Exhibit 2
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AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF NOVEMBER 3, 2003
BY AND AMONG
CONEXANT SYSTEMS, INC.
CONCENTRIC SUB, INC.
AND
GLOBESPANVIRATA, INC.
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TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER................................................ 1
SECTION 1.1 The Merger............................................. 1
SECTION 1.2 Closing................................................ 2
SECTION 1.3 Effective Time......................................... 2
SECTION 1.4 Effect of the Merger................................... 2
SECTION 1.5 Conversion of GlobespanVirata Common Stock............. 2
SECTION 1.6 Conversion of Concentric Sub Common Stock.............. 3
SECTION 1.7 Options and Warrants................................... 3
SECTION 1.8 Certificate of Incorporation........................... 4
SECTION 1.9 By-Laws................................................ 4
SECTION 1.10 Officers and Directors................................. 4
SECTION 1.11 Tax Consequences....................................... 4
ARTICLE II EXCHANGE OF SHARES........................................ 5
SECTION 2.1 Conexant to Make Shares Available...................... 5
SECTION 2.2 Exchange of Shares..................................... 5
SECTION 2.3 Affiliates............................................. 8
ARTICLE III REPRESENTATIONS AND WARRANTIES............................ 9
SECTION 3.1 Representations and Warranties of GlobespanVirata...... 9
SECTION 3.2 Representations and Warranties of Conexant............. 23
SECTION 3.3 Representations and Warranties of Conexant and
Concentric Sub ...................................... 35
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS................. 36
SECTION 4.1 Covenants of GlobespanVirata........................... 36
SECTION 4.2 Covenants of Conexant and Concentric Sub............... 40
SECTION 4.3 Governmental Filings................................... 45
SECTION 4.4 Control of Other Party's Business...................... 45
ARTICLE V ADDITIONAL AGREEMENTS..................................... 45
SECTION 5.1 Preparation of Proxy Statement; Stockholders Meetings.. 45
SECTION 5.2 Conexant Board of Directors and Management............. 48
SECTION 5.3 Headquarters........................................... 49
SECTION 5.4 Employment Agreements.................................. 49
SECTION 5.5 Fiscal Year............................................ 49
SECTION 5.6 Access to Information.................................. 50
SECTION 5.7 Reasonable Best Efforts................................ 51
SECTION 5.8 Acquisition Proposals.................................. 53
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SECTION 5.9 Employee Benefits Matters.............................. 56
SECTION 5.10 Fees and Expenses...................................... 57
SECTION 5.11 Directors' and Officers' Indemnification and Insurance. 57
SECTION 5.12 Public Announcements................................... 58
SECTION 5.13 Accounting Matters..................................... 58
SECTION 5.14 Listing of Shares of Conexant Common Stock............. 58
SECTION 5.15 Affiliates............................................. 59
SECTION 5.16 Section 16 Matters..................................... 59
SECTION 5.17 Takeover Statutes...................................... 59
SECTION 5.18 Advice of Changes...................................... 59
SECTION 5.19 Shareholders Agreements................................ 60
ARTICLE VI CONDITIONS PRECEDENT...................................... 60
SECTION 6.1 Conditions to Each Party's Obligation to Effect the
Merger .............................................. 60
SECTION 6.2 Additional Conditions to Obligations of GlobespanVirata 61
SECTION 6.3 Additional Conditions to Obligations of Conexant....... 62
ARTICLE VII TERMINATION AND AMENDMENT................................. 63
SECTION 7.1 Termination............................................ 63
SECTION 7.2 Effect of Termination.................................. 65
SECTION 7.3 Amendment.............................................. 67
SECTION 7.4 Extension; Waiver...................................... 67
ARTICLE VIII GENERAL PROVISIONS........................................ 68
SECTION 8.1 Non-Survival of Representations, Warranties and
Agreements .......................................... 68
SECTION 8.2 Notices................................................ 68
SECTION 8.3 Interpretation......................................... 69
SECTION 8.4 Counterparts........................................... 69
SECTION 8.5 Entire Agreement; No Third Party Beneficiaries......... 69
SECTION 8.6 Governing Law.......................................... 70
SECTION 8.7 Severability........................................... 70
SECTION 8.8 Assignment............................................. 70
SECTION 8.9 Submission to Jurisdiction; Waivers.................... 70
SECTION 8.10 Enforcement............................................ 71
SECTION 8.11 Definitions............................................ 71
SECTION 8.12 Disclosure Schedule.................................... 77
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EXHIBITS
Exhibit A - Employment Agreements
Exhibit B - Form of Affiliate Agreement
Exhibit C - Form of GlobespanVirata Shareholders Agreement
Exhibit D - Form of Conexant Shareholders Agreement
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of November 3, 2003
(this "Agreement"), by and among CONEXANT SYSTEMS, INC., a Delaware corporation
("Conexant"), CONCENTRIC SUB, INC., a Delaware corporation and a wholly-owned
subsidiary of Conexant ("Concentric Sub"), and GLOBESPANVIRATA, INC., a Delaware
corporation ("GlobespanVirata").
W I T N E S S E T H :
WHEREAS, the Boards of Directors of Conexant and GlobespanVirata
deem it advisable and in the best interests of each corporation and its
respective stockholders that Conexant and GlobespanVirata enter into a strategic
merger in order to advance the long-term strategic business interests of
Conexant and GlobespanVirata;
WHEREAS, the Boards of Directors of Conexant, GlobespanVirata and
Concentric Sub have determined to consummate such strategic merger by means of
the business combination transaction provided for herein in which Concentric Sub
will, subject to the terms and conditions set forth herein, merge with and into
GlobespanVirata (the "Merger"), with GlobespanVirata being the surviving
corporation (hereinafter sometimes referred to in such capacity as the
"Surviving Corporation") in the Merger as a wholly-owned subsidiary of Conexant;
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger; and
WHEREAS, capitalized terms used in this Agreement will have the
respective meanings set forth (i) in Section 8.11 or (ii) in the Sections of
this Agreement set forth opposite such terms in Section 8.11.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and conditions of this
Agreement, and in accordance with the General Corporation Law of the State of
Delaware (the "DGCL"), at the Effective Time, Concentric Sub shall merge with
and into GlobespanVirata. GlobespanVirata shall be the surviving corporation in
the Merger and shall continue its corporate existence under the laws of the
State of Delaware under the name "GlobespanVirata, Inc.". Upon consummation of
the Merger, the separate corporate existence of Concentric Sub shall terminate
and GlobespanVirata shall become a wholly-owned subsidiary of Conexant.
SECTION 1.2 Closing. The closing of the Merger (the "Closing") will
take place as soon as practicable, but in any event within three Business Days,
after the satisfaction or waiver (subject to Applicable Laws) of the conditions
(excluding conditions that, by their nature, cannot be satisfied until the
Closing Date) set forth in Article VI, unless this Agreement has been
theretofore terminated pursuant to its terms or unless another time or date is
agreed to in writing by the parties hereto (the actual time and date of the
Closing being referred to herein as the "Closing Date"). The Closing shall be
held at the offices of Xxxxxxxxxx & Xxxxx LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, unless another place is agreed to in writing by the parties
hereto.
SECTION 1.3 Effective Time. The Merger shall become effective as set
forth in the certificate of merger (the "Certificate of Merger") that shall be
filed with the Secretary of State of the State of Delaware (the "Delaware
Secretary") on the Closing Date. The term "Effective Time" shall mean the date
and time when the Merger becomes effective, as set forth in the Certificate of
Merger.
SECTION 1.4 Effect of the Merger. At and after the Effective Time,
the Merger shall have the effect set forth in the DGCL.
SECTION 1.5 Conversion of GlobespanVirata Common Stock. At the
Effective Time, by virtue of the Merger and without any action on the part of
Conexant, GlobespanVirata, Concentric Sub or the holders of any capital stock of
Conexant, GlobespanVirata or Concentric Sub:
(a) Subject to Section 2.2(e), each share of common stock, par value
$.001 per share, of GlobespanVirata (including the associated GlobespanVirata
Rights) ("GlobespanVirata Common Stock") issued and outstanding immediately
prior to the Effective Time, other than shares of GlobespanVirata Common Stock
held in GlobespanVirata's treasury or owned by Conexant or any Subsidiary of
GlobespanVirata or Conexant, shall be converted into the right to receive 1.198
(the "Exchange Ratio") shares of common stock, par value $.01 per share, of
Conexant (including the associated Conexant Rights) ("Conexant Common Stock").
(b) All shares of GlobespanVirata Common Stock converted into the
right to receive Conexant Common Stock pursuant to this Article I shall no
longer be
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outstanding and shall automatically be canceled and shall cease to exist as of
the Effective Time, and each certificate previously representing any such shares
of GlobespanVirata Common Stock (a "Certificate") shall thereafter represent
only the right to receive (i) a certificate (or book-entry credit) representing
the number of whole shares of Conexant Common Stock and (ii) cash in lieu of
fractional shares of Conexant Common Stock into which the shares of
GlobespanVirata Common Stock formerly represented by such Certificate have been
converted pursuant to this Section 1.5 and Section 2.2(e). Certificates shall be
exchanged for certificates representing whole shares of Conexant Common Stock
and cash in lieu of fractional shares issued in consideration therefor upon the
surrender of such Certificates in accordance with Section 2.2, without any
interest thereon. If, between the date hereof and the Effective Time, the
outstanding shares of GlobespanVirata Common Stock or Conexant Common Stock
shall have been increased, decreased, or changed into or exchanged for a
different number or kind of shares or securities as a result of a
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar change in capitalization, an appropriate
and proportionate adjustment shall be made to the Exchange Ratio.
(c) All shares of GlobespanVirata Common Stock held in
GlobespanVirata's treasury or owned by Conexant or any Subsidiary of
GlobespanVirata or Conexant shall be canceled and shall cease to exist, and no
shares of Conexant Common Stock or other consideration shall be delivered in
exchange therefor.
SECTION 1.6 Conversion of Concentric Sub Common Stock. At the
Effective Time, each share of common stock, par value $.01 per share, of
Concentric Sub ("Concentric Sub Common Stock") issued and outstanding
immediately prior to the Effective Time shall be converted into and become an
issued and outstanding share of common stock of the Surviving Corporation.
SECTION 1.7 Options and Warrants.
(a) At or prior to the Effective Time, Conexant and GlobespanVirata
will take all action necessary such that each GlobespanVirata Stock Option and
GlobespanVirata Warrant that is outstanding and unexercised immediately prior
thereto shall cease to represent a right to acquire shares of GlobespanVirata
Common Stock and shall be converted into an option or warrant, as applicable, to
purchase shares of Conexant Common Stock in an amount and at an exercise price
(in the case of a GlobespanVirata Stock Option) and at a purchase price (in the
case of the GlobespanVirata Warrant) determined as provided below (and otherwise
subject to the terms of the appropriate GlobespanVirata Stock Plan pursuant to
which such option has been issued and the agreements evidencing grants
thereunder or otherwise subject to the terms of the GlobespanVirata Warrant, as
applicable):
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(i) The number of shares of Conexant Common Stock to be
subject to the new option or the new warrant, as applicable, shall be
equal to the product of the number of shares of GlobespanVirata Common
Stock subject to the original option or the original warrant, as
applicable, multiplied by the Exchange Ratio, provided that any fractional
shares of Conexant Common Stock resulting from such multiplication shall
be rounded to the nearest whole share; and
(ii) The exercise price or purchase price, as applicable, per
share of Conexant Common Stock under the new option or the new warrant, as
applicable, shall be equal to the exercise price per share of
GlobespanVirata Common Stock under the original option (or, in the case of
a warrant, the purchase price per share of GlobespanVirata Common Stock
under the original warrant) divided by the Exchange Ratio, provided that
such exercise price (or purchase price) shall be rounded to the nearest
whole cent.
(b) The adjustment provided herein with respect to any options that
are "incentive stock options" (as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code")) shall be and is intended to be effected
in a manner that is consistent with Section 424(a) of the Code. The duration and
other terms of the new option shall be the same as the original option, except
that all references to GlobespanVirata shall be deemed to be references to
Conexant (but taking into account any changes thereto, including acceleration
thereof, provided for in the GlobespanVirata Stock Plans by reason of this
Agreement or the transactions contemplated hereby).
SECTION 1.8 Certificate of Incorporation. At the Effective Time, the
certificate of incorporation of Concentric Sub (the "Concentric Sub
Certificate") shall be the certificate of incorporation of the Surviving
Corporation, until thereafter amended in accordance with the terms thereof and
Applicable Laws.
SECTION 1.9 By-Laws. At the Effective Time, the by-laws of
Concentric Sub (the "Concentric Sub By-Laws") shall be the by-laws of the
Surviving Corporation until thereafter amended in accordance with the terms
thereof, the Concentric Sub Certificate and Applicable Laws.
SECTION 1.10 Officers and Directors. At the Effective Time, the
officers and directors of Concentric Sub shall be the officers and directors of
the Surviving Corporation, in each case, until their respective successors are
duly elected and qualified.
SECTION 1.11 Tax Consequences. It is intended that the Merger shall
constitute a "reorganization" within the meaning of Section 368(a) of the Code
and that
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this Agreement shall constitute a "plan of reorganization" for the purposes of
Sections 354 and 361 of the Code.
ARTICLE II
EXCHANGE OF SHARES
SECTION 2.1 Conexant to Make Shares Available. From time to time,
prior to, at or after the Effective Time, Conexant shall deposit, or shall cause
to be deposited, with a bank or trust company reasonably acceptable to Conexant
and GlobespanVirata (the "Exchange Agent"), for the benefit of the holders of
the Certificates, for exchange in accordance with this Article II, certificates
representing the shares of Conexant Common Stock to be issued pursuant to
Section 1.5 and delivered pursuant to Section 2.2(a) in exchange for
Certificates (such certificates for shares of Conexant Common Stock, together
with any dividends or distributions with respect thereto, the "Exchange Fund").
SECTION 2.2 Exchange of Shares.
(a) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of one or more Certificates a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent, and which shall be in customary form and
have such other provisions as Conexant or GlobespanVirata may reasonably
request) and instructions for use in effecting the surrender of Certificates in
exchange for certificates representing the shares of Conexant Common Stock (and
any cash in lieu of fractional shares) into which the shares of GlobespanVirata
Common Stock formerly represented by such Certificate or Certificates shall have
been converted pursuant to this Agreement. Upon proper surrender of a
Certificate for exchange and cancellation to the Exchange Agent, together with
such properly completed letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Exchange Agent, the holder of
such Certificate shall be entitled to receive in exchange therefor, (i) the
number of shares of Conexant Common Stock (which shall be in uncertificated
book-entry form unless a physical certificate is requested) representing that
number of whole shares of Conexant Common Stock to which such holder shall have
become entitled pursuant to the provisions of Article I and (ii) a check
representing the amount of any cash in lieu of fractional shares of Conexant
Common Stock that such holder has the right to receive in respect of the
Certificate surrendered pursuant to the provisions of this Article II, and the
Certificate so surrendered shall forthwith be canceled. No interest will be paid
or accrued on any cash
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in lieu of fractional shares or on any unpaid dividends and distributions
payable to holders of Certificates.
(b) No dividends or other distributions declared or made with
respect to Conexant Common Stock shall be paid to the holder of any
unsurrendered Certificate (and no cash payment in lieu of fractional shares of
Conexant Common Stock shall be paid to any such holder pursuant to Section
2.2(e)) until the holder thereof shall surrender such Certificate in accordance
with this Article II. Subject to the effect of Applicable Laws, following
surrender of any Certificate, there shall be paid to the holder of shares of
Conexant Common Stock issuable in exchange therefor, without interest, (a)
promptly after the time of such surrender, the amount of any cash payable in
lieu of fractional shares of Conexant Common Stock to which such holder is
entitled pursuant to Section 2.2(e) and the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such whole shares of Conexant Common Stock and (b) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to such surrender and a payment date
subsequent to such surrender payable with respect to such whole shares of
Conexant Common Stock.
(c) If any certificate representing shares of Conexant Common Stock
is to be issued in a name other than that in which the Certificate surrendered
in exchange therefor is registered, it shall be a condition of the issuance
thereof that the Certificate so surrendered shall be properly endorsed (or
accompanied by an appropriate instrument of transfer) and otherwise in proper
form for transfer, and that the person requesting such exchange shall pay to the
Exchange Agent in advance any transfer or other taxes required by reason of the
issuance of a certificate representing shares of Conexant Common Stock in any
name other than that of the registered holder of the Certificate surrendered or
shall establish to the satisfaction of the Exchange Agent that such tax has been
paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the
stock transfer books of GlobespanVirata of the shares of GlobespanVirata Common
Stock that were issued and outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented for transfer to the
Exchange Agent, they shall be canceled and exchanged for certificates
representing shares of Conexant Common Stock (and any cash in lieu of fractional
shares) as provided in this Article II.
(e) (i) Notwithstanding anything to the contrary contained herein,
no certificates or scrip representing fractional shares of Conexant Common
Stock or book-entry credit of the same shall be issued upon the surrender
for exchange of Certificates, no dividend or distribution with respect to
Conexant Common Stock shall be payable on or with respect to any such
fractional share, and such
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fractional share interests shall not entitle the owner thereof to vote or
to any other rights of a stockholder of Conexant. In lieu of the issuance
of any such fractional share, Conexant shall pay to each holder of
Certificates who otherwise would be entitled to receive such fractional
share an amount in cash determined in the manner provided in clauses (ii)
and (iii) of this Section 2.2(e).
(ii) As promptly as practicable following the Effective Time,
the Exchange Agent shall determine the excess of (x) the aggregate number
of whole shares of Conexant Common Stock into which shares of
GlobespanVirata Common Stock have been converted pursuant to Section 1.5
over (y) the aggregate number of whole shares of Conexant Common Stock to
be distributed to holders of Certificates pursuant to this Section 2.2
(such excess being herein referred to as the "Excess Shares"). As soon
after the Effective Time as practicable, the Exchange Agent, as agent for
such holders of Certificates, shall sell the Excess Shares at then
prevailing prices on the Nasdaq National Market System, all in the manner
provided in clause (iii) of this Section 2.2(e).
(iii) The sale of the Excess Shares by the Exchange Agent
shall be executed on the Nasdaq National Market System through one or more
member firms of the National Association of Securities Dealers, Inc. and
shall be executed in round lots to the extent practicable. Until the net
proceeds of any such sale or sales have been distributed to the holders of
Certificates, the Exchange Agent will hold such proceeds in trust for such
holders as part of the Exchange Fund. Conexant shall pay all commissions,
transfer taxes and other out-of-pocket transaction costs of the Exchange
Agent incurred in connection with such sale or sales of Excess Shares. In
addition, Conexant shall pay the Exchange Agent's compensation and
expenses in connection with such sale or sales. The Exchange Agent shall
determine the portion of such net proceeds to which each holder of
Certificates shall be entitled, if any, by multiplying the amount of the
aggregate net proceeds by a fraction, the numerator of which is the amount
of the fractional share interest in Conexant Common Stock to which such
holder of Certificates is entitled (after taking into account all
Certificates then held by such holder) and the denominator of which is the
aggregate amount of fractional share interests in Conexant Common Stock to
which all holders of Certificates are entitled. As soon as practicable
after the determination of the amount of cash, if any, to be paid to
holders of Certificates with respect to any fractional share interests in
Conexant Common Stock, the Exchange Agent shall promptly pay such amounts
to such holders of Certificates subject to and in accordance with this
Section 2.2.
(f) Any portion of the Exchange Fund that remains unclaimed by
holders of Certificates for twelve months after the Effective Time shall be
delivered to Conexant, and any holders of Certificates who have not theretofore
complied with this
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Article II shall thereafter look only to Conexant for payment of the shares of
Conexant Common Stock, cash in lieu of any fractional shares of Conexant Common
Stock and any unpaid dividends and distributions on the Conexant Common Stock
deliverable in respect of each share of GlobespanVirata Common Stock formerly
represented by such Certificate as determined pursuant to this Agreement,
without any interest thereon. Any such portion of the Exchange Fund remaining
unclaimed by holders of Certificates five years after the Effective Time (or
such earlier date immediately prior to such time as such amounts would otherwise
escheat to or become property of any Governmental Entity) shall, to the extent
permitted by Applicable Laws, become the property of Conexant free and clear of
any claims or interest of any Person previously entitled thereto.
(g) None of Conexant, Concentric Sub, GlobespanVirata, the Exchange
Agent or any other Person shall be liable to any holder of Certificates for any
amount delivered in good faith to a public official pursuant to applicable
abandoned property, escheat or similar Applicable Laws.
(h) The Exchange Agent shall invest any cash included in the
Exchange Fund on a daily basis as directed by Conexant. Any interest and other
income resulting from such investments shall be paid to Conexant promptly upon
request by Conexant.
(i) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed, and the posting by such Person
of a bond in such amount as Conexant may determine is reasonably necessary as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the shares of Conexant Common Stock (and any cash in lieu
of fractional shares) deliverable in respect thereof pursuant to this Agreement.
(j) All references in this Agreement to Certificates shall include
any book-entry credits representing shares of GlobespanVirata Common Stock.
SECTION 2.3 Affiliates. Notwithstanding anything to the contrary
herein, to the fullest extent permitted by law, no certificates representing
shares of Conexant Common Stock or cash shall be delivered to a Person who may
be deemed an "affiliate" of GlobespanVirata in accordance with Section 5.15, for
purposes of Rule 145 under the Securities Act of 1933, as amended (the
"Securities Act"), until such Person has executed and delivered an Affiliate
Agreement pursuant to Section 5.15.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of GlobespanVirata.
Except as set forth in the GlobespanVirata Disclosure Schedule delivered by
GlobespanVirata to Conexant prior to the execution of this Agreement (the
"GlobespanVirata Disclosure Schedule") (each section of which qualifies the
correspondingly numbered representation and warranty or covenant of
GlobespanVirata to the extent specified therein), GlobespanVirata represents and
warrants to Conexant as follows:
(a) Organization, Standing and Power; Subsidiaries.
(i) Each of GlobespanVirata and its Subsidiaries is a
corporation or other organization duly organized, validly existing and in
good standing (where applicable) under the laws of its jurisdiction of
incorporation or organization, has the requisite power and authority to
own, lease and operate its properties and to carry on its business as now
being conducted and as it will be conducted through the Effective Time,
except where the failure to be so organized, existing and in good standing
or to have such power and authority, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on
GlobespanVirata and its Subsidiaries, and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such
qualification necessary, other than in such jurisdictions where the
failure so to qualify or to be in good standing, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect on GlobespanVirata and its Subsidiaries. The copies of the
certificate of incorporation and by-laws of GlobespanVirata which were
previously furnished or made available to Conexant are true, complete and
correct copies of such documents as in effect on the date of this
Agreement.
(ii) Section 3.1(a)(ii) of the GlobespanVirata Disclosure
Schedule sets forth a list of all the Subsidiaries of GlobespanVirata
which as of the date of this Agreement are Significant Subsidiaries (as
defined in Rule 1-02 of Regulation S-X of the Securities and Exchange
Commission (the "SEC")). All the outstanding shares of capital stock of,
or other equity interests in, each such Significant Subsidiary have been
validly issued and are fully paid and nonassessable and are owned directly
or indirectly by GlobespanVirata, free and clear of all material pledges,
claims, liens, charges, encumbrances and security interests of any kind or
nature whatsoever (collectively, "Liens") and free of any
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other material restriction (including any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other equity
interests). None of GlobespanVirata or any of its Subsidiaries directly or
indirectly owns any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity (other than Subsidiaries) that is or would
reasonably be expected to be material to GlobespanVirata and its
Subsidiaries taken as a whole.
(b) Capital Structure.
(i) The authorized capital stock of GlobespanVirata consists
of 400,000,000 shares of GlobespanVirata Common Stock and 10,000,000
shares of preferred stock, par value $.001 per share ("GlobespanVirata
Preferred Stock"), 500,000 shares of which are designated as "Series A
Preferred Stock". As of October 24, 2003, (i) 149,089,683 shares of
GlobespanVirata Common Stock and (ii) no shares of GlobespanVirata
Preferred Stock were issued and outstanding. As of October 24, 2003,
43,953,566 shares of GlobespanVirata Common Stock were reserved for
issuance upon exercise of options or rights ("GlobespanVirata Stock
Options") outstanding under GlobespanVirata Stock Plans. As of October 24,
2003, 13,523,530 shares of GlobespanVirata Common Stock were held as
treasury shares. Since October 24, 2003 to the date of this Agreement, no
shares of capital stock of GlobespanVirata or any other securities of
GlobespanVirata have been issued other than shares of GlobespanVirata
Common Stock issued pursuant to (x) GlobespanVirata Stock Options
outstanding as of October 24, 2003 under the GlobespanVirata Stock Plans
and (y) the GlobespanVirata ESPP. All issued and outstanding shares of
capital stock of GlobespanVirata are duly authorized, validly issued,
fully paid and nonassessable, and no class of capital stock of
GlobespanVirata is entitled to preemptive rights. There are outstanding as
of the date hereof no options, warrants or other rights to acquire capital
stock from GlobespanVirata other than (A) preferred share purchase rights
(the "GlobespanVirata Rights") distributed to the holders of
GlobespanVirata Common Stock pursuant to the GlobespanVirata Rights
Agreement, (B) GlobespanVirata Stock Options under the GlobespanVirata
Stock Plans, (C) the GlobespanVirata Convertible Notes which are
convertible into GlobespanVirata Common Stock at a conversion price of
$26.67 per share, (D) a warrant to purchase 450,000 shares of
GlobespanVirata Common Stock (the "GlobespanVirata Warrant") and (E)
rights to acquire shares of GlobespanVirata Common Stock pursuant to the
GlobespanVirata ESPP. Section 3.1(b)(i) of the GlobespanVirata Disclosure
Schedule sets forth a complete and correct list as October 24, 2003 of all
outstanding GlobespanVirata Stock Options and the exercise prices thereof.
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(ii) No bonds, debentures, notes or other indebtedness of
GlobespanVirata having the right to vote on any matters on which
stockholders of GlobespanVirata may vote ("GlobespanVirata Voting Debt")
are issued or outstanding.
(iii) Except as otherwise set forth in this Section 3.1(b), as
of the date of this Agreement, there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of
any kind to which GlobespanVirata or any of its Subsidiaries is a party or
by which any of them is bound obligating GlobespanVirata or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock or other voting securities of
GlobespanVirata or any of its Subsidiaries or obligating GlobespanVirata
or any of its Subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement
or undertaking. As of the date of this Agreement, there are no outstanding
obligations of GlobespanVirata or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of GlobespanVirata
or any of its Subsidiaries.
(c) Authority; No Conflicts.
(i) GlobespanVirata has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby, subject, in the case of the consummation of the
Merger, to the approval and adoption of this Agreement and the Merger by
the Required GlobespanVirata Vote. The execution and delivery of this
Agreement by GlobespanVirata and the consummation by GlobespanVirata of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of GlobespanVirata, subject, in the
case of the consummation of the Merger, to the approval and adoption of
this Agreement and the Merger by the Required GlobespanVirata Vote. This
Agreement has been duly executed and delivered by GlobespanVirata and,
assuming the due authorization and valid execution and delivery of this
Agreement by each of Conexant and Concentric Sub, constitutes a valid and
binding agreement of GlobespanVirata, enforceable against GlobespanVirata
in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and similar
Applicable Laws relating to or affecting creditors generally or by general
equity principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
(ii) The execution and delivery of this Agreement by
GlobespanVirata does not, and the consummation by GlobespanVirata of the
11
Merger and the other transactions contemplated hereby will not, conflict
with, or result in any breach or violation of, or constitute a default
(with or without notice or lapse of time, or both) under, or give rise to
a right of or result by its terms in the termination, amendment,
cancellation or acceleration of any obligation or the loss of a material
benefit under, or the creation of a Lien, charge, "put" or "call" right or
other encumbrance on, or the loss of, any assets (any such conflict,
breach, violation, default, right of termination, amendment, cancellation
or acceleration, loss or creation, a "Violation") pursuant to: (A) any
provision of the certificate of incorporation or by-laws or similar
organizational document of GlobespanVirata or any Significant Subsidiary
of GlobespanVirata or (B) except as, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on
GlobespanVirata and its Subsidiaries or, to the Knowledge of
GlobespanVirata, on Conexant and its Subsidiaries following the Merger,
subject to obtaining or making the GlobespanVirata Necessary Consents, any
loan or credit agreement, note, instrument, mortgage, bond, indenture,
lease, benefit plan or other contract, agreement or obligation (a
"Contract") to which GlobespanVirata or any of its Subsidiaries is a party
or by which any of them or any of their respective properties or assets is
bound, or any permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to
GlobespanVirata or any Subsidiary of GlobespanVirata or their respective
properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any supranational, national,
state, municipal, local or foreign government, any instrumentality,
subdivision, court, administrative agency, department or commission or
other authority thereof, or any quasi-governmental or private body
exercising any regulatory, taxing, importing or other governmental or
quasi-governmental authority (a "Governmental Entity") or any other Person
is required by or with respect to GlobespanVirata or any Subsidiary of
GlobespanVirata in connection with the execution and delivery of this
Agreement by GlobespanVirata or the consummation by GlobespanVirata of the
Merger and the other transactions contemplated hereby, except for those
required under or in relation to (A) the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (B) state securities
or "blue sky" laws, (C) the Securities Act, (D) the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), (E) the DGCL with respect to
the filing of the Certificate of Merger with the Delaware Secretary, (F)
the rules and regulations of Nasdaq, (G) antitrust or other competition
laws of other jurisdictions, and (H) such consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of
which to make or obtain, individually or in the aggregate, would not
reasonably be expected to
12
have a Material Adverse Effect on GlobespanVirata and its Subsidiaries.
Consents, approvals, orders, authorizations, registrations, declarations
and filings required under or in relation to any of the foregoing clauses
(A) through (G) are hereinafter referred to as the "GlobespanVirata
Necessary Consents".
(d) Reports and Financial Statements.
(i) Each of GlobespanVirata and its Subsidiaries has filed all
registration statements, prospectuses, reports, schedules, forms,
statements and other documents required to be filed by it with the SEC
since January 1, 2002 (collectively, including all exhibits thereto, the
"GlobespanVirata SEC Reports"). No Subsidiary of GlobespanVirata is
required to file any form, report, registration statement, prospectus or
other document with the SEC. None of the GlobespanVirata SEC Reports, as
of their respective dates (or, if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing), contained
any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Each of the financial statements (including the related notes)
included in the GlobespanVirata SEC Reports fairly presents, in all
material respects, the consolidated financial position and consolidated
results of operations and cash flows of GlobespanVirata and its
consolidated Subsidiaries as of the respective dates or for the respective
periods set forth therein, all in conformity with generally accepted
accounting principles ("GAAP") consistently applied during the periods
involved except as otherwise noted therein, and subject, in the case of
unaudited interim financial statements, to normal and recurring year-end
adjustments that have not been and are not expected to be material in
amount. All GlobespanVirata SEC Reports, as of their respective dates (and
as of the date of any amendment to the respective GlobespanVirata SEC
Report), complied as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder.
(ii) Except as disclosed in the GlobespanVirata SEC Reports
filed and publicly available prior to the date hereof (the
"GlobespanVirata Filed SEC Reports"), since June 30, 2003, GlobespanVirata
and its Subsidiaries have not (and since April 4, 2003, the WLAN Business
has not) incurred any liabilities that are of a nature that would be
required to be disclosed on a balance sheet of GlobespanVirata and its
Subsidiaries or the footnotes thereto prepared in conformity with GAAP,
other than (A) liabilities incurred in the ordinary course of business
consistent with past practice or (B) liabilities that, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect on GlobespanVirata and its Subsidiaries.
13
(iii) Set forth in Section 3.1(d)(iii) of the GlobespanVirata
Disclosure Schedule are (A) the audited balance sheets of the WLAN
Business as at January 3, 2003, December 28, 2001 and December 29, 2000,
together with the related audited statements of operations, product group
equity and cash flows for the fiscal years then ended, accompanied by the
notes thereto and the report of Ernst & Young LLP, and (B) the unaudited
balance sheet of the WLAN Business as at April 4, 2003 and the related
unaudited statement of revenues, costs and related expenses, depreciation
and capital expenditures for the three months then ended (collectively,
the "WLAN Financial Information"). The WLAN Financial Information was
derived from the internal books and records of Intersil Corporation
("Intersil") and was prepared in a manner consistent with Intersil's then
current accounting practices with respect to the WLAN Business. The WLAN
Financial Information is complete and accurate, is presented in accordance
with GAAP, applied on a consistent basis throughout the periods indicated,
and presents fairly, in all material respects, the financial position and
the results of operations of the WLAN Business for the periods indicated
in the manner set forth in Section 3.1(d)(iii) of the GlobespanVirata
Disclosure Schedule, except for the omission of certain information
required to be included in footnotes to the interim financial statements,
which footnotes were not prepared by GlobespanVirata or Intersil.
GlobespanVirata makes no other representations with regard to the WLAN
Financial Information. Without limiting any of the foregoing, Conexant
acknowledges that the WLAN Financial Information was prepared solely for
the purpose of the WLAN Acquisition Agreement and that the WLAN Business
was not conducted on a stand-alone basis as a separate entity during the
periods indicated in the WLAN Financial Information and that the WLAN
Financial Information includes allocations and estimates not necessarily
indicative of the costs that would have resulted if the WLAN Business had
been operated and conducted on a stand-alone basis as a separate entity
during such periods.
(e) Information Supplied.
(i) None of the information supplied or to be supplied by
GlobespanVirata for inclusion or incorporation by reference in (A) the
Form S-4 will, at the time the Form S-4 is filed with the SEC, at any time
it is amended or supplemented or at the time it becomes effective under
the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading, and (B) the Joint Proxy
Statement/Prospectus will, on the date it is first mailed to Conexant
stockholders or GlobespanVirata stockholders or at the time of the
Conexant Stockholders Meeting or the GlobespanVirata Stockholders Meeting,
14
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they
were made, not misleading. The Form S-4 and the Joint Proxy
Statement/Prospectus will comply as to form in all material respects with
the requirements of the Exchange Act and the Securities Act and the rules
and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this Section
3.1(e), no representation or warranty is made by GlobespanVirata with
respect to statements made or incorporated by reference in the Form S-4 or
the Joint Proxy Statement/Prospectus based on information supplied by
Conexant or Concentric Sub for inclusion or incorporation by reference
therein.
(f) Board Approval. The Board of Directors of GlobespanVirata, by
resolutions duly adopted by unanimous vote of all directors present at a meeting
duly called and held and, other than as set forth in Section 5.8, not
subsequently rescinded or modified in any way, has duly (i) determined that this
Agreement and the Merger are advisable and in the best interests of
GlobespanVirata and its stockholders, (ii) approved this Agreement and the
Merger, (iii) resolved to recommend that the stockholders of GlobespanVirata
approve and adopt this Agreement and the Merger and directed that the Merger and
this Agreement be submitted for consideration by GlobespanVirata's stockholders
at the GlobespanVirata Stockholders Meeting and (iv) taken all other action
necessary to render any limitations on business combinations similar to those
contained in Section 203 of the DGCL inapplicable to the transactions
contemplated hereby. Pursuant to Article XII of the Restated Certificate of
Incorporation of GlobespanVirata, the limitations on business combinations
contained in Section 203 of the DGCL do not apply to GlobespanVirata. To the
Knowledge of GlobespanVirata, no state takeover statute is applicable or
purports to be applicable to the Merger or the other transactions contemplated
hereby.
(g) Vote Required. The affirmative vote of the holders of a majority
of the outstanding shares of GlobespanVirata Common Stock (the "Required
GlobespanVirata Vote") to approve and adopt this Agreement and the Merger is the
only vote of the holders of any class or series of GlobespanVirata capital stock
necessary to approve or adopt this Agreement and the Merger and the other
transactions contemplated hereby.
(h) Litigation; Compliance with Laws.
(i) Except as set forth in the GlobespanVirata Filed SEC
Reports, there is no suit, action, proceeding or regulatory investigation
pending or, to the Knowledge of GlobespanVirata, threatened, against or
affecting
15
GlobespanVirata or any of its Subsidiaries or any property or asset of
GlobespanVirata or any of its Subsidiaries which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect
on GlobespanVirata and its Subsidiaries, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against GlobespanVirata or any of its Subsidiaries which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on GlobespanVirata and its Subsidiaries.
(ii) Except as, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on
GlobespanVirata and its Subsidiaries, GlobespanVirata and its Subsidiaries
hold all permits, licenses, franchises, variances, exemptions, orders and
approvals of all Governmental Entities which are necessary for the
operation of the businesses of GlobespanVirata and its Subsidiaries (the
"GlobespanVirata Permits"), and no suspension or cancellation of any of
the GlobespanVirata Permits is pending or, to the Knowledge of
GlobespanVirata, threatened, except for suspensions or cancellations
which, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on GlobespanVirata and its Subsidiaries.
GlobespanVirata and its Subsidiaries are in compliance with the terms of
the GlobespanVirata Permits, except where the failure so to comply,
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect on GlobespanVirata and its Subsidiaries. None of
GlobespanVirata or any of its Subsidiaries is in violation of, and
GlobespanVirata and its Subsidiaries have not received any notices of
violations with respect to, any Applicable Laws, except for violations
which, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on GlobespanVirata and its Subsidiaries.
(i) Absence of Certain Changes or Events. Except as set forth in the
GlobespanVirata Filed SEC Reports, since June 30, 2003, GlobespanVirata and its
Subsidiaries have conducted their businesses only in the ordinary course,
consistent with past practice, and there has not been any change, circumstance,
event or development which, individually or in the aggregate, has had, or would
reasonably be expected to have, a Material Adverse Effect on GlobespanVirata and
its Subsidiaries. Since April 4, 2003, the WLAN Business has been conducted in
the ordinary course, consistent with past practice, and there has not been any
change, circumstance, event or development in the WLAN Business which,
individually or in the aggregate, has had, or would reasonably be expected to
have, a Material Adverse Effect on GlobespanVirata and its Subsidiaries.
16
(j) Environmental Matters. Except as set forth in the
GlobespanVirata Filed SEC Reports and except as, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
GlobespanVirata and its Subsidiaries, (i) the operations of GlobespanVirata and
its Subsidiaries have been and are in compliance with all Environmental Laws and
with all GlobespanVirata Permits required by Environmental Laws, (ii) there are
no pending or, to the Knowledge of GlobespanVirata, threatened, actions, suits,
claims, investigations or other proceedings (collectively, "Actions") under or
pursuant to Environmental Laws against GlobespanVirata or its Subsidiaries or
involving any real property currently or, to the Knowledge of GlobespanVirata,
formerly owned, operated or leased by GlobespanVirata or its Subsidiaries and
(iii) GlobespanVirata and its Subsidiaries have not incurred any Environmental
Liabilities, and, to the Knowledge of GlobespanVirata, no facts, circumstances
or conditions relating to, arising from, associated with or attributable to any
real property currently or, to the Knowledge of GlobespanVirata, formerly owned,
operated or leased by GlobespanVirata or its Subsidiaries or operations thereon
would reasonably be expected to result in Environmental Liabilities.
As used in this Agreement, "Environmental Laws" means any and all
foreign, federal, state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decisions, injunctions, orders, decrees,
requirements of any Governmental Entity, any and all common law requirements,
rules and bases of liability regulating, relating to or imposing liability or
standards of conduct concerning pollution, Hazardous Materials or protection of
human health, safety or the environment, as in effect on or prior to the Closing
Date and includes the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601 et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et seq., the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901 et seq., the Clean Water Act, 33 U.S.C.
Section 1251 et seq., the Clean Air Act, 33 U.S.C. Section 2601 et seq., the
Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the Occupational
Safety and Health Act, 29 U.S.C. Section 651 et seq. and the Oil Pollution Act
of 1990, 33 U.S.C. Section 2701 et seq., as such laws have been amended or
supplemented, and the regulations promulgated pursuant thereto, and all
analogous state or local statutes. As used in this Agreement, "Environmental
Liabilities" with respect to any Person means any and all liabilities of or
relating to such Person or any of its Subsidiaries (including any entity which
is, in whole or in part, a predecessor of such Person or any of such
Subsidiaries), whether vested or unvested, contingent or fixed, actual or
potential, known or unknown, which (i) arise under or relate to matters covered
or regulated by, or for which liability is imposed under, Environmental Laws and
(ii) relate to actions occurring or conditions existing on or prior to the
Closing Date. As used in this Agreement, "Hazardous Materials" means any
hazardous or toxic substances, materials or wastes, defined, listed, classified
or regulated in or for which liability or responsibility is imposed
17
under any Environmental Laws and which includes petroleum, petroleum products,
friable asbestos, urea formaldehyde and polychlorinated biphenyls.
(k) Intellectual Property. Except as set forth in the
GlobespanVirata Filed SEC Reports: (i) GlobespanVirata and each of its
Subsidiaries owns, or is licensed to use (in each case, free and clear of any
Liens), all material Intellectual Property used in or necessary for the conduct
of its business as currently conducted; (ii) to the Knowledge of
GlobespanVirata, the use of any Intellectual Property by GlobespanVirata and its
Subsidiaries does not infringe on or otherwise violate, and is not alleged to
infringe or otherwise violate, the rights of any Person; (iii) the use of third
party Intellectual Property by GlobespanVirata and its Subsidiaries is in
accordance with the applicable license pursuant to which GlobespanVirata or any
of its Subsidiaries acquired the right to use such Intellectual Property, which
license is valid and in effect; (iv) to the Knowledge of GlobespanVirata, no
Person is challenging, infringing on or otherwise violating any material right
of GlobespanVirata or any of its Subsidiaries with respect to any Intellectual
Property owned by and/or licensed to GlobespanVirata or its Subsidiaries; (v)
there are no pending claims, orders or proceedings with respect to either any
Intellectual Property owned by GlobespanVirata and any of its Subsidiaries, or
to the Knowledge of GlobespanVirata, any other Intellectual Property used by
GlobespanVirata and its Subsidiaries; and (vi) to the Knowledge of
GlobespanVirata, no Intellectual Property owned and/or licensed by
GlobespanVirata or its Subsidiaries is being used or enforced in a manner that
would reasonably be expected to result in the abandonment, cancellation or
unenforceability either of such Intellectual Property or of GlobespanVirata's
and its Subsidiaries' rights to use such Intellectual Property. For purposes of
this Agreement, "Intellectual Property" shall mean trademarks, service marks,
brand names, certification marks, trade dress and other indications of origin,
the goodwill associated with the foregoing and registrations in any jurisdiction
of, and applications in any jurisdiction to register, the foregoing, including
any extension, modification or renewal of any such registration or application;
inventions, discoveries and ideas, whether patentable or not, in any
jurisdiction; patents, applications for patents (including, without limitation,
divisions, continuations, continuations in part and renewal applications), and
any renewals, extensions or reissues thereof, in any jurisdiction; nonpublic
information, trade secrets and confidential information and rights in any
jurisdiction to limit the use or disclosure thereof by any Person; writings and
other works, whether copyrightable or not, in any jurisdiction; and
registrations or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; publicity and privacy
rights; and any similar intellectual property or proprietary rights.
(l) GlobespanVirata Rights Agreement. GlobespanVirata has taken all
action necessary or appropriate so that the execution of this Agreement and
consummation of the transactions contemplated hereby does not and will not
result in the ability of any Person to exercise any GlobespanVirata Rights under
the Rights Agreement
18
dated as of July 5, 2002 between GlobespanVirata and American Stock Transfer &
Trust Company, as Rights Agent (the "GlobespanVirata Rights Agreement"), or
enable or require such GlobespanVirata Rights to separate from the shares of
GlobespanVirata Common Stock to which they are attached or to be triggered or
become exercisable. No "Distribution Date" or "15% Ownership Date" (each as
defined in the GlobespanVirata Rights Agreement) has occurred. Copies of the
GlobespanVirata Rights Agreement, and all amendments thereto, have previously
been provided to Conexant.
(m) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of GlobespanVirata or any of its Subsidiaries, except Xxxxxx
Xxxxxxx & Co., Incorporated (the "GlobespanVirata Financial Advisor"), whose
fees and expenses will be paid by GlobespanVirata in accordance with
GlobespanVirata's agreement with such firm, a copy of which has been previously
provided to Conexant.
(n) Opinion of GlobespanVirata Financial Advisor. GlobespanVirata
has received the opinion of the GlobespanVirata Financial Advisor, dated the
date of this Agreement, to the effect that, as of such date, the Exchange Ratio
is fair, from a financial point of view, to GlobespanVirata's stockholders.
(o) Taxes.
(i) Each of GlobespanVirata and its Subsidiaries has timely
filed or has caused to be timely filed all Tax Returns required to be
filed by it and all such Tax Returns are complete and correct in all
respects, or requests for extensions to file such Tax Returns have been
timely filed, granted and have not expired, except to the extent that such
failure to file, to be complete or correct or to have any extension
granted that remains in effect, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on
GlobespanVirata and its Subsidiaries. GlobespanVirata and each of its
Subsidiaries have paid or caused to be paid all Taxes required to be paid
by it, and has paid all Taxes that it was required to withhold from
amounts owing to any employee, creditor or third party, except to the
extent that any failure to pay such Taxes would not reasonably be expected
to have a Material Adverse Effect on GlobespanVirata and its Subsidiaries.
There are no Liens for Taxes upon the assets of GlobespanVirata or any of
its Subsidiaries, other than Liens for current Taxes not yet due or Liens
for Taxes that are being contested in good faith by appropriate
proceedings and Liens for Taxes that would not reasonably be expected to
have a Material Adverse Effect on GlobespanVirata and its Subsidiaries.
19
(ii) There are no pending, or to the Knowledge of
GlobespanVirata, threatened, Tax audits, examinations or investigations,
and no deficiencies for any Taxes have been proposed, asserted or assessed
in writing against GlobespanVirata or any of its Subsidiaries, except for
deficiencies that, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect on GlobespanVirata and its
Subsidiaries.
(iii) None of GlobespanVirata or any of its Subsidiaries has
taken any action, and GlobespanVirata has no Knowledge of any fact,
agreement, plan or other circumstance, that is reasonably likely to
prevent the Merger from qualifying as a reorganization within the meaning
of Section 368(a) of the Code.
(iv) Within the past five years, none of GlobespanVirata or
any of its Subsidiaries has been a "distributing corporation" or a
"controlled corporation" within the meaning of Section 355(a)(i)(A) of the
Code in a distribution intended to qualify under Section 355(a) of the
Code.
(v) None of GlobespanVirata or any of its Subsidiaries has
agreed to make, nor is required to make, any material adjustment under
Section 481(a) of the Code or any similar provision of state, local or
foreign law by reason of a change in accounting methods or otherwise.
(vi) None of GlobespanVirata or any of its Subsidiaries has
any liability for Taxes of any Person as a result of being a member of an
affiliated, consolidated, combined or unitary group (other than
GlobespanVirata and its Subsidiaries) under Treasury Reg. Section 1.1502-6
(or any comparable provision of state, local or foreign law), or is bound
by or has any obligation under any Tax sharing arrangement, Tax
indemnification arrangement or similar contract or arrangement, except as
would not reasonably be expected to have a Material Adverse Effect on
GlobespanVirata and its Subsidiaries.
(p) Certain Contracts. As of the date hereof, none of
GlobespanVirata or any of its Subsidiaries is a party to or bound by (i) any
"material contract" (as such term is defined in Item 601(b)(10) of Regulation
S-K of the SEC), (ii) any non-competition agreement or any other agreement or
arrangement that limits or otherwise restricts GlobespanVirata or any of its
Subsidiaries or any of their respective affiliates or any successor thereto, or
that would, after the Effective Time, to the Knowledge of GlobespanVirata, limit
or restrict Conexant or any of its Subsidiaries or any of their respective
affiliates or any successor thereto, from engaging or competing in any line of
business or in any geographic area, which agreement or arrangement would
reasonably be expected to have a Material Adverse Effect on Conexant and its
Subsidiaries, after giving effect to the Merger, (iii) any employee benefit
plan, employee contract with a
20
senior executive or any other material contract, any of the benefits of which
will be increased, or the vesting of the benefits of which will be accelerated,
by the occurrence of any of the transactions contemplated by this Agreement or
the value of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement or (iv) any Contract which
would prohibit or materially delay the consummation of the Merger or any of the
transactions contemplated by this Agreement. All "material contracts" (as
defined in clause (i) above) set forth in Section 3.1(p) of the GlobespanVirata
Disclosure Schedule are valid and binding on GlobespanVirata and its
Subsidiaries, as applicable, and in full force and effect except to the extent
they have previously expired in accordance with their terms or if the failure to
be in full force and effect, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on GlobespanVirata and
its Subsidiaries. None of GlobespanVirata or any of its Subsidiaries or, to the
Knowledge of GlobespanVirata, any other party thereto has violated any provision
of, or committed or failed to perform any act which with or without notice,
lapse of time or both would constitute a default under the provisions of, any
"material contract" (as defined in clause (i) above) set forth in Section 3.1(p)
of the GlobespanVirata Disclosure Schedule, except in each case for those
violations and defaults which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on GlobespanVirata and
its Subsidiaries.
(q) Employee Benefits.
(i) With respect to each GlobespanVirata Plan, except for
GlobespanVirata Plans the liabilities under which, individually or in the
aggregate, would not have a Material Adverse Effect on GlobespanVirata and
its Subsidiaries, GlobespanVirata has made available to Conexant a true,
correct and complete copy of: (A) all plan documents, trust agreements,
and insurance contracts and other funding vehicles; (B) the three most
recent Annual Reports (Form 5500 Series) and accompanying schedules and
exhibits, if any; (C) the current summary plan description and any
material modifications thereto, if any (in each case, whether or not
required to be furnished under ERISA); (D) the three most recent annual
financial reports, if any; (E) the three most recent actuarial reports, if
any; (F) the most recent determination letter from the IRS, if any; and
(G) the annual compliance testing under Sections 401(a) through 416 of the
Code for the three most recently completed plan years.
(ii) With respect to each GlobespanVirata Plan,
GlobespanVirata and its Subsidiaries have complied with, and are now in
compliance with, all provisions of ERISA, the Code and all other
Applicable Laws and regulations applicable to such GlobespanVirata Plans
and each GlobespanVirata Plan has been administered in accordance with its
terms, in each case except as would not have a Material Adverse Effect on
GlobespanVirata and
21
its Subsidiaries. Each GlobespanVirata Plan that is required by ERISA to
be funded is fully funded in accordance with reasonable actuarial
assumptions, except as would not have a Material Adverse Effect on
GlobespanVirata and its Subsidiaries.
(iii) All GlobespanVirata Plans subject to the Applicable Laws
of any jurisdiction outside of the United States (A) have been maintained
in accordance with all applicable requirements, (B) if they are intended
to qualify for special tax treatment meet all requirements for such
treatment, and (C) if they are intended to be funded and/or book-reserved
are fully funded and/or book-reserved, as appropriate, based upon
reasonable actuarial assumptions, in each case except as would not have a
Material Adverse Effect on GlobespanVirata and its Subsidiaries.
(iv) None of GlobespanVirata or any of its Subsidiaries has
any liability or obligation in respect of any Multiemployer Plan.
(v) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (either
alone or in conjunction with any other act) result in, cause the
accelerated vesting or delivery of, or increase the amount or value of,
any payment, option, award or benefit (including any "excess parachute
payment" within the meaning of Section 280G of the Code) to any director
or employee of GlobespanVirata or any of its Subsidiaries, or require the
funding of any "rabbi" trust or similar trust.
(r) Labor Relations. As of the date of this Agreement, (i) none of
GlobespanVirata or any of its Subsidiaries is a party to any collective
bargaining agreement, (ii) except as would not have a Material Adverse Effect on
GlobespanVirata and its Subsidiaries, no labor organization or group of
employees of GlobespanVirata or any of its Subsidiaries has made a pending
demand for recognition or certification, and there are no representation or
certification proceedings or petitions seeking a representation proceeding
presently pending or, to the Knowledge of GlobespanVirata, threatened to be
brought or filed, with the National Labor Relations Board or any other domestic
or foreign labor relations tribunal or authority and (iii) except as would not
have a Material Adverse Effect on GlobespanVirata and its Subsidiaries, there
are no organizing activities, strikes, work stoppages, slowdowns, lockouts,
arbitrations or grievances, or other labor disputes pending or, to the Knowledge
of GlobespanVirata, threatened against or involving GlobespanVirata or any of
its Subsidiaries.
(s) Insurance. GlobespanVirata and its Subsidiaries maintain
insurance coverage with reputable insurers in such amounts and covering such
risks as are in accordance with normal industry practice for companies engaged
in businesses
22
similar to that of GlobespanVirata and its Subsidiaries (taking into account the
cost and availability of such insurance).
(t) Liens. No Liens exist on any assets of GlobespanVirata or any of
its Subsidiaries, except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on GlobespanVirata and
its Subsidiaries.
(u) Ownership of Capital Stock of Conexant and Concentric Sub. None
of GlobespanVirata or any of its Subsidiaries owns any shares of Conexant Common
Stock, Conexant Preferred Stock or Concentric Sub Common Stock (other than
shares held in a fiduciary capacity for the benefit of third parties).
SECTION 3.2 Representations and Warranties of Conexant. Except as
set forth in the Conexant Disclosure Schedule delivered by Conexant to
GlobespanVirata prior to the execution of this Agreement (the "Conexant
Disclosure Schedule") (each section of which qualifies the correspondingly
numbered representation and warranty or covenant of Conexant to the extent
specified therein), Conexant represents and warrants to GlobespanVirata as
follows:
(a) Organization, Standing and Power; Subsidiaries.
(i) Each of Conexant and its Subsidiaries is a corporation or
other organization duly organized, validly existing and in good standing
(where applicable) under the laws of its jurisdiction of incorporation or
organization, has the requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted
and as it will be conducted through the Effective Time, except where the
failure to be so organized, existing and in good standing or to have such
power and authority, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Conexant and
its Subsidiaries, and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
other than in such jurisdictions where the failure so to qualify or to be
in good standing, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect on Conexant and its
Subsidiaries. The copies of the certificate of incorporation and by-laws
of Conexant which were previously furnished or made available to
GlobespanVirata are true, complete and correct copies of such documents as
in effect on the date of this Agreement.
(ii) Section 3.2(a)(ii) of the Conexant Disclosure Schedule
sets forth a list of all Subsidiaries of Conexant which as of the date of
this Agreement are Significant Subsidiaries (as defined in Rule 1-02 of
Regulation S-X of the
23
SEC). All the outstanding shares of capital stock of, or other equity
interests in, each such Significant Subsidiary have been validly issued
and are fully paid and nonassessable and are owned directly or indirectly
by Conexant, free and clear of all material Liens and free of any other
material restriction (including any restriction on the right to vote, sell
or otherwise dispose of such capital stock or other equity interests).
None of Conexant or any of its Subsidiaries directly or indirectly owns
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business association or
entity (other than Subsidiaries) that is or would reasonably be expected
to be material to Conexant and its Subsidiaries taken as a whole.
(b) Capital Structure.
(i) The authorized capital stock of Conexant consists of
1,000,000,000 shares of Conexant Common Stock and 25,000,000 shares of
preferred stock, without par value ("Conexant Preferred Stock"), 1,500,000
shares of which are designated as "Series A Junior Participating Preferred
Stock" and one share of which is designated as "Series B Voting Preferred
Stock". As of October 28, 2003, (i) 276,615,467 shares of Conexant Common
Stock and (ii) no shares of Conexant Preferred Stock were issued and
outstanding. As of October 28, 2003, 80,912,519 shares of Conexant Common
Stock were reserved for issuance upon exercise of options or rights
("Conexant Stock Options") outstanding under Conexant Stock Plans. As of
October 28, 2003, no shares of Conexant Common Stock were held as treasury
shares. Since October 28, 2003 to the date of this Agreement, no shares of
capital stock of Conexant or any other securities of Conexant have been
issued other than shares of Conexant Common Stock issued pursuant to (x)
Conexant Stock Options outstanding as of October 28, 2003 under Conexant
Stock Plans and (y) the Conexant ESPP. All issued and outstanding shares
of capital stock of Conexant are duly authorized, validly issued, fully
paid and nonassessable, and no class of capital stock of Conexant is
entitled to preemptive rights. There are outstanding as of the date hereof
no options, warrants or other rights to acquire capital stock from
Conexant other than (A) preferred share purchase rights (the "Conexant
Rights") distributed to the holders of Conexant Common Stock pursuant to
the Conexant Rights Agreement, (B) Conexant Stock Options under the
Conexant Stock Plans, (C) Conexant's 4 1/4% Convertible Subordinated Notes
due 2006 and 4% Convertible Subordinated Notes due 2007 (collectively, the
"Conexant Convertible Notes") which are convertible into Conexant Common
Stock at a conversion price of $9.075 and $42.432 per share, respectively,
(D) warrants to purchase 2,704,240 shares of Conexant Common Stock issued
to Jazz Semiconductor, Inc. (the "Jazz Warrant") and (E) rights to acquire
shares of
00
Xxxxxxxx Xxxxxx Stock pursuant to the Conexant ESPP. Section 3.2(b)(i) of
the Conexant Disclosure Schedule sets forth a complete and correct list as
of October 24, 2003 of all outstanding Conexant Stock Options and the
exercise prices thereof.
(ii) No bonds, debentures, notes or other indebtedness of
Conexant having the right to vote on any matters on which stockholders of
Conexant may vote ("Conexant Voting Debt") are issued or outstanding.
(iii) Except as otherwise set forth in this Section 3.2(b), as
of the date of this Agreement, there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of
any kind to which Conexant or any of its Subsidiaries is a party or by
which any of them is bound obligating Conexant or any of its Subsidiaries
to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of Conexant
or any of its Subsidiaries or obligating Conexant or any of its
Subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or
undertaking. As of the date of this Agreement, there are no outstanding
obligations of Conexant or any of its Subsidiaries to repurchase, redeem
or otherwise acquire any shares of capital stock of Conexant or any of its
Subsidiaries.
(iv) All shares of Conexant Common Stock to be issued in
connection with the Merger will be duly authorized, validly issued, fully
paid and nonassessable and free of preemptive rights.
(c) Authority; No Conflicts.
(i) Conexant has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby, subject, in the case of the consummation of the
Merger, to the approval of the issuance of Conexant Common Stock in the
Merger pursuant to this Agreement by the Required Conexant Vote. The
execution and delivery of this Agreement by Conexant and the consummation
by Conexant of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Conexant,
subject, in the case of the consummation of the Merger, to the approval of
the issuance of Conexant Common Stock in the Merger pursuant to this
Agreement by the Required Conexant Vote. This Agreement has been duly
executed and delivered by Conexant and, assuming the due authorization and
valid execution and delivery of this Agreement by GlobespanVirata,
constitutes a valid and binding agreement of Conexant, enforceable against
Conexant in accordance with its terms, except as may be
25
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and similar Applicable Laws relating to or affecting creditors
generally or by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(ii) The execution and delivery by Conexant of this Agreement
does not, and the consummation by Conexant of the Merger and the other
transactions contemplated hereby will not result in a Violation pursuant
to: (A) any provision of the certificate of incorporation or by-laws or
similar organizational document of Conexant or any Significant Subsidiary
of Conexant or (B) except as, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Conexant and
its Subsidiaries or, to the Knowledge of Conexant, on Conexant and its
Subsidiaries following the Merger, subject to obtaining or making the
Conexant Necessary Consents, any Contract to which Conexant or any of its
Subsidiaries is a party or by which any of them or any of their respective
properties or assets is bound, or any permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Conexant or any Subsidiary of Conexant or their
respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity or any
other Person is required by or with respect to Conexant or any Subsidiary
of Conexant in connection with the execution and delivery of this
Agreement by Conexant or the consummation by Conexant of the Merger and
the other transactions contemplated hereby, except for those required
under or in relation to (A) the HSR Act, (B) state securities or "blue
sky" laws, (C) the Securities Act, (D) the Exchange Act, (E) the DGCL with
respect to the filing of the Certificate of Merger with the Delaware
Secretary, (F) the rules and regulations of Nasdaq, including with respect
to authorization for inclusion of the shares of Conexant Common Stock to
be issued in the Merger and the transaction contemplated hereby on the
Nasdaq National Market System, subject to official notice of issuance, (G)
antitrust or other competition laws of other jurisdictions, and (H) such
consents, approvals, orders, authorizations, registrations, declarations
and filings the failure of which to make or obtain, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect on Conexant and its Subsidiaries. Consents, approvals, orders,
authorizations, registrations, declarations and filings required under or
in relation to any of the foregoing clauses (A) through (G) are
hereinafter referred to as the "Conexant Necessary Consents".
26
(d) Reports and Financial Statements.
(i) Each of Conexant and its Subsidiaries has filed all
registration statements, prospectuses, reports, schedules, forms,
statements and other documents required to be filed by it with the SEC
since January 1, 2002 (collectively, including all exhibits thereto, the
"Conexant SEC Reports"). No Subsidiary of Conexant is required to file any
form, report, registration statement, prospectus or other document with
the SEC. None of the Conexant SEC Reports, as of their respective dates
(or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contained any untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. Each of the
financial statements (including the related notes) included in the
Conexant SEC Reports fairly presents, in all material respects, the
consolidated financial position and consolidated results of operations and
cash flows of Conexant and its consolidated Subsidiaries as of the
respective dates or for the respective periods set forth therein, all in
conformity with GAAP consistently applied during the periods involved
except as otherwise noted therein, and subject, in the case of unaudited
interim financial statements, to normal and recurring year-end adjustments
that have not been and are not expected to be material in amount. All
Conexant SEC Reports, as of their respective dates (and as of the date of
any amendment to the respective Conexant SEC Report), complied as to form
in all material respects with the applicable requirements of the
Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder.
(ii) Except as disclosed in the Conexant SEC Reports filed and
publicly available prior to the date hereof (the "Conexant Filed SEC
Reports"), since June 30, 2003, Conexant and its Subsidiaries have not
incurred any liabilities that are of a nature that would be required to be
disclosed on a balance sheet of Conexant and its Subsidiaries or the
footnotes thereto prepared in conformity with GAAP, other than (A)
liabilities incurred in the ordinary course of business consistent with
past practice or (B) liabilities that, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on
Conexant and its Subsidiaries.
(e) Information Supplied.
(i) None of the information supplied or to be supplied by
Conexant or Concentric Sub for inclusion or incorporation by reference in
(A) the Form S-4 will, at the time the Form S-4 is filed with the SEC, at
any time it is amended or supplemented or at the time it becomes effective
under the Securities
27
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, and (B) the Joint Proxy Statement/Prospectus will,
on the date it is first mailed to Conexant stockholders or GlobespanVirata
stockholders or at the time of the Conexant Stockholders Meeting or the
GlobespanVirata Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Form S-4
and the Joint Proxy Statement/Prospectus will comply as to form in all
material respects with the requirements of the Exchange Act and the
Securities Act and the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this Section
3.2(e), no representation or warranty is made by Conexant with respect to
statements made or incorporated by reference in the Form S-4 or the Joint
Proxy Statement/Prospectus based on information supplied by
GlobespanVirata for inclusion or incorporation by reference therein.
(f) Board Approval. The Board of Directors of Conexant, by
resolutions duly adopted by unanimous vote of all directors at a meeting duly
called and held and, other than as set forth in Section 5.8, not subsequently
rescinded or modified in any way, has duly (i) determined that this Agreement
and the Merger are advisable and in the best interests of Conexant and its
stockholders, (ii) approved this Agreement and the Merger, (iii) resolved to
recommend that the stockholders of Conexant approve the issuance of Conexant
Common Stock in the Merger pursuant to this Agreement and directed that the
issuance of Conexant Common Stock in the Merger pursuant to this Agreement be
submitted for consideration by Conexant's stockholders at the Conexant
Stockholders Meeting and (iv) taken all other action necessary to render any
limitations on business combinations contained in Section 203 of the DGCL or any
other similar limitations inapplicable to the transactions contemplated hereby.
To the Knowledge of Conexant, no state takeover statute is applicable or
purports to be applicable to the Merger or the other transactions contemplated
hereby.
(g) Vote Required. The affirmative vote of a majority of the votes
entitled to be cast by holders of shares of Conexant Common Stock present or
represented by proxy and entitled to vote at the Conexant Stockholders Meeting,
a quorum being present (the "Required Conexant Vote"), is the only vote of the
holders of any class or series of Conexant capital stock necessary to approve
the issuance of Conexant Common Stock in the Merger pursuant to this Agreement
and the other transactions contemplated hereby.
28
(h) Litigation; Compliance with Laws.
(i) Except as set forth in the Conexant Filed SEC Reports,
there is no suit, action, proceeding or regulatory investigation pending
or, to the Knowledge of Conexant, threatened, against or affecting
Conexant or any of its Subsidiaries or any property or asset of Conexant
or any of its Subsidiaries which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on Conexant and
its Subsidiaries, nor is there any judgment, decree, injunction, rule or
order of any Governmental Entity or arbitrator outstanding against
Conexant or any of its Subsidiaries which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect
on Conexant and its Subsidiaries.
(ii) Except as, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Conexant and
its Subsidiaries, Conexant and its Subsidiaries hold all permits,
licenses, franchises, variances, exemptions, orders and approvals of all
Governmental Entities which are necessary for the operation of the
businesses of Conexant and its Subsidiaries (the "Conexant Permits"), and
no suspension or cancellation of any of the Conexant Permits is pending
or, to the Knowledge of Conexant, threatened, except for suspensions or
cancellations which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Conexant and
its Subsidiaries. Conexant and its Subsidiaries are in compliance with the
terms of the Conexant Permits, except where the failure so to comply,
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect on Conexant and its Subsidiaries. None of
Conexant or any of its Subsidiaries is in violation of, and Conexant and
its Subsidiaries have not received any notices of violations with respect
to, any Applicable Laws, except for violations which, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect on Conexant and its Subsidiaries.
(i) Absence of Certain Changes or Events. Except as set forth in the
Conexant Filed SEC Reports, since June 30, 2003, Conexant and its Subsidiaries
have conducted their businesses only in the ordinary course, consistent with
past practice, and there has not been any change, circumstance, event or
development which, individually or in the aggregate, has had, or would
reasonably be expected to have, a Material Adverse Effect on Conexant and its
Subsidiaries.
(j) Environmental Matters. Except as set forth in the Conexant Filed
SEC Reports and except as, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Conexant and its
Subsidiaries, (i) the
29
operations of Conexant and its Subsidiaries have been and are in compliance with
all Environmental Laws and with all Conexant Permits required by Environmental
Laws, (ii) there are no pending or, to the Knowledge of Conexant, threatened,
Actions under or pursuant to Environmental Laws against Conexant or its
Subsidiaries or involving any real property currently or, to the Knowledge of
Conexant, formerly owned, operated or leased by Conexant or its Subsidiaries and
(iii) Conexant and its Subsidiaries have not incurred any Environmental
Liabilities and, to the Knowledge of Conexant, no facts, circumstances or
conditions relating to, arising from, associated with or attributable to any
real property currently or, to the Knowledge of Conexant, formerly owned,
operated or leased by Conexant or its Subsidiaries or operations thereon would
reasonably be expected to result in Environmental Liabilities.
(k) Intellectual Property. Except as set forth in the Conexant Filed
SEC Reports: (i) Conexant and each of its Subsidiaries owns, or is licensed to
use (in each case, free and clear of any Liens), all material Intellectual
Property used in or necessary for the conduct of its business as currently
conducted; (ii) to the Knowledge of Conexant, the use of any Intellectual
Property by Conexant and its Subsidiaries does not infringe on or otherwise
violate, and is not alleged to infringe or otherwise violate, the rights of any
Person; (iii) the use of third party Intellectual Property by Conexant and its
Subsidiaries is in accordance with the applicable license pursuant to which
Conexant or any of its Subsidiaries acquired the right to use such Intellectual
Property, which license is valid and in effect; (iv) to the Knowledge of
Conexant, no Person is challenging, infringing on or otherwise violating any
material right of Conexant or any of its Subsidiaries with respect to any
Intellectual Property owned by and/or licensed to Conexant or its Subsidiaries;
(v) there are no pending claims, orders or proceedings with respect to either
any Intellectual Property owned by Conexant and any of its Subsidiaries, or to
the Knowledge of Conexant, any other Intellectual Property used by Conexant and
its Subsidiaries; and (vi) to the Knowledge of Conexant, no Intellectual
Property owned and/or licensed by Conexant or its Subsidiaries is being used or
enforced in a manner that would reasonably be expected to result in the
abandonment, cancellation or unenforceability either of such Intellectual
Property or of Conexant's and its Subsidiaries' rights to use such Intellectual
Property.
(l) Conexant Rights Agreement. Conexant has taken all action
necessary or appropriate so that the execution of this Agreement and
consummation of the transactions contemplated hereby does not and will not
result in the ability of any Person to exercise any Conexant Rights under the
Rights Agreement dated as of November 30, 1998, as amended as of December 9,
1999, between Conexant and Mellon Investor Services LLC, as Rights Agent (the
"Conexant Rights Agreement"), or enable or require such Conexant Rights to
separate from the shares of Conexant Common Stock to which they are attached or
to be triggered or become exercisable. No "Distribution Date" or "Shares
Acquisition Date" (each as defined in the Conexant Rights Agreement) has
30
occurred. Copies of the Conexant Rights Agreement, and all amendments thereto,
have previously been provided to GlobespanVirata.
(m) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Conexant or any of its Subsidiaries, except Credit Suisse First
Boston LLC (the "Conexant Financial Advisor"), whose fees and expenses will be
paid by Conexant in accordance with Conexant's agreement with such firm, a copy
of which has been previously provided to GlobespanVirata.
(n) Opinion of Conexant Financial Advisor. Conexant has received the
opinion of the Conexant Financial Advisor, dated the date of this Agreement, to
the effect that, as of such date, the Exchange Ratio is fair, from a financial
point of view, to Conexant.
(o) Taxes.
(i) Each of Conexant and its Subsidiaries has timely filed or
has caused to be timely filed all Tax Returns required to be filed by it
and all such Tax Returns are complete and correct in all respects, or
requests for extensions to file such Tax Returns have been timely filed,
granted and have not expired, except to the extent that such failure to
file, to be complete or correct or to have any extension granted that
remains in effect, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect on Conexant and its
Subsidiaries. Conexant and each of its Subsidiaries have paid or caused to
be paid all Taxes required to be paid by it, and has paid all Taxes that
it was required to withhold from amounts owing to any employee, creditor
or third party, except to the extent that any failure to pay such Taxes
would not reasonably be expected to have a Material Adverse Effect on
Conexant and its Subsidiaries. There are no Liens for Taxes upon the
assets of Conexant or any of its Subsidiaries, other than Liens for
current Taxes not yet due or Liens for Taxes that are being contested in
good faith by appropriate proceedings and Liens for Taxes that would not
reasonably be expected to have a Material Adverse Effect on Conexant and
its Subsidiaries.
(ii) There are no pending, or to the Knowledge of Conexant,
threatened, Tax audits, examinations or investigations, and no
deficiencies for any Taxes have been proposed, asserted or assessed in
writing against Conexant or any of its Subsidiaries, except for
deficiencies that, individually or in the
31
aggregate, would not reasonably be expected to have a Material Adverse
Effect on Conexant and its Subsidiaries.
(iii) None of Conexant or any of its Subsidiaries has taken
any action, and Conexant has no Knowledge of any fact, agreement, plan or
other circumstance, that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
(iv) Within the past five years, none of Conexant or any of
its Subsidiaries has been a "distributing corporation" or a "controlled
corporation" within the meaning of Section 355(a)(i)(A) of the Code in a
distribution intended to qualify under Section 355(a) of the Code.
(v) None of Conexant or any of its Subsidiaries has agreed to
make, nor is required to make, any material adjustment under Section
481(a) of the Code or any similar provision of state, local or foreign law
by reason of a change in accounting methods or otherwise.
(vi) None of Conexant or any of its Subsidiaries has any
liability for Taxes of any Person as a result of being a member of an
affiliated, consolidated, combined or unitary group (other than Conexant
and its Subsidiaries) under Treasury Reg. Section 1.1502-6 (or any
comparable provision of state, local or foreign law), or is bound by or
has any obligation under any Tax sharing arrangement, Tax indemnification
arrangement or similar contract or arrangement, except as would not
reasonably be expected to have a Material Adverse Effect on Conexant and
its Subsidiaries.
(p) Certain Contracts. As of the date hereof, none of Conexant or
any of its Subsidiaries is a party to or bound by (i) any "material contract"
(as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC), (ii)
any non-competition agreement or any other agreement or arrangement that limits
or otherwise restricts Conexant or any of its Subsidiaries or any of their
respective affiliates or any successor thereto, or that would, after the
Effective Time, to the Knowledge of Conexant, limit or restrict Conexant or any
of its Subsidiaries or any of their respective affiliates or any successor
thereto, from engaging or competing in any line of business or in any geographic
area, which agreement or arrangement would reasonably be expected to have a
Material Adverse Effect on Conexant and its Subsidiaries, after giving effect to
the Merger, (iii) any employee benefit plan, employee contract with a senior
executive or any other material contract, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement or
32
(iv) any Contract which would prohibit or materially delay the consummation of
the Merger or any of the transactions contemplated by this Agreement. All
"material contracts" (as defined in clause (i) above) set forth in Section
3.2(p) of the Conexant Disclosure Schedule are valid and binding on Conexant and
its Subsidiaries, as applicable, and in full force and effect except to the
extent they have previously expired in accordance with their terms or if the
failure to be in full force and effect, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on Conexant and its
Subsidiaries. None of Conexant or any of its Subsidiaries or, to the Knowledge
of Conexant, any other party thereto has violated any provision of, or committed
or failed to perform any act which with or without notice, lapse of time or both
would constitute a default under the provisions of, any "material contract" (as
defined in clause (i) above) set forth in Section 3.2(p) of the Conexant
Disclosure Schedule, except in each case for those violations and defaults
which, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on Conexant and its Subsidiaries.
(q) Employee Benefits.
(i) With respect to each Conexant Plan, except for Conexant
Plans the liabilities under which, individually or in the aggregate, would
not have a Material Adverse Effect on Conexant and its Subsidiaries,
Conexant has made available to GlobespanVirata a true, correct and
complete copy of: (A) all plan documents, trust agreements, and insurance
contracts and other funding vehicles; (B) the three most recent Annual
Reports (Form 5500 Series) and accompanying schedules and exhibits, if
any; (C) the current summary plan description and any material
modifications thereto, if any (in each case, whether or not required to be
furnished under ERISA); (D) the three most recent annual financial
reports, if any; (E) the three most recent actuarial reports, if any; (F)
the most recent determination letter from the IRS, if any; and (G) the
annual compliance testing under Sections 401(a) through 416 of the Code
for the three most recently completed plan years.
(ii) With respect to each Conexant Plan, Conexant and its
Subsidiaries have complied with, and are now in compliance with, all
provisions of ERISA, the Code and all other Applicable Laws and
regulations applicable to such Conexant Plans and each Conexant Plan has
been administered in accordance with its terms, in each case except as
would not have a Material Adverse Effect on Conexant and its Subsidiaries.
Each Conexant Plan that is required by ERISA to be funded is fully funded
in accordance with reasonable actuarial assumptions, except as would not
have a Material Adverse Effect on Conexant and its Subsidiaries.
33
(iii) All Conexant Plans subject to the Applicable Laws of any
jurisdiction outside of the United States (A) have been maintained in
accordance with all applicable requirements, (B) if they are intended to
qualify for special tax treatment meet all requirements for such
treatment, and (C) if they are intended to be funded and/or book-reserved
are fully funded and/or book-reserved, as appropriate, based upon
reasonable actuarial assumptions, in each case except as would not have a
Material Adverse Effect on Conexant and its Subsidiaries.
(iv) None of Conexant or any of its Subsidiaries has any liability
or obligation in respect of any Multiemployer Plan.
(v) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or
in conjunction with any other act) result in, cause the accelerated
vesting or delivery of, or increase the amount or value of, any payment,
option, award or benefit (including any "excess parachute payment" within
the meaning of Section 280G of the Code) to any director or employee of
Conexant or any of its Subsidiaries, or require the funding of any "rabbi"
trust or similar trust.
(r) Labor Relations. As of the date of this Agreement, (i) none of
Conexant or any of its Subsidiaries is a party to any collective bargaining
agreement, (ii) except as would not have a Material Adverse Effect on Conexant
and its Subsidiaries, no labor organization or group of employees of Conexant or
any of its Subsidiaries has made a pending demand for recognition or
certification, and there are no representation or certification proceedings or
petitions seeking a representation proceeding presently pending or, to the
Knowledge of Conexant, threatened to be brought or filed, with the National
Labor Relations Board or any other domestic or foreign labor relations tribunal
or authority and (iii) except as would not have a Material Adverse Effect on
Conexant and its Subsidiaries, there are no organizing activities, strikes, work
stoppages, slowdowns, lockouts, arbitrations or grievances, or other labor
disputes pending or, to the Knowledge of Conexant, threatened against or
involving Conexant or any of its Subsidiaries.
(s) Insurance. Conexant and its Subsidiaries maintain insurance coverage
with reputable insurers in such amounts and covering such risks as are in
accordance with normal industry practice for companies engaged in businesses
similar to that of Conexant and its Subsidiaries (taking into account the cost
and availability of such insurance).
(t) Liens. No Liens exist on any assets of Conexant or any of its
Subsidiaries, except as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Conexant and its Subsidiaries.
34
(u) Ownership of Capital Stock of GlobespanVirata. None of Conexant or any
of its Subsidiaries owns any shares of GlobespanVirata Common Stock or
GlobespanVirata Preferred Stock (other than shares held in a fiduciary capacity
for the benefit of third parties).
SECTION 3.3 Representations and Warranties of Conexant and Concentric Sub.
Conexant and Concentric Sub represent and warrant to GlobespanVirata as follows:
(a) Organization. Concentric Sub is a corporation duly incorporated,
validly existing and in good standing under the laws of Delaware. Concentric Sub
is a direct wholly-owned subsidiary of Conexant. Conexant, as the sole
stockholder of Concentric Sub, has duly approved this Agreement and the
transactions contemplated hereby.
(b) Capital Structure. On the date hereof, the authorized capital stock of
Concentric Sub consists of 1,000 shares of Concentric Sub Common Stock.
(c) Authority. Concentric Sub has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Concentric
Sub and the consummation by Concentric Sub of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Concentric Sub. This Agreement has been duly executed and delivered by
Concentric Sub and constitutes a valid and binding agreement of Concentric Sub,
enforceable against Concentric Sub in accordance with its terms, except as may
be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and similar Applicable Laws relating to or affecting creditors
generally or by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(d) No Conflicts. The execution and delivery by Concentric Sub of this
Agreement and the consummation by Concentric Sub of the transactions
contemplated hereby will not contravene or conflict with the Concentric Sub
Certificate or the Concentric Sub By-Laws.
(e) No Business Activities. Concentric Sub has not conducted any
activities other than in connection with the organization of Concentric Sub, the
negotiation, execution and performance of this Agreement and the consummation of
the transactions contemplated hereby. As of the date hereof, Concentric Sub has
no Subsidiaries.
35
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1 Covenants of GlobespanVirata. During the period from the date
of this Agreement and continuing until the Effective Time, GlobespanVirata
agrees as to itself and its Subsidiaries that (except as required or otherwise
expressly contemplated or permitted by this Agreement or Section 4.1 (including
its subsections) of the GlobespanVirata Disclosure Schedule or as required by a
Governmental Entity or to the extent that Conexant shall otherwise consent in
writing, which consent shall not be unreasonably withheld or delayed):
(a) Ordinary Course.
(i) GlobespanVirata and its Subsidiaries shall carry on their
respective businesses in the usual, regular and ordinary course, in
substantially the same manner as heretofore conducted, and shall use all
reasonable efforts to preserve intact their present business
organizations, keep available the services of their current officers and
other key employees and preserve their relationships with customers,
suppliers and others having business dealings with them to the end that
their ongoing businesses shall not be impaired at the Effective Time;
provided, however, that no action by GlobespanVirata or its Subsidiaries
with respect to matters specifically addressed by any other provision of
this Section 4.1 shall be deemed a breach of this Section 4.1(a)(i) unless
such action would constitute a breach of one or more of such other
provisions.
(ii) Other than investments permitted by Section 4.1(g),
GlobespanVirata shall not, and shall not permit any of its Subsidiaries
to, (A) enter into any new material line of business or (B) incur or
commit to any capital expenditures or any obligations or liabilities in
connection with any capital expenditures other than capital expenditures
and obligations or liabilities in connection therewith incurred or
committed to in the ordinary course of business consistent with past
practice, and in no event in excess of $7 million in any calendar quarter
or $25 million in the aggregate, it being understood that any unused
amount in any calendar quarter may be carried forward and applied to any
subsequent calendar quarter.
(b) Dividends; Changes in Share Capital. GlobespanVirata shall not, and
shall not permit any of its Subsidiaries to, and shall not propose to, (i)
declare or pay any dividends on or make other distributions (whether in cash,
stock or property) in respect of any of its capital stock, except for dividends
by any direct or indirect wholly-owned Subsidiaries of GlobespanVirata, (ii)
split, combine or reclassify any of its capital
36
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for, shares of its capital stock,
except for any such transaction by a wholly-owned Subsidiary of GlobespanVirata
which remains a wholly-owned Subsidiary after consummation of such transaction
or (iii) repurchase, redeem or otherwise acquire any shares of its capital stock
for an amount in excess of $10 million in the aggregate or any securities
convertible into or exercisable for any shares of its capital stock for an
amount in excess of $50 million in the aggregate.
(c) Issuance of Securities. GlobespanVirata shall not, and shall not
permit any of its Subsidiaries to, issue, deliver, sell, pledge or otherwise
encumber, or authorize or propose the issuance, delivery, sale, pledge or
encumbrance of, any shares of its capital stock of any class, any
GlobespanVirata Voting Debt or any securities convertible into or exercisable
for, or any rights, warrants, calls or options to acquire, any such shares or
GlobespanVirata Voting Debt, or enter into any commitment, arrangement,
undertaking or agreement with respect to any of the foregoing, other than (i)
the issuance of GlobespanVirata Common Stock upon the exercise of
GlobespanVirata Stock Options outstanding on the date hereof in accordance with
their present terms or pursuant to GlobespanVirata Stock Options or other stock
based awards granted pursuant to clause (ii) below, (ii) the granting of
GlobespanVirata Stock Options or other stock based awards of or to acquire not
more than 250,000 shares in the aggregate in any calendar quarter of
GlobespanVirata Common Stock granted under GlobespanVirata Stock Plans in effect
on the date hereof in the ordinary course of business consistent with past
practice, (iii) issuances, sales or deliveries by a wholly-owned Subsidiary of
GlobespanVirata of capital stock of such Subsidiary to such Subsidiary's parent
or another wholly-owned Subsidiary of GlobespanVirata, (iv) issuances in
accordance with the GlobespanVirata Rights Agreement, (v) issuances permitted by
Section 4.1(e), (vi) issuances upon conversion of the GlobespanVirata
Convertible Notes, (vii) issuances upon the exercise of the GlobespanVirata
Warrant or (viii) issuances pursuant to the GlobespanVirata ESPP.
(d) Governing Documents. Except to the extent required to comply with its
obligations hereunder or with Applicable Laws, GlobespanVirata shall not amend
or propose to so amend its certificate of incorporation, by-laws or other
governing documents.
(e) No Acquisitions. GlobespanVirata shall not, and shall not permit any
of its Subsidiaries to, acquire or agree to acquire by merger or consolidation,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, limited liability entity, joint venture, association or other
business organization or division thereof or otherwise acquire or agree to
acquire any material assets (excluding the acquisition of assets used in the
operations of the businesses of GlobespanVirata and its Subsidiaries in the
ordinary
37
course consistent with past practice, which assets do not constitute a business
unit, division or all or substantially all of the assets of the transferor);
provided, however, that the foregoing shall not prohibit (x) internal
reorganizations or consolidations involving existing Subsidiaries of
GlobespanVirata, (y) the creation of new direct or indirect wholly-owned
Subsidiaries of GlobespanVirata organized to conduct or continue activities
otherwise permitted by this Agreement or (z) acquisitions for which the
aggregate consideration paid does not exceed $25 million, whether in cash or
shares of GlobespanVirata Common Stock, provided that not more than 5 million
shares of GlobespanVirata Common Stock may be issued pursuant to this clause
(z).
(f) No Dispositions. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of GlobespanVirata or (ii) as may
be required by or in conformance with Applicable Laws in order to permit or
facilitate the consummation of the transactions contemplated hereby,
GlobespanVirata shall not, and shall not permit any of its Subsidiaries to,
sell, lease, license or otherwise encumber or subject to any Lien or otherwise
dispose of, or agree to sell, lease, license or otherwise encumber or subject to
any Lien or otherwise dispose of, any of its material assets (including capital
stock of Subsidiaries of GlobespanVirata but excluding inventory in the ordinary
course of business consistent with past practice).
(g) Investments; Indebtedness. GlobespanVirata shall not, and shall not
permit any of its Subsidiaries to (i) make any loans, advances or capital
contributions to, or investments in, any other Person, other than (A) loans or
investments by GlobespanVirata or a Subsidiary of GlobespanVirata to or in
GlobespanVirata or a Subsidiary of GlobespanVirata, (B) pursuant to any contract
or other legal obligation of GlobespanVirata or any of its Subsidiaries as in
effect at the date of this Agreement, (C) employee loans or advances for travel,
business, relocation or other reimbursable expenses made in the ordinary course
of business consistent with past practice, (D) in the ordinary course of
business consistent with past practice which are not, individually or in the
aggregate, material to GlobespanVirata and its Subsidiaries taken as a whole
(provided that none of the transactions referred to in this clause (D) presents
a material risk of making it more difficult to obtain any approval or
authorization required in connection with the Merger under Applicable Laws) or
(E) investments, loans or advances not in excess of $10 million in the aggregate
or (ii) create, incur, assume or suffer to exist any indebtedness, issuances of
debt securities, guarantees, loans or advances not in existence as of the date
of this Agreement except in the ordinary course of business consistent with past
practice which are not, individually or in the aggregate, material to
GlobespanVirata and its Subsidiaries taken as a whole (other than any such
indebtedness, issuances of debt securities, guarantees, loans or advances that
refinance or replace any such indebtedness, debt securities, guarantees, loans
or advances in existence on the date of this Agreement, provided that such
refinancing or replacement does not impair or delay the consummation of the
Merger).
38
(h) Tax-Free Qualification. GlobespanVirata shall use its reasonable best
efforts not to, and shall use its reasonable best efforts not to permit any of
its Subsidiaries to, take any action (including any action otherwise permitted
by this Section 4.1) that would prevent or impede the Merger from qualifying as
a "reorganization" under Section 368(a) of the Code.
(i) Compensation. Except (x) as set forth in Section 4.1(c), (y) as
required by Applicable Laws or by the terms of any collective bargaining
agreement or other agreement currently in effect between GlobespanVirata or any
of its Subsidiaries and any executive officer or employee thereof or (z) in the
ordinary course of business consistent with past practice, GlobespanVirata shall
not increase the amount of compensation or employee benefits of any director,
officer or employee of GlobespanVirata or any of its Subsidiaries, pay any
pension, retirement, savings or profit-sharing allowance to any employee that is
not required by any existing plan or agreement, enter into any Contract with any
of its employees regarding his or her employment, compensation or benefits,
increase or commit to increase any employee benefits, issue any additional
GlobespanVirata Stock Options, adopt or amend or make any commitment to adopt or
amend any GlobespanVirata Plan or make any contribution, other than regularly
scheduled contributions, to any GlobespanVirata Plan. GlobespanVirata shall not
accelerate the vesting of, or the lapsing of restrictions with respect to, any
stock options or other stock-based compensation, except as required by
Applicable Laws, by the terms of the plan or agreement under which such option
or other stock-based compensation was granted or in the ordinary course of
business consistent with past practice or in accordance with this Agreement, and
any option committed to be granted or granted after the date hereof shall not
accelerate as a result of the approval or consummation of any transaction
contemplated by this Agreement.
(j) Accounting Methods; Income Tax Elections. Except as disclosed in
GlobespanVirata Filed SEC Reports, or as required by a Governmental Entity,
GlobespanVirata shall not, and shall not permit any of its Subsidiaries to,
change its methods of accounting in effect at December 31, 2002, except as
required by changes in GAAP as concurred in by GlobespanVirata's independent
public accountants. GlobespanVirata shall not, and shall not permit any of its
Subsidiaries to, (i) change its fiscal year or (ii) make any material Tax
election or settle or compromise any material income Tax liability, other than
in the ordinary course of business consistent with past practice.
(k) Certain Agreements and Arrangements. GlobespanVirata shall not, and
shall not permit any of its Subsidiaries to, enter into any Contracts that limit
or otherwise restrict GlobespanVirata or any of its Subsidiaries or any of their
respective affiliates or any successor thereto, or that would, after the
Effective Time, limit or restrict Conexant or any of its Subsidiaries or any of
their respective affiliates or any successor
39
thereto, from engaging or competing in any line of business or in any geographic
area which agreements or arrangements, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on Conexant and its
Subsidiaries, after giving effect to the Merger.
(l) GlobespanVirata Rights Agreement. Other than in connection with the
Merger, GlobespanVirata shall not amend, modify or waive any provision of the
GlobespanVirata Rights Agreement and shall not take any action to redeem the
GlobespanVirata Rights or render the GlobespanVirata Rights inapplicable to any
transaction.
(m) Litigation. GlobespanVirata shall not, and shall not permit any of its
Subsidiaries to, settle or compromise any threatened or pending Actions for an
amount in excess of $5 million in the aggregate or enter into any consent
decree, injunction or similar restraint or form of equitable relief in
settlement of any threatened or pending Actions, except for such consent
decrees, injunctions, restraints or equitable relief which would not,
individually or in the aggregate, have a Material Adverse Effect on
GlobespanVirata and its Subsidiaries.
(n) No Related Actions. GlobespanVirata will not, and will not permit any
of its Subsidiaries to, agree or commit to do any of the foregoing actions.
SECTION 4.2 Covenants of Conexant and Concentric Sub. During the period
from the date of this Agreement and continuing until the Effective Time,
Conexant and Concentric Sub each agrees that (except as required or otherwise
expressly contemplated or permitted by this Agreement or Section 4.2 (including
its subsections) of the Conexant Disclosure Schedule or as required by a
Governmental Entity or to the extent that GlobespanVirata shall otherwise
consent in writing, which consent shall not be unreasonably withheld or
delayed):
(a) Ordinary Course.
(i) Conexant and its Subsidiaries shall carry on their respective
businesses in the usual, regular and ordinary course, in substantially the
same manner as heretofore conducted, and shall use all reasonable efforts
to preserve intact their present business organizations, keep available
the services of their current officers and other key employees and
preserve their relationships with customers, suppliers and others having
business dealings with them to the end that their ongoing businesses shall
not be impaired at the Effective Time; provided, however, that no action
by Conexant or its Subsidiaries with respect to matters specifically
addressed by any other provision of this Section 4.2 shall be deemed a
40
breach of this Section 4.2(a)(i) unless such action would constitute a
breach of one or more of such other provisions.
(ii) Other than investments permitted by Section 4.2(g), Conexant
shall not, and shall not permit any of its Subsidiaries to, (A) enter into
any new material line of business or (B) incur or commit to any capital
expenditures or any obligations or liabilities in connection with any
capital expenditures other than capital expenditures and obligations or
liabilities in connection therewith incurred or committed to in the
ordinary course of business consistent with past practice, and in no event
in excess of $7 million in any calendar quarter or $25 million in the
aggregate, it being understood that any unused amount in any calendar
quarter may be carried forward and applied to any subsequent calendar
quarter.
(b) Dividends; Changes in Share Capital. Conexant shall not, and shall not
permit any of its Subsidiaries to, and shall not propose to, (i) declare or pay
any dividends on or make other distributions (whether in cash, stock or
property) in respect of any of its capital stock, except for dividends by any
direct or indirect wholly-owned Subsidiaries of Conexant, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for, shares of its capital stock, except for any such transaction by a
wholly-owned Subsidiary of Conexant which remains a wholly-owned Subsidiary
after consummation of such transaction or (iii) repurchase, redeem or otherwise
acquire any shares of its capital stock for an amount in excess of $10 million
in the aggregate or any securities convertible into or exercisable for any
shares of its capital stock for an amount in excess of $50 million in the
aggregate.
(c) Issuance of Securities. Conexant shall not, and shall not permit any
of its Subsidiaries to, issue, deliver, sell, pledge or otherwise encumber, or
authorize or propose the issuance, delivery, sale, pledge or encumbrance of, any
shares of its capital stock of any class, any Conexant Voting Debt or any
securities convertible into or exercisable for, or any rights, warrants, calls
or options to acquire, any such shares or Conexant Voting Debt, or enter into
any commitment, arrangement, undertaking or agreement with respect to any of the
foregoing, other than (i) the issuance of Conexant Common Stock upon the
exercise of Conexant Stock Options outstanding on the date hereof in accordance
with their present terms or pursuant to Conexant Stock Options or other stock
based awards granted pursuant to clause (ii) below, (ii) the granting of
Conexant Stock Options or other stock based awards of or to acquire not more
than 250,000 shares in the aggregate in any calendar quarter of Conexant Common
Stock granted under Conexant Stock Plans in effect on the date hereof in the
ordinary course of business consistent with past practice, (iii) issuances,
sales or deliveries by a wholly-owned Subsidiary of Conexant of capital stock of
such Subsidiary to such
41
Subsidiary's parent or another wholly-owned Subsidiary of Conexant, (iv)
issuances in accordance with the Conexant Rights Agreement, (v) issuances
permitted by Section 4.2(e), (vi) issuances upon conversion of the Conexant
Convertible Notes, (vii) issuances upon the exercise of the Jazz Warrant or
(viii) issuances pursuant to the Conexant ESPP.
(d) Governing Documents. Except to the extent required to comply with its
obligations hereunder or with Applicable Laws, Conexant shall not amend or
propose to so amend its certificate of incorporation, by-laws or other governing
documents.
(e) No Acquisitions. Conexant shall not, and shall not permit any its
Subsidiaries to, acquire or agree to acquire by merger or consolidation, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
limited liability entity, joint venture, association or other business
organization or division thereof or otherwise acquire or agree to acquire any
material assets (excluding the acquisition of assets used in the operations of
the businesses of Conexant and its Subsidiaries in the ordinary course
consistent with past practice, which assets do not constitute a business unit,
division or all or substantially all of the assets of the transferor); provided,
however, that the foregoing shall not prohibit (x) internal reorganizations or
consolidations involving existing Subsidiaries of Conexant, (y) the creation of
new direct or indirect wholly-owned Subsidiaries of Conexant organized to
conduct or continue activities otherwise permitted by this Agreement or (z)
acquisitions for which the aggregate consideration paid does not exceed $25
million, whether in cash or shares of Conexant Common Stock, provided that not
more than 5 million shares of Conexant Common Stock may be issued pursuant to
this clause (z).
(f) No Dispositions. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of Conexant or (ii) as may be
required by or in conformance with Applicable Laws in order to permit or
facilitate the consummation of the transactions contemplated hereby, Conexant
shall not, and shall not permit any of its Subsidiaries to, sell, lease, license
or otherwise encumber or subject to any Lien or otherwise dispose of, or agree
to sell, lease, license or otherwise encumber or subject to any Lien or
otherwise dispose of, any of its material assets (including capital stock of
Subsidiaries of Conexant but excluding inventory in the ordinary course of
business consistent with past practice).
(g) Investments; Indebtedness. Conexant shall not, and shall not permit
any of its Subsidiaries to (i) make any loans, advances or capital contributions
to, or investments in, any other Person, other than (A) loans or investments by
Conexant or a Subsidiary of Conexant to or in Conexant or a Subsidiary of
Conexant, (B) pursuant to
42
any contract or other legal obligation of Conexant or any of its Subsidiaries as
in effect at the date of this Agreement, (C) employee loans or advances for
travel, business, relocation or other reimbursable expenses made in the ordinary
course of business consistent with past practice, (D) in the ordinary course of
business consistent with past practice which are not, individually or in the
aggregate, material to Conexant and its Subsidiaries taken as a whole (provided
that none of the transactions referred to in this clause (D) presents a material
risk of making it more difficult to obtain any approval or authorization
required in connection with the Merger under Applicable Laws) or (E)
investments, loans or advances not in excess of $10 million in the aggregate or
(ii) create, incur, assume or suffer to exist any indebtedness, issuances of
debt securities, guarantees, loans or advances not in existence as of the date
of this Agreement except in the ordinary course of business consistent with past
practice which are not, individually or in the aggregate, material to Conexant
and its Subsidiaries taken as a whole (other than any such indebtedness,
issuances of debt securities, guarantees, loans or advances that refinance or
replace any such indebtedness, debt securities, guarantees, loans or advances in
existence on the date of this Agreement, provided that such refinancing or
replacement does not impair or delay the consummation of the Merger).
(h) Tax-Free Qualification. Conexant shall use its reasonable best efforts
not to, and shall use its reasonable best efforts not to permit any of its
Subsidiaries to, take any action (including any action otherwise permitted by
this Section 4.2) that would prevent or impede the Merger from qualifying as a
"reorganization" under Section 368(a) of the Code.
(i) Compensation. Except (x) as set forth in Section 4.2(c), (y) as
required by Applicable Laws or by the terms of any collective bargaining
agreement or other agreement currently in effect between Conexant or any of its
Subsidiaries and any executive officer or employee thereof or (z) in the
ordinary course of business consistent with past practice, Conexant shall not
increase the amount of compensation or employee benefits of any director,
officer or employee of Conexant or any of its Subsidiaries, pay any pension,
retirement, savings or profit-sharing allowance to any employee that is not
required by any existing plan or agreement, enter into any Contract with any of
its employees regarding his or her employment, compensation or benefits,
increase or commit to increase any employee benefits, issue any additional
Conexant Stock Options, adopt or amend or make any commitment to adopt or amend
any Conexant Plan or make any contribution, other than regularly scheduled
contributions, to any Conexant Plan. Conexant shall not accelerate the vesting
of, or the lapsing of restrictions with respect to, any stock options or other
stock-based compensation, except as required by Applicable Laws, by the terms of
the plan or agreement under which such option or other stock-based compensation
was granted or in the ordinary course of business consistent with past practice
or in accordance with this Agreement, and any option committed to be
43
granted or granted after the date hereof shall not accelerate as a result of the
approval or consummation of any transaction contemplated by this Agreement.
(j) Accounting Methods; Income Tax Elections. Except as disclosed in
Conexant Filed SEC Reports, or as required by a Governmental Entity, Conexant
shall not, and shall not permit any of its Subsidiaries to, change its methods
of accounting in effect at September 30, 2002, except as required by changes in
GAAP as concurred in by Conexant's independent public accountants. Conexant
shall not, and shall not permit any of its Subsidiaries to, (i) change its
fiscal year or (ii) make any material Tax election or settle or compromise any
material income Tax liability, other than in the ordinary course of business
consistent with past practice.
(k) Certain Agreements and Arrangements. Conexant shall not, and shall not
permit any of its Subsidiaries to, enter into any Contracts that limit or
otherwise restrict Conexant or any of its Subsidiaries or any of their
respective affiliates or any successor thereto, or that would, after the
Effective Time, limit or restrict Conexant or any of its Subsidiaries or any of
their respective affiliates or any successor thereto, from engaging or competing
in any line of business or in any geographic area which agreements or
arrangements, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect on Conexant and its Subsidiaries, after giving
effect to the Merger.
(l) Conexant Rights Agreement. Other than in connection with the Merger,
Conexant shall not amend, modify or waive any provision of the Conexant Rights
Agreement and shall not take any action to redeem the Conexant Rights or render
the Conexant Rights inapplicable to any transaction.
(m) Litigation. Conexant shall not, and shall not permit any of its
Subsidiaries to, settle or compromise any threatened or pending Actions for an
amount in excess of $5 million in the aggregate or enter into any consent
decree, injunction or similar restraint or form of equitable relief in
settlement of any threatened or pending Actions, except for such consent
decrees, injunctions, restraints or equitable relief which would not,
individually or in the aggregate, have a Material Adverse Effect on Conexant and
its Subsidiaries.
(n) No Concentric Sub Business Activities. Concentric Sub will not conduct
any activities other than in connection with the organization of Concentric Sub,
the negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby.
(o) No Related Actions. Conexant will not, and will not permit any of its
Subsidiaries to, agree or commit to do any of the foregoing actions.
44
SECTION 4.3 Governmental Filings. Each of Conexant and Concentric
Sub, on the one hand, and GlobespanVirata, on the other hand, shall (a) confer
on a regular and frequent basis with the other and (b) report to the other (to
the extent permitted by Applicable Laws or any applicable confidentiality
agreement) on operational matters. Each party shall file all reports required to
be filed by each of them with the SEC (and all other Governmental Entities)
between the date of this Agreement and the Effective Time and shall (to the
extent permitted by Applicable Laws or any applicable confidentiality agreement)
deliver to the other parties copies of all such reports, announcements and
publications promptly after the same are filed.
SECTION 4.4 Control of Other Party's Business. Nothing contained in
this Agreement shall give Conexant, directly or indirectly, the right to control
or direct GlobespanVirata's operations prior to the Effective Time. Nothing
contained in this Agreement shall give GlobespanVirata, directly or indirectly,
the right to control or direct the operations of Conexant prior to the Effective
Time. Prior to the Effective Time, each of Conexant and GlobespanVirata shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision over its respective operations.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Preparation of Proxy Statement; Stockholders Meetings.
(a) As promptly as reasonably practicable following the date hereof,
Conexant and GlobespanVirata shall prepare and file with the SEC mutually
acceptable proxy materials which shall constitute the Joint Proxy
Statement/Prospectus (such proxy statement/prospectus, and any amendments or
supplements thereto, the "Joint Proxy Statement/Prospectus") and Conexant shall
prepare and file with the SEC a registration statement on Form S-4 with respect
to the issuance of Conexant Common Stock in the Merger (the "Form S-4"). The
Joint Proxy Statement/Prospectus will be included in and will constitute a part
of the Form S-4 as Conexant's prospectus. Each of Conexant and GlobespanVirata
shall use reasonable best efforts to have the Joint Proxy Statement/Prospectus
cleared by the SEC and the Form S-4 declared effective by the SEC as promptly as
reasonably practicable after filing with the SEC and to keep the Form S-4
effective as long as is necessary to consummate the Merger and the transactions
contemplated thereby. Conexant and GlobespanVirata shall, as promptly as
practicable after receipt thereof, provide the other party copies of any written
comments and advise the other party of any oral comments, with respect to the
Joint Proxy Statement/Prospectus or the Form S-4 received from the SEC. The
parties shall
45
cooperate and provide the other party with a reasonable opportunity to review
and comment on any amendment or supplement to the Joint Proxy
Statement/Prospectus and the Form S-4 prior to filing such with the SEC, and
will provide each other with a copy of all such filings made with the SEC.
Notwithstanding any other provision herein to the contrary, no amendment or
supplement (including by incorporation by reference) to the Joint Proxy
Statement/Prospectus or the Form S-4 shall be made without the approval of both
Conexant and GlobespanVirata, which approval shall not be unreasonably withheld
or delayed; provided that with respect to documents filed by a party which are
incorporated by reference in the Form S-4 or Joint Proxy Statement/Prospectus,
this right of approval shall apply only with respect to information relating to
the other party or its business, financial condition or results of operations;
and provided, further, that Conexant, in connection with a Change in the
Conexant Recommendation, and GlobespanVirata, in connection with a Change in the
GlobespanVirata Recommendation (each of a Change in the Conexant Recommendation
and a Change in the GlobespanVirata Recommendation being hereinafter sometimes
referred to as a "Change"), may amend or supplement the Joint Proxy
Statement/Prospectus or the Form S-4 (including by incorporation by reference)
pursuant to a Qualifying Amendment to effect such a Change, and in such event,
this right of approval shall apply only with respect to information relating to
the other party or its business, financial condition or results of operations,
and shall be subject to the right of each party to have its Board of Directors'
deliberations and conclusions accurately described. Conexant will use reasonable
best efforts to cause the Joint Proxy Statement/Prospectus to be mailed to
Conexant's stockholders, and GlobespanVirata will use reasonable best efforts to
cause the Joint Proxy Statement/Prospectus to be mailed to GlobespanVirata's
stockholders, in each case as promptly as practicable after the Form S-4 is
declared effective under the Securities Act. Conexant shall also take any action
(other than qualifying to do business in any jurisdiction in which it is not now
so qualified or to file a general consent to service of process) required to be
taken under any applicable state securities laws in connection with the issuance
of Conexant Common Stock in the Merger and GlobespanVirata and Conexant shall
furnish all information concerning GlobespanVirata and Conexant and the holders
of GlobespanVirata Common Stock as may be reasonably requested in connection
with any such action. Each of Conexant and GlobespanVirata will advise the
other, promptly after it receives notice thereof, of the time when the Form S-4
has become effective, the issuance of any stop order with respect to the Form
S-4, the suspension of the qualification of the Conexant Common Stock issuable
in connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Joint Proxy Statement/Prospectus or the
Form S-4. If at any time prior to the Effective Time any information relating to
Conexant or GlobespanVirata, or any of their respective affiliates, officers or
directors, is discovered by Conexant or GlobespanVirata which should be set
forth in an amendment or supplement to the Form S-4 or the Joint Proxy
Statement/Prospectus so that any of such
46
documents would not include any misstatement of a material fact or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto and,
to the extent required by Applicable Laws, an appropriate amendment or
supplement describing such information shall be promptly filed with the SEC and
disseminated to the stockholders Conexant and GlobespanVirata.
(b) GlobespanVirata shall duly take all lawful action to call, give
notice of, convene and hold a meeting of its stockholders on a date determined
in accordance with the mutual agreement of Conexant and GlobespanVirata (the
"GlobespanVirata Stockholders Meeting") for the purpose of obtaining the
Required GlobespanVirata Vote with respect to the transactions contemplated by
this Agreement and shall take all lawful action to solicit the approval and
adoption of this Agreement and the Merger by the Required GlobespanVirata Vote;
and the Board of Directors of GlobespanVirata shall recommend approval and
adoption of this Agreement and the Merger by the stockholders of GlobespanVirata
to the effect as set forth in Section 3.1(f) (the "GlobespanVirata
Recommendation"), and shall not (i) withdraw, modify or qualify (or propose to
withdraw, modify or qualify) in any manner adverse to Conexant the
GlobespanVirata Recommendation or (ii) take any action or make any statement in
connection with the GlobespanVirata Stockholders Meeting inconsistent with such
recommendation (collectively, a "Change in the GlobespanVirata Recommendation");
provided, however, that the Board of Directors of GlobespanVirata may make a
Change in the GlobespanVirata Recommendation pursuant to Section 5.8.
Notwithstanding any Change in the GlobespanVirata Recommendation, this Agreement
shall be submitted to the stockholders of GlobespanVirata at the GlobespanVirata
Stockholders Meeting for the purpose of approving and adopting this Agreement
and the Merger and nothing contained herein shall be deemed to relieve
GlobespanVirata of such obligation.
(c) Conexant shall duly take all lawful action to call, give notice
of, convene and hold a meeting of its stockholders on a date determined in
accordance with the mutual agreement of Conexant and GlobespanVirata (the
"Conexant Stockholders Meeting") for the purpose of obtaining the Required
Conexant Vote with respect to the transactions contemplated by this Agreement
and shall take all lawful action to solicit the approval of the issuance of
Conexant Common Stock in the Merger pursuant to this Agreement by the Required
Conexant Vote, and the Board of Directors of Conexant shall recommend approval
of the issuance of Conexant Common Stock in the Merger pursuant to this
Agreement by the stockholders of Conexant to the effect as set forth in Section
3.2(f) (the "Conexant Recommendation") and shall not (i) withdraw, modify or
qualify (or propose to withdraw, modify or qualify) in any manner adverse to
GlobespanVirata the Conexant Recommendation or (ii) take any action or make any
statement in connection with the Conexant Stockholders Meeting inconsistent with
such recommendation (collectively, a "Change in the Conexant Recommendation");
provided,
47
however, that the Board of Directors of Conexant may make a Change in the
Conexant Recommendation pursuant to Section 5.8. Notwithstanding any Change in
the Conexant Recommendation, the issuance of Conexant Common Stock in the Merger
pursuant to this Agreement shall be submitted to the stockholders of Conexant at
the Conexant Stockholders Meeting for the purpose of approving the issuance of
Conexant Common Stock in the Merger pursuant to this Agreement and nothing
contained herein shall be deemed to relieve Conexant of such obligation.
SECTION 5.2 Conexant Board of Directors and Management.
(a) Conexant shall take all requisite action such that, immediately
following the Effective Time, its Board of Directors shall consist of twelve
directors, seven of whom shall be designated by Conexant prior to the Effective
Time (one of whom shall be Xxxxxx X. Xxxxxx) and five of whom shall be
designated by GlobespanVirata prior to the Effective Time (one of whom shall be
Xxxxxxx Xxxxx). Of the five directors designated by GlobespanVirata, two shall
be members of Class I, one shall be a member of Class II and two shall be
members of Class III of the Conexant Board of Directors. The By-laws of Conexant
shall be amended as of the Effective Time to provide that (i) if a director
designated by Conexant resigns, dies or is removed during the period beginning
at the Effective Time and ending on the expiration of the current term of the
class of which such director is a member (such period for each such director,
the "Transition Period"), such director shall be replaced by the remaining
Conexant designees (or their successors) (the "Conexant Directors"), (ii) if a
director designated by GlobespanVirata resigns, dies or is removed during the
Transition Period such director shall be replaced by the remaining
GlobespanVirata designees (or their successors) (the "GlobespanVirata
Directors"), (iii) if the Conexant Directors or the GlobespanVirata Directors
are entitled to designate a successor for a director who resigns, dies or is
removed, the Conexant Directors or the GlobespanVirata Directors shall also be
entitled to designate a successor for such director to serve on any of the Audit
Committee, the Compensation and Management Development Committee and the
Governance and Board Composition Committee of the Board on which such director
served and (iv) for a period of two years after the Effective Time of the
Merger, the affirmative vote of at least 75% of the whole Board of Directors of
Conexant (without taking into account any vacancies) shall be required (A) to
change the number of directors comprising the whole Board of Directors of
Conexant, (B) to change the number of directors comprising each of the Audit
Committee, the Compensation and Management Development Committee and the
Governance and Board Composition Committee of the Board, (C) to remove Xxxxxx X.
Xxxxxx, Xxxxxxx Xxxxx or F. Xxxxxxx Xxxxxx from their respective positions of
Non-Executive Chairman of the Board, Chief Executive Officer and President or
(D) to amend the foregoing provisions of the Conexant By-Laws.
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(b) Conexant shall take all requisite action such that, immediately
following the Effective Time, (i) Xxxxxx X. Xxxxxx shall be appointed to serve,
at the discretion of the Board of Directors, as the Non-Executive Chairman of
the Board of Conexant, and (ii) Xxxxxxx Xxxxx shall be appointed as the Chief
Executive Officer of Conexant, F. Xxxxxxx Xxxxxx shall be appointed as the
President of Conexant, and such other individuals as Conexant and
GlobespanVirata shall otherwise agree prior to the Effective Time shall be
appointed as officers of Conexant, such officers to hold office until their
respective successors are duly elected and qualified, or their earlier death,
resignation or removal.
(c) Conexant shall take all requisite action such that, immediately
following the Effective Time, (i) the Audit Committee of the Board of Directors
of Conexant shall be comprised of two members designated prior to the Effective
Time by Conexant and two directors (one of whom shall be the chairperson)
designated prior to the Effective Time by GlobespanVirata, (ii) the Compensation
and Management Development Committee of the Board of Directors of Conexant shall
be comprised of two directors (one of whom shall be the chairperson) designated
prior to the Effective Time by Conexant and two directors designated prior to
the Effective Time by GlobespanVirata and (iii) the Governance and Board
Composition Committee of the Board of Directors of Conexant shall be comprised
of four directors (one of whom shall be the chairperson) designated prior to the
Effective Time by Conexant and four directors designated prior to the Effective
Time by GlobespanVirata. Each of the foregoing committees shall act by a
majority vote of the whole committee (without taking into account any
vacancies). Each member of the foregoing committees of the Board shall meet
applicable independence and other requirements of any Applicable Laws and the
rules of Nasdaq.
SECTION 5.3 Headquarters. Following the Effective Time, the
headquarters for Conexant shall be located in Red Bank, New Jersey.
SECTION 5.4 Employment Agreements. Prior to the Effective Time,
Conexant will offer to enter into employment agreements, to be effective as of
the Effective Time, with (i) each of the individuals listed in Exhibit A, such
employment agreements to be on substantially the terms set forth in the
respective term sheets included in the Schedules to Exhibit A and (ii) such
other individuals, and on such terms, as Conexant and GlobespanVirata shall
agree.
SECTION 5.5 Fiscal Year. It is the intention of Conexant and
GlobespanVirata that the fiscal year of Conexant will end on the Friday closest
to September 30 of each year.
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SECTION 5.6 Access to Information.
(a) Upon reasonable notice, each of Conexant and GlobespanVirata
shall (and shall cause its Subsidiaries to) afford to the officers, employees,
accountants, counsel, financial advisors and other representatives of the other
reasonable access during normal business hours, during the period prior to the
Effective Time, to all its books, records, properties, plants and personnel and,
during such period, such party shall (and shall cause its Subsidiaries to)
furnish promptly to the other party (i) a copy of each report, schedule,
registration statement and other document filed, published, announced or
received by it during such period pursuant to the requirements of Federal or
state securities laws, as applicable (other than documents which such party is
not permitted to disclose under Applicable Laws), and (ii) all other information
concerning it and its business, properties and personnel as such other party may
reasonably request; provided, however, that either party may restrict the
foregoing access to the extent that (A) any Applicable Laws or Contract requires
such party or its Subsidiaries to restrict or prohibit access to any such
properties or information or (B) the information is subject to confidentiality
obligations to a third party. The parties will hold any such information
obtained pursuant to this Section 5.6(a) in confidence in accordance with, and
will otherwise be subject to, the provisions of the non-disclosure agreement
dated October 16, 2003 between Conexant and GlobespanVirata (as it may be
amended or supplemented, the "Confidentiality Agreement"). Any investigation by
either Conexant or GlobespanVirata shall not affect the representations and
warranties of the other or the conditions to the respective obligations of the
parties to consummate the Merger.
(b) Notwithstanding anything to the contrary set forth herein or in
any other agreement between the parties, the obligations of confidentiality
contained herein, as they relate to the transactions contemplated by this
Agreement or in any other agreement between the parties, shall not apply to the
federal tax structure or federal tax treatment of such transactions, and each
party (and any employee, representative or agent of any party) may disclose to
any and all Persons, without limitation of any kind, the federal tax structure
and federal tax treatment of each of such transactions and all materials of any
kind (including opinions and analyses) that are provided to the parties relating
to such federal tax treatment or federal tax structure. The preceding sentence
is intended to cause such transactions not to be treated as having been offered
under conditions of confidentiality for purposes of Treasury Reg. Section
1.6011-4(b)(3) (or any successor provision), and shall be construed in a manner
consistent with such purpose. In addition, each party acknowledges that it has
no proprietary or exclusive rights to the tax structure or tax treatment of the
transactions contemplated by this Agreement or any tax matter or tax idea
related to such transactions.
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SECTION 5.7 Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement, each
party will use its reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, and to assist and cooperate with the
other parties in doing or causing to be done, all things necessary, proper or
advisable under this Agreement and Applicable Laws to consummate the Merger and
the other transactions contemplated by this Agreement as soon as practicable
after the date hereof, including (i) preparing and filing as promptly as
practicable all documentation to effect all necessary applications, notices,
petitions and filings and to obtain as promptly as practicable all
GlobespanVirata Necessary Consents and Conexant Necessary Consents and all other
consents, waivers, licenses, orders, registrations, approvals, permits, rulings,
authorizations and clearances necessary or advisable to be obtained from any
third party and/or any Governmental Entity in order to consummate the Merger or
any of the other transactions contemplated by this Agreement (collectively, the
"Required Approvals") and (ii) taking all reasonable steps as may be necessary
to obtain all Required Approvals. In furtherance and not in limitation of the
foregoing, each party hereto agrees to make (i) an appropriate filing of a
Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby as promptly as practicable after the date
hereof, (ii) appropriate filings, if any are required, with any foreign
regulatory authorities in accordance with applicable competition, merger
control, antitrust, investment or similar Applicable Laws, and (iii) all other
necessary filings with other Governmental Entities relating to the Merger, and,
in each case, to supply as promptly as practicable any additional information
and documentary material that may be requested pursuant to such Applicable Laws
or by such authorities and to use reasonable best efforts to cause the
expiration or termination of the applicable waiting periods under the HSR Act
and the receipt of the Required Approvals under such other Applicable Laws or
from such authorities as soon as practicable and to avoid or eliminate each and
every impediment under any antitrust, competition, or trade regulation law that
may be asserted by any Governmental Entity or any private party with respect to
this Agreement so as to make effective as promptly as practicable the
transactions contemplated hereby and avoid any administrative, judicial or other
action or proceeding, including any action or proceeding by a private party,
which would otherwise have the effect of preventing or delaying the Closing
beyond the Termination Date. The reasonable best efforts involved in the
preceding sentence shall include (i) defending through litigation on the merits,
including appeals, any claim asserted in any such action or proceeding, (ii)
proposing, negotiating, committing to and effecting, by consent decree, hold
separate order or otherwise, the sale, divestiture or disposition of such assets
or businesses of Conexant (including its Subsidiaries) or GlobespanVirata
(including its Subsidiaries), including entering into customary ancillary
agreements on commercially reasonable terms relating to any such sale,
divestiture or disposition of such assets or businesses, (iii) agreeing to any
limitation on the conduct of
51
Conexant (including its Subsidiaries) or GlobespanVirata (including its
Subsidiaries), or (iv) agreeing to take any other action as may be necessary or
required by a Governmental Entity or otherwise in order (x) to obtain all
necessary consents, approvals and authorizations as soon as reasonably possible,
(y) to avoid the entry of, or to effect the dissolution of, any injunction,
temporary restraining order or other order in any suit or proceeding, or (z) to
effect the expiration or termination of any waiting period, which would
otherwise have the effect of preventing or delaying the Closing beyond the
Termination Date. At the request of one party, the other party shall agree to
take any action in the two preceding sentences, provided that any such action
may be conditioned upon the consummation of the transactions contemplated
hereby.
(b) Each of Conexant and GlobespanVirata shall, in connection with
the efforts referenced in Section 5.7(a) to obtain all Required Approvals, use
its reasonable best efforts to (i) cooperate in all respects with each other in
connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
party, (ii) promptly inform the other party of any communication received by
such party from, or given by such party to, the Antitrust Division of the
Department of Justice (the "DOJ"), the Federal Trade Commission (the "FTC") or
any other Governmental Entity and of any material communication received or
given in connection with any proceeding by a private party, in each case
regarding any of the transactions contemplated hereby, and (iii) permit the
other party to review any communication given by it to, and consult with each
other in advance of any meeting or conference with, the DOJ, the FTC or any such
other Governmental Entity or, in connection with any proceeding by a private
party, with any other Person, and to the extent appropriate or permitted by the
DOJ, the FTC or such other applicable Governmental Entity or other Person, give
the other party the opportunity to attend and participate in such meetings and
conferences.
(c) In furtherance and not in limitation of the covenants of the
parties contained in Section 5.7(a) and Section 5.7(b), if any administrative,
judicial or other action or proceeding, including any proceeding by a private
party, is instituted (or threatened to be instituted) challenging any
transaction contemplated by this Agreement as violative of any Applicable Laws,
or if any statute, rule, regulation, executive order, decree, injunction or
administrative order is enacted, entered, promulgated or enforced by a
Governmental Entity which would make the Merger or the other transactions
contemplated hereby illegal or would otherwise prohibit or materially impair or
delay the consummation of the Merger or the other transactions contemplated
hereby, each of Conexant and GlobespanVirata shall cooperate in all respects
with each other to avoid, contest and resist any such action or proceeding and
to have vacated, lifted, reversed or overturned any decree, judgment, injunction
or other order, whether temporary, preliminary or permanent, that is in effect
and that prohibits, prevents or restricts consummation of the Merger or the
other transactions contemplated by this Agreement
52
and to have such statute, rule, regulation, executive order, decree, injunction
or administrative order repealed, rescinded or made inapplicable so as to permit
consummation of the transactions contemplated by this Agreement. Notwithstanding
the foregoing or any other provision of this Agreement, nothing in this Section
5.7 shall limit a party's right to terminate this Agreement pursuant to Section
7.1(b) or Section 7.1(c) so long as such party has complied with its obligations
under this Section 5.7.
(d) Each of Conexant and GlobespanVirata and shall cooperate with
each other in obtaining opinions of Xxxxxxxxxx & Xxxxx LLP, counsel to Conexant,
and Ropes & Xxxx LLP, counsel to GlobespanVirata, to satisfy the conditions set
forth in Section 6.3(c) and Section 6.2(c). In connection therewith, each of
Conexant and GlobespanVirata shall deliver to such counsel customary
representation letters in form and substance reasonably satisfactory to such
counsel.
SECTION 5.8 Acquisition Proposals.
(a) Without limiting any party's other obligations under this
Agreement (including under Article IV hereof), each of GlobespanVirata and
Conexant agrees that neither it nor any of its Subsidiaries nor any of the
officers and directors of it or its Subsidiaries shall, and that it shall use
its reasonable best efforts to cause its and its Subsidiaries' employees, agents
and representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly, (i)
initiate, solicit, encourage or knowingly facilitate (including by way of
furnishing information) any inquiries or the making of any proposal or offer
with respect to, or a transaction to effect, any Acquisition Proposal, (ii) have
any discussion with or provide any confidential information or data to any
Person relating to an Acquisition Proposal, or engage in any negotiations
concerning an Acquisition Proposal, or knowingly facilitate any effort or
attempt to make or implement an Acquisition Proposal, (iii) approve or
recommend, or propose publicly to approve or recommend, any Acquisition Proposal
or (iv) approve or recommend, or propose to approve or recommend, or execute or
enter into, any letter of intent, agreement in principle, merger agreement,
acquisition agreement, option agreement or other similar agreement or propose
publicly or agree to do any of the foregoing related to any Acquisition
Proposal.
(b) For purposes of this Agreement, "Acquisition Proposal" means (i)
with respect to GlobespanVirata, any inquiry, proposal or offer from any Person
with respect to (A) any purchase or sale of a business or asset of
GlobespanVirata and its Subsidiaries that constitutes 30% or more of the net
revenues, net income or assets of GlobespanVirata and its Subsidiaries, taken as
a whole, (B) a merger, reorganization, share exchange, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving GlobespanVirata or any of its Significant Subsidiaries (as defined in
Rule 1-02 of Regulation S-X of the SEC), or (C) any purchase
53
or sale of, or tender or exchange offer for, the equity securities of
GlobespanVirata that, if consummated, would result in any Person (or the
stockholders of such Person) beneficially owning securities representing 30% or
more of the total voting power of GlobespanVirata (or of the surviving parent
entity in such transaction) or any of its Significant Subsidiaries, including
any single or multi-step transaction or series of related transactions (other
than a proposal or offer made by Conexant or an affiliate thereof), and (ii)
with respect to Conexant, any inquiry, proposal or offer from any Person with
respect to (A) any purchase or sale of a business or asset of Conexant and its
Subsidiaries that constitutes 30% or more of the net revenues, net income or
assets of Conexant and its Subsidiaries, taken as a whole, (B) a merger,
reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
Conexant or any of its Significant Subsidiaries or (C) any purchase or sale of,
or tender or exchange offer for, the equity securities of Conexant that, if
consummated, would result in any Person (or the stockholders of such Person)
beneficially owning securities representing 30% or more of the total voting
power of Conexant (or of the surviving parent entity in such transaction) or any
of its Significant Subsidiaries, including any single or multi-step transaction
or series of related transactions (other than a proposal or offer made by
GlobespanVirata or an affiliate thereof).
(c) Notwithstanding anything in this Agreement to the contrary, each
of GlobespanVirata and Conexant or its respective Board of Directors shall be
permitted to (i) to the extent applicable, comply with Rule 14d-9 and Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal, (ii)
effect a Change in the GlobespanVirata Recommendation or a Change in the
Conexant Recommendation, as the case may be, or (iii) engage in any discussions
or negotiations with, or provide any information to, any Person in response to
an unsolicited bona fide written Acquisition Proposal by any such Person in
order to be informed with respect thereto in order to make any determination
permitted in clause (ii), if and only to the extent that, in any such case
referred to in clause (ii) or (iii), (A) its Stockholders Meeting shall not have
occurred, (B) (x) in the case of clause (ii) above, it has received an
unsolicited bona fide written Acquisition Proposal (for purposes of this clause
(B), references to 30% in the definition of "Acquisition Proposal" shall be
deemed to be references to 50%) from a third party and its Board of Directors
concludes in good faith that such Acquisition Proposal constitutes a Superior
Proposal and (y) in the case of clause (iii) above, its Board of Directors
concludes in good faith that there is a reasonable likelihood that such
Acquisition Proposal would constitute a Superior Proposal, (C) its Board of
Directors, after consultation with outside counsel, determines in good faith
that it is required to take such action in the exercise of its fiduciary duties
to stockholders under Applicable Laws, (D) prior to providing any information or
data to any Person in connection with an Acquisition Proposal by any such
Person, its Board of Directors receives from such
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Person an executed confidentiality agreement having provisions that are at least
as restrictive to such Person as the comparable provisions contained in the
Confidentiality Agreement and (E) prior to providing any information or data to
any Person or entering into discussions or negotiations with any Person, it
notifies the other parties promptly of such inquiries, proposals or offers
received by, any such information requested from, or any such discussions or
negotiations sought to be initiated or continued with, it or any of its
representatives indicating, in connection with such notice, the name of such
Person and the material terms and conditions of any inquiries, proposals or
offers, and furnishes to the other parties a copy of any such written inquiry,
proposal or offer. Each of GlobespanVirata and Conexant agrees that it will
promptly keep each other informed of the status and terms of any such inquiries,
proposals or offers and the status and terms of any such discussions or
negotiations. Each of GlobespanVirata and Conexant agrees that it will, and will
cause its officers, directors and representatives to, immediately cease and
cause to be terminated any activities, discussions or negotiations existing as
of the date of this Agreement with any Persons conducted heretofore with respect
to any Acquisition Proposal, and request the return or destruction of all
non-public information furnished in connection therewith. Each of
GlobespanVirata and Conexant agrees that it will use reasonable best efforts to
promptly inform its directors, officers, key employees, agents and
representatives of the obligations undertaken in this Section 5.8. Nothing in
this Section 5.8 shall (x) permit GlobespanVirata or Conexant to terminate this
Agreement (except as specifically provided in Article VII) or (y) affect any
other obligation of GlobespanVirata or Conexant under this Agreement. Neither
GlobespanVirata nor Conexant shall submit to the vote of its stockholders any
Acquisition Proposal other than the Merger.
(d) For purposes of this Agreement, "Superior Proposal" means with
respect to GlobespanVirata or Conexant, as the case may be, a bona fide written
proposal made by a Person other than either such party which is (i) for a
merger, reorganization, consolidation, share exchange, business combination,
recapitalization or similar transaction involving such party as a result of
which the other Person thereto or its stockholders will own 50% or more of the
combined voting power of the entity surviving or resulting from such transaction
(or the ultimate parent entity thereof), and (ii) is not subject to any
financing contingency or due diligence condition and is otherwise on terms which
the Board of Directors of such party in good faith concludes (following receipt
of the advice of its financial advisors and outside counsel), taking into
account, among other things, all legal, financial, regulatory and other aspects
of the proposal and the Person making the proposal, (x) would, if consummated,
result in a transaction that is more favorable to its stockholders (in their
capacities as stockholders), from a financial point of view, than the
transactions contemplated by this Agreement and (y) is reasonably capable of
being completed.
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SECTION 5.9 Employee Benefits Matters.
(a) Continuation and Comparability of Benefits. From and after the
Effective Time, the Conexant Plans and the GlobespanVirata Plans in effect at
the Effective Time shall remain in effect with respect to employees and former
employees of Conexant and its Subsidiaries and employees and former employees of
GlobespanVirata and its Subsidiaries covered by such plans at the Effective Time
(whether or not such covered employees have then satisfied waiting periods or
other preconditions to participation under such plans) (collectively, the
"Continuing Employees"), until such time as Conexant shall determine, subject to
Applicable Laws and the terms of such plans. Prior to the Closing Date, Conexant
and GlobespanVirata shall cooperate in reviewing, evaluating and analyzing the
Conexant Plans and the GlobespanVirata Plans with a view towards developing
appropriate new benefit plans for Continuing Employees. It is the intention of
Conexant and GlobespanVirata, to the extent permitted by Applicable Laws, to
develop new benefit plans, as soon as reasonably practicable after the Effective
Time, which, among other things, (i) treat similarly situated employees on a
substantially equivalent basis, taking into account all relevant factors and
(ii) do not discriminate between Continuing Employees who were covered by
Conexant Plans, on the one hand, and those covered by GlobespanVirata Plans, on
the other, at the Effective Time. Nothing in this Section 5.9 shall be
interpreted as preventing Conexant or the Surviving Corporation from amending,
modifying or terminating any Conexant Plan or GlobespanVirata Plan or other
contract, arrangement, commitment or understanding, in accordance with its terms
and Applicable Laws.
(b) Pre-Existing Limitations; Deductibles; Service Credit. With
respect to any employee benefit plans in which any Continuing Employees who were
employees of Conexant or GlobespanVirata (or their Subsidiaries) prior to the
Effective Time first become eligible to participate on or after the Effective
Time, and in which the Continuing Employees did not participate prior to the
Effective Time (the "Post-Closing Plans"), Conexant shall: (i) waive all
pre-existing conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Continuing Employees
and their eligible dependents under any Post-Closing Plans in which such
employees may be eligible to participate after the Effective Time, except to the
extent such pre-existing conditions, exclusions or waiting periods under the
analogous pre-Effective Time employee benefit plan had not been satisfied or
completed as of the Effective Time; (ii) provide each Continuing Employee and
his or her eligible dependents with credit for any co-payments and deductibles
paid prior to the Effective Time under the analogous pre-Effective Time employee
benefit plan in satisfying any applicable deductible or out-of-pocket
requirements under any Post-Closing Plans in which such employees may be
eligible to participate after the Effective Time; and (iii) recognize all
service of the Continuing Employees with Conexant and GlobespanVirata, and their
respective affiliates, for all purposes (including, without limitation, purposes
of eligibility
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to participate, vesting credit, entitlement to benefits, and, except with
respect to defined benefit pension plans, benefit accrual) in any Post-Closing
Plan in which such employees may be eligible to participate after the Effective
Time, to the extent such service is taken into account under the applicable New
Conexant Plan; provided that the foregoing shall not apply to the extent it
would result in duplication of benefits.
(c) ESPP. Prior to the Closing Date, Conexant and GlobespanVirata
will cooperate in developing a mutually agreeable plan for transitioning the
Continuing Employees from participation in the GlobespanVirata ESPP to
participation in the Conexant ESPP with a view to preserving, to the extent
practicable, certain mutually agreed benefits of Continuing Employees under the
GlobespanVirata ESPP and including Continuing Employees in the Conexant ESPP as
soon as practicable after termination of the GlobespanVirata ESPP.
SECTION 5.10 Fees and Expenses. Subject to Section 7.2(d), whether
or not the Merger is consummated, all Expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such Expenses, except Expenses incurred in connection with the filing,
printing and mailing of the Form S-4 and the Joint Proxy Statement/Prospectus,
which shall be shared equally by GlobespanVirata and Conexant. As used in this
Agreement, "Expenses" means all out-of-pocket expenses (including all fees and
expenses of counsel, accountants, investment bankers, experts and consultants to
a party hereto and its affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement and the transactions contemplated
hereby, including the preparation, filing, printing and mailing of the Form S-4
and the Joint Proxy Statement/Prospectus and the solicitation of stockholder
approvals and all other matters related to the transactions contemplated hereby.
SECTION 5.11 Directors' and Officers' Indemnification and Insurance.
Conexant shall (i) indemnify and hold harmless, and provide advancement of
expenses to, all past and present directors, officers and employees of
GlobespanVirata and its Subsidiaries (in all of their capacities as such), to
the same extent such persons are indemnified or have the right to advancement of
expenses as of the date of this Agreement by GlobespanVirata pursuant to
GlobespanVirata's certificate of incorporation, by-laws and indemnification
agreements, if any, in existence on the date hereof with any such directors,
officers and employees of GlobespanVirata and its Subsidiaries for acts or
omissions occurring at or prior to the Effective Time (including for acts or
omissions occurring in connection with the approval of this Agreement and the
consummation of the transactions contemplated hereby) and (ii) cause to be
maintained for a period of six years after the Effective Time the current
policies of directors' and officers' liability insurance and fiduciary liability
insurance maintained by
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GlobespanVirata (provided that Conexant may substitute therefor policies of at
least the same coverage and amounts containing terms and conditions which are,
in the aggregate, no less advantageous to the insured) with respect to claims
arising from facts or events that occurred on or before the Effective Time;
provided, however, that in no event shall Conexant be required to expend in any
one year an amount in excess of 200% of the annual premiums currently paid by
GlobespanVirata for such insurance; and, provided, further, that if the annual
premiums for such insurance coverage exceed such amount, Conexant shall be
obligated to obtain a policy with the greatest coverage available for a cost not
exceeding such amount.
SECTION 5.12 Public Announcements. GlobespanVirata and Conexant each
shall use reasonable best efforts to develop a joint communications plan and
each party shall use reasonable best efforts (i) to ensure that all press
releases and other public statements with respect to the transactions
contemplated hereby shall be consistent with such joint communications plan, and
(ii) unless otherwise required by Applicable Laws or by obligations pursuant to
any listing agreement with or rules of any securities exchange, to consult with
each other before issuing any press release or, to the extent practicable,
otherwise making any public statement with respect to this Agreement or the
transactions contemplated hereby.
SECTION 5.13 Accounting Matters.
(a) GlobespanVirata shall use reasonable best efforts to cause to be
delivered to Conexant two letters from GlobespanVirata's independent public
accountants, one dated approximately the date on which the Form S-4 shall become
effective and one dated the Closing Date, addressed to GlobespanVirata and
Conexant, in form and substance reasonably satisfactory to Conexant and
reasonably customary in scope and substance for comfort letters delivered by
independent public accountants in connection with registration statements
similar to the Form S-4.
(b) Conexant shall use reasonable best efforts to cause to be
delivered to GlobespanVirata two letters from Conexant's independent public
accountants, one dated approximately the date on which the Form S-4 shall become
effective and one dated the Closing Date, addressed to Conexant and
GlobespanVirata, in form and substance reasonably satisfactory to
GlobespanVirata and reasonably customary in scope and substance for comfort
letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
SECTION 5.14 Listing of Shares of Conexant Common Stock. Conexant
shall use reasonable best efforts to cause the shares of Conexant Common Stock
to be issued in the Merger and the shares of Conexant Common Stock to be
reserved for issuance upon exercise of the GlobespanVirata Stock Options that
are
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converted into options to acquire Conexant Common Stock to be approved for
listing on the Nasdaq National Market System, subject to official notice of
issuance, prior to the Closing Date.
SECTION 5.15 Affiliates. Not less than 45 days prior to the
Effective Time, GlobespanVirata shall deliver to Conexant a letter identifying
all persons who, in the judgment of GlobespanVirata, may be deemed at the time
this Agreement is submitted for approval by the stockholders of GlobespanVirata,
"affiliates" of GlobespanVirata for purposes of Rule 145 under the Securities
Act and applicable SEC rules and regulations, and such list shall be updated as
necessary to reflect changes from the date hereof. GlobespanVirata shall use
reasonable best efforts to cause each person identified on such list to deliver
to Conexant not less than 20 days prior to the Effective Time, a written
agreement substantially in the form attached as Exhibit B hereto (an "Affiliate
Agreement").
SECTION 5.16 Section 16 Matters. Prior to the Effective Time,
Conexant and GlobespanVirata shall take all such steps as may be required to
cause any dispositions of GlobespanVirata Common Stock (including derivative
securities with respect to GlobespanVirata Common Stock) or acquisitions of
Conexant Common Stock (including derivative securities with respect to Conexant
Common Stock) resulting from the transactions contemplated by this Agreement by
each individual who is subject to the reporting requirements of Section 16(a) of
the Exchange Act with respect to GlobespanVirata or Conexant to be exempt under
Rule 16b-3 promulgated under the Exchange Act.
SECTION 5.17 Takeover Statutes. If any "fair price", "moratorium",
"control share acquisition" or other form of antitakeover statute or regulation
shall become applicable to the transactions contemplated hereby, each of
Conexant and GlobespanVirata and their respective Boards of Directors shall use
all reasonable efforts to grant such approvals and take such actions as are
reasonably necessary so that the transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of such statute or regulation
on the transactions contemplated hereby.
SECTION 5.18 Advice of Changes. Each of Conexant and GlobespanVirata
shall as promptly as reasonably practicable after becoming aware thereof advise
the other of (a) any representation or warranty made by it contained in this
Agreement that is qualified as to materiality becoming untrue or inaccurate in
any respect or any such representation or warranty that is not so qualified
becoming untrue or inaccurate in any material respect, (b) the failure by it to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement or (c) any
change or event (i) having, or which, insofar as can
59
reasonably be foreseen, would have, in the case of GlobespanVirata, a Material
Adverse Effect on GlobespanVirata and its Subsidiaries, and, in the case of
Conexant, a Material Adverse Effect on Conexant and its Subsidiaries, or (ii)
which has resulted, or which, insofar as can reasonably be foreseen, would
result, in any of the conditions set forth in Article VI not being satisfied;
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
SECTION 5.19 Shareholders Agreements. Concurrently with the
execution and delivery of this Agreement, (a) each of the directors and
executive officers of GlobespanVirata shall execute and deliver a Shareholders
Agreement, substantially in the form attached as Exhibit C hereto, and (b) each
of the directors and executive officers of Conexant shall execute and deliver a
Shareholders Agreement, substantially in the form attached as Exhibit D hereto.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger are
subject to the satisfaction or waiver prior to the Effective Time of the
following conditions:
(a) Stockholder Approval. (i) Conexant shall have obtained the
Required Conexant Vote in connection with the approval of the issuance of
Conexant Common Stock in the Merger pursuant to this Agreement by the
stockholders of Conexant and (ii) GlobespanVirata shall have obtained the
Required GlobespanVirata Vote in connection with the approval and adoption of
this Agreement and the Merger by the stockholders of GlobespanVirata.
(b) No Injunctions or Restraints, Illegality. No Applicable Laws
shall have been adopted, promulgated or enforced by any Governmental Entity, and
no temporary restraining order, preliminary or permanent injunction or other
order issued by a court or other Governmental Entity of competent jurisdiction
(an "Injunction") shall be in effect, having the effect of making the Merger
illegal or otherwise prohibiting consummation of the Merger.
(c) No Pending Governmental Actions. No proceeding initiated by any
Governmental Entity seeking, and which is reasonably likely to result in the
granting of, an Injunction shall be pending.
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(d) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.
(e) Governmental and Regulatory Approvals. Other than the filing
provided for under Section 1.3 and filings pursuant to the HSR Act (which are
addressed in Section 6.1(d)), all consents, approvals, orders or authorizations
of, actions of, filings and registrations with and notices to any Governmental
Entity (i) set forth in Section 6.1(e) of the GlobespanVirata Disclosure
Schedule or Section 6.1(e) of the Conexant Disclosure Schedule or (ii) required
of GlobespanVirata, Conexant or any of their Subsidiaries to consummate the
Merger and the other transactions contemplated hereby, the failure of which to
be obtained or taken would reasonably be expected to have a Material Adverse
Effect on Conexant and its Subsidiaries, taken together after giving effect to
the Merger, shall have been obtained and shall be in full force and effect.
(f) Nasdaq Listing. The shares of Conexant Common Stock to be issued
in the Merger and to be reserved for issuance in connection with the Merger
shall have been approved for listing on the Nasdaq National Market System,
subject to official notice of issuance.
(g) Effectiveness of the Form S-4. The Form S-4 shall have been
declared effective by the SEC under the Securities Act and no stop order
suspending the effectiveness of the Form S-4 shall then be in effect and no
proceedings for that purpose shall be pending before or threatened by the SEC.
SECTION 6.2 Additional Conditions to Obligations of GlobespanVirata.
The obligation of GlobespanVirata to effect the Merger is subject to the
satisfaction or waiver by GlobespanVirata prior to the Effective Time of the
following additional conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Conexant and Concentric Sub set forth in this Agreement,
disregarding all qualifications and exceptions contained therein relating to
Knowledge, materiality or Material Adverse Effect, shall be true and correct as
of the date of this Agreement and as of the Closing Date as though made on and
as of the Closing Date (except to the extent that such representations and
warranties speak as of another date), except where the failure of such
representations and warranties to be true and correct would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on
Conexant and its Subsidiaries; and GlobespanVirata shall have received a
certificate of Conexant executed by an executive officer of Conexant to such
effect.
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(b) Performance of Obligations of Conexant and Concentric Sub. Each
of Conexant and Concentric Sub shall have performed or complied with all
agreements and covenants required to be performed by it under this Agreement at
or prior to the Closing Date that are qualified as to materiality or Material
Adverse Effect and shall have performed or complied in all material respects
with all other agreements and covenants required to be performed by it under
this Agreement at or prior to the Closing Date that are not so qualified, and
GlobespanVirata shall have received a certificate of Conexant executed by an
executive officer of Conexant to such effect.
(c) Tax Opinion. GlobespanVirata shall have received an opinion from
Ropes & Xxxx LLP, dated the Closing Date, to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, the Merger
will constitute a reorganization under Section 368(a) of the Code.
(d) Conexant Rights Agreement. (i) No Distribution Date (as defined
in the Conexant Rights Agreement) shall have occurred pursuant to the Conexant
Rights Agreement unless all Conexant Rights have thereafter been redeemed and
(ii) no Shares Acquisition Date (as defined in the Conexant Rights Agreement)
shall have occurred pursuant to the Conexant Rights Agreement.
SECTION 6.3 Additional Conditions to Obligations of Conexant. The
obligation of Conexant to effect the Merger is subject to the satisfaction or
waiver by Conexant prior to the Effective Time of the following additional
conditions:
(a) Representations and Warranties. Each of the representations and
warranties of GlobespanVirata set forth in this Agreement, disregarding all
qualifications and exceptions contained therein relating to Knowledge,
materiality or Material Adverse Effect, shall be true and correct as of the date
of this Agreement and as of the Closing Date as though made on and as of the
Closing Date (except to the extent that such representations and warranties
speak as of another date), except where the failure of such representations and
warranties to be true and correct would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on GlobespanVirata and
its Subsidiaries; and Conexant shall have received a certificate of
GlobespanVirata executed by an executive officer of GlobespanVirata to such
effect.
(b) Performance of Obligations of GlobespanVirata. GlobespanVirata
shall have performed or complied with all agreements and covenants required to
be performed by it under this Agreement at or prior to the Closing Date that are
qualified as to materiality or Material Adverse Effect and shall have performed
or complied in all material respects with all other agreements and covenants
required to be performed by it under this Agreement at or prior to the Closing
Date that are not so qualified, and
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Conexant shall have received a certificate of GlobespanVirata executed by an
executive officer of GlobespanVirata to such effect.
(c) Tax Opinion. Conexant shall have received an opinion from
Xxxxxxxxxx & Xxxxx LLP, dated the Closing Date, to the effect that, on the basis
of facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, the Merger
will constitute a reorganization under Section 368(a) of the Code.
(d) GlobespanVirata Rights Agreement. (i) No Distribution Date (as
defined in the GlobespanVirata Rights Agreement) shall have occurred pursuant to
the GlobespanVirata Rights Agreement unless all GlobespanVirata Rights have
thereafter been redeemed and (ii) no 15% Ownership Date (as defined in the
GlobespanVirata Rights Agreement) shall have occurred pursuant to the
GlobespanVirata Rights Agreement.
ARTICLE VII
TERMINATION AND AMENDMENT
SECTION 7.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, by action taken or authorized by the Board of
Directors of the terminating party or parties, and except as provided below,
whether before or after approval of the matters presented in connection with the
Merger by the stockholders of Conexant or GlobespanVirata:
(a) by mutual written consent of Conexant and GlobespanVirata;
(b) by either Conexant or GlobespanVirata if the Effective Time
shall not have occurred on or before December 31, 2004 (the "Termination Date");
provided, however, that the right to terminate this Agreement under this Section
7.1(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement (including such party's obligations set forth in
Section 5.7) has been the cause of, or resulted in, the failure of the Effective
Time to occur on or before the Termination Date;
(c) by either Conexant or GlobespanVirata if any Governmental Entity
(i) shall have issued an order, decree or ruling or taken any other action
(which such party shall have used its reasonable best efforts to resist, resolve
or lift, as applicable, in accordance with Section 5.7) permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement, and such order, decree, ruling or other action shall have become
final and nonappealable or (ii) shall have failed to issue an
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order, decree or ruling, or to take any other action, necessary to fulfill any
conditions set forth in subsections 6.1(d) and (e), and the failure to issue
such order, decree or ruling or take such action shall have become final and
nonappealable; provided, however, that the right to terminate this Agreement
under this Section 7.1(c) shall not be available to any party whose failure to
comply with Section 5.7 has been the cause of, or resulted in, such action or
inaction;
(d) by either Conexant or GlobespanVirata if (i) the approval by the
stockholders of Conexant required for the issuance of Conexant Common Stock in
the Merger shall not have been obtained by reason of the failure to obtain the
Required Conexant Vote or (ii) the approval by the stockholders of
GlobespanVirata required for the consummation of the Merger shall not have been
obtained by reason of the failure to obtain the Required GlobespanVirata Vote,
in each case upon the taking of such vote at a duly held meeting of stockholders
of Conexant or GlobespanVirata, as the case may be, or at any adjournment
thereof;
(e) by Conexant, if (i) GlobespanVirata's Board of Directors shall
have (A) failed to make the GlobespanVirata Recommendation, (B) withdrawn the
GlobespanVirata Recommendation or (C) modified or qualified, in any manner
adverse to Conexant, the GlobespanVirata Recommendation without also
simultaneously reaffirming the GlobespanVirata Recommendation (or resolved or
proposed to take any such action referred to in clause (A), (B) or (C)), in each
case whether or not permitted by the terms hereof, or (ii) GlobespanVirata shall
have breached its obligations under this Agreement by reason of a failure to
call the GlobespanVirata Stockholders Meeting in accordance with Section 5.1(b)
or a failure to prepare and mail to its stockholders the Joint Proxy
Statement/Prospectus in accordance with Section 5.1(a);
(f) by GlobespanVirata, if (i) Conexant's Board of Directors shall
have (A) failed to make the Conexant Recommendation, (B) withdrawn the Conexant
Recommendation or (C) modified or qualified, in any manner adverse to
GlobespanVirata, the Conexant Recommendation without also simultaneously
reaffirming the Conexant Recommendation (or resolved or proposed to take any
such action referred to in clause (A), (B) or (C)), in each case whether or not
permitted by the terms hereof or (ii) Conexant shall have breached its
obligations under this Agreement by reason of a failure to call the Conexant
Stockholders Meeting in accordance with Section 5.1(c) or a failure to prepare
and mail to its stockholders the Joint Proxy Statement/Prospectus in accordance
with Section 5.1(a);
(g) by Conexant, if GlobespanVirata shall have breached or failed to
perform any of its representations, warranties, covenants or other agreements
contained in this Agreement, such that the conditions set forth in Section
6.3(a) or Section 6.3(b) are not capable of being satisfied on or before the
Termination Date;
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(h) by GlobespanVirata, if either Conexant or Concentric Sub shall
have breached or failed to perform any of its representations, warranties,
covenants or other agreements contained in this Agreement, such that the
conditions set forth in Section 6.2(a) or Section 6.2(b) are not capable of
being satisfied on or before the Termination Date;
(i) by GlobespanVirata, if a Shares Acquisition Date (as defined in
the Conexant Rights Agreement) shall have occurred pursuant to the Conexant
Rights Agreement; or
(j) by Conexant, if a 15% Ownership Date (as defined in the
GlobespanVirata Rights Agreement) shall have occurred pursuant to the
GlobespanVirata Rights Agreement.
SECTION 7.2 Effect of Termination.
(a) In the event of termination of this Agreement by either Conexant
or GlobespanVirata as provided in Section 7.1, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of
GlobespanVirata, Conexant or Concentric Sub or their respective officers or
directors under this Agreement, except that (i) the provisions of Section
3.1(m), Section 3.2(m), the second sentence of Section 5.6(a), Section 5.10,
this Section 7.2 and Article VIII shall survive such termination, and (ii)
notwithstanding anything to the contrary contained in this Agreement, none of
GlobespanVirata, Conexant or Concentric Sub shall be relieved or released from
any liabilities or damages arising out of its willful breach of any provision of
this Agreement.
(b) If:
(i) (A) (x) either Conexant or GlobespanVirata shall terminate
this Agreement pursuant to Section 7.1(d) (provided that the basis
for such termination is the failure of GlobespanVirata's
stockholders to approve the transactions contemplated hereby) or
pursuant to Section 7.1(b) without the GlobespanVirata Stockholder
Meeting having occurred or (y) Conexant shall terminate this
Agreement pursuant to Section 7.1(g) as a result of any intentional
breach or failure to perform by GlobespanVirata (unless covered by
clause (ii) below), and
(B) at any time after the date of this Agreement and before
such termination an Acquisition Proposal with respect to
GlobespanVirata shall have been publicly announced or otherwise
communicated to the senior management, Board of Directors or
stockholders of GlobespanVirata and
65
(C) within twelve months of such termination GlobespanVirata
or any of its Subsidiaries enters into any definitive agreement with
respect to, or consummates, any Acquisition Proposal (provided that
for purposes of this Section 7.2(b)(i)(C) the references in the
definition of Acquisition Proposal to 30% shall be to 50%) or
(ii) Conexant shall terminate this Agreement
pursuant to Section 7.1(e) or Section 7.1(j);
then GlobespanVirata shall promptly, but in no event later than one
Business Day after the date of such termination (or in the case of
clause (i), if later, the date GlobespanVirata or its Subsidiary
enters into such agreement with respect to or consummates such
Acquisition Proposal), pay Conexant an amount equal to $35 million,
by wire transfer of immediately available funds.
(c) If:
(i) (A) (x) either Conexant or GlobespanVirata shall terminate
this Agreement pursuant to Section 7.1(d) (provided that the basis
for such termination is the failure of Conexant's stockholders to
approve the transactions contemplated hereby) or pursuant to Section
7.1(b) without the Conexant Stockholders Meeting having occurred or
(y) GlobespanVirata shall terminate this Agreement pursuant to
Section 7.1(h) as a result of any intentional breach or failure to
perform by Conexant or Concentric Sub (unless covered by clause (ii)
below), and
(B) at any time after the date of this Agreement and before
such termination an Acquisition Proposal with respect to Conexant
shall have been publicly announced or otherwise communicated to the
senior management, Board of Directors or stockholders of Conexant
and
(C) within twelve months of such termination Conexant or any
of its Subsidiaries enters into any definitive agreement with
respect to, or consummates, any Acquisition Proposal (provided that
for purposes of this Section 7.2(c)(i)(C) the references in the
definition of Acquisition Proposal to 30% shall be to 50%) or
(ii) GlobespanVirata shall terminate this Agreement pursuant
to Section 7.1(f) or Section 7.1(i);
66
then Conexant shall promptly, but in no event later than one
Business Day after the date of such termination (or in the case of
clause (i), if later, the date Conexant or its Subsidiary enters
into such agreement with respect to or consummates such Acquisition
Proposal), pay GlobespanVirata an amount equal to $35 million, by
wire transfer of immediately available funds.
(d) The parties acknowledge that the agreements contained in this
Section 7.2 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, neither party would enter into
this Agreement; accordingly, if either party fails promptly to pay any amount
due pursuant to this Section 7.2, and, in order to obtain such payment, the
other party commences a suit which results in a judgment against such party for
the fee set forth in this Section 7.2, such party shall pay to the other party
its costs and expenses (including attorneys' fees and expenses) in connection
with such suit, together with interest on the amount of the fee from the date
such payment is required to be made until the date such payment is actually made
at the prime rate of Citibank, N.A. in effect on the date such payment was
required to be made. The parties agree that any remedy or amount payable
pursuant to this Section 7.2 shall not preclude any other remedy or amount
payable hereunder, and shall not be an exclusive remedy, for any willful breach
of any provision of this Agreement.
SECTION 7.3 Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of Conexant and GlobespanVirata, but, after any
such approval, no amendment shall be made which by law or in accordance with the
rules of any relevant stock exchange requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
SECTION 7.4 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of those rights.
67
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 Non-Survival of Representations, Warranties and
Agreements. None of the representations, warranties, covenants and other
agreements in this Agreement or in any instrument delivered pursuant to this
Agreement, including any rights arising out of any breach of such
representations, warranties, covenants and other agreements, shall survive the
Effective Time, except for those covenants and agreements contained herein and
therein that by their terms apply or are to be performed in whole or in part
after the Effective Time.
SECTION 8.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed duly given (a) on the date of delivery
if delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (b) on the first Business Day following the date of dispatch if
delivered by a recognized next-day courier service, or (c) on the fifth Business
Day following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice:
(a) if to Conexant or Concentric Sub to
Conexant Systems, Inc.
0000 XxxXxxxxx Xxxxxxxxx, Xxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. X'Xxxxxx, Senior Vice President, General
Counsel and Secretary
with a copy to
Xxxxxxxxxx & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
68
(b) if to GlobespanVirata to
GlobespanVirata, Inc.
000 Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxx, Chief Executive Officer
with a copy to
Ropes & Xxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
SECTION 8.3 Interpretation. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of or Exhibit or Schedule to this Agreement unless otherwise indicated.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation". The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement.
SECTION 8.4 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
the parties need not sign the same counterpart.
SECTION 8.5 Entire Agreement; No Third Party Beneficiaries.
(a) This Agreement, the Confidentiality Agreement and the exhibits
and schedules hereto and the other agreements and instruments of the parties
delivered in connection herewith constitute the entire agreement and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
69
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement, other than
Section 5.11 (which is intended to be for the benefit of the Persons covered
thereby).
SECTION 8.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (without giving
effect to choice of law principles thereof).
SECTION 8.7 Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to Persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon any such determination, the parties shall
negotiate in good faith in an effort to agree upon a suitable and equitable
substitute provision to effect the original intent of the parties.
SECTION 8.8 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto, in whole or in part (whether by operation of law or otherwise),
without the prior written consent of the other parties, and any attempt to make
any such assignment without such consent shall be null and void. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
SECTION 8.9 Submission to Jurisdiction; Waivers. Each of
GlobespanVirata, Conexant and Concentric Sub irrevocably agrees that any legal
action or proceeding with respect to this Agreement or for recognition and
enforcement of any judgment in respect hereof brought by another party hereto or
its successors or permitted assigns may be brought and determined in any federal
or state court located in the State of Delaware, and each of GlobespanVirata,
Conexant and Concentric Sub hereby irrevocably submits with regard to any such
action or proceeding for itself and in respect to its property, generally and
unconditionally, to the exclusive jurisdiction of the aforesaid courts. Each of
GlobespanVirata, Conexant and Concentric Sub hereby irrevocably waives, and
agrees not to assert, by way of motion, as a defense, counterclaim or otherwise,
in any action or proceeding with respect to this Agreement, (a) any claim that
it is not personally subject to the jurisdiction of the above-named courts for
any reason other than the failure to lawfully serve process, (b) that it or its
property is
70
exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior to
judgment, attachment in aid of execution of judgment, execution of judgment or
otherwise), and (c) to the fullest extent permitted by Applicable Laws, that (i)
the suit, action or proceeding in any such court is brought in an inconvenient
forum, (ii) the venue of such suit, action or proceeding is improper and (iii)
this Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
SECTION 8.10 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
SECTION 8.11 Definitions. As used in this Agreement:
(a) "affiliate" means (except as specifically otherwise defined), as
to any person, any other person which, directly or indirectly, controls, or is
controlled by, or is under common control with, such person. As used in this
definition, "control" (including, with its correlative meanings, "controlled by"
and "under common control with") means the possession, directly or indirectly,
of the power to direct or cause the direction of management or policies of a
person, whether through the ownership of securities or partnership or other
ownership interests, by contract or otherwise.
(b) "Applicable Laws" means all applicable laws, statutes, orders,
rules, regulations, policies or guidelines promulgated, or judgments, decisions
or orders entered, by any Governmental Entity.
(c) "beneficial ownership" or "beneficially own" shall have the
meaning under Section 13(d) of the Exchange Act and the rules and regulations
thereunder.
(d) "Board of Directors" means the Board of Directors of any
specified Person and any committees thereof.
(e) "Business Day" means any day on which banks are not required or
authorized to close in the City of New York.
(f) "Conexant ESPP" means, collectively, the Conexant Non-Qualified
Employee Stock Purchase Plan and the Conexant 2001 Employee Stock Purchase Plan.
71
(g) A "Conexant Plan" means any employee benefit plan, program,
policy, practice or other arrangement providing benefits to any current or
former employee, officer or director of Conexant or any of its Subsidiaries or
any beneficiary or dependent thereof that is sponsored or maintained by Conexant
or any of its Subsidiaries or to which Conexant or any of its Subsidiaries
contributes or is obligated to contribute, whether or not written, including any
employee benefit plan within the meaning of Section 3(3) of ERISA (whether or
not such plan is subject to ERISA) and any bonus, incentive, deferred
compensation, vacation, stock purchase, stock option, severance, employment,
change of control or fringe benefit plan, program or agreement.
(h) "Conexant Stock Plans" means, collectively, the Conexant
Systems, Inc. 1998 Stock Option Plan; the Conexant Systems, Inc. 1999 Long-Term
Incentives Plan; the Conexant Systems, Inc. 2000 Non-Qualified Stock Plan; the
Conexant Systems, Inc. Directors Stock Plan; the Conexant Systems, Inc. 2001
Performance Share Plan; the Istari Design, Inc. 1997 Stock Option Plan; the
Microcosm Communications Limited Stock Option Plan; the Maker Communications,
Inc. 1996 Stock Incentive Plan; the Maker Communications, Inc. 1999 Stock
Incentive Plan; the Applied Telecom, Inc. 2000 Non-Qualified Stock Option Plan;
the Philsar Semiconductor Inc. Stock Option Plan; the Sierra Imaging, Inc. 1996
Stock Option Plan; the HotRail, Inc. 1997 Equity Incentive Plan; the HotRail,
Inc. 2000 Equity Plan; the NetPlane Systems, Inc. Stock Option Plan; the Novanet
Semiconductor Ltd. Employee Shares Option Plan; the HyperXS Communications, Inc.
2000 Stock Option Plan; and any sub-plans thereunder.
(i) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(j) "GlobespanVirata Convertible Notes" means GlobespanVirata's 5
1/4% Convertible Subordinated Notes due 2006 issued pursuant to the Indenture
dated as of May 11, 0000 xxxxxxx XxxxxxxxxXxxxxx xxx Xxxxxx Xxxxxx Trust Company
of New York, as Trustee.
(k) "GlobespanVirata ESPP" means the GlobespanVirata Employee Stock
Purchase Plan.
(l) A "GlobespanVirata Plan" means any employee benefit plan,
program, policy, practice or other arrangement providing benefits to any current
or former employee, officer or director of GlobespanVirata or any of its
Subsidiaries or any beneficiary or dependent thereof that is sponsored or
maintained by GlobespanVirata or any of its Subsidiaries or to which
GlobespanVirata or any of its Subsidiaries contributes or is obligated to
contribute, whether or not written, including any employee benefit plan within
the meaning of Section 3(3) of ERISA (whether or not such plan is subject to
72
ERISA) and any bonus, incentive, deferred compensation, vacation, stock
purchase, stock option, severance, employment, change of control or fringe
benefit plan, program or agreement.
(m) "GlobespanVirata Stock Plans" means, collectively, the Globespan
Semiconductor, Inc. 1996 Equity Incentive Plan; the Globespan Semiconductor,
Inc. 1999 Equity Incentive Plan; the Globespan Semiconductor, Inc. 1999
Directors Stock Plan; the Globespan, Inc. 1999 Supplemental Stock Option Plan;
the T.Sqware, Inc. 1997 Option Plan; the T.Sqware, Inc. 1997 Stock Option Sub
Plan for French Employees; the GlobespanVirata 2000 Stock Option Sub Plan for
French Employees; the Internext Compression, Inc. 1997 Equity Incentive Plan;
the iCompression, Inc. 1998 Equity Incentive Plan; the ATecoM, Inc. 1996 Stock
Plan; the Ultima Communication, Inc. 1999 Stock Option/Stock Issuance Plan; the
Amended and Restated GlobespanVirata, Inc. 1999 Stock Incentive Plan; the Virata
Corporation 1999 Non-Employee Director Compensation Plan; the D2 Technologies,
Inc. Tandem Stock Option Plan; the Inverness Systems Ltd. Share Option Plan; the
Agranat Systems, Inc. 1996 Stock Option Plan; and the Excess Bandwidth 1998
Equity Incentive Plan.
(n) "Known" or "Knowledge" means, (i) with respect to Conexant, the
knowledge of any of Xxxxxx X. Xxxxxx, F. Xxxxxxx Xxxxxx, J. Xxxxx Xxxxxx and
Xxxxxx X. X'Xxxxxx after reasonable inquiry and (ii) with respect to
GlobespanVirata, the knowledge of any of Xxxxxxx Xxxxx, Xxxxxx XxXxxxxx,
Xxxxxxxx X. Xxxxxxx and Xxxxxxx Xxxxx after reasonable inquiry.
(o) "Material Adverse Effect" means, with respect to any entity (or
group of entities taken as a whole), any event, change, circumstance or effect
that is or is reasonably likely to be materially adverse to (i) the business,
financial condition or results of operations of such entity (or, if with respect
thereto, of such group of entities taken as a whole), other than any event,
change, circumstance or effect (v) resulting from the public announcement or
pendency of the transactions contemplated hereby, (w) resulting from any action
taken in connection with the transactions contemplated hereby pursuant to the
terms of this Agreement, (x) relating to the economy or financial markets in
general, (y) relating in general to the industries in which such entity (or
group of entities taken as a whole) operates and not specifically relating to
such entity (or group of entities taken as a whole) or (z) relating to any
action or omission of Conexant, GlobespanVirata or Concentric Sub or any
Subsidiary of any of them taken with the express prior written consent of the
other parties hereto or (ii) the ability of such entity (or group of entities
taken as a whole) to consummate the transactions contemplated by this Agreement.
For all purposes of this Agreement, any reference to a Material Adverse Effect
on GlobespanVirata and its Subsidiaries shall mean a Material Adverse Effect on
GlobespanVirata and its Subsidiaries taken as a whole and any reference to a
Material
73
Adverse Effect on Conexant and its Subsidiaries shall mean a Material Adverse
Effect on Conexant and its Subsidiaries taken as a whole.
(p) A "Multiemployer Plan" means any "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA.
(q) "Nasdaq" means The Nasdaq Stock Market, Inc.
(r) "Person" means an individual, corporation, limited liability
entity, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act), including any Governmental
Entity.
(s) "Qualifying Amendment" means an amendment or supplement to the
Joint Proxy Statement/Prospectus or the Form S-4 (including by incorporation by
reference) to the extent it contains (i) a Change, (ii) a statement of the
reasons of the Board of Directors of Conexant or GlobespanVirata (as the case
may be) for making the Change and (iii) additional information reasonably
related to the foregoing.
(t) "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated, at
least a majority of the securities or other interests of which having by their
terms ordinary voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries.
(u) "Tax" (and, with correlative meaning, "Taxes" and "Taxable")
shall mean any federal, state, local or foreign net income, gross income,
receipts, windfall profit, severance, property, production, sales, use, license,
excise, franchise, employment, payroll, withholding, alternative or add-on
minimum, ad valorem, transfer, stamp, or environmental tax, or any other tax,
customs, duty or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, addition to tax or additional amount
imposed by any governmental authority.
(v) "Tax Returns" means any return, report or similar statement
(including any attached schedules) required to be filed with respect to any Tax,
including any information return, claim for refund, amended return or
declaration of estimated Tax.
(w) "WLAN Acquisition Agreement" means the Asset Purchase Agreement
dated July 15, 2003 between Intersil and GlobespanVirata.
74
(x) "WLAN Business" means the business of development, production,
manufacture, have-manufacture, marketing and/or sale of IEEE802.11, IEEE802.15,
IEEE802.16, ultra wide-band wireless networking and IEEE802 legacy wireless
local area networking products and services acquired by GlobespanVirata pursuant
to the WLAN Acquisition Agreement.
Each of the following terms is defined in the Section of this
Agreement set forth opposite such term:
Term Section
---- -------
Acquisition Proposal 5.8(b)
Actions 3.1(j)
Affiliate Agreement 5.15
Agreement Preamble
Certificate 1.5(b)
Certificate of Merger 1.3
Change 5.1(a)
Change in the Conexant Recommendation 5.1(c)
Change in the GlobespanVirata Recommendation 5.1(b)
Closing 1.2
Closing Date 1.2
Code 1.7(b)
Concentric Sub Preamble
Concentric Sub By-Laws 1.9
Concentric Sub Certificate 1.8
Concentric Sub Common Stock 1.6
Conexant Preamble
Conexant Common Stock 1.5(a)
Conexant Convertible Notes 3.2(b)(i)
Conexant Directors 5.2(a)
Conexant Disclosure Schedule 3.2
Conexant Filed SEC Reports 3.2(d)(ii)
Conexant Financial Advisor 3.2(m)
Conexant Necessary Consents 3.2(c)(iii)
Conexant Permits 3.2(h)(ii)
Conexant Preferred Stock 3.2(b)(i)
Conexant Recommendation 5.1(c)
Conexant Rights 3.2(b)(i)
Conexant Rights Agreement 3.2(l)
Conexant SEC Reports 3.2(d)(i)
Conexant Stock Options 3.2(b)(i)
75
Conexant Stockholders Meeting 5.1(c)
Conexant Voting Debt 3.2(b)(ii)
Confidentiality Agreement 5.6(a)
Continuing Employees 5.9(a)
Contract 3.1(c)(ii)
Delaware Secretary 1.3
DGCL 1.1
DOJ 5.7(b)
Effective Time 1.3
Environmental Laws 3.1(j)
Environmental Liabilities 3.1(j)
Excess Shares 2.2(e)(ii)
Exchange Act 3.1(c)(iii)
Exchange Agent 2.1
Exchange Fund 2.1
Exchange Ratio 1.5(a)
Expenses 5.10
Form S-4 5.1(a)
FTC 5.7(b)
GAAP 3.1(d)(i)
GlobespanVirata Preamble
GlobespanVirata Common Stock 1.5(a)
GlobespanVirata Directors 5.2(a)
GlobespanVirata Disclosure Schedule 3.1
GlobespanVirata Filed SEC Reports 3.1(d)(ii)
GlobespanVirata Financial Advisor 3.1(m)
GlobespanVirata Necessary Consents 3.1(c)(iii)
GlobespanVirata Permits 3.1(h)(ii)
GlobespanVirata Preferred Stock 3.1(b)(i)
GlobespanVirata Recommendation 5.1(b)
GlobespanVirata Rights 3.1(b)(i)
GlobespanVirata Rights Agreement 3.1(l)
GlobespanVirata SEC Reports 3.1(d)(i)
GlobespanVirata Stock Options 3.1(b)(i)
GlobespanVirata Stockholders Meeting 5.1(b)
GlobespanVirata Voting Debt 3.1(b)(ii)
GlobespanVirata Warrant 3.1(b)(i)
Governmental Entity 3.1(c)(iii)
Hazardous Materials 3.1(j)
HSR Act 3.1(c)(iii)
Intersil 3.1(d)(ii)
76
Injunction 6.1(b)
Intellectual Property 3.1(k)
Jazz Warrant 3.2(b)
Joint Proxy Statement/Prospectus 5.1(a)
Liens 3.1(a)(ii)
Merger Recitals
Post-Closing Plans 5.9(b)
Required Approvals 5.7(a)
Required Conexant Vote 3.2(g)
Required GlobespanVirata Vote 3.1(g)
SEC 3.1(a)(ii)
Securities Act 2.3
Superior Proposal 5.8(d)
Surviving Corporation Recitals
Termination Date 7.1(b)
Transition Period 5.2(a)
Violation 3.1(c)(ii)
WLAN Financial Information 3.1(d)(iii)
SECTION 8.12 Disclosure Schedule. The mere inclusion of an item in
the relevant Disclosure Schedule as an exception to a representation, warranty
or covenant shall not be deemed an admission by a party that such item
represents a material exception or material fact, event or circumstance or that
such item has had or would have a Material Adverse Effect with respect to
Conexant, GlobespanVirata or Concentric Sub, as applicable.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their respective officers thereunto duly authorized, all as of the
date first written above.
CONEXANT SYSTEMS, INC.
By: /s/ XXXXXX X. XXXXXX
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman and CEO
CONCENTRIC SUB, INC.
By: /s/ XXXXXX X. XXXXXX
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
GLOBESPANVIRATA, INC.
By: /s/ XXXXXXX XXXXX
--------------------------------
Name: Xxxxxxx Xxxxx
Title: President and
Chief Executive Officer
78
