Exhibit 2
[5/13/03]
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FORM OF
DISTRIBUTION AGREEMENT
by and between
CONEXANT SYSTEMS, INC.
and
MINDSPEED TECHNOLOGIES, INC.
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[ ], 2003
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS................................................................... 1
Section 1.01 General............................................................. 1
ARTICLE II THE CONTRIBUTION............................................................. 21
Section 2.01 Intercorporate Reorganization....................................... 21
Section 2.02 Financial Instruments............................................... 24
Section 2.03 Intercompany Accounts and Arrangements.............................. 24
Section 2.04 Cash Management..................................................... 26
Section 2.05 The Mindspeed Board................................................. 27
Section 2.06 Resignations; Transfer of Stock Held as Nominee..................... 27
Section 2.07 Mindspeed Certificate of Incorporation and Bylaws; Rights Plan...... 28
Section 2.08 Consents............................................................ 28
ARTICLE III THE DISTRIBUTION............................................................ 29
Section 3.01 The Distribution.................................................... 29
Section 3.02 Fractional Shares................................................... 30
Section 3.03 Cooperation Prior to the Distribution............................... 30
Section 3.04 Conexant Board Action; Conditions to the Distribution............... 31
Section 3.05 Waiver of Conditions................................................ 32
ARTICLE IV MUTUAL RELEASE; INDEMNIFICATION; EXPENSES.................................... 32
Section 4.01 Mutual Release...................................................... 32
Section 4.02 Indemnification by Conexant......................................... 34
Section 4.03 Indemnification by Mindspeed........................................ 34
Section 4.04 Limitations on Indemnification Obligations.......................... 35
Section 4.05 Procedures Relating to Indemnification.............................. 36
Section 4.06 Remedies Cumulative................................................. 38
Section 4.07 Indemnification under Tax Allocation Agreement...................... 38
Section 4.08 Expenses............................................................ 38
ARTICLE V CERTAIN OTHER MATTERS......................................................... 39
Section 5.01 Insurance........................................................... 39
Section 5.02 Use of Names, Trademarks, etc....................................... 43
Section 5.03 License of Intellectual Property.................................... 46
Section 5.04 Jazz Warrant........................................................ 50
ARTICLE VI ACCESS TO INFORMATION........................................................ 51
Section 6.01 Provision of Corporate Records...................................... 51
Section 6.02 Access to Information............................................... 51
Section 6.03 Production of Witnesses............................................. 53
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Section 6.04 Retention of Records................................................ 53
Section 6.05 Confidentiality..................................................... 53
ARTICLE VII MISCELLANEOUS............................................................... 54
Section 7.01 Entire Agreement; Construction...................................... 54
Section 7.02 Survival of Agreements.............................................. 54
Section 7.03 Governing Law....................................................... 55
Section 7.04 Notices............................................................. 55
Section 7.05 Dispute Resolution.................................................. 56
Section 7.06 Consent to Jurisdiction............................................. 57
Section 7.07 Amendments.......................................................... 57
Section 7.08 Assignment.......................................................... 57
Section 7.09 Captions; Currency.................................................. 58
Section 7.10 Severability........................................................ 58
Section 7.11 Parties in Interest................................................. 58
Section 7.12 Schedules........................................................... 59
Section 7.13 Termination......................................................... 59
Section 7.14 Waivers; Remedies................................................... 59
Section 7.15 Further Assurances.................................................. 59
Section 7.16 Counterparts........................................................ 59
Section 7.17 Performance......................................................... 59
Section 7.18 Currency Calculations............................................... 60
Section 7.19 Interpretation...................................................... 60
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SCHEDULES
Schedule 1.01(a) - Conexant Former Businesses
Schedule 1.01(b) - Amended Bylaws
Schedule 1.01(c) - Restated Certificate of Incorporation
Schedule 1.01(d) - Mindspeed Patents and Trademarks
Schedule 1.01(e) - Mindspeed Former Businesses
Schedule 1.01(f) - Mindspeed Company Codes
Schedule 1.01(g) - Mindspeed Financial Instruments
Schedule 1.01(h) - Mindspeed Actions
Schedule 1.01(i) - Mindspeed Real Property
Schedule 1.01(j) - Mindspeed Subsidiaries
Schedule 2.01(c) - Reorganization Transactions
Schedule 2.03(a) - Intercompany Accounts
Schedule 2.03(b)(ii) - Intercompany Agreements
Schedule 2.05 - Mindspeed Directors
Schedule 2.06 - Continuing Directors and Officers
Schedule 4.02(b) - Certain Form 10 Sections
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DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT (this "Agreement") is dated as of [ ],
2003 by and between CONEXANT SYSTEMS, INC., a Delaware corporation ("Conexant"),
and MINDSPEED TECHNOLOGIES, INC., a Delaware corporation and a wholly-owned
subsidiary of Conexant ("Mindspeed"). Capitalized terms used in this Agreement
shall have the meanings set forth in Section 1.01.
WHEREAS, the Conexant Board has determined that it is appropriate
and desirable to distribute all outstanding shares of Mindspeed Common Stock on
a pro rata basis to the holders of Conexant Common Stock; and
WHEREAS, subject to the terms and conditions contained herein,
immediately prior to the Distribution, Conexant and the Conexant Subsidiaries
will transfer the Mindspeed Assets and the Mindspeed Subsidiaries to Mindspeed
or one of the Mindspeed Subsidiaries and Mindspeed and the Mindspeed
Subsidiaries will assume the Mindspeed Liabilities, all as more fully described
in this Agreement (the "Contribution"); and
WHEREAS, Conexant and Mindspeed 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, Mindspeed and the respective
members of the Conexant Group and the Mindspeed Group following the Contribution
and the Distribution.
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):
"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.
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"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(c)(i)(A).
"Administrative Services Software" shall have the meaning set forth
in Section 5.03(c)(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 Separation Agreements,
following the Time of Distribution, neither Conexant nor any Conexant Subsidiary
shall be deemed to be an Affiliate of any member of the Mindspeed Group and
neither Mindspeed nor any Mindspeed Subsidiary shall be deemed to be an
Affiliate of any member of the Conexant 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.
"American Stock Exchange" means the American Stock Exchange LLC.
"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;
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(e) cash (including cash in bank accounts), cash on hand, cash
equivalents, funds, certificates of deposit, similar instruments,
travelers checks and cash deposits held by third parties securing or
otherwise collateralizing obligations;
(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 and prepaid expenses;
(o) claims, causes of 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.
"Broadband 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,
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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, network access products, digital information and entertainment
products, and activities related thereto, (b) Former Businesses set forth on
Schedule 1.01(a), (c) other Former Business related primarily to any of the
foregoing, and (d) activities related primarily to the foregoing, other than, in
the case of each of the foregoing clauses (a), (b), (c) and (d), any businesses,
operations or activities included in the Mindspeed Business.
"Business Day" means any day other than a Saturday, Sunday or other
day when banks are authorized or required by law to be closed in California or
New York.
"Bylaws" means Mindspeed's amended Bylaws in the form attached
hereto as Schedule 1.01(b).
"Certificate of Incorporation" means Mindspeed's restated
certificate of incorporation in the form attached hereto as Schedule 1.01(c).
"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)(ii).
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor legislation.
"Commission" means the Securities and Exchange Commission.
"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 Separation
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 the Employee Matters Agreement or the Tax
Allocation Agreement;
(c) the following specifically enumerated Assets which immediately prior
to the Time of Distribution are owned by Conexant or any of its
Subsidiaries
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(including members of the Mindspeed Group), in each case whether or not
such Assets are used in or relate to the Broadband Business or the
Mindspeed Business:
(i) all Conexant Bank Accounts;
(ii) all Conexant Cash;
(iii) all Accounts Receivable other than Mindspeed Accounts
Receivable;
(iv) all Inventories other than Mindspeed Inventories;
(v) all Securities;
(vi) all Hedging Arrangements;
(vii) all Machinery and Equipment other than Mindspeed
Machinery and Equipment;
(viii) all Real Property other than Mindspeed Real Property;
(ix) all Patents and Trademarks other than those set forth on
Schedule 1.01(d);
(x) all rights in, and to the use of, the Conexant Marks,
other than as provided for in Section 5.02; and
(xi) 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);
(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
Mindspeed Group) that are not Mindspeed Assets; and
(e) all rights, causes of action and claims of Conexant or any of its
Subsidiaries (including members of the Mindspeed Group) to the extent
relating to any asset described in clauses (a) through (d) above.
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Anything contained herein to the contrary notwithstanding, assets
described in paragraphs (b) and (c) of the definition of "Mindspeed 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 Mindspeed Group) immediately prior
to the Time of Distribution, other than Mindspeed Bank Accounts.
"Conexant Board" means the Board of Directors of Conexant or a duly
authorized committee thereof.
"Conexant Cash" means all (i) cash (including cash in bank
accounts), 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 Mindspeed Group)
immediately prior to the Time of Distribution and (ii) cash deposits held by
third parties securing or otherwise collateralizing obligations of Conexant or
any of its Subsidiaries or Affiliates (including members of Mindspeed Group)
immediately prior to the Time of Distribution, other than, in the case of each
of the foregoing clauses (i) and (ii), Mindspeed Cash.
"Conexant Common Stock" means the common stock, par value $.01 per
share, of Conexant.
"Conexant Expenses" means all out-of-pocket fees, costs and expenses
of Conexant or any of its Subsidiaries (including members of the Mindspeed
Group) incurred prior to the Time of Distribution in connection with effecting
the Contribution, the Distribution, the preparation, execution and delivery of
the Separation Agreements and the consummation of the Contribution and the
Distribution, other than Mindspeed Expenses.
"Conexant Group" means Conexant and the Conexant Subsidiaries.
"Conexant Indemnitees" mean each member of the Conexant Group and
each of their respective Representatives and Affiliates and each of the heirs,
executors, successors and permitted assigns of any of the foregoing.
"Conexant Liabilities" means the following:
(a) all Liabilities of any member of the Conexant Group under any
Separation Agreement to which it is or becomes a party;
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(b) all Liabilities for which any member of the Conexant Group is
expressly made responsible pursuant to the Employee Matters Agreement or
the Tax Allocation Agreement;
(c) the following specifically enumerated Liabilities of Conexant or any
of its Subsidiaries (including members of the Mindspeed Group), in each
case whether or not such Liabilities relate to the Broadband Business, the
Conexant Assets, the Mindspeed Business or the Mindspeed Assets:
(i) all Liabilities in respect of the Convertible Notes; and
(d) all other Liabilities of Conexant or any of its Subsidiaries
(including members of the Mindspeed Group) in respect of operations
engaged in prior to the Time of Distribution that are not Mindspeed
Liabilities.
Anything contained herein to the contrary notwithstanding,
Liabilities described in paragraphs (b) and (c) of the definition of "Mindspeed
Liabilities" will not be included in Conexant Liabilities.
"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 and any other name, xxxx or symbol connoting "Conexant" or which
constitutes a formative thereof.
"Conexant Spin-Off" shall have the meaning set forth in Section
5.03(b)(iii).
"Conexant Subsidiary" means each Subsidiary of Conexant other than
Mindspeed and the Mindspeed Subsidiaries.
"Consents" means consents, approvals, waivers, clearances,
exemptions, allowances, novations, authorizations, filings, registrations and
notifications.
"Contracts" means all agreements, personal property 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, but excluding real
property leases.
"Contribution" shall have the meaning set forth in the recitals.
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"Convertible Notes" means Conexant's (a) 4-1/4% convertible
subordinated notes due May 1, 2006 issued under the Indenture dated as of May
12, 1999 between Conexant and The First National Bank of Chicago, as trustee and
(b) 4% convertible subordinated notes due February 1, 2007 issued under the
Indenture dated as of February 1, 2000 between Conexant and Bank One Trust
Company, National Association, as trustee.
"Conveyance and Assumption Instruments" means, collectively, the
various agreements, bills of sale, stock powers, certificates of title,
instruments of conveyance and assignment, instruments of assumption and other
instruments and documents to be entered into to effect the transfer of Assets
and Subsidiaries and the assumption of Liabilities contemplated by the
transactions described in Sections 2.01(b) and (c).
"Credit Agreement" means the senior secured revolving credit
agreement dated as of the date hereof entered into prior to the Time of
Distribution by and between Conexant and Mindspeed under which Mindspeed may
borrow up to $50 million, subject to the terms set forth therein, together with
any related security documents and ancillary agreements.
"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" means the distribution, on the basis provided for in
Section 3.01, to the holders of Conexant Common Stock of the shares of Mindspeed
Common Stock owned by Conexant on the Distribution Date.
"Distribution Agent" means the distribution agent selected by
Conexant to distribute Mindspeed 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.
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"Employee Matters Agreement" means the Employee Matters Agreement
dated as of the date hereof entered into prior to the Time of Distribution by
and between Conexant and Mindspeed.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Financing Agreements" means the Credit Agreement, the Initial
Warrants, the Financing Warrants, the Registration Rights Agreements, and each
other agreement, instrument or document expressly contemplated thereby to be
entered into by any party thereto.
"Financing Warrants" means warrants to purchase shares of Mindspeed
Common Stock to be issued by Mindspeed to Conexant in connection with borrowings
under the Credit Agreement.
"Form 10" means the registration statement on Form 10 filed by
Mindspeed with the Commission to effect the registration of the Mindspeed Common
Stock pursuant to the Exchange Act, including all amendments thereto filed by
Mindspeed with the Commission prior to the Time of Distribution.
"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 Mindspeed Group, as
applicable.
"Hedging Arrangements" means swaps, collars, caps, forward contracts
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
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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 Mindspeed
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 Mindspeed, which is part of the Form 10, sent to holders of Conexant Common
Stock in connection with the Distribution.
"Initial Warrants" mean warrants to purchase shares of Mindspeed
Common Stock dated as of the date hereof issued by Mindspeed to Conexant prior
to the Time of 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.
"IT Transition Agreement" means the Information Technology
Transition Services Agreement dated as of the date hereof entered into prior to
the Time of Distribution by and between Conexant and Mindspeed.
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"Jazz" means Jazz Semiconductor, Inc. (formerly named
Specialtysemi, Inc.), a Delaware corporation.
"Jazz Contribution Agreement" means the Contribution Agreement dated
February 23, 2002 among Jazz, Conexant and Carlyle Capital Investors, L.L.C., as
amended by the First Amendment to Contribution Agreement dated March 12, 2002.
"Jazz Warrant" means the warrant to purchase 2.9 million shares of
Conexant Common Stock issued by Conexant to Jazz dated March 12, 2002, as it may
be adjusted from time to time.
"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
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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.
"Machinery and Equipment" means machinery, equipment, tooling,
vehicles, furniture and fixtures (other than real property 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.
"Mindspeed" shall have the meaning set forth in the preamble.
"Mindspeed Accounting Ledgers" means the general ledgers and other
subsidiary ledgers of Conexant for each of the Mindspeed Company Codes.
"Mindspeed Accounts Receivable" mean the Accounts Receivable set
forth on the Mindspeed Accounting Ledgers immediately prior to the Time of
Distribution.
"Mindspeed Assets" means the following:
(a) all rights of any member of the Mindspeed Group under any Separation
Agreement to which it is or becomes a party;
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(b) all Assets which are expressly allocated to any member of the
Mindspeed Group pursuant to the Employee Matters Agreement or the Tax
Allocation 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 Mindspeed Group):
(i) the Mindspeed Bank Accounts;
(ii) the Mindspeed Cash (subject to Section 2.04(b));
(iii) the Mindspeed Accounts Receivable;
(iv) the Mindspeed Inventories;
(v) the Mindspeed Machinery and Equipment;
(vi) the Mindspeed Real Property;
(vii) the Patents and Trademarks set forth on Schedule
1.01(d);
(viii) rights to the extent relating to the Mindspeed Business
to receive indemnification from Rockwell pursuant to the Rockwell
Distribution Agreement;
(ix) rights to the extent relating to the Mindspeed Business
to receive indemnification from Skyworks pursuant to the Skyworks
Distribution Agreement; and
(x) rights to the extent relating to the Mindspeed Business
to receive indemnification from Jazz pursuant to the Jazz
Contribution Agreement;
(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 Mindspeed Group) and which are used exclusively
in or relate exclusively to the Mindspeed Business, as the same shall
exist as of such time:
(i) Contracts;
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(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 and prepaid expenses;
(vii) claims, causes of 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); 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, causes of action and claims of Conexant or any of its
Subsidiaries (including members of the Mindspeed 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 Mindspeed Assets.
"Mindspeed Bank Accounts" means all bank accounts which are solely
in the name of one or more members of the Mindspeed Group immediately prior to
the Time of Distribution.
"Mindspeed Board" means the Board of Directors of Mindspeed.
"Mindspeed 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 networking products for communications
14
applications in enterprise, access, metropolitan and wide-area networks and
activities related thereto, (b) Former Businesses set forth on Schedule 1.01(e),
(c) other Former Businesses related primarily to any of the foregoing and (d)
activities related primarily to the foregoing.
"Mindspeed Cash" means (i) the following to the extent set forth on
the Mindspeed Accounting Ledgers immediately prior to the Time of Distribution
or located at locations of the Mindspeed Business at the Time of Distribution:
cash in Mindspeed Bank Accounts, cash on hand, cash equivalents, funds,
certificates of deposits, similar instruments and travelers checks and (ii) cash
deposits held by third parties securing or otherwise collateralizing obligations
relating to the Mindspeed Business immediately prior to the Time of
Distribution.
"Mindspeed Common Stock" means the common stock, par value $.01 per
share, of Mindspeed.
"Mindspeed Company Codes" means the Mindspeed company codes set
forth on Schedule 1.01(f).
"Mindspeed Expenses" means the following out-of-pocket fees, costs
and expenses of Conexant or any of its Subsidiaries (including members of the
Mindspeed Group), in each case, whether incurred and/or paid before, at or after
the Time of Distribution:
(a) all out-of-pocket fees, costs, and expenses (including legal fees
and expenses) of and related to the Credit Agreement, the credit facility
established thereby and the Financing Warrants; and
(b) all out-of-pocket fees, costs and expenses of the transfer agent and
registrar for the Mindspeed Common Stock.
"Mindspeed Financial Instruments" means those credit facilities,
guaranties, foreign currency forward exchange contracts, comfort letters,
letters of credit and similar instruments related to the Mindspeed Business
under which any member of the Conexant Group has any primary, secondary,
contingent, joint, several or other Liability, including those set forth on
Schedule 1.0(g).
"Mindspeed Group" means Mindspeed and the Mindspeed Subsidiaries.
"Mindspeed Indemnitees" means each member of the Mindspeed Group and
each of their respective Representatives and Affiliates and each of the heirs,
executors, successors and permitted assigns of any of the foregoing.
15
"Mindspeed Inventories" means the Inventories set forth on the
Mindspeed Accounting Ledgers immediately prior to Time of Distribution.
"Mindspeed Liabilities" means the following:
(a) all Liabilities of any member of the Mindspeed Group under any
Separation Agreement to which it is or becomes a party;
(b) all Liabilities for which any member of the Mindspeed Group is
expressly made responsible pursuant to the Employee Matters Agreement or
the Tax Allocation Agreement;
(c) the following specifically enumerated Liabilities of Conexant or any
of its Subsidiaries (including members of the Mindspeed Group), in each
case whether or not such Liabilities relate to the Broadband Business, the
Conexant Assets, the Mindspeed Business or the Mindspeed Assets:
(i) all Liabilities set forth on the Mindspeed Accounting
Ledgers immediately prior to the Time of Distribution; and
(ii) all Liabilities based upon, arising out of or relating
to the Actions set forth on Schedule 1.01(h);
(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 Mindspeed Group) to the extent
based upon, arising out of or relating to the Mindspeed Assets or the
Mindspeed Business, including:
(i) all Liabilities (including Liabilities arising out of
any breaches or violations) to the extent relating to the Mindspeed
Business based upon, arising out of or relating to Contracts
(whether or not such Contracts constitute Mindspeed Assets)
(including any primary, secondary, contingent or other obligations,
such as under guaranties or indemnities, in respect of such
Contracts), including (A) all Liabilities to the extent relating to
the Mindspeed Assets or the Mindspeed Business for which Conexant
has agreed to indemnify Rockwell and certain other Persons pursuant
to the Rockwell Distribution Agreement, (B) all Liabilities to the
extent relating to the Mindspeed Assets or the Mindspeed Business
for which Conexant has agreed to indemnify Skyworks and certain
other Persons pursuant to the Skyworks Distribution Agreement and
(C) all Liabilities to the extent relating to the Mindspeed Assets
or the
16
Mindspeed Business for which Conexant has agreed to indemnify Jazz
and certain other Persons pursuant to the Jazz Contribution
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 Mindspeed Liabilities.
"Mindspeed Machinery and Equipment" means the Machinery and
Equipment set forth on the Mindspeed Accounting Ledgers immediately prior to the
Time of Distribution.
"Mindspeed Real Property" means the Real Property set forth on
Schedule 1.01(i).
"Mindspeed Spin-Off" shall have the meaning set forth in Section
5.03(a)(iii).
"Mindspeed Subsidiary" means each Person listed on Schedule 1.01(j).
"New Jazz-Mindspeed Warrant" shall have the meaning set forth in
Section 5.04.
"Occurrence Basis Policies" shall have the meaning set forth in
Section 5.01(b)(i).
"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.
17
"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 Mindspeed 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 to cover only Mindspeed and its
Subsidiaries after the Time of Distribution), including the Property Policy,
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 Mindspeed 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, (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 and (iii) Washington and Persons who are Affiliates of
Washington or its successor after June 25, 2002 will not constitute members of
the Pre-Distribution Group for periods after June 25, 2002.
"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.
"Property Policy" means the Conexant property insurance policies for
the policy year July 1, 2002 through June 30, 2003.
18
"Real Property" means real property (including land, plants,
buildings, real property fixtures and improvements) and real property interests
(including real property leases, easements and rights of way, occupancy or use).
"Recipient Party" shall have the meaning set forth in Section 2.08.
"Record Date" means the close of business on [ ], 2003.
"Registration Rights Agreements" means the two Registration Rights
Agreements dated as of the date hereof entered into prior to the Time of
Distribution by and between Conexant and Mindspeed, one each relating to (i) the
Initial Warrants and (ii) the Financing Warrants.
"Representative" means, with respect to any Person, any of such
Person's directors, officers, employees, agents, consultants, advisors,
accountants, attorneys and representatives.
"Rights" means the Rights to be issued pursuant to the Rights Plan.
"Rights Plan" means the rights agreement entered into prior to the
Time of Distribution by and between Mindspeed and [ ],
as rights agent.
"Rockwell" means Rockwell Automation, Inc. (formerly named 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 all 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).
"Separation Agreements" means, collectively, this Agreement, the
Employee Matters Agreement, the Tax Allocation Agreement, the Transition
Agreement, the IT Transition Agreement, the Conveyance and Assumption
Instruments, the Sublease and any other agreement entered into between Conexant
and Mindspeed in connection with the Contribution and the Distribution (other
than the Financing Agreements).
19
"Skyworks" means Skyworks Solutions, Inc., a Delaware corporation
(formerly named Alpha Industries, Inc.) and successor by merger to Washington.
"Skyworks Distribution Agreement" means the Contribution and
Distribution Agreement dated as of December 16, 2001, as amended as of June 25,
2002, by and between Conexant and Washington.
"Sublease" means the Sublease dated as of the date hereof entered
into prior to the Time of Distribution by and between Conexant and Mindspeed
relating to premises at 0000 XxxXxxxxx Xxxxxxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx
00000-0000.
"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.
"Tax" and "Taxes" shall have the meaning set forth in the Tax
Allocation Agreement.
"Tax Allocation Agreement" means the Tax Allocation Agreement dated
as of the date hereof entered into prior to the Time of Distribution by and
between Conexant and Mindspeed.
"Third Party Claim" shall have the meaning set forth in Section
4.05(a).
"Time of Distribution" means the close of business 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).
20
"Transition Agreement" means the Transition Services Agreement dated
as of the date hereof entered into prior to the Time of Distribution by and
between Conexant and Mindspeed.
"Washington" means Washington Sub, Inc., a Delaware corporation.
ARTICLE II
THE CONTRIBUTION
Section 2.01 Intercorporate Reorganization. (a) Prior to the Time of
Distribution, Conexant and Mindspeed will take all actions necessary to increase
the outstanding shares of Mindspeed Common Stock so that, immediately prior to
the Distribution, Conexant will hold a number of shares of Mindspeed Common
Stock (rounded down to the nearest whole share) equal to the aggregate number of
shares of Conexant Common Stock (excluding treasury shares held by Conexant)
issued and outstanding as of the Record Date divided by three.
(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 Mindspeed
or a Mindspeed Subsidiary, as appropriate, any and all right, title and
interest of Conexant and each of the Conexant Subsidiaries in the
Mindspeed Subsidiaries;
(ii) Mindspeed and each Mindspeed 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 Mindspeed and each of the Mindspeed 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 Mindspeed
or a Mindspeed Subsidiary, as appropriate, any and all right, title and
interest of Conexant and each of the Conexant Subsidiaries in the
Mindspeed Assets;
(iv) Mindspeed and each Mindspeed 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 Mindspeed and each of the Mindspeed 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
21
manner and in accordance with the terms thereof, all Liabilities of
Mindspeed and the Mindspeed Subsidiaries that are Conexant Liabilities;
and
(vi) Mindspeed or a Mindspeed 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 Liabilities of
Conexant and the Conexant Subsidiaries that are Mindspeed Liabilities.
In the event that at any time or from time to time (whether at or
after the Time of Distribution) any member of the Conexant Group shall receive
or otherwise possess any Mindspeed Asset or interest in a Mindspeed Subsidiary,
such member will promptly convey, assign and transfer, or cause to be conveyed,
assigned and transferred, such Mindspeed Asset or interest in a Mindspeed
Subsidiary to Mindspeed. In the event that at any time or from time to time
(whether at or after the Time of Distribution) any member of the Mindspeed 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).
In the event that at any time or from time to time (whether at or
after the Time of Distribution) either Conexant or Mindspeed 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, the Employee Matters Agreement or the Tax Allocation 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 Mindspeed agree to discuss the
allocation of any Asset or Liability of Conexant and its Subsidiaries (including
members of the Mindspeed 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 Conexant and the Mindspeed Chief Executive
Officer will designate an employee of Mindspeed 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
22
by either Conexant or Mindspeed pursuant to this paragraph, or such other time
as Conexant and Mindspeed 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
Mindspeed 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. 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 7.07.
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) Subject to Section 2.08, Conexant and Mindspeed will take, or
cause to be taken, the actions described on Schedule 2.01(c) in connection with
United States and international operations of the Broadband Business and the
Mindspeed Business.
(d) In connection with the transfers of Subsidiaries and Assets
and the assumptions of Liabilities contemplated by subsections (b) and (c) of
this Section 2.01, Conexant and Mindspeed will execute or cause to be executed
by the appropriate entities the Conveyance and Assumption Instruments. The
transfer of capital stock contemplated by such subsections will be effected 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.
(e) Each of Conexant (on behalf of itself and each other member of
the Conexant Group) and Mindspeed (on behalf of itself and each other member of
the Mindspeed Group) understands and agrees that, except as expressly set forth
in any Separation Agreement, any Financing Agreement or any other agreement or
document contemplated by any Separation Agreement or Financing Agreement, no
party to any Separation Agreement, Financing Agreement or any other agreement or
document contemplated by any Separation Agreement or Financing 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 hereby or thereby, as to any
consents or approvals required in connection with the transactions contemplated
by the Separation Agreements or the Financing 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
23
assignment, document or instrument delivered hereunder or 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 Separation
Agreement, all Assets and Subsidiaries being transferred or retained as
contemplated by any Separation 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
for title and an assignment for leasehold or other rights not subject to the
Sublease) 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.
(f) 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
Mindspeed will, and will cause the Conexant Subsidiaries and the Mindspeed
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) Mindspeed will (from and
after the Time of Distribution, at its expense) take or cause to be taken all
actions, and enter into (or cause the Mindspeed 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, effective as of the Time of
Distribution, from all primary, secondary, contingent, joint, several and other
Liabilities in respect of Mindspeed Financial Instruments (it being understood
that all Liabilities in respect of Mindspeed Financial Instruments are Mindspeed
Liabilities).
(b) Mindspeed's obligations under Section 2.02(a) will continue to
be applicable to all Mindspeed Financial Instruments identified at any time by
Conexant, whether before, at or 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 Mindspeed, on behalf of itself and
each other member of the
24
Mindspeed 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 (including intercompany cash management
balances) existing immediately prior to the Time of Distribution between
Conexant and/or any Conexant Subsidiary, on the one hand, and Mindspeed
and/or any Mindspeed 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
Separation Agreement, including those arising under Section 2.04 or
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 4.08.
(b) Intercompany Agreements.
(i) Except as set forth in Section 2.03(b)(ii), in furtherance of
the releases and other provisions of Section 4.01, Mindspeed, on behalf of
itself and each other member of the Mindspeed Group, and Conexant, on
behalf of itself and each other member of the Conexant Group, hereby
terminate any and all agreements, arrangements, commitments or
understandings in existence as of the Time of Distribution, whether or not
in writing, between or among Mindspeed and/or any Mindspeed Subsidiary, on
the one hand, and Conexant and/or any Conexant Subsidiary, on the other
hand. No such terminated agreement, arrangement, commitment or
understanding (including any provision thereof which purports to survive
termination) shall be of any further force or effect after the Time of
Distribution.
(ii) The provisions of Section 2.03(b)(i) will not apply to any of
the following agreements, arrangements, commitments or understandings (or
to any of the provisions thereof): (A) the Separation Agreements and the
Financing Agreements (and each other agreement, instrument or document
expressly contemplated by any Separation Agreement or Financing Agreement
to be entered into by any party hereto or any of the members of their
respective Groups); (B) any agreements, arrangements, commitments or
understandings listed or described on Schedule 2.03(b)(ii); (C) any
agreements, arrangements, commitments or understandings to which any
Person other than the parties hereto and their respective Affiliates is a
party; and (D) any other agreements, arrangements, commitments or
understandings that any Separation Agreement or Financing Agreement
expressly contemplates will survive the Time of Distribution.
25
Section 2.04 Cash Management.
(a) Pre-Distribution Cash Contribution. At least one Business Day
prior to the Time of Distribution, Conexant shall contribute to Mindspeed (by
wire transfer to Mindspeed's Bank Account at Comerica Bank, Account No.
1850968197, A.B.A. Routing Number 000000000) an amount in cash equal to $[ ].
(b) Cash Balances at the Time of Distribution. In the event the
amount of Mindspeed Cash (after giving effect to the contribution described in
Section 2.04(a)) (x) exceeds $100 million, Mindspeed will pay to Conexant (by
wire transfer to Conexant's bank account at Comerica Bank, Account No.
1850967629, A.B.A. Routing Number 000000000), within five Business Days after
the Distribution, an amount equal to such excess or (y) is less than $100
million, Conexant will pay to Mindspeed, within five Business Days after the
Distribution Date, an amount equal to such deficit.
(c) Funding of Outstanding Checks.
(i) Mindspeed or a Mindspeed Subsidiary will fund all amounts in
respect of checks that are outstanding immediately prior to the Time of
Distribution and presented for payment at or after the Time of
Distribution in Mindspeed Bank Accounts.
(ii) Conexant or a Conexant Subsidiary will fund all amounts in
respect of checks that are outstanding immediately prior to the Time of
Distribution and presented for payment at or after the Time of
Distribution in Conexant Bank Accounts.
(iii) The provisions of this Section 2.04(c) with respect to funding
of outstanding checks will not affect in any way, and will be subject to,
all other provisions of this Agreement providing for the reimbursement of
any amounts or the allocation of any Liabilities, including Section 4.08.
(d) Customer Payments.
(i) Mindspeed will, and will cause the Mindspeed Subsidiaries to,
forward to Conexant (for the account of Conexant or the applicable
Conexant Subsidiary) any customer payments in respect of accounts
receivable constituting Conexant Assets received by Mindspeed or any of
the Mindspeed 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
26
Conexant's bank account at Comerica Bank, Account No. 1850967629, A.B.A.
Routing Number 000000000) in the case of customer payments received within
thirty days after the Time of Distribution and by check in the case of
customer payments received thereafter.
(ii) Conexant will, and will cause the Conexant Subsidiaries to,
forward to Mindspeed (for the account of Mindspeed or the applicable
Mindspeed Subsidiary) any customer payments in respect of accounts
receivable constituting Mindspeed Assets received by Conexant or any of
the Conexant 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 Mindspeed's bank account at
Comerica Bank, Account No. 1850968197, A.B.A. Routing Number 000000000) in
the case of customer payments received within thirty days after the Time
of Distribution and by check in the case of customer payments received
thereafter.
Section 2.05 The Mindspeed Board. Prior to the Time of Distribution,
Mindspeed and Conexant will take all actions which may be required to elect or
otherwise appoint as directors of Mindspeed the persons named on Schedule 2.05
to constitute the board of directors of Mindspeed 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 Mindspeed or any other member of the Mindspeed Group on
which they serve, and from all positions as officers of Mindspeed or any other
member of the Mindspeed Group in which they serve, except as otherwise specified
on Schedule 2.06. Mindspeed will cause all of its employees and directors and
all of the employees and directors of each other member of the Mindspeed 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 Mindspeed 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
Mindspeed to be such nominee as of and after the Time of Distribution. Mindspeed
will cause each of its
27
employees, and each of the employees of the other members of the Mindspeed
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 Mindspeed Group
entity as an agent or representative therefor after the Time of Distribution.
Mindspeed will cause each of its employees and each of the employees of the
other members of the Mindspeed 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 Mindspeed Certificate of Incorporation and Bylaws;
Rights Plan. Prior to the Time of Distribution, (a) the Mindspeed 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 Bylaws,
and (b) Conexant, as sole shareholder of Mindspeed, will approve the Certificate
of Incorporation. Prior to the Time of Distribution, the Mindspeed Board will
adopt the Rights Plan and declare a dividend of the Rights so that each share of
Mindspeed Common Stock issued and outstanding as of the Time of Distribution
will initially have one Right attached thereto.
Section 2.08 Consents. Prior to and after the Distribution Date,
Conexant and Mindspeed will, and will cause the Conexant Subsidiaries and the
Mindspeed 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 Mindspeed (or any of the Mindspeed 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 Mindspeed Group thereunder. If any such
Consent is not obtained or if an attempted assignment would be ineffective or
would impair any rights of any member 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 after the Time of Distribution (x) the party
contemplated hereunder to assign such Contract or Permit (the
28
"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) 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, it
nonetheless being agreed and understood by the parties that no party shall be
liable in any manner to any other party for any failure of any of the transfers
contemplated by this Article II to be consummated prior to the Time of
Distribution.
ARTICLE III
THE DISTRIBUTION
Section 3.01 The Distribution. (a) Subject to Section 3.04, prior to
the Time of Distribution, Conexant will deliver to the Distribution Agent, for
the benefit of holders of record of Conexant Common Stock as of the Record Date,
a number of shares of Mindspeed Common Stock (rounded down to the nearest whole
share) equal to the number of shares of Conexant Common Stock issued and
outstanding as of the Record Date (excluding treasury shares held by Conexant)
divided by three, 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 as of the Record Date, or the
designated transferee or transferees of such holder, for a number of shares of
Mindspeed Common Stock (rounded down to the nearest whole share) equal to the
number of shares of Conexant Common Stock so held by such holder of record as of
the Record Date (excluding treasury shares held by Conexant) divided by three.
The Distribution will be effective as of the Time of Distribution.
(b) Conexant and Mindspeed 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
29
Distribution on the basis of one share of Mindspeed Common Stock for every three
shares of Conexant Common Stock (excluding treasury shares held by Conexant).
Section 3.02 Fractional Shares. Anything contained herein to the
contrary notwithstanding, no fractional shares of Mindspeed Common Stock will be
distributed to holders of Conexant Common Stock in the Distribution. Holders
that are otherwise entitled to receive less than one whole share of Mindspeed
Common Stock in the Distribution will receive cash in lieu of such fractional
share as contemplated hereby. As soon as practicable after the Distribution
Date, Conexant will direct the Distribution Agent to determine in accordance
with its customary practice the number of fractional shares of Mindspeed Common
Stock otherwise allocable to holders of record or beneficial owners of Conexant
Common Stock as of the Record Date, to aggregate all such fractional shares and
sell as soon as practicable the whole shares obtained by aggregating such
fractional shares either in open market transactions or otherwise, in each case
at then prevailing trading prices, and to cause to be distributed to each such
holder or for the benefit of each such beneficial owner, in lieu of any
fractional share, such holder's or owner's ratable share of the proceeds of such
sale, after making appropriate deductions of the amount required to be withheld
for federal income tax purposes and after deducting an amount equal to all
brokerage charges, commissions and transfer taxes attributed to such sale.
Conexant will direct the Distribution Agent to seek to aggregate the shares of
Conexant Common Stock that may be held by any such beneficial owner thereof
through more than one account in determining the fractional share allocable to
such beneficial owner.
Section 3.03 Cooperation Prior to the Distribution. Prior to the
Distribution:
(a) Conexant and Mindspeed will prepare the Information Statement
which will include appropriate disclosure concerning Mindspeed, its business,
operations and management, the Contribution, the Distribution and such other
matters as Conexant and Mindspeed may determine and as may be required by law.
Conexant and Mindspeed will prepare, and Mindspeed will file with the
Commission, the Form 10, which will include or incorporate by reference the
Information Statement. Mindspeed will use its commercially reasonable efforts to
cause the Form 10 to become effective under the Exchange Act as soon as
practicable following the filing thereof. Promptly after effectiveness of the
Form 10 and completion of the Information Statement included therein, and prior
to the Distribution, Conexant will mail to the holders of Conexant Common Stock
the Information Statement.
(b) Conexant and Mindspeed will cooperate in preparing, filing
with the Commission and causing to become effective any registration statements
or
30
amendments thereof which are required to reflect the establishment of, or
amendments to, any employee benefit and other plans contemplated by the Employee
Matters Agreement.
(c) Conexant and Mindspeed 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.
(d) Conexant and Mindspeed will cause to be prepared, and
Mindspeed will file and use its commercially reasonable efforts to have
approved, an application for the listing on the American Stock Exchange of the
Mindspeed Common Stock to be distributed in the Distribution.
Section 3.04 Conexant Board Action; Conditions to the Distribution.
The Conexant Board will in its discretion establish the Record Date and the
Distribution Date and all appropriate procedures in connection with the
Distribution, but 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 in accordance with Section 3.05:
(a) the Conexant Board shall be reasonably satisfied that (i)
Conexant will have sufficient surplus under Section 170 of the Delaware
General Corporation Law to permit the Distribution and (ii) after giving
effect to the Contribution and the Distribution, each of Conexant and
Mindspeed will not be insolvent and will not have unreasonably small
capital with which to engage in its respective businesses;
(b) the Conexant Board shall have given final approval of the
Distribution;
(c) the Conexant Board shall have received a favorable opinion
issued by Xxxxxxxxxx & Xxxxx LLP confirming that the Distribution should
qualify as a tax-free reorganization within the meaning of Section
368(a)(i)(d) of the Code;
(d) all material Consents which are required to effect the
Contribution and the Distribution shall have been obtained and shall be in
full force and effect;
(e) the Form 10 shall have become effective under the Exchange
Act;
(f) the Certificate of Incorporation, the Bylaws and the Rights
Plan each shall have been adopted and be in effect;
31
(g) the Mindspeed Common Stock shall have been approved for
listing upon notice of issuance on the American Stock Exchange;
(h) the transactions contemplated by Section 2.01, Section 2.02
and Section 2.04(a) shall have been consummated in all material respects;
(i) Conexant and Mindspeed shall have entered into each of the
Separation Agreements and the Financing Agreements to which they are
parties and each such agreement shall be in full force and effect;
(j) no order, injunction or decree issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
consummation of the Contribution or the Distribution shall be in effect;
(k) 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
Distribution, and no inquiry shall have been received that in the
reasonable judgment of the Conexant Board may lead to such a suit, action
or proceeding; and
(l) Mindspeed shall have issued to Conexant the Initial Warrants;
provided, that the satisfaction of such conditions will not create any
obligation on the part of Conexant to effect or seek to effect the Contribution
or the Distribution or in any way limit Conexant's right to terminate this
Agreement set forth in Section 7.13 or alter the consequences of any such
termination from those specified in Section 7.13.
Section 3.05 Waiver of Conditions. Any or all of the conditions set
forth in Section 3.04 may be waived, in whole or in part, in the sole discretion
of the Conexant Board. The conditions set forth in Section 3.04 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.
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 Separation
Agreements and Financing Agreements, each of Conexant, on behalf of itself and
each other member of the Conexant Group, on the one hand, and Mindspeed, on
behalf of itself and each other member of the Mindspeed Group, on the other
hand, hereby releases and forever
32
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 Separation Agreements or Financing
Agreements or assumed, transferred, assigned, allocated or arising under any of
the Separation Agreements or Financing Agreements (including any Liability that
the parties may have with respect to payment, performance, reimbursement,
indemnification or contribution pursuant to any Separation Agreement or
Financing 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 Separation Agreements or Financing Agreements in accordance with
their terms or (ii) any Liability arising from or relating to any agreement,
arrangement, commitment or undertaking described in Section 2.03(b)(ii), or
(iii) 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 (iii)).
Each of Conexant and Mindspeed 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 each
of the Conexant Subsidiaries, and Mindspeed, on behalf of itself and each of the
Mindspeed 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.
33
Section 4.02 Indemnification by Conexant. Subject to the provisions
of this Article IV, Conexant shall indemnify, defend and hold harmless the
Mindspeed Indemnitees from and against, and pay or reimburse, as the case may
be, the Mindspeed Indemnitees for, all Indemnifiable Losses, as incurred,
suffered by any Mindspeed 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) any untrue statement or alleged untrue statement of a material
fact contained in the sections of the Form 10 listed on Schedule 4.02(b),
or any omission or alleged omission to state in such sections 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; but only in each case with respect to information relating to
the Conexant Group provided by Conexant expressly for use in the sections
of the Form 10 listed on Schedule 4.02(b);
(c) the breach by any member of the Conexant Group of any
agreement or covenant contained in a Separation Agreement which does not
by its express terms expire at the Time of Distribution;
(d) the use by members of the Conexant Group or their respective
sublicensees of any intellectual property licensed by Mindspeed and the
Mindspeed Subsidiaries pursuant to Section 5.03; and
(e) the enforcement by the Mindspeed Indemnitees of their rights
to be indemnified, defended and held harmless under this Section 4.02.
Section 4.03 Indemnification by Mindspeed. Subject to the provisions
of this Article IV, Mindspeed 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 Mindspeed Liabilities (including the failure by Mindspeed
or any other member of the Mindspeed Group to pay, perform or otherwise
discharge the Mindspeed Liabilities in accordance with their terms),
whether such Indemnifiable Losses are based upon, arise out of or relate
to events, occurrences,
34
actions, omissions, facts, circumstances or conditions occurring, existing
or asserted before, at or after the Time of Distribution;
(b) any untrue statement or alleged untrue statement of a material
fact contained in the Form 10, or any omission or alleged omission to
state in the Form 10 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, except in each case with
respect to information relating to the Conexant Group provided by Conexant
expressly for use in the sections of the Form 10 listed on Schedule
4.02(b);
(c) the breach by any member of the Mindspeed Group of any
agreement or covenant contained in a Separation Agreement which does not
by its express terms expire at the Time of Distribution;
(d) the use by members of the Mindspeed Group (or, in the case of
intellectual property licensed by Conexant and the Conexant Subsidiaries
pursuant to Section 5.03, members of the Mindspeed 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; and
(e) 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
related directly and solely to the related 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
35
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. An insurer or other third party who would otherwise be obligated to pay
any claim shall not be relieved of the responsibility with respect thereto or,
solely by virtue of the indemnification provisions hereof, have any subrogation
rights with respect thereto, it being expressly understood and agreed that no
insurer or any other third party shall be entitled to any benefit they would not
be entitled to receive in the absence of the indemnification provisions by
virtue of the indemnification provisions hereof.
(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. It
is the intention of the parties 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.
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
36
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 reasonable 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
37
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.
Section 4.07 Indemnification under Tax Allocation Agreement.
Notwithstanding anything in this Agreement to the contrary, indemnification in
respect of Tax matters will be governed exclusively by the Tax Allocation
Agreement.
Section 4.08 Expenses. (a) Except as otherwise set forth in any
Separation Agreement or Financing Agreement, (i) all Conexant Expenses will be
charged to and paid by Conexant and (ii) all Mindspeed Expenses will be charged
to and paid by Mindspeed.
(b) Within ten days after the Distribution Date, Mindspeed will
reimburse Conexant (by wire transfer to Conexant's bank account at Comerica
Bank,
38
Account No. 1850967629, A.B.A. Routing Number 000000000) for all amounts in
respect of Mindspeed Expenses paid by Conexant or any of its Subsidiaries
(including members of the Mindspeed Group) before or at the Time of Distribution
and notified in writing by Conexant to Mindspeed within five days after the
Distribution Date. From time to time thereafter, promptly after Conexant's
request therefor, and in any event within ten days after any such request,
Mindspeed will reimburse Conexant (by wire transfer to the same bank account
referred to in the preceding sentence) for all Mindspeed Expenses paid by
Conexant or any of its Subsidiaries before, at or after the Time of Distribution
(other than as previously reimbursed by Mindspeed pursuant to the preceding
sentence). Conexant will, at the request of Mindspeed, provide Mindspeed with
appropriate documentation to support Mindspeed Expenses required to be
reimbursed to Conexant pursuant to this Section 4.08(b).
(c) Except as otherwise set forth in any Separation Agreement or
Financing Agreement, and subject in all events to the provisions of Section
4.08(a), all out-of-pocket costs and expenses incurred following the Time of
Distribution in connection with implementation of the transactions contemplated
by the Separation Agreements will be charged to and paid by the party for whose
benefit the expenses are incurred, with any out-of-pocket expenses which cannot
be allocated on such basis to be split equally between Conexant and Mindspeed.
ARTICLE V
CERTAIN OTHER MATTERS
Section 5.01 Insurance.
(a) Coverage. Subject to the provisions of this Section 5.01,
coverage of Mindspeed and the Mindspeed Subsidiaries under all Policies shall
cease as of the Time of Distribution. From and after the Time of Distribution,
Mindspeed and the Mindspeed Subsidiaries will be responsible for obtaining and
maintaining all insurance coverages in their own right.
(b) Rights Under Shared Policies. From and after the Time of
Distribution, Mindspeed and the Mindspeed Subsidiaries will have no rights with
respect to any Policies, except that:
(i) Mindspeed will have the right to assert claims (and Conexant
will use commercially reasonable efforts to assist Mindspeed in asserting
claims) for any loss, liability or damage with respect to Mindspeed Assets
or Mindspeed Liabilities under Policies with third-party insurers which
are "occurrence basis"
39
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) Mindspeed will have the right to continue to prosecute claims
with respect to Mindspeed Assets or Mindspeed Liabilities properly
asserted with an insurer prior to the Time of Distribution (and Conexant
will use commercially reasonable efforts to assist Mindspeed 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
Mindspeed, (B) Conexant and the Conexant Subsidiaries may, at any time, without
liability or obligation to Mindspeed or any Mindspeed Subsidiary (other than as
set forth in Section 5.01(d)), 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. In the event
that claims submitted by Conexant and Mindspeed exhaust existing aggregate
limits in any one policy year, the amount payable under the Policies shall be
allocated pro rata based on the amounts paid in satisfaction of such claims or
the amounts that would have been paid to satisfy such claims absent exhaustion
of Policy limits. To the extent the amount paid to Mindspeed or Conexant, as the
case may be, in satisfaction of claims exceeds its pro rata portion, Mindspeed
or Conexant, as the case may be, shall pay to the other party an amount equal to
such excess. Conexant's obligation to use commercially reasonable efforts to
assist Mindspeed in asserting claims under applicable Policies will include
using commercially reasonable efforts in assisting Mindspeed 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
Mindspeed). 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
40
any coverage to Mindspeed and the Mindspeed Subsidiaries for incidents occurring
prior to the Time of Distribution but which are asserted with the insurance
carrier after the Time of Distribution. If a claim or claims submitted by
Mindspeed are paid under any Policy during any policy year in which no claim or
claims are paid to Conexant, and Conexant's annual premium increases in the next
policy year in respect of the Policy, then the full amount of such premium
increase in the first policy year after such Mindspeed claim or claims are paid
shall be deemed to be attributable to the Mindspeed claim or claims and charged
to Mindspeed. Promptly (and in no event later than ten (10) Business Days) after
receipt of a written request by Conexant, Mindspeed shall reimburse Conexant for
the full amount of such annual premium increase. If claims submitted by both
Conexant and Mindspeed are paid under the same Policy during any policy year,
and Conexant's annual premium increases in the next policy year in respect of
the Policy, then the amount of the premium increase will be allocated between
Conexant and Mindspeed based on the amount of the claims paid to each party
during the prior policy year. Promptly (and in no event later than ten (10)
Business Days) after receipt of a written request by Conexant, Mindspeed shall
reimburse Conexant for its pro rata portion.
(c) Rights Under Property Policy. Conexant will request that the
insurer under the Property Policy permit members of the Mindspeed Group to be
named as additional named insureds under the Property Policy with respect to
incidents occurring from the Time of Distribution to July 1, 2003, provided,
that no member of the Conexant Group will be required to pay any consideration
or grant any financial or other accommodation in connection therewith. In
connection therewith, from and after the Time of Distribution, Mindspeed will
have the right to assert claims (and Conexant will use commercially reasonable
efforts to assist Mindspeed in asserting claims) for any loss, liability or
damage with respect to Mindspeed Assets or Mindspeed Liabilities under the
Property Policy arising out of insured incidents occurring from the Time of
Distribution to July 1, 2003 to the extent that the terms and conditions of the
Property Policy and agreements relating thereto and the insurer thereunder so
allow; provided, that (i) all of Conexant's and each Conexant Subsidiary's
reasonable costs and expenses incurred in connection with the foregoing are
promptly paid by Mindspeed, (ii) Conexant and the Conexant Subsidiaries may, at
any time, without liability or obligation to Mindspeed or any Mindspeed
Subsidiary (other than as set forth in Section 5.01(d)), amend, commute,
terminate, buy-out, extinguish liability under or otherwise modify the Property
Policy (and such claims shall be subject to any such amendments, commutations,
terminations, buy-outs, extinguishments and modifications), (iii) such claims
will be subject to (and recovery thereon will be reduced by the amount of) any
applicable deductibles, retentions, self-insurance provisions or any payment or
reimbursement obligations of Conexant, any Conexant Subsidiary or any Affiliate
of Conexant or any Conexant Subsidiary in respect thereof, and (iv) such claims
will be subject to exhaustion of
41
existing aggregate limits. Conexant's obligation to use commercially reasonable
efforts to assist Mindspeed in asserting claims under the Property Policy will
include using commercially reasonable efforts in assisting Mindspeed to
establish its right to coverage under the Property Policy (so long as all of
Conexant's costs and expenses in connection therewith are promptly paid by
Mindspeed). None of Conexant or the Conexant Subsidiaries will bear any
Liability for the failure of the insurer to pay any Mindspeed claim under the
Property Policy. Within five (5) Business Days after the Time of Distribution,
Mindspeed will reimburse Conexant for its pro rata portion of the premium paid
by Conexant under the Property Policy reasonably determined by Conexant to be
attributable to Mindspeed for the period from the Time of Distribution to June
30, 2003.
(d) 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 Mindspeed has rights to assert claims pursuant to Section 5.01(b)
and Section 5.01(c) in a manner that would adversely affect any such rights of
Mindspeed, (i) Conexant will give Mindspeed prior notice thereof and consult
with Mindspeed 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 Mindspeed its equitable share (which shall be
determined by Conexant in good faith based on the amount of premiums paid by or
allocated to the Mindspeed 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).
(e) 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) Mindspeed or a Mindspeed Subsidiary, as appropriate, will be
responsible for the Claims Administration with respect to claims of
Mindspeed and the Mindspeed Subsidiaries under Policies.
(f) 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 Mindspeed 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
Mindspeed Business.
42
(g) 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 Mindspeed and/or a Mindspeed Subsidiary, on the
other hand, relating to the same occurrence, Conexant and Mindspeed 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(g) 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.
(h) Directors' and Officers' Insurance. Conexant will use
commercially reasonable efforts to cause the persons currently serving as
directors and/or officers of Conexant or any Subsidiary of Conexant who will be,
effective as of the Time of Distribution, directors and/or officers of Mindspeed
or any Mindspeed Subsidiary to be covered for a period of six years from the
Time of Distribution with respect to claims arising from facts or events which
occurred prior to the Time of Distribution by the directors' and officers'
liability insurance policies maintained by Conexant during such six-year period
following the Time of Distribution for all persons who served as directors
and/or officers of Conexant or any Conexant Subsidiary prior to the Time of
Distribution with respect to claims arising from facts or events which occurred
prior to the Time of Distribution. The parties understand and acknowledge that
coverage under such directors' and officers' liability insurance policies will
continue so long as the continuity date under such policies remains December 31,
1998. Conexant shall be under no obligation to purchase run-off coverage in the
event that the continuity date under such policies changes. In addition,
Conexant shall not be restricted from reducing the amount of directors' and
officers' liability insurance coverage purchased after the Time of Distribution
so long as the coverage for the Mindspeed directors and officers is no less than
the coverage purchased for Conexant's ongoing directors and officers.
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 Mindspeed
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), Mindspeed will change
the name of any Mindspeed 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 Mindspeed Group will not use or have any rights to
the Conexant Marks or any name, xxxx or symbol confusingly similar thereto, or
any special script, type font, form, style, logo, design, device, trade dress or
symbol which contains,
43
represents or evokes the Conexant Marks or any name or xxxx confusingly similar
thereto. From and after the Time of Distribution, the Mindspeed Group will not
hold itself out as having any affiliation with the Conexant Group. However,
Conexant hereby grants to Mindspeed a non-exclusive, non-transferable (other
than by way of sublicenses to members of the Mindspeed 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 Mindspeed Business, but only as described in paragraphs (i) through (v)
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 Mindspeed Business at any time within the two year
period preceding the Distribution:
(i) All documents constituting Mindspeed Assets as of the Time of
Distribution within the following categories may be used for the duration
of the periods following the 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 Distribution
--------------------- ------------
A. Stationery 6 months
B. Invoices, purchase orders, debit and credit memos and
other similar documents of a transactional nature 6 months
C. Business cards 6 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 Mindspeed will cause each document within any of
the above categories A, B or F used for any purpose within the stated
period to clearly
44
and prominently display a statement, the form of which is approved by
Conexant, to the effect that the Mindspeed Group was formerly affiliated
with Conexant.
(ii) All vehicles constituting Mindspeed 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 six months following the Distribution Date or the date of
disposition of the vehicle, whichever is the first to occur. Mindspeed
will cause all markings on such vehicles to be removed or permanently
obscured prior to the disposition of such vehicles.
(iii) Within six months following the Distribution Date, Mindspeed
will remove or cause to be removed from display all signs and displays
which contain the Conexant Marks.
(iv) Products of the Mindspeed 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 six months after the Distribution.
(v) Products of the Mindspeed Business in finished goods inventory
and work in process (to the extent the same bear the name, trademark,
trade name or service xxxx "Conexant", "Conexant Systems" or "Conexant
Systems, Inc." or any Conexant corporate symbol or logo related thereto as
of the Time of Distribution or have any such name, trademark, trade name,
service xxxx, corporate symbol or logo applied to them in accordance with
paragraph (iv) above) may be disposed of without re-marking.
(c) (i) Apart from the rights granted under Section 5.02(b), no
member of the Mindspeed 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 Mindspeed Group utilize
the Conexant Marks as a component of a company or trade name. Mindspeed will
not, and will cause each other member of the Mindspeed Group not to, challenge
or contest the validity of the Conexant Marks, the registration thereof or the
ownership thereof by the Conexant Group. Mindspeed will not, and will cause each
other member of the Mindspeed 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 Mindspeed 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, Mindspeed will,
45
and will cause the Mindspeed Subsidiaries, 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 xxxx subject to
Section 5.02(b) or the right of any member of the Mindspeed Group to use any
xxxx as permitted by Section 5.02(b) be registered in order to fully protect the
Conexant Group, Conexant and Mindspeed will cooperate in constituting such
member of the Mindspeed Group as a registered user (or its equivalent) in each
of the countries in which such registration is necessary. If any such laws of
any country require that any such xxxx or the use by any member of the Mindspeed
Group of any such xxxx be registered prior to use in order to protect fully the
Conexant Group, the license granted pursuant to Section 5.02(b) will not extend
to such country until such registration has been effected to the reasonable
satisfaction of Conexant. Any expenses for registering such xxxx or constituting
such member of the Mindspeed Group as a registered user in any country shall be
borne by Mindspeed. Any registration of such member of the Mindspeed Group as a
registered user of any xxxx hereunder shall be expunged on termination of the
period of permitted use under this Agreement or upon a breach or threatened
breach by any member of the Mindspeed Group of the terms of this Section 5.02
and Mindspeed 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.
(iii) Conexant will have the right to terminate the license granted
in Section 5.02(b) upon 30 days written notice to Mindspeed for any material
failure by any member of the Mindspeed Group to observe the terms of Section
5.02(b) or this Section 5.02(c), provided that such failure is not remedied
prior to the effectiveness of the termination.
(iv) Mindspeed hereby constitutes and appoints Conexant the true
and lawful attorney of Mindspeed and its Subsidiaries to act as their
attorney-in-fact to execute any documents and to take all necessary steps to
cause Mindspeed and its Subsidiaries to perform any of their obligations set
forth in this Section 5.02(c), provided however, that Conexant will provide
Mindspeed sixty days written notice prior to executing such documents or
commencing such steps.
Section 5.03 License of Intellectual Property.
(a) License of Conexant Intellectual Property to Mindspeed.
(i) Subject to Sections 5.03(a)(iv), effective as of the Time of
Distribution, Conexant, on behalf of itself and the Conexant Subsidiaries,
hereby grants
46
to the Mindspeed 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
Mindspeed 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(a)(i) is non-assignable
and non-transferable (whether in insolvency proceedings, in corporate mergers,
by acquisition or other change of control or otherwise) by the Mindspeed Group.
(iii) The license granted under Section 5.03(a)(i) does not include
the right to grant sublicenses, except that the Mindspeed 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 Mindspeed
Group's businesses (a "Mindspeed 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 Time of Distribution,
Mindspeed or a Mindspeed 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
otherwise agrees; provided, that such termination of such license or sublicense
shall not necessarily affect any other license or sublicense.
(b) License of Mindspeed Intellectual Property to Conexant
(i) Subject to in Sections 5.03(b)(iv), effective as of the Time
of Distribution, Mindspeed, on behalf of itself and the Mindspeed 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
that constitute Mindspeed Assets (excluding trademarks, trade names, domain
names, service marks, trade dress and
47
any other form of trade identity) that the Mindspeed 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 Broadband 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 not assignable
and non-transferable (whether in insolvency proceedings, in corporate mergers,
by acquisition or other change of 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"); 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 Time of Distribution, 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 Mindspeed otherwise
agrees; provided, that such termination of such license or sublicense shall not
necessarily affect any other license or sublicense.
(c) Administrative Services Software.
(i) For purposes of this Section 5.03(c), 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
48
Mindspeed Group) prior to the Time of Distribution and relating to the
provision of Administrative Services to the Broadband Business or the
Mindspeed 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(c).
(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 Mindspeed 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 Mindspeed Group, including the right to
sublicense only to (x) members of the Mindspeed Group and (y) service
providers and similar third parties to use the Administrative Services
Software only for or on behalf of the Mindspeed Group.
(B) Effective as of the Time of Distribution, Mindspeed, on behalf of
itself and the Mindspeed Subsidiaries, hereby grants to Conexant a
royalty-free, world-wide, irrevocable, non-exclusive license to use
Administrative Services Software which constitutes Mindspeed Assets and
which immediately after the Time of Distribution is either owned by the
Mindspeed Group or under which the Mindspeed 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 (c)(ii), the licenses granted
pursuant to this Section 5.03(c) 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,
49
disclose, sell, assign or sublicense, or otherwise transfer Administrative
Services Software licensed to it under this Section 5.03(c) or any derivative
works thereof, except as expressly provided in this Section 5.03(c) and Section
7.08.
(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(c) 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.
(d) (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) Mindspeed makes no representations or warranties of any kind
with respect to the validity, scope or enforceability of any intellectual
property rights licensed by Mindspeed or the Mindspeed Subsidiaries pursuant to
this Section 5.03 and none of Mindspeed or the Mindspeed Subsidiaries has any
obligation to file or prosecute any patent applications or maintain any patents
in force in connection therewith.
Section 5.04 Jazz Warrant. Effective as of the Time of Distribution
Mindspeed will issue to the holder of the Jazz Warrant a warrant to purchase
shares of Mindspeed Common Stock (the "New Jazz-Mindspeed Warrant"), pursuant to
the equitable adjustment and other provisions of the Jazz Warrant. The number of
shares of Mindspeed Common Stock subject to the New Jazz-Mindspeed Warrant and
the per-
50
share exercise price of the New Jazz-Mindspeed Warrant will be determined as set
forth in the Jazz Warrant. The New Jazz-Mindspeed Warrant will otherwise have
substantially the same terms and conditions as the Jazz Warrant, except that
references to Conexant will be changed to refer to Mindspeed.
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
Mindspeed all minute books and other records of meetings of the Board of
Directors, committees of the Board of Directors and stockholders of the
Mindspeed Group and all corporate books and records of the Mindspeed Group in
its possession, including, in each case, all active agreements and active
litigation files. From and after the Time of Distribution, all such books and
records shall be the property of Mindspeed. Prior to or as promptly as
practicable after the Time of Distribution, Mindspeed shall deliver to Conexant
all corporate books and records of the Conexant Group in Mindspeed's possession
(other than the books and records described in the first sentence of this
Section 6.01), including, in each case, all active agreements and active
litigation files. From and after the Time of Distribution, all such books and
records 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 Mindspeed and its Representatives (at Mindspeed's expense) reasonable access
and duplicating rights during normal business hours and upon reasonable advance
notice to all Information within the Conexant Group's possession or control
relating to Mindspeed, any Mindspeed Subsidiary, any Mindspeed Asset, any
Mindspeed Liability or the Mindspeed Business, insofar as such access is
reasonably required by Mindspeed or any Mindspeed Subsidiary, subject to the
provisions below regarding Privileged Information.
(b) From and after the Time of Distribution, Mindspeed will, and
will cause each Mindspeed 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
Information within the Mindspeed Group's possession or control relating to
Conexant, any Conexant Subsidiary, any Conexant Asset, any Conexant Liability or
the Broadband Business, insofar as such access is reasonably required by
Conexant or any Conexant Subsidiary, subject to the provisions below regarding
Privileged Information.
51
(c) Without limiting the foregoing, Information may be requested
under this Article VI for audit, 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
Mindspeed (and the members of the Conexant Group and the Mindspeed 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 Mindspeed 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 Mindspeed intends that the transactions
contemplated by the Separation 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 Mindspeed 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 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 any member of the Mindspeed 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
Mindspeed 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
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
52
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 Mindspeed will, and will cause
each member of the Conexant Group and the Mindspeed 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 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 Mindspeed 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, if, prior to the
scheduled date for destruction or disposal of such Information under the
applicable Conexant records retention policy, Conexant or Mindspeed, on behalf
of any member of its Group, requests in writing that any of the Information
scheduled to be destroyed or disposed of be delivered to such requesting party,
the party whose Group is scheduled to destroy or dispose of such Information
will arrange for the delivery of the requested Information to a location
specified by, and at the expense of, the requesting party, at or about the time
such Information would have otherwise been destroyed or disposed of.
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 Mindspeed 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
Separation 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 Mindspeed Group may disclose
53
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 (at the expense of 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 Mindspeed 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. The Separation
Agreements and the Financing 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 Separation 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 Separation Agreements (including Section 7.13 of this
Agreement), all covenants and agreements of the parties contained in the
Separation Agreements will remain in full
54
force and effect and survive the Time of Distribution. The obligations of each
of Conexant and Mindspeed under 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 with respect to any
Indemnifiable Losses of the other related to such assets, businesses or
Liabilities.
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.
0000 Xxxxxxxx Xxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx
Chairman of the Board and Chief Executive Officer
Telecopy: (000) 000-0000
E-mail: xxxxxx.xxxxxx@xxxxxxxx.xxx
55
' with a copy to:
Conexant Systems, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. X'Xxxxxx, Esq.
Senior Vice President, General Counsel
and Secretary
Telecopy: (000) 000-0000
E-mail: xxxxxx.x'xxxxxx@xxxxxxxx.xxx
(b) If to Mindspeed:
Mindspeed Technologies, Inc.
0000 XxxXxxxxx Xxxxxxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Chief Executive Officer
Telecopy: (000) 000-0000
E-mail: xxxxx.xxxxx@xxxxxxxxx.xxx
with a copy to:
Mindspeed Technologies, Inc.
0000 XxxXxxxxx Xxxxxxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx
Associate General Counsel
Telecopy: (000) 000-0000
E-mail: xxxxxx.xxxxxxxx@xxxxxxxxx.xxx
Section 7.05 Dispute Resolution. In the event that from and after
the Time of Distribution any dispute, claim or controversy (collectively, a
"Dispute") arises out of or relates to this Agreement, the Employee Matters
Agreement or the Tax Allocation Agreement or any transaction contemplated
thereby or the breach, performance, enforcement or validity or invalidity of any
thereof, the designees of the Conexant Chief Executive Officer and the Mindspeed
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
56
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 Mindspeed 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 Mindspeed 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. If such mediation is unsuccessful within sixty days after
commencement thereof, any party to the Dispute may pursue any other remedies
available to it.
Section 7.06 Consent to Jurisdiction. Each of Conexant and Mindspeed
irrevocably submits to the exclusive jurisdiction of (i) the Superior Court of
the State of California, Orange County and (ii) the United States District Court
for the Central District of California, for the purposes of any suit, action or
other proceeding arising out of this Agreement, the Employee Matters Agreement
or the Tax Allocation Agreement or any transaction contemplated thereby or the
breach, performance, enforcement or validity or invalidity of any thereof (and
agrees not to commence any action, suit or proceeding relating thereto except in
such courts). Each of Conexant and Mindspeed further agrees that service of any
process, summons, notice or document hand delivered or sent by U.S. registered
mail to such party's respective address set forth in Section 7.04 will be
effective service of process for any action, suit or proceeding in California
with respect to any matters to which it has submitted to jurisdiction as set
forth in the immediately preceding sentence. Each of Conexant and Mindspeed
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement, the Employee
Matters Agreement or the Tax Allocation Agreement or the transactions
contemplated thereby or the breach, performance, enforcement or validity or
invalidity of any thereof in (i) the Superior Court of the State of California,
Orange County or (ii) the United States District Court for the Central District
of California, and hereby further irrevocably and unconditionally waives and
agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
Notwithstanding the foregoing, each party agrees that a final judgment in any
action, suit or proceeding so brought shall be conclusive and may be enforced by
suit on the judgment in any jurisdiction or in any other manner provided in law
or in equity.
Section 7.07 Amendments. This Agreement cannot be amended, modified
or supplemented except by a written agreement executed by Conexant and
Mindspeed.
Section 7.08 Assignment. Except as otherwise provided herein,
neither party 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
57
discretion. Notwithstanding the foregoing, either party may (without obtaining
any consent) assign 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 7.08 which is made without such consent will be void ab initio. No
assignment of this Agreement will relieve the assigning party of its obligations
hereunder.
Section 7.09 Captions; Currency. The article, section and paragraph
captions herein and the table of contents hereto are for convenience of
reference only, do not constitute part of this Agreement and will not be deemed
to limit or otherwise affect any of the provisions hereof. Unless otherwise
specified, all references herein to numbered articles or sections are to
articles and sections of this Agreement and all references herein to schedules
are to schedules to this Agreement. Unless otherwise specified, all references
contained in this Agreement, in any schedule referred to herein or in any
instrument or document delivered pursuant hereto to dollars or "$" shall mean
United States Dollars.
Section 7.10 Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to Persons or
circumstances other than those as to which it has been held invalid or
unenforceable, will remain in full force and effect and will in no way be
affected, impaired or invalidated thereby. If the economic or legal substance of
the transactions contemplated hereby is affected in any manner adverse to any
party as a result thereof, the parties will negotiate in good faith in an effort
to agree upon a suitable and equitable substitute provision to effect the
original intent of the parties.
Section 7.11 Parties in Interest. This Agreement is binding upon and
is for the benefit of the parties hereto and their respective successors and
permitted assigns. This 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
58
Agreement, except that 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.
Section 7.12 Schedules. All schedules attached hereto are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein. Capitalized terms used in the schedules hereto but not otherwise defined
therein will have the respective meanings assigned to such terms in this
Agreement.
Section 7.13 Termination. This Agreement may be terminated and the
Distribution abandoned at any time prior to the Time of Distribution by and in
the sole discretion of the Conexant Board without the approval of Mindspeed or
Conexant's shareowners. In the event of such termination, neither party will
have any liability of any kind to the other party on account of such
termination.
Section 7.14 Waivers; Remedies. The conditions to Conexant's
obligation to consummate the Distribution are for the sole benefit of Conexant
and may be waived in writing by Conexant in whole or in part in Conexant's sole
discretion. No failure or delay on the part of either Conexant or Mindspeed 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 Mindspeed 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, the rights and remedies herein provided are cumulative
and are not exclusive of any rights or remedies which the parties may otherwise
have at law or in equity.
Section 7.15 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 Separation Agreements.
Section 7.16 Counterparts. This Agreement may be executed in
separate counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts will together constitute the same
agreement. 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 7.17 Performance. Conexant will cause to be performed and
hereby guarantees the performance of all actions, agreements and obligations set
forth
59
herein to be performed by any Conexant Subsidiary. Mindspeed will cause to be
performed and hereby guarantees the performance of all actions, agreements and
obligations set forth herein to be performed by any Mindspeed Subsidiary.
Section 7.18 Currency Calculations. Following the Distribution Date,
for purposes of calculating the United States Dollar equivalent of any amount
payable under any Separation 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 7.18 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 7.19 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.]
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties as of the date first
hereinabove written.
CONEXANT SYSTEMS, INC.
By:
--------------------------------
Name:
Title:
MINDSPEED TECHNOLOGIES, INC.
By:
--------------------------------
Name:
Title:
61
