstanding immediately prior to the Effective
Time.
(d) (i) Notwithstanding anything to the contrary contained
herein, no certificates or scrip representing fractional shares of Alpha
Common Stock or book-entry credit of the same shall be issued in exchange
for Washington Certificates, no dividend or distribution with respect to
Alpha Common Stock shall be payable on or with respect to any such
fractional share, and such fractional share interests shall not entitle the
owner thereof to vote or to any other rights of a stockholder of Alpha. In
lieu of the issuance of any such fractional share, Alpha shall pay to each
holder of Washington Certificates who otherwise would be entitled to
receive such fractional share an amount in cash determined in the manner
provided in clauses (ii) and (iii) of this Section 3.2(d).
(ii) As promptly as practicable following the Effective Time,
the Exchange Agent shall determine the excess of (x) the number of full
shares of Alpha Common Stock delivered to the Exchange Agent by Alpha
pursuant to Section 3.1 for issuance to holders of Washington Certificates
pursuant to Section 1.4 over (y) the aggregate number of full shares of
Alpha Common Stock to be distributed to holders of Washington Certificates
pursuant to this Section 3.2 (such excess being herein referred to as the
"Excess Alpha Shares"). As soon as reasonably practicable following the
Effective Time, the Exchange Agent, as agent for such holders of Washington
Certificates, shall sell the Excess Alpha Shares at then prevailing prices
on the Nasdaq National Market System, all in the manner provided in clause
(iii) of this Section 3.2(d).
(iii) The sale of the Excess Alpha Shares by the Exchange Agent
shall be executed on the Nasdaq National Market System through one or more
member firms of the National Association of Securities Dealers, Inc. and
shall be executed in round lots to the extent practicable. Until the net
proceeds of any such sale or sales have been distributed to the holders of
Washington Certificates, the Exchange Agent will hold such proceeds in
trust for such holders as part of the Exchange Fund. The Combined Company
shall pay all commissions, transfer taxes and other out-of-pocket
transaction costs of the Exchange Agent incurred in connection with such
sale or sales of Excess Alpha Shares. In addition, the Combined Company
shall pay the Exchange Agent's compensation and expenses in connection with
such sale or sales. The Exchange Agent shall determine the portion of such
net proceeds to which each holder of Washington Certificates shall be
entitled, if any, by multiplying the amount of the aggregate net proceeds
by a fraction, the numerator of which is the amount of the fractional share
interest to which such holder of Washington Certificates is entitled (after
taking into account all Washington Certificates then held by such holder)
and the denominator of which is the aggregate amount of fractional share
interests to which all holders of Washington Certificates are entitled. As
soon as practicable after the determination of the amount of cash, if any,
to be paid to holders of Washington Certificates with respect to any
fractional share interests, the Exchange Agent shall promptly pay such
amounts to such holders of Washington Certificates subject to and in
accordance with this Section 3.2.
(e) Any portion of the Exchange Fund that remains unclaimed by
holders of Certificates for twelve months after the Effective Time shall be
delivered to the Combined Company, and any holders of Washington
Certificates who have not theretofore complied with this Article III shall
thereafter look only to the Combined Company for payment of the shares of
Alpha Common Stock, cash in lieu of any fractional shares and any unpaid
dividends and distributions on the Alpha Common Stock deliverable in
respect of each share of Washington Common Stock formerly evidenced by such
Washington Certificate as determined pursuant to this Agreement, without
any interest thereon. Any such portion of the Exchange Fund remaining
unclaimed by holders of Washington Certificates five years after the
Effective Time (or such earlier date immediately prior to such time as such
amounts would otherwise escheat to or become property of any Governmental
Entity (as defined in Section 5.1(c)(iii)) shall, to the extent permitted
by Applicable Laws, become the property of the Combined Company free and
clear of any claims or interest of any Person previously entitled thereto.
(f) None of the Combined Company, Conexant, Washington, the
Exchange Agent or any other Person shall be liable to any holder of
Washington Certificates for any shares of Alpha Common Stock, cash in lieu
of fractional shares thereof and any dividend or other distribution with
respect thereto delivered in good faith to a public official pursuant to
applicable abandoned property, escheat or similar Applicable Laws.
(g) The Exchange Agent shall invest any cash included in the
Exchange Fund, as directed by the Combined Company, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
the Combined Company promptly upon request by the Combined Company.
(h) The Combined Company shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Washington Certificates such amounts as the
Combined Company or the Exchange Agent is required to deduct and withhold
with respect to the making of such payment under the Code, or any provision
of state, local or foreign tax law. To the extent that amounts are so
withheld by the Combined Company or the Exchange Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been
paid to the holder of the shares of Alpha Common Stock in respect of which
such deduction and withholding was made by the Combined Company or the
Exchange Agent.
SECTION 3.3 AFFILIATES. Notwithstanding anything to the
contrary herein, to the fullest extent permitted by law, no certificates or
book-entry credits evidencing shares of Alpha Common Stock or cash shall be
issued or delivered pursuant to this Article III to a Person who may be
deemed an "affiliate" of Washington in accordance with Section 7.12 hereof
for purposes of Rule 145 under the Securities Act of 1933, as amended (the
"Securities Act"), until such Person has executed and delivered an
Affiliate Agreement (as defined in Section 7.12) pursuant to Section 7.12.
ARTICLE IV
CERTAIN PRE-MERGER TRANSACTIONS
SECTION 4.1 ANCILLARY AGREEMENTS. Prior to the Time of
Distribution, Conexant, Washington and Alpha will execute and deliver a tax
allocation agreement substantially in the form attached hereto as Exhibit F
(the "Tax Allocation Agreement") and an employee matters agreement
substantially in the form attached hereto as Exhibit G (the "Employee
Matters Agreement"). Prior to the Effective Time, Conexant and Alpha will
execute and deliver a Newport Supply Agreement substantially on the terms
attached hereto as Exhibit K (the "Newport Supply Agreement"), a Newbury
Supply Agreement substantially on the terms attached hereto as Exhibit L
(the "Newbury Supply Agreement") and a Transition Services Agreement in
accordance with Section 7.20 (the "Transition Services Agreement").
SECTION 4.2 CONTRIBUTION. Prior to the Time of Distribution and
pursuant to the terms and conditions of the Distribution Agreement,
Conexant and Washington will consummate the Contribution contemplated by
Article II of the Distribution Agreement.
SECTION 4.3 DISTRIBUTION. Prior to the Effective Time, and
pursuant to the terms and conditions of the Distribution Agreement,
Conexant will cause Washington to be recapitalized and effect the
Distribution.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 REPRESENTATIONS AND WARRANTIES OF ALPHA. Except as
set forth in the Alpha Disclosure Schedule delivered by Alpha to Conexant
prior to the execution of this Agreement (the "Alpha Disclosure Schedule")
(each section of which, to the extent specified therein, qualifies the
correspondingly numbered representation and warranty or covenant of Alpha
contained herein and, to the extent it is apparent on the face of such
disclosure that such disclosure qualifies another representation and
warranty of Alpha contained herein, such other representation and warranty
of Alpha), Alpha represents and warrants to Conexant as follows:
(a) Organization, Standing and Power; Subsidiaries.
(i) Each of Alpha and its Subsidiaries is a corporation
or other organization duly organized, validly existing and in good
standing (where applicable) under the laws of its jurisdiction of
incorporation or organization, has the requisite power and authority
to own, lease and operate its properties and to carry on its business
as now being conducted and as it will be conducted through the
Effective Time, except where the failure to be so organized, existing
and in good standing or to have such power and authority,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on Alpha and its Subsidiaries, and is
duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary, other
than in such jurisdictions where the failure so to qualify or to be
in good standing, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Alpha and
its Subsidiaries. The copies of the certificate of incorporation and
by-laws of Alpha which were previously furnished or made available to
Conexant are true, complete and correct copies of such documents as
in effect on the date of this Agreement.
(ii) Exhibit 21 to Alpha's Annual Report on Form 10-K for
the year ended April 1, 2001 includes all the Subsidiaries of Alpha
which as of the date of this Agreement are Significant Subsidiaries
of Alpha (as defined in Rule 1-02 of Regulation S-X of the Securities
and Exchange Commission (the "SEC")). All the --- outstanding shares
of capital stock of, or other equity interests in, each such
Significant Subsidiary have been validly issued and are fully paid
and nonassessable and are owned directly or indirectly by Alpha, free
and clear of all material pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens") and free of any other material -----
restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other equity interests,
but excluding restrictions under the Securities Act). None of Alpha
or any of its Subsidiaries directly or indirectly owns any equity or
similar interest in, or any interest convertible into or exchangeable
or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business association
or entity (other than Subsidiaries of Alpha), that is or would
reasonably be expected to be material to Alpha and its Subsidiaries
taken as a whole.
(b) Capital Structure.
(i) The authorized capital stock of Alpha consists of
100,000,000 shares of Alpha Common Stock. As of December 14, 2001,
44,174,096 shares of Alpha Common Stock were issued and outstanding
and no other shares of capital stock of Alpha were issued and
outstanding. As of December 14, 2001, 10,370,507 shares of Alpha
Common Stock were reserved for issuance upon exercise of options
outstanding under Alpha Stock Plans. As of December 14, 2001, no
shares of Alpha Common Stock were held as treasury shares. Since
December 14, 2001 to the date of this Agreement, no shares of capital
stock of Alpha or any other securities of Alpha have been issued
other than shares of Alpha Common Stock issued pursuant to options or
rights outstanding as of December 14, 2001 under the Alpha Stock
Plans. All issued and outstanding shares of capital stock of Alpha
are duly authorized, validly issued, fully paid and nonassessable,
and no class of capital stock of Alpha is entitled to preemptive
rights. There are outstanding as of the date hereof no options,
warrants or other rights to acquire capital stock from Alpha other
than options and other rights to acquire Alpha Common Stock from
Alpha ("Alpha Stock Options") representing in the aggregate the right
to purchase 6,619,900 shares of Alpha Common Stock under the Alpha
Stock Plans. Section 5.1(b) of the Alpha Disclosure Schedule sets
forth a complete and correct list as of a recent date of all
outstanding Alpha Stock Options and the exercise prices thereof.
(ii) No bonds, debentures, notes or other indebtedness of
Alpha having the right to vote on any matters on which stockholders
of Alpha may vote ("Alpha Voting Debt") are issued or outstanding.
(iii) Except as otherwise set forth in this Section
5.1(b), as of the date of this Agreement, there are no securities,
options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which Alpha or any of its
Subsidiaries is a party or by which any of them is bound obligating
Alpha or any of its Subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock
or other voting securities of Alpha or any of its Subsidiaries or
obligating Alpha or any of its Subsidiaries to issue, grant, extend
or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. As of the date of
this Agreement, there are no outstanding obligations of Alpha or any
of its Subsidiaries to repurchase, redeem or otherwise acquire any
shares of capital stock of Alpha or any of its Subsidiaries.
(c) Authority; No Conflicts.
(i) Alpha has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby, subject, in the case of the consummation of the
Merger, to the approval and adoption of this Agreement and the Merger
by the Required Alpha Vote (as defined in Section 5.1(g)). The
execution and delivery of this Agreement by Alpha and the
consummation by Alpha of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of
Alpha, subject in the case of the consummation of the Merger, to the
approval and adoption of this Agreement and the Merger by the
Required Alpha Vote. This Agreement has been duly executed and
delivered by Alpha and, assuming the due authorization and valid
execution and delivery of this Agreement by each of Conexant and
Washington, constitutes a valid and binding agreement of Alpha,
enforceable against Alpha in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and similar
Applicable Laws relating to or affecting creditors generally or by
general equity principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(ii) The execution and delivery of this Agreement by
Alpha does not, and the consummation by Alpha of the Merger and the
other transactions contemplated hereby will not, conflict with, or
result in any breach or violation of, or constitute a default (with
or without notice or lapse of time, or both) under, or give rise to a
right of or result by its terms in the termination, amendment,
cancellation or acceleration of any obligation or the loss of a
material benefit under, or the creation of a Lien, charge, "put" or
"call" right or other encumbrance on, or the loss of, any assets (any
such conflict, breach, violation, default, right of termination,
amendment, cancellation or acceleration, loss or creation, a
"Violation") pursuant to: (A) any provision of the certificate of
incorporation or by-laws or similar organizational documents of Alpha
or any Significant Subsidiary of Alpha or (B) except as, individually
or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Alpha and its Subsidiaries or, to the
Knowledge of Alpha, the Combined Company and its Subsidiaries
following the Merger, subject to obtaining or making the Alpha
Necessary Consents (as defined in paragraph (iii) below), (I) any
loan or credit agreement, note, instrument, mortgage, bond,
indenture, lease, benefit plan or other contract, agreement or
obligation (a "Contract") to which Alpha or any of its Subsidiaries
is a party or by which any of them or any of their respective
properties or assets is bound, or (II) any permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Alpha or any Subsidiary of Alpha or
their respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any supranational,
national, state, municipal, local or foreign government, any
instrumentality, subdivision, court, administrative agency or
commission or other authority thereof, or any quasi-governmental or
private body exercising any regulatory, taxing, importing or other
governmental or quasi-governmental authority (a "Governmental
Entity") or any other Person is required by or with respect to Alpha
or any Subsidiary of Alpha in connection with the execution and
delivery of this Agreement by Alpha or the consummation by Alpha of
the Merger and the other transactions contemplated hereby, except for
those required under or in relation to (A) the Required Alpha Vote,
(B) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (C) state securities or "blue sky" laws, (D)
the Securities Act, (E) the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (F) the DGCL with respect to the filing
of the Certificate of Merger with the Delaware Secretary, (G) the
rules and regulations of Nasdaq, (H) antitrust or other competition
laws of other jurisdictions and (I) such consents, approvals, orders,
authorizations, registrations, declarations and filings the failure
of which to make or obtain, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on Alpha
and its Subsidiaries. Consents, approvals, orders, authorizations,
registrations, declarations and filings required under or in relation
to any of the foregoing clauses (A) through (H) or set forth in
Section 5.1(c)(iii) of the Alpha Disclosure Schedule are hereinafter
referred to as "Alpha Necessary Consents".
(d) Reports and Financial Statements.
(i) Alpha has filed all registration statements,
prospectuses, reports, schedules, forms, statements and other
documents required to be filed by it with the SEC since January 1,
2000 (collectively, including all exhibits thereto, the "Alpha SEC
Reports"). No Subsidiary of Alpha is subject to the periodic
reporting requirements of the Exchange Act. None of the Alpha SEC
Reports, as of their respective dates (or, if amended or superseded
by a filing prior to the date of this Agreement, then on the date of
such filing) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the
financial statements (including the related notes) included in the
Alpha SEC Reports fairly presents, in all material respects, the
consolidated financial position and consolidated results of
operations and cash flows of Alpha and its consolidated Subsidiaries
as of the respective dates or for the respective periods set forth
therein, all in conformity with generally accepted accounting
principles ("GAAP") consistently applied during the ---- periods
involved except as otherwise noted therein, and subject, in the case
of unaudited interim financial statements, to normal and recurring
year-end adjustments that have not been and are not expected to be
material in amount. All Alpha SEC Reports, as of their respective
dates (and as of the date of any amendment to the respective Alpha
SEC Report), complied as to form in all material respects with the
applicable requirements of the Securities Act and the Exchange Act
and the rules and regulations promulgated thereunder.
(ii) Except as disclosed in the Alpha SEC Reports filed
and publicly available prior to the date hereof (the "Alpha Filed SEC
Reports"), since April 1, 2001, Alpha and its Subsidiaries have not
incurred any liabilities that are of a nature that would be required
to be disclosed on a balance sheet of Alpha and its Subsidiaries or
in the footnotes thereto prepared in conformity with GAAP, other than
liabilities incurred in the ordinary course of business or that,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on Alpha and its Subsidiaries.
(e) Information Supplied.
(i) None of the information supplied or to be supplied by
Alpha for inclusion or incorporation by reference in (A) the Form S-4
(as defined in Section 7.1(a)) will, at the time the Form S-4 is
filed with the SEC, at any time it is amended or supplemented or at
the time it becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading and (B) the Proxy Statement/Prospectus (as
defined in Section 7.1(a)) will, on the date it is first mailed to
Conexant stockholders or Alpha stockholders or at the time of the
Alpha Stockholders Meeting (as defined in Section 7.1(b)), contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
(ii) Notwithstanding the foregoing provisions of this
Section 5.1(e), no representation or warranty is made by Alpha with
respect to statements made or incorporated by reference in the Form
S-4 or the Proxy Statement/Prospectus based on information supplied
by Conexant or Washington for inclusion or incorporation by reference
therein, or based on information with is not included or incorporated
by reference in such documents but which should have been disclosed
therein pursuant to Section 5.2(e).
(f) Board Approval. The Board of Directors of Alpha, by
resolutions duly adopted by unanimous vote at a meeting duly called and
held and, other than as provided for in Section 7.5, not subsequently
rescinded or modified in any way, has duly (i) determined that this
Agreement and the Merger are advisable and in the best interests of Alpha
and its stockholders, (ii) approved this Agreement and the Merger, (iii)
resolved to recommend that the stockholders of Alpha approve and adopt this
Agreement and the Merger and directed that this Agreement and the Merger be
submitted for consideration by Alpha's stockholders at the Alpha
Stockholders Meeting and (iv) taken all other action necessary to render
(A) the limitations on business combinations contained in Section 203 of
the DGCL (or any similar provision) and (B) the provisions of Article
Fifteenth of Alpha's Certificate of Incorporation inapplicable to the
transactions contemplated hereby. To the Knowledge of Alpha, except for the
limitations on business combinations contained in Section 203 of the DGCL
(which have been rendered inapplicable), no state takeover statute is
applicable or purports to be applicable to the Merger or the other
transactions contemplated hereby.
(g) Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Alpha Common Stock (the "Required
Alpha Vote") to approve and adopt this Agreement and the Merger is the only
vote of the holders of any class or series of Alpha capital stock necessary
to approve or adopt this Agreement and the Merger and the other
transactions contemplated hereby.
(h) Litigation; Compliance with Laws.
(i) Except as set forth in the Alpha Filed SEC Reports,
there is no suit, action, proceeding or regulatory investigation
pending or, to the Knowledge of Alpha, threatened, against or
affecting Alpha or any Subsidiary of Alpha or any property or asset
of Alpha or any Subsidiary of Alpha which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse
Effect on Alpha and its Subsidiaries, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against Alpha or any Subsidiary of Alpha
which, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect on Alpha and its Subsidiaries.
(ii) Except as, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on Alpha
and its Subsidiaries, Alpha and its Subsidiaries hold all permits,
licenses, franchises, variances, exemptions, orders and approvals of
all Governmental Entities which are necessary for the operation of
the businesses of Alpha and its Subsidiaries, taken as a whole (the
"Alpha Permits"), and no suspension or cancellation of any of the
Alpha Permits is pending or, to the Knowledge of Alpha, threatened,
except for suspensions or cancellations which, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect on Alpha and its Subsidiaries. Alpha and its
Subsidiaries are in compliance with the terms of the Alpha Permits,
except where the failure so to comply, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect on Alpha and its Subsidiaries. None of Alpha or any of
its Subsidiaries is in violation of, and Alpha and its Subsidiaries
have not received any notices of violations with respect to, any
Applicable Laws, except for violations which, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect on Alpha and its Subsidiaries.
(i) Absence of Certain Changes or Events. Except as set forth
in the Alpha Filed SEC Reports, since April 1, 2001, Alpha and its
Subsidiaries have conducted their business only in the ordinary course,
consistent with past practice. Except as set forth in the Alpha Filed SEC
Reports, since April 1, 2001, there has not been any event, change,
circumstance or development which, individually or in the aggregate, has
had, or would reasonably be expected to have, a Material Adverse Effect on
Alpha and its Subsidiaries. Since April 1, 2001 through the date of this
Agreement, none of Alpha or any of its Subsidiaries has taken any action
that, if taken during the period from the date of this Agreement through
the Effective Time, would constitute a breach of Section 6.1 (other than
Section 6.1(a)(i)).
(j) Environmental Matters. Except as set forth in the Alpha
Filed SEC Reports and except as, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on Alpha and
its Subsidiaries, (i) the operations of Alpha and its Subsidiaries have
been and are in compliance with all applicable Environmental Laws (as
defined below) and with all Alpha Permits required by applicable
Environmental Laws, (ii) there are no pending or, to the Knowledge of
Alpha, threatened, actions, suits, claims, investigations or other
proceedings (collectively, "Actions") under or pursuant to Environmental
Laws against Alpha or its Subsidiaries or involving any real property
currently owned or, to the Knowledge of Alpha, formerly owned, or currently
or formerly operated or leased, by Alpha or its Subsidiaries and (iii) to
the Knowledge of Alpha, Alpha and its Subsidiaries are not subject to any
Environmental Liabilities (as defined below), and no facts, circumstances
or conditions relating to, arising from, associated with or attributable to
any real property currently or formerly owned, operated or leased by Alpha
or its Subsidiaries or operations thereon would reasonably be expected to
result in Environmental Liabilities for Alpha or its Subsidiaries. The
representations and warranties in this Section 5.1(j) constitute the sole
representations and warranties of Alpha concerning environmental matters in
this Agreement.
As used in this Agreement, "Environmental Laws" means any and
all federal, state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decisions, injunctions, orders, decrees,
requirements of any Governmental Entity, any and all common law
requirements, rules and bases of liability regulating or imposing liability
or legally binding standards of conduct concerning pollution, Hazardous
Materials (as defined below) or protection of human health, safety or the
environment, as in effect on or prior to the Closing Date and includes the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601 et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801 et seq., the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et
seq., the Clean Air Act, 33 U.S.C. Section 2601 et seq., the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq., the Occupational
Safety and Health Act, 29 U.S.C. Section 651 et seq. and the Oil Pollution
Act of 1990, 33 U.S.C. Section 2701 et seq., as such laws have been amended
or supplemented, and the regulations promulgated pursuant thereto, and all
analogous state or local statutes. As used in this Agreement,
"Environmental Liabilities" with respect to any Person means any and all
liabilities of or relating to such Person or any of its Subsidiaries
(including any entity which is a predecessor of such Person or any of such
Subsidiaries and for which such Person has liability by law or contract),
whether vested or unvested, contingent or fixed, which (i) arise under or
relate to matters covered or regulated by, or for which liability is
imposed under, Environmental Laws and (ii) relate to actions occurring or
conditions existing on or prior to the Closing Date. As used in this
Agreement, "Hazardous Materials" means any hazardous or toxic substances,
materials or wastes, defined, listed, classified or regulated as such in or
under any Environmental Laws and which includes petroleum, petroleum
products, friable asbestos, urea formaldehyde and polychlorinated
biphenyls.
(k) Intellectual Property. Except as set forth in the Alpha
Filed SEC Reports and except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on
Alpha and its Subsidiaries: (i) Alpha and each of its Subsidiaries owns, or
is licensed to use (in each case, free and clear of any Liens), all
Intellectual Property (as defined below) used in or necessary for the
conduct of its business as currently conducted; (ii) to the Knowledge of
Alpha, the use of any Intellectual Property by Alpha and its Subsidiaries
does not infringe on or otherwise violate the rights of any Person; (iii)
the use of Intellectual Property by or on behalf of Alpha and its
Subsidiaries is in accordance with any applicable license pursuant to which
Alpha or any Subsidiary acquired the right to use any Intellectual
Property; (iv) to the Knowledge of Alpha, no Person is challenging,
infringing on or otherwise violating any right of Alpha or any of its
Subsidiaries with respect to any Intellectual Property owned by and/or
licensed to Alpha or its Subsidiaries; and (v) Alpha does not have any
Knowledge of any pending claim, order or proceeding with respect to any use
of Intellectual Property by Alpha and its Subsidiaries and, to the
Knowledge of Alpha, no Intellectual Property owned and/or licensed by Alpha
or its Subsidiaries is being used or enforced in a manner that would
reasonably be expected to result in the abandonment, cancellation or
unenforceability of such Intellectual Property. For purposes of this
Agreement, "Intellectual Property" shall mean trademarks, service marks,
brand names, certification marks, trade dress and other indications of
origin, the goodwill associated with the foregoing and registrations in any
jurisdiction of, and applications in any jurisdiction to register, the
foregoing, including any extension, modification or renewal of any such
registration or application; inventions, discoveries and ideas, whether
patentable or not, in any jurisdiction; patents, applications for patents
(including divisions, continuations, continuations in part and renewal
applications), and any renewals, extensions or reissues thereof and rights
to apply for any of the foregoing, in any jurisdiction; nonpublic
information, trade secrets and confidential information and rights in any
jurisdiction to limit the use or disclosure thereof by any Person; writings
and other works, whether copyrightable or not, in any jurisdiction; and
registrations or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; and any similar
intellectual property or proprietary rights.
(l) Title to Properties. Each of Alpha and its Subsidiaries has
good and valid title to, or, in the case of leased properties and assets,
valid leasehold interests in, all of its tangible properties and assets,
except where the failure to have such good and valid title, or valid
leasehold interest, would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Alpha and its
Subsidiaries.
(m) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in
connection with any of the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Alpha or any of its
Subsidiaries, except U.S. Bancorp Piper Jaffray (the "Alpha Financial
Advisor"), whose fees and expenses will be paid by Alpha in accordance with
Alpha's agreement with such firm.
(n) Opinion of Alpha Financial Advisor. Alpha has received the
opinion of the Alpha Financial Advisor, dated the date of this Agreement,
to the effect that, as of such date, the consideration to be paid to
Washington's stockholders in the Merger is fair, from a financial point of
view, to Alpha and its stockholders.
(o) Taxes.
(i) Each of Alpha and its Subsidiaries has timely filed
or has caused to be timely filed all Tax returns or reports required
to be filed by it, or requests for extensions to file such returns or
reports have been timely filed, granted and have not expired, and all
such returns and reports are complete and correct, except to the
extent that such failures to file, to have extensions granted that
remain in effect or to be complete or correct, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect on Alpha and its Subsidiaries. Alpha and each of its
Subsidiaries has paid or caused to be paid all Taxes shown as due on
such returns and the most recent financial statements contained in
the Alpha Filed SEC Reports reflect an adequate reserve in accordance
with GAAP for all Taxes payable by Alpha and its Subsidiaries for all
taxable periods and portions thereof accrued through the date of such
financial statements.
(ii) No deficiencies for any Taxes have been proposed,
asserted or assessed in writing against Alpha or any of its
Subsidiaries that are not adequately reserved for, except for
deficiencies that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Alpha and
its Subsidiaries. The U.S. federal income Tax returns of Alpha and
each of its Subsidiaries consolidated in such returns have been
either examined by and settled with the IRS or closed by virtue of
the applicable statute of limitations and no requests for waivers of
the time to assess any such Taxes are pending.
(iii) None of Alpha or any of its Subsidiaries has taken
any action, and Alpha has no Knowledge of any fact, agreement, plan
or other circumstance, that is reasonably likely to prevent the
Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
(iv) None of Alpha or any of its Subsidiaries is a party
to any Tax sharing or Tax indemnity agreements (other than agreements
between or among Alpha and its Subsidiaries).
(v) Within the past five years, none of Alpha or any of
its Subsidiaries has been a "distributing corporation" or a
"controlled corporation" in a distribution intended to qualify under
Section 355(a) of the Code.
(vi) Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect
on Alpha and its Subsidiaries, none of Alpha or any of its
Subsidiaries is obligated to make any payments, or is a party to any
contract that could obligate it to make any payments, that would not
be deductible by reason of Section 162(m) or Section 280G of the
Code.
(vii) None of Alpha or any of its Subsidiaries has agreed
to make, or is required to make, any material adjustment under
Section 481(a) of the Code or any similar provision of state, local
or foreign law by reason of a change in accounting methods or
otherwise.
(p) Certain Contracts. As of the date hereof, none of Alpha or
any of its Subsidiaries is a party to or bound by (i) any non-competition
agreement or any other Contract that limits or otherwise restricts Alpha or
any of its Subsidiaries or any of their respective affiliates or any
successor thereto, or that would, after the Effective Time, to the
Knowledge of Alpha, limit or restrict the Combined Company or any of its
Subsidiaries or any of their respective affiliates or any successor
thereto, from engaging or competing in any line of business in any
geographic area, which agreements or other Contracts, individually or in
the aggregate, would reasonably be expected to have a Material Adverse
Effect on the Combined Company and its Subsidiaries, after giving effect to
the Merger or (ii) any employee benefit plan, employee contract or any
other material Contract, pursuant to which any benefits will arise or be
increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement or
the value of any of the benefits of which will be calculated on the basis
of any of the transactions contemplated by this Agreement. All material
Contracts of Alpha and its Subsidiaries are valid and binding on Alpha and
its Subsidiaries, as applicable, and in full force and effect except to the
extent they have previously expired in accordance with their terms or if
the failure to be valid, binding and in full force and effect, individually
or in the aggregate, would not reasonably be expected to have a Material
Adverse Effect on Alpha and its Subsidiaries. None of Alpha or any of its
Subsidiaries has Knowledge of, or has received notice of, any violation or
default under (nor to their Knowledge does there exist any condition which
with the passage of time or the giving of notice would cause such a
violation or default under) the provisions of any Contract of Alpha or any
of its Subsidiaries, except for violations or defaults which, individually
or in the aggregate, would not reasonably be expected to have a Material
Adverse Effect on Alpha and its Subsidiaries.
(q) Employee Benefits.
(i) With respect to each Alpha Plan, except for Alpha
Plans the liabilities under which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on
Alpha and its Subsidiaries, Alpha has made available to Conexant a
true, correct and complete copy of: (A) all plan documents, trust
agreements, and insurance contracts and other funding vehicles; (B)
the three most recent Annual Reports (Form 5500 Series) and
accompanying schedules and exhibits, if any; (C) the current summary
plan description and any material modifications thereto, if any (in
each case, whether or not required to be furnished under ERISA); (D)
the three most recent annual financial reports, if any; (E) the three
most recent actuarial reports, if any; (F) the most recent
determination letter from the IRS, if any; and (G) the annual
compliance testing under Sections 401(a) through 416 of the Code for
the three most recently completed plan years, if any.
(ii) With respect to each Alpha Plan, Alpha and its
Subsidiaries have complied with, and are now in compliance with, all
provisions of ERISA, the Code and all other Applicable Laws and
regulations applicable to such Alpha Plans and each Alpha Plan has
been administered in accordance with its terms, in each case except
as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Alpha and its
Subsidiaries. Each Alpha Plan that is required by ERISA to be funded
is fully funded in accordance with reasonable actuarial assumptions,
except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Alpha and its
Subsidiaries.
(iii) All Alpha Plans subject to the Applicable Laws of
any jurisdiction outside of the United States (A) have been
maintained in accordance with all applicable requirements, (B) if
they are intended to qualify for special tax treatment meet all
requirements for such treatment, and (C) if they are intended to be
funded and/or book-reserved are fully funded and/or book-reserved, as
appropriate, based upon reasonable actuarial assumptions, in each
case except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Alpha and
its Subsidiaries.
(iv) None of Alpha or any of its Subsidiaries has any
liability under or obligation to any Multiemployer Plan.
(r) Labor Relations. As of the date of this Agreement, (i) none
of Alpha or any of its Subsidiaries is a party to any collective bargaining
agreement, (ii) except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Alpha and its
Subsidiaries, no labor organization or group of employees of Alpha or any
of its Subsidiaries has made a pending demand for recognition or
certification, and there are no representation or certification proceedings
or petitions seeking a representation proceeding presently pending or, to
the Knowledge of Alpha, threatened to be brought or filed, with the
National Labor Relations Board or any other domestic or foreign labor
relations tribunal or authority and (iii) except as would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect on Alpha and its Subsidiaries, there are no organizing activities,
strikes, work stoppages, slowdowns, lockouts, arbitrations or grievances,
or other labor disputes pending or, to the Knowledge of Alpha, threatened
against or involving Alpha or any of its Subsidiaries.
(s) Insurance. Alpha maintains insurance coverage with
reputable insurers in such amounts and covering such risks as is deemed
reasonably appropriate for its business (taking into account the cost and
availability of such insurance).
(t) Liens. No Liens exist on any assets of Alpha or any of its
Subsidiaries, except (i) Liens expressly set forth in the notes to Alpha's
audited consolidated financial statements as of April 1, 2001 included in
the Alpha Filed SEC Reports, (ii) Liens consisting of zoning or planning
restrictions, easements, permits or other restrictions or limitations on
the use of real property or irregularities in title thereto which do not
materially detract from the value of, or impair the use of, such property
by Alpha and its Subsidiaries, (iii) Liens for current taxes, assessments
or governmental charges or levies on property not yet due or which are
being contested in good faith and for which appropriate reserves in
accordance with GAAP have been created and (iv) Liens which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Alpha and its Subsidiaries.
SECTION 5.2 REPRESENTATIONS AND WARRANTIES OF CONEXANT. Except
as set forth in the Conexant Disclosure Schedule delivered by Conexant to
Alpha prior to the execution of this Agreement (the "Conexant Disclosure
Schedule") (each section of which, to the extent specified therein,
qualifies the correspondingly numbered representation and warranty or
covenant of Conexant contained herein and, to the extent it is apparent on
the face of such disclosure that such disclosure qualifies another
representation and warranty of Conexant contained herein, such other
representation and warranty of Conexant), Conexant represents and warrants
to Alpha as follows:
(a) Organization, Standing and Power; Subsidiaries.
(i) Conexant and each Subsidiary of Conexant engaged in
the Washington Business (as defined in the Distribution Agreement) is
a corporation or other organization duly organized, validly existing
and in good standing (where applicable) under the laws of its
jurisdiction of incorporation or organization, except where the
failure to be so organized, existing and in good standing,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Washington Business. Each of
the Washington Companies (as defined in Section 10.11) has the
requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted and as
it will be conducted through the Effective Time, except where the
failure to have such power and authority, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect on the Washington Business, and is duly qualified and
in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties
makes such qualification necessary, other than in such jurisdictions
where the failure so to qualify or to be in good standing,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Washington Business. The copies
of the certificate of incorporation and by-laws of Conexant which
were previously furnished or made available to Alpha are true,
complete and correct copies of such documents as in effect on the
date of this Agreement.
(ii) Washington is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Delaware. Washington is a direct wholly-owned subsidiary of Conexant.
The copies of the certificate of incorporation and by-laws of
Washington which were previously furnished or made available to Alpha
are true, complete and correct copies of such documents as in effect
on the date of this Agreement.
(iii) Section 5.2(a)(iii) of the Conexant Disclosure
Schedule sets forth a list of the Washington Companies which as of
the date of this Agreement would be Significant Subsidiaries of
Washington (as defined in Rule 1-02 of Regulation S-X of the SEC) if
the Distribution had occurred immediately prior to the date hereof
(the "Washington Significant Subsidiaries"). All the outstanding
shares of capital stock of, or other equity interests in, each
Washington Significant Subsidiary have been validly issued and are
fully paid and nonassessable and are owned directly or indirectly by
Conexant, free and clear of all material Liens and free of any other
material restriction (including any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other equity
interests, but excluding restrictions under the Securities Act). None
of the Washington Companies directly or indirectly owns any equity or
similar interest in, or any interest convertible into or exchangeable
or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business association
or entity (other than Subsidiaries of Conexant) that is or would
reasonably be expected to be material to the Washington Business
taken as a whole.
(b) Capital Structure.
(i) The authorized capital stock of Conexant consists of
1,000,000,000 shares of Common Stock, par value $1.00 per share (the
"Conexant Common Stock"), and 25,000,000 shares of preferred stock,
without par value (the "Conexant Preferred Stock"), 1,500,000 shares
of which are designated as "Series A Junior Participating Preferred
Stock" and one share of which is designated as "Series B Voting
Preferred Stock". As of November 30, 2001, (A) 254,423,819 shares of
Conexant Common Stock and (B) one share of Conexant Preferred Stock
designated as "Series B Voting Preferred Stock" were issued and
outstanding and no other shares of capital stock of Conexant were
issued and outstanding. As of November 30, 2001, 84,082,811 shares of
Conexant Common Stock were reserved for issuance upon exercise of
options outstanding under Conexant Stock Plans. As of November 30,
2001, no shares of Conexant Common Stock were held as treasury
shares. Since November 30, 2001 to the date of this Agreement, no
shares of capital stock of Conexant or any other securities of
Conexant have been issued other than shares of Conexant Common Stock
(and accompanying Conexant Rights (as defined below)) issued pursuant
to (w) the Conexant Systems, Inc. Retirement Savings Plan and the
Conexant Systems, Inc. Hourly Employees Savings Plan, (x) options or
rights outstanding as of November 30, 2001 under Conexant Stock Plans
and (y) the exchange or retraction of Exchangeable Shares of Philsar
Semiconductor Inc. All issued and outstanding shares of capital stock
of Conexant are duly authorized, validly issued, fully paid and
nonassessable, and no class of capital stock of Conexant is entitled
to preemptive rights. There are outstanding as of the date hereof no
options, warrants or other rights to acquire capital stock from
Conexant other than (w) rights (the "Conexant Rights") distributed to
the holders of Conexant Common Stock pursuant to the Rights Agreement
dated as of November 30, 1998, as amended as of December 9, 1999,
between Conexant and ChaseMellon Shareholder Services, L.L.C., as
Rights Agent (the "Conexant Rights Agreement"), (x) options and other
rights to acquire Conexant Common Stock from Conexant ("Conexant
Stock Options") representing in the aggregate the right to purchase
51,394,095 shares of Conexant Common Stock under the Conexant Stock
Plans, (y) $94,849,000 aggregate principal amount of Conexant's 4
1/4% Convertible Subordinated Notes due 2006 and $615,000,000
aggregate principal amount of Conexant's 4% Convertible Subordinated
Notes due 2007 which are, on the date hereof, convertible into
Conexant Common Stock at exercise prices of $23.098 and $108,
respectively, per share (collectively, the "Conexant Convertible
Notes") and (z) Exchangeable Shares of Philsar Semiconductor Inc.
which are exchangeable into, or subject to retraction in exchange
for, an aggregate of 357,640 shares of Conexant Common Stock. Section
5.2(b) of the Conexant Disclosure Schedule sets forth a complete and
correct list as of a recent date of all outstanding Conexant Stock
Options and the exercise prices thereof.
(ii) On the date hereof, the authorized capital stock of
Washington consists of 1,000 shares of Washington Common Stock, all
of which are issued and outstanding.
(iii) Except as otherwise set forth in this Section
5.2(b) or as provided for in the Reorganization Agreements, as of the
date of this Agreement, there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which Conexant or any member of the Washington Group
(as defined in the Distribution Agreement) is a party or by which any
of them is bound obligating any of Conexant or any member of the
Washington Group to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting
securities of Conexant or any member of the Washington Group or
obligating Conexant or any member of the Washington Group to issue,
grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking. As of the
date of this Agreement, there are no outstanding obligations of
Conexant or any member of the Washington Group to repurchase, redeem
or otherwise acquire any shares of capital stock of Conexant or any
member of the Washington Group.
(c) Authority; No Conflicts.
(i) Conexant has all requisite corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby, subject to further action of the
Board of Directors of Conexant to establish the Record Date and the
Distribution Date (each as defined in the Distribution Agreement) and
provided that the effectiveness of the declaration of the
Distribution by the Board of Directors of Conexant is subject to the
satisfaction of the conditions set forth in the Distribution
Agreement. The execution and delivery of this Agreement and the
Reorganization Agreements by Conexant and the consummation by
Conexant of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of
Conexant, subject to further action of the Board of Directors of
Conexant to establish the Record Date and the Distribution Date and
provided that the effectiveness of the declaration of the
Distribution by the Board of Directors of Conexant is subject to the
satisfaction of the conditions set forth in the Distribution
Agreement. This Agreement and the Distribution Agreement have been,
and the other Reorganization Agreements will be, duly executed and
delivered by Conexant and, assuming the due authorization and valid
execution and delivery of this Agreement by Alpha, constitute or will
constitute valid and binding agreements of Conexant, enforceable
against Conexant in accordance with their respective terms, except as
such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and similar
Applicable Laws relating to or affecting creditors generally or by
general equity principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(ii) Washington has all requisite corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Washington and the consummation by Washington of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Washington. Conexant, as
the sole stockholder of Washington, has duly approved and adopted
this Agreement and the Merger and has duly approved the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Washington and constitutes a valid and binding agreement
of Washington, enforceable against Washington in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and
similar Applicable Laws relating to or affecting creditors generally
and by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(iii) The execution and delivery by Conexant and
Washington of this Agreement and the Distribution Agreement do not,
the execution and delivery by Conexant and Washington of the other
Reorganization Agreements will not, and the consummation by Conexant
and Washington of the Contribution, the Distribution, the Merger and
the other transactions contemplated hereby and thereby will not
result in a Violation pursuant to: (A) any provision of the
certificate of incorporation or by-laws or similar organizational
documents of Conexant, Washington or any Washington Significant
Subsidiary or (B) except as, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on the
Washington Business or, to the Knowledge of Conexant, the Combined
Company and its Subsidiaries following the Merger, subject to
obtaining or making the Conexant Necessary Consents (as defined in
paragraph (iv) below), (I) any Contract included in the Washington
Assets or by which any of the properties or assets included in the
Washington Assets is bound, or (II) any permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to any of the Washington Companies or
the properties or assets included in the Washington Assets.
(iv) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity or
any other Person is required by or with respect to Conexant or any
Subsidiary of Conexant in connection with the execution and delivery
of this Agreement and the Reorganization Agreements by Conexant or
Washington or the consummation by Conexant or Washington of the
Contribution, the Distribution and the Merger and the other
transactions contemplated hereby and thereby, except for those
required under or in relation to (A) the HSR Act, (B) state
securities or "blue sky" laws, (C) the Securities Act, (D) the
Exchange Act, (E) the DGCL with respect to the filing of the
Certificate of Merger with the Delaware Secretary, (F) the rules and
regulations of Nasdaq, (G) antitrust or other competition laws of
other jurisdictions, (H) the further action of the Board of Directors
of Conexant to establish the Record Date and the Distribution Date,
and the effectiveness of the declaration of the Distribution by the
Board of Directors of Conexant (which is subject to the satisfaction
of the conditions set forth in the Distribution Agreement) and (I)
such consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to make or obtain,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Washington Business. Consents,
approvals, orders, authorizations, registrations, declarations and
filings required under or in relation to any of the foregoing clauses
(A) through (H) or set forth in Section 5.2(c)(iv) of the Conexant
Disclosure Schedule are hereinafter referred to as the "Conexant
Necessary Consents".
(v) The Board of Directors of Conexant, by resolutions
duly adopted by a unanimous vote of those in attendance at a meeting
duly called and held, a quorum being present, has duly (i) determined
that this Agreement is advisable and in the best interests of
Conexant and its stockholders and (ii) approved this Agreement and
the Distribution Agreement and the transactions contemplated hereby
and thereby. The Board of Directors of Washington, by resolutions
duly adopted by a unanimous vote at a meeting duly called and held,
or by action by unanimous written consent, has duly (i) determined
that this Agreement is advisable and in the best interests of
Washington and its stockholders and (ii) approved this Agreement and
the transactions contemplated hereby.
(d) Reports and Financial Statements.
(i) No member of the Washington Group is subject to the
periodic reporting requirements of the Exchange Act. With respect to
the Washington Business, none of the registration statements,
prospectuses, reports, schedules, forms, statements and other
documents required to be filed by Conexant and its Subsidiaries with
the SEC since January 1, 2000 (collectively, including all exhibits
thereto, the "Conexant SEC Reports"), as of their respective dates
(or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading.
(ii) Included in Section 5.2(d)(ii) of the Conexant
Disclosure Schedule are a 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 (together with
the notes thereto, the "Unaudited Special Purpose Statement of
Tangible Net Assets") and a special purpose product line contribution
statement with respect to the Washington Business for the year ended
September 30, 2001 (together with the notes thereto, and collectively
with the Unaudited Special Purpose Statement of Tangible Net Assets,
the "Washington Financial Statements"). The Washington Financial
Statements fairly present, in all material respects, the tangible
assets and liabilities to be contributed by Conexant and its
Subsidiaries to the Washington Group as of September 30, 2001 and the
product line contribution of the Washington Business for the year
ended September 30, 2001.
(iii) Except as disclosed in the Conexant SEC Reports
filed and publicly available prior to the date hereof (the "Conexant
Filed SEC Reports") or in the Washington Financial Statements, since
September 30, 2001, Conexant and its Subsidiaries have not incurred
any liabilities that are of a nature that would be required to be
disclosed on a statement of assets and liabilities of the Washington
Business or in the footnotes thereto prepared in conformity with
GAAP, other than liabilities incurred in the ordinary course of
business or that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the
Washington Business.
(e) Information Supplied.
(i) None of the information supplied or to be supplied by
Conexant or Washington for inclusion or incorporation by reference in
(A) the Form S-4 will, at the time the Form S-4 is filed with the
SEC, at any time it is amended or supplemented or at the time it
becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading and (B) the Proxy Statement/Prospectus will, on the
date it is first mailed to Conexant stockholders or Alpha
stockholders or at the time of the Alpha Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under
which they were made, not misleading.
(ii) Notwithstanding the foregoing provisions of this
Section 5.2(e), no representation or warranty is made by Conexant
with respect to statements made or incorporated by reference in the
Form S-4 or the Proxy Statement/Prospectus based on information
supplied by Alpha for inclusion or incorporation by reference
therein, or based on information which is not included or
incorporated by reference in such documents but which should have
been disclosed pursuant to Section 5.1(e).
(f) Litigation; Compliance with Laws.
(i) Except as set forth in the Conexant Filed SEC Reports
or in the Washington Financial Statements, there is no suit, action,
proceeding or regulatory investigation pending or, to the Knowledge
of Conexant, threatened, against or affecting any of the Washington
Companies or any property or asset included in the Washington Assets
which, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect on the Washington Business, nor is
there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against any of the
Washington Companies which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on the
Washington Business.
(ii) Except as, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on the
Washington Business, the Washington Companies hold all permits,
licenses, franchises, variances, exemptions, orders and approvals of
all Governmental Entities which are necessary for the operation of
the Washington Business, taken as a whole (the "Washington Permits"),
and no suspension or cancellation of any of the Washington Permits is
pending or, to the Knowledge of Conexant, threatened, except for
suspensions or cancellations which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on
the Washington Business. The Washington Companies are in compliance
with the terms of the Washington Permits, except where the failure so
to comply, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Washington
Business. None of the Washington Companies is in violation of, and
the Washington Companies have not received any notices of violations
with respect to, any Applicable Laws, except for violations which,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Washington Business.
(g) Absence of Certain Changes or Events. Except as set forth
in the Conexant Filed SEC Reports or in the Washington Financial
Statements, since September 30, 2001, the Washington Companies have
conducted the Washington Business only in the ordinary course, consistent
with past practice. Except as set forth in the Conexant Filed SEC Reports,
since September 30, 2001, there has not been any event, change,
circumstance or development which, individually or in the aggregate, has
had, or would reasonably be expected to have, a Material Adverse Effect on
the Washington Business. Since September 30, 2001 through the date of this
Agreement, none of the Washington Companies has taken any action that, if
taken during the period from the date of this Agreement through the
Effective Time, would constitute a breach of Section 6.2 (other than
Section 6.2(a)(i)). Washington has not conducted any activities other than
in connection with the organization of Washington, the negotiation,
execution and performance of this Agreement and the Reorganization
Agreements and the consummation of the transactions contemplated hereby and
thereby.
(h) Environmental Matters. Except as set forth in the Conexant
Filed SEC Reports or in the Washington Financial Statements and except as,
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect on the Washington Business, (i) the operations of
the Washington Companies have been and are in compliance with all
applicable Environmental Laws and with all Washington Permits required by
applicable Environmental Laws, (ii) there are no pending or, to the
Knowledge of Conexant, threatened, Actions under or pursuant to
Environmental Laws against the Washington Companies or involving any real
property currently owned or formerly owned, or currently or formerly
operated or leased, by the Washington Companies and (iii) to the Knowledge
of Conexant, the Washington Companies are not subject to any Environmental
Liabilities and no facts, circumstances or conditions relating to, arising
from, associated with or attributable to any real property currently or
formerly owned, operated or leased by the Washington Companies or
operations thereon would reasonably be expected to result in Environmental
Liabilities for the Washington Companies. The representations and
warranties in this Section 5.2(h) constitute the sole representations and
warranties of Conexant concerning environmental matters in this Agreement.
(i) Intellectual Property. Except as set forth in the Conexant
Filed SEC Reports or in the Washington Financial Statements and except as
would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on the Washington Business: (i) the Washington
Companies own, or are licensed to use (in each case, free and clear of any
Liens), all Intellectual Property used in or necessary for the conduct of
the Washington Business as currently conducted; (ii) to the Knowledge of
Conexant, the use of any Intellectual Property by the Washington Companies
does not infringe on or otherwise violate the rights of any Person; (iii)
the use of Intellectual Property by or on behalf of the Washington
Companies is in accordance with any applicable license pursuant to which
the Washington Companies acquired the right to use any Intellectual
Property; (iv) to the Knowledge of Conexant, no Person is challenging,
infringing on or otherwise violating any right of the Washington Companies
with respect to any Intellectual Property owned by and/or licensed to the
Washington Companies; and (v) Conexant does not have any Knowledge of any
pending claim, order or proceeding with respect to any use of Intellectual
Property by the Washington Companies and, to the Knowledge of Conexant, no
Intellectual Property owned and/or licensed by the Washington Companies is
being used or enforced in a manner that would reasonably be expected to
result in the abandonment, cancellation or unenforceability of such
Intellectual Property.
(j) Title to Properties. Each of the Washington Companies has
good and valid title to, or, in the case of leased properties and assets,
valid leasehold interests in, all of the tangible properties and assets
that are Washington Assets, except where the failure to have such good and
valid title, or valid leasehold interest, would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Washington Business.
(k) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in
connection with any of the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Conexant or any of its
Subsidiaries, except Credit Suisse First Boston Corporation (the "Conexant
Financial Advisor"), whose fees and expenses will be paid by Conexant in
accordance with Conexant's agreement with such firm.
(l) Opinion of Conexant Financial Advisor. Conexant has
received the opinion of the Conexant Financial Advisor, dated the date of
this Agreement, to the effect that, as of such date, the Exchange Ratio is
fair, from a financial point of view, to holders of Conexant Common Stock.
(m) Taxes.
(i) Each of the Washington Companies has timely filed or
has caused to be timely filed all Tax returns or reports required to
be filed by it with respect to Taxes for which the Washington Group
will have liability following the Time of Distribution pursuant to
the Tax Allocation Agreement, or requests for extensions to file such
returns or reports have been timely filed, granted and have not
expired, and all such returns and reports are complete and correct,
except to the extent that such failures to file, to have extensions
granted that remain in effect or to be complete or correct,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Washington Business. The
Washington Companies have paid or caused to be paid all Taxes shown
as due on such returns, other than Taxes for which the Conexant Group
will have liability following the Time of Distribution pursuant to
the Tax Allocation Agreement.
(ii) No deficiencies for any Taxes have been proposed,
asserted or assessed in writing against the Washington Companies that
are not adequately reserved for, except for deficiencies that,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Washington Business and
deficiencies with respect to Taxes for which Conexant will have
liability following the Time of Distribution pursuant to the Tax
Allocation Agreement. The U.S. federal income Tax returns required to
be filed with respect to Taxes for which the Washington Group will
have liability following the Time of Distribution pursuant to the Tax
Allocation Agreement have been either examined by and settled with
the IRS or closed by virtue of the applicable statute of limitations
and no requests for waivers of the time to assess any such Taxes are
pending.
(iii) None of Conexant or its Subsidiaries has taken any
action, and Conexant has no Knowledge of any fact, agreement, plan or
other circumstance, that is reasonably likely to prevent the Merger
from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
(iv) No member of the Washington Group is a party to any
Tax sharing or Tax indemnity agreements (other than agreements
between or among members of the Washington Group) that will be in
effect after the Time of Distribution.
(v) Within the past five years, no member of the
Washington Group has been a "distributing corporation" or a
"controlled corporation" in a distribution intended to qualify under
Section 355(a) of the Code.
(vi) Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect
on the Washington Business, no member of the Washington Group is
obligated to make any payments, or is a party to any contract that
could obligate it to make any payments, that would not be deductible
by reason of Section 162(m) or Section 280G of the Code.
(vii) No member of the Washington Group has agreed to
make, or is required to make, any material adjustment under Section
481(a) of the Code or any similar provision of state, local or
foreign law by reason of a change in accounting methods or otherwise.
(n) Certain Contracts. As of the date hereof, none of the
Washington Companies is a party to or bound by (i) any non-competition
agreement or any other Contract that will be binding on any member of the
Washington Group following the Time of Distribution that limits or
otherwise restricts the Washington Companies or any of their respective
affiliates or any successor thereto, or that would, after the Effective
Time, to the Knowledge of Conexant, limit or restrict the Combined Company
or any of its Subsidiaries or any of their respective affiliates or any
successor thereto, from engaging or competing in any line of business in
any geographic area, which agreements or other Contracts, individually or
in the aggregate, would reasonably be expected to have a Material Adverse
Effect on the Combined Company and its Subsidiaries, after giving effect to
the Merger or (ii) any employee benefit plan, employee contract or any
other material Contract that will be binding on any member of the
Washington Group following the Time of Distribution, pursuant to which any
benefits will arise or be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement. All material Contracts that will be included in the
Washington Assets are valid and binding on the Washington Companies, as
applicable, and in full force and effect except to the extent they have
previously expired in accordance with their terms or if the failure to be
valid, binding and in full force and effect, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Washington Business. None of the Washington Companies has
Knowledge of, or has received notice of, any violation or default under
(nor to their Knowledge does there exist any condition which with the
passage of time or the giving of notice would cause such a violation or
default under) the provisions of any Contract of the Washington Companies
that will be included in the Washington Assets, except for violations or
defaults which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Washington Business.
(o) Employee Benefits.
(i) With respect to each Washington Plan, except for
Washington Plans the liabilities under which, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect on the Washington Business, Conexant has made
available to Alpha a true, correct and complete copy of: (A) all plan
documents, trust agreements, and insurance contracts and other
funding vehicles; (B) the three most recent Annual Reports (Form 5500
Series) and accompanying schedules and exhibits, if any; (C) the
current summary plan description and any material modifications
thereto, if any (in each case, whether or not required to be
furnished under ERISA); (D) the three most recent annual financial
reports, if any; (E) the three most recent actuarial reports, if any;
(F) the most recent determination letter from the IRS, if any; and
(G) the annual compliance testing under Sections 401(a) through 416
of the Code for the three most recently completed plan years, if any.
(ii) With respect to each Washington Plan, Conexant and
its Subsidiaries have complied with, and are now in compliance with,
all provisions of ERISA, the Code and all other Applicable Laws and
regulations applicable to such Washington Plans and each Washington
Plan has been administered in accordance with its terms, in each case
except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Washington
Business. Each Washington Plan that is required by ERISA to be funded
is fully funded in accordance with reasonable actuarial assumptions,
except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Washington
Business.
(iii) All Washington Plans subject to the Applicable Laws
of any jurisdiction outside of the United States (A) have been
maintained in accordance with all applicable requirements, (B) if
they are intended to qualify for special tax treatment meet all
requirements for such treatment, and (C) if they are intended to be
funded and/or book-reserved are fully funded and/or book-reserved, as
appropriate, based upon reasonable actuarial assumptions, in each
case except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the
Washington Business.
(iv) None of the Washington Companies has any liability
under or obligation to any Multiemployer Plan that will be included
in the Washington Liabilities.
(p) Labor Relations. As of the date of this Agreement, (i) none
of the Washington Companies is a party to any collective bargaining
agreement, (ii) except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Washington
Business, no labor organization or group of employees of the Washington
Business has made a pending demand for recognition or certification, and
there are no representation or certification proceedings or petitions
seeking a representation proceeding presently pending or, to the Knowledge
of Conexant, threatened to be brought or filed, with the National Labor
Relations Board or any other domestic or foreign labor relations tribunal
or authority and (iii) except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Washington Business, there are no organizing activities, strikes, work
stoppages, slowdowns, lockouts, arbitrations or grievances, or other labor
disputes pending or, to the Knowledge of Conexant, threatened against or
involving any of the Washington Companies.
(q) Insurance. The Washington Companies maintain insurance
coverage with reputable insurers in such amounts and covering such risks as
is deemed reasonably appropriate for its business (taking into account the
cost and availability of such insurance).
(r) Liens. No Liens exist on any of the Washington Assets,
except (i) Liens expressly set forth in the Washington Financial
Statements, (ii) Liens consisting of zoning or planning restrictions,
easements, permits or other restrictions or limitations on the use of real
property or irregularities in title thereto which do not materially detract
from the value of, or impair the use of, such property in the Washington
Business, (iii) Liens for current taxes, assessments or governmental
charges or levies on property not yet due or which are being contested in
good faith and for which appropriate reserves in accordance with GAAP have
been created and (iv) Liens which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Washington Business.
(s) Ownership of Alpha Common Stock. Conexant, together with
its affiliates and associates (as those terms are defined in Rule 12b-2
promulgated under the Exchange Act), is not the beneficial owner of 5% or
more of the outstanding shares of Alpha Common Stock. For purposes of this
Section 5.2(s), a Person shall be deemed to be the "beneficial owner" of
Alpha Common Stock if such Person, directly or indirectly, controls the
voting of such Alpha Common Stock or has any options, warrants, conversion
or other rights to acquire such Alpha Common Stock.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 6.1 COVENANTS OF ALPHA. During the period from the date
of this Agreement and continuing until the Effective Time, Alpha agrees as
to itself and its Subsidiaries that (except as required or otherwise
expressly contemplated or permitted by this Agreement or Section 6.1
(including its subsections) of the Alpha Disclosure Schedule or as required
by a Governmental Entity or to the extent that Conexant shall otherwise
consent in writing, which consent shall not be unreasonably withheld or
delayed):
(a) Ordinary Course.
(i) Alpha and its Subsidiaries shall carry on their
respective businesses in the ordinary course, in substantially the
same manner as heretofore conducted, and shall use all reasonable
efforts to preserve intact their present business organizations, keep
available the services of their current officers and other key
employees and preserve their relationships with customers, suppliers
and others having business dealings with them to the end that their
ongoing businesses shall not be materially impaired at the Effective
Time; provided, however, that no action by Alpha or its Subsidiaries
with respect to matters specifically addressed by any other provision
of this Section 6.1 shall be deemed a breach of this Section
6.1(a)(i) unless such action would constitute a breach of one or more
of such other provisions.
(ii) Other than in connection with acquisitions permitted
by Section 6.1(e) or investments permitted by Section 6.1(g), Alpha
shall not, and shall not permit any of its Subsidiaries to, (A) enter
into any new material line of business or (B) incur or commit to any
capital expenditures or any obligations or liabilities in connection
with any capital expenditures other than capital expenditures and
obligations or liabilities in connection therewith incurred or
committed to in the ordinary course of business consistent with past
practice.
(b) Dividends; Changes in Share Capital. Alpha shall not, and
shall not permit any of its Subsidiaries to, and shall not propose to, (i)
declare or pay any dividends on or make other distributions (whether in
cash, stock or property) in respect of any of its capital stock, except for
dividends by any direct or indirect wholly-owned Subsidiaries of Alpha,
(ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in
lieu of or in substitution for, shares of its capital stock, except for any
such transaction by a wholly-owned Subsidiary of Alpha which remains a
wholly-owned Subsidiary after consummation of such transaction or (iii)
repurchase, redeem or otherwise acquire any shares of its capital stock or
any securities convertible into or exercisable for any shares of its
capital stock.
(c) Issuance of Securities. Alpha shall not, and shall not
permit any of its Subsidiaries to, issue, deliver, sell, pledge or
otherwise encumber, or authorize or propose the issuance, delivery, sale,
pledge or encumbrance of, any shares of its capital stock of any class, any
Alpha Voting Debt or any securities convertible into or exercisable for, or
any rights, warrants, calls or options to acquire, any such shares or Alpha
Voting Debt, or enter into any commitment, arrangement, undertaking or
agreement with respect to any of the foregoing, other than (i) the issuance
of Alpha Common Stock upon the exercise of Alpha Stock Options outstanding
on the date hereof in accordance with their present terms or pursuant to
Alpha Stock Options or other stock based awards granted pursuant to clause
(ii) below, (ii) the granting of Alpha Stock Options or other stock based
awards under the Alpha Stock Plans in a manner consistent with Alpha's
established policies and guidelines in effect on the date hereof relating
to the granting of Alpha Stock Options or other stock based awards or (iii)
issuances by a wholly-owned Subsidiary of Alpha of capital stock of such
Subsidiary to such Subsidiary's parent or another wholly-owned Subsidiary
of Alpha.
(d) Governing Documents. Except to the extent required to
comply with its obligations hereunder or with Applicable Laws, Alpha shall
not amend or propose to so amend its certificate of incorporation, by-laws
or other governing documents.
(e) No Acquisitions. Alpha shall not, and shall not permit any
of its Subsidiaries to, acquire or agree to acquire by merger or
consolidation, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, limited liability entity, joint venture,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any material assets (excluding the acquisition
of assets used in the operations of the business of Alpha and its
Subsidiaries in the ordinary course consistent with past practice, which
assets do not constitute a business unit, division or all or substantially
all of the assets of the transferor); provided, however, that the foregoing
shall not prohibit (x) internal reorganizations or consolidations involving
existing Subsidiaries of Alpha or (y) the creation of new direct or
indirect wholly-owned Subsidiaries of Alpha organized to conduct or
continue activities otherwise permitted by this Agreement.
(f) No Dispositions. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of Alpha or (ii) as may be
required by or in conformance with Applicable Laws in order to permit or
facilitate the consummation of the transactions contemplated hereby, Alpha
shall not, and shall not permit any of its Subsidiaries to, sell, lease,
license or otherwise encumber or subject to any Lien or otherwise dispose
of, or agree to sell, lease, license or otherwise encumber or subject to
any Lien or otherwise dispose of, any of its assets (including capital
stock of Subsidiaries of Alpha but excluding inventory and obsolete
equipment in the ordinary course of business consistent with past
practice).
(g) Investments; Indebtedness. Alpha shall not, and shall not
permit any of its Subsidiaries to, (i) make any loans, advances or capital
contributions to, or investments in, any other Person, other than (A) loans
or investments by Alpha or a Subsidiary of Alpha to or in Alpha or a
Subsidiary of Alpha, (B) pursuant to any contract or other legal obligation
of Alpha or any of its Subsidiaries as in effect at the date of this
Agreement, (C) employee loans or advances for travel, business, relocation
or other reimbursable expenses made in the ordinary course of business, (D)
loans, advances, capital contributions or investments which in the
aggregate do not exceed the amount specified in Section 6.1(g) of the Alpha
Disclosure Schedule or (E) loans, advances, capital contributions or
investments in the ordinary course of business which are not, individually
or in the aggregate, material to Alpha and its Subsidiaries taken as a
whole or (ii) create, incur, assume or suffer to exist any indebtedness,
issuances of debt securities, guarantees, loans or advances not in
existence as of the date of this Agreement except in the ordinary course of
business which are not, individually or in the aggregate, material to Alpha
and its Subsidiaries taken as a whole. Without limiting Alpha's covenants
contained in this Section 6.1, Alpha will consult with Conexant in any
efforts by Alpha to obtain financing with respect to Alpha's obligations
under the Facility Sale Agreement, provided that Conexant's consent in
writing, which shall not be unreasonably withheld or delayed, shall be
required prior to Alpha agreeing or committing to such financing. Conexant
will cooperate with and reasonably assist Alpha, at Alpha's expense, in
Alpha's efforts to obtain such financing.
(h) Tax-Free Qualification. Alpha shall use its reasonable best
efforts not to, and shall use its reasonable best efforts not to permit any
of its Subsidiaries to, take any action (including any action otherwise
permitted by this Section 6.1) that would prevent or impede the
Contribution and Distribution from qualifying as a reorganization under
Sections 355 and 368 of the Code or the Merger from qualifying as a
reorganization under Section 368 of the Code.
(i) Compensation. Except (x) as set forth in Section 6.1(c),
(y) as required by Applicable Laws or by the terms of any collective
bargaining agreement or other agreement currently in effect between Alpha
or any Subsidiary of Alpha and any executive officer or employee thereof or
(z) in the ordinary course of business, Alpha shall not increase the amount
of compensation or employee benefits of any director, officer or employee
of Alpha or any Subsidiary or business unit of Alpha, pay any pension,
retirement, savings or profit-sharing allowance to any employee that is not
required by any existing plan or agreement, enter into any Contract with
any of its employees regarding his or her employment, compensation or
benefits, increase or commit to increase any employee benefits, issue any
additional Alpha Stock Options, adopt or amend or make any commitment to
adopt or amend any Alpha Plan or make any contribution, other than
regularly scheduled contributions, to any Alpha Plan. Alpha shall not
accelerate the vesting of, or the lapsing of restrictions with respect to,
any stock options or other stock-based compensation, except as required by
Applicable Laws or in the ordinary course of business or in accordance with
this Agreement, and any option committed to be granted or granted after the
date hereof shall not accelerate as a result of the approval or
consummation of any transaction contemplated by this Agreement.
Notwithstanding the foregoing, Alpha may, without Conexant's consent but
only after consultation with Conexant, enter into retention or other
similar agreements with employees of Alpha on terms, and with such number
of employees, as are substantially comparable to the severance or other
similar agreements to be entered into between the Washington Companies and
their employees.
(j) Accounting Methods; Income Tax Elections. Except as
disclosed in the Alpha Filed SEC Reports, as required by a Governmental
Entity or as required by changes in GAAP as concurred in by Alpha's
independent public accountants, Alpha shall not make any material change in
its methods of accounting in effect at April 1, 2001. Alpha shall not, and
shall not permit its Subsidiaries to, (i) change its fiscal year or (ii)
make any material Tax election or settle or compromise any material income
Tax liability, other than in the ordinary course of business consistent
with past practice.
(k) Certain Agreements and Arrangements. Alpha shall not, and
shall not permit any of its Subsidiaries to, enter into any Contracts that
limit or otherwise restrict Alpha or any of its Subsidiaries or any of
their respective affiliates or any successor thereto, or that would, after
the Effective Time, limit or restrict the Combined Company or any of its
Subsidiaries or any of their respective affiliates or any successor
thereto, from engaging or competing in any line of business in any
geographic area which agreements or arrangements, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect
on the Combined Company and its Subsidiaries following the Merger.
(l) No Related Actions. Alpha will not, and will not permit any
of its Subsidiaries to, agree or commit to do any of the foregoing actions.
SECTION 6.2 COVENANTS OF CONEXANT AND WASHINGTON. During the
period from the date of this Agreement and continuing until the Effective
Time, Conexant, as to the Washington Companies, and Washington each agrees
that (except for the Contribution, the Distribution, as required or
otherwise expressly contemplated or permitted by this Agreement, the
Reorganization Agreements or Section 6.2 (including its subsections) of the
Conexant Disclosure Schedule or as required by a Governmental Entity or to
the extent that Alpha shall otherwise consent in writing, which consent
shall not be unreasonably withheld or delayed):
(a) Ordinary Course.
(i) The Washington Companies shall carry on the
Washington Business in the ordinary course, in substantially the same
manner as heretofore conducted, and shall use all reasonable efforts
to preserve intact their present business organizations, keep
available the services of their current officers and other key
employees of the Washington Business and preserve their relationships
with customers, suppliers and others having business dealings with
them to the end that the Washington Business shall not be materially
impaired at the Effective Time; provided, however, that no action by
the Washington Companies with respect to matters specifically
addressed by any other provision of this Section 6.2 shall be deemed
a breach of this Section 6.2(a)(i) unless such action would
constitute a breach of one or more of such other provisions.
(ii) Other than in connection with acquisitions permitted
by Section 6.2(e) or investments permitted by Section 6.2(g), the
Washington Companies shall not (A) enter into any new material line
of business that would be part of the Washington Business or (B)
incur or commit to any capital expenditures or any obligations or
liabilities in connection with any capital expenditures other than
capital expenditures and obligations or liabilities in connection
therewith incurred or committed to in the ordinary course of business
consistent with past practice.
(b) Dividends; Changes in Share Capital. The members of the
Washington Group shall not, and shall not propose to, declare any dividends
on or make other distributions (whether in cash, stock or property) in
respect of any of their capital stock that will be payable after the
Effective Time, except for dividends payable entirely to members of the
Washington Group. Prior to the Time of Distribution, Conexant will not, and
following the Time of Distribution and prior to the Effective Time,
Washington will not, (i) split, combine or reclassify any of its capital
stock or issue or authorize or propose the issuance of any other securities
of Conexant or Washington, as the case may be, in respect of, in lieu of or
in substitution for, shares of its capital stock or (ii) repurchase, redeem
or otherwise acquire any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock.
(c) Issuance of Securities.
(i) Prior to the Time of Distribution, Conexant shall not
issue, deliver, sell, pledge or otherwise encumber, or authorize or
propose the issuance, delivery, sale, pledge or encumbrance of, any
shares of Conexant Common Stock or any securities convertible into or
exercisable for, or any rights, warrants, calls or options to
acquire, any such shares, or enter into any commitment, arrangement,
undertaking or agreement with respect to any of the foregoing, other
than (A) the issuance of Conexant Common Stock (and the associated
Conexant Rights) (w) pursuant to the Conexant Systems, Inc.
Retirement Savings Plan and the Conexant Systems, Inc. Hourly
Employees Savings Plan, (x) upon the exercise of Conexant Stock
Options outstanding on the date hereof in accordance with their
present terms or pursuant to Conexant Stock Options or other stock
based awards granted pursuant to clause (B) below, (y) upon
conversion of the Conexant Convertible Notes or (z) pursuant to the
exchange or retraction of Exchangeable Shares of Philsar
Semiconductor Inc., (B) the granting of Conexant Stock Options or
other stock based awards under the Conexant Stock Plans in a manner
consistent with Conexant's established policies and guidelines in
effect on the date hereof relating to the granting of Conexant Stock
Options or other stock based awards or (C) issuances in accordance
with the Conexant Rights Agreement.
(ii) Following the Time of Distribution and prior to the
Effective Time, no member of the Washington Group will issue,
deliver, sell, pledge or otherwise encumber, or authorize or propose
the issuance, delivery, sale, pledge or encumbrance of, any shares of
its capital stock of any class or any securities convertible into or
exercisable for, or any rights, warrants, calls or options to
acquire, any such shares, or enter into any commitment, arrangement,
undertaking or agreement with respect to any of the foregoing, other
than (A) the granting of options to purchase Washington Common Stock
upon conversion of Conexant Stock Options in connection with the
Distribution in accordance with the Employee Matters Agreement or (B)
issuances by a wholly-owned Subsidiary of Washington of capital stock
of such Subsidiary to such Subsidiary's parent or another
wholly-owned Subsidiary of Washington.
(d) Governing Documents. Except to the extent required to
comply with its obligations hereunder or under the Reorganization
Agreements or with Applicable Laws, Washington shall not amend or propose
to so amend its certificate of incorporation, by-laws or other governing
documents.
(e) No Acquisitions. The Washington Companies shall not acquire
or agree to acquire by merger or consolidation, or by purchasing a
substantial equity interest in or a substantial portion of the assets of,
or by any other manner, any business or any corporation, partnership,
limited liability entity, joint venture, association or other business
organization or division thereof or otherwise acquire or agree to acquire
any material assets (excluding the acquisition of assets used in the
operations of the Washington Business in the ordinary course consistent
with past practice, which assets do not constitute a business unit,
division or all or substantially all of the assets of the transferor), in
each case, that would be part of the Washington Business; provided,
however, that the foregoing shall not prohibit (x) internal reorganizations
or consolidations involving existing Subsidiaries of Conexant or (y) the
creation of new direct or indirect wholly-owned Subsidiaries of Conexant
organized to conduct or continue activities otherwise permitted by this
Agreement.
(f) No Dispositions. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of Conexant (with respect to
which, to the extent involving Washington Assets or Washington Liabilities,
Conexant shall reasonably consult with Alpha) or (ii) as may be required by
or in conformance with Applicable Laws in order to permit or facilitate the
consummation of the transactions contemplated hereby or by the
Reorganization Agreements, the Washington Companies shall not sell, lease,
license or otherwise encumber or subject to any Lien or otherwise dispose
of, or agree to sell, lease, license or otherwise encumber or subject to
any Lien or otherwise dispose of, any Assets that would constitute
Washington Assets if the Distribution Date were the date hereof (including
capital stock of members of the Washington Group, but excluding inventory
and obsolete equipment in the ordinary course of business consistent with
past practice).
(g) Investments; Indebtedness. The Washington Companies shall
not (i) make any loans, advances or capital contributions to, or
investments in, any other Person that will be included in the Washington
Assets, other than (A) loans or investments by a member of the Washington
Group to or in another member of the Washington Group, (B) pursuant to any
contract or other legal obligation of any of the Washington Companies as in
effect at the date of this Agreement, (C) employee loans or advances for
travel, business, relocation or other reimbursable expenses made in the
ordinary course of business, (D) loans, advances, capital contributions or
investments which in the aggregate do not exceed the amount specified in
Section 6.2(g) of the Conexant Disclosure Schedule or (E) loans, advances,
capital contributions or investments in the ordinary course of business
which are not, individually or in the aggregate, material to the Washington
Business taken as a whole or (ii) create, incur, assume or suffer to exist
any indebtedness, issuances of debt securities, guarantees, loans or
advances not in existence as of the date of this Agreement that will be
included in the Washington Liabilities except in the ordinary course of
business which are not, individually or in the aggregate, material to the
Washington Business taken as a whole.
(h) Tax-Free Qualification. Conexant and Washington shall use
their reasonable best efforts not to, and shall use their reasonable best
efforts not to permit any of their Subsidiaries to, take any action
(including any action otherwise permitted by this Section 6.2) that would
prevent or impede the Contribution and Distribution from qualifying as a
reorganization under Sections 355 and 368 of the Code or the Merger from
qualifying as a reorganization under Section 368 of the Code.
(i) Compensation. Except (x) as set forth in Section 6.2(c),
(y) as required by Applicable Laws or by the terms of any collective
bargaining agreement or other agreement currently in effect between any of
the Washington Companies and any Washington Employee or (z) in the ordinary
course of business, none of the Washington Companies shall increase the
amount of compensation or employee benefits of any director or any
Washington Employee, pay any pension, retirement, savings or profit-sharing
allowance to any Washington Employee that is not required by any existing
plan or agreement, enter into any Contract with any Washington Employee
regarding his or her employment, compensation or benefits, increase or
commit to increase any employee benefits for Washington Employees, issue
any additional Conexant Stock Options, adopt or amend or make any
commitment to adopt or amend any Washington Plan or make any contribution,
other than regularly scheduled contributions, to any Washington Plan for
the benefit of Washington Employees. The Washington Companies shall not
accelerate the vesting of, or the lapsing of restrictions with respect to,
any stock options or other stock-based compensation, except as required by
Applicable Laws or in the ordinary course of business or in accordance with
this Agreement, and any option committed to be granted or granted after the
date hereof shall not accelerate as a result of the approval or
consummation of any transaction contemplated by this Agreement.
Notwithstanding the foregoing, the Washington Companies may, without
Alpha's consent but only after consultation with Alpha, enter into
retention or other similar agreements with employees of the Washington
Business on terms, and with such number of employees, as are substantially
comparable to the severance or other similar agreements currently in effect
or to be entered into between Alpha and its employees.
(j) Accounting Methods; Income Tax Elections. Except as
disclosed in Conexant Filed SEC Reports or the Washington Financial
Statements, as required by a Governmental Entity or as required by changes
in GAAP as concurred in by their independent public accountants, the
Washington Business shall not make any material change in its methods of
accounting in effect at September 30, 2001. No member of the Washington
Group will (i) change its fiscal year or (ii) make any material Tax
election or settle or compromise any material income Tax liability with
respect to matters that will be a liability of the Washington Group after
the Time of Distribution pursuant to the Tax Allocation Agreement, other
than in the ordinary course of business consistent with past practice.
(k) Certain Agreements and Arrangements. Except as contemplated
by the Reorganization Agreements, the Washington Companies shall not enter
into any Contracts that will bind any member of the Washington Group after
the Time of Distribution that limit or otherwise restrict any of the
Washington Companies or any of their respective affiliates or any successor
thereto, or that would, after the Effective Time, limit or restrict the
Combined Company or any of its Subsidiaries or any of their respective
affiliates or any successor thereto, from engaging or competing in any line
of business in any geographic area, which agreements or arrangements,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Combined Company and its Subsidiaries
following the Merger.
(l) No Washington Business Activities. Prior to the Effective
Time, Washington will not conduct any activities other than in connection
with the organization of Washington, the negotiation and execution of this
Agreement, the Reorganization Agreements, the Mexican Stock and Asset
Purchase Agreement dated as of the date hereof between Conexant and Alpha
(the "Facility Sale Agreement"), the U.S. Asset Purchase Agreement dated as
of the date hereof between Conexant and Alpha (the "U.S. Asset Purchase
Agreement"), the Facility Services Agreement to be entered into prior to
the Effective Time between Conexant and Alpha (the "Facility Services
Agreement"), the Newport Supply Agreement, the Newbury Supply Agreement and
the consummation of the transactions contemplated hereby and thereby.
(m) No Related Actions. None of Conexant or its Subsidiaries
(as to the Washington Companies) or Washington will agree or commit to do
any of the foregoing actions.
SECTION 6.3 REPORTS; SEC REPORTS. Each of Conexant (with
respect to the Washington Business) and Alpha shall (a) confer on a regular
and frequent basis with the other and (b) report to the other (to the
extent permitted by law or regulation or any applicable confidentiality
agreement) on operational matters. Each of Conexant (with respect to the
Washington Business) and Alpha shall file all reports required to be filed
by each of them with the SEC between the date of this Agreement and the
Effective Time and shall deliver to the other parties copies of all such
reports promptly after the same are filed.
SECTION 6.4 CONTROL OF OTHER PARTY'S BUSINESS. Nothing
contained in this Agreement shall give Conexant, directly or indirectly,
the right to control or direct Alpha's operations prior to the Effective
Time. Nothing contained in this Agreement shall give Alpha, directly or
indirectly, the right to control or direct the operations of the Washington
Business prior to the Effective Time. Prior to the Effective Time, each of
Conexant and Alpha shall exercise, consistent with the terms and conditions
of this Agreement, complete control and supervision over its respective
operations.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 PREPARATION OF PROXY STATEMENT; STOCKHOLDERS MEETING.
(a) As promptly as reasonably practicable following the date
hereof, Alpha and Conexant shall prepare and Alpha shall file with the SEC
proxy materials which shall constitute the Proxy Statement/Prospectus to be
mailed to Alpha's stockholders in connection with the Alpha Stockholders
Meeting (such proxy statement/prospectus, and any amendments or supplements
thereto, the "Proxy Statement/Prospectus") and Conexant and Alpha shall
prepare and Alpha shall file with the SEC a registration statement on Form
S-4 with respect to the issuance of Alpha Common Stock in the Merger (the
"Form S-4"). The Proxy Statement/Prospectus will be included in and will
constitute a part of the Form S-4 as Alpha's prospectus and will be mailed
to Conexant's stockholders as an Information Statement in connection with
the Distribution. The Form S-4 and the Proxy Statement/Prospectus will
comply as to form in all material respects with the requirements of the
Exchange Act and the Securities Act and the rules and regulations of the
SEC thereunder. Alpha shall use reasonable best efforts to have the Proxy
Statement/Prospectus cleared by the SEC as promptly as reasonably
practicable after filing with the SEC, to have the Form S-4 declared
effective by the SEC as promptly as reasonably practicable after filing
with the SEC and to keep the Form S-4 effective as long as is necessary to
consummate the Merger and the transactions contemplated thereby. Alpha
shall, as promptly as practicable after receipt thereof, provide to
Conexant copies of any written comments and advise Conexant of any oral
comments with respect to the Proxy Statement/Prospectus and the Form S-4
received from the SEC. Alpha shall provide Conexant with a reasonable
opportunity to review and comment on any amendment or supplement to the
Form S-4 or the Proxy Statement/Prospectus prior to filing such with the
SEC, and with a copy of all such filings made with the SEC. Notwithstanding
any other provision herein to the contrary, no amendment or supplement
(including by incorporation by reference) to the Proxy Statement/Prospectus
or the Form S-4 shall be made without the approval of both Conexant and
Alpha, which approval shall not be unreasonably withheld or delayed. Alpha
will use reasonable best efforts to cause the Proxy Statement/Prospectus to
be mailed to Alpha's stockholders, and Conexant will use reasonable best
efforts to cause the Proxy Statement/Prospectus to be mailed to Conexant's
stockholders, in each case as promptly as practicable after the Proxy
Statement/Prospectus is cleared by the SEC and the Form S-4 is declared
effective under the Securities Act. Alpha shall also take any action (other
than qualifying to do business in any jurisdiction in which it is not now
so qualified or to file a general consent to service of process) required
to be taken under any applicable state securities laws in connection with
the issuance of Alpha Common Stock in the Merger and Alpha and Conexant
shall furnish all information concerning Alpha, Washington and Conexant and
the holders of Conexant Common Stock as may be reasonably requested in
connection with any such action. Alpha will advise Conexant, promptly after
it receives notice thereof, of the time when the Form S-4 has become
effective, the issuance of any stop order with respect to the Form S-4, the
suspension of the qualification of the Alpha Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Proxy Statement/Prospectus or the
Form S-4. If at any time prior to the Effective Time any information
relating to Alpha or Washington, or any of their respective affiliates,
officers or directors, should be discovered by Alpha or Conexant which
should be set forth in an amendment or supplement to the Form S-4 or the
Proxy Statement/Prospectus so that any of such documents would not include
any misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, the party which discovers such
information shall promptly notify the other parties hereto and, to the
extent required by Applicable Laws, an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and
disseminated to the stockholders of Alpha and Conexant.
(b) Alpha shall duly take all lawful action to call, give
notice of, convene and hold a meeting of its stockholders on a date
determined in accordance with the mutual agreement of Alpha and Conexant
(the "Alpha Stockholders Meeting") for the purpose of obtaining the
Required Alpha Vote with respect to the transactions contemplated by this
Agreement and shall take all lawful action to solicit the approval and
adoption of this Agreement and the Merger by the Required Alpha Vote, and
the Board of Directors of Alpha shall recommend approval and adoption of
this Agreement and the Merger by the stockholders of Alpha to the effect as
set forth in Section 5.1(f) (the "Alpha Recommendation"), and shall not
withdraw, modify or qualify (or propose to withdraw, modify or qualify)
such recommendation (a "Change in the Alpha Recommendation"); provided,
however, that the Board of Directors of Alpha may make a Change in the
Alpha Recommendation pursuant to Section 7.5. Notwithstanding any Change in
the Alpha Recommendation, this Agreement shall be submitted to the
stockholders of Alpha at the Alpha Stockholders Meeting for the purpose of
approving and adopting this Agreement and the Merger, and nothing contained
herein shall be deemed to relieve Alpha of such obligation.
SECTION 7.2 COMBINED COMPANY BOARD OF DIRECTORS AND MANAGEMENT.
At or prior to the Effective Time, the parties will take all action
necessary to effectuate the provisions of Sections 1.8 and 1.9.
SECTION 7.3 ACCESS TO INFORMATION. Upon reasonable notice, each
of Conexant and Alpha shall (and shall cause its Subsidiaries to) afford to
the officers, employees, accountants, counsel, financial advisors and other
representatives of the other reasonable access during normal business
hours, during the period prior to the Effective Time, to all its books,
records, properties, plants and personnel (in the case of Conexant and its
Subsidiaries, only with respect to the Washington Business) and, during
such period, such party shall (and shall cause its Subsidiaries to) furnish
promptly to the other party all information concerning it and its business,
properties and personnel (as to Conexant and its Subsidiaries, only with
respect to the Washington Business) as such other party may reasonably
request; provided, however, that either party may restrict the foregoing
access to the extent that (i) any Applicable Laws or Contract requires such
party or its Subsidiaries to restrict or prohibit access to any such
properties or information or (ii) the information is subject to
confidentiality obligations to a third party. The parties will hold any
such information obtained pursuant to this Section 7.3 in confidence in
accordance with, and will otherwise be subject to, the provisions of the
Mutual Confidentiality Agreement dated September 28, 2001 between Conexant
and Alpha (as it may be amended or supplemented, the "Confidentiality
Agreement"). Any investigation by either Alpha or Conexant shall not affect
the representations and warranties contained herein or the conditions to
the respective obligations of the parties to consummate the Merger.
SECTION 7.4 REASONABLE BEST EFFORTS.
(a) Subject to the terms and conditions of this Agreement, each
party will use its reasonable best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, and to assist and cooperate
with the other parties in doing or causing to be done, all things
necessary, proper or advisable under this Agreement and Applicable Laws to
consummate the Merger and the other transactions contemplated by this
Agreement as soon as practicable after the date hereof, including (i)
taking all reasonable actions to cause the conditions set forth in Article
VIII to be satisfied as promptly as reasonably practicable; (ii) preparing
and filing as promptly as practicable all documentation to effect all
necessary applications, notices, petitions and filings and to obtain as
promptly as practicable the Tax Ruling, all Alpha Necessary Consents and
Conexant Necessary Consents and all other consents, waivers, licenses,
orders, registrations, approvals, permits, rulings, authorizations and
clearances necessary or advisable to be obtained from any third party
and/or any Governmental Entity in order to consummate the Merger or any of
the other transactions contemplated by this Agreement (collectively, the
"Required Approvals") and (iii) taking all reasonable steps as may be
necessary to obtain all Required Approvals. In furtherance and not in
limitation of the foregoing, each party hereto agrees to make (i) an
appropriate filing of a Notification and Report Form pursuant to the HSR
Act with respect to the transactions contemplated hereby as promptly as
practicable after the date hereof, (ii) appropriate filings, if any are
required, with the European Commission and/or other foreign regulatory
authorities in accordance with applicable competition, merger control,
antitrust, investment or similar Applicable Laws, and (iii) all other
necessary filings with other Governmental Entities relating to the Merger,
and, in each case, to supply as promptly as practicable any additional
information and documentary material that may be requested pursuant to such
Applicable Laws or by such authorities and to use reasonable best efforts
to cause the expiration or termination of the applicable waiting periods
under the HSR Act and the receipt of the Required Approvals under such
other Applicable Laws or from such authorities as soon as practicable.
Notwithstanding the foregoing, nothing in this Section 7.4 shall require
any of Alpha and its Subsidiaries, Conexant and its Subsidiaries,
Washington and its Subsidiaries or the Combined Company and its
Subsidiaries to sell, hold separate or otherwise dispose of any assets of
Alpha, Conexant, Washington, the Combined Company or their respective
Subsidiaries (including the capital stock of any Subsidiary) or conduct
their business in a specified manner, or agree to do so, whether as a
condition to obtaining any approval from a Governmental Entity or any other
Person or for any other reason, if such sale, holding separate or other
disposition or the conduct of their business in a specified manner is not
conditioned on the Closing or, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on the Combined
Company and its Subsidiaries, after giving effect to the Merger (or, only
with respect to Conexant and its Subsidiaries, to have a Material Adverse
Effect on Conexant and its Subsidiaries, after giving effect to the
Distribution).
(b) Each of Alpha, on the one hand, and Conexant and
Washington, on the other hand, shall, in connection with the efforts
referenced in Section 7.4(a) to obtain all Required Approvals, use its
reasonable best efforts to (i) cooperate in all respects with each other in
connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a
private party, (ii) promptly inform the other party of any communication
received by such party from, or given by such party to, the Antitrust
Division of the Department of Justice (the "DOJ"), the Federal Trade
Commission (the "FTC") or any other Governmental Entity and of any material
communication received or given in connection with any proceeding by a
private party, in each case regarding any of the transactions contemplated
hereby, and (iii) permit the other party to review any communication given
by it to, and consult with each other in advance of any meeting or
conference with, the DOJ, the FTC or any such other Governmental Entity or,
in connection with any proceeding by a private party, with any other
Person, and to the extent appropriate or permitted by the DOJ, the FTC or
such other applicable Governmental Entity or other Person, give the other
party the opportunity to attend and participate in such meetings and
conferences.
(c) In furtherance and not in limitation of the covenants of
the parties contained in Section 7.4(a) and Section 7.4(b), if any
administrative or judicial action or proceeding, including any proceeding
by a private party, is instituted (or threatened to be instituted)
challenging any transaction contemplated by this Agreement as violative of
any Applicable Laws, or if any statute, rule, regulation, executive order,
decree, injunction or administrative order is enacted, entered, promulgated
or enforced by a Governmental Entity which would make the Merger or the
other transactions contemplated hereby illegal or would otherwise prohibit
or materially impair or delay the consummation of the Merger or the other
transactions contemplated hereby, each of Conexant and Alpha shall
cooperate in all respects with each other and use its respective reasonable
best efforts, including, subject to the last sentence of Section 7.4(a),
selling, holding separate or otherwise disposing of any assets of Alpha or
its Subsidiaries or the Washington Companies (including the capital stock
of any Subsidiary) or conducting their business (in the case of Conexant,
only with respect to the Washington Business) in a specified manner, or
agreeing to do so, to contest and resist any such action or proceeding and
to have vacated, lifted, reversed or overturned any decree, judgment,
injunction or other order, whether temporary, preliminary or permanent,
that is in effect and that prohibits, prevents or restricts consummation of
the Merger or the other transactions contemplated by this Agreement and to
have such statute, rule, regulation, executive order, decree, injunction or
administrative order repealed, rescinded or made inapplicable so as to
permit consummation of the transactions contemplated by this Agreement.
Notwithstanding the foregoing or any other provision of this Agreement,
nothing in this Section 7.4 shall limit a party's right to terminate this
Agreement pursuant to Section 9.1(b) or Section 9.1(c) so long as such
party has complied with its obligations under this Section 7.4.
(d) Each of Alpha, Conexant and Washington shall cooperate with
each other in obtaining opinions of Skadden, Arps, Slate, Meagher & Flom
LLP, counsel to Alpha, and Chadbourne & Parke LLP, counsel to Conexant and
Washington, to satisfy the conditions set forth in Section 8.2(c) and
Section 8.3(c). In connection therewith, each of Alpha and Conexant shall
deliver to such counsel customary representation letters in form and
substance reasonably satisfactory to such counsel.
SECTION 7.5 ACQUISITION PROPOSALS.
(a) Without limiting Alpha's other obligations under this
Agreement (including under Article VI hereof), Alpha agrees that from and
after the date of this Agreement until the earlier of the Effective Time or
the termination of this Agreement in accordance with Article IX, neither it
nor any of its Subsidiaries shall, and it shall use its reasonable best
efforts to cause its and its Subsidiaries' officers, directors, employees,
agents and representatives (including any investment banker, attorney or
accountant retained by it or any of its Subsidiaries) not to, directly or
indirectly, (i) initiate, solicit, encourage or knowingly facilitate
(including by way of furnishing information) any inquiries or the making of
any proposal or offer with respect to, or a transaction to effect, any
Alpha Acquisition Proposal (as defined below), (ii) have any discussions
with or provide any confidential information or data to any Person relating
to an Alpha Acquisition Proposal, or engage in any negotiations concerning
an Alpha Acquisition Proposal, or knowingly facilitate any effort or
attempt to make or implement an Alpha Acquisition Proposal, (iii) approve
or recommend, or propose publicly to approve or recommend, any Alpha
Acquisition Proposal or (iv) approve or recommend, or propose to approve or
recommend, or execute or enter into, any letter of intent, agreement in
principle, merger agreement, acquisition agreement, option agreement or
other similar agreement related to any Alpha Acquisition Proposal.
(b) For purposes of this Agreement, "Alpha Acquisition
Proposal" means any inquiry, proposal or offer from any Person with respect
to (A) a merger, reorganization, share exchange, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving Alpha or any of its Significant Subsidiaries (as
defined in Rule 1-02 of Regulation S-X of the SEC), (B) any purchase or
sale or other disposition of 20% or more of the consolidated assets
(including stock of its Subsidiaries) of Alpha and its Subsidiaries, taken
as a whole, or (C) any purchase or sale of, or tender or exchange offer
for, or similar transaction with respect to, the equity securities of Alpha
that, if consummated, would result in any Person (or the stockholders of
such Person) beneficially owning securities representing 20% or more of the
total voting power of Alpha (or of the surviving parent entity in such
transaction) or any of its Significant Subsidiaries, including in the case
of each of clauses (A) through (C), any single or multi-step transaction or
series of related transactions (other than a proposal or offer made by
Conexant or a Subsidiary thereof).
(c) Notwithstanding anything in this Agreement to the contrary,
Alpha or its Board of Directors shall be permitted to (i) to the extent
applicable, comply with Rule 14d-9 and Rule 14e-2 promulgated under the
Exchange Act with regard to an Alpha Acquisition Proposal, (ii) effect a
Change in the Alpha Recommendation or (iii) engage in any discussions or
negotiations with, or provide any information to, any Person in response to
an unsolicited bona fide written Alpha Acquisition Proposal by any such
Person (which has not been withdrawn) in order to be informed with respect
thereto in order to make any determination permitted in clause (ii), if and
only to the extent that, in any such case referred to in clause (ii) or
(iii), (A) the Alpha Stockholders Meeting shall not have occurred, (B) it
has received an unsolicited bona fide written Alpha Acquisition Proposal
from a third party (which has not been withdrawn) and (x) in the case of
clause (ii) above, its Board of Directors concludes in good faith that such
Alpha Acquisition Proposal constitutes a Superior Alpha Proposal and (y) in
the case of clause (iii) above, its Board of Directors concludes in good
faith that there is a reasonable likelihood that such Alpha Acquisition
Proposal would constitute a Superior Alpha Proposal, (C) its Board of
Directors, after consultation with its outside counsel, determines in good
faith that such action is required by its fiduciary duties to stockholders
under Applicable Laws as a result of such Alpha Acquisition Proposal, (D)
in the case of clause (ii) above, it shall provide Conexant immediate
written notice of such action, (E) prior to providing any information or
data to any Person in connection with an Alpha Acquisition Proposal by any
such Person, it receives from such Person an executed confidentiality
agreement containing terms substantially the same as the Confidentiality
Agreement and (F) prior to providing any information or data to any Person
or entering into discussions or negotiations with any Person, it notifies
Conexant promptly of such inquiries, proposals or offers received by, any
such information requested from, or any such discussions or negotiations
sought to be initiated or continued with, such Person or any of its
representatives indicating, in connection with such notice, the name of
such Person and the material terms and conditions of any inquiries,
proposals or offers, and furnishes to Conexant a copy of any such written
inquiry, proposal or offer. Alpha agrees that it will promptly keep
Conexant informed of the status and terms of any such proposals or offers
and the status and terms of any such discussions or negotiations and will
promptly provide Conexant with any such written proposals or offers. Alpha
agrees that it will, and will cause its officers, directors and
representatives to, immediately cease and cause to be terminated any
activities, discussions or negotiations existing as of the date of this
Agreement with any Persons conducted heretofore with respect to any Alpha
Acquisition Proposal, and request the return or destruction of all
non-public information furnished in connection therewith. Alpha agrees that
it will use reasonable best efforts to promptly inform its directors,
officers, key employees, agents and representatives of the obligations
undertaken by Alpha in this Section 7.5. Nothing in this Section 7.5 shall
(x) permit Alpha to terminate this Agreement (except as specifically
provided in Article IX) or (y) affect any other obligation of Alpha or
Conexant under this Agreement. Alpha shall not submit to the vote of its
stockholders any Alpha Acquisition Proposal other than the Merger.
(d) For purposes of this Agreement, "Superior Alpha Proposal"
means a bona fide written Alpha Acquisition Proposal (for purposes of this
definition of "Superior Alpha Proposal", references to 20% in the
definition of "Alpha Acquisition Proposal" shall be deemed to be references
to 50%) made by a Person other than a party hereto which is on terms which
the Board of Directors of Alpha in good faith concludes (following receipt
of the advice of its financial advisors), taking into account, among other
things, all legal, financial, regulatory and other aspects of the proposal
and the Person making the proposal, (x) would, if consummated, result in a
transaction that is more favorable to its stockholders (in their capacities
as stockholders), from a financial point of view, than the transactions
contemplated by this Agreement and (y) is reasonably likely to be
completed.
(e) Without limiting Conexant's other obligations under this
Agreement (including under Article VI hereof), Conexant agrees that from
and after the date of this Agreement until the earlier of the Effective
Time or the termination of this Agreement in accordance with Article IX,
neither it nor any of its Subsidiaries shall, and it shall use its
reasonable best efforts to cause its and its Subsidiaries' officers,
directors, employees, agents and representatives (including any investment
banker, attorney or accountant retained by it or any of its Subsidiaries)
not to, directly or indirectly, (i) initiate, solicit, encourage or
knowingly facilitate (including by way of furnishing information) any
inquiries or the making of any proposal or offer with respect to, or a
transaction to effect, any Washington Acquisition Proposal (as defined
below), (ii) have any discussions with or provide any confidential
information or data to any Person relating to a Washington Acquisition
Proposal, or engage in any negotiations concerning a Washington Acquisition
Proposal, or knowingly facilitate any effort or attempt to make or
implement a Washington Acquisition Proposal, (iii) approve or recommend, or
propose publicly to approve or recommend, any Washington Acquisition
Proposal or (iv) approve or recommend, or propose to approve or recommend,
or execute or enter into, any letter of intent, agreement in principle,
merger agreement, acquisition agreement, option agreement or other similar
agreement related to any Washington Acquisition Proposal.
(f) For purposes of this Agreement, "Washington Acquisition
Proposal" means any inquiry, proposal or offer from any Person with respect
to any purchase or sale or other disposition of 20% or more of the
consolidated assets (including stock of subsidiaries) of the Washington
Business, including any single or multi-step transaction or series of
related transactions (other than a proposal or offer made by Alpha or a
Subsidiary thereof).
SECTION 7.6 EMPLOYEE BENEFITS MATTERS.
(a) Continuation and Comparability of Benefits. Subject to the
Employee Matters Agreement, from and after the Effective Time, the employee
benefit plans established or assumed by Washington pursuant to the Employee
Matters Agreement and the Alpha Plans in effect as of the date of this
Agreement and at the Effective Time shall remain in effect with respect to
Washington Participants (as defined in the Employee Matters Agreement) and
employees and former employees of Alpha and its Subsidiaries (collectively,
the "Combined Company Employees"), covered by such plans at the Effective
Time, until such time as the Combined Company shall otherwise determine,
subject to Applicable Laws and the terms of such plans. Prior to the
Effective Time, or as soon as reasonably practicable thereafter, Conexant
and Alpha shall cooperate in reviewing, evaluating and analyzing the
Washington Plans and the Alpha Plans with a view towards developing
appropriate new benefit plans for Combined Company Employees. It is the
intention of Conexant and Alpha, to the extent permitted by Applicable
Laws, to develop new benefit plans prior to the Effective Time or as soon
as reasonably practicable after the Effective Time which, among other
things, (i) treat similarly situated employees on a substantially
equivalent basis, taking into account all relevant factors, including
duties, geographic location, tenure, qualifications and abilities and (ii)
do not discriminate between Combined Company Employees who were covered by
Washington Plans, on the one hand, and those covered by Alpha Plans, on the
other, at the Effective Time. Nothing in this Section 7.6 shall be
interpreted as preventing the Combined Company from amending, modifying or
terminating any employee benefit plans established or assumed by Washington
pursuant to the Employee Matters Agreement or any Alpha Plan or other
contract, arrangement, commitment or understanding, in accordance with its
terms and Applicable Laws.
(b) Pre-Existing Limitations; Deductibles; Service Credit. With
respect to any employee benefit plans in which any Combined Company
Employees who were employees of Conexant or Alpha (or their Subsidiaries)
prior to the Effective Time first become eligible to participate on or
after the Effective Time, and in which the Combined Company Employees did
not participate prior to the Effective Time (the "New Combined Company
Plans"), the Combined Company shall: (A) waive all pre-existing conditions,
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Combined Company Employees and their
eligible dependents under any New Combined Company Plans in which such
employees may be eligible to participate after the Effective Time, except
to the extent such pre-existing conditions, exclusions or waiting periods
would apply under the analogous Washington Plan or Alpha Plan, as the case
may be; (B) provide each Combined Company Employee and their eligible
dependents with credit for any co-payments and deductibles paid prior to
the Effective Time under a Washington Plan or an Alpha Plan (to the same
extent such credit was given under the analogous employee benefit plan
prior to the Effective Time) in satisfying any applicable deductible or
out-of-pocket requirements under any New Combined Company Plans in which
such employees may be eligible to participate after the Effective Time; and
(C) recognize all service of the Combined Company Employees with Conexant
and Alpha, and their respective affiliates, for purposes of eligibility to
participate, vesting credit, entitlement to benefits and, other than with
respect to defined benefit pension plans, benefit accrual, in any New
Combined Company Plan in which such employees may be eligible to
participate after the Effective Time, to the extent such service is taken
into account under the applicable New Combined Company Plan; provided that
the foregoing shall not apply to the extent it would result in duplication
of benefits.
SECTION 7.7 Fees and Expenses. Subject to Section 9.2(c) of
this Agreement and Section 4.09 of the Distribution Agreement, whether or
not the Merger is consummated, all Expenses (as defined below) incurred in
connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such Expenses, except Expenses
incurred in connection with the filing, printing and mailing of the Form
S-4 and the Proxy Statement/Prospectus, which shall be shared equally by
Alpha and Conexant. As used in this Agreement, "Expenses" means all
out-of-pocket expenses (including all fees and expenses of counsel,
accountants, investment bankers, experts and consultants to a party hereto
and its affiliates) incurred by a party or on its behalf in connection with
or related to the authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby,
including the preparation, printing, filing and mailing of the Form S-4 and
the Proxy Statement/Prospectus and the solicitation of stockholder approval
and all other matters related to the transactions contemplated hereby.
SECTION 7.8 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
(a) The Combined Company shall (i) indemnify and hold harmless,
and provide advancement of expenses to, all past and present directors,
officers and employees of Alpha and its Subsidiaries (in all of their
capacities as such), to the same extent such persons are indemnified or
have the right to advancement of expenses as of the date of this Agreement
by Alpha pursuant to Alpha's certificate of incorporation, by-laws and
indemnification agreements, if any, in existence on the date hereof with
any such directors, officers and employees of Alpha and its Subsidiaries
for acts or omissions occurring at or prior to the Effective Time
(including for acts or omissions occurring in connection with the approval
of this Agreement and the consummation of the transactions contemplated
hereby) and (ii) cause to be maintained for a period of six years after the
Effective Time the current policies of directors' and officers' liability
insurance and fiduciary liability insurance maintained by Alpha (provided
that the Combined Company may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which are, in the
aggregate, no less advantageous to the insured than the current policies
maintained by Alpha) with respect to claims arising from facts or events
that occurred on or before the Effective Time; provided, however, that in
no event shall the Combined Company be required to expend in any one year
an amount in excess of 200% of the annual premiums (on a per capita basis)
currently paid by Alpha for such insurance; and, provided, further, that if
the annual premiums of such insurance coverage exceed such amount, the
Combined Company shall be obligated to obtain a policy with the greatest
coverage available for a cost not exceeding such amount.
(b) The Combined Company shall (i) indemnify and hold harmless,
and provide advancement of expenses to, all past and present directors,
officers and employees of the Washington Companies (in all of their
capacities as such), to the same extent such persons are indemnified or
have the right to advancement of expenses as of the date of this Agreement
by Conexant pursuant to Conexant's certificate of incorporation, by-laws
and indemnification agreements, if any, in existence on the date hereof
with any such directors, officers and employees of the Washington Companies
for acts or omissions occurring at or prior to the Effective Time
(including for acts or omissions occurring in connection with the approval
of this Agreement and the consummation of the transactions contemplated
hereby) and (ii) maintain in effect for each of the applicable persons
referred to in clause (i) for a period of six years after the Effective
Time policies of directors' and officers' liability insurance and fiduciary
liability insurance of at least the same coverage and amounts as, and
containing terms and conditions which are, in the aggregate, no less
advantageous to the insured than, the current policies of directors' and
officers' liability insurance maintained by Conexant, with respect to
claims arising from facts or events that occurred on or before the
Effective Time; provided, however, that in no event shall the Combined
Company be required to expend in any one year an amount in excess of 200%
of the annual premiums (on a per capita basis) currently paid by Conexant
for such insurance; and, provided, further, that if the annual premiums of
such insurance coverage exceed such amount, the Combined Company shall be
obligated to obtain a policy with the greatest coverage available for a
cost not exceeding such amount.
(c) The provisions of this Section 7.8 are intended to be for
the benefit of and shall be enforceable by each indemnified or insured
party referred to above in this Section 7.8.
SECTION 7.9 PUBLIC ANNOUNCEMENTS. Alpha and Conexant each shall
use reasonable best efforts to develop a joint communications plan and each
party shall use reasonable best efforts (i) to ensure that all press
releases and other public statements with respect to the transactions
contemplated hereby shall be consistent with such joint communications
plan, and (ii) unless otherwise required by Applicable Laws or by
obligations pursuant to any listing agreement with or rules of any
securities exchange or automated quotation system, to consult with each
other before issuing any press release or, to the extent practicable,
otherwise making any public statement with respect to this Agreement or the
transactions contemplated hereby.
SECTION 7.10 ACCOUNTING MATTERS.
(a) Alpha shall use reasonable best efforts to cause to be
delivered to Conexant two letters from Alpha's independent public
accountants, one dated approximately the date on which the Form S-4 shall
become effective and one dated the Closing Date, each addressed to Alpha,
Conexant and Washington, in form and substance reasonably satisfactory to
Conexant and reasonably customary in scope and substance for comfort
letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
(b) Conexant shall use reasonable best efforts to cause to be
delivered to Alpha two letters from Washington's independent public
accountants, one dated approximately the date on which the Form S-4 shall
become effective and one dated the Closing Date, each addressed to
Conexant, Alpha and Washington, in form and substance reasonably
satisfactory to Alpha and reasonably customary in scope and substance for
comfort letters delivered by independent public accountants in connection
with registration statements similar to the Form S-4.
SECTION 7.11 LISTING OF SHARES OF ALPHA COMMON STOCK. Alpha
shall prior to the Effective Time use reasonable best efforts to cause the
shares of Alpha Common Stock to be issued in the Merger and the shares of
Alpha Common Stock to be reserved for issuance upon exercise of the
Converted Options to be approved for listing on the Nasdaq National Market
System prior to the Closing Date.
SECTION 7.12 AFFILIATES. Not less than 45 days prior to the
Effective Time, Conexant shall deliver to Alpha a letter identifying all
persons who, in the judgment of Conexant, may be deemed at the time this
Agreement is submitted for approval by Conexant as the sole stockholder of
Washington, "affiliates" of Washington for purposes of Rule 145 under the
Securities Act and applicable SEC rules and regulations, and such list
shall be updated as necessary to reflect changes from the date of delivery
thereof. Conexant shall use reasonable best efforts to cause each person
identified on such list to deliver to Alpha not less than 30 days prior to
the Effective Time, a written agreement substantially in the form attached
hereto as Exhibit H (an "Affiliate Agreement").
SECTION 7.13 SECTION 16 MATTERS. Prior to the Effective Time,
Alpha shall take all such steps as may be required to cause any
acquisitions or dispositions of Alpha Common Stock (including derivative
securities with respect to Alpha Common Stock) resulting from the
transactions contemplated by this Agreement by each individual who is or
will be subject to the reporting requirements of Section 16(a) of the
Exchange Act with respect to Alpha to be exempt under Rule 16b-3
promulgated under the Exchange Act, such steps to be taken in accordance
with applicable SEC rules and regulations and interpretations of the SEC
staff.
SECTION 7.14 TAKEOVER STATUTES. If any "fair price",
"moratorium", "control share acquisition" or other form of antitakeover
statute or regulation shall become applicable to the transactions
contemplated hereby, each of Conexant, Alpha and Washington and their
respective Boards of Directors shall use all reasonable efforts to grant
such approvals and take such actions as are reasonably necessary so that
the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate
or minimize the effects of such statute or regulation on the transactions
contemplated hereby.
SECTION 7.15 ADVICE OF CHANGES. Each of Conexant and Alpha
shall as promptly as reasonably practicable after becoming aware thereof
advise the others of (a) any representation or warranty made by it
contained in this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any such representation or warranty
that is not so qualified becoming untrue or inaccurate in any material
respect, (b) the failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement or (c) any change or event (i) having,
or which would, individually or in the aggregate, reasonably be expected to
have, in the case of Alpha, a Material Adverse Effect on Alpha and its
Subsidiaries, and, in the case of Conexant, a Material Adverse Effect on
the Washington Business, or (ii) which has resulted, or which, insofar as
can reasonably be foreseen, would result, in any of the conditions set
forth in Article VIII not being satisfied; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the
parties under this Agreement.
SECTION 7.16 SHAREHOLDERS AGREEMENT. Concurrently with the
execution and delivery of this Agreement, each of the directors and
executive officers of Alpha set forth on Exhibit I shall execute and
deliver a Shareholders Agreement, substantially in the form attached hereto
as Exhibit J (the "Shareholders Agreement").
SECTION 7.17 TAX RULING. In connection with the Distribution,
Conexant shall use its reasonable best efforts in seeking, as promptly as
practicable, the Tax Ruling. Prior to filing with the Internal Revenue
Service (the "IRS"), Conexant shall furnish Alpha with a draft of the
ruling request letter with respect to the Tax Ruling and of any substantive
supplemental submission in respect thereof. Alpha may review and provide
any comments on such drafts and Conexant shall reasonably consider any
comments provided in a reasonably prompt manner by Alpha. Conexant shall
keep Alpha fully informed of the status of the Tax Ruling request. At
Conexant's request, Alpha shall cooperate with and use its reasonable best
efforts to assist Conexant in connection with the Tax Ruling request. At
Alpha's reasonable request, Conexant shall cooperate with Alpha and use its
reasonable best efforts to seek to obtain, as promptly as practicable, any
supplemental Tax Ruling or other guidance from the IRS.
SECTION 7.18 OPTION ACCELERATION.
(a) Except with respect to the acceleration of the vesting and
the extension of the exercise period of the Alpha Stock Options set forth
in Section 7.18 of the Alpha Disclosure Schedule, Alpha will take all
action necessary to prevent the acceleration of the vesting of, or the
lapsing of restrictions with respect to, any stock options, restricted
stock or other stock-based compensation (including the Alpha Stock Options,
and whether granted under the Alpha Stock Plans or otherwise) as a result
of the approval or consummation of any transaction contemplated by this
Agreement.
(b) Washington will take all action necessary to prevent the
acceleration of the vesting of, or the lapsing of restrictions with respect
to, any stock options, restricted stock or other stock-based compensation
(including the Washington Options and any Converted Options into which they
may be converted hereunder, and whether granted under the Conexant Stock
Plans, the Washington Stock Plans or otherwise) as a result of the approval
or consummation of any transaction contemplated by this Agreement.
SECTION 7.19 EMPLOYMENT AND SEVERANCE ARRANGEMENTS. Except with
respect to the acceleration of the vesting and the extension of the
exercise period of the Alpha Stock Options set forth in Section 7.18 of the
Alpha Disclosure Schedule, Alpha will take all action necessary to ensure
that no officer, director or other employee of Alpha or any of its
Subsidiaries will become entitled to receive any change of control or other
payment or benefit under any employment, severance or other agreement with
Alpha or any of its Subsidiaries, including those agreements set forth on
Exhibit E, that may otherwise arise as a result of the approval or
consummation of any transaction contemplated by this Agreement.
SECTION 7.20 TRANSITION SERVICES AGREEMENT. Promptly following
the date hereof, Alpha and Conexant will discuss the scope, nature, term
and pricing of the transition services to be provided by Conexant to Alpha
following the Effective Time pursuant to the Transition Services Agreement.
Alpha and Conexant will negotiate in good faith with respect thereto and
prior to the Effective Time will enter into the Transition Services
Agreement in a form reasonably satisfactory to Alpha and Conexant. The
Transition Services Agreement will provide that either party may terminate
any services provided under the Transition Services Agreement upon such
prior written notice as the parties shall mutually agree prior to the
Effective Time.
ARTICLE VIII
CONDITIONS PRECEDENT
SECTION 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of Washington and Alpha to effect the
Merger are subject to the satisfaction or waiver prior to the Effective
Time of the following conditions:
(a) Stockholder Approval. Alpha shall have obtained the
Required Alpha Vote.
(b) No Injunctions or Restraints, Illegality. No Applicable
Laws shall have been adopted, promulgated or enforced by any Governmental
Entity, and no temporary restraining order, preliminary or permanent
injunction or other order issued by a court or other Governmental Entity of
competent jurisdiction (an "Injunction") shall be in effect, having the
effect of making the Merger illegal or otherwise prohibiting consummation
of the Merger.
(c) No Pending Governmental Actions. No proceeding initiated by
any Governmental Entity seeking, and which is reasonably likely to result
in the granting of, an Injunction shall be pending.
(d) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired.
(e) EU Antitrust. If required, Alpha and Conexant shall have
received in respect of the Merger and any matters arising therefrom
confirmation by way of a determination from the European Commission under
Regulation 4064/89 (with or without the initiation of proceedings under
Article 6(1)(c) thereof) that the Merger and any matters arising therefrom
are compatible with the common market.
(f) Governmental and Regulatory Approvals. Other than the
filings provided for under Section 1.2 and filings pursuant to the HSR Act
and, if required, the EC Merger Regulation (which are addressed in Section
8.1(d) and Section 8.1(e)), all consents, approvals, orders or
authorizations of, actions of, filings and registrations with and notices
to any Governmental Entity (i) required of Alpha, Conexant, Washington or
any of their Subsidiaries to consummate the Merger and the other
transactions contemplated hereby, the failure of which to be obtained or
taken would reasonably be expected to have a Material Adverse Effect on the
Combined Company and its Subsidiaries, taken together after giving effect
to the Merger or (ii) set forth in Section 8.1(f) of the Alpha Disclosure
Schedule or Section 8.1(f) of the Conexant Disclosure Schedule shall have
been obtained and shall be in full force and effect.
(g) Nasdaq Listing. The shares of Alpha Common Stock to be
issued in the Merger and to be reserved for issuance in connection with the
Merger shall have been approved for listing on the Nasdaq National Market
System.
(h) Effectiveness of the Form S-4. The Form S-4 shall have been
declared effective by the SEC under the Securities Act and no stop order
suspending the effectiveness of the Form S-4 shall then be in effect and no
proceedings for that purpose shall be pending before or threatened by the
SEC.
(i) Pre-Merger Transactions. The Contribution and the
Distribution shall have been consummated in accordance with the terms of
this Agreement and the Distribution Agreement (which includes additional
conditions to such consummation) and in all material respects in accordance
with the Tax Ruling, provided that the failure of the Contribution and the
Distribution to be consummated shall not be a condition to the obligations
of a party whose breach (or breach by an Affiliate thereof) of the
Distribution Agreement has been the cause of, or resulted in, such failure.
(j) Tax Ruling. Conexant shall have received the Tax Ruling and
the Tax Ruling shall be in full force and effect and shall not have been
modified or amended in any respect adversely affecting the Tax consequences
set forth therein.
(k) Mexicali Conditions. Each condition to the closing of the
Facility Sale Agreement set forth in Article VI thereof (other than in
Section 6.4 thereof) shall have been satisfied.
SECTION 8.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF ALPHA. The
obligation of Alpha to effect the Merger is subject to the satisfaction or
waiver by Alpha prior to the Effective Time of the following additional
conditions:
(a) Representations and Warranties. Each of the representations
and warranties of Conexant set forth in this Agreement and in Section
2.01(d)(i) of the Distribution Agreement shall be true and correct (without
giving effect to any qualification or limitation as to materiality or
Material Adverse Effect set forth therein), in each case as of the date of
this Agreement and (except to the extent that such representations and
warranties speak solely as of another date) as of the Closing Date as
though made on and as of the Closing Date, except where the failure of such
representations and warranties to be true and correct would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Washington Business, and Alpha shall have received a
certificate of Conexant executed by an executive officer of Conexant to
such effect.
(b) Performance of Obligations of Conexant and Washington. Each
of Conexant and Washington shall have performed or complied with all
agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date that are qualified as to
materiality or Material Adverse Effect and shall have performed or complied
in all material respects with all other agreements and covenants required
to be performed by it under this Agreement at or prior to the Closing Date
that are not so qualified, and Alpha shall have received a certificate of
Conexant executed by an executive officer of Conexant to such effect.
(c) Tax Opinion. Alpha shall have received an opinion from
Skadden, Arps, Slate, Meagher & Flom LLP, dated the Closing Date, to the
effect that, on the basis of facts, representations and assumptions,
including the validity of the Tax Ruling, set forth in such opinion which
are consistent with the state of facts existing at the Effective Time, the
Merger will constitute a reorganization under Section 368 of the Code.
(d) Net Assets Statement. Conexant shall have delivered the
Special Purpose Statement of Tangible Net Assets in accordance with Section
2.01(d)(ii) of the Distribution Agreement.
(e) Mexicali Conditions. Each condition to the closing of the
Facility Sale Agreement set forth in Section 7.2 thereof shall have been
satisfied.
(f) Ancillary Agreements. The Employee Matters Agreement and
the Tax Allocation Agreement shall have been executed and delivered by
Conexant and Washington and the Facility Services Agreement, the Newport
Supply Agreement, the Newbury Supply Agreement and the Transition Services
Agreement shall have been executed and delivered by Conexant.
SECTION 8.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF WASHINGTON.
The obligation of Washington to effect the Merger is subject to the
satisfaction or waiver by Conexant prior to the Effective Time of the
following additional conditions:
(a) Representations and Warranties. Each of the representations
and warranties of Alpha set forth in this Agreement shall be true and
correct (without giving effect to any qualification or limitation as to
materiality or Material Adverse Effect set forth therein), in each case as
of the date of this Agreement and (except to the extent that such
representations and warranties speak solely as of another date) as of the
Closing Date as though made on and as of the Closing Date, except where the
failure of such representations and warranties to be true and correct would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Alpha and its Subsidiaries, and Conexant shall
have received a certificate of Alpha executed by an executive officer of
Alpha to such effect.
(b) Performance of Obligations of Alpha. Alpha shall have
performed or complied with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that
are qualified as to materiality or Material Adverse Effect and shall have
performed or complied in all material respects with all other agreements
and covenants required to be performed by it under this Agreement at or
prior to the Closing Date that are not so qualified, and Conexant shall
have received a certificate of Alpha executed by an executive officer of
Alpha to such effect.
(c) Tax Opinion. Conexant and Washington shall have received an
opinion from Chadbourne & Parke LLP, dated the Closing Date, to the effect
that, on the basis of facts, representations and assumptions, including the
validity of the Tax Ruling, set forth in such opinion which are consistent
with the state of facts existing at the Effective Time, the Merger will
constitute a reorganization under Section 368 of the Code.
(d) Employment and Severance Arrangements. Conexant shall have
received written evidence reasonably satisfactory to Conexant that Alpha
has taken all action necessary to ensure that no officer, director or other
employee of Alpha or any of its Subsidiaries has received or will become
entitled to receive any change of control or other payment or benefit under
any employment, severance or other agreement with Alpha or any of its
Subsidiaries (except with respect to the acceleration of the vesting and
the extension of the exercise period of the Alpha Stock Options set forth
in Section 7.18 of the Alpha Disclosure Schedule), including those
agreements set forth on Exhibit E, that may otherwise arise as a result of
the approval or consummation of any transaction contemplated by this
Agreement.
(e) Mexicali Condition. Each condition to the closing of the
Facility Sale Agreement set forth in Section 7.1 thereof shall have been
satisfied.
(f) Ancillary Agreements. The Employee Matters Agreement, the
Tax Allocation Agreement, the Facility Services Agreement, the Newport
Supply Agreement, the Newbury Supply Agreement and the Transition Services
Agreement shall have been executed and delivered by Alpha.
ARTICLE IX
TERMINATION AND AMENDMENT
SECTION 9.1 TERMINATION. This Agreement may be terminated at
any time prior to the Effective Time, by action taken or authorized by the
Board of Directors of the terminating party or parties, and except as
provided below, whether before or after approval of the matters presented
in connection with the Merger by the stockholders of Alpha:
(a) by mutual written consent of Conexant and Alpha;
(b) by either Conexant or Alpha if the Effective Time
shall not have occurred on or before September 30, 2002 (the
"Termination Date"); provided, however, that the right to terminate
this Agreement under this Section 9.1(b) shall not be available to
any party whose failure to fulfill in any material respect any
obligation under this Agreement (including such party's obligations
set forth in Section 7.4) has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before the Termination
Date;
(c) by either Conexant or Alpha if any Governmental
Entity (i) shall have issued an order, decree or ruling or taken any
other action (which such party shall have used its reasonable best
efforts to resist, resolve or lift, as applicable, in accordance with
Section 7.4) permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement, and such
order, decree, ruling or other action shall have become final and
nonappealable or (ii) shall have failed to issue an order, decree or
ruling, or to take any other action, necessary to fulfill any
conditions set forth in subsections 8.1(d) and (e), and the failure
to issue such order, decree, ruling or take such action shall have
become final and nonappealable; provided, however, that the right to
terminate this Agreement under this Section 9.1(c) shall not be
available to any party whose failure to comply with Section 7.4 has
been the cause of, or resulted in, such action or inaction;
(d) by either Conexant or Alpha if the approval by the
stockholders of Alpha required for the consummation of the Merger
shall not have been obtained by reason of the failure to obtain the
Required Alpha Vote upon the taking of such vote at a duly held
meeting of stockholders of Alpha or at any adjournment thereof;
(e) by Conexant, if (i) Alpha's Board of Directors shall
have (A) failed to make the Alpha Recommendation, (B) withdrawn the
Alpha Recommendation, (C) modified or qualified the Alpha
Recommendation in any manner adverse to Conexant or Washington or (D)
failed to confirm the Alpha Recommendation within five Business Days
of Conexant's request to do so (or resolved or proposed to take any
such action referred to in clause (A), (B), (C) or (D)), in each
case, whether or not permitted by the terms hereof, (ii) Alpha shall
have breached its obligations under this Agreement by reason of a
failure to call and hold the Alpha Stockholders Meeting in accordance
with Section 7.1(b) or a failure to prepare and mail to its
stockholders the Proxy Statement/Prospectus in accordance with
Section 7.1(a) or (iii) a tender or exchange offer relating to
securities of Alpha shall have been commenced by a Person
unaffiliated with Conexant, and Alpha shall not have sent to its
stockholders pursuant to Rule 14e-2 under the Exchange Act, within
ten Business Days after such tender or exchange offer is first
published, sent or given, a statement that Alpha recommends rejection
of such tender or exchange offer;
(f) by Conexant, if Alpha shall have breached or failed
to perform any of its representations, warranties, covenants or other
agreements contained in this Agreement, such that the conditions set
forth in Section 8.3(a) or Section 8.3(b) are not capable of being
satisfied on or before the Termination Date; or
(g) by Alpha, if Conexant or Washington shall have
breached or failed to perform any of its representations, warranties,
covenants or other agreements contained in this Agreement, such that
the conditions set forth in Section 8.2(a) or Section 8.2(b) are not
capable of being satisfied on or before the Termination Date.
SECTION 9.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either
Conexant or Alpha as provided in Section 9.1, this Agreement shall
forthwith become void and there shall be no liability or obligation on the
part of Alpha, Conexant or Washington or their respective officers or
directors under this Agreement, except that (i) the provisions of Section
5.1(m), Section 5.2(k), the second sentence of Section 7.3, Section 7.7,
this Section 9.2 and Article X shall survive such termination, and (ii)
notwithstanding anything to the contrary contained in this Agreement
(including Section 7.7), none of Alpha, Conexant or Washington shall be
relieved or released from any liabilities or damages arising out of its
willful breach of any provision of this Agreement.
(b) If:
(i) (A) (x) either Conexant or Alpha shall terminate this
Agreement pursuant to Section 9.1(b) without the Alpha Stockholder
Meeting having occurred or pursuant to Section 9.1(d) or (y) Conexant
shall terminate this Agreement pursuant to Section 9.1(f) as a result
of any intentional breach or failure to perform by Alpha (unless
covered by clause (ii) below), and
(B) at any time after the date of this Agreement and
before such termination an Alpha Acquisition Proposal shall have been
publicly announced or, in the case of termination of this Agreement
pursuant to Section 9.1(b) or Section 9.1(f), publicly announced or
otherwise communicated to the senior management, Board of Directors
or stockholders of Alpha, and
(C) within nine months of such termination Alpha or any
of its Subsidiaries enters into a definitive agreement with respect
to, or consummates, any Alpha Acquisition Proposal (for purposes of
this clause (C), references to 20% in the definition of "Alpha
Acquisition Proposal" shall be deemed to be references to 50%); or
(ii) Conexant shall terminate this Agreement pursuant to
Section 9.1(e);
then Alpha shall promptly, but in no event later than the date of such
termination (or in the case of clause (i), if later, the date Alpha or its
Subsidiary enters into such agreement with respect to or consummates such
Alpha Acquisition Proposal), pay Conexant an amount equal to Forty-Five
Million dollars ($45,000,000), by wire transfer of immediately available
funds.
(c) The parties acknowledge that the agreements contained in
this Section 9.2 are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, the parties would not
enter into this Agreement; accordingly, if Conexant or Alpha fails promptly
to pay any amount due pursuant to this Section 9.2, and, in order to obtain
such payment, the other party commences a suit which results in a judgment
against such party for the fee set forth in this Section 9.2, such party
shall pay to the other party its costs and expenses (including attorneys'
fees and expenses) in connection with such suit, together with interest on
the amount of the fee from the date such payment is required to be made
until the date such payment is actually made at the prime rate of Citibank,
N.A. in effect on the date such payment was required to be made. The
parties agree that any remedy or amount payable pursuant to this Section
9.2 shall not preclude any other remedy or amount payable hereunder, and
shall not be an exclusive remedy, for any willful breach of any provision
of this Agreement.
SECTION 9.3 AMENDMENT. This Agreement may be amended by the
parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with this Agreement and the Merger by the stockholders of Alpha,
but, after any such approval, no amendment shall be made which by law or in
accordance with the rules of any relevant stock exchange or automated
quotation system requires further approval by such stockholders without
such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
SECTION 9.4 EXTENSION; WAIVER. At any time prior to the
Effective Time, the parties hereto, by action taken or authorized by their
respective Boards of Directors, may, to the extent legally allowed, (i)
extend the time for the performance of any of the obligations or other acts
of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties of other parties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of
the agreements or conditions of other parties contained herein or in any
document delivered pursuant hereto. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in
a written instrument signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS. None of the representations, warranties,
covenants and other agreements in this Agreement or in any certificate
delivered pursuant to this Agreement, including any rights arising out of
any breach of such representations, warranties, covenants and other
agreements, shall survive the Effective Time, except for those covenants
and agreements contained herein and therein that by their terms apply or
are to be performed in whole or in part after the Effective Time.
SECTION 10.2 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed duly given (a) on the
date of delivery if delivered personally, (b) upon confirmation of receipt
if delivered by telecopy or telefacsimile, (c) on the first Business Day
following the date of dispatch if delivered by a recognized next-day
courier service, or (d) on the fifth Business Day following the date of
mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder shall be delivered as set
forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice:
(a) if to Conexant or Washington to
Conexant Systems, Inc.
4311 Jamboree Road
Newport Beach, California 92660-3095
Fax: (949) 483-6388
Attention: Dennis E. O'Reilly
Senior Vice President, General
Counsel and Secretary
with a copy to
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, New York 10112
Fax: (212) 541-5369
Attention: Peter R. Kolyer, Esq.
(b) if to Alpha to
Alpha Industries, Inc.
20 Sylvan Road
Woburn, MA 01801
Fax: (617) 824-4426
Attention: Paul E. Vincent
Chief Financial Officer
with a copy to
Alpha Industries, Inc.
20 Sylvan Road
Woburn, MA 01801
Fax: (617) 824-4564
Attention: James K. Jacobs, Esq.
General Counsel
SECTION 10.3 INTERPRETATION. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of or Exhibit or Schedule to this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed
to be followed by the words "without limitation".
SECTION 10.4 COUNTERPARTS. This Agreement may be executed in
two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have
been signed by each of the parties and delivered to the other parties, it
being understood that the parties need not sign the same counterpart.
SECTION 10.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
(a) This Agreement, the Confidentiality Agreement, the
Reorganization Agreements, the Facility Sale Agreement, the U.S. Asset
Purchase Agreement, the Facility Services Agreement, the Newport Supply
Agreement, the Newbury Supply Agreement and the exhibits and schedules
hereto and thereto and the other agreements and instruments of the parties
delivered in connection herewith and therewith constitute the entire
agreement and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter
hereof and thereof.
(b) This Agreement shall be binding upon and inure solely to
the benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement, other than Section 7.8 (which is intended to be for the benefit
of the Persons covered thereby).
SECTION 10.6 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware (without
giving effect to choice of law principles thereof).
SECTION 10.7 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, shall remain in full force and effect and shall
in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon any such
determination, the parties shall 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 10.8 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto, in whole or in part (whether by operation of law or
otherwise), without the prior written consent of the other parties, and any
attempt to make any such assignment without such consent shall be null and
void. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
SECTION 10.9 SUBMISSION TO JURISDICTION; WAIVERS. Each of
Alpha, Conexant and Washington irrevocably agrees that any legal action or
proceeding with respect to this Agreement, the transactions contemplated
hereby, any provision hereof, the breach, performance, validity or
invalidity hereof or for recognition and enforcement of any judgment in
respect hereof brought by another party hereto or its successors or
permitted assigns may be brought and determined in any federal or state
court located in the State of Delaware, and each of Alpha, Conexant and
Washington hereby irrevocably submits with regard to any such action or
proceeding for itself and in respect to its property, generally and
unconditionally, to the exclusive jurisdiction of the aforesaid courts.
Each of Alpha, Conexant and Washington hereby irrevocably waives, and
agrees not to assert, by way of motion, as a defense, counterclaim or
otherwise, in any action or proceeding with respect to this Agreement, the
transactions contemplated hereby, any provision hereof or the breach,
performance, enforcement, validity or invalidity hereof, (a) any claim that
it is not personally subject to the jurisdiction of the above-named courts
for any reason other than the failure to lawfully serve process, (b) that
it or its property is exempt or immune from jurisdiction of any such court
or from any legal process commenced in such courts (whether through service
of notice, attachment prior to judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise), and (c) to the fullest
extent permitted by Applicable Laws, that (i) the suit, action or
proceeding in any such court is brought in an inconvenient forum, (ii) the
venue of such suit, action or proceeding is improper and (iii) this
Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
SECTION 10.10 ENFORCEMENT. The parties agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms. It is
accordingly agreed that the parties shall be entitled to specific
performance of the terms hereof, this being in addition to any other remedy
to which they are entitled at law or in equity.
SECTION 10.11 DEFINITIONS. As used in this Agreement:
(a) "affiliate" means (except as specifically otherwise
defined), as to any Person, any other Person which, directly or indirectly,
controls, or is controlled by, or is under common control with, such
Person. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with")
means the possession, directly or indirectly, of the power to direct or
cause the direction of management or policies of a Person, whether through
the ownership of securities or partnership or other ownership interests, by
contract or otherwise.
(b) An "Alpha Plan" means any employee benefit plan, program,
policy, practice or other arrangement providing benefits to any current or
former employee, officer or director of Alpha or any of its Subsidiaries or
any beneficiary or dependent thereof that is sponsored or maintained by
Alpha or any of its Subsidiaries or to which Alpha or any of its
Subsidiaries contributes or is obligated to contribute, whether or not
written, including any employee benefit plan within the meaning of Section
3(3) of ERISA (whether or not such plan is subject to ERISA) and any bonus,
incentive, deferred compensation, vacation, stock purchase, stock option,
severance, employment, change of control or fringe benefit plan, or similar
program or agreement.
(c) "Alpha Stock Plans" means, collectively, the Alpha
Industries, Inc. 1986 Long-Term Incentive Plan; the Alpha Industries, Inc.
1999 Employee Long-Term Incentive Plan; the Alpha Industries, Inc.
Long-Term Compensation Plan; the Alpha Industries, Inc. 1994 Non-Qualified
Stock Option Plan for Non-Employee Directors; the Alpha Industries, Inc.
1997 Non-Qualified Stock Option Plan for Non-Employee Directors; the Alpha
Industries, Inc. 1996 Long-Term Incentive Plan; the Alpha Industries, Inc.
Directors' 2001 Stock Option Plan; and the Alpha Industries, Inc. Employee
Stock Purchase Plan.
(d) "Applicable Laws" means all applicable laws, statutes,
orders, rules, regulations, policies or guidelines promulgated, or
judgments, decisions or orders entered, by any Governmental Entity.
(e) "beneficial ownership" or "beneficially own" (except as
specifically otherwise defined) shall have the meaning under Section 13(d)
of the Exchange Act and the rules and regulations thereunder.
(f) "Board of Directors" means the Board of Directors of any
specified Person and any committees thereof.
(g) "Business Day" means a day other than a Saturday, a Sunday
or a day on which banks are required or authorized to close in the City of
New York.
(h) "Conexant Stock Plans" means, collectively, the Conexant
Systems, Inc. 2001 Employee Stock Purchase Plan; the Conexant Systems, Inc.
2001 Performance Share Plan; the Conexant Systems, Inc. 1999 Non-Qualified
Stock Purchase Plan; the Conexant Systems, Inc. 1998 Stock Option Plan; the
Conexant Systems, Inc. 1999 Long-Term Incentives Plan; the Conexant
Systems, Inc. 2000 Non-Qualified Stock Plan; the Conexant Systems, Inc.
Directors Stock Plan; the Istari Design, Inc. 1997 Stock Option Plan; the
Microcosm Communications Limited Stock Option Plan; the Maker
Communications, Inc. 1999 Stock Incentive Plan; the Maker Communications,
Inc. 1999 Non-Employee Director Stock Option Plan; the Maker
Communications, Inc. 1996 Stock Option Plan; the Applied Telecom, Inc. 2000
Non-Qualified Stock Option Plan; the Philsar Semiconductor Inc. Stock
Option Plan; the Sierra Imaging, Inc. 1996 Stock Option Plan; the HotRail,
Inc. 2000 Equity Plan; the HotRail, Inc. 1997 Equity Incentive Plan; the
Novanet Semiconductor Ltd. Employee Shares Option Plan; the NetPlane
Systems, Inc. Stock Option Plan; and the HyperXS Communications, Inc. 2000
Stock Option Plan.
(i) "Converted Option" means a Washington Option which has been
converted into an option to purchase shares of Alpha Common Stock pursuant
to the Merger.
(j) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
(k) "Known" or "Knowledge" means, (i) with respect to Conexant,
the knowledge of any of Dwight W. Decker, Balakrishnan S. Iyer, Dennis E.
O'Reilly, Moiz M. Beguwala and Mohy Abdelgany after reasonable inquiry and
(ii) with respect to Alpha, the knowledge of any of Thomas C. Leonard,
David J. Aldrich, Paul E. Vincent, Ljubisa Ristic, Michael Dys, David
Fryklund and Jean-Pierre Gillard after reasonable inquiry.
(l) "Material Adverse Effect" means, with respect to any entity
or business (or group of entities or businesses taken as a whole), any
event, change, circumstance or development that is materially adverse to
(i) the ability of such entity or business (or group of entities or
businesses taken as a whole) (or, in the case of a Material Adverse Effect
with respect to the Washington Business, Conexant and its Subsidiaries) to
consummate the transactions contemplated by this Agreement or (ii) the
business, financial condition or results of operations of such entity or
business (or, if with respect thereto, of such group of entities or
businesses taken as a whole), other than, with respect to this clause (ii),
any (1) change in the stock price of such entity or business, in and of
itself, or (2) event, change, circumstance or development (A) resulting
from any action taken in connection with the transactions contemplated
hereby pursuant to the terms of this Agreement, (B) relating to the economy
or financial markets in general, (C) relating in general to the industries
in which such entity or business operates and not specifically relating to
such entity or business or (D) relating to any action or omission of
Conexant, Alpha or Washington or any Subsidiary of any of them taken with
the express prior written consent of the parties hereto.
(m) A "Multiemployer Plan" means any "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA.
(n) "Nasdaq" means The Nasdaq Stock Market, Inc.
(o) "Person" means an individual, corporation, limited
liability entity, partnership, association, trust, unincorporated
organization, other entity or group (as defined in the Exchange Act),
including any Governmental Entity.
(p) "Reorganization Agreements" means collectively, the
Distribution Agreement, the Employee Matters Agreement, the Tax Allocation
Agreement and the Transition Services Agreement.
(q) "Subsidiary" when used with respect to any Person means any
corporation or other organization, whether incorporated or unincorporated,
at least a majority of the securities or other interests of which having by
their terms ordinary voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or
controlled by such Person or by any one or more of its Subsidiaries, or by
such Person and one or more of its Subsidiaries.
(r) "Tax" (and, with correlative meaning, "Taxes" and
"Taxable") shall mean (i) any federal, state, local or foreign net income,
gross income, receipts, windfall profit, severance, property, production,
sales, use, license, excise, franchise, employment, payroll, withholding,
alternative or add-on minimum, ad valorem, transfer, stamp, or
environmental tax, or any other tax, customs, duty or other like assessment
or charge of any kind whatsoever, together with any interest or penalty,
addition to tax or additional amount imposed by any governmental authority;
(ii) any liability for payments of a type described in clause (i) as a
result of being a member of an affiliated, consolidated, combined or
unitary group; and (iii) any liability for the payment of any amounts as a
result of being party to a tax sharing arrangement or as a result of any
express or implied obligation to indemnify any Person with respect to the
payment of amounts of the type described in clause (i) or clause (ii).
(s) "Tax Ruling" means a private letter ruling issued by the
IRS in form and substance reasonably satisfactory to Conexant and Alpha
indicating that the Contribution and the Distribution will qualify as a
reorganization under Sections 355 and 368 of the Code.
(t) "Washington Companies" means, collectively, Conexant and
its Subsidiaries who are engaged in the Washington Business, in each case,
solely to the extent related to the Washington Business, it being
understood that the term "Washington Companies" shall not be deemed to
refer to Conexant and its Subsidiaries to the extent not related to the
Washington Business.
(u) "Washington Employee" means any employee or former employee
of the Washington Business with respect to whom a member of the Washington
Group will have liability pursuant to the Employee Matters Agreement.
(v) A "Washington Plan" means any employee benefit plan,
program, policy, practice or other arrangement providing benefits to any
Washington Participants or any beneficiary or dependent thereof that is
sponsored or maintained by Conexant or any of its Subsidiaries or to which
Conexant or any of its Subsidiaries contributes or is obligated to
contribute, whether or not written, including any employee benefit plan
within the meaning of Section 3(3) of ERISA (whether or not such plan is
subject to ERISA) and any bonus, incentive, deferred compensation,
vacation, stock purchase, stock option, severance, employment, change of
control or fringe benefit plan, or similar program or agreement.
Each of the following terms is defined in the Section of this
Agreement or the agreement set forth opposite such term:
Term Section
- ---- -------
Actions.............................................. 5.1(j)
Affiliate Agreement.................................. 7.12
Agreement............................................ Preamble
Alpha................................................ Preamble
Alpha Acquisition Proposal........................... 7.5(b)
Alpha Common Stock................................... 1.4(a)
Alpha Disclosure Schedule............................ 5.1
Alpha Filed SEC Reports.............................. 5.1(d)(ii)
Alpha Financial Advisor.............................. 5.1(m)
Alpha Necessary Consents............................. 5.1(c)(iii)
Alpha Permits........................................ 5.1(h)(ii)
Alpha Recommendation................................. 7.1(b)
Alpha SEC Reports.................................... 5.1(d)(i)
Alpha Stock Options.................................. 5.1(b)(i)
Alpha Stockholders Meeting........................... 7.1(b)
Alpha Voting Debt.................................... 5.1(b)(ii)
Assets............................................... Distribution Agreement
By-Laws.............................................. 1.7
Certificate of Merger................................ 1.2(b)
Change in the Alpha Recommendation................... 7.1(b)
Closing.............................................. 1.2(a)
Closing Date......................................... 1.2(a)
Code................................................. Recitals
Combined Company..................................... Recitals
Combined Company Employees........................... 7.6(a)
Conexant............................................. Preamble
Conexant Common Stock................................ 5.2(b)(i)
Conexant Convertible Notes........................... 5.2(b)(i)
Conexant Disclosure Schedule......................... 5.2
Conexant Filed SEC Reports........................... 5.2(d)(iii)
Conexant Financial Advisor........................... 5.2(k)
Conexant Necessary Consents.......................... 5.2(c)(iv)
Conexant Preferred Stock............................. 5.2(b)(i)
Conexant Rights...................................... 5.2(b)(i)
Conexant Rights Agreement............................ 5.2(b)(i)
Conexant SEC Reports................................. 5.2(d)(i)
Conexant Stock Options............................... 5.2(b)(i)
Confidentiality Agreement............................ 7.3
Contract............................................. 5.1(c)(ii)
Contribution......................................... Recitals
Delaware Secretary................................... 1.2(b)
DGCL................................................. 1.1
Distribution......................................... Recitals
Distribution Agreement............................... Recitals
Distribution Date.................................... Distribution Agreement
DOJ.................................................. 7.4(b)
Effective Time....................................... 1.2(b)
Employee Matters Agreement........................... 4.1
Environmental Laws................................... 5.1(j)
Environmental Liabilities............................ 5.1(j)
Excess Alpha Shares.................................. 3.2(d)(ii)
Exchange Act......................................... 5.1(c)(iii)
Exchange Agent....................................... 3.1
Exchange Fund........................................ 3.1
Exchange Ratio....................................... 1.4(a)
Expenses............................................. 7.7
Facility Sale Agreement.............................. 6.2(l)
Facility Services Agreement.......................... 6.2(l)
Form S-4............................................. 7.1(a)
FTC.................................................. 7.4(b)
GAAP................................................. 5.1(d)(i)
Governmental Entity.................................. 5.1(c)(iii)
Hazardous Materials.................................. 5.1(j)
HSR Act.............................................. 5.1(c)(iii)
Injunction........................................... 8.1(b)
Intellectual Property................................ 5.1(k)
IRS.................................................. 7.17
Liens................................................ 5.1(a)(ii)
Merger............................................... Recitals
New Combined Company Plans........................... 7.6(b)
Newbury Supply Agreement............................. 4.1
Newport Supply Agreement............................. 4.1
Proxy Statement/Prospectus........................... 7.1(a)
Record Date.......................................... Distribution Agreement
Required Approvals................................... 7.4(a)
Required Alpha Vote.................................. 5.1(g)
Restated Certificate................................. 1.6
SEC.................................................. 5.1(a)(ii)
Securities Act....................................... 3.3
Shareholders Agreement............................... 7.16
Special Purpose Statement of
Tangible Net Assets.......................... Distribution Agreement
Superior Alpha Proposal.............................. 7.5(d)
Tax Allocation Agreement............................. 4.1
Termination Date..................................... 9.1(b)
Time of Distribution................................. Distribution Agreement
Transition Services Agreement........................ 4.1
Unaudited Special Purpose Statement of
Tangible Net Assets........................... 5.2(d)(ii)
U.S. Asset Purchase Agreement........................ 6.2(l)
Violation............................................ 5.1(c)(ii)
Washington........................................... Preamble
Washington Acquisition Proposal...................... 7.5(f)
Washington Assets.................................... Distribution Agreement
Washington Business.................................. Distribution Agreement
Washington Certificate............................... 1.4(b)
Washington Common Stock.............................. Recitals
Washington Financial Statements...................... 5.2(d)(ii)
Washington Group..................................... Distribution Agreement
Washington Liabilities............................... Distribution Agreement
Washington Option.................................... Employee Matters Agreement
Washington Participant............................... Employee Matters Agreement
Washington Permits................................... 5.2(f)(ii)
Washington Significant Subsidiaries.................. 5.2(a)(iii)
Washington Stock Plan................................ Employee Matters Agreement
Washington Subsidiaries.............................. Distribution Agreement
SECTION 10.12 DISCLOSURE SCHEDULE. The mere inclusion of an
item in the relevant Disclosure Schedule as an exception to a
representation, warranty or covenant shall not be deemed an admission by a
party that such item represents a material exception or material fact,
event or circumstance or that such item has had or would have a Material
Adverse Effect with respect to Conexant, Alpha, Washington, any Subsidiary
of the foregoing or the Washington Business, as applicable.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
CONEXANT SYSTEMS, INC.
By: /s/ Dwight W. Decker
------------------------------------
Dwight W. Decker
Chairman of the Board and Chief
Executive Officer
WASHINGTON SUB, INC.
By: /s/ Dwight W. Decker
------------------------------------
Dwight W. Decker
Chairman of the Board and Chief
Executive Officer
ALPHA INDUSTRIES, INC.
By: /s/ David J. Aldrich
------------------------------------
David J. Aldrich
President and Chief Executive Officer
Exhibit 2.2
==============================================================================
CONTRIBUTION AND DISTRIBUTION AGREEMENT
by and between
CONEXANT SYSTEMS, INC.
and
WASHINGTON SUB, INC.
==============================================================================
December 16, 2001
TABLE OF CONTENTS
Page
----
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
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
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
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.
"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;
(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 (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
(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 "Albert" 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.
"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
(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 1999 Indenture 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 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.
"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 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.
"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,
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 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).
"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 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
(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 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 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;
(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).
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
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
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 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 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.
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 071000013) 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 071000013), within
three business days after the Distribution Date, (x) the amount of all
balances contained immediately prior to the Time of Distribution in petty
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.
(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 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).
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 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 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.
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 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 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 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 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
071000013) 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).
(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 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, mark 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 the Conexant Marks or any name or mark 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 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 mark "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 mark,
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
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 mark subject
to Section 5.02(b) or the right of any member of the Washington Group to
use any mark 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 mark or
the use by any member of the Washington Group of any such mark 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 mark 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 mark 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 (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.
(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) 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 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 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 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.
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.
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 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 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:
(a) If to Conexant:
Conexant Systems, Inc.
4311 Jamboree Road
Newport Beach, California 92660-3095
Attention: Dwight W. Decker
Chairman of the Board and Chief Executive Officer
Telecopy: (949) 483-4318
E-mail: dwight.decker@conexant.com
with a copy to:
Conexant Systems, Inc.
4311 Jamboree Road
Newport Beach, California 92660-3095
Attention: Dennis E. O'Reilly, Esq.
Senior Vice President, General Counsel
and Secretary
Telecopy: (949) 483-6388
E-mail: dennis.o'reilly@conexant.com
(b) If to Washington after the Effective Time:
Washington Sub, Inc.
c/o Alpha Industries, Inc.
20 Sylvan Road
Woburn, Massachusetts 01801
Attention: Paul E. Vincent
Chief Financial Officer
Telecopy: (617) 824-4426
E-mail: pvincent@alphaind.com
with a copy to:
Alpha Industries, Inc.
20 Sylvan Road
Woburn, Massachusetts 01801
Attention: James K. Jacobs, Esq.
General Counsel
Telecopy: (617) 824-4564
E-mail: jjacobs@alphaind.com
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 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.
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).
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.]
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/ Dwight W. Decker
------------------------------------
Dwight W. Decker
Chairman of the Board and
Chief Executive Officer
WASHINGTON SUB, INC.
By: /s/ Dwight W. Decker
------------------------------------
Dwight W. Decker
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/ David J. Aldrich
--------------------------------------
David J. Aldrich
President and Chief Executive Officer
Exhibit 2.3
===============================================================================
MEXICAN STOCK AND ASSET PURCHASE AGREEMENT
DATED AS OF DECEMBER 16, 2001
BY AND BETWEEN
CONEXANT SYSTEMS, INC.
AND
ALPHA INDUSTRIES, INC.
===============================================================================
TABLE OF CONTENTS
Page No.
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ARTICLE I DEFINITIONS.....................................................................2
ARTICLE II SALE AND PURCHASE OF STOCK AND ASSETS..........................................12
Section 2.1. Purchase and Sale of Shares and Minority Shares................................12
Section 2.2. Purchase and Sale of Assets....................................................12
Section 2.3. Purchase Price.................................................................13
Section 2.4. Liabilities....................................................................13
Section 2.5. Allocation of Purchase Price...................................................13
ARTICLE III SELLER'S REPRESENTATIONS AND WARRANTIES........................................14
Section 3.1. Corporate Status, Good Standing and Authorization..............................14
Section 3.2. Authority; Enforceability......................................................14
Section 3.3. Consents; No Conflicts or Violations...........................................14
Section 3.4. Stock of Maquiladora...........................................................15
Section 3.5. Permits........................................................................15
Section 3.6. Compliance with Laws...........................................................16
Section 3.7. Financial Statements...........................................................16
Section 3.8. Absence of Certain Changes or Events...........................................16
Section 3.9. Facility.......................................................................17
Section 3.10. Litigation.....................................................................17
Section 3.11. Maquiladora Employee Matters...................................................17
Section 3.12. Maquiladora Labor Relations....................................................18
Section 3.13. Tax Matters....................................................................18
Section 3.14. Environmental Matters..........................................................19
Section 3.15. Assumed Contracts..............................................................20
Section 3.16. Material Contracts of Maquiladora..............................................20
Section 3.17. No Brokers.....................................................................22
Section 3.18. Title to Properties............................................................22
Section 3.19. Sufficiency of Assets..........................................................22
Section 3.20. Insurance......................................................................22
Section 3.21. Separate Tax Parcel............................................................22
Section 3.22. Utilities, etc.................................................................22
ARTICLE IV PURCHASER'S REPRESENTATIONS AND WARRANTIES.....................................23
Section 4.1. Organization of Purchaser and Minority Purchaser...............................23
Section 4.2. Authority; Enforceability......................................................23
Section 4.3. Consents; No Conflicts or Violations...........................................23
Section 4.4. Litigation.....................................................................24
Section 4.5. No Brokers.....................................................................24
ARTICLE V COVENANTS......................................................................24
Section 5.1. Access.........................................................................24
Section 5.2. Reasonable Best Efforts........................................................26
Section 5.3. Conduct of Business by Seller and Maquiladora..................................28
Section 5.4. Elimination of Intercompany Accounts...........................................29
Section 5.5. Intercompany Agreements........................................................29
Section 5.6. Mutual Release.................................................................29
Section 5.7. Public Announcements...........................................................31
Section 5.8. Supplements to Schedules.......................................................31
Section 5.9. Insurance......................................................................31
Section 5.10. Transition Services Agreement..................................................33
ARTICLE VI CONDITIONS TO SELLER'S AND PURCHASER'S OBLIGATIONS.............................34
Section 6.1. HSR Act........................................................................34
Section 6.2. Mexican Competition Commission Approval........................................34
Section 6.3. No Injunctions or Restraints, Illegality.......................................34
Section 6.4. Completion of the Merger.......................................................34
ARTICLE VII ADDITIONAL CONDITIONS TO SELLER'S AND PURCHASER'S OBLIGATIONS..................34
Section 7.1. Conditions to Seller's Obligations.............................................34
Section 7.2. Conditions to Purchaser's Obligations..........................................35
ARTICLE VIII CLOSING........................................................................36
Section 8.1. Deliveries by Seller...........................................................36
Section 8.2. Deliveries by Minority Shareholder.............................................37
Section 8.3. Deliveries by Purchaser........................................................37
Section 8.4. Deliveries by Minority Purchaser...............................................38
ARTICLE IX INDEMNIFICATION................................................................38
Section 9.1. Indemnification by Seller......................................................38
Section 9.2. Indemnification by Purchaser...................................................39
Section 9.3. Limitations on Indemnification Obligations.....................................39
Section 9.4. Procedures Relating to Indemnification.........................................41
Section 9.5. Sole and Exclusive Remedy......................................................43
Section 9.6. Termination of Indemnification Obligations.....................................43
Section 9.7. Effect of Investigation........................................................43
Section 9.8. Tax Matters....................................................................43
ARTICLE X TAX MATTERS....................................................................44
Section 10.1. Preparation and Filing of Tax Returns..........................................44
Section 10.2. Consistent with Past Practice..................................................44
Section 10.3. Payment of Taxes...............................................................44
Section 10.4. Allocation of Straddle Period Taxes............................................45
Section 10.5. Tax Refunds and Carrybacks.....................................................45
Section 10.6. Tax Indemnification............................................................46
Section 10.7. Notice of Indemnity............................................................48
Section 10.8. Payments.......................................................................48
Section 10.9. Tax Contests...................................................................48
Section 10.10. Cooperation and Exchange of Information........................................49
Section 10.11. Taxes; Profit-Sharing; Customs Duties; Transfer Sales and Use Taxes............49
Section 10.12. Tax Records....................................................................50
Section 10.13. Tax Sharing Agreements.........................................................51
Section 10.14. Dispute Resolution.............................................................51
ARTICLE XI TERMINATION....................................................................52
Section 11.1. Voluntary Termination..........................................................52
Section 11.2. Automatic Termination..........................................................52
Section 11.3. Effect of Termination..........................................................52
ARTICLE XII MISCELLANEOUS..................................................................52
Section 12.1. Assignment.....................................................................52
Section 12.2. Notices........................................................................53
Section 12.3. Choice of Law; Dispute Resolution..............................................54
Section 12.4. Survival of Representations and Warranties and Covenants.......................55
Section 12.5. Limitations on Representations and Warranties..................................55
Section 12.6. Entire Agreement; Waivers......................................................55
Section 12.7. Counterparts...................................................................55
Section 12.8. Severability...................................................................56
Section 12.9. Headings.......................................................................56
Section 12.10. Expenses.......................................................................56
Section 12.11. Amendments.....................................................................56
Section 12.12. Parties in Interest............................................................56
Section 12.13. Schedules and Exhibits.........................................................56
Section 12.14. Controlling Agreement..........................................................56
Section 12.15. Compliance with Bulk Sales Laws................................................57
Section 12.16. Savings Clause.................................................................57
Section 12.17. Cooperation Following the Closing..............................................57
MEXICAN STOCK AND ASSET PURCHASE AGREEMENT
MEXICAN STOCK AND ASSET PURCHASE AGREEMENT (this "Agreement"),
dated as of December 16, 2001, by and between Conexant Systems, Inc., a
Delaware corporation ("Seller"), and Alpha Industries, Inc., a Delaware
corporation ("Purchaser"). Seller and Purchaser are sometimes hereinafter
collectively referred to as the "Parties" and individually as a "Party."
RECITALS
A. Seller owns 108,096,704 shares (the "Shares") of the issued
and outstanding fixed and variable capital stock of Maquiladora (as defined
herein), which represent approximately 99.9999% of the issued and
outstanding shares of fixed and variable capital stock of Maquiladora; and
Minority Shareholder (as defined herein) owns the remaining 25 issued and
outstanding shares ("Minority Shares" and, together with the Shares, the
"Purchased Shares") of variable capital stock of Maquiladora.
B. Maquiladora conducts its business from the Facility (as
defined herein) located in Mexicali, Baja California, Mexico.
C. Seller owns certain tangible personal property located at
the Facility, including machinery and equipment, that is used by
Maquiladora in the conduct of its business and Seller is a party to certain
contracts relating to Maquiladora.
D. Seller desires to sell all of Seller's right, title and
interest in and to the Shares and the Assets (as defined herein), and
Purchaser desires to purchase the Shares and the Assets, all in accordance
with the terms of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the representations,
warranties, mutual covenants and promises contained herein and for other
good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
As used in this Agreement, the following terms shall have the
meanings given those terms in this ARTICLE I or in the Section of this
Agreement referenced in the definition provided for such term:
"Actually Realized" shall mean, for purposes of determining the
timing of any Taxes (or related Tax cost or benefit) relating to any
payment, transaction, occurrence or event, the time at which the amount of
Taxes (including estimated Taxes) payable by any Person is increased above
or reduced below, as the case may be, the amount of Taxes that such person
would be required to pay but for the payment, transaction, occurrence or
event.
"Advanced Pricing Agreement" means the proposed transfer
pricing agreement among, Seller, Maquiladora, the United States Internal
Revenue Service and certain Mexican Tax authorities for transactions
between Seller and Maquiladora for the annual tax periods of Maquiladora
commencing January 1, 2000 through January 1, 2004, which has been
submitted to the United States Internal Revenue Service and the appropriate
Mexican Tax authorities.
"Affiliate" of a Person means any other Person that, directly
or indirectly, controls, is controlled by, or is under common control with,
such Person. The term "control" (including, with correlative meaning, the
terms "controlled by" and "under common control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agreement" is defined in the first paragraph hereof.
"Assembly Agreement" is defined in Section 3.16(i).
"Assets" means all of Seller's right, title and interest in and
to (i) all tangible personal property (other than computer data, documents,
information, files, books and records), including Equipment, owned by
Seller and located at the Facility on the date hereof and used by
Maquiladora in the conduct of its business, together with prepaid expenses
paid by Seller with respect to such tangible personal property and all
third party insurance proceeds (if any) in respect of losses, liabilities
or damage with respect to such property arising out of insured incidents
occurring after the date hereof and prior to the Closing (to the extent
Seller and its Affiliates have no obligation to reimburse the insurer for
such insurance proceeds), (ii) all tangible personal property (other than
computer data, documents, information, files, books and records) owned by
Seller and located at the Facility on the Closing Date and used by
Maquiladora in the conduct of its business which is acquired by Seller
after the date hereof and prior to the Closing and all third party
insurance proceeds (if any) in respect of losses, liabilities or damage
with respect to such property arising out of insured incidents occurring
after the date hereof and prior to the Closing (to the extent Seller and
its Affiliates have no obligation to reimburse the insurer for such
insurance proceeds), (iii) the Assumed Contracts, (iv) the Books and
Records and (v) all third party insurance proceeds (if any) in respect of
losses, liabilities or damage with respect to the assets or properties of
Maquiladora arising out of insured incidents occurring after the date
hereof and prior to the Closing (to the extent Seller and its Affiliates
have no obligation to reimburse the insurer for such insurance proceeds),
but, in each case, excluding (A) the Excluded Assets and (B) all tangible
personal property owned by Seller located at the Facility and used by
Maquiladora in the conduct of its business which is sold or otherwise
disposed of by Seller in the ordinary course of business consistent with
past practice and the terms of this Agreement from and after the date
hereof and prior to the Closing (and all insurance proceeds related to such
property).
"Assumed Contracts" means all contracts listed on Schedule 3.15
and all contracts (including purchase orders) of Seller relating to the
Assets or entered into on behalf of Maquiladora (to the extent related to
the Assets) which are entered into after the date hereof and prior to the
Closing in the ordinary course of business consistent with past practice
and the terms of this Agreement.
"Assumed Liabilities" is defined in Section 2.4(a).
"Bailment Agreements" is defined in Section 3.16(ii).
"Benefit Plans" is defined in Section 3.11(b).
"Books and Records" means all documents, information, computer
data, files, books and records (in each case, in whatever form or media,
including electronic media) owned by Seller that relate exclusively to (i)
Maquiladora and its operations or (ii) the Assets, but excluding any
documents, information, files, books and records pertaining to any Excluded
Assets or Excluded Liabilities.
"Business Day" means a day other than a Saturday, a Sunday or a
day on which banks are required or authorized to close in the City of New
York.
"Charter Document" means any of the certificate of
incorporation, bylaws, agreement of limited partnership, operating
agreement or other organizational or constitutive document of a Person
(including, in the case of a Mexican Person, the acta constitutiva or
estatutos of such Person).
"Claim(s)" means any action, suit, litigation, proceeding,
arbitration or other method of settling disputes or disagreements and any
grievance, complaint, claim, charge, demand, investigation or other similar
matter.
"Claims Made Policies" is defined in Section 5.9(b).
"Closing" means the consummation of the transactions
contemplated by this Agreement on the Closing Date.
"Closing Material Adverse Effect" means any event, change,
circumstance or development that is materially adverse to (i) the ability
of Seller to consummate the transactions contemplated by this Agreement and
the Merger Agreement or (ii) the business, financial condition or results
of operations of Maquiladora, the business, financial condition or results
of operations of the Washington Business and the Assets taken as a whole,
other than, with respect to clause (ii), any event, change, circumstance or
development (A) resulting from any action taken in connection with the
transactions contemplated hereby pursuant to the terms of this Agreement or
the Merger Agreement, (B) relating to the economy or financial markets in
general, (C) relating in general to the industries in which Seller,
Maquiladora and the Washington Business operate and not specifically
relating to Seller, Maquiladora and the Washington Business or (D) relating
to any action or omission of Seller, Maquiladora or Washington or any
Subsidiary of any of them taken with the express prior written consent of
Purchaser.
"Closing Date" is defined in the first paragraph of ARTICLE VIII.
"Code" means the United States Internal Revenue Code of 1986,
as amended.
"Consent(s)" means any and all consents, waivers, approvals,
authorizations, declarations, filings, recordings, registrations or
exemptions.
"Damages" means any and all losses, Liabilities, claims,
damages, deficiencies, obligations, fines, payments, Taxes, Encumbrances,
and costs and expenses, whether 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 Claims; 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 Claims or in asserting,
preserving or enforcing an Indemnified Party's rights hereunder; and any
losses that may result from the granting of injunctive relief as a result
of any such Claims).
"Dispute" is defined in Section 12.3(b).
"dollars" or "U.S.$" means United States dollars.
"Effective Time" is defined in the Merger Agreement.
"Employee(s)" means any person employed by Maquiladora,
including persons employed on a full-time or part-time basis.
"Encumbrance" means any lien, pledge, easement, security
interest, mortgage, deed of trust, right-of-way, retention of title
agreement or other encumbrance of whatever nature.
"Environmental Claim" is defined in Section 3.14.
"Environmental Law" means any law, rule or regulation
applicable to the Facility enacted as of the Closing Date issued by any
Governmental Authority that asserts authority over Maquiladora or the
Assets regulating or pertaining to protection of human health or the
environment (including soil, surface waters, ground waters, natural
resources, land, stream, sediments, surface or subsurface strata and indoor
and ambient air, or relating to the presence, spillage, discharge, release
or emission of, or contamination and damage from, Hazardous Materials,
including those (i) requiring any Permits, or the renewal thereof, (ii)
regulating the amount, form, manner or storage, transport and/or disposal
of Hazardous Materials or (iii) requiring any record keeping, reporting,
inspection report or notification regarding Hazardous Material to a
Governmental Authority.
"Equipment" means machinery, equipment, furniture, furnishings,
fixtures and other tangible personal property (except Inventory and Books
and Records), including, data processing equipment, motor vehicles, dies,
tools, jigs and office equipment, together with all components and
auxiliary parts and supplies used in connection therewith, and all manuals,
drawings, instructions, warranties and rights with respect thereto.
"Excluded Assets" means the assets specifically set forth on
Schedule 2.2(a), including all Inventory and any and all Intellectual
Property of Seller.
"Excluded Liabilities" is defined in Section 2.4(a).
"Facility" means the Land and Improvements, including all
easements, licenses, options, insurance proceeds and condemnation awards
and all other rights of Maquiladora in or appurtenant thereto.
"Financial Statements" means the balance sheet of Maquiladora
as of November 23, 2001 and the related statement of income of Maquiladora
for the twelve-month period ended November 23, 2001, together with the
notes thereto.
"Governmental Authority" means any federal, state or local
governmental authority or regulatory body of any nation (including the
United States of America and the United Mexican States ("Mexico")), any
subdivision, agency, commission, board or authority or instrumentality
thereof, or any quasi-governmental or private body asserting, exercising or
empowered to assert or exercise any regulatory authority thereunder and any
Person, directly or indirectly, owned by and subject to the control of any
of the foregoing.
"Hazardous Material" means any hazardous waste, hazardous
material, hazardous substance, petroleum product, oil, toxic substance,
pollutant, contaminant, or other substance that is regulated under any
Environmental Law.
"HSR Act" means the Hart Scott Rodino Antitrust Improvements
Act of 1976, as amended.
"Improvements" means all buildings, structures, fixtures and
real property improvements located on the Land.
"including" means including without limiting the generality of
what precedes that term.
"Indemnified Party" is defined in Section 9.3(a).
"Indemnifying Party" is defined in Section 9.3(a).
"Indemnity Issue" is defined in Section 10.7.
"Indemnity Reduction Amounts" is defined in Section 9.3(a).
"Injunction" is defined in Section 6.3
"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).
"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" means trademarks, service marks, brand
names, certification marks, trade dress and other indications of origin,
the goodwill associated with the foregoing and registrations in any
jurisdiction of, and applications in any jurisdiction to register, the
foregoing, including any extension, modification or renewal of any such
registration or application; inventions, discoveries and ideas, whether
patentable or not, in any jurisdiction; patents, applications for patents
(including divisions, continuations, continuations in part and renewal
applications), and any renewals, extensions or reissues thereof, in any
jurisdiction; nonpublic information, trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any Person; writings and other works, whether copyrightable or
not, in any jurisdiction; and registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or
extensions thereof; and any similar intellectual property or proprietary
rights.
"Inventory" means all raw materials, components, Semiconductor
Wafers, other inputs, work in process and finished goods.
"Land" means that certain parcel of land owned by Maquiladora
commonly known as Ave. Iqnacio Lopez Rayon No. 1699, Colonial Rivera,
Mexicali, Baja California, Mexico.
"Law" means all laws, principals of common law, statutes,
constitutions, treaties, rules, regulations, ordinances, codes, ruling,
orders and determinations of any Governmental Authority.
"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 accepted
accounting principles to be reflected as a liability in financial
statements or disclosed in the notes thereto.
"Maquila Decree" is defined in Section 3.6.
"Maquiladora" means Conexant Systems, S.A. de C.V., a sociedad
anonima de capital variable organized under the laws of Mexico.
"Maquiladora Contracts" means all agreements listed in
Section 3.16.
"Material Adverse Change" or "Material Adverse Effect" means
any event, change, circumstance or development that is materially adverse
to (i) the ability of Seller to consummate the transactions contemplated by
this Agreement or (ii) the business, financial condition or results of
operations of Maquiladora and the Assets taken as a whole, other than, with
respect to clause (ii), any event, change, circumstance or development (A)
resulting from any action taken in connection with the transactions
contemplated hereby pursuant to the terms of this Agreement, (B) relating
to the economy or financial markets in general, (C) relating in general to
the industries in which Seller and Maquiladora operate and not specifically
relating to Seller and Maquiladora or (D) relating to any action or
omission of Seller or Maquiladora or any Subsidiary of either of them taken
with the express prior written consent of Purchaser.
"Merger" is defined in the recitals of the Merger Agreement.
"Merger Agreement" means the Agreement and Plan of
Reorganization, dated as of December 16, 2001, by and among Seller,
Washington and Purchaser.
"Mexican Compensation Requirements" is defined in Section
3.11(a).
"Mexican Competition Commission" means the Mexican Comision
Federal de Competencia established under Chapter IV of the Mexican Economic
Competition Law.
"Mexican Economic Competition Law" means the Mexican Ley
Federal de Competencia Economica published in the Mexican Official Gazette
(Diario Oficial de la Federacion) on December 24, 1992.
"Minority Purchaser" means the Person designated by Purchaser,
in a writing delivered to Seller at least two (2) Business Days prior to
the Closing Date, to purchase the Minority Shares.
"Minority Shareholder" means Mr. Balakrishnan S. Iyer.
"Minority Shareholder's Contrato de Compra-Venta de Acciones"
is defined in Section 10.12(a).
"Minority Shares" is defined in Recital A.
"Occurrence Basis Policies" is defined in Section 5.9(b).
"Party" and "Parties" are defined in the first paragraph of
this Agreement.
"Permits" means licenses, permits, authorizations, consents,
certificates, registrations, variances, franchises and other approvals from
any Governmental Authority, including those relating to environmental
matters.
"Permitted Encumbrance" means (i) in respect of real property,
Encumbrances consisting of zoning or planning restrictions, easements,
Permits or other restrictions or limitations on the use of real property or
irregularities in title thereto which do not materially detract from the
value of, or impair the use of, such real property as currently operated,
(ii) Encumbrances for Taxes, assessments or governmental charges or levies
on property not yet due and payable or which are being contested in good
faith and for which appropriate reserves are maintained, (iii) Encumbrances
of landlords, carriers, warehousemen, mechanics and other Encumbrances
imposed by law and incurred in the ordinary course of business, (iv) for
personal property, Encumbrances for purchase money obligations incurred in
the ordinary course of business consistent with past practice, (v)
Encumbrances set forth on Schedule 2.2(b) and (vi) other Encumbrances
(other than mortgages, deeds of trust, title retention agreements or
similar security interests on the Facility) which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect.
"Person" means an individual, corporation, limited liability
entity, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act), including any
Governmental Authority.
"Policies" means all insurance policies, insurance contracts
and claim administration contracts of any kind of Seller relating to
Maquiladora or the Assets which were or are in effect at any time at or
prior to the Closing, including primary, excess and umbrella, commercial
general liability, fiduciary liability, product liability, 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.
"Privileged Information" means, with respect to a Party,
Information regarding the Party or Maquiladora, 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 Party has or may come into
possession of or has obtained or may obtain access to pursuant to this
Agreement or otherwise.
"Promissory Note" means a promissory note issued by Purchaser
in favor of Seller in a principal amount equal to the Purchase Price,
substantially on the terms attached hereto as Exhibit "A" and in customary
form for transactions of this nature.
"Purchase Price" is defined in Section 2.3.
"Purchased Shares" is defined in Recital A.
"Purchaser" is defined in the first paragraph of this
Agreement.
"Purchaser Indemnified Parties" is defined in Section 9.1.
"Representative" means, with respect to any Person, any of such
Person's directors, officers, employees, agents, consultants, advisors,
accountants, attorneys and representatives.
"Schedules" means the disclosure schedules contained in this
Agreement which schedules are attached hereto and incorporated by reference
as if specifically set forth herein.
"SECOFI" is defined in Section 3.5.
"Seller" is defined in the first paragraph of this Agreement.
"Seller Indemnified Parties" is defined in Section 9.2.
"Seller's Contrato de Compra-Venta de Acciones" is defined in
Section 10.12(a).
"Semiconductor Wafers" means silicon and gallium arsenide
wafers, including cut wafers and dies, for the manufacture of
semiconductors supplied to Maquiladora by Seller prior to the Closing Date.
"Shares" is defined in Recital A.
"Straddle Period" is defined in Section 10.1.
"Subsidiary" when used with respect to any Person means any
corporation or other organization, whether incorporated or unincorporated,
at least a majority of the securities or other interests of which having by
their terms ordinary voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation or other organization is, directly or indirectly, owned or
controlled by such Person or by any one or more of its Subsidiaries, or by
such Person and one or more of its Subsidiaries.
"Supply Agreement" means the Supply Agreement, to be dated as
of the Closing Date, between Seller and Purchaser relating to the provision
by Purchaser to Seller of specified services and the provision by Seller to
Purchaser of other specified services, substantially on the terms attached
hereto as Exhibit "B".
"Tax" and "Taxes" shall mean all forms of taxation, whenever
created or imposed, and whether of the United States or elsewhere, and
whether imposed by a federal, state, municipal, governmental, territorial,
local, foreign or other body, and without limiting the generality of the
foregoing, shall include net income, gross income, gross receipts, sales,
use, value added, ad valorem, transfer, recording, franchise, profits,
license, lease, service, service use, payroll, wage, withholding,
employment, unemployment insurance, workers compensation, social security,
excise, severance, stamp, business license, business organization,
occupation, premium, property, environmental, windfall profits, customs,
duties, alternative minimum, estimated or other taxes, fees, premiums,
assessments or charges of any kind whatever imposed or collected by any
governmental entity or political subdivision thereof, together with any
related interest and any penalties, additions to such tax or additional
amounts imposed with respect thereto by any Tax authority.
"Tax Proceeding" means any audit, examination, Claim or other
administrative or judicial proceeding relating to Taxes or Tax Returns.
"Tax Return" shall mean any return, filing, questionnaire,
information return, election or other document required or permitted to be
filed, including requests for extensions of time, filings made with respect
to estimated tax payments, claims for refund and amended returns that may
be filed, for any period with any Tax authority (whether domestic or
foreign) in connection with any Tax (whether or not a payment is required
to be made with respect to such filing).
"Third Party Claim" is defined in Section 9.4(a).
"To the knowledge of Seller" or words of similar import with
respect to a fact or matter means the actual knowledge of the executive
officers of Seller listed on Schedule 1 after reasonable inquiry.
"Transition Services Agreement" means the Transition Services
Agreement to be entered into between Seller and Purchaser on or prior to
the Closing Date, relating to the provision by Purchaser to Seller of
specified services.
"U.S. Asset Purchase Agreement" means the U.S. Asset Purchase
Agreement, dated December 16, 2001, by and between Seller and Purchaser.
"U.S. GAAP" means generally accepted accounting principles as
applied in the United States as of the date of this Agreement.
"Washington" means Washington Sub, Inc., a Delaware
corporation.
"Washington Business" is defined in the Merger Agreement.
ARTICLE II
SALE AND PURCHASE OF STOCK AND ASSETS
-------------------------------------
Section 2.1. Purchase and Sale of Shares and Minority Shares.
(a) Purchase and Sale of Shares. At the Closing, Seller shall
sell, transfer, convey, assign and deliver to Purchaser, and Purchaser
shall purchase, acquire and accept, the Shares, free and clear of any
Encumbrances.
(b) Purchase and Sale of Minority Shares. At the Closing,
Seller shall cause Minority Shareholder to sell, transfer, convey, assign
and deliver to Minority Purchaser, and Purchaser shall cause Minority
Purchaser to purchase, acquire and accept, the Minority Shares, free and
clear of any Encumbrances.
Section 2.2. Purchase and Sale of Assets. At the Closing,
Seller shall sell, transfer, convey, assign and deliver to Purchaser, and
Purchaser shall purchase, acquire and accept, the Assets, as the same shall
exist on the Closing Date, free and clear of any Encumbrances other than
Permitted Encumbrances.
Section 2.3. Purchase Price. The purchase price (the "Purchase
Price") to be paid by Purchaser to Seller in consideration for the Shares,
the Minority Shares and the Assets shall be one hundred fifty million
dollars (U.S.$150,000,000), less the purchase paid by Purchaser in
consideration for the purchase of assets under the U.S. Asset Purchase
Agreement, payable, at the election of Purchaser, either (A) by wire
transfer of immediately available funds at the Closing or (B) by delivery
of the Promissory Note at the Closing; provided, however, that if Purchaser
shall elect to pay the Purchase Price pursuant to clause (B), Purchaser
shall provide written notice of such election to Seller no later than
thirty (30) days prior to the Closing Date.
Section 2.4. Liabilities.
(a) Assumption of Liabilities. At the Closing, Purchaser shall
unconditionally assume and agree to pay, perform and discharge in a timely
manner and in accordance with their respective terms those Liabilities of
Seller set forth on Schedule 2.4(a) (the "Assumed Liabilities"). Purchaser
shall not assume hereunder any Liabilities of Seller related to the Assets
that are not Assumed Liabilities (the "Excluded Liabilities").
(b) Liabilities of Maquiladora. Purchaser acknowledges that
subsequent to the Closing, except as specifically provided in Article X,
Maquiladora will retain and be responsible for all Liabilities and
obligations of Maquiladora, including any and all Liabilities or
obligations that relate back to events prior to the Closing Date.
Section 2.5. Allocation of Purchase Price. Purchaser and Seller
mutually agree that the aggregate purchase price to be paid by Purchaser to
Seller under this Agreement and the U.S. Asset Purchase Agreement is one
hundred fifty million dollars (U.S.$150,000,000). As soon as practicable
after the date hereof and prior to the Closing, Purchaser and Seller shall
agree upon a reasonable allocation from such amount to be the purchase
price to be paid by Purchaser to Seller under the U.S. Asset Purchase
Agreement. Purchaser and Seller mutually agree that the Purchase Price and
the Assumed Liabilities hereunder shall be allocated among the Assets, the
Shares and the Minority Shares in the manner required by Section 1060 of
the Code and Treasury Regulations promulgated thereunder. Purchaser and
Seller shall agree upon such allocation prior to the Closing and shall file
Form 8594 with the United States Internal Revenue Service reflecting such
allocation. Neither Seller nor Purchaser shall take a position inconsistent
with such allocation in any Tax Proceeding, in any refund claim, in any
litigation or investigation or otherwise. If a competent Government
Authority adjusts such allocation for any reason, the allocation shall be
deemed to be amended to conform to any such adjustments.
ARTICLE III
SELLER'S REPRESENTATIONS AND WARRANTIES
---------------------------------------
Seller hereby represents and warrants to Purchaser as of the
date hereof and as of the Closing Date the following:
Section 3.1. Corporate Status, Good Standing and Authorization.
Seller is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, with all
requisite corporate power and authority to own the Shares and the Assets,
except where the failure to have such power and authority, individually or
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect. Maquiladora is a sociedad anonima de capital variable duly
incorporated and validly existing under the law of its jurisdiction of
incorporation, with all requisite corporate power and authority to own and
lease its properties and to conduct its business as presently conducted,
except where the failure to have such power and authority, individually or
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect. Seller and Maquiladora are each duly licensed or qualified
to do business as a foreign corporation in all states or jurisdictions in
which the nature of its business requires such license or qualification,
except where the failure to be so licensed or qualified, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect. Seller has heretofore delivered to Purchaser complete and correct
copies of Maquiladora's Charter Documents.
Section 3.2. Authority; Enforceability. Seller has all
requisite corporate power and authority to enter into this Agreement and
perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement by Seller and the consummation by Seller of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement has been
duly authorized, executed and delivered by Seller and is a legally valid
and binding obligation of Seller (assuming that this Agreement constitutes
the valid and binding obligation of Purchaser) and is enforceable against
Seller in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and similar Laws relating to or affecting creditors generally or
by general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Section 3.3. Consents; No Conflicts or Violations. Except for
the Consents set forth on Schedule 3.3 and Consents which if not obtained
and maintained by Seller, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect, there are no
Consents of any Governmental Authority required in connection with (i)
Seller's execution and delivery of this Agreement and the other agreements,
documents and instruments to be executed and delivered by Seller in
connection herewith or (ii) the performance by Seller of its obligations
herein or therein or the consummation by Seller of the transactions
contemplated hereby or thereby. Assuming receipt of all of the Consents set
forth on Schedule 3.3 (including any required HSR Act approval, any
approval required by the Mexican Competition Commission under the Mexican
Economic Competition Law and any approval by SECOFI (as defined below) of
any change of any Permits held by Maquiladora), neither the execution or
delivery by Seller of this Agreement nor the consummation by Seller of the
transactions contemplated hereby will, with or without the giving of notice
or the lapse of time or both, conflict with or result in a breach or
violation of or give rise to a default or right of termination, amendment,
cancellation or acceleration under (i) any provision of Seller's or
Maquiladora's Charter Documents, (ii) any contract, agreement, note, bond,
mortgage, indenture, lease, license, franchise, permit, concession,
instrument or obligation to which Seller or Maquiladora is a party or by
which any of their respective properties or assets are bound or (iii) any
Law or license or other requirement to which Seller or Maquiladora or their
respective properties or assets is subject, except, in the case of items
(ii) and (iii) above only, for those which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect.
Section 3.4. Stock of Maquiladora. Maquiladora's Charter
Documents authorize the issuance of 8,750 shares of fixed capital stock and
an unlimited number of shares of variable capital stock, P$1.00 Mexican
Pesos par value, of which 8,750 shares of fixed capital stock and
108,087,979 shares of variable capital stock are issued and outstanding.
Seller owns directly 8,750 shares of fixed capital stock and 108,087,954
shares of variable capital stock and Minority Shareholder owns directly 25
shares of variable capital stock of Maquiladora. All of the capital stock
of Maquiladora has been duly authorized and is validly issued, fully paid
and nonassessable and is owned by Seller and Minority Shareholder free and
clear of all Encumbrances. There are no outstanding subscriptions, options,
warrants, preemptive or contractual rights, voting trusts, privileges or
any agreements to acquire any shares of capital stock of Maquiladora, or
any securities or obligations of any kind convertible or exchangeable into
any class of capital stock of Maquiladora. Maquiladora has no Subsidiaries
and does not own any shares of capital stock or any other securities of any
corporation and does not have any equity interest in any other Person.
Section 3.5. Permits. Seller and Maquiladora have or will have
as of the Closing all Permits which are required in order to allow Seller
to own the Shares and to own and use the Assets in the manner in which it
currently owns and uses such Assets or which are required in order to allow
Maquiladora to own its assets and properties and to conduct its business as
conducted as of the date hereof, including all Permits required from the
Mexican Ministry of Commerce and Industrial Promotion ("SECOFI") or its
successor, the Mexican Ministry of the Economy, except, in any such case,
for such Permits, which if not obtained or maintained, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect. Each of Seller and Maquiladora is and will be in compliance with
each such Permit, except where the failure to so comply, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect. No suspension or cancellation of any such Permits is or will be
pending or, to the knowledge of Seller, threatened, except for suspensions
or cancellations which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. Seller will have
delivered to Purchaser at or prior to Closing a list of all such Permits
held or obtained as of the Closing Date, except for such Permits, which if
not held or obtained, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
Section 3.6. Compliance with Laws. Except as disclosed on
Schedule 3.6, (i) Maquiladora is in compliance in all material respects
with all applicable Laws, including the Decree for the Development and
Operation of Maquiladora Export Industry, as amended (the "Maquila
Decree"), (ii) Seller is in compliance in all material respects with all
Laws applicable with respect to the Assets and the Shares, except in the
case of (i) or (ii) above, where the failure to so comply, individually or
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect, and (iii) to the knowledge of Seller, Maquiladora has not
received within the past twelve (12) months any written notice or
correspondence from any Governmental Authority to the effect that it is not
in compliance with any such applicable Laws, except for such violations
which, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect.
Section 3.7. Financial Statements. Annexed hereto as Schedule
3.7 are true and correct copies of the Financial Statements. The Financial
Statements fairly present the tangible assets and liabilities of
Maquiladora in all material respects as of November 23, 2001 and the
results of operations for the period indicated. Except as set forth on
Schedule 3.7, since November 23, 2001, Maquiladora has not incurred any
liabilities that are of a nature that would be required to be disclosed on
a statement of assets and liabilities of Maquiladora or in the footnotes
thereto prepared in conformity with U.S. GAAP, other than 1iabilities
incurred in the ordinary course of business or that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect.
Section 3.8. Absence of Certain Changes or Events. Except as
set forth on Schedule 3.8, since November 23, 2001, there has not been any
Material Adverse Change or any event, change, circumstance or development
which, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Change. Without limiting the generality of the
foregoing, except as set forth on Schedule 3.8, Maquiladora has been
operated since November 23, 2001 in the ordinary course of business
consistent with past practice (except as may be expressly contemplated by
this Agreement).
Section 3.9. Facility.
(a) Facility. Maquiladora owns good and marketable title to the
Facility, free and clear of any Encumbrances, except for Permitted
Encumbrances. To Seller's knowledge, there are no condemnation actions
pending against the Facility. There are no material leases, licenses,
concessions or occupancy agreements affecting the Facility. No interest of
Seller or Maquiladora in the Facility is subject to any right of first
refusal or right or option to purchase, lease or license the Facility or
any portion therein.
(b) Zoning. Neither Seller nor, to the knowledge of Seller,
Maquiladora has received notification or correspondence within the past
twelve (12) months that it is in violation of any applicable building,
zoning, health or other law, ordinance or regulation in respect to its
stores, plants or structures or their operations of the Facility, except
for such violations that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
Section 3.10. Litigation. Except as set forth on Schedule 3.10,
there is no action, suit or proceeding or regulatory investigation pending
or, to the knowledge of Seller, threatened against Seller, Minority
Shareholder or Maquiladora or its business or operations affecting (i)
Maquiladora or its business or operations, (ii) any of the Assets (iii) the
Purchased Shares or (iv) this Agreement before any court or arbitrator or
any governmental body, agency or official, except for those which, if
adversely determined, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. None of Seller,
Minority Shareholder or Maquiladora is a party to or subject to any
judgment, order, rule, writ, injunction, or decree of any Governmental
Authority or arbitrator which relates to or affects Maquiladora, the Assets
or the Purchased Shares, except as, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect.
Section 3.11. Maquiladora Employee Matters.
(a) Maquiladora Employees; Mexican Compensation Requirements.
Schedule 3.11(a) contains a list of all current Employees of Maquiladora as
of the date hereof. To the knowledge of Seller, Maquiladora is in
compliance with all Mexican laws, rules and regulations with respect to
severance, profit-sharing, Christmas bonus, vacation pay, vacation bonus,
retirement, pension and other employee benefit matters (collectively
"Mexican Compensation Requirements") applicable to its current and former
Employees, except where the failure to so comply, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect.
(b) Benefit Plans. Schedule 3.11(b) lists all material employee
pension benefit plans, employee welfare benefit plans, bonus, stock option,
stock purchase, other equity compensation, deferred compensation, incentive
compensation, severance, employee assistance plans and other employee
fringe benefit plans (collectively, the "Benefit Plans") maintained, or
contributed to, by Maquiladora or Seller for the benefit of any present or
former Employees except for those Benefit Plans (i) required by any Mexican
Governmental Authority and (ii) providing de minimis benefits.
(c) Compliance. To the knowledge of Seller, all employer and
employee contributions to each Benefit Plan required by the terms of such
Benefit Plan have been made, or, if applicable, accrued, in accordance with
Seller's normal accounting practices.
Section 3.12. Maquiladora Labor Relations. Except as stated on
Schedule 3.12, Maquiladora is not a signatory to any collective bargaining
agreement with any trade union or labor organization. Except as,
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect, (i) to the knowledge of Seller, Maquiladora is
not engaged in any unfair labor practice, (ii) there is no pending labor
board proceeding of any kind with respect to Maquiladora and (iii) no walk
out, strike or work stoppage by the Employees is in progress nor, to the
knowledge of Seller, has notice of any such walk out, strike or work
stoppage been filed or received by Maquiladora within the past twelve (12)
months.
Section 3.13. Tax Matters.
(a) Tax Returns. All material Tax Returns required to be filed
by Maquiladora or with respect to the Assets have been timely filed. All
such Tax Returns are true, correct and complete, except as, individually or
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect. All Taxes shown as due and payable by or with respect to
such Tax Returns have been timely paid in full.
(b) No Tax Proceedings. Except as set forth on Schedule
3.13(b), there are no Tax Proceedings presently pending with regard to any
Tax Returns or Taxes of Maquiladora or Taxes related to the Assets, and no
notice has been received from any Governmental Authority of the expected
commencement of such a Tax Proceeding.
(c) No Tax Liens. There are no Encumbrances for any Tax on the
Assets or the assets of Maquiladora, except for Permitted Encumbrances.
(d) No Consolidated Filings. Seller has not made an election
under Code Section 1504(d) to treat Maquiladora as a member of Seller's
affiliated group of corporations filing a consolidated income tax return
for United States income Tax purposes. No liability has been asserted
against Maquiladora with respect to Taxes of any affiliated group within
the meaning of Section 1504(a) of the Code of which Maquiladora has been a
member.
(e) No Tax Liability. No liability has been asserted against
Maquiladora with respect to Taxes of any other Person pursuant to any Tax
allocation or sharing agreement with any such Person, or any agreement to
indemnify any such Person with respect to Taxes.
(f) Tax Audits. Schedule 3.13(f) sets forth all income Tax
Returns of Maquiladora that are under audit by the relevant taxing
authority.
(g) None of the Assets is a lease made pursuant to Section
168(f)(8) of the Internal Revenue Code of 1954.
(h) None of the Assets constitute "tax exempt use property"
within the meaning of Section 168(h) of the Code or is "tax exempt bond
financed property" within the meaning of Section 168(g) of the Code.
(i) No Trade or Business. Maquiladora is not engaged in the
conduct of a "trade or business within the United States" within the
meaning of Code Section 864(b).
(j) IRC Code ss.ss. 956, 956A. Maquiladora does not have any of
its earnings invested in United States property within the meaning of Code
Section 956 and does not have "excess passive assets" within the meaning of
Code Section 956A.
Section 3.14. Environmental Matters. Except as disclosed on
Schedule 3.14 and except as, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect, (i) Maquiladora
and the Facility comply with all Environmental Laws, (ii) Maquiladora and
the Facility are not subject to any action, cause of action, or other
proceeding alleging the violation of any Environmental Law or relating to
the presence, or release into the environment, of any Hazardous Material
(collectively, "Environmental Claim"), (iii) Maquiladora has not received
any notice or claim (A) that it is or has been in violation (or potential
violation) of any Environmental Law or (B) alleging that Maquiladora is or
may be responsible for any response, cleanup, or corrective action,
including any remedial investigation/feasibility studies, under any
Environmental Law, which notice is not resolved or otherwise remains
pending, (iv) to Seller's knowledge, Maquiladora and the Facility are not
the subject of any investigation by a Governmental Authority pursuant to an
Environmental Law evaluating whether any remedial action or other response
is needed to respond to spillage, disposal or release or threatened release
into the environment of any Hazardous Material, (v) Maquiladora has not
filed any notice under or relating to any such Environmental Law indicating
or reporting any past or present spillage, disposal or release into the
environment of, or treatment, storage or disposal of, any Hazardous
Material which spill, release, treatment, storage or disposal has not been
performed and/or addressed in accordance with Environmental Laws and (vi)
to the knowledge of Seller as of the date hereof, there has been no release
of Hazardous Materials at the Facility that would be reasonably likely to
form the basis of any Environmental Claim against Maquiladora. The
representations and warranties in this Section 3.14 constitute the sole
representations and warranties of Seller concerning environmental matters
in this Agreement.
Section 3.15. Assumed Contracts. True and correct copies of all
Assumed Contracts in effect as of the date hereof have been made available
to Purchaser. Prior to Closing, Seller shall have made available to
Purchaser all Assumed Contracts that came into effect after the date
hereof. None of Seller or, to the knowledge of Seller, any other party to
any Assumed Contract, is in default under any Assumed Contract, except for
such defaults that, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect. To the knowledge of Seller,
no event has occurred with respect to any Assumed Contract which, with the
lapse of time or the giving of notice or both, would constitute a default
under any Assumed Contract, except for such defaults that, individually or
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect.
Section 3.16. Material Contracts of Maquiladora. Schedule 3.16
sets forth all of the following written agreements, commitments or
contracts of Maquiladora as of the date of this Agreement (collectively,
the "Maquiladora Contracts"):
(i) the assembly agreement with Seller whereby Seller
transfers raw materials, components, parts and other inputs to
Maquiladora and Maquiladora assembles, tests and ships finished
products to Seller (the "Assembly Agreement");
(ii) all gratuitous bailment agreements with Seller whereby
Seller gratuitously transfers equipment, machinery, tools and other
similar capital equipment to be used by Maquiladora to assemble and
test products (the "Bailment Agreements");
(iii) all agreements evidencing indebtedness for borrowed
money in an amount in excess of two hundred fifty thousand dollars
(U.S.$250,000) and all instruments constituting guarantees, sureties
or indemnities of obligations of third parties in an amount in excess
of two hundred fifty thousand dollars (U.S.$250,000);
(iv) all agreements restricting Maquiladora from conducting
any business in any geographic location;
(v) all agreements for construction of improvements on the
Facility in excess of two hundred fifty thousand dollars
(U.S.$250,000), individually, or five hundred thousand dollars
(U.S.$500,000), in the aggregate;
(vi) all agreements for the purchase, sale or lease of
capital assets in excess of one hundred thousand dollars
(U.S.$100,000), individually, or five hundred thousand dollars
(U.S.$500,000), in the aggregate;
(vii) all agreements under which termination, severance or
change in control payments may result due to a change of control of
Maquiladora in an amount in excess of fifty thousand dollars
(U.S.$50,000);
(viii) all agreements for the purchase or sale of any
business or any division, material assets or operating unit thereof;
(ix) all agreements with individual Employees providing for
payment in excess of fifty thousand dollars (U.S.$50,000) in any
given year;
(x) all powers of attorney granted by Maquiladora;
(xi) all agreements evidencing loans made by Maquiladora to
any Person, other than Employee advances in the ordinary course of
business consistent with past practice or loans made to Affiliates;
(xii) all agreements committing Maquiladora to use the
services of any vendor, supplier, licensor or licensee providing for
payments in excess of five hundred thousand dollars (U.S.$500,000) in
any given year; and
(xiii) all agreements (other than as set forth in (i)-(xii)
above) that are not cancelable by Seller on notice of ninety (90)
calendar days or less, without any material liability, penalty or
premium or acceleration of any material benefits, and which require
payment by Seller after the date hereof of more than five hundred
thousand dollars (U.S.$500,000) in any given year.
True and correct copies of all Maquiladora Contracts have been
made available to Purchaser. None of Maquiladora or, to the knowledge of
Seller, any other party to any Maquiladora Contract, is in default under
any Maquiladora Contract, except for such defaults that, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect. To the knowledge of Seller, no event has occurred with respect to
any Maquiladora Contract which, with the lapse of time or the giving of
notice or both, would constitute a default or give rise to any right of
termination, amendment, cancellation or acceleration under any Maquiladora
Contract, except for such as, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
Section 3.17. No Brokers. Neither this Agreement nor the sale
of the Assets, the Shares or the Minority Shares was induced or procured
through any Person acting on behalf of or representing Seller and no
commissions or any other payment is due to any intermediary in connection
therewith.
Section 3.18. Title to Properties. Seller has good and valid
title to the Assets and Maquiladora has good and valid title to all of its
tangible properties and assets, except, in each case, where the failure to
have such good and valid title, or valid leasehold interest, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
Section 3.19. Sufficiency of Assets. After giving effect to the
transfers, conveyances and assignments contemplated by this Agreement, the
U.S. Asset Purchase Agreement and the agreements, documents and instruments
executed and delivered pursuant hereto or thereto and after taking into
account any services to be provided to Purchaser and Maquiladora pursuant
to the Transition Services Agreement and the Supply Agreement, except for
the Excluded Assets (other than the Intellectual Property being assigned
pursuant to the U.S. Asset Purchase Agreement) and corporate services
provided by Seller to Maquiladora immediately after the Closing, the assets
of Maquiladora and the Assets will constitute all of the material assets
and rights of Seller and Maquiladora that are necessary to conduct the
operations of Maquiladora substantially as conducted on the date hereof.
Section 3.20. Insurance. Seller maintains insurance coverage in
respect of Maquiladora and the Assets with reputable insurers in such
amounts and covering such risks as is deemed reasonably appropriate for its
business (taking into account the cost and availability of such insurance).
Section 3.21. Separate Tax Parcel. To the knowledge of Seller,
the Facility is designated as one or more separate tax parcels.
Section 3.22. Utilities, etc. The Facility has rights of access
to public ways and is served by water, sewer, sanitary sewer and storm
drain facilities adequate to service the Facility for its current uses.
ARTICLE IV
PURCHASER'S REPRESENTATIONS AND WARRANTIES
------------------------------------------
Purchaser hereby represents and warrants to Seller as of the
date hereof and as of the Closing Date the following:
Section 4.1. Organization of Purchaser and Minority Purchaser.
Purchaser is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation.
Section 4.2. Authority; Enforceability. Purchaser has all
requisite corporate power and authority to enter into this Agreement and
perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement by Purchaser and the consummation by
Purchaser of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Purchaser. This Agreement
has been duly authorized, executed and delivered by Purchaser and is a
legally valid and binding obligation of Purchaser (assuming that this
Agreement constitutes the valid and binding obligation of Seller) and is
enforceable against Purchaser in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and similar Laws relating to or affecting
creditors generally or by general equity principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
Section 4.3. Consents; No Conflicts or Violations. Except for
the Consents set forth on Schedule 4.3 and the Consents which if not
obtained and maintained by Purchaser, individually or in the aggregate,
would not reasonably be expected to have a material adverse effect on
Purchaser's ability to consummate the transactions contemplated by this
Agreement, there are no Consents of any Governmental Authorities required
in connection with (i) Purchaser's execution and delivery of this Agreement
and the other agreements, documents and instruments to be executed and
delivered by Purchaser in connection herewith or (ii) the performance by
Purchaser of its obligations herein or therein or the consummation by
Seller of the transactions contemplated hereby or thereby. Assuming receipt
of all of the Consents set forth on Schedule 4.3 (including, any required
HSR Act approval and any approval required by the Mexican Competition
Commission under the Mexican Economic Competition Law), neither the
execution or delivery by Purchaser of this Agreement nor the consummation
by Purchaser of the transactions contemplated hereby will, with or without
the giving of notice or the lapse of time or both, conflict with or result
in a breach or violation of or give rise to a default or right of
termination, amendment, cancellation or acceleration under (i) any
provision of Purchaser's Charter Documents, (ii) any material contract,
agreement, note, bond, mortgage, indenture, lease, license, franchise,
permit, concession, instrument or obligation to which Purchaser is a party
or by which any of its properties or assets are bound or (iii) any Law or
license or other requirement to which Purchaser or its properties or assets
is subject, except, in the case of items (ii) and (iii) above only, for
those which, individually or in the aggregate, would not reasonably be
expected to have a material adverse effect on Purchaser's ability to
consummate the transactions contemplated by this Agreement.
Section 4.4. Litigation. Except as set forth on Schedule 4.4,
there is no action, suit or proceeding or regulatory investigation pending
or, to the knowledge of Purchaser, threatened against Purchaser or Minority
Purchaser affecting this Agreement before any court or arbitrator or any
governmental body, agency or official, except for those which, if adversely
determined, individually or in the aggregate, would not reasonably be
expected to have a material adverse effect on Purchaser's ability to
consummate the transactions contemplated by this Agreement. Neither
Purchaser nor Minority Purchaser is a party to or subject to any judgment,
order, writ, injunction, or decree of any Governmental Authority or
arbitrator, except as, individually or in the aggregate, would not
reasonably be expected to have a material adverse effect on Purchaser's
ability to consummate the transactions contemplated by this Agreement.
Section 4.5. No Brokers. Neither this Agreement nor the
purchase of the Assets, the Shares or the Minority Shares was induced or
procured through any Person acting on behalf of or representing Purchaser
and no commissions or any other payment is due to any intermediary in
connection therewith.
ARTICLE V
COVENANTS
---------
The Parties hereby covenant as follows:
Section 5.1. Access.
(a) Access to Information by Purchaser Prior to Closing. Prior
to Closing, subject to compliance with applicable laws, Seller and
Maquiladora shall, upon reasonable request, afford to Purchaser and its
Representatives reasonable access during normal business hours to all Books
and Records and all books and records of Maquiladora. Purchaser shall
coordinate its requests and activities under this Section 5.1 with Seller's
need for security and will assist Seller in minimizing disruption to
Maquiladora's normal business operations.
(b) Access to Information by Purchaser After Closing. From and
after the Closing, Seller will afford to Purchaser and its Representatives
(at Purchaser's expense) reasonable access and duplicating rights during
normal business hours and upon reasonable advance notice to all Books and
Records and all books and records within Seller's possession or control
relating to the Assets or Maquiladora, insofar as such access is reasonably
required by Purchaser.
(c) Access to Books and Records by Seller. Purchaser shall,
following the Closing, give Seller and its Representatives such access,
during normal business hours and upon reasonable prior notice, to the Books
and Records, the books and records of Maquiladora relating to periods prior
to the Closing and such other documents as shall be reasonably necessary
for Seller in connection with its performance of its obligations hereunder
and for any other reasonable purposes, and Purchaser will allow Seller and
its Representatives to make extracts and copies thereof as may be necessary
for such purposes at Seller's expense. Purchaser shall preserve and protect
the Books and Records and the books and records of Maquiladora relating to
periods prior to the Closing in its possession and control for the period
required by the applicable records retention policy of Seller in effect
immediately prior to the Closing. Purchaser shall offer to deliver the
Books and Records and the books and records of Maquiladora relating to
periods prior to the Closing to Seller prior to their destruction or other
disposition.
(d) Production of Witnesses. Subject to Section 5.1(e), after
the Closing, each Party will, and Purchaser will cause Maquiladora to, make
available to the other Party, upon written request and at the cost and
expense of the Party so requesting, its directors, officers, employees and
agents as witnesses 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 Claims or
administrative or other proceedings in which the requesting party may from
time to time be involved and relating to the Assets, Maquiladora's business
or operations prior to the Closing or arising in connection with the
relationship between the Parties and/or Maquiladora on or prior to the
Closing Date, provided that the same shall not unreasonably interfere with
the conduct of business by the Party of which the request is made.
(e) Confidentiality. From and after the Closing, each of Seller
and Purchaser shall hold, and shall use reasonable efforts to cause its
Affiliates and Representatives to hold, in strict confidence all
Information concerning the other Party or Maquiladora in its possession or
control prior to the Closing or furnished to it by another Party pursuant
to the Merger and the transactions contemplated thereby and will not
release or disclose such Information to any other Person, except its
Affiliates and its and their Representatives, who will be bound by the
provisions of this Section 5.1(e); provided, however, that any Person 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
Party) 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 or its Affiliates, Representatives or Subsidiaries, and not
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 5.1(e) by its Affiliates, Representatives and Subsidiaries.
Notwithstanding the foregoing, each Party will be deemed to have satisfied
its obligations under this Section 5.1(e) 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.
Section 5.2. Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement, each
Party will use its reasonable best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, and to assist and cooperate
with the other Party in doing or causing to be done, all things necessary,
proper or advisable under this Agreement and applicable laws to consummate
the transactions contemplated by this Agreement as soon as practicable
after the date hereof, including (i) taking all reasonable actions to cause
the conditions set forth in ARTICLES VI and VII to be satisfied as promptly
as practicable, (ii) preparing and filing as promptly as practicable all
documentation to obtain as promptly as practicable all Consents set forth
on Schedules 3.3 and 4.3 and (iii) taking all reasonable steps as may be
necessary to obtain all Consents set forth on Schedules 3.3 and 4.3. In
furtherance and not in limitation of the foregoing, each Party hereto
agrees to make (i) an appropriate filing (if applicable) of a Notification
and Report Form pursuant to the HSR Act and any comparable filings (if
applicable) pursuant to the Mexican Economic Competition Act with respect
to the transactions contemplated hereby as promptly as practicable after
the date hereof and (ii) all other necessary filings with other
Governmental Authorities relating to the transactions contemplated herein,
and, in each case, to supply as promptly as practicable any additional
information and documentary material that may be requested pursuant to such
applicable laws or by such Governmental Authorities and to use reasonable
best efforts to cause the expiration or termination of the applicable
waiting periods under the HSR Act and the Mexican Economic Competition Act
and the receipt of the Consents set forth on Schedules 3.3 and 4.3 under
such other applicable laws or from such Governmental Authorities as soon as
practicable.
(b) Each of Seller and Purchaser shall, in connection with the
efforts referenced in Section 5.2(a) to obtain all Consents set forth on
Schedules 3.3 and 4.3, use its reasonable best efforts to (i) cooperate in
all respects with each other in connection with any filing or submission
and in connection with any investigation or other inquiry, including any
proceeding initiated by a private party, (ii) promptly inform the other
Party of any communication received by such Party from, or given by such
Party to, the Antitrust Division of the Department of Justice (the "DOJ"),
the Federal Trade Commission (the "FTC"), the Mexican Competition
Commission or any other Governmental Authority and of any material
communication received or given in connection with any proceeding by a
private party, in each case regarding any of the transactions contemplated
hereby, and (iii) permit the other Party to review any communication given
by it to, and consult with each other in advance of any meeting or
conference with, the DOJ, the FTC, the Mexican Competition Commission or
any such other Governmental Authority or, in connection with any proceeding
by a private party, with any other Person, and to the extent appropriate or
permitted by the DOJ, the FTC, the Mexican Competition Commission or such
other applicable Governmental Authority or other Person, give the other
Party the opportunity to attend and participate in such meetings and
conferences.
(c) In furtherance and not in limitation of the covenants of
the Parties contained in Section 5.2(a) and Section 5.2(b), if any
administrative or judicial action or proceeding, including any proceeding
by a private party, is instituted (or threatened to be instituted)
challenging any transaction contemplated by this Agreement as violative of
any applicable laws, or if any statute, rule, regulation, executive order,
decree, injunction or administrative order is enacted, entered, promulgated
or enforced by a Governmental Authority which would make transactions
contemplated hereby illegal or would otherwise prohibit or materially
impair or delay the consummation of the transactions contemplated hereby,
each of the Parties shall cooperate in all respects with each other and use
its respective reasonable best efforts to contest and resist any such
action or proceeding and to have vacated, lifted, reversed or overturned
any decree, judgment, injunction or other order, whether temporary,
preliminary or permanent, that is in effect and that prohibits, prevents or
restricts consummation of the transactions contemplated by this Agreement
and to have such statute, rule, regulation, executive order, decree,
injunction or administrative order repealed, rescinded or made inapplicable
so as to permit the consummation of the transactions contemplated by this
Agreement.
(d) Notwithstanding the foregoing or any other provision of
this Agreement, nothing in this Section 5.2 shall create an obligation by
the Parties to take any action in addition to the actions required to be
taken pursuant to the Merger Agreement to consummate the Merger.
Section 5.3. Conduct of Business by Seller and Maquiladora.
From the data hereof until the Closing Date, Seller shall (and shall cause
Maquiladora to), except as expressly required or permitted by this
Agreement and except as otherwise consented to in writing by Purchaser:
(i) conduct the business and operations of Maquiladora and
employ the Assets in the ordinary course of business consistent with
past practice, subject to Maquiladora's right to declare and pay cash
dividends to its stockholders in respect of its capital stock prior
to the Closing in accordance with applicable Law;
(ii) not engage Maquiladora or the Assets in any new
material line of business;
(iii) use its commercially reasonable efforts to preserve
intact the business organization of Maquiladora and preserve the
relationships of Maquiladora with its suppliers and others having
business relations with Maquiladora;
(iv) maintain Maquiladora's existence in Mexico;
(v) not amend or modify Maquiladora's Charter Documents in
any material respects;
(vi) not permit Maquiladora to declare, pay or set aside for
payment any dividend or other distribution to its stockholders in
respect of its capital stock, other than the declaration and payment
of cash dividends by Maquiladora to its stockholders in respect of
its capital stock prior to the Closing in accordance with applicable
Law;
(vii) not permit Maquiladora to create any subsidiary,
acquire any capital stock or other equity securities of any
corporation or acquire any equity or ownership interest in any
business or entity;
(viii) not (A) grant, create, incur or suffer to exist any
Encumbrance (other than a Permitted Encumbrance granted, created,
incurred or suffered to exist in the ordinary course of business
consistent with past practice) on the Assets, (B) permit Maquiladora
to grant, create, incur, or suffer to exist any Encumbrance (other
than a Permitted Encumbrance granted, created, incurred or suffered
to exist in the ordinary course of business consistent with past
practice) on the assets of Maquiladora which did not exist on the
date hereof or (C) permit Maquiladora to create, incur or assume any
indebtedness for borrowed money (other than indebtedness to
Affiliates);
(ix) not permit Maquiladora to increase in any manner the
base compensation of, or enter into any new bonus or incentive
agreement or arrangement with, any Employees, directors or
consultants other than in the ordinary course of business consistent
with past practice;
(x) not permit Maquiladora to adopt or amend any Benefit
Plan or to increase the benefits provided under any Benefit Plan
other than in the ordinary course of business consistent with past
practice;
(xi) not permit Maquiladora to make any material Tax
election or settle or compromise any material Tax liability, other
than in the ordinary course of business consistent with past practice
or in accordance with Section 10.11(c) of this Agreement; and
(xii) not authorize, or commit or agree to take, any of the
foregoing actions.
Section 5.4. Elimination of Intercompany Accounts. Except as
set forth on Schedule 5.4, Seller (on behalf of itself and each of its
Subsidiaries, other than Maquiladora), on the one hand, and Maquiladora, on
the other hand, shall settle and eliminate, by cancellation or transfer to
the other (in a manner to be determined by Seller), effective as of the
Closing, all intercompany receivables, payables and other balances existing
immediately prior to the Closing between Seller and/or any of Seller's
Subsidiaries (other than Maquiladora), on the one hand, and Maquiladora, on
the other hand. This Section 5.4 shall not affect any rights of any Party
arising under this Agreement or any document, agreement or instrument
entered into pursuant hereto.
Section 5.5. Intercompany Agreements. Effective as of the
Closing, Seller and Maquiladora shall terminate (and, in the case of
Seller, Seller shall cause all of Seller's Subsidiaries to terminate) all
agreements between Seller and/or any of Seller's Subsidiaries, on the one
hand, and Maquiladora, on the other hand, including the Assembly Agreement
and the Bailment Agreements. This Section 5.5 shall not affect any rights
of any Party arising under this Agreement or any document, agreement or
instrument entered into pursuant hereto.
Section 5.6. Mutual Release. Effective as of the Closing and
except as otherwise specifically set forth in this Agreement, each of
Seller, on behalf of itself and each of Seller's Subsidiaries (other than
Maquiladora), on the one hand, shall, and Seller shall cause Maquiladora,
on the other hand, to, release and forever discharge 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
Closing; 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 this Agreement or any other document, agreement or instrument entered
into pursuant to this Agreement or assumed, transferred, assigned,
allocated or arising under this Agreement or any other document, agreement
or instrument entered into pursuant to this Agreement (including any
Liability that the Parties may have with respect to payment, performance,
reimbursement, indemnification or contribution pursuant to this Agreement
or any other document agreement or instrument entered into pursuant to this
Agreement for claims brought against the Parties by third Persons or any
Indemnified Party), and the foregoing release will not affect any Party's
right to enforce this Agreement or any other document agreement or
instrument entered into pursuant to this Agreement in accordance with their
respective 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 5.6 (provided, that the Parties agree not to bring suit or permit
any of their Subsidiaries to bring suit against any Party, its Subsidiaries
or Affiliates with respect to any Liability to the extent such Party, its
Subsidiaries and Affiliates would be released with respect to such
Liability by this Section 5.6 but for this clause (ii)).
Each of Seller and Purchaser 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 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 Seller, on behalf of itself and
Seller's Subsidiaries, and Purchaser, on behalf of itself and Maquiladora,
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 5.7. Public Announcements. The Parties shall use
reasonable best efforts to develop a joint communications plan and each
Party shall use reasonable best efforts (i) to ensure that all press
releases and other public statements with respect to the transactions
contemplated hereby shall be consistent with such joint communications
plan, and (ii) unless otherwise required by applicable laws or by
obligations pursuant to any listing agreement with or rules of any
securities exchange or automated quotation system, to consult with each
other before issuing any press release or, to the extent practicable,
otherwise making any public statement with respect to this Agreement or the
transactions contemplated hereby.
Section 5.8. Supplements to Schedules. From time to time up to
the Closing, Seller and Purchaser may supplement or amend the Schedules
after they have been delivered pursuant to this Agreement with respect to
any matter first existing or occurring on or after the date hereof which,
if existing or occurring at or prior to the date hereof, would have been
required to be set forth or described in such Schedules or which is
necessary to correct any information in such Schedules which has been
rendered inaccurate thereby; provided, however, that if any facts that give
rise to such matter existed or occurred on or before the date hereof, no
such supplement or amendment may be made under this Section 5.8 with
respect thereto. Any such supplement or amendment to any Schedule shall
not, following Closing, constitute a basis for any Claim for
indemnification pursuant to ARTICLE IX; provided, however, that no such
supplement or amendment shall be deemed to cure any breach of any
representations or warranties made pursuant to this Agreement for purposes
of Section 7.1(a) or Section 7.2(a).
Section 5.9. Insurance.
(a) Coverage. Subject to the provisions of this Section 5.9,
coverage of Maquiladora and the Assets under all Policies shall cease as of
the Closing. From and after the Closing, Purchaser will be responsible for
obtaining and maintaining all insurance coverages for the Assets and
Maquiladora. All Policies will be retained by Seller and Seller's
Subsidiaries, together with all rights, benefits and privileges thereunder
(including the right to receive any and all return premiums with respect
thereto), except that Purchaser will have the rights in respect of Policies
to the extent described in Section 5.9(b).
(b) Rights Under Policies. From and after the Closing,
Purchaser and Maquiladora will have no rights with respect to any Policies,
except that (i) Purchaser will have the right to assert claims (and Seller
will use commercially reasonable efforts to assist Purchaser in asserting
claims) for any loss, liability or damage with respect to the Assets or the
assets of Maquiladora 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 Closing to the extent that the terms and conditions of
any such Occurrence Basis Policies and agreements relating thereto so allow
and (ii) Purchaser will have the right to continue to prosecute claims with
respect to the Assets or the assets of Maquiladora properly asserted with
an insurer prior to the Closing (and Seller will use commercially
reasonable efforts to assist Purchaser 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 Closing 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 Seller's reasonable
out-of-pocket costs and expenses incurred in connection with the foregoing
are promptly paid by Purchaser, (B) Seller may, at any time, without
liability or obligation to Purchaser (other than as set forth in Section
5.9(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 Seller, any of
Seller's Subsidiaries or any Affiliate of Seller or any of Seller's
Subsidiaries in respect thereof and (E) such claims will be subject to
exhaustion of existing aggregate limits. Seller's obligation to use
commercially reasonable efforts to assist Purchaser in asserting claims
under applicable Policies will include using commercially reasonable
efforts in assisting Purchaser to establish its right to coverage under
such Policies (so long as all of Seller's reasonable out-of-pocket costs
and expenses in connection therewith are promptly paid by Purchaser). None
of Seller or Seller's 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 Purchaser for
incidents occurring prior to the Closing but which are asserted with the
insurance carrier after the Closing.
(c) Seller Actions. In the event that after the Closing, Seller
proposes to amend, commute, terminate, buy-out, extinguish liability under
or otherwise modify any Policies under which Purchaser has rights to assert
claims pursuant to Section 5.9(b) in a manner that would adversely affect
any such rights of Purchaser, (i) Seller will give Purchaser prior notice
thereof and consult with Purchaser with respect to such action (it being
understood that the decision to take any such action will be in the sole
discretion of Seller) and (ii) Seller will pay to Purchaser its equitable
share (which shall be determined by Seller in good faith based on the
amount of premiums paid by or allocated to Purchaser or Maquiladora in
respect of the applicable Policy) of any net proceeds actually received by
Seller from the insurer under the applicable Policy as a result of such
action by Seller (after deducting Seller's reasonable costs and expenses
incurred in connection with such action).
(d) Administration. From and after the Closing:
(i) Seller or a Subsidiary of Seller, as appropriate, will
be responsible for the Claims Administration with respect to claims
of Seller and Seller's Subsidiaries under Policies; and
(ii) Purchaser will be responsible for the Claims
Administration with respect to claims of Purchaser under Policies.
(e) Insurance Premiums. From and after the Closing, Seller 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 Closing, whereupon Purchaser will upon the request of Seller,
forthwith reimburse Seller for that portion of such premiums paid by Seller
as are reasonably determined by Seller to be attributable to the Assets or
Maquiladora.
(f) Agreement for Waiver of Conflict and Shared Defense. In the
event that a Policy provides coverage for both Seller and/or a Subsidiary
of Seller, on the one hand, and Purchaser, on the other hand, relating to
the same occurrence, Seller and Purchaser agree to defend jointly and to
waive any conflict of interest necessary to the conduct of that joint
defense. Nothing in this Section 5.9(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 5.10. Transition Services Agreement. Promptly following
the date hereof, Purchaser and Seller will discuss the scope, nature, term
and pricing of the transition services to be provided by Seller to
Purchaser following the Closing pursuant to the Transition Services
Agreement. Purchaser and Seller will negotiate in good faith with respect
thereto and prior to the Effective Time will enter into the Transition
Services Agreement in a form reasonably satisfactory to Purchaser and
Seller. The Transition Services Agreement will provide that either Party
may terminate any services provided under the Transition Services Agreement
upon such prior written notice as the Parties shall mutually agree prior to
the Closing.
ARTICLE VI
CONDITIONS TO
SELLER'S AND PURCHASER'S OBLIGATIONS
------------------------------------
The obligations of Seller and Purchaser to complete the
transactions contemplated by this Agreement are subject to the
satisfaction, on or prior to the Closing, of each of the following
conditions precedent; provided, however, that upon consummation of the
Merger, all conditions precedent contained in this ARTICLE VI shall be
deemed fully satisfied for purposes of this ARTICLE VI:
Section 6.1. HSR Act. The waiting period (and any extension
thereof) applicable to the transactions contemplated by this Agreement
under the HSR Act shall have been terminated or shall have expired.
Section 6.2. Mexican Competition Commission Approval. Seller
and Purchaser shall have received the required consent or approval of the
Mexican Competition Commission.
Section 6.3. No Injunctions or Restraints, Illegality. No Laws
shall have been adopted, promulgated or enforced by any Governmental
Authority, and no temporary restraining order, preliminary or permanent
injunction or other order issued by a court or other Governmental Authority
of competent jurisdiction (an "Injunction") shall be in effect, having the
effect of making the transactions contemplated under this Agreement illegal
or otherwise prohibiting such transactions. No proceeding initiated by any
Governmental Authority seeking, and which is reasonably likely to result in
the granting of, an Injunction shall be pending.
Section 6.4. Completion of the Merger. The Merger shall have
been consummated.
ARTICLE VII
ADDITIONAL CONDITIONS TO
SELLER'S AND PURCHASER'S OBLIGATIONS
------------------------------------
Section 7.1. Conditions to Seller's Obligations. The
obligations of Seller to complete the transactions contemplated by this
Agreement are subject to the satisfaction, on or prior to the Closing, of
each of the following conditions precedent; provided, however, that upon
consummation of the Merger, all conditions precedent contained in this
Section 7.1 shall be deemed fully satisfied for purposes of this ARTICLE VII:
(a) Representations, Warranties and Covenants. Each of the
representations and warranties of Purchaser contained in this Agreement
shall be true and correct (without giving effect to any qualification or
limitation as to materiality or material adverse effect set forth therein)
in each case as of the date hereof and (except to the extent that such
representations and warranties speak solely as to another date) as of the
Closing Date as though made on and as of the Closing Date, except where the
failure of such representations and warranties to be true and correct,
individually or in the aggregate, would not reasonably be expected to have
a material adverse effect on the ability of Purchaser to consummate the
transactions contemplated in this Agreement.
(b) Performance of Obligations of Purchaser. Purchaser (i)
shall have performed or complied with all agreements and covenants required
to be performed by it under this Agreement at or prior to the Closing Date
that are qualified as to materiality or material adverse effect and (ii)
shall have performed or complied in all material respects with all other
agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date that are not so qualified.
Section 7.2. Conditions to Purchaser's Obligations. The
obligations of Purchaser to complete the transactions contemplated by this
Agreement are subject to the satisfaction, on or prior to the Closing, of
each of the following conditions precedent; provided, however, that upon
consummation of the Merger, all conditions precedent contained in this
Section 7.2 shall be deemed fully satisfied for purposes of this ARTICLE VII:
(a) Representations, Warranties and Covenants. Each of the
representations and warranties of Seller contained in this Agreement shall
have been true and correct (without giving effect to any qualification or
limitation as to materiality or Material Adverse Effect set forth therein)
in each case as of the date hereof and (except to the extent that such
representations and warranties speak solely as to another date) as of the
Closing Date as though made on and as of the Closing Date, except where the
failure of such representations and warranties to be true and correct,
individually or in the aggregate, would not reasonably be expected to have
a Closing Material Adverse Effect.
(b) Performance of Obligations of Seller. Seller (i) shall have
performed or complied with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that
are qualified as to materiality or Material Adverse Effect and (ii) shall
have performed or complied in all material respects with all other
agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date that are not so qualified.
ARTICLE VIII
CLOSING
-------
The Closing shall, unless another time and date is agreed to in
writing by the Parties, take place immediately following the Closing (as
defined in the Merger Agreement) under the Merger Agreement and will be
effective immediately following the Effective Time (the time and date of
such Closing being herein called the "Closing Date"). The Closing will take
place at the offices of Chadbourne & Parke LLP, 30 Rockefeller Plaza, New
York, New York 10112, or such other place as the Parties may agree. On the
Closing Date, the Parties hereto shall deliver the following:
Section 8.1. Deliveries by Seller. At the Closing, Seller shall
deliver to Purchaser the following which in the case of documents, shall be
reasonably satisfactory to Purchaser:
(i) a stock certificate or certificates representing the
Shares, duly endorsed by Seller to Purchaser sufficient to transfer
to Purchaser good and marketable title to the Shares, and evidence
that such transfer to Purchaser of the Shares has been recorded on
the Maquiladora's stock registry book;
(ii) the Seller's Contrato de Compra-Venta de Acciones, duly
executed by Seller, in form and substance reasonably satisfactory to
Purchaser;
(iii) an Assets Bill of Sale and Assignment and Assumption
Agreement, duly executed by Seller, in form and substance reasonably
satisfactory to Purchaser;
(iv) the Assets;
(v) the Supply Agreement, duly executed by Seller, in form
and substance reasonably satisfactory to Purchaser;
(vi) the Transition Services Agreement, duly executed by
Seller, in form and substance reasonably satisfactory to Purchaser;
(vii) a duly sworn affidavit of Seller, dated as of the
Closing Date, stating that Seller is not a "foreign person" as that
term is defined in the Code, setting forth Seller's tax
identification numbers and otherwise meeting the requirements of
Section 1445(b)(2) of the Code and the Treasury Regulations
promulgated thereunder; and
(viii) all documents of title and instruments of conveyance
necessary to transfer record and beneficial ownership to Purchaser of
all Assets which require execution, endorsement or delivery of such a
document under applicable Law in order to vest record or beneficial
ownership thereto in Purchaser.
Section 8.2. Deliveries by Minority Shareholder. At the
Closing, Seller shall cause Minority Shareholder to deliver to Minority
Purchaser the following documents, which shall be reasonably satisfactory
to Purchaser:
(i) a stock certificate or certificates representing the
Minority Shares, duly endorsed by Minority Shareholder sufficient to
transfer to Purchaser good and marketable title to the Minority
Shares to Minority Purchaser, and evidence that such transfer of the
Minority Shares has been recorded on the Maquiladora's stock registry
book;
(ii) the Minority Shareholder's Contrato de Compra-Venta de
Acciones, duly executed by Minority Shareholder, in form and
substance reasonably satisfactory to Purchaser; and
(iii) a duly sworn affidavit of Minority Shareholder, dated
as of the Closing Date, stating that Minority Shareholder is not a
"foreign person" as that term is defined in the Code, setting forth
Minority Shareholder's tax identification numbers and otherwise
meeting the requirements of Section 1445(b)(2) of the Code and the
Treasury Regulations promulgated thereunder.
Section 8.3. Deliveries by Purchaser. At the Closing, Purchaser
shall deliver to Seller the following, which in the case of documents shall
be reasonably satisfactory to Seller:
(i) (A) cash payment of the Purchase Price (via wire
transfer of immediately available funds), pursuant to Section 2.3, or
(B) the Promissory Note, duly executed by Purchaser, in form and
substance reasonably satisfactory to Seller, in which case, Purchaser
shall deliver to Seller at Closing, in addition to the other
deliveries required hereby, (I) a security agreement, duly executed
by Purchaser, in form and substance reasonably satisfactory to Seller
and Purchaser and in customary form for transactions of this nature,
granting Seller a first priority security interest in the security
described on Exhibit "A", (II) such notices, recordings, mortgages,
statements, filings, instruments or other agreements and documents as
Seller may reasonably require to have a perfected first priority
security interest in the security described on Exhibit "A" and (III)
customary opinions of counsel to Purchaser for secured transactions
of this nature reasonably satisfactory to the Parties and their
counsel;
(ii) the Seller's Contrato de Compra-Venta de Acciones, duly
executed by Purchaser, in form and substance reasonably satisfactory
to Seller;
(iii) an Asset Bill of Sale and Assignment and Assumption
Agreement, duly executed by Purchaser, in form and substance
reasonably satisfactory to Seller;
(iv) the Supply Agreement, duly executed by Purchaser, in
form and substance reasonably satisfactory to Seller; and
(v) the Transition Services Agreement, duly executed by
Purchaser, in form and substance reasonably satisfactory to Seller.
Section 8.4. Deliveries by Minority Purchaser. At the Closing,
Purchaser shall cause Minority Purchaser to deliver to the Minority
Shareholder the following, which in the case of documents shall be
reasonably satisfactory to Minority Shareholder:
(i) the Minority Shareholder's Contrato de Compra-Venta de
Acciones duly executed by Minority Purchaser, in form and substance
reasonably satisfactory to Seller.
ARTICLE IX
INDEMNIFICATION
---------------
Section 9.1. Indemnification by Seller. Subject to the
limitations on and procedures for indemnification set forth in this ARTICLE
IX, Seller shall indemnify, defend and hold harmless Purchaser and its
Representatives and Affiliates and each of the heirs, executors, successors
and assigns of any of the foregoing (the "Purchaser Indemnified Parties")
from and against, and pay or reimburse, as the case may be, the Purchaser
Indemnified Parties for, any Damages, as incurred, suffered by any
Purchaser Indemnified Parties to the extent based upon, arising out of or
relating to the following:
(i) the breach of any representation or warranty of Seller
contained in this Agreement;
(ii) the breach by Seller of any covenant or agreement of
Seller contained in this Agreement;
(iii) the Excluded Liabilities (including the failure of
Seller to pay, perform or otherwise discharge any Excluded Liability
in accordance with its terms); or
(iv) the Excluded Assets.
Section 9.2. Indemnification by Purchaser. Subject to the
limitations on and procedures for indemnification set forth in this ARTICLE
IX, Purchaser shall indemnify, defend and hold harmless Seller and its
Representatives and Affiliates and each of the heirs, executors, successors
and assigns of any of the foregoing (collectively, the "Seller Indemnified
Parties") from and against, and pay or reimburse, as the case may be, the
Seller Indemnified Parties for, any Damages, as incurred, suffered by any
Seller Indemnified Parties to the extent based upon, arising out of or
relating to the following:
(i) the breach of any representation or warranty of
Purchaser contained in this Agreement;
(ii) the breach by Purchaser of any covenant or agreement of
Purchaser contained in this Agreement; or
(iii) the Assumed Liabilities (including, except as provided
in Section 12.16, the failure of Purchaser to pay, perform or
otherwise discharge any Assumed Liability in accordance with its
terms); or
(iv) any Liabilities of Maquiladora, except to the extent
that Seller is or would be required to indemnify an Indemnified Party
for such Liability under Section 9.1(i) (assuming for purposes of the
determination of whether such indemnification is or would be required
that (A) the indemnification obligation has not terminated under
Section 9.6 and (B) any relevant representations or warranties have
not expired under Section 12.4).
Section 9.3. Limitations on Indemnification Obligations. (a)
The amount which any Party (an "Indemnifying Party") is or may be required
to pay to any Person (an "Indemnified Party") in respect of Damages 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 Indemnified Party (net
of increased insurance premiums and charges to the extent related to
Damages and costs and expenses (including reasonable legal fees and
expenses) incurred by such Indemnified Party in connection with seeking to
collect and collecting such amounts) in respect of such Damages or other
Liability (such net amounts are referred to herein as "Indemnity Reduction
Amounts"). If any Indemnified Party receives any Indemnity Reduction
Amounts in respect of Damages for which indemnification is provided under
this Agreement after the full amount of such Damages has been paid by an
Indemnifying Party or after an Indemnifying Party has made a partial
payment of such Damages and such Indemnity Reduction Amounts exceed the
remaining unpaid balance of such Damages, then the Indemnified Party 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 Damages, less (B) the amount of the indemnity payment that
would have been 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 indemnity payment under
this Agreement, such amount shall be (i) reduced to take into account any
net Tax benefit realized by the Indemnified Party and its Affiliates
arising from the incurrence or payment by the Indemnified Party or its
Affiliates of any amount in respect of which such payment is made and (ii)
increased to take into account any net Tax cost incurred by the Indemnified
Party and its Affiliates as a result of the receipt or accrual of payments
hereunder (grossed-up for such increase), in each case determined by
treating the Indemnified Party and its Affiliates as recognizing all other
items of income, gain, loss, deduction or credit before recognizing any
item arising from the receipt of accrual of any payment hereunder. In
determining the amount of any such Tax benefit or Tax cost, the Indemnified
Party and its Affiliates shall be deemed to be subject to the applicable
Taxes at the maximum statutory rate then in effect. It is the intention of
the Parties to this Agreement that payments made pursuant to this Agreement
are to be treated as relating back to the Closing Date as a purchase price
adjustment, and the Parties shall not take any position inconsistent with
such intention before any Tax authority, 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 Seller to any
Purchaser Indemnified Party with respect to the indemnification of any
claims pursuant to Section 9.1(i) until the aggregate amount of Damages
actually incurred by the Purchaser Indemnified Parties with respect to such
claims shall exceed on a cumulative basis an amount equal to one million
dollars (U.S.$1,000,000), in which event Seller shall be responsible only
for the amount of such Damages in excess of one million dollars
(U.S.$1,000,000). No monetary amount will be payable by Seller to any
Purchaser Indemnified Party with respect to the indemnification of any
claims pursuant to Section 9.1(i) after the aggregate amount of Damages
actually paid by Seller with respect to such claims shall equal on a
cumulative basis an amount equal to ten million dollars (U.S.$10,000,000).
(d) No monetary amount will be payable by Purchaser to any
Seller Indemnified Party with respect to the indemnification of any claims
pursuant to Section 9.2(i) until the aggregate amount of Damages actually
incurred by the Seller Indemnified Parties with respect to such claims
shall exceed on a cumulative basis an amount equal to one million dollars
(U.S.$1,000,000), in which event Purchaser shall be responsible only for
the amount of such Damages in excess of one million dollars
(U.S.$1,000,000). No monetary amount will be payable by Purchaser to any
Seller Indemnified Party with respect to the indemnification of any claims
pursuant to Section 9.2(i) after the aggregate amount of Damages actually
paid by Purchaser with respect to such claims shall equal on a cumulative
basis an amount equal to ten million dollars (U.S.$10,000,000).
Section 9.4. Procedures Relating to Indemnification. (a) If a
claim or demand is made against an Indemnified Party, or an Indemnified
Party 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 Indemnified Party 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 Indemnified Party will deliver to the Indemnifying
Party, promptly after the Indemnified Party's receipt thereof, copies of
all material notices and documents (including court papers) received or
transmitted by the Indemnified Party's relating to the Third Party Claim.
(b) If a Third Party Claim is made against an Indemnified
Party, 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 Indemnified Party. Should the Indemnifying
Party so elect to assume the defense of a Third Party Claim, the
Indemnifying Party will not be liable to the Indemnified Party for any
legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof; provided, however, that if in the
Indemnified Party'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
Indemnified Party will have the right to employ separate counsel reasonably
satisfactory to the Indemnifying Party to represent such Indemnified Party
and in that event the reasonable fees and expenses of such separate counsel
(but not more than one separate counsel for all Indemnified Parties
similarly situated) shall be paid by such Indemnifying Party. If the
Indemnifying Party assumes the defense of any Third Party Claim, the
Indemnified Party 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 reasonable fees and expenses of counsel employed by the
Indemnified Party 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 Indemnified Party copies of all material correspondence and
documents relating to or in connection with such Third Party Claim and keep
the Indemnified Party fully informed of all material developments relating
to or in connection with such Third Party Claim (including providing to the
Indemnified Party on request updates and summaries as to the status
thereof). If the Indemnifying Party chooses to defend a Third Party Claim,
the Parties 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 Indemnified Party's prior written consent
(which consent will not be unreasonably withheld); provided, however, that
if the Indemnifying Party assumes the defense of any Third Party Claim, the
Indemnified Party 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
Damages in connection with such Third Party Claim and unconditionally and
irrevocably releases the Indemnified Party and its Affiliates completely
from all Liability in connection with such Third Party Claim; provided,
however, that the Indemnified Party may refuse to agree to any such
settlement, compromise or discharge (x) that provides for injunctive or
other non-monetary relief affecting the Indemnified Party or any of its
Affiliates or (y) that, in the reasonable opinion of the Indemnified Party,
would otherwise materially adversely affect the Indemnified Party or any of
its Affiliates. Whether or not the Indemnifying Party shall have assumed
the defense of a Third Party Claim, the Indemnified Party 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 Damages which does not involve a
Third Party Claim will be asserted by reasonably prompt written notice
given by the Indemnified Party to the Indemnifying Party from whom such
indemnification is sought. The failure by any Indemnified Party to so
notify the Indemnifying Party will not relieve the Indemnifying Party from
any liability which it may have to such Indemnified Party 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 Indemnified Party in connection with any Third Party Claim, such
Indemnifying Party will be subrogated to and shall stand in the place of
such Indemnified Party as to any events or circumstances in respect of
which such Indemnified Party 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 Indemnified Party 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 9.5. Sole and Exclusive Remedy. The indemnities
contained in this ARTICLE IX and ARTICLE X shall be the sole and exclusive
remedies of the Parties hereto, their Affiliates, successors and assigns
with respect to any and all claims arising out of or relating to this
Agreement, the transactions contemplated hereby, any provision hereof or
the breach or performance thereof.
Section 9.6. Termination of Indemnification Obligations. Except
as set forth in the following sentence, the indemnification obligations of
each of Seller and Purchaser hereunder will survive the Closing, including
surviving the sale or other transfer by any party to this Agreement of any
assets or businesses or the assignment by any party of any Liabilities. The
obligations of each Party to indemnify, defend and hold harmless
Indemnified Parties (i) pursuant to Sections 9.1(i) and 9.2(i), shall
terminate when the applicable representation or warranty expires pursuant
to Section 12.4, (ii) pursuant to Sections 9.1(ii) and 9.2(ii) shall
terminate upon the expiration of all applicable statutes of limitation
(giving effect to any extensions thereof, other than extensions caused by
the applicable Indemnified Party) and (iii) pursuant to Sections 9.1(iii),
9.1(iv), 9.2(iii) and 9.2(iv) shall continue without time limitation and
shall not terminate at any time; provided, however, that as to clauses (i)
and (ii) above, such obligations to indemnify, defend and hold harmless
shall not terminate with respect to any individual claim as to which the
Indemnified Party shall have, before the expiration of the applicable
period, previously delivered a notice (stating in reasonable detail the
basis of such claim) to the Indemnifying Party.
Section 9.7. Effect of Investigation. The right to
indemnification pursuant to Sections 9.1(i) and 9.2(i) 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.
Section 9.8. Tax Matters. Notwithstanding anything in Sections
9.1, 9.2, 9.4 or 9.5 to the contrary, ARTICLE X will be the exclusive
agreement among the Parties with respect to indemnification, procedures and
remedies with respect to Tax matters.
ARTICLE X
TAX MATTERS
-----------
Section 10.1. Preparation and Filing of Tax Returns. Seller
shall prepare and file or cause to be prepared and filed all Tax Returns
(including amendments thereto) which are required to be filed in respect of
Maquiladora or the Assets for any taxable period ending on or before the
Closing Date and any taxable period that includes (but does not end on) the
Closing Date (a "Straddle Period"). Purchaser hereby irrevocably
designates, and agrees to cause each of its Affiliates to designate, Seller
as its agent to take any and all actions necessary or incidental to the
preparation and filing of such Tax Returns. All Tax Returns (including
amendments thereto) required to be filed in respect of Maquiladora or the
Assets for taxable periods beginning after the Closing Date shall be the
responsibility of Purchaser.
Section 10.2. Consistent with Past Practice. Unless Seller and
Purchaser otherwise agree in writing, all Tax Returns (including amendments
thereto) described in Section 10.1 filed after the Closing Date for taxable
periods ending on or before the Closing Date or Straddle Periods, in the
absence of a controlling change in law or circumstances, shall be prepared
on a basis consistent with the elections, accounting methods, conventions
and principles of taxation used for the most recent taxable periods for
which Tax Returns involving similar matters have been filed. Upon request
of Purchaser, Seller shall make available a draft of such Tax Return (or
relevant portions thereof) for review and comment by Purchaser. Subject to
the provisions of this Agreement, all decisions relating to the preparation
of Tax Returns shall be made in the sole discretion of the party
responsible under this Agreement for such preparation.
Section 10.3. Payment of Taxes. Except as otherwise provided in
this Agreement, Seller shall pay or cause to be paid, on a timely basis,
(i) all Taxes due with respect to the Tax liability of Maquiladora for
taxable periods ending on or before the Closing Date or Straddle Periods
and (ii) all Taxes due with respect to the Assets for taxable periods
ending on or before the Closing Date and the portion of any Straddle Period
ending on the Closing Date; provided, however, that Purchaser, on behalf of
Maquiladora, hereby assumes and agrees to pay directly to or at the
direction of Seller, at least five days prior to the date payment
(including estimated payment) thereof is due, the portion of such Taxes for
that portion of any Straddle Period which begins on the day after the
Closing Date (calculated pursuant to Section 10.4) which relates to
Maquiladora or its business, assets or activities. Purchaser shall pay or
cause to be paid, on a timely basis, (i) all Taxes due with respect the Tax
liability of Maquiladora for any taxable period beginning after the Closing
Date and (ii) all Taxes due with respect to the Assets for taxable periods
beginning after the Closing Date and the portion of any Straddle Period
beginning on the day after the Closing Date.
Section 10.4. Allocation of Straddle Period Taxes. In the case
of any Straddle Period:
(a) Periodic Taxes. (i) The periodic Taxes of Maquiladora or
its business, assets or activities and the periodic Taxes with respect to
the Assets that are not based on income or receipts (e.g., property Taxes)
for the portion of any Straddle Period which ends on the Closing Date shall
be computed based on the ratio of the number of days in such portion of the
Straddle Period and the number of days in the entire taxable period, and
(ii) the periodic taxes of Maquiladora or its business, assets or
activities and the periodic Taxes with respect to the Assets that are not
based on income or receipts for the portion of any Straddle Period
beginning on the day after the Closing Date shall be computed based on the
ratio of the number of days in such portion of the Straddle Period and the
number of days in the entire taxable period
(b) Non-Periodic Taxes. (i) The Taxes of Maquiladora or its
business, assets or activities for that portion of any Straddle Period
ending on the Closing Date (other than Taxes described in Section 10.4(a)
above), shall be computed on a "closing-of-the-books" basis as if such
taxable period ended as of the close of business on the Closing Date, and
(ii) the Taxes of Maquiladora or its business, assets or activities for
that portion of any Straddle Period beginning after the Closing Date (other
than Taxes described in Section 10.4(a) above), shall be computed on a
"closing-of-the-books" basis as if such taxable period began on the day
after the Closing Date.
Section 10.5. Tax Refunds and Carrybacks.
(a) Retention and Payment of Tax Refunds. Except as otherwise
provided in this Agreement, Seller shall be entitled to retain, and to
receive within ten days after Actually Realized by Purchaser and its
Affiliates, the portion of all refunds or credits of Taxes for which Seller
is liable pursuant to Section 10.3 or Section 10.6(a), and Purchaser shall
be entitled to retain, and to receive within ten days after Actually
Realized by Seller and its Affiliates, the portion of all refunds or
credits of Taxes for which Purchaser is liable pursuant to Section 10.3 or
Section 10.6(b). The amount of any refund or credit of Taxes to which
Seller or Purchaser is entitled to retain or receive pursuant to the
foregoing sentence shall be reduced to take account of any Taxes incurred
by Purchaser and its Affiliates, in the case of a refund or credit to which
Seller is entitled, or Seller and its Affiliates, in the case of a refund
or credit to which Purchaser is entitled, upon the receipt of such refund
or credit.
(b) Carrybacks. Unless the parties otherwise agree in writing,
Purchaser shall elect where permitted by law, to carry forward any net
operating loss, net capital loss, charitable contribution or other item
arising after the Closing Date that could, in the absence of such election,
be carried back to a taxable period ending on or before the Closing Date.
Except as otherwise provided in this Agreement, notwithstanding the
provisions of Section 10.5(a), (i) any refund or credit of Taxes resulting
from the carryback of any item of Taxes attributable to Purchaser or its
Affiliates arising in a taxable period beginning after the Closing Date to
a taxable period ending on or before the Closing Date or that portion of
any Straddle Period that ends on the Closing Date shall be for the account
and benefit of Purchaser and its Affiliates, and (ii) any refund or credit
of Taxes resulting from the carryback of any item of Taxes attributable to
Seller or its Affiliates arising in a taxable period beginning after the
Closing Date to a taxable period ending on or before the Closing Date or
that portion of any Straddle Period that ends on the Closing Date shall be
for the account and benefit of Seller and its Affiliates.
(c) Refund Claims. Seller shall be permitted to file at
Seller's sole expense, and Purchaser shall reasonably cooperate with Seller
in connection with, any claims for refund of Taxes to which Seller is
entitled pursuant to this Section 10.5 or any other provision of this
Agreement. Seller shall reimburse Purchaser for any reasonable
out-of-pocket costs and expenses incurred by Purchaser and its
Representatives or Affiliates in connection with such cooperation.
Purchaser shall be permitted to file at Purchaser's sole expense, and
Seller shall reasonably cooperate with Purchaser in connection with, any
claims for refunds of Taxes to which Purchaser is entitled pursuant to this
Section 10.5 or any other provision of this Agreement. Purchaser shall
reimburse Seller for any reasonable out-of-pocket costs and expenses
incurred by Seller and its Representatives and Affiliates in connection
with such cooperation.
Section 10.6. Tax Indemnification.
(a) Seller Indemnification. Seller shall be liable for, and
shall indemnify, defend and hold harmless the Purchaser Indemnified Parties
from and against:
(i) all Taxes of Maquiladora for any taxable period that
ends on or before the Closing Date and the portion of any Straddle
Period ending on the Closing Date;
(ii) all Taxes due with respect to the Assets for taxable
periods ending on or before the Closing Date and the portion of any
Straddle Period ending on the Closing Date;
(iii) all Taxes for any Tax period (whether beginning
before, on or after the Closing Date) attributable to the breach by
Seller or its Affiliates of any representation, warranty, covenant or
obligation under this Agreement;
(iv) all liability for a breach by Seller of any
representation, warranty, covenant, or obligation under this
Agreement with respect to Tax matters; and
(v) all liability for any reasonable legal, accounting,
appraisal, consulting or similar fees and expenses relating to the
foregoing.
Notwithstanding the foregoing, Seller shall not indemnify,
defend or hold harmless the Purchaser Indemnified Parties from any
liability for Taxes attributable to a Purchaser Tax Act. A Purchaser Tax
Act shall mean any action specified in Schedule 10.6 attached hereto.
Seller's obligations under this Section 10.6(a) shall not be subject to the
limitations in Section 9.3 of this Agreement.
(b) Purchaser Indemnification. Purchaser shall be liable for,
and shall indemnify, defend and hold harmless the Seller Indemnified
Parties from and against:
(i) all Taxes of Maquiladora (other than Taxes for which
Seller is obligated to provide indemnification for pursuant to
Section 10.6(a)(i));
(ii) all Taxes due with respect to the Assets (other than
Taxes for which Seller is obligated to provide indemnification
pursuant to Section 10.6(a)(ii));
(iii) all Taxes for any Tax period (whether beginning
before, on or after the Closing Date) attributable to the breach by
Purchaser or its Affiliates of any representation, warranty, covenant
or obligation under this Agreement;
(iv) all liability for a breach by Purchaser of any
representation, warranty, covenant, or obligation under this
Agreement with respect to Tax matters;
(v) all Taxes attributable to a Purchaser Tax Act; and
(vi) all liability for any reasonable legal, accounting,
appraisal, consulting or similar fees and expenses relating to the
foregoing.
Purchaser's obligation under this Section 10.6(b) shall not be
subject to the limitations in Section 9.3 of this Agreement.
Section 10.7. Notice of Indemnity. Whenever an Indemnified
Party becomes aware of the existence of an issue raised by any Tax
authority which could reasonably be expected to result in a determination
that would increase the liability for any Tax of the other Party hereto or
any of its Representatives or Affiliates for any Tax period or require a
payment hereunder by the other party (hereinafter an "Indemnity Issue"),
the Indemnified Party shall in good faith promptly give notice to an
Indemnifying Party of such Indemnity Issue. The failure of the Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations under this Agreement, except to the extent such Indemnifying
Party or any of its Representatives or Affiliates is actually prejudiced by
such failure to give notice.
Section 10.8. Payments.
(a) Timing Adjustments. In the event that a final determination
(which shall include the execution of a Form 870-AD or successor form)
results in a timing difference (e.g., an acceleration of income or delay of
deductions) that would increase Seller's liability for Taxes pursuant to
ARTICLE IX or this ARTICLE X or results in a timing difference (e.g., an
acceleration of deductions or delay of income) that would increase
Purchaser's liability for Taxes pursuant to ARTICLE IX or this ARTICLE X,
Purchaser or Seller, as the case may be, will promptly make payments to
Seller or Purchaser as and when Purchaser or Seller (or its Affiliates), as
the case may be, actually realizes any Tax benefits as a result of such
timing difference (or under such other method for determining the present
value of any such anticipated Tax benefits as agreed to by the Parties).
(b) Time for Payment. Any indemnity payment required to be made
pursuant to this Agreement shall be paid within thirty days after the
Indemnified Party makes written demand upon the Indemnifying Party,
provided that in no event shall such payment be required to be made earlier
than five business days prior to the date on which the relevant Taxes
(including estimated Taxes) are required to be paid (or would be required
to be paid if no such Taxes are due) to the relevant Tax authority.
Section 10.9. Tax Contests. The Indemnifying Party and its
Representatives, at the Indemnifying Party's expense, shall be entitled to
participate (a) in all conferences, meetings and proceedings with any Tax
authority, the subject matter of which is or includes an Indemnity Issue
and (b) in all appearances before any court, the subject matter of which is
or includes an Indemnity Issue. The Party who has responsibility for filing
the Tax Return under this Agreement with respect to which there could be an
increase in liability for any Tax or with respect to which a payment could
be required hereunder shall have the right to decide as between the Parties
hereto how such matter is to be dealt with and finally resolved with the
appropriate Tax Authority and shall control all audits and similar
proceedings, provided, however, that if such contest would be reasonably
expected to result in a material increase in the tax liability (i) of
Maquiladora or (ii) related to the Assets, for which Purchaser would be
liable, Purchaser may participate in the conduct of such contest and Seller
shall not settle any such contest without the consent of Purchaser, which
consent shall not be unreasonably withheld. If no Tax Return is or was
required to be filed in respect of an Indemnity Issue, the Indemnifying
Party shall be treated as the responsible party with respect thereto. The
responsible party agrees to cooperate in the settlement of any Indemnity
Issue with the other Party and to take such other Party's interests into
account.
Section 10.10. Cooperation and Exchange of Information. Each
Party hereto agrees to provide, and to cause each of its Affiliates to
provide, such cooperation and information as such other Party shall
request, on a timely basis, in connection with the preparation or filing of
any Tax Return or claim for Tax refund not inconsistent with this Agreement
or in conducting any Tax audit, Tax dispute, or otherwise in respect of
Taxes or to carry out the provisions of this Agreement, provided, however,
that neither Party shall be obligated to provide the other Party with Tax
Returns, documentation or other information of a proprietary or
confidential nature for purposes of verifying any calculation, and provided
further, that in any such case where one Party does not provide the other
Party with Tax Returns, documentation or information because it is
proprietary or confidential, both Parties shall cooperate in developing
mutually acceptable procedures including retaining a mutually agreeable
accounting firm to review such Tax Returns, documentation or information
for purposes of verifying such calculation.
Section 10.11. Taxes; Profit-Sharing; Customs Duties; Transfer
Sales and Use Taxes.
(a) Mexican Taxes on Sale of Shares, Minority Shares and the
Assets. Seller shall, and shall cause Minority Shareholder to, fully comply
with all Mexican Tax laws in connection with the sale of the Shares, the
Minority Shares and the Assets, respectively, such that Purchaser and the
Minority Purchaser shall not be required to deduct or withhold any amount
from the Purchase Price. Seller agrees to indemnify and hold Purchaser and
Minority Purchaser harmless from and against any Taxes imposed on any gain
from the sale by Seller or Minority Shareholder, respectively, of the
Shares, the Minority Shares or the Assets under this Agreement due to any
Governmental Authority, including any obligation Purchaser or Minority
Purchaser may have to withhold or remit to Mexican Governmental Authorities
Taxes levied on Seller or Minority Shareholder as a result of the sale of
the Shares, the Minority Shares or the Assets under this Agreement. The
Parties agree that the Spanish language stock purchase agreement with
respect to the Shares and the Spanish language stock purchase agreement
with respect to the Minority Shares to be delivered at the Closing as
provided in Section 8.1(ii), Section 8.2(ii), Section 8.3(ii) and Section
8.4(i), shall be used by the Parties, Minority Shareholder and Minority
Purchaser for Mexican Tax reporting purposes and that the consideration set
forth in such documents shall be the same as and not in addition to the
Purchase Price.
(b) No Tax Elections. Purchaser shall not make any U.S. federal
income Tax elections with respect to its purchase of the Shares.
(c) Advanced Pricing Agreement; Effect on Taxes and Profit
Sharing. Seller, at its own expense, shall have the sole and exclusive
right, power and authority to negotiate with the appropriate Mexican
Governmental Authorities and enter into the Advanced Pricing Agreement.
Seller agrees to keep Purchaser informed of the status of such negotiations
and shall not enter into the Advanced Pricing Agreement without the consent
of Purchaser, which consent shall not be unreasonably withheld. Maquiladora
shall cooperate with Seller in negotiating and finalizing the Advanced
Pricing Agreement. Purchaser agrees to cause Maquiladora not amend,
supplement or modify the Advanced Pricing Agreement as it would relate to
periods prior to the Closing.
(d) Mexican Customs Duties. Purchaser and Seller will, and
Purchaser will cause Maquiladora after the Closing to, cooperate in good
faith to prepare and execute any and all customs documents required to
legally allow Maquiladora to continue to use the Assets in Mexico, in
accordance with applicable Mexican Law and to file a virtual exportation
and virtual importation pediment to reconcile the open pediments of
Maquiladora at the Closing. Seller shall be responsible for any customs
duties or fees relating to periods prior to the Closing. Purchaser and
Maquiladora will be responsible for any customs duties or fees relating to
periods from and after the Closing.
(e) Transfer, Sales and Use Taxes. Notwithstanding anything to
the contrary in this Agreement, all transfer, documentary, sales, use,
stamp, registration, value added and other similar Taxes and fees
(including any penalties and interest) incurred in connection with the
transactions contemplated by this Agreement shall be shared equally by
Seller and Purchaser. Each Party hereto agrees to file all necessary
documentation (including all Tax Returns) with respect to all such Taxes in
a timely manner. On or before the Closing Date, Purchaser shall provide to
Seller a required sales and use tax purchase exemption certificate or
certificates with respect to the Assets to the extent they constitute (i)
exempt tangible personal property held for resale or for incorporation into
goods to be held for resale, (ii) exempt manufacturing and production
equipment, or (iii) otherwise are exempt from the sales and use tax upon
the provision of an appropriate exemption certificate.
Section 10.12. Tax Records.
(a) The Parties agree to (and to cause each of their Affiliates
to) (i) retain all Tax Returns, related schedules and work papers, and all
material records and other documents as required under Section 6001 of the
Code and the regulations promulgated thereunder relating thereto existing
on the date hereof or created through the Closing Date, for a period of at
least ten years following the Closing Date and (ii) allow the Party to this
Agreement, at times and dates reasonably acceptable to the retaining Party,
to inspect, review and make copies of such records, as the Parties may
reasonably deem necessary or appropriate from time to time. In addition,
after the expiration of such ten-year period, such Tax Returns, related
schedules and workpapers, and material records shall not be destroyed or
otherwise disposed of at any time, unless, prior to such destruction or
disposal, (A) the Party proposing to destroy or otherwise dispose of such
records shall provide no less than 30 days' prior written notice to the
other Party, specifying in reasonable detail the records proposed to be
destroyed or disposed of and (B) if a recipient of such notice shall
request in writing prior to the scheduled date for such destruction or
disposal that any of the records proposed to be destroyed or disposed of be
delivered to such requesting Party, the Party proposing the destruction or
disposal shall promptly arrange for the delivery of such requested records
at the expense of the Party requesting such records.
(b) Notwithstanding anything in this Agreement to the contrary,
if any Party fails to comply with the requirements of Section 10.12(a)
hereof, the Party failing so to comply shall be liable for, and shall hold
the other Party, harmless from, any Taxes (including without limitation,
penalties for failure to comply with the record retention requirements of
the Code) and other costs resulting from such Party's failure to comply.
Section 10.13. Tax Sharing Agreements. On the Closing Date, all
Tax sharing agreements and arrangements between (a) Maquiladora, on the one
side, and (b) Seller or any of its Subsidiaries or Affiliates, on the other
side, will be terminated and have no further effect for any taxable year or
period (whether a past, present or future year or period), and no
additional payments will be made thereunder on or after the Closing Date in
respect of a redetermination of Tax liabilities or otherwise.
Section 10.14. Dispute Resolution. Any dispute, claim or
controversy arising out of or relating to any provision of ARTICLE X of
this Agreement will be resolved in accordance with the procedures set forth
in Section 12.3(b) of this Agreement, provided that each such mediator or
arbitrator selected pursuant to such procedures shall have an expertise in
Tax matters.
ARTICLE XI
TERMINATION
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Section 11.1. Voluntary Termination. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned at any
time prior to the Closing Date by the mutual written consent of Purchaser
and Seller.
Section 11.2. Automatic Termination. In the event of a
termination of the Merger Agreement, this Agreement shall automatically and
immediately terminate.
Section 11.3. Effect of Termination. In the event of the
termination of this Agreement, all further obligations of the Parties
hereunder shall terminate, and the transactions contemplated hereby shall
be abandoned without further action or liability by any of the Parties
hereto, except that (i) Section 11.3 ("Effect of Termination"), Section
12.2 ("Notices"), Section 12.3 ("Choice of Law, Dispute Resolution"),
Section 12.6 ("Entire Agreement; Waivers"), Section 12.8 ("Severability"),
Section 12.10 ("Expenses"), Section 12.12 ("Parties in Interest") and
Section 12.14 ("Controlling Agreement") shall survive such termination and
(ii) nothing shall relieve any Party hereto from liability for any breach
of this Agreement prior to such termination.
ARTICLE XII
MISCELLANEOUS
-------------
Section 12.1. Assignment. No 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. Notwithstanding the foregoing, any 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 (A) all or substantially
all of the assets of such Party as a whole, (B) any line of business or
division of such Party, or (C), in the case of Purchaser, the Facility,
(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 or (iv) an Affiliate. In the event of an
assignment pursuant to (ii) or (iii) above, the non-assigning 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 12.1 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 12.2. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed duly given (a) on the
date of delivery if delivered personally, (b) upon confirmation of receipt
if delivered by telecopy or telefacsimile, (c) on the first Business Day
following the date of dispatch if delivered by a recognized next-day
courier service, or (d) on the fifth Business Day following the date of
mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder shall be delivered as set
forth below, or pursuant to such other instructions as may be designated in
writing by the Party to receive such notice:
If to Purchaser, to:
Alpha Industries, Inc.
20 Sylvan Road
Woburn, MA 01801
Fax: (617) 824-4426
Attention: Paul E. Vincent
Chief Financial Officer
With copies to (not effective for purposes of notice):
Alpha Industries, Inc.
20 Sylvan Road
Woburn, MA 01801
Fax: (617) 824-4564
Attention: James K. Jacobs, Esq.
General Counsel
or if to Seller, to:
Conexant Systems, Inc.
4311 Jamboree Road
Newport Beach, California 92660-3095
Fax: (949) 483-6388
Attention: Dennis E. O'Reilly
Senior Vice President, General
Counsel and Secretary
With a copy to (not effective for purposes of notice):
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, New York 10112
Fax: (212) 541-5369
Attention: Peter R. Kolyer, Esq.
Section 12.3. Choice of Law; Dispute Resolution.
(a) Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (without
giving effect to choice of law principles).
(b) Dispute Resolution. In the event that from and after the
Closing, any dispute, claim or controversy (collectively, a "Dispute")
arises out of or relates to any provision of this Agreement or the breach,
performance, enforcement or validity or invalidity thereof, the designees
of Seller's Chief Executive Officer and Purchaser's Chief Executive Officer
will attempt a good faith resolution of the Dispute within thirty (30) days
after either Party notifies the other Party in writing of the Dispute. If
the Dispute is not resolved within thirty (30) days of the receipt of the
notification, or within such other time as they may agree, the Dispute will
be referred for resolution to Seller's Chief Executive Officer and
Purchaser's Chief Executive Officer. Should they be unable to resolve the
Dispute within thirty (30) days following the referral to them, or within
such other time as they may agree, Seller and Purchaser 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 (30) 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 Seller and Purchaser,
who shall not be the same person as the mediator appointed pursuant to the
preceding sentence. If Seller and Purchaser cannot agree upon the identity
of an arbitrator within ten (10) days after the arbitration process is
initiated, then the arbitration will be conducted before three arbitrators,
one selected by Seller, one selected by Purchaser 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 (180) days from the commencement of the arbitration
action, subject to any extension of time thereof allowed by the arbitrators
upon good cause shown.
Section 12.4. Survival of Representations and Warranties and
Covenants. The respective representations and warranties of the Parties
contained in this Agreement (other than those set forth in the following
sentence) will survive the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the Closing and
will continue in full force and effect until six (6) months after the
Closing Date and will then expire. The representations and warranties of
the Parties contained in Section 3.1, Section 3.2, Section 3.3, Section
3.4, Section 3.9(a), Section 3.13, Section 3.18, Section 4.1, Section 4.2,
and Section 4.3 will survive the execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby and the Closing
and will continue in full force and effect until all applicable statutes of
limitation (including any extensions thereof) have expired and will then
expire. All covenants of the Parties contained in this Agreement will
remain in full force and effect after, and survive, the Closing (other than
those to be performed at or prior to the Closing).
Section 12.5. Limitations on Representations and Warranties.
Except for the representations and warranties set forth in this Agreement,
the Assets, the Shares and the Minority Shares are being sold "AS IS, WHERE
IS, AND WITH ALL FAULTS." EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET
FORTH IN THIS AGREEMENT, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES
WHATSOEVER CONCERNING THE ASSUMED LIABILITIES, THE ASSETS, THE FACILITY,
THE BUSINESS OR OPERATIONS OF MAQUILADORA OR ANY OTHER MATTER, EXPRESS OR
IMPLIED, ORAL, OR WRITTEN. SELLER HEREBY SPECIFICALLY DISCLAIMS THE IMPLIED
WARRANTY OF MERCHANTABILITY AND THE IMPLIED WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE.
Section 12.6. Entire Agreement; Waivers. This Agreement,
together with all exhibits and Schedules hereto, and the other agreements
and instruments of the Parties delivered in connection herewith constitute
the entire agreement and supersede all prior agreements and understandings
both written and oral, among the Parties with respect to the subject matter
hereof. The failure of any Party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of
those rights.
Section 12.7. 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 12.8. 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 12.9. Headings. The headings of the Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
Section 12.10. Expenses. Except as otherwise provided in this
Agreement, each of the Parties shall be liable for its own expenses
incurred in connection with the negotiation, preparation, execution and
performance of this Agreement prior to Closing.
Section 12.11. Amendments. This Agreement cannot be amended,
modified or supplemented except by a written agreement executed by Seller
and Purchaser.
Section 12.12. 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 the provisions of Sections 9.1, 9.2 and 10.6
hereof shall inure to the benefit of the Persons referred to therein.
Section 12.13. Schedules and Exhibits. Inclusion of an item or
matter on any of the Schedules or Exhibits attached hereto shall not be
deemed to be an admission by any Party that such item or matter is required
to be disclosed in such Schedule or Exhibit. Each disclosure on each
Schedule, to the extent specified therein, qualifies the correspondingly
numbered representation and warranty or covenant contained herein and, to
the extent it is apparent on the face of such disclosure that such
disclosure qualifies another representation or warranty contained herein,
such other representation and warranty.
Section 12.14. Controlling Agreement. In the event of any
inconsistency between the provisions of this Agreement and those of either
Seller's Contrato de Compra-Venta de Acciones or Minority Shareholder's
Contrato de Compra-Venta de Acciones, this Agreement shall be controlling
(other than with respect to the governing law).
Section 12.15. Compliance with Bulk Sales Laws. The Parties
hereby waive compliance with the bulk sales laws and any other similar laws
in any applicable jurisdiction in respect of the transactions contemplated
by this Agreement.
Section 12.16. Savings Clause. Anything contained herein to the
contrary notwithstanding, this Agreement shall not constitute an agreement
to assign any Assumed Contract 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 Seller or Purchaser thereunder. If any
such Consent is not obtained or if an attempted assignment would be
ineffective or would impair any rights of either Seller or Purchaser under
any such Assumed Contract that Purchaser would not receive all such rights,
then (x) Seller will use commercially reasonable efforts (it being
understood that such efforts shall not include any requirement of Seller to
pay any consideration or offer or grant any financial accommodation) to
provide or cause to be provided to Purchaser the benefits of any such
Assumed Contract and Seller will promptly pay or cause to be paid to
Purchaser when received all moneys and properties received by Seller with
respect to any such Assumed Contract and (y) to the extent that Purchaser
receives the benefits of such Assumed Contract, Purchaser will pay, perform
and discharge on behalf of Seller all of Seller'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 Assumed Contract
shall be effected as promptly following the Closing as shall be practicable
in accordance with the terms of this Agreement.
Section 12.17. Cooperation Following the Closing. Following the
Closing, the Parties shall each deliver to the other such further
information and documents and shall execute and deliver to the other such
further instruments and agreements as the other shall reasonably request to
consummate or confirm the transactions provided for in this Agreement, to
accomplish the purpose of this Agreement or to assure to the other the
benefits of this Agreement.
[The remainder of this page is left intentionally blank;
signature page follows]
IN WITNESS WHEREOF, each of the Parties listed below has
executed this Mexican Stock and Asset Purchase Agreement as of the day and
year first above written.
CONEXANT SYSTEMS, INC.
By: /s/ Dwight W. Decker
--------------------------------------
Dwight W. Decker
Chairman of the Board and Chief
Executive Officer
ALPHA INDUSTRIES, INC.
By: /s/ David J. Aldrich
--------------------------------------
David J. Aldrich
President and Chief Executive Officer
Schedules
Schedule 1 Certain Executive Officers of Seller
Schedule 2.2(a) Excluded Assets
Schedule 2.2(b) Permitted Encumbrances
Schedule 2.4(a) Assumed Liabilities
Schedule 3.3 Consents Required by Seller
Schedule 3.6 Compliance with Laws
Schedule 3.7 Financial Statements
Schedule 3.8 Certain Changes or Events
Schedule 3.10 Seller Litigation
Schedule 3.11(a) List of Employees
Schedule 3.11(b) Benefit Plans
Schedule 3.12 Labor Relations
Schedule 3.13(b) Tax Proceedings
Schedule 3.13(f) Tax Audits
Schedule 3.14 Environmental Matters
Schedule 3.15 Assumed Contracts
Schedule 3.16 Maquiladora Contracts
Schedule 4.3 Consents Required by Purchaser
Schedule 4.4 Purchaser Litigation
Schedule 5.4 Intercompany Accounts
Schedule 10.6(a) Purchaser Tax Act
Exhibits
Exhibit A Terms of Promissory Note
Exhibit B Terms of Supply Agreement
Exhibit 2.4
==============================================================================
U.S. ASSET PURCHASE AGREEMENT
DATED AS OF DECEMBER 16, 2001
BY AND BETWEEN
CONEXANT SYSTEMS, INC.,
AND
ALPHA INDUSTRIES, INC.
==============================================================================
TABLE OF CONTENTS
Page No.
ARTICLE I DEFINITIONS.....................................................................1
ARTICLE II SALE AND PURCHASE OF ASSETS.....................................................8
Section 2.1. Purchase and Sale of Assets.....................................................8
Section 2.2. Purchase Price..................................................................8
Section 2.3. No Assumption of Liabilities....................................................9
Section 2.4. Allocation of Purchase Price....................................................9
ARTICLE III SELLER'S REPRESENTATIONS AND WARRANTIES.........................................9
Section 3.1. Corporate Status, Good Standing and Authorization...............................9
Section 3.2. Authority; Enforceability.......................................................9
Section 3.3. Consents; No Conflicts or Violations...........................................10
Section 3.4. Compliance with Laws...........................................................10
Section 3.5. Intellectual Property..........................................................10
Section 3.6. Litigation.....................................................................11
Section 3.7. Employee Matters...............................................................11
Section 3.8. Labor Relations................................................................11
Section 3.9. Tax Matters....................................................................11
Section 3.10. No Brokers.....................................................................12
Section 3.11. Title to Properties............................................................12
Section 3.12. Insurance......................................................................12
ARTICLE IV PURCHASER'S REPRESENTATIONS AND WARRANTIES.....................................12
Section 4.1. Organization of Purchaser......................................................12
Section 4.2. Authority; Enforceability......................................................12
Section 4.3. Consents; No Conflicts or Violations...........................................13
Section 4.4. Litigation.....................................................................13
Section 4.5. No Brokers.....................................................................14
ARTICLE V COVENANTS......................................................................14
Section 5.1. Access.........................................................................14
Section 5.2. Reasonable Best Efforts........................................................15
Section 5.3. Conduct of Business by Seller..................................................17
Section 5.4. Employment Arrangements........................................................18
Section 5.5. Public Announcements...........................................................18
Section 5.6. Supplements to Schedules.......................................................19
Section 5.7. Insurance......................................................................19
Section 5.8. License of Purchaser Intellectual Property to Seller...........................21
ARTICLE VI CONDITIONS TO SELLER'S AND PURCHASER'S OBLIGATIONS.............................22
ARTICLE VII CLOSING........................................................................22
Section 7.1. Deliveries by Seller...........................................................22
Section 7.2. Deliveries by Purchaser........................................................23
ARTICLE VIII INDEMNIFICATION................................................................23
Section 8.1. Indemnification by Seller......................................................23
Section 8.2. Indemnification by Purchaser...................................................24
Section 8.3. Limitations on Indemnification Obligations.....................................24
Section 8.4. Procedures Relating to Indemnification.........................................25
Section 8.5. Sole and Exclusive Remedy......................................................27
Section 8.6. Termination of Indemnification Obligations.....................................28
Section 8.7. Effect of Investigation........................................................28
ARTICLE IX TAXES..........................................................................28
Section 9.1. Transfer, Sales and Use Taxes..................................................28
Section 9.2. Tax Returns....................................................................28
Section 9.3. Prorations.....................................................................29
Section 9.4. Allocation of Straddle Period Taxes............................................29
ARTICLE X TERMINATION....................................................................29
Section 10.1. Voluntary Termination..........................................................29
Section 10.2. Automatic Termination..........................................................30
Section 10.3. Effect of Termination..........................................................30
ARTICLE XI MISCELLANEOUS..................................................................30
Section 11.1. Assignment.....................................................................30
Section 11.2. Notices........................................................................30
Section 11.3. Choice of Law; Dispute Resolution..............................................32
Section 11.4. Survival of Representations and Warranties and Covenants.......................32
Section 11.5. Limitations on Representations and Warranties..................................33
Section 11.6. Entire Agreement; Waivers......................................................33
Section 11.7. Counterparts...................................................................33
Section 11.8. Severability...................................................................33
Section 11.9. Headings.......................................................................34
Section 11.10. Expenses.......................................................................34
Section 11.11. Amendments.....................................................................34
Section 11.12. Parties in Interest............................................................34
Section 11.13. Schedules and Exhibits.........................................................34
Section 11.14. Cooperation Following the Closing..............................................34
U.S. ASSET PURCHASE AGREEMENT
U.S. ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of
December 16, 2001, by and between Conexant Systems, Inc., a Delaware
corporation ("Seller"), and Alpha Industries, Inc., a Delaware corporation
("Purchaser"). Seller and Purchaser are sometimes hereinafter collectively
referred to as the "Parties" and individually as a "Party."
RECITALS
A. Seller employs certain employees (the "Package Design Team")
at its facilities in Newport Beach, California, who perform certain design
and other functions in support of certain manufacturing and assembly
operations conducted by Seller and its Affiliates (as defined herein) in
Mexicali, Baja California, Mexico;
B. Seller owns certain assets (including certain intellectual
property) in the United States utilized by the Package Design Team, which
it desires to sell to Purchaser; and
C. Purchaser desires to purchase the Assets (as defined herein)
and employ the Package Design Team Employees (as defined herein) pursuant
to the terms set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the representations,
warranties, mutual covenants and promises contained herein and for other
good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
As used in this Agreement, the following terms shall have the
meanings given those terms in this ARTICLE I or in the Section of this
Agreement referenced in the definition provided for such term:
"Affiliate" of a Person means any other Person that, directly
or indirectly, controls, is controlled by, or is under common control with,
such Person. The term "control" (including, with correlative meaning, the
terms "controlled by" and "under common control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agreement" is defined in the first paragraph hereof.
"Assets" means all of Seller's right, title and interest in and
to (i) the equipment specifically set forth on Schedule 2.1, together with
all prepaid expenses paid by Seller with respect to such equipment and all
third party insurance proceeds (if any) in respect of losses, liabilities
or damage with respect to such equipment arising out of insured incidents
occurring after the date hereof and prior to the Closing (to the extent
Seller and its Affiliates have no obligation to reimburse the insurer for
such insurance proceeds), (ii) the Intellectual Property set forth on
Schedule 3.5 and (iii) the Books and Records.
"Books and Records" means all documents, information, computer
data, files, books and records (in each case, in whatever form or media,
including electronic media) that relate exclusively to (i) the Assets or
(ii) the Package Design Team Employees.
"Business Day" means a day other than a Saturday, a Sunday or a
day on which banks are required or authorized to close in the City of New
York.
"Charter Document" means any of the certificate of
incorporation, bylaws, agreement of limited partnership, operating
agreement or other organizational or constitutive document of a Person.
"Claim(s)" means any action, suit, litigation, proceeding,
arbitration or other method of settling disputes or disagreements and any
grievance, complaint, claim, charge, demand, investigation or other similar
matter.
"Claims Made Policies" is defined in Section 5.7(b).
"Closing" means the consummation of the transactions
contemplated by this Agreement on the Closing Date.
"Closing Date" is defined in the first paragraph of ARTICLE
VII.
"Code" means the United States Internal Revenue Code of 1986,
as amended.
"Consent(s)" means any and all consents, waivers, approvals,
authorizations, declarations, filings, recordings, registrations or
exemptions.
"Damages" means any and all losses, Liabilities, claims,
damages, deficiencies, obligations, fines, payments, Taxes, Encumbrances,
and costs and expenses, whether 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 Claims; 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 Claims or in asserting,
preserving or enforcing an Indemnified Party's rights hereunder; and any
losses that may result from the granting of injunctive relief as a result
of any such Claims).
"Dispute" is defined in Section 11.3(b).
"dollars" or "U.S.$" means United States dollars.
"Effective Time" is defined in the Merger Agreement.
"Employee Matters Agreement" means the Employee Matters
Agreement to be entered into by and among Seller, Washington and Purchaser
on or before the Effective Time.
"Encumbrance" means any lien, pledge, easement, security
interest, mortgage, deed of trust, right-of-way, retention of title
agreement or other encumbrance of whatever nature.
"Governmental Authority" means any federal, state or local
governmental authority or regulatory body of any nation, any subdivision,
agency, commission, board or authority or instrumentality thereof, or any
quasi-governmental or private body asserting, exercising or empowered to
assert or exercise any regulatory authority thereunder and any Person,
directly or indirectly, owned by and subject to the control of any of the
foregoing.
"HSR Act" means the Hart Scott Rodino Antitrust Improvements
Act of 1976, as amended.
"including" means including without limiting the generality of
what precedes that term.
"Income Tax" means (a) any Tax based upon, measured by, or
calculated with respect to (i) net income or profits (including, but not
limited to, any capital gains, minimum Tax and any Tax on items of Tax
preference, but not including sales, use, real or personal property, gross
or net receipts, transfer or similar Taxes) or (ii) multiple bases
(including, but not limited to, corporate franchise, doing business or
occupation Taxes) if one or more of the bases upon which such Tax may be
based, measured by, or calculated with respect to, is described in clause
(i) above, or (b) any U.S. state or local franchise Tax; including in the
case of each of (a) and (b) any related interest and any penalties,
additions to such Tax or additional amounts imposed with respect thereto by
any Tax authority.
"Indemnified Party" is defined in Section 8.3(a).
"Indemnifying Party" is defined in Section 8.3(a).
"Indemnity Reduction Amounts" is defined in Section 8.3(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).
"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" means trademarks, service marks, brand
names, certification marks, trade dress and other indications of origin,
the goodwill associated with the foregoing and registrations in any
jurisdiction of, and applications in any jurisdiction to register, the
foregoing, including any extension, modification or renewal of any such
registration or application; inventions, discoveries and ideas, whether
patentable or not, in any jurisdiction; patents, applications for patents
(including divisions, continuations, continuations in part and renewal
applications), and any renewals, extensions or reissues thereof, in any
jurisdiction; nonpublic information, trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any Person; writings and other works, whether copyrightable or
not, in any jurisdiction; and registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or
extensions thereof; and any other intellectual property or proprietary
rights.
"Law" means all laws, principals of common law, statutes,
constitutions, treaties, rules, regulations, ordinances, codes, ruling,
orders and determinations of any Governmental Authority.
"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 accepted
accounting principles to be reflected as a liability in financial
statements or disclosed in the notes thereto.
"Maquiladora" means Conexant Systems, S.A. de C.V., a sociedad
anonima de capital variable organized under the laws of Mexico.
"Material Adverse Change" or "Material Adverse Effect" means
any event, change, circumstance or development that is materially adverse
to (i) the ability of Seller to consummate the transactions contemplated by
this Agreement or (ii) the Assets taken as a whole or the use of the
Assets, taken as a whole, in the manner heretofore used by Seller, other
than, with respect to clause (ii), any event, change, circumstance or
development (A) resulting from any action taken in connection with the
transactions contemplated hereby pursuant to the terms of this Agreement,
(B) relating to the economy or financial markets in general, (C) relating
in general to the industries in which Seller operates and not specifically
relating to Seller or (D) relating to any action or omission of Seller or
any Subsidiary of either of them taken with the express prior written
consent of Purchaser.
"Merger" is defined in the recitals of the Merger Agreement.
"Merger Agreement" means the Agreement and Plan of
Reorganization, dated as of December 16, 2001, by and among Seller,
Washington and Purchaser.
"Mexican Stock and Asset Purchase Agreement" means that certain
Mexican Stock and Asset Purchase Agreement, dated as of December 16, 2001,
by and between Seller and Purchaser.
"Non-Income Tax" means any Tax other than an Income Tax.
"Occurrence Basis Policies" is defined in Section 5.7(b).
"Package Design Team" is defined in Recital A.
"Package Design Team Employee(s)" means the persons employed by
Seller and listed on Schedule 3.7(a).
"Party" and "Parties" are defined in the first paragraph of
this Agreement.
"Permits" means licenses, permits, authorizations, consents,
certificates, registrations, variances, franchises and other approvals from
any Governmental Authority, including those relating to environmental
matters.
"Permitted Encumbrance" means (i) Encumbrances for Taxes,
assessments or governmental charges or levies on property not yet due and
payable or which are being contested in good faith and for which
appropriate reserves are maintained, (ii) Encumbrances of landlords,
carriers, warehousemen, mechanics and other Encumbrances imposed by law and
incurred in the ordinary course of business as currently operated, (iii)
Encumbrances for purchase money obligations incurred in the ordinary course
of business consistent with past practice and (iv) Encumbrances incurred in
the ordinary course of business which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect.
"Person" means an individual, corporation, limited liability
entity, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act), including any
Governmental Authority.
"Policies" means all insurance policies, insurance contracts
and claim administration contracts of any kind of Seller relating to the
Assets which were or are in effect at any time at or prior to the Closing,
including primary, excess and umbrella, commercial general liability,
fiduciary liability, product liability, 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.
"Privileged Information" means, with respect to a Party,
Information regarding the Party, 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 Party has or may come into
possession of or has obtained or may obtain access to pursuant to this
Agreement or otherwise.
"Promissory Note" means a promissory note issued by Purchaser
in favor of Seller in a principal amount equal to the Purchase Price,
substantially on the terms attached hereto as Exhibit "A".
"Purchase Price" means the amount allocated to the purchase
price of the Assets being sold hereunder pursuant to the terms of Section
2.5 of the Mexican Stock and Asset Purchase Agreement.
"Purchaser" is defined in the first paragraph of this
Agreement.
"Purchaser Indemnified Parties" is defined in Section 8.1.
"Representative" means, with respect to any Person, any of such
Person's directors, officers, employees, agents, consultants, advisors,
accountants, attorneys and representatives.
"Schedules" means the disclosure schedules contained in this
Agreement which schedules are attached hereto and incorporated by reference
as if specifically set forth herein.
"Seller" is defined in the first paragraph of this Agreement.
"Seller Indemnified Parties" is defined in Section 8.2.
"Seller Spinoff" is defined in Section 5.8(c).
"Subsidiary" when used with respect to any Person means any
corporation or other organization, whether incorporated or unincorporated,
at least a majority of the securities or other interests of which having by
their terms ordinary voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation or other organization is, directly or indirectly, owned or
controlled by such Person or by any one or more of its Subsidiaries, or by
such Person and one or more of its Subsidiaries.
"Tax" and "Taxes" shall mean all forms of taxation, whenever
created or imposed, and whether of the United States or elsewhere, and
whether imposed by a federal, state, municipal, governmental, territorial,
local, foreign or other body, and without limiting the generality of the
foregoing, shall include net income, gross income, gross receipts, sales,
use, value added, ad valorem, transfer, recording, franchise, profits,
license, lease, service, service use, payroll, wage, withholding,
employment, unemployment insurance, workers compensation, social security,
excise, severance, stamp, business license, business organization,
occupation, premium, property, environmental, windfall profits, customs,
duties, alternative minimum, estimated or other taxes, fees, premiums,
assessments or charges of any kind whatever imposed or collected by any
governmental entity or political subdivision thereof, together with any
related interest and any penalties, additions to such tax or additional
amounts imposed with respect thereto by any Tax authority.
"Tax Proceeding" means any audit, examination, Claim or other
administrative or judicial proceeding relating to Taxes or Tax Returns.
"Tax Return" shall mean any return, filing, questionnaire,
information return, election or other document required or permitted to be
filed, including requests for extensions of time, filings made with respect
to estimated tax payments, claims for refund and amended returns that may
be filed, for any period with any Tax authority (whether domestic or
foreign) in connection with any Tax (whether or not a payment is required
to be made with respect to such filing).
"Third Party Claim" is defined in Section 8.4(a).
"To the knowledge of Seller" or words of similar import with
respect to a fact or matter means the actual knowledge of the executive
officers of Seller listed on Schedule 1 after reasonable inquiry.
"Washington" means Washington Sub, Inc., a Delaware
corporation.
"Washington Business" is defined in the Merger Agreement.
"Washington Participants" is defined in the Employee Matters
Agreement.
ARTICLE II
SALE AND PURCHASE OF ASSETS
---------------------------
Section 2.1. Purchase and Sale of Assets. At the Closing,
Seller shall sell, transfer, convey, assign and deliver to Purchaser, and
Purchaser shall purchase, acquire and accept, the Assets, as the same shall
exist on the Closing Date, free and clear of any Encumbrances other than
Permitted Encumbrances.
Section 2.2. Purchase Price. The Purchase Price to be paid by
Purchaser to Seller in consideration for the Assets shall be payable, at
the election of Purchaser, either (A) by wire transfer of immediately
available funds at the Closing or (B) by delivery of the Promissory Note at
the Closing; provided, however, that if Purchaser shall elect to pay the
Purchase Price pursuant to clause (B), Purchaser shall provide written
notice of such election to Seller no later than thirty (30) days prior to
the Closing Date.
Section 2.3. No Assumption of Liabilities. Purchaser shall not
assume hereunder any Liabilities of Seller related to the Assets. This
section shall not affect any other obligation of Purchaser under this
Agreement.
Section 2.4. Allocation of Purchase Price. Purchaser and Seller
mutually agree that the Purchase Price shall be allocated among the Assets
in the manner required by Section 1060 of the Code and Treasury Regulations
promulgated thereunder. Purchaser and Seller shall agree upon such
allocation prior to the Closing and shall file Form 8594 with the United
States Internal Revenue Service reflecting such allocation. Neither Seller
nor Purchaser shall take a position inconsistent with such allocation in
any Tax Proceeding, in any refund claim, in any litigation or investigation
or otherwise. If a competent Government Authority adjusts such allocation
for any reason, the allocation shall be deemed to be amended to conform to
any such adjustments.
ARTICLE III
SELLER'S REPRESENTATIONS AND WARRANTIES
---------------------------------------
Seller hereby represents and warrants to Purchaser as of the
date hereof and as of the Closing Date the following:
Section 3.1. Corporate Status, Good Standing and Authorization.
Seller is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, with all
requisite corporate power and authority to own the Assets, except where the
failure to have such power and authority, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect. Seller
is duly licensed or qualified to do business as a foreign corporation in
all states or jurisdictions in which the nature of Assets or the operations
thereof by the Package Design Team requires such license or qualification,
except where the failure to be so licensed or qualified, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect.
Section 3.2. Authority; Enforceability. Seller has all
requisite corporate power and authority to enter into this Agreement and
perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement by Seller and the consummation by Seller of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement has been
duly authorized, executed and delivered by Seller and is a legally valid
and binding obligation of Seller (assuming that this Agreement constitutes
the valid and binding obligation of Purchaser) and is enforceable against
Seller in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and similar Laws relating to or affecting creditors generally or
by general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Section 3.3. Consents; No Conflicts or Violations. Except for
the Consents set forth on Schedule 3.3 and Consents which if not obtained
and maintained by Seller, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect, there are no
Consents of any Governmental Authority required in connection with (i)
Seller's execution and delivery of this Agreement and the other agreements,
documents and instruments to be executed and delivered by Seller in
connection herewith or (ii) the performance by Seller of its obligations
herein or therein or the consummation by Seller of the transactions
contemplated hereby or thereby. Assuming receipt of all of the Consents set
forth on Schedule 3.3 (including any required HSR Act approval), neither
the execution or delivery by Seller of this Agreement nor the consummation
by Seller of the transactions contemplated hereby will, with or without the
giving of notice or the lapse of time or both, conflict with or result in a
breach or violation of or give rise to a default or right of termination,
amendment, cancellation or acceleration under (i) any provision of Seller's
Charter Documents, (ii) any contract, agreement, note, bond, mortgage,
indenture, lease, license, franchise, permit, concession, instrument or
obligation to which Seller is a party or by which any of its properties or
assets are bound or (iii) any Law or license or other requirement to which
Seller or its properties or assets is subject, except, in the case of items
(ii) and (iii) above only, for those which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect.
Section 3.4. Compliance with Laws. Except as disclosed on
Schedule 3.4, Seller is in compliance in all material respects with all
Laws applicable with respect to the Assets, the manner in which the Assets
are used and the Package Design Team, except where the failure to so
comply, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect, and Seller has not received within the
past twelve (12) months any written notice or correspondence from any
Governmental Authority to the effect that it is not in compliance with any
such applicable Laws, except for such violations which, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect.
Section 3.5. Intellectual Property. Except as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect: (i) Seller owns, or is licensed to use (in each case, free
and clear of any Encumbrances), all Intellectual Property set forth on
Schedule 3.5; (ii) to the knowledge of Seller, the use of any Intellectual
Property set forth on Schedule 3.5 by Seller does not infringe on or
otherwise violate the rights of any Person; (iii) the use of Intellectual
Property set forth on Schedule 3.5 by or on behalf of Seller is in
accordance with any applicable license pursuant to which Seller acquired
the right to use any Intellectual Property; (iv) to the knowledge of
Seller, no Person is challenging, infringing on or otherwise violating any
right of Seller with respect to any Intellectual Property set forth on
Schedule 3.5 owned by and/or licensed to Seller; and (v) Seller does not
have any knowledge of any pending claim, order or proceeding with respect
to any use of Intellectual Property set forth on Schedule 3.5 by Seller
and, to the knowledge of Seller, no Intellectual Property set forth on
Schedule 3.5 is being used or enforced in a manner that would reasonably be
expected to result in the abandonment, cancellation or unenforceability of
such Intellectual Property.
Section 3.6. Litigation. Except as set forth on Schedule 3.6,
there is no action, suit or proceeding or regulatory investigation pending
or, to the knowledge of Seller, threatened against Seller or its business
or operations affecting the Package Design Team or any of the Assets or
this Agreement before any court or arbitrator or any governmental body,
agency or official, except for those which, if adversely determined,
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect. Seller is not a party to or subject to any
judgment, order, rule, writ, injunction, or decree of any Governmental
Authority or arbitrator which relates to or affects the Assets or the
Package Design Team, except as, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
Section 3.7. Employee Matters.
(a) Package Design Team Employees. Schedule 3.7(a) contains a
list of all current Package Design Team Employees as of the date hereof.
Section 3.8. Labor Relations. Except as stated on Schedule 3.8,
as of the date hereof, Seller is not a signatory to any collective
bargaining agreement with any trade union or labor organization relating to
Package Design Team Employees.
Section 3.9. Tax Matters.
(a) All material Tax Returns required to be filed by Seller
with respect to the Assets have been timely filed. All such Tax Returns are
true, correct and complete, except as, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect. All
Taxes shown as due and payable by or with respect to such Tax Returns have
been timely paid in full.
(b) Except as set forth on Schedule 3.9(b), there are no Tax
proceedings presently pending with regard to any Non-Income Taxes related
to the Assets, and no notice has been received from any Governmental
Authority of the expected commencement of such a Tax Proceeding.
(c) There are no Encumbrances for any Tax on the Assets, except
for Permitted Encumbrances.
(d) None of the Assets is a lease made pursuant to Section
168(f)(8) of the Internal Revenue Code of 1954.
(e) None of the Assets constitute "tax exempt use property"
within the meaning of Section 168(h) of the Code or is "tax exempt bond
financed property" within the meaning of Section 168(g) of the Code.
Section 3.10. No Brokers. Neither this Agreement nor the sale
of the Assets was induced or procured through any Person acting on behalf
of or representing Seller and no commissions or any other payment is due to
any intermediary in connection therewith.
Section 3.11. Title to Properties. Seller has good and valid
title to the Assets, except, in each case, where the failure to have such
good and valid title, or valid leasehold interest, would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
Section 3.12. Insurance. Seller maintains insurance coverage in
respect of the Assets with reputable insurers in such amounts and covering
such risks as is deemed reasonably appropriate for its business (taking
into account the cost and availability of such insurance).
ARTICLE IV
PURCHASER'S REPRESENTATIONS AND WARRANTIES
------------------------------------------
Purchaser hereby represents and warrants to Seller as of the
date hereof and as of the Closing Date the following:
Section 4.1. Organization of Purchaser. Purchaser is a
corporation duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation.
Section 4.2. Authority; Enforceability. Purchaser has all
requisite corporate power and authority to enter into this Agreement and
perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement by Purchaser and the consummation by
Purchaser of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Purchaser. This Agreement
has been duly authorized, executed and delivered by Purchaser and is a
legally valid and binding obligation of Purchaser (assuming that this
Agreement constitutes the valid and binding obligation of Seller) and is
enforceable against Purchaser in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and similar Laws relating to or affecting
creditors generally or by general equity principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
Section 4.3. Consents; No Conflicts or Violations. Except for
the Consents set forth on Schedule 4.3 and the Consents which if not
obtained and maintained by Purchaser, individually or in the aggregate,
would not reasonably be expected to have a material adverse effect on
Purchaser's ability to consummate the transactions contemplated by this
Agreement, there are no Consents of any Governmental Authorities required
in connection with (i) Purchaser's execution and delivery of this Agreement
and the other agreements, documents and instruments to be executed and
delivered by Purchaser in connection herewith or (ii) the performance by
Purchaser of its obligations herein or therein or the consummation by
Seller of the transactions contemplated hereby or thereby. Assuming receipt
of all of the Consents set forth on Schedule 4.3 (including, any required
HSR Act approval), neither the execution or delivery by Purchaser of this
Agreement nor the consummation by Purchaser of the transactions
contemplated hereby will, with or without the giving of notice or the lapse
of time or both, conflict with or result in a breach or violation of or
give rise to a default or right of termination, amendment, cancellation or
acceleration under (i) any provision of Purchaser's Charter Documents, (ii)
any material contract, agreement, note, bond, mortgage, indenture, lease,
license, franchise, permit, concession, instrument or obligation to which
Purchaser is a party or by which any of its properties or assets are bound
or (iii) any Law or license or other requirement to which Purchaser or its
properties or assets is subject, except, in the case of items (ii) and
(iii) above only, for those which, individually or in the aggregate, would
not reasonably be expected to have a material adverse effect on Purchaser's
ability to consummate the transactions contemplated by this Agreement.
Section 4.4. Litigation. Except as set forth on Schedule 4.4,
there is no action, suit or proceeding or regulatory investigation pending
or, to the knowledge of Purchaser, threatened against Purchaser affecting
this Agreement before any court or arbitrator or any governmental body,
agency or official, except for those which, if adversely determined,
individually or in the aggregate, would not reasonably be expected to have
a material adverse effect on Purchaser's ability to consummate the
transactions contemplated by this Agreement. Purchaser is not a party to or
subject to any judgment, order, writ, injunction, or decree of any
Governmental Authority or arbitrator, except as, individually or in the
aggregate, would not reasonably be expected to have a material adverse
effect on Purchaser's ability to consummate the transactions contemplated
by this Agreement.
Section 4.5. No Brokers. Neither this Agreement nor the
purchase of the Assets was induced or procured through any Person acting on
behalf of or representing Purchaser and no commissions or any other payment
is due to any intermediary in connection therewith.
ARTICLE V
COVENANTS
---------
The Parties hereby covenant as follows:
Section 5.1. Access.
(a) Access to Information by Purchaser Prior to Closing. Prior
to Closing, subject to compliance with applicable laws, Seller and
Maquiladora shall, upon reasonable request, afford to Purchaser and its
Representatives reasonable access during normal business hours to all Books
and Records. Purchaser shall coordinate its requests and activities under
this Section 5.1 with Seller's need for security and will assist Seller in
minimizing disruption to Seller's normal business operations.
(b) Access to Information by Purchaser After Closing. From and
after the Closing, Seller will afford to Purchaser and its Representatives
(at Purchaser's expense) reasonable access and duplicating rights during
normal business hours and upon reasonable advance notice to all Books and
Records within Seller's possession or control relating to the Assets,
insofar as such access is reasonably required by Purchaser.
(c) Access to Books and Records by Seller. Purchaser shall,
following the Closing, give Seller and its Representatives such access,
during normal business hours and upon reasonable prior notice, to the Books
and Records and such other documents as shall be reasonably necessary for
Seller in connection with its performance of its obligations hereunder, for
the preparation and filing of Seller's Tax Returns for periods prior to the
Closing Date and for any other reasonable purposes, and Purchaser will
allow Seller and its Representatives to make extracts and copies thereof as
may be necessary for such purposes at Seller's expense. Purchaser shall
preserve and protect the Books and Records in its possession and control
for the period required by the applicable records retention policy of
Seller in effect immediately prior to the Closing. Purchaser shall offer to
deliver the Books and Records to Seller prior to their destruction or other
disposition.
(d) Production of Witnesses. Subject to Section 5.1(e), after
the Closing, each Party will make available to the other Party, upon
written request and at the cost and expense of the Party so requesting, its
directors, officers, employees and agents as witnesses 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 Claims or administrative or other proceedings in which
the requesting party may from time to time be involved and relating to the
Assets or the Package Design Team or arising in connection with the
relationship between the Parties on or prior to the Closing Date, provided
that the same shall not unreasonably interfere with the conduct of business
by the Party of which the request is made.
(e) Confidentiality. From and after the Closing, each of Seller
and Purchaser shall hold, and shall use reasonable efforts to cause its
Affiliates and Representatives to hold, in strict confidence all
Information concerning the other Party in its possession or control prior
to the Closing or furnished to it by another Party pursuant to the Merger
and the transactions contemplated thereby and will not release or disclose
such Information to any other Person, except its Affiliates and its and
their Representatives, who will be bound by the provisions of this Section
5.1(e); provided, however, that any Person 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 Party) 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 or
its Affiliates, Representatives or Subsidiaries, and not 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 5.1(e)
by its Affiliates, Representatives and Subsidiaries. Notwithstanding the
foregoing, each Party will be deemed to have satisfied its obligations
under this Section 5.1(e) 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.
Section 5.2. Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement, each
Party will use its reasonable best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, and to assist and cooperate
with the other Party in doing or causing to be done, all things necessary,
proper or advisable under this Agreement and applicable laws to consummate
the transactions contemplated by this Agreement as soon as practicable
after the date hereof, including (i) preparing and filing as promptly as
practicable all documentation to obtain as promptly as practicable all
Consents set forth on Schedules 3.3 and 4.3 and (ii) taking all reasonable
steps as may be necessary to obtain all Consents set forth on Schedules 3.3
and 4.3. In furtherance and not in limitation of the foregoing, each Party
hereto agrees to make (i) an appropriate filing (if applicable) of a
Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby as promptly as practicable after the date
hereof and (ii) all other necessary filings with other Governmental
Authorities relating to the transactions contemplated herein, and, in each
case, to supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to such applicable laws
or by such Governmental Authorities and to use reasonable best efforts to
cause the expiration or termination of the applicable waiting periods under
the HSR Act and the receipt of the Consents set forth on Schedules 3.3 and
4.3 under such other applicable laws or from such Governmental Authorities
as soon as practicable.
(b) Each of Seller and Purchaser shall, in connection with the
efforts referenced in Section 5.2(a) to obtain all Consents set forth on
Schedules 3.3 and 4.3, use its reasonable best efforts to (i) cooperate in
all respects with each other in connection with any filing or submission
and in connection with any investigation or other inquiry, including any
proceeding initiated by a private party, (ii) promptly inform the other
Party of any communication received by such Party from, or given by such
Party to, the Antitrust Division of the Department of Justice (the "DOJ"),
the Federal Trade Commission (the "FTC") or any other Governmental
Authority and of any material communication received or given in connection
with any proceeding by a private party, in each case regarding any of the
transactions contemplated hereby, and (iii) permit the other Party to
review any communication given by it to, and consult with each other in
advance of any meeting or conference with, the DOJ, the FTC or any such
other Governmental Authority or, in connection with any proceeding by a
private party, with any other Person, and to the extent appropriate or
permitted by the DOJ, the FTC or such other applicable Governmental
Authority or other Person, give the other Party the opportunity to attend
and participate in such meetings and conferences.
(c) In furtherance and not in limitation of the covenants of
the Parties contained in Section 5.2(a) and Section 5.2(b), if any
administrative or judicial action or proceeding, including any proceeding
by a private party, is instituted (or threatened to be instituted)
challenging any transaction contemplated by this Agreement as violative of
any applicable laws, or if any statute, rule, regulation, executive order,
decree, injunction or administrative order is enacted, entered, promulgated
or enforced by a Governmental Authority which would make transactions
contemplated hereby illegal or would otherwise prohibit or materially
impair or delay the consummation of the transactions contemplated hereby,
each of the Parties shall cooperate in all respects with each other and use
its respective reasonable best efforts to contest and resist any such
action or proceeding and to have vacated, lifted, reversed or overturned
any decree, judgment, injunction or other order, whether temporary,
preliminary or permanent, that is in effect and that prohibits, prevents or
restricts consummation of the transactions contemplated by this Agreement
and to have such statute, rule, regulation, executive order, decree,
injunction or administrative order repealed, rescinded or made inapplicable
so as to permit the consummation of the transactions contemplated by this
Agreement.
(d) Notwithstanding the foregoing or any other provision of
this Agreement, nothing in this Section 5.2 shall create an obligation by
the Parties to take any action in addition to the actions required to be
taken pursuant to the Merger Agreement to consummate the Merger.
Section 5.3. Conduct of Business by Seller. From the data
hereof until the Closing Date, Seller shall, except as expressly required
or permitted by this Agreement and except as otherwise consented to in
writing by Purchaser:
(i) conduct the operations of the Package Design Team and
employ the Assets in the ordinary course of business consistent
with past practice;
(ii) not grant, create, incur or suffer to exist any
Encumbrance (other than a Permitted Encumbrance granted, created,
incurred or suffered to exist in the ordinary course of business
consistent with past practice) on the Assets;
(iii) not increase in any manner the base compensation
of, or enter into any new bonus or incentive agreement or
arrangement with, any Package Design Team Employees, other than in
the ordinary course of business consistent with past practice;
(iv) not adopt or amend any Benefit Plan with respect to
Package Design Team Employees or to increase the benefits provided
under any Benefit Plan to Package Design Team Employees other than
in the ordinary course of business consistent with past practice;
(v) not grant any license or sublicense or otherwise
transfer, other than in the ordinary course of business consistent
with past practice, any portion of its right, title or interest in
any Intellectual Property included in the Assets; and
(vi) not authorize, or commit or agree to take, any of
the foregoing actions.
Section 5.4. Employment Arrangements.
(a) Employment. Purchaser shall offer employment, with
comparable compensation and benefits, commencing as of the Closing Date, to
each of the Package Design Team Employees (including those who are actively
employed or on layoff, leave or short-term or long-term disability or other
permitted absence from employment). Purchaser shall provide to each Package
Design Team Employee (i) employment and a salary or wage level at least
equal to that which such Package Design Team Employee was entitled from
Seller and its Subsidiaries and Affiliates immediately prior to the Closing
Date and (ii) employee benefits comparable in all material respects to and
no less favorable in the aggregate than the employee benefits provided to
each such Package Design Team Employee by Seller and its Subsidiaries and
Affiliates immediately prior to the Closing Date; provided, however, that
after the Closing Date, Purchaser expressly reserves the right to modify
any salary or wage level of any Package Design Team Employee and to amend,
modify or terminate any benefit plan or program established or maintained
by Purchaser for the benefit of Package Design Team Employees in accordance
with the terms of such plan or program and applicable law.
(b) Employee Matters Agreement Terms Applicable. The Parties
agree that all terms and provisions of the Employee Matters Agreement
applicable to Washington Participants (including all Liabilities and
obligations assumed or to be performed by Purchaser or Washington under the
Employee Matters Agreement relating to the Washington Participants) shall,
to the extent applicable, also apply to the Package Design Team Employees,
and that the Package Design Team Employees shall be deemed to be Washington
Participants for all purposes of the Employee Matters Agreement (other than
Section 2.01 thereof). Accordingly, Purchaser hereby assumes, and agrees to
fully perform, pay and discharge, all Liabilities and obligations in
respect of the Package Design Team Employees of the type that were assumed
by or allocated to Purchaser, Washington or any Subsidiary of Washington
under the Employee Matters Agreement in respect of Washington Participants
and to perform, pay and discharge such Liabilities and obligations in the
same manner as provided in the Employee Matters Agreement.
Section 5.5. Public Announcements. The Parties shall use
reasonable best efforts to develop a joint communications plan and each
Party shall use reasonable best efforts (i) to ensure that all press
releases and other public statements with respect to the transactions
contemplated hereby shall be consistent with such joint communications
plan, and (ii) unless otherwise required by applicable laws or by
obligations pursuant to any listing agreement with or rules of any
securities exchange or automated quotation system, to consult with each
other before issuing any press release or, to the extent practicable,
otherwise making any public statement with respect to this Agreement or the
transactions contemplated hereby.
Section 5.6. Supplements to Schedules. From time to time up to
the Closing, Seller and Purchaser may supplement or amend the Schedules
after they have been delivered pursuant to this Agreement with respect to
any matter first existing or occurring on or after the date hereof which,
if existing or occurring at or prior to the date hereof, would have been
required to be set forth or described in such Schedules or which is
necessary to correct any information in such Schedules which has been
rendered inaccurate thereby; provided, however, that if any facts that give
rise to such matter existed or occurred on or before the date hereof, no
such supplement or amendment may be made under this Section 5.6 with
respect thereto. Any supplement or amendment to any Schedule shall not,
following Closing, constitute a basis for any Claim for indemnification
pursuant to ARTICLE VIII.
Section 5.7. Insurance.
(a) Coverage. Subject to the provisions of this Section 5.7,
coverage of the Assets under all Policies shall cease as of the Closing.
From and after the Closing, Purchaser will be responsible for obtaining and
maintaining all insurance coverages for the Assets. All Policies will be
retained by Seller and Seller's Subsidiaries, together with all rights,
benefits and privileges thereunder (including the right to receive any and
all return premiums with respect thereto), except that Purchaser will have
the rights in respect of Policies to the extent described in Section
5.7(b).
(b) Rights Under Policies. From and after the Closing,
Purchaser will have no rights with respect to any Policies, except that (i)
Purchaser will have the right to assert claims (and Seller will use
commercially reasonable efforts to assist Purchaser in asserting claims)
for any loss, liability or damage with respect to the Assets 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 Closing to the
extent that the terms and conditions of any such Occurrence Basis Policies
and agreements relating thereto so allow and (ii) Purchaser will have the
right to continue to prosecute claims with respect to the Assets properly
asserted with an insurer prior to the Closing (and Seller will use
commercially reasonable efforts to assist Purchaser 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 Closing 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
Seller's reasonable out-of-pocket costs and expenses incurred in connection
with the foregoing are promptly paid by Purchaser, (B) Seller may, at any
time, without liability or obligation to Purchaser (other than as set forth
in Section 5.7(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
Seller, any of Seller's Subsidiaries or any Affiliate of Seller or any of
Seller's Subsidiaries in respect thereof and (E) such claims will be
subject to exhaustion of existing aggregate limits. Seller's obligation to
use commercially reasonable efforts to assist Purchaser in asserting claims
under applicable Policies will include using commercially reasonable
efforts in assisting Purchaser to establish its right to coverage under
such Policies (so long as all of Seller's reasonable out-of-pocket costs
and expenses in connection therewith are promptly paid by Purchaser). None
of Seller or Seller's 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 Purchaser for
incidents occurring prior to the Closing but which are asserted with the
insurance carrier after the Closing.
(c) Seller Actions. In the event that after the Closing, Seller
proposes to amend, commute, terminate, buy-out, extinguish liability under
or otherwise modify any Policies under which Purchaser has rights to assert
claims pursuant to Section 5.7(b) in a manner that would adversely affect
any such rights of Purchaser, (i) Seller will give Purchaser prior notice
thereof and consult with Purchaser with respect to such action (it being
understood that the decision to take any such action will be in the sole
discretion of Seller) and (ii) Seller will pay to Purchaser its equitable
share (which shall be determined by Seller in good faith based on the
amount of premiums paid by or allocated to Purchaser or the Assets in
respect of the applicable Policy) of any net proceeds actually received by
Seller from the insurer under the applicable Policy as a result of such
action by Seller (after deducting Seller's reasonable costs and expenses
incurred in connection with such action).
(d) Administration. From and after the Closing:
(i) Seller or a Subsidiary of Seller, as appropriate,
will be responsible for the Claims Administration with respect to
claims of Seller and Seller's Subsidiaries under Policies; and
(ii) Purchaser will be responsible for the Claims
Administration with respect to claims of Purchaser under Policies.
(e) Insurance Premiums. From and after the Closing, Seller 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 Closing, whereupon Purchaser will upon the request of Seller,
forthwith reimburse Seller for that portion of such premiums paid by Seller
as are reasonably determined by Seller to be attributable to the Assets.
(f) Agreement for Waiver of Conflict and Shared Defense. In the
event that a Policy provides coverage for both Seller and/or a Subsidiary
of Seller, on the one hand, and Purchaser, on the other hand, relating to
the same occurrence, Seller and Purchaser agree to defend jointly and to
waive any conflict of interest necessary to the conduct of that joint
defense. Nothing in this Section 5.7(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 5.8. License of Purchaser Intellectual Property to
Seller.
(a) Effective as of the Closing Date, Purchaser hereby grants
to Seller, its Subsidiaries and its Affiliates, a non-exclusive,
world-wide, irrevocable royalty-free license, without the right to assign
or grant sublicenses, except as provided in Sections 5.8(b) and (c), under
all Intellectual Property constituting Assets (excluding trademarks, trade
names, domain names, service marks, trade dress and any other form of trade
identity), to make, have made, use, sell, offer for sale, import, or
otherwise dispose of semiconductor products and systems in the conduct of
their respective businesses as they are being conducted on the Closing Date
and any related extensions or expansions thereof, and to practice any
process involved in the use or manufacture thereof.
(b) The license granted under Section 5.8(a) is non-assignable
and non-transferable (in insolvency proceedings, by reason of corporate
merger, by acquisition or other change in control or otherwise).
(c) The license granted under Section 5.8(a) does not include
the right to grant sublicenses, except that Seller, its Subsidiaries and
its Affiliates 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 businesses of Seller, its Subsidiaries and its
Affiliates (a "Seller 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
Seller 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 5.8.
(d) In the event that following the Closing, Seller or a Seller
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 Seller and Purchaser
otherwise agree; provided that such termination of such license or
sublicense shall not necessarily affect any other license or sublicense.
ARTICLE VI
CONDITIONS TO
SELLER'S AND PURCHASER'S OBLIGATIONS
------------------------------------
The obligations of Seller and Purchaser to complete the
transactions contemplated by this Agreement are subject to the Closing (as
defined in the Merger Agreement) under the Merger Agreement having been
consummated.
ARTICLE VII
CLOSING
-------
The Closing shall, unless another time and date is agreed to in
writing by the Parties, take place immediately following the Closing (as
defined in the Merger Agreement) under the Merger Agreement and will be
effective immediately following the Effective Time (the time and date of
such Closing being herein called the "Closing Date"). The Closing will take
place at the offices of Chadbourne & Parke LLP, 30 Rockefeller Plaza, New
York, New York 10112, or such other place as the Parties may agree. On the
Closing Date, the Parties hereto shall deliver the following:
Section 7.1. Deliveries by Seller. At the Closing, Seller shall
deliver to Purchaser the following which in the case of documents, shall be
reasonably satisfactory to Purchaser:
(i) an Assets Bill of Sale and Assignment and Assumption
Agreement, duly executed by Seller, in form and substance
reasonably satisfactory to Purchaser;
(ii) the Assets; and
(iii) all documents of title and instruments of
conveyance necessary to transfer record and beneficial ownership
to Purchaser of all Assets which require execution, endorsement or
delivery of such a document under applicable Law in order to vest
record or beneficial ownership thereto in Purchaser.
Section 7.2. Deliveries by Purchaser. At the Closing, Purchaser
shall deliver to Seller the following, which in the case of documents shall
be reasonably satisfactory to Seller:
(i) (A) cash payment of the Purchase Price (via wire
transfer of immediately available funds), pursuant to Section 2.3,
or (B) the Promissory Note, duly executed by Purchaser, in form
and substance reasonably satisfactory to Seller, in which case,
the Purchase shall deliver to Seller at Closing, in addition to
the other deliveries required hereby, (I) a security agreement,
duly executed by Purchaser, in form and substance reasonably
satisfactory to Seller and Purchaser and in customary form for
transactions of this nature, granting Seller a first priority
security interest in the security described on Exhibit "A", (II)
such notices, recordings, mortgages, statements, filings,
instruments or other agreements and documents as Seller may
reasonably require to have a perfected first priority security
interest in the security described on Exhibit "A" and (III)
customary opinions of counsel to Purchaser for secured
transactions of this nature reasonably satisfactory to the Parties
and their counsel; and
(ii) an Asset Bill of Sale and Assignment and Assumption
Agreement, duly executed by Purchaser, in form and substance
reasonably satisfactory to Seller.
ARTICLE VIII
INDEMNIFICATION
---------------
Section 8.1. Indemnification by Seller. Subject to the
limitations on and procedures for indemnification set forth in this ARTICLE
VIII, Seller shall indemnify, defend and hold harmless Purchaser and its
Representatives and Affiliates and each of the heirs, executors, successors
and assigns of any of the foregoing (collectively, the "Purchaser
Indemnified Parties") from and against, and pay or reimburse, as the case
may be, the Purchaser Indemnified Parties for, any Damages, as incurred,
suffered by any Purchaser Indemnified Parties to the extent based upon,
arising out of or relating to the following:
(i) the breach of any representation or warranty of
Seller contained in this Agreement; or
(ii) the breach by Seller of any covenant or agreement of
Seller contained in this Agreement.
Section 8.2. Indemnification by Purchaser. Subject to the
limitations on and procedures for indemnification set forth in this ARTICLE
VIII, Purchaser shall indemnify, defend and hold harmless Seller and its
Representatives and Affiliates and each of the heirs, executors, successors
and assigns of any of the foregoing (collectively, the "Seller Indemnified
Parties") from and against, and pay or reimburse, as the case may be, the
Seller Indemnified Parties for, any Damages, as incurred, suffered by any
Seller Indemnified Parties to the extent based upon, arising out of or
relating to the following:
(i) the breach of any representation or warranty of
Purchaser contained in this Agreement; or
(ii) the breach by Purchaser of any covenant or agreement
of Purchaser contained in this Agreement.
Section 8.3. Limitations on Indemnification Obligations. (a)
The amount which any Party (an "Indemnifying Party") is or may be required
to pay to any Person (an "Indemnified Party") in respect of Damages 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 Indemnified Party (net
of increased insurance premiums and charges to the extent related to
Damages and costs and expenses (including reasonable legal fees and
expenses) incurred by such Indemnified Party in connection with seeking to
collect and collecting such amounts) in respect of such Damages or other
Liability (such net amounts are referred to herein as "Indemnity Reduction
Amounts"). If any Indemnified Party receives any Indemnity Reduction
Amounts in respect of Damages for which indemnification is provided under
this Agreement after the full amount of such Damages has been paid by an
Indemnifying Party or after an Indemnifying Party has made a partial
payment of such Damages and such Indemnity Reduction Amounts exceed the
remaining unpaid balance of such Damages, then the Indemnified Party 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 Damages, less (B) the amount of the indemnity payment that
would have been 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 indemnity payment under
this Agreement, such amount shall be (i) reduced to take into account any
net Tax benefit realized by the Indemnified Party and its Affiliates
arising from the incurrence or payment by the Indemnified Party or its
Affiliates of any amount in respect of which such payment is made and (ii)
increased to take into account any net Tax cost incurred by the Indemnified
Party and its Affiliates as a result of the receipt or accrual of payments
hereunder (grossed-up for such increase), in each case determined by
treating the Indemnified Party and its Affiliates as recognizing all other
items of income, gain, loss, deduction or credit before recognizing any
item arising from the receipt of accrual of any payment hereunder. In
determining the amount of any such Tax benefit or Tax cost, the Indemnified
Party and its Affiliates shall be deemed to be subject to the applicable
Taxes at the maximum statutory rate then in effect. It is the intention of
the Parties to this Agreement that payments made pursuant to this Agreement
are to be treated as relating back to the Closing Date as a purchase price
adjustment, and the Parties shall not take any position inconsistent with
such intention before any Tax authority, 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 Seller to any
Purchaser Indemnified Party with respect to the indemnification of any
claims pursuant to Section 8.1(i) until the aggregate amount of Damages
actually incurred by the Purchaser Indemnified Parties with respect to such
claims shall exceed on a cumulative basis an amount equal to fifty thousand
dollars (U.S.$50,000), in which event Seller shall be responsible only for
the amount of such Damages in excess of fifty thousand dollars
(U.S.$50,000). No monetary amount will be payable by Seller to any
Purchaser Indemnified Party with respect to the indemnification of any
claims pursuant to Section 8.1(i) after the aggregate amount of Damages
actually paid by Seller with respect to such claims shall equal on a
cumulative basis an amount equal to five hundred thousand dollars
(U.S.$500,000).
(d) No monetary amount will be payable by Purchaser to any
Seller Indemnified Party with respect to the indemnification of any claims
pursuant to Section 8.2(i) until the aggregate amount of Damages actually
incurred by the Seller Indemnified Parties with respect to such claims
shall exceed on a cumulative basis an amount equal to fifty thousand
dollars (U.S.$50,000), in which event Purchaser shall be responsible only
for the amount of such Damages in excess of fifty thousand dollars
(U.S.$50,000). No monetary amount will be payable by Purchaser to any
Seller Indemnified Party with respect to the indemnification of any claims
pursuant to Section 8.2(i) after the aggregate amount of Damages actually
paid by Purchaser with respect to such claims shall equal on a cumulative
basis an amount equal to five hundred thousand dollars (U.S.$500,000).
Section 8.4. Procedures Relating to Indemnification. (a) If a
claim or demand is made against an Indemnified Party, or an Indemnified
Party 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 Indemnified Party 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 Indemnified Party will deliver to the Indemnifying
Party, promptly after the Indemnified Party's receipt thereof, copies of
all material notices and documents (including court papers) received or
transmitted by the Indemnified Party relating to the Third Party Claim.
(b) If a Third Party Claim is made against an Indemnified
Party, 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 Indemnified Party. Should the Indemnifying
Party so elect to assume the defense of a Third Party Claim, the
Indemnifying Party will not be liable to the Indemnified Party for any
legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof; provided, however, that if in the
Indemnified Party'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
Indemnified Party will have the right to employ separate counsel reasonably
satisfactory to the Indemnifying Party to represent such Indemnified Party
and in that event the reasonable fees and expenses of such separate counsel
(but not more than one separate counsel for all Indemnified Parties
similarly situated) shall be paid by such Indemnifying Party. If the
Indemnifying Party assumes the defense of any Third Party Claim, the
Indemnified Party 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 reasonable fees and expenses of counsel employed by the
Indemnified Party 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 Indemnified Party copies of all material correspondence and
documents relating to or in connection with such Third Party Claim and keep
the Indemnified Party fully informed of all material developments relating
to or in connection with such Third Party Claim (including providing to the
Indemnified Party on request updates and summaries as to the status
thereof). If the Indemnifying Party chooses to defend a Third Party Claim,
the Parties 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 Indemnified Party's prior written consent
(which consent will not be unreasonably withheld); provided, however, that
if the Indemnifying Party assumes the defense of any Third Party Claim, the
Indemnified Party 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
Damages in connection with such Third Party Claim and unconditionally and
irrevocably releases the Indemnified Party and its Affiliates completely
from all Liability in connection with such Third Party Claim; provided,
however, that the Indemnified Party may refuse to agree to any such
settlement, compromise or discharge (x) that provides for injunctive or
other non-monetary relief affecting the Indemnified Party or any of its
Affiliates or (y) that, in the reasonable opinion of the Indemnified Party,
would otherwise materially adversely affect the Indemnified Party or any of
its Affiliates. Whether or not the Indemnifying Party shall have assumed
the defense of a Third Party Claim, the Indemnified Party 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 Damages which does not involve a
Third Party Claim will be asserted by reasonably prompt written notice
given by the Indemnified Party to the Indemnifying Party from whom such
indemnification is sought. The failure by any Indemnified Party to so
notify the Indemnifying Party will not relieve the Indemnifying Party from
any liability which it may have to such Indemnified Party 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 Indemnified Party in connection with any Third Party Claim, such
Indemnifying Party will be subrogated to and shall stand in the place of
such Indemnified Party as to any events or circumstances in respect of
which such Indemnified Party 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 Indemnified Party 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 8.5. Sole and Exclusive Remedy. The indemnities
contained in this ARTICLE VIII shall be the sole and exclusive remedies of
the Parties hereto, their Affiliates, successors and assigns with respect
to any and all claims arising out of or relating to this Agreement, the
transactions contemplated hereby, any provision hereof or the breach or
performance thereof.
Section 8.6. Termination of Indemnification Obligations. Except
as set forth in the following sentence, the indemnification obligations of
each of Seller and Purchaser hereunder will survive, including surviving
the sale or other transfer by any party of any assets or businesses or the
assignment by any party of any Liabilities. The obligations of each Party
to indemnify, defend and hold harmless Indemnified Parties (i) pursuant to
Sections 8.1(i) and 8.2(i), shall terminate when the applicable
representation or warranty expires pursuant to Section 11.4 and (ii)
pursuant to Sections 8.1(ii) and 8.2(ii) shall terminate upon the
expiration of all applicable statutes of limitation (giving effect to any
extensions thereof, other than extensions caused by the applicable
Indemnified Party); provided, however, that as to clauses (i) and (ii)
above, such obligations to indemnify, defend and hold harmless shall not
terminate with respect to any individual claim as to which the Indemnified
Party shall have, before the expiration of the applicable period,
previously delivered a notice (stating in reasonable detail the basis of
such claim) to the Indemnifying Party.
Section 8.7. Effect of Investigation. The right to
indemnification pursuant to Sections 8.1(i) and 8.2(i) 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.
ARTICLE IX
TAXES
-----
Section 9.1. Transfer, Sales and Use Taxes. Notwithstanding
anything to the contrary in this Agreement, all transfer, documentary,
sales, use, stamp, registration, value added and other similar Taxes and
fees (including any penalties and interest) incurred in connection with the
transactions contemplated by this Agreement shall be shared equally by
Seller and Purchaser. Each Party hereto agrees to file all necessary
documentation (including all Tax Returns) with respect to all such Taxes in
a timely manner. On or before the Closing Date, Purchaser shall provide to
Seller a required sales and use tax purchase exemption certificate or
certificates with respect to the Assets to the extent they constitute (i)
exempt tangible personal property held for resale or for incorporation into
goods to be held for resale, (ii) exempt manufacturing and production
equipment, or (iii) otherwise are exempt from the sales and use tax upon
the provision of an appropriate exemption certificate.
Section 9.2. Tax Returns. Seller shall prepare and file or
cause to be prepared and filed all Tax Returns (including amendments
thereto) which are required to be filed in respect of the Assets for any
taxable period ending on or before the Closing Date and any taxable period
that includes (but does not end on) the Closing Date (a "Straddle Period").
Purchaser hereby irrevocably designates, and agrees to cause each of its
Affiliates to designate Seller as its agent to take any and all actions
necessary or incidental to the preparation and filing of such Tax Returns.
All Tax Returns (including amendments thereto) required to be filed in
respect of the Assets for taxable periods beginning after the Closing Date
shall be the responsibility of Purchaser.
Section 9.3. Prorations. Purchaser and Seller agree that Taxes
with respect to the Assets shall be prorated as of the Closing Date, with
Seller liable to the extent such Taxes relate to any time period on or
before the Closing Date, and Purchaser liable to the extent such Taxes
relate to periods commencing after the Closing Date.
Section 9.4. Allocation of Straddle Period Taxes. In the case
of any Straddle Period:
(a) Periodic Taxes. (i) The periodic Taxes with respect to the
Assets that are not based on income or receipts (e.g., property Taxes) for
the portion of any Straddle Period which ends on the Closing Date shall be
computed based on the ratio of the number of days in such portion of the
Straddle Period and the number of days in the entire taxable period, and
(ii) the periodic taxes with respect to the Assets that are not based on
income or receipts for the portion of any Straddle Period beginning on the
day after the Closing Date shall be computed based on the ratio of the
number of days in such portion of the Straddle Period and the number of
days in the entire taxable period.
(b) Non-Periodic Taxes. (i) The Taxes with respect to the
Assets for that portion of any Straddle Period ending on the Closing Date
(other than Taxes described in Section 9.4(a) above), shall be computed on
a "closing-of-the-books" basis as if such taxable period ended as of the
close of business on the Closing Date, and (ii) the Taxes with respect to
the Assets for that portion of any Straddle Period beginning after the
Closing Date (other than Taxes described in Section 9.4(a) above), shall be
computed on a "closing-of-the-books" basis as if such taxable period began
on the day after the Closing Date.
ARTICLE X
TERMINATION
-----------
Section 10.1. Voluntary Termination. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned at any
time prior to the Closing Date by the mutual written consent of Purchaser
and Seller.
Section 10.2. Automatic Termination. In the event of a
termination of the Merger Agreement, this Agreement shall automatically and
immediately terminate.
Section 10.3. Effect of Termination. In the event of the
termination of this Agreement, all further obligations of the Parties
hereunder shall terminate, and the transactions contemplated hereby shall
be abandoned without further action or liability by any of the Parties
hereto, except that (i) Section 10.3 ("Effect of Termination"), Section
11.2 ("Notices"), Section 11.3 ("Choice of Law, Dispute Resolution"),
Section 11.6 ("Entire Agreement; Waivers"), Section 11.8 ("Severability"),
Section 11.10 ("Expenses") and Section 11.12 ("Parties in Interest") shall
survive such termination and (ii) nothing shall relieve any Party hereto
from liability for any breach of this Agreement prior to such termination.
ARTICLE XI
MISCELLANEOUS
-------------
Section 11.1. Assignment. No 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. Notwithstanding the foregoing, any 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 (A) all or substantially
all of the assets of such Party as a whole or (B) any line of business or
division of such Party, (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, (iv) in the case of
Purchaser, to Maquiladora or (v) an Affiliate. In the event of an
assignment pursuant to (ii) or (iii) above, the non-assigning 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 11.1 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 11.2. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed duly given (a) on the
date of delivery if delivered personally, (b) upon confirmation of receipt
if delivered by telecopy or telefacsimile, (c) on the first Business Day
following the date of dispatch if delivered by a recognized next-day
courier service, or (d) on the fifth Business Day following the date of
mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder shall be delivered as set
forth below, or pursuant to such other instructions as may be designated in
writing by the Party to receive such notice:
If to Purchaser, to:
Alpha Industries, Inc.
20 Sylvan Road
Woburn, MA 01801
Fax: (617) 824-4426
Attention: Paul E. Vincent
Chief Financial Officer
With copies to (not effective for purposes of notice):
Alpha Industries, Inc.
20 Sylvan Road
Woburn, MA 01801
Fax: (617) 824-4564
Attention: James K. Jacobs, Esq.
General Counsel
or if to Seller, to:
Conexant Systems, Inc.
4311 Jamboree Road
Newport Beach, California 92660-3095
Fax: (949) 483-6388
Attention: Dennis E. O'Reilly
Senior Vice President, General
Counsel and Secretary
With a copy to (not effective for purposes of notice):
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, New York 10112
Fax: (212) 541-5369
Attention: Peter R. Kolyer, Esq.
Section 11.3. Choice of Law; Dispute Resolution.
(a) Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (without
giving effect to choice of law principles).
(b) Dispute Resolution. In the event that from and after the
Closing, any dispute, claim or controversy (collectively, a "Dispute")
arises out of or relates to any provision of this Agreement or the breach,
performance, enforcement or validity or invalidity thereof, the designees
of Seller's Chief Executive Officer and Purchaser's Chief Executive Officer
will attempt a good faith resolution of the Dispute within thirty (30) days
after either Party notifies the other Party in writing of the Dispute. If
the Dispute is not resolved within thirty (30) days of the receipt of the
notification, or within such other time as they may agree, the Dispute will
be referred for resolution to Seller's Chief Executive Officer and
Purchaser's Chief Executive Officer. Should they be unable to resolve the
Dispute within thirty (30) days following the referral to them, or within
such other time as they may agree, Seller and Purchaser 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 (30) 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 Seller and Purchaser,
who shall not be the same person as the mediator appointed pursuant to the
preceding sentence. If Seller and Purchaser cannot agree upon the identity
of an arbitrator within ten (10) days after the arbitration process is
initiated, then the arbitration will be conducted before three arbitrators,
one selected by Seller, one selected by Purchaser 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 (180) days from the commencement of the arbitration
action, subject to any extension of time thereof allowed by the arbitrators
upon good cause shown.
Section 11.4. Survival of Representations and Warranties and
Covenants. The respective representations and warranties of the Parties
contained in this Agreement (other than those set forth in the following
sentence) will survive the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the Closing and
will continue in full force and effect until six (6) months after the
Closing Date and will then expire. The representations and warranties of
the Parties contained in Section 3.1, Section 3.2, Section 3.3, Section
3.9, Section 3.11, Section 4.1, Section 4.2, and Section 4.3 will survive
the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the Closing and will continue in full
force and effect until all applicable statutes of limitation (including any
extensions thereof) have expired and will then expire. All covenants of the
Parties contained in this Agreement will remain in full force and effect
after, and survive, the Closing (other than those to be performed at or
prior to the Closing).
Section 11.5. Limitations on Representations and Warranties.
Except for the representations and warranties set forth in this Agreement,
the Assets are being sold "AS IS, WHERE IS, AND WITH ALL FAULTS." EXCEPT
FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT, SELLER
MAKES NO REPRESENTATIONS OR WARRANTIES WHATSOEVER CONCERNING THE ASSUMED
LIABILITIES, THE ASSETS, OR ANY OTHER MATTER, EXPRESS OR IMPLIED, ORAL, OR
WRITTEN. SELLER HEREBY SPECIFICALLY DISCLAIMS THE IMPLIED WARRANTY OF
MERCHANTABILITY AND THE IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE.
Section 11.6. Entire Agreement; Waivers. This Agreement,
together with all exhibits and Schedules hereto, and the other agreements
and instruments of the Parties delivered in connection herewith constitute
the entire agreement and supersede all prior agreements and understandings
both written and oral, among the Parties with respect to the subject matter
hereof. The failure of any Party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of
those rights.
Section 11.7. 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 11.8. 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 11.9. Headings. The headings of the Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
Section 11.10. Expenses. Except as otherwise provided in this
Agreement, each of the Parties shall be liable for its own expenses
incurred in connection with the negotiation, preparation, execution and
performance of this Agreement prior to Closing.
Section 11.11. Amendments. This Agreement cannot be amended,
modified or supplemented except by a written agreement executed by Seller
and Purchaser.
Section 11.12. 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 the provisions of Sections 8.1 and 8.2 hereof
shall inure to the benefit of the Persons referred to therein.
Section 11.13. Schedules and Exhibits. Inclusion of an item or
matter on any of the Schedules or Exhibits attached hereto shall not be
deemed to be an admission by any Party that such item or matter is required
to be disclosed in such Schedule or Exhibit. Each disclosure on each
Schedule, to the extent specified therein, qualifies the correspondingly
numbered representation and warranty or covenant contained herein and, to
the extent it is apparent on the face of such disclosure that such
disclosure qualifies another representation or warranty contained herein,
such other representation and warranty.
Section 11.14. Cooperation Following the Closing. Following the
Closing, the Parties shall each deliver to the other such further
information and documents and shall execute and deliver to the other such
further instruments and agreements as the other shall reasonably request to
consummate or confirm the transactions provided for in this Agreement, to
accomplish the purpose of this Agreement or to assure to the other the
benefits of this Agreement.
[The remainder of this page is left intentionally blank;
signature page follows]
IN WITNESS WHEREOF, each of the Parties listed below has
executed this U.S. Asset Purchase Agreement as of the day and year first
above written.
CONEXANT SYSTEMS, INC.
By: /s/ Dwight W. Decker
---------------------------------
Dwight W. Decker
Chairman of the Board and Chief
Executive Officer
ALPHA INDUSTRIES, INC.
By: /s/ David J. Aldrich
--------------------------------
David J. Aldrich
President and Chief Executive
Officer
Schedules
Schedule 1 Certain Executive Officers of Seller
Schedule 2.1 Assets
Schedule 3.3 Consents Required by Seller
Schedule 3.4 Compliance with Laws
Schedule 3.5 Intellectual Property
Schedule 3.6 Seller Litigation
Schedule 3.7(a) List of Package Design Team Employees
Schedule 3.8 Labor Relations
Schedule 3.9(b) Tax Proceedings
Schedule 4.3 Consents Required by Purchaser
Schedule 4.4 Purchaser Litigation
Exhibits
Exhibit A Terms of Promissory Note
Exhibit 99.1
ALPHA CONTACT: CONEXANT CONTACTS:
Paul Vincent Editorial
Chief Financial Officer Gwen Carlson
(781) 935-5150, ext. 4438 (949) 483-7363
Investor Relations
Thomas Schiller
(949) 483-2698
ALPHA AND CONEXANT'S WIRELESS BUSINESS MERGE TO CREATE THE
PURE-PLAY LEADER IN MOBILE COMMUNICATIONS SEMICONDUCTORS
New Company Uniquely Positioned to Drive the Evolution of RF and
Complete System Solutions For 2.5G and 3G Applications
WOBURN, Mass., and NEWPORT BEACH, Calif., Dec. 17, 2001 - Alpha Industries,
Inc., (Nasdaq: AHAA) and Conexant Systems, Inc., (Nasdaq: CNXT) today
announced the signing of a definitive agreement that will combine
Conexant's wireless business with Alpha to create the pure-play world
leader in radio frequency (RF) and complete semiconductor system solutions
for mobile communications applications.
Combining the wireless technology and product portfolios of the
two companies will uniquely position the new entity to drive the evolution
of RF integration for all major air interfaces, including CDMA and GSM, and
complete semiconductor and software solutions for advanced 2.5G and 3G
applications.
David Aldrich, Alpha president and chief executive officer,
will be chief executive officer of the new company and Dwight W. Decker,
Conexant chairman and chief executive officer, will serve as chairman of
the board of directors. Alpha and Conexant will have equal representation
on the board of directors of the new company.
The new company would have approximately 140 million fully
diluted shares outstanding, with current Alpha shareholders owning
approximately 33 percent and current Conexant shareholders owning
approximately 67 percent of the combined company's shares on a fully
diluted basis. The combined company would be valued at approximately $3
billion, based on Alpha's December 14 closing price of $21.20 per share.
Under the terms of the agreement, Conexant will spin-off its
wireless business, including its GaAs wafer fabrication facility located in
Newbury Park, Calif., to be followed immediately by a merger of this
business with Alpha. Upon completion of the merger, the new company will
purchase Conexant's semiconductor assembly, module manufacturing and test
facility, located in Mexicali, Mexico, for $150 million in cash.
The merged company will have executive offices in Woburn, Mass.
and Newport Beach, Calif., and will employ approximately 4,000 people
worldwide. It will operate under a new name and stock ticker symbol that
will be announced within the next few months.
"Success in today's wireless semiconductor industry
increasingly demands a comprehensive portfolio of technology and products,"
said David Aldrich. "This merger of two highly complementary wireless
businesses will create the world's pure-play leader in mobile
communications semiconductors, with the industry's broadest technology
capability and most complete product offering.
"For RF systems, this portfolio will include combination switch
and filter products, multi-chip power-amplifier modules, and highly
integrated transmit-and-receive devices for all major air-interface
standards," Aldrich continued. "For complete handset systems, the combined
company will deliver the world's most comprehensive 2.5G GSM/GPRS solution,
including the complete radio as well as all baseband processing, protocol
stack and user interface software, plus complete reference designs and
development platforms. For infrastructure applications, we are excited
about the opportunity to leverage Conexant's integrated RF product and
technology capabilities across Alpha's existing strong channel
relationships and broad customer engagements."
"Conexant has viewed wireless communications as a core
investment, and over the past five years this business has grown from
approximately $50 million in annual revenues to more than $250 million this
year," said Dwight Decker. "With Alpha's proven track record of product
execution and operational excellence, we strongly believe this merger will
create a company that is capable of even greater long-term success.
"Together, the merger partners sell to virtually every key
wireless OEM, including the world's top 10 handset manufacturers," Decker
continued. "In fact, as a result of the merger, the new company's top four
handset customers will consist of Nokia, Motorola, Sony/Ericsson and
Samsung, the world's largest handset OEMs, and the company's top four
infrastructure customers will be Ericsson, Motorola, Nokia and Nortel, the
world's largest infrastructure OEMs.
The new company will have an expanded GaAs wafer manufacturing
capability, including both PHEMT and InGaP HBT, for RF switch and
power-amplifier applications. In addition, the company will have long-term
assured access to Conexant's advanced SiGe and BiCMOS wafer manufacturing
for integrated RF applications. The company will also own a high-volume,
low-cost RF module assembly and test facility that has manufactured nearly
150 million power-amplifier modules to date.
"The new company will have access to all critical RF specialty
process technologies, and will be unique in its capabilities for both PHEMT
and HBT manufacturing," said David Aldrich. "Also, the addition of
Conexant's industry-leading module manufacturing and test facility will
bring significant economies of scale to the combined company."
The boards of directors of both companies have approved the
definitive agreement. Under the terms of the transaction, Alpha
shareholders will receive one share and Conexant shareowners will receive
0.342 of a share in the new company. The transaction is subject to
customary regulatory approvals, receipt of a ruling by the IRS that the
Conexant wireless business spin-off qualifies as tax-free, and an Alpha
shareholder vote to approve the merger. The transaction is expected to be
completed in the second quarter of calendar 2002.
NOTE TO EDITORS, ANALYSTS AND INVESTORS
Alpha and Conexant will be holding a conference call to discuss
the merger agreement. The call will take place on Monday, Dec. 17, 2001 at
6:00 a.m. PST, 9 a.m. EST. To listen to the conference call via telephone,
please call 800-680-9685 (domestic) or 334-323-7242 (international),
security code: USA. To listen via the Internet, please visit
www.alphaind.com, www.conexant.com, or www.ccbn.com. Playback of the
conference call will begin at 9:00 a.m. PST on Monday, Dec. 17, and end at
5:00 p.m. PST on Friday, Dec. 21. The replay will be available on Alpha's
web site at www.alphaind.com, or at Conexant's web site at
www.conexant.com, or by calling 800-858-5309 (domestic) or 334-323-9869
(international), access code: 40313, pass code 16809.
SECURITY LEGEND
Alpha Industries intends to file a registration statement with
the Securities and Exchange Commission in connection with the transaction,
and to mail a proxy statement/prospectus and other relevant documents to
Alpha shareholders. Investors are urged to read the proxy
statement/prospectus and other relevant documents when they become
available, because they will contain important information about Conexant,
Alpha and the proposed transaction. Shareholders will be able to obtain the
documents filed with the Commission free of charge at the Web site
maintained by the Commission at www.sec.gov. In addition, shareholders may
obtain documents filed with the Commission by Alpha free of charge by
requesting them in writing from Alpha Industries, Inc., 20 Sylvan Road,
P.O. Box 1044, Woburn, MA 01801, Attention: Investor Relations, or by
telephone at (781) 935-5150, ext. 5.
Alpha Industries, Inc. and its directors and executive officers
may be deemed participants in the solicitation of proxies from Alpha
Industries shareholders. A list of the names of those directors and
officers and descriptions of their interests in Alpha Industries will be
contained in Alpha Industries proxy statement/prospectus when it becomes
available.
ABOUT ALPHA
Alpha Industries is a leading provider of RF integrated
circuit-based solutions, including semiconductors and ceramic components,
for the wireless and broadband communications markets. Alpha's switches,
power amplifiers and discrete semiconductors are used by the world's
leading broadband, infrastructure and wireless communications companies to
enhance the speed, quality and performance of voice, data and video. The
company's Alpha Integration Platform(TM) (aiIP(TM)) is a breakthrough
manufacturing, packaging and design technique that reduces design
complexity and improves the OEM's overall time to market for new products.
For more information, please visit Alpha's Web site, www.alphaind.com.
ABOUT CONEXANT
Conexant Systems, Inc. is a worldwide leader in semiconductor
system solutions for communications applications. Conexant leverages its
expertise in mixed-signal processing to deliver integrated systems and
semiconductor products through two separate businesses: Conexant and
Mindspeed Technologies.
Conexant's personal networking business is focused on wireless
communications, digital infotainment and personal computing products that
are used in mobile communications and the broadband digital home. Mindspeed
Technologies designs, develops and sells a complete portfolio of
semiconductor networking solutions that facilitate the aggregation,
transmission and switching of data, video and voice from the edge of the
Internet to linked metropolitan area networks and long-haul networks.
Conexant, headquartered in Newport Beach, Calif., delivered
revenues of $1.1 billion for fiscal 2001, and has approximately 6,900
employees worldwide. The company is a member of the S&P 500 and Nasdaq-100
indices. To learn more, visit us at www.conexant.com or www.mindspeed.com.
SAFE HARBOR STATEMENT
This press release contains statements relating to future results of
Conexant Systems, Inc. and Alpha Industries, Inc. (including certain
projections and business trends) that are "forward-looking statements" as
defined in the Private Securities Litigation Reform Act of 1995. Actual
results may differ materially from those projected as a result of certain
risks and uncertainties. For Conexant, these risks and uncertainties
include, but are not limited to: global economic and market conditions,
such as the cyclical nature of the semiconductor industry and the markets
addressed by the company's and its customers' products; demand for and
market acceptance of new and existing products; successful development of
new products; the timing of new product introductions; the availability and
extent of utilization of manufacturing capacity; pricing pressures and
other competitive factors; changes in product mix; fluctuations in
manufacturing yields; product obsolescence; the ability to develop and
implement new technologies and to obtain protection for the related
intellectual property; the successful planned disposition of certain
assets; the successful separation of Conexant's Internet infrastructure and
personal networking businesses; the successful merger of Conexant's
wireless business with Alpha; the ability to attract and retain qualified
personnel; labor relations of Conexant, its customers and suppliers; and
the uncertainties of litigation, as well as other risks and uncertainties,
including but not limited to the security and safety risks of Conexant's
employees and of Conexant facilities and those risks and uncertainties
detailed from time to time in Conexant's Securities and Exchange Commission
filings. For Alpha, factors include, but are not limited to: the successful
merger of Alpha with Conexant's wireless business, the cancellation or
postponement of customer orders, the ability to provide advantageous cycle
times and a range of product offerings, inability to predict customer
orders, the disproportionate impact of Alpha's business relationships with
its larger customers, difficulty manufacturing products in sufficient
quantity and quality, erosion of selling prices or margins, modification of
Alpha's plans or intentions, and market developments, competitive pressures
and changes in economic conditions that vary from Alpha's expectations.
Additional information on these and other factors that may cause actual
results and Alpha's performance to differ materially is included in the
Alpha's periodic reports filed with the SEC, including but not limited to
Alpha's Form 10-K for the year ended April 1, 2001 and subsequent Forms
10-Q. Copies may be obtained by contacting Alpha or the SEC. Alpha cautions
readers not to place undue reliance upon any forward-looking statements,
which speak only as of the date made. Alpha does not undertake or accept
any obligation or undertaking to release publicly any updates or revisions
to any forward-looking statement to reflect any change in Alpha's
expectations or any change in events, conditions or circumstance on which
any such statement is based. These forward-looking statements are made only
as of the date hereof, and the companies undertake no obligation to update
or revise the forward-looking statements, whether as a result of new
information, future events or otherwise.
Note to Editors: Conexant and Mindspeed are trademarks of Conexant Systems,
Inc. Other brands and names contained in this release are the property of
their respective owners.
GLOSSARY OF TERMS
- -----------------
BiCMOS (bipolar complementary metal oxide semiconductor) -- a type of
integrated circuit that uses both bipolar and CMOS technologies to create
transistors that can handle higher current than CMOS-only transistors.
CDMA (Code Division Multiple Access) -- a digital spread-spectrum
modulation technology for radio links, used primarily with personal
communications devices such as mobile phones.
GaAs (gallium arsenide) -- an alloy of gallium and arsenic that is used as
the base material for compound (multi-element) semiconductors. It is
several times faster than silicon and is used in high-frequency,
high-speed, low-power applications such as cell phones, and is particularly
effective for manufacturing the RF front-ends of cellular/PCS handsets, the
part that broadcasts and detects the signal.
GSM (Global System for Mobile Communications) -- a set of standards for
digital transmission techniques that have been widely adopted in Europe for
mobile communications and supported in North America for Personal
Communications Service (PCS).
GPRS (General Packet Radio Service) is a wireless service for digital
cellular networks. It provides efficient, low-cost, end-to-end access to
Internet network services. GPRS uses a packet-mode technique to transfer
high-speed and low-speed data and signaling in an efficient manner over GSM
radio networks.
HBT (heterojunction bipolar transistor) -- a very high-performance
transistor structure that offers higher RF power gain per stage and does
not require a negative power supply, making it ideal for wireless
applications.
InGaP (indium gallium phosphide) HBT -- a semiconductor used to form the
emitter region of a gallium arsenide heterojunction bipolar transistor.
PHEMT (pseudomorphic high electron mobility transistor) -- a type of
compound semiconductor that features high electron mobility and low-noise
characteristics, making it suitable for high-speed devices.
SiGe (silicon germanium) -- a semiconductor material made from silicon and
germanium that is compatible with standard semiconductor fabrication
processes, and that enables transistors to switch faster and yield higher
performance than all-silicon transistors, and can be built on the same chip
with silicon transistors to create high-frequency circuits.
Transistor -- a device used to amplify a signal or open and close a
circuit. The transistor contains a semiconductor material that can change
its electrical state when pulsed.
