Exhibit 2.1
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AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF DECEMBER 16, 2001
BY AND AMONG
CONEXANT SYSTEMS, INC.,
WASHINGTON SUB, INC.
AND
ALPHA INDUSTRIES, INC.
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TABLE OF CONTENTS
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ARTICLE I THE MERGER....................................................................2
SECTION 1.1 The Merger....................................................................2
SECTION 1.2 Closing; Effective Time.......................................................2
SECTION 1.3 Effects of the Merger.........................................................3
SECTION 1.4 Conversion of Washington Common Stock.........................................3
SECTION 1.5 Alpha Common Stock............................................................4
SECTION 1.6 Certificate of Incorporation..................................................4
SECTION 1.7 By-Laws.......................................................................4
SECTION 1.8 Officers......................................................................4
SECTION 1.9 Board of Directors............................................................4
SECTION 1.10 Name; Corporate Offices.......................................................5
SECTION 1.11 Fiscal Year...................................................................5
ARTICLE II OPTIONS.......................................................................5
SECTION 2.1 Option Conversion.............................................................5
SECTION 2.2 Incentive Stock Options.......................................................6
SECTION 2.3 Shares Reserved; Registration.................................................6
ARTICLE III EXCHANGE OF SHARES............................................................6
SECTION 3.1 Alpha to Make Shares Available................................................6
SECTION 3.2 Exchange of Shares............................................................7
SECTION 3.3 Affiliates....................................................................9
ARTICLE IV CERTAIN PRE-MERGER TRANSACTIONS...............................................9
SECTION 4.1 Ancillary Agreements..........................................................9
SECTION 4.2 Contribution.................................................................10
SECTION 4.3 Distribution.................................................................10
ARTICLE V REPRESENTATIONS AND WARRANTIES...............................................10
SECTION 5.1 Representations and Warranties of Alpha......................................10
SECTION 5.2 Representations and Warranties of Conexant...................................22
ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS....................................36
SECTION 6.1 Covenants of Alpha...........................................................36
SECTION 6.2 Covenants of Conexant and Washington.........................................39
SECTION 6.3 Reports; SEC Reports.........................................................44
SECTION 6.4 Control of Other Party's Business............................................44
ARTICLE VII ADDITIONAL AGREEMENTS........................................................45
SECTION 7.1 Preparation of Proxy Statement; Stockholders Meeting.........................45
SECTION 7.2 Combined Company Board of Directors and Management...........................46
SECTION 7.3 Access to Information........................................................46
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SECTION 7.4 Reasonable Best Efforts......................................................47
SECTION 7.5 Acquisition Proposals........................................................49
SECTION 7.6 Employee Benefits Matters....................................................52
SECTION 7.7 Fees and Expenses............................................................53
SECTION 7.8 Directors' and Officers' Indemnification and Insurance.......................54
SECTION 7.9 Public Announcements.........................................................55
SECTION 7.10 Accounting Matters...........................................................55
SECTION 7.11 Listing of Shares of Alpha Common Stock......................................56
SECTION 7.12 Affiliates...................................................................56
SECTION 7.13 Section 16 Matters...........................................................56
SECTION 7.14 Takeover Statutes............................................................56
SECTION 7.15 Advice of Changes............................................................56
SECTION 7.16 Shareholders Agreement.......................................................57
SECTION 7.17 Tax Ruling...................................................................57
SECTION 7.18 Option Acceleration..........................................................57
SECTION 7.19 Employment and Severance Arrangements........................................58
SECTION 7.20 Transition Services Agreement................................................58
ARTICLE VIII CONDITIONS PRECEDENT.........................................................58
SECTION 8.1 Conditions to Each Party's Obligation to Effect the Merger...................58
SECTION 8.2 Additional Conditions to Obligations of Alpha................................60
SECTION 8.3 Additional Conditions to Obligations of Washington...........................61
ARTICLE IX TERMINATION AND AMENDMENT....................................................62
SECTION 9.1 Termination..................................................................62
SECTION 9.2 Effect of Termination........................................................64
SECTION 9.3 Amendment....................................................................65
SECTION 9.4 Extension; Waiver............................................................65
ARTICLE X GENERAL PROVISIONS...........................................................66
SECTION 10.1 Non-Survival of Representations, Warranties, Covenants and Agreements........66
SECTION 10.2 Notices......................................................................66
SECTION 10.3 Interpretation...............................................................67
SECTION 10.4 Counterparts.................................................................67
SECTION 10.5 Entire Agreement; No Third Party Beneficiaries...............................67
SECTION 10.6 Governing Law................................................................68
SECTION 10.7 Severability.................................................................68
SECTION 10.8 Assignment...................................................................68
SECTION 10.9 Submission to Jurisdiction; Waivers..........................................68
SECTION 10.10 Enforcement..................................................................69
SECTION 10.11 Definitions..................................................................69
SECTION 10.12 Disclosure Schedule..........................................................75
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EXHIBITS
Exhibit A - Form of Contribution and Distribution Agreement
Exhibit B - Form of Amended and Restated Certificate
Exhibit C - Form of By-Laws
Exhibit D - Form of Certificate of Merger
Exhibit E - Certain Alpha Agreements
Exhibit F - Form of Tax Allocation Agreement
Exhibit G - Form of Employee Matters Agreement
Exhibit H - Form of Affiliate Agreement
Exhibit I - Parties to Shareholder Agreement
Exhibit J - Form of Shareholder Agreement
Exhibit K - Terms of Newport Supply Agreement
Exhibit L - Terms of Newbury Supply Agreement
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of December 16, 2001
(this "Agreement"), by and among CONEXANT SYSTEMS, INC., a Delaware
corporation ("Conexant"), WASHINGTON SUB, INC., a Delaware corporation and
a wholly-owned subsidiary of Conexant ("Washington"), and ALPHA INDUSTRIES,
INC., a Delaware corporation ("Alpha").
W I T N E S S E T H :
WHEREAS, simultaneously with the execution and delivery of this
Agreement, Conexant and Washington are entering into a contribution and
distribution agreement in the form attached hereto as Exhibit A (the
"Distribution Agreement") pursuant to which (a) all the Washington Assets
(as defined in the Distribution Agreement) will be assigned to Washington
and/or to one or more of the Washington Subsidiaries (as defined in the
Distribution Agreement) and all of the Washington Liabilities (as defined
in the Distribution Agreement) will be assumed by Washington and/or by one
or more of the Washington Subsidiaries, all as provided in the Distribution
Agreement (the "Contribution") and (b) all of the issued and outstanding
shares of common stock, par value $.01 per share, of Washington (the
"Washington Common Stock") will be distributed on a pro rata basis to
Conexant's stockholders as provided in the Distribution Agreement (the
"Distribution");
WHEREAS, the Boards of Directors of Conexant, Washington and
Alpha deem it advisable and in the best interests of each corporation and
its respective stockholders that Washington and Alpha enter into a merger
transaction in order to advance the long-term strategic business interests
of Conexant, Washington and Alpha;
WHEREAS, the Boards of Directors of Conexant, Washington and
Alpha have determined to consummate such merger transaction by means of the
business combination transaction provided for herein in which, immediately
following the Distribution Washington will, subject to the terms and
conditions set forth herein, merge with and into Alpha (the "Merger"), with
Alpha being the surviving corporation (hereinafter sometimes referred to in
such capacity as the "Combined Company") in the Merger;
WHEREAS, the parties to this Agreement intend that the
Contribution and the Distribution qualify under Sections 355 and 368 of the
Internal Revenue Code of 1986, as amended (the "Code"), as a
reorganization, that the Merger qualify under Section 368 of the Code as a
reorganization and that this Agreement shall constitute a "plan of
reorganization" for purposes of Sections 354 and 361 of the Code;
WHEREAS, the parties desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also
to prescribe certain conditions to the Merger; and
WHEREAS, capitalized terms used in this Agreement will have the
respective meanings set forth (i) in Section 10.11 or (ii) in the Sections
of this Agreement or in the relevant Reorganization Agreement (as defined
in Section 10.11) set forth opposite such terms in Section 10.11.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
in this Agreement, and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. Upon the terms and conditions of this
Agreement, and in accordance with the General Corporation Law of the State
of Delaware (the "DGCL"), at the Effective Time (as defined in Section
1.2(b)), Washington shall merge with and into Alpha. Alpha shall be the
surviving corporation in the Merger and shall continue its corporate
existence under the laws of the State of Delaware. Upon consummation of the
Merger, the separate corporate existence of Washington shall terminate.
SECTION 1.2 CLOSING; EFFECTIVE TIME.
(a) The closing of the Merger (the "Closing") will take place
as soon as practicable, but in any event within three Business Days, after
the satisfaction or waiver (subject to Applicable Laws) of the conditions
(excluding conditions that, by their nature, cannot be satisfied until the
Closing Date (as defined below)) set forth in Article VIII, unless this
Agreement has been theretofore terminated pursuant to its terms or unless
another time or date is agreed to in writing by the parties hereto (the
actual time and date of the Closing being referred to herein as the
"Closing Date"). The Closing shall be held at the offices of ▇▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, unless another place
is agreed to in writing by the parties hereto.
(b) The Merger shall become effective as set forth in the
certificate of merger relating thereto substantially in the form attached
hereto as Exhibit D that shall be filed with the Secretary of State of the
State of Delaware (the "Delaware Secretary") on the Closing Date (the
"Certificate of Merger"). The term "Effective Time" shall be the
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date and time when the Merger becomes effective, as set forth in the Certificate
of Merger. The Effective Time shall occur immediately after the Time of
Distribution (as defined in the Distribution Agreement).
SECTION 1.3 EFFECTS OF THE MERGER. At and after the Effective
Time, the Merger shall have the effects set forth in the DGCL. Without
limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all of the properties, rights, privileges, powers and
franchises of Washington shall vest in Alpha, and all debts, liabilities
and duties of Washington shall become the debts, liabilities and duties of
Alpha.
SECTION 1.4 CONVERSION OF WASHINGTON COMMON STOCK. At the
Effective Time, by virtue of the Merger and without any action on the part
of Washington, Alpha or the holders of any capital stock of Washington or
Alpha:
(a) Subject to Section 3.2(d), each share of Washington Common
Stock issued and outstanding immediately prior to the Effective Time (after
giving effect to the Distribution), other than shares of Washington Common
Stock held in Washington's treasury or owned by Alpha or any wholly-owned
Subsidiary of Washington or Alpha, shall automatically be converted into
the right to receive 0.342 shares (the "Exchange Ratio") of common stock,
par value $.25 per share, of Alpha (including the associated preferred
share purchase rights, the "Alpha Common Stock"). If (i) between the date
hereof and the Effective Time, the outstanding shares of Alpha Common
Stock, (ii) between the date hereof and the Time of Distribution, the
outstanding shares of Conexant Common Stock (as defined in Section
5.2(b)(i)) or (iii) following the Time of Distribution and prior to the
Effective Time, the outstanding shares of Washington Common Stock, shall
have been increased, decreased, changed into or exchanged for a different
number or kind of shares or securities (or a record date within any such
period shall have been established for any of the foregoing) as a result of
a reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar change in capitalization (other
than solely as a result of the Distribution or the Merger, but including
any increase or decrease in the outstanding shares of Conexant Common Stock
as a result of the issuance of any security in accordance with the Conexant
Rights Agreement (as defined in Section 5.2(b)(i)), an appropriate and
proportionate adjustment shall be made to the Exchange Ratio to the extent
necessary to reflect such reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or
similar change in capitalization.
(b) All shares of Washington Common Stock converted into the
right to receive Alpha Common Stock pursuant to this Article I shall no
longer be outstanding and shall automatically be canceled and shall cease
to exist, and each certificate or book-entry credit previously evidencing
any such shares of Washington Common Stock (a
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"Washington Certificate") shall thereafter evidence only the right to receive
(i) the number of whole shares of Alpha Common Stock (which shall be in
uncertificated book-entry form unless a physical certificate is requested) and
(ii) cash in lieu of fractional shares of Alpha Common Stock into which the
shares of Washington Common Stock formerly evidenced by such Washington
Certificate have been converted pursuant to this Section 1.4 and Section 3.2(d),
without any interest thereon.
(c) All shares of Washington Common Stock held in Washington's
treasury or owned by Alpha, or any wholly-owned Subsidiary of Washington or
Alpha shall be canceled and shall cease to exist and no shares of Alpha
Common Stock or other consideration shall be delivered in exchange
therefor.
SECTION 1.5 ALPHA COMMON STOCK. At and after the Effective
Time, each share of Alpha Common Stock issued and outstanding immediately
prior to the Effective Time shall remain an issued and outstanding share of
common stock of the Combined Company and shall not be affected by the
Merger.
SECTION 1.6 CERTIFICATE OF INCORPORATION. At the Effective
Time, the certificate of incorporation of the Combined Company shall be in
the form attached hereto as Exhibit B, with such changes thereto as shall
be mutually agreed upon by Conexant and Alpha (the "Restated Certificate"),
until thereafter amended in accordance with the terms thereof and
Applicable Laws (as defined in Section 10.11).
SECTION 1.7 BY-LAWS. At the Effective Time, the by-laws of the
Combined Company shall be in the form attached hereto as Exhibit C, with
such changes as may be mutually agreed upon by Conexant and Alpha (the
"By-Laws"), until thereafter amended in accordance with the terms thereof,
the Restated Certificate and Applicable Laws.
SECTION 1.8 OFFICERS. At the Effective Time, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
shall be Chief Executive Officer of the Combined Company and ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ shall be President of the Combined Company and otherwise the
initial officers of the Combined Company shall be as Conexant and Alpha
shall agree prior to the Effective Time, and such officers shall hold
office until their respective successors are duly appointed and qualified,
or their earlier death, resignation or removal.
SECTION 1.9 BOARD OF DIRECTORS. At the Effective Time, until
duly changed in compliance with the Restated Certificate, the By-Laws and
Applicable Laws, the Board of Directors of the Combined Company shall
consist of either nine or eleven persons (as agreed by Conexant and Alpha
prior to the Effective Time), including (a) four (in the case of a
nine-person Board of Directors) or five (in the case of an eleven-person
Board of Directors) persons (one of whom shall be Chairman of the Board of
the
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Combined Company) to be named by the Board of Directors of Conexant,
(b) four (in the case of a nine-person Board of Directors) or five (in the
case of an eleven-person Board of Directors) persons to be named by the
Board of Directors of Alpha and (c) one person to be jointly named by the
Boards of Directors of Conexant and Alpha. The directors named by Conexant
and Alpha shall be allocated proportionately among the classes of the Board
of Directors of the Combined Company as shall be agreed between Conexant
and Alpha prior to the Effective Time.
SECTION 1.10 NAME; CORPORATE OFFICES.
(a) At the Effective Time, the name of the Combined Company
shall be as agreed by Conexant and Alpha prior to the Effective Time.
(b) At the Effective Time, the Combined Company shall have
joint headquarters located in Newport Beach, California and Woburn,
Massachusetts.
SECTION 1.11 FISCAL YEAR. The fiscal year of the Combined
Company will initially end on September 30 of each year.
ARTICLE II
OPTIONS
SECTION 2.1 OPTION CONVERSION. At or prior to the Effective
Time, Washington and Alpha will take all action necessary such that each
Washington Option (as defined in the Employee Matters Agreement) that is
outstanding and unexercised immediately prior thereto (after giving effect
to the adjustments to Conexant Stock Options (as defined in Section
5.2(b)(i)) to be effected in connection with the Distribution as provided
for in the Employee Matters Agreement) shall cease to represent a right to
acquire shares of Washington Common Stock and shall, as of the Effective
Time, automatically be converted into a Converted Option exercisable for a
number of shares of Alpha Common Stock and at an exercise price determined
as provided below (and otherwise subject to the terms of the appropriate
Washington Stock Plan (as defined in the Employee Matters Agreement)
governing such option and the agreements evidencing grants thereunder):
(i) The number of shares of Alpha Common Stock to be
subject to the Converted Option shall be equal to the product of the
number of shares of Washington Common Stock subject to the
unexercised portion of the Washington Option (as adjusted in
connection with the Distribution) multiplied by the Exchange Ratio,
provided that any fractional shares of Alpha Common
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Stock resulting from such multiplication shall be rounded down to the
nearest whole share; and
(ii) The exercise price per share of Alpha Common Stock
under the Converted Option shall be equal to the exercise price per
share of Washington Common Stock under the Washington Option (as
adjusted in connection with the Distribution) divided by the Exchange
Ratio, provided that such exercise price shall be rounded up to the
nearest whole cent.
SECTION 2.2 INCENTIVE STOCK OPTIONS. The adjustment provided
herein with respect to any options that are "incentive stock options" (as
defined in Section 422 of the Code) shall be and is intended to be effected
in a manner that is consistent with Section 424(a) of the Code. Except as
set forth in this Section 2.2, the duration and other terms of such
Converted Option shall be the same as the Washington Option, except that
all references to Washington shall be deemed to be references to the
Combined Company (but taking into account any changes thereto provided for
in the Washington Stock Plans by reason of this Agreement or the
transactions contemplated hereby).
SECTION 2.3 SHARES RESERVED; REGISTRATION. Following the
Effective Time, the Combined Company shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of Alpha
Common Stock for delivery upon exercise of the Converted Options pursuant
to the terms set forth in this Article II. As soon as practicable but in
any event not later than five days following the Effective Time, the shares
of Alpha Common Stock subject to the Converted Options will be covered by
an effective registration statement on Form S-8 (or any successor form) or
another appropriate form and the Combined Company shall use its reasonable
best efforts to maintain the effectiveness of such registration statement
for so long as the Converted Options remain outstanding.
ARTICLE III
EXCHANGE OF SHARES
SECTION 3.1 ALPHA TO MAKE SHARES AVAILABLE. From time to time,
prior to, at or after the Effective Time, Alpha shall deposit, or shall
cause to be deposited, with a bank or trust company appointed by Conexant
and reasonably acceptable to Alpha (the "Exchange Agent"), for the benefit
of the holders of the Washington Certificates, for exchange in accordance
with this Article III, the shares of Alpha Common Stock to be issued
pursuant to Section 1.4 and delivered pursuant to Section 3.2(a) in
exchange for Washington Certificates (such shares of Alpha Common Stock,
together with any dividends or distributions with respect thereto, the
"Exchange Fund").
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SECTION 3.2 EXCHANGE OF SHARES.
(a) As soon as reasonably practicable after the Effective Time,
the Exchange Agent shall make book-entry credits as of the Closing Date for
each holder of record of Washington Common Stock immediately prior to the
Effective Time for that number of whole shares of Alpha Common Stock into
which the shares of Washington Common Stock formerly evidenced by such
holder's Washington Certificate shall have been converted pursuant to this
Agreement and shall deliver to each such holder (x) an account statement
indicating the number of whole shares of Alpha Common Stock that such
holder owns of record as of the Effective Time and (y) a check representing
the amount of any cash in lieu of fractional shares that such holder has
the right to receive pursuant to Section 3.2(d) in respect of such holder's
Washington Certificate. No interest will be paid or accrued on any cash in
lieu of fractional shares or on any unpaid dividends and distributions
payable to holders of Washington Certificates.
(b) If any certificate or book-entry credit evidencing shares
of Alpha Common Stock is to be registered in a name other than that in
which the Washington Certificate is registered, it shall be a condition of
the issuance thereof that an appropriate instrument of transfer of
Washington Certificates be delivered and that the person requesting such
exchange will have paid to the Exchange Agent in advance any transfer or
other taxes required by reason of the issuance of a certificate or
book-entry credit evidencing shares of Alpha Common Stock in any name other
than that of the registered holder of the Washington Certificate formerly
held, or required for any other reason, or shall have established to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(c) After the Effective Time, there shall be no transfers on
the stock transfer books of Washington of the shares of Washington Common
Stock that were issued and outstanding immediately prior to the Effective
Time.
(d) (i) Notwithstanding anything to the contrary contained
herein, no certificates or scrip representing fractional shares of Alpha
Common Stock or book-entry credit of the same shall be issued in exchange
for Washington Certificates, no dividend or distribution with respect to
Alpha Common Stock shall be payable on or with respect to any such
fractional share, and such fractional share interests shall not entitle the
owner thereof to vote or to any other rights of a stockholder of Alpha. In
lieu of the issuance of any such fractional share, Alpha shall pay to each
holder of Washington Certificates who otherwise would be entitled to
receive such fractional share an amount in cash determined in the manner
provided in clauses (ii) and (iii) of this Section 3.2(d).
(ii) As promptly as practicable following the Effective Time,
the Exchange Agent shall determine the excess of (x) the number of full
shares of Alpha
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Common Stock delivered to the Exchange Agent by Alpha pursuant to Section 3.1
for issuance to holders of Washington Certificates pursuant to Section 1.4 over
(y) the aggregate number of full shares of Alpha Common Stock to be distributed
to holders of Washington Certificates pursuant to this Section 3.2 (such excess
being herein referred to as the "Excess Alpha Shares"). As soon as reasonably
practicable following the Effective Time, the Exchange Agent, as agent for such
holders of Washington Certificates, shall sell the Excess Alpha Shares at then
prevailing prices on the Nasdaq National Market System, all in the manner
provided in clause (iii) of this Section 3.2(d).
(iii) The sale of the Excess Alpha Shares by the Exchange Agent
shall be executed on the Nasdaq National Market System through one or more
member firms of the National Association of Securities Dealers, Inc. and
shall be executed in round lots to the extent practicable. Until the net
proceeds of any such sale or sales have been distributed to the holders of
Washington Certificates, the Exchange Agent will hold such proceeds in
trust for such holders as part of the Exchange Fund. The Combined Company
shall pay all commissions, transfer taxes and other out-of-pocket
transaction costs of the Exchange Agent incurred in connection with such
sale or sales of Excess Alpha Shares. In addition, the Combined Company
shall pay the Exchange Agent's compensation and expenses in connection with
such sale or sales. The Exchange Agent shall determine the portion of such
net proceeds to which each holder of Washington Certificates shall be
entitled, if any, by multiplying the amount of the aggregate net proceeds
by a fraction, the numerator of which is the amount of the fractional share
interest to which such holder of Washington Certificates is entitled (after
taking into account all Washington Certificates then held by such holder)
and the denominator of which is the aggregate amount of fractional share
interests to which all holders of Washington Certificates are entitled. As
soon as practicable after the determination of the amount of cash, if any,
to be paid to holders of Washington Certificates with respect to any
fractional share interests, the Exchange Agent shall promptly pay such
amounts to such holders of Washington Certificates subject to and in
accordance with this Section 3.2.
(e) Any portion of the Exchange Fund that remains unclaimed by
holders of Certificates for twelve months after the Effective Time shall be
delivered to the Combined Company, and any holders of Washington
Certificates who have not theretofore complied with this Article III shall
thereafter look only to the Combined Company for payment of the shares of
Alpha Common Stock, cash in lieu of any fractional shares and any unpaid
dividends and distributions on the Alpha Common Stock deliverable in
respect of each share of Washington Common Stock formerly evidenced by such
Washington Certificate as determined pursuant to this Agreement, without
any interest thereon. Any such portion of the Exchange Fund remaining
unclaimed by holders of Washington Certificates five years after the
Effective Time (or such earlier date immediately prior to such time as such
amounts would otherwise escheat to or
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become property of any Governmental Entity (as defined in Section 5.1(c)(iii))
shall, to the extent permitted by Applicable Laws, become the property of the
Combined Company free and clear of any claims or interest of any Person
previously entitled thereto.
(f) None of the Combined Company, Conexant, Washington, the
Exchange Agent or any other Person shall be liable to any holder of
Washington Certificates for any shares of Alpha Common Stock, cash in lieu
of fractional shares thereof and any dividend or other distribution with
respect thereto delivered in good faith to a public official pursuant to
applicable abandoned property, escheat or similar Applicable Laws.
(g) The Exchange Agent shall invest any cash included in the
Exchange Fund, as directed by the Combined Company, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
the Combined Company promptly upon request by the Combined Company.
(h) The Combined Company shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Washington Certificates such amounts as the
Combined Company or the Exchange Agent is required to deduct and withhold
with respect to the making of such payment under the Code, or any provision
of state, local or foreign tax law. To the extent that amounts are so
withheld by the Combined Company or the Exchange Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been
paid to the holder of the shares of Alpha Common Stock in respect of which
such deduction and withholding was made by the Combined Company or the
Exchange Agent.
SECTION 3.3 AFFILIATES. Notwithstanding anything to the
contrary herein, to the fullest extent permitted by law, no certificates or
book-entry credits evidencing shares of Alpha Common Stock or cash shall be
issued or delivered pursuant to this Article III to a Person who may be
deemed an "affiliate" of Washington in accordance with Section 7.12 hereof
for purposes of Rule 145 under the Securities Act of 1933, as amended (the
"Securities Act"), until such Person has executed and delivered an
Affiliate Agreement (as defined in Section 7.12) pursuant to Section 7.12.
ARTICLE IV
CERTAIN PRE-MERGER TRANSACTIONS
SECTION 4.1 ANCILLARY AGREEMENTS. Prior to the Time of
Distribution, Conexant, Washington and Alpha will execute and deliver a tax
allocation agreement
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substantially in the form attached hereto as Exhibit F (the "Tax Allocation
Agreement") and an employee matters agreement substantially in the form attached
hereto as Exhibit G (the "Employee Matters Agreement"). Prior to the Effective
Time, Conexant and Alpha will execute and deliver a Newport Supply Agreement
substantially on the terms attached hereto as Exhibit K (the "Newport Supply
Agreement"), a Newbury Supply Agreement substantially on the terms attached
hereto as Exhibit L (the "Newbury Supply Agreement") and a Transition Services
Agreement in accordance with Section 7.20 (the "Transition Services Agreement").
SECTION 4.2 CONTRIBUTION. Prior to the Time of Distribution and
pursuant to the terms and conditions of the Distribution Agreement,
Conexant and Washington will consummate the Contribution contemplated by
Article II of the Distribution Agreement.
SECTION 4.3 DISTRIBUTION. Prior to the Effective Time, and
pursuant to the terms and conditions of the Distribution Agreement,
Conexant will cause Washington to be recapitalized and effect the
Distribution.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 REPRESENTATIONS AND WARRANTIES OF ALPHA. Except as
set forth in the Alpha Disclosure Schedule delivered by Alpha to Conexant
prior to the execution of this Agreement (the "Alpha Disclosure Schedule")
(each section of which, to the extent specified therein, qualifies the
correspondingly numbered representation and warranty or covenant of Alpha
contained herein and, to the extent it is apparent on the face of such
disclosure that such disclosure qualifies another representation and
warranty of Alpha contained herein, such other representation and warranty
of Alpha), Alpha represents and warrants to Conexant as follows:
(a) Organization, Standing and Power; Subsidiaries.
(i) Each of Alpha and its Subsidiaries is a corporation
or other organization duly organized, validly existing and in good
standing (where applicable) under the laws of its jurisdiction of
incorporation or organization, has the requisite power and authority
to own, lease and operate its properties and to carry on its business
as now being conducted and as it will be conducted through the
Effective Time, except where the failure to be so organized, existing
and in good standing or to have such power and authority,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect
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on Alpha and its Subsidiaries, and is duly qualified and in good standing
to do business in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification
necessary, other than in such jurisdictions where the failure so to
qualify or to be in good standing, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on Alpha and
its Subsidiaries. The copies of the certificate of incorporation and
by-laws of Alpha which were previously furnished or made available to
Conexant are true, complete and correct copies of such documents as
in effect on the date of this Agreement.
(ii) Exhibit 21 to Alpha's Annual Report on Form 10-K for
the year ended April 1, 2001 includes all the Subsidiaries of Alpha
which as of the date of this Agreement are Significant Subsidiaries
of Alpha (as defined in Rule 1-02 of Regulation S-X of the Securities
and Exchange Commission (the "SEC")). All the --- outstanding shares
of capital stock of, or other equity interests in, each such
Significant Subsidiary have been validly issued and are fully paid
and nonassessable and are owned directly or indirectly by Alpha, free
and clear of all material pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens") and free of any other material -----
restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other equity interests,
but excluding restrictions under the Securities Act). None of Alpha
or any of its Subsidiaries directly or indirectly owns any equity or
similar interest in, or any interest convertible into or exchangeable
or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business association
or entity (other than Subsidiaries of Alpha), that is or would
reasonably be expected to be material to Alpha and its Subsidiaries
taken as a whole.
(b) Capital Structure.
(i) The authorized capital stock of Alpha consists of
100,000,000 shares of Alpha Common Stock. As of December 14, 2001,
44,174,096 shares of Alpha Common Stock were issued and outstanding
and no other shares of capital stock of Alpha were issued and
outstanding. As of December 14, 2001, 10,370,507 shares of Alpha
Common Stock were reserved for issuance upon exercise of options
outstanding under Alpha Stock Plans. As of December 14, 2001, no
shares of Alpha Common Stock were held as treasury shares. Since
December 14, 2001 to the date of this Agreement, no shares of capital
stock of Alpha or any other securities of Alpha have been issued
other than shares of Alpha Common Stock issued pursuant to options or
rights outstanding as of December 14, 2001 under the Alpha Stock
Plans. All issued and outstanding shares of capital stock of Alpha
are duly authorized, validly issued,
11
fully paid and nonassessable, and no class of capital stock of Alpha is
entitled to preemptive rights. There are outstanding as of the date hereof
no options, warrants or other rights to acquire capital stock from Alpha
other than options and other rights to acquire Alpha Common Stock from
Alpha ("Alpha Stock Options") representing in the aggregate the right
to purchase 6,619,900 shares of Alpha Common Stock under the Alpha
Stock Plans. Section 5.1(b) of the Alpha Disclosure Schedule sets
forth a complete and correct list as of a recent date of all
outstanding Alpha Stock Options and the exercise prices thereof.
(ii) No bonds, debentures, notes or other indebtedness of
Alpha having the right to vote on any matters on which stockholders
of Alpha may vote ("Alpha Voting Debt") are issued or outstanding.
(iii) Except as otherwise set forth in this Section
5.1(b), as of the date of this Agreement, there are no securities,
options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which Alpha or any of its
Subsidiaries is a party or by which any of them is bound obligating
Alpha or any of its Subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock
or other voting securities of Alpha or any of its Subsidiaries or
obligating Alpha or any of its Subsidiaries to issue, grant, extend
or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. As of the date of
this Agreement, there are no outstanding obligations of Alpha or any
of its Subsidiaries to repurchase, redeem or otherwise acquire any
shares of capital stock of Alpha or any of its Subsidiaries.
(c) Authority; No Conflicts.
(i) Alpha has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby, subject, in the case of the consummation of the
Merger, to the approval and adoption of this Agreement and the Merger
by the Required Alpha Vote (as defined in Section 5.1(g)). The
execution and delivery of this Agreement by Alpha and the
consummation by Alpha of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of
Alpha, subject in the case of the consummation of the Merger, to the
approval and adoption of this Agreement and the Merger by the
Required Alpha Vote. This Agreement has been duly executed and
delivered by Alpha and, assuming the due authorization and valid
execution and delivery of this Agreement by each of Conexant and
Washington, constitutes a valid and binding agreement of Alpha,
enforceable against Alpha in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency,
reorganization,
12
fraudulent conveyance, moratorium and similar Applicable Laws relating to
or affecting creditors generally or by general equity principles
(regardless of whether such enforceability is considered in a proceeding
in equity or at law).
(ii) The execution and delivery of this Agreement by
Alpha does not, and the consummation by Alpha of the Merger and the
other transactions contemplated hereby will not, conflict with, or
result in any breach or violation of, or constitute a default (with
or without notice or lapse of time, or both) under, or give rise to a
right of or result by its terms in the termination, amendment,
cancellation or acceleration of any obligation or the loss of a
material benefit under, or the creation of a Lien, charge, "put" or
"call" right or other encumbrance on, or the loss of, any assets (any
such conflict, breach, violation, default, right of termination,
amendment, cancellation or acceleration, loss or creation, a
"Violation") pursuant to: (A) any provision of the certificate of
incorporation or by-laws or similar organizational documents of Alpha
or any Significant Subsidiary of Alpha or (B) except as, individually
or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Alpha and its Subsidiaries or, to the
Knowledge of Alpha, the Combined Company and its Subsidiaries
following the Merger, subject to obtaining or making the Alpha
Necessary Consents (as defined in paragraph (iii) below), (I) any
loan or credit agreement, note, instrument, mortgage, bond,
indenture, lease, benefit plan or other contract, agreement or
obligation (a "Contract") to which Alpha or any of its Subsidiaries
is a party or by which any of them or any of their respective
properties or assets is bound, or (II) any permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Alpha or any Subsidiary of Alpha or
their respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any supranational,
national, state, municipal, local or foreign government, any
instrumentality, subdivision, court, administrative agency or
commission or other authority thereof, or any quasi-governmental or
private body exercising any regulatory, taxing, importing or other
governmental or quasi-governmental authority (a "Governmental
Entity") or any other Person is required by or with respect to Alpha
or any Subsidiary of Alpha in connection with the execution and
delivery of this Agreement by Alpha or the consummation by Alpha of
the Merger and the other transactions contemplated hereby, except for
those required under or in relation to (A) the Required Alpha Vote,
(B) the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (C) state securities or "blue sky" laws, (D)
the Securities Act, (E) the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (F) the DGCL with respect to the filing
of the Certificate of Merger with the Delaware Secretary, (G) the
rules and regulations of Nasdaq,
13
(H) antitrust or other competition laws of other jurisdictions and (I)
such consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to make or obtain,
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect on Alpha and its Subsidiaries. Consents,
approvals, orders, authorizations, registrations, declarations and filings
required under or in relation to any of the foregoing clauses (A) through
(H) or set forth in Section 5.1(c)(iii) of the Alpha Disclosure Schedule
are hereinafter referred to as "Alpha Necessary Consents".
(d) Reports and Financial Statements.
(i) Alpha has filed all registration statements,
prospectuses, reports, schedules, forms, statements and other
documents required to be filed by it with the SEC since January 1,
2000 (collectively, including all exhibits thereto, the "Alpha SEC
Reports"). No Subsidiary of Alpha is subject to the periodic
reporting requirements of the Exchange Act. None of the Alpha SEC
Reports, as of their respective dates (or, if amended or superseded
by a filing prior to the date of this Agreement, then on the date of
such filing) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the
financial statements (including the related notes) included in the
Alpha SEC Reports fairly presents, in all material respects, the
consolidated financial position and consolidated results of
operations and cash flows of Alpha and its consolidated Subsidiaries
as of the respective dates or for the respective periods set forth
therein, all in conformity with generally accepted accounting
principles ("GAAP") consistently applied during the ---- periods
involved except as otherwise noted therein, and subject, in the case
of unaudited interim financial statements, to normal and recurring
year-end adjustments that have not been and are not expected to be
material in amount. All Alpha SEC Reports, as of their respective
dates (and as of the date of any amendment to the respective Alpha
SEC Report), complied as to form in all material respects with the
applicable requirements of the Securities Act and the Exchange Act
and the rules and regulations promulgated thereunder.
(ii) Except as disclosed in the Alpha SEC Reports filed
and publicly available prior to the date hereof (the "Alpha Filed SEC
Reports"), since April 1, 2001, Alpha and its Subsidiaries have not
incurred any liabilities that are of a nature that would be required
to be disclosed on a balance sheet of Alpha and its Subsidiaries or
in the footnotes thereto prepared in conformity with GAAP, other than
liabilities incurred in the ordinary course of business or that,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on Alpha and its Subsidiaries.
14
(e) Information Supplied.
(i) None of the information supplied or to be supplied by
Alpha for inclusion or incorporation by reference in (A) the Form S-4
(as defined in Section 7.1(a)) will, at the time the Form S-4 is
filed with the SEC, at any time it is amended or supplemented or at
the time it becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading and (B) the Proxy Statement/Prospectus (as
defined in Section 7.1(a)) will, on the date it is first mailed to
Conexant stockholders or Alpha stockholders or at the time of the
Alpha Stockholders Meeting (as defined in Section 7.1(b)), contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
(ii) Notwithstanding the foregoing provisions of this
Section 5.1(e), no representation or warranty is made by Alpha with
respect to statements made or incorporated by reference in the Form
S-4 or the Proxy Statement/Prospectus based on information supplied
by Conexant or Washington for inclusion or incorporation by reference
therein, or based on information with is not included or incorporated
by reference in such documents but which should have been disclosed
therein pursuant to Section 5.2(e).
(f) Board Approval. The Board of Directors of Alpha, by
resolutions duly adopted by unanimous vote at a meeting duly called and
held and, other than as provided for in Section 7.5, not subsequently
rescinded or modified in any way, has duly (i) determined that this
Agreement and the Merger are advisable and in the best interests of Alpha
and its stockholders, (ii) approved this Agreement and the Merger, (iii)
resolved to recommend that the stockholders of Alpha approve and adopt this
Agreement and the Merger and directed that this Agreement and the Merger be
submitted for consideration by Alpha's stockholders at the Alpha
Stockholders Meeting and (iv) taken all other action necessary to render
(A) the limitations on business combinations contained in Section 203 of
the DGCL (or any similar provision) and (B) the provisions of Article
Fifteenth of Alpha's Certificate of Incorporation inapplicable to the
transactions contemplated hereby. To the Knowledge of Alpha, except for the
limitations on business combinations contained in Section 203 of the DGCL
(which have been rendered inapplicable), no state takeover statute is
applicable or purports to be applicable to the Merger or the other
transactions contemplated hereby.
(g) Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Alpha Common Stock (the "Required
Alpha Vote") to
15
approve and adopt this Agreement and the Merger is the only vote of the holders
of any class or series of Alpha capital stock necessary to approve or adopt this
Agreement and the Merger and the other transactions contemplated hereby.
(h) Litigation; Compliance with Laws.
(i) Except as set forth in the Alpha Filed SEC Reports,
there is no suit, action, proceeding or regulatory investigation
pending or, to the Knowledge of Alpha, threatened, against or
affecting Alpha or any Subsidiary of Alpha or any property or asset
of Alpha or any Subsidiary of Alpha which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse
Effect on Alpha and its Subsidiaries, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against Alpha or any Subsidiary of Alpha
which, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect on Alpha and its Subsidiaries.
(ii) Except as, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on Alpha
and its Subsidiaries, Alpha and its Subsidiaries hold all permits,
licenses, franchises, variances, exemptions, orders and approvals of
all Governmental Entities which are necessary for the operation of
the businesses of Alpha and its Subsidiaries, taken as a whole (the
"Alpha Permits"), and no suspension or cancellation of any of the
Alpha Permits is pending or, to the Knowledge of Alpha, threatened,
except for suspensions or cancellations which, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect on Alpha and its Subsidiaries. Alpha and its
Subsidiaries are in compliance with the terms of the Alpha Permits,
except where the failure so to comply, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect on Alpha and its Subsidiaries. None of Alpha or any of
its Subsidiaries is in violation of, and Alpha and its Subsidiaries
have not received any notices of violations with respect to, any
Applicable Laws, except for violations which, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect on Alpha and its Subsidiaries.
(i) Absence of Certain Changes or Events. Except as set forth
in the Alpha Filed SEC Reports, since April 1, 2001, Alpha and its
Subsidiaries have conducted their business only in the ordinary course,
consistent with past practice. Except as set forth in the Alpha Filed SEC
Reports, since April 1, 2001, there has not been any event, change,
circumstance or development which, individually or in the aggregate, has
had, or would reasonably be expected to have, a Material Adverse Effect on
Alpha and its Subsidiaries. Since April 1, 2001 through the date of this
Agreement, none of Alpha or
16
any of its Subsidiaries has taken any action that, if taken during the period
from the date of this Agreement through the Effective Time, would constitute a
breach of Section 6.1 (other than Section 6.1(a)(i)).
(j) Environmental Matters. Except as set forth in the Alpha
Filed SEC Reports and except as, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on Alpha and
its Subsidiaries, (i) the operations of Alpha and its Subsidiaries have
been and are in compliance with all applicable Environmental Laws (as
defined below) and with all Alpha Permits required by applicable
Environmental Laws, (ii) there are no pending or, to the Knowledge of
Alpha, threatened, actions, suits, claims, investigations or other
proceedings (collectively, "Actions") under or pursuant to Environmental
Laws against Alpha or its Subsidiaries or involving any real property
currently owned or, to the Knowledge of Alpha, formerly owned, or currently
or formerly operated or leased, by Alpha or its Subsidiaries and (iii) to
the Knowledge of Alpha, Alpha and its Subsidiaries are not subject to any
Environmental Liabilities (as defined below), and no facts, circumstances
or conditions relating to, arising from, associated with or attributable to
any real property currently or formerly owned, operated or leased by Alpha
or its Subsidiaries or operations thereon would reasonably be expected to
result in Environmental Liabilities for Alpha or its Subsidiaries. The
representations and warranties in this Section 5.1(j) constitute the sole
representations and warranties of Alpha concerning environmental matters in
this Agreement.
As used in this Agreement, "Environmental Laws" means any and
all federal, state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decisions, injunctions, orders, decrees,
requirements of any Governmental Entity, any and all common law
requirements, rules and bases of liability regulating or imposing liability
or legally binding standards of conduct concerning pollution, Hazardous
Materials (as defined below) or protection of human health, safety or the
environment, as in effect on or prior to the Closing Date and includes the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601 et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801 et seq., the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et
seq., the Clean Air Act, 33 U.S.C. Section 2601 et seq., the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq., the Occupational
Safety and Health Act, 29 U.S.C. Section 651 et seq. and the Oil Pollution
Act of 1990, 33 U.S.C. Section 2701 et seq., as such laws have been amended
or supplemented, and the regulations promulgated pursuant thereto, and all
analogous state or local statutes. As used in this Agreement,
"Environmental Liabilities" with respect to any Person means any and all
liabilities of or relating to such Person or any of its Subsidiaries
(including any entity which is a predecessor of such Person or any of such
Subsidiaries and for which such Person has liability by law or contract),
whether vested or unvested,
17
contingent or fixed, which (i) arise under or relate to matters covered or
regulated by, or for which liability is imposed under, Environmental Laws and
(ii) relate to actions occurring or conditions existing on or prior to the
Closing Date. As used in this Agreement, "Hazardous Materials" means any
hazardous or toxic substances, materials or wastes, defined, listed, classified
or regulated as such in or under any Environmental Laws and which includes
petroleum, petroleum products, friable asbestos, urea formaldehyde and
polychlorinated biphenyls.
(k) Intellectual Property. Except as set forth in the Alpha
Filed SEC Reports and except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on
Alpha and its Subsidiaries: (i) Alpha and each of its Subsidiaries owns, or
is licensed to use (in each case, free and clear of any Liens), all
Intellectual Property (as defined below) used in or necessary for the
conduct of its business as currently conducted; (ii) to the Knowledge of
Alpha, the use of any Intellectual Property by Alpha and its Subsidiaries
does not infringe on or otherwise violate the rights of any Person; (iii)
the use of Intellectual Property by or on behalf of Alpha and its
Subsidiaries is in accordance with any applicable license pursuant to which
Alpha or any Subsidiary acquired the right to use any Intellectual
Property; (iv) to the Knowledge of Alpha, no Person is challenging,
infringing on or otherwise violating any right of Alpha or any of its
Subsidiaries with respect to any Intellectual Property owned by and/or
licensed to Alpha or its Subsidiaries; and (v) Alpha does not have any
Knowledge of any pending claim, order or proceeding with respect to any use
of Intellectual Property by Alpha and its Subsidiaries and, to the
Knowledge of Alpha, no Intellectual Property owned and/or licensed by Alpha
or its Subsidiaries is being used or enforced in a manner that would
reasonably be expected to result in the abandonment, cancellation or
unenforceability of such Intellectual Property. For purposes of this
Agreement, "Intellectual Property" shall mean trademarks, service marks,
brand names, certification marks, trade dress and other indications of
origin, the goodwill associated with the foregoing and registrations in any
jurisdiction of, and applications in any jurisdiction to register, the
foregoing, including any extension, modification or renewal of any such
registration or application; inventions, discoveries and ideas, whether
patentable or not, in any jurisdiction; patents, applications for patents
(including divisions, continuations, continuations in part and renewal
applications), and any renewals, extensions or reissues thereof and rights
to apply for any of the foregoing, in any jurisdiction; nonpublic
information, trade secrets and confidential information and rights in any
jurisdiction to limit the use or disclosure thereof by any Person; writings
and other works, whether copyrightable or not, in any jurisdiction; and
registrations or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; and any similar
intellectual property or proprietary rights.
(l) Title to Properties. Each of Alpha and its Subsidiaries has
good and valid title to, or, in the case of leased properties and assets,
valid leasehold interests
18
in, all of its tangible properties and assets, except where the failure to have
such good and valid title, or valid leasehold interest, would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
Alpha and its Subsidiaries.
(m) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in
connection with any of the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Alpha or any of its
Subsidiaries, except U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "Alpha Financial
Advisor"), whose fees and expenses will be paid by Alpha in accordance with
Alpha's agreement with such firm.
(n) Opinion of Alpha Financial Advisor. Alpha has received the
opinion of the Alpha Financial Advisor, dated the date of this Agreement,
to the effect that, as of such date, the consideration to be paid to
Washington's stockholders in the Merger is fair, from a financial point of
view, to Alpha and its stockholders.
(o) Taxes.
(i) Each of Alpha and its Subsidiaries has timely filed
or has caused to be timely filed all Tax returns or reports required
to be filed by it, or requests for extensions to file such returns or
reports have been timely filed, granted and have not expired, and all
such returns and reports are complete and correct, except to the
extent that such failures to file, to have extensions granted that
remain in effect or to be complete or correct, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect on Alpha and its Subsidiaries. Alpha and each of its
Subsidiaries has paid or caused to be paid all Taxes shown as due on
such returns and the most recent financial statements contained in
the Alpha Filed SEC Reports reflect an adequate reserve in accordance
with GAAP for all Taxes payable by Alpha and its Subsidiaries for all
taxable periods and portions thereof accrued through the date of such
financial statements.
(ii) No deficiencies for any Taxes have been proposed,
asserted or assessed in writing against Alpha or any of its
Subsidiaries that are not adequately reserved for, except for
deficiencies that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Alpha and
its Subsidiaries. The U.S. federal income Tax returns of Alpha and
each of its Subsidiaries consolidated in such returns have been
either examined by and settled with the IRS or closed by virtue of
the applicable statute of limitations and no requests for waivers of
the time to assess any such Taxes are pending.
19
(iii) None of Alpha or any of its Subsidiaries has taken
any action, and Alpha has no Knowledge of any fact, agreement, plan
or other circumstance, that is reasonably likely to prevent the
Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
(iv) None of Alpha or any of its Subsidiaries is a party
to any Tax sharing or Tax indemnity agreements (other than agreements
between or among Alpha and its Subsidiaries).
(v) Within the past five years, none of Alpha or any of
its Subsidiaries has been a "distributing corporation" or a
"controlled corporation" in a distribution intended to qualify under
Section 355(a) of the Code.
(vi) Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect
on Alpha and its Subsidiaries, none of Alpha or any of its
Subsidiaries is obligated to make any payments, or is a party to any
contract that could obligate it to make any payments, that would not
be deductible by reason of Section 162(m) or Section 280G of the
Code.
(vii) None of Alpha or any of its Subsidiaries has agreed
to make, or is required to make, any material adjustment under
Section 481(a) of the Code or any similar provision of state, local
or foreign law by reason of a change in accounting methods or
otherwise.
(p) Certain Contracts. As of the date hereof, none of Alpha or
any of its Subsidiaries is a party to or bound by (i) any non-competition
agreement or any other Contract that limits or otherwise restricts Alpha or
any of its Subsidiaries or any of their respective affiliates or any
successor thereto, or that would, after the Effective Time, to the
Knowledge of Alpha, limit or restrict the Combined Company or any of its
Subsidiaries or any of their respective affiliates or any successor
thereto, from engaging or competing in any line of business in any
geographic area, which agreements or other Contracts, individually or in
the aggregate, would reasonably be expected to have a Material Adverse
Effect on the Combined Company and its Subsidiaries, after giving effect to
the Merger or (ii) any employee benefit plan, employee contract or any
other material Contract, pursuant to which any benefits will arise or be
increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement or
the value of any of the benefits of which will be calculated on the basis
of any of the transactions contemplated by this Agreement. All material
Contracts of Alpha and its Subsidiaries are valid and binding on Alpha and
its Subsidiaries, as applicable, and in full force and effect except to the
extent they have previously expired in accordance with their terms or if
the failure to be valid, binding and
20
in full force and effect, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect on Alpha and its Subsidiaries.
None of Alpha or any of its Subsidiaries has Knowledge of, or has received
notice of, any violation or default under (nor to their Knowledge does there
exist any condition which with the passage of time or the giving of notice would
cause such a violation or default under) the provisions of any Contract of Alpha
or any of its Subsidiaries, except for violations or defaults which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Alpha and its Subsidiaries.
(q) Employee Benefits.
(i) With respect to each Alpha Plan, except for Alpha
Plans the liabilities under which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on
Alpha and its Subsidiaries, Alpha has made available to Conexant a
true, correct and complete copy of: (A) all plan documents, trust
agreements, and insurance contracts and other funding vehicles; (B)
the three most recent Annual Reports (Form 5500 Series) and
accompanying schedules and exhibits, if any; (C) the current summary
plan description and any material modifications thereto, if any (in
each case, whether or not required to be furnished under ERISA); (D)
the three most recent annual financial reports, if any; (E) the three
most recent actuarial reports, if any; (F) the most recent
determination letter from the IRS, if any; and (G) the annual
compliance testing under Sections 401(a) through 416 of the Code for
the three most recently completed plan years, if any.
(ii) With respect to each Alpha Plan, Alpha and its
Subsidiaries have complied with, and are now in compliance with, all
provisions of ERISA, the Code and all other Applicable Laws and
regulations applicable to such Alpha Plans and each Alpha Plan has
been administered in accordance with its terms, in each case except
as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Alpha and its
Subsidiaries. Each Alpha Plan that is required by ERISA to be funded
is fully funded in accordance with reasonable actuarial assumptions,
except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Alpha and its
Subsidiaries.
(iii) All Alpha Plans subject to the Applicable Laws of
any jurisdiction outside of the United States (A) have been
maintained in accordance with all applicable requirements, (B) if
they are intended to qualify for special tax treatment meet all
requirements for such treatment, and (C) if they are intended to be
funded and/or book-reserved are fully funded and/or book-reserved, as
appropriate, based upon reasonable actuarial assumptions, in each
case except as
21
would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on Alpha and its Subsidiaries.
(iv) None of Alpha or any of its Subsidiaries has any
liability under or obligation to any Multiemployer Plan.
(r) Labor Relations. As of the date of this Agreement, (i) none
of Alpha or any of its Subsidiaries is a party to any collective bargaining
agreement, (ii) except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Alpha and its
Subsidiaries, no labor organization or group of employees of Alpha or any
of its Subsidiaries has made a pending demand for recognition or
certification, and there are no representation or certification proceedings
or petitions seeking a representation proceeding presently pending or, to
the Knowledge of Alpha, threatened to be brought or filed, with the
National Labor Relations Board or any other domestic or foreign labor
relations tribunal or authority and (iii) except as would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect on Alpha and its Subsidiaries, there are no organizing activities,
strikes, work stoppages, slowdowns, lockouts, arbitrations or grievances,
or other labor disputes pending or, to the Knowledge of Alpha, threatened
against or involving Alpha or any of its Subsidiaries.
(s) Insurance. Alpha maintains insurance coverage with
reputable insurers in such amounts and covering such risks as is deemed
reasonably appropriate for its business (taking into account the cost and
availability of such insurance).
(t) Liens. No Liens exist on any assets of Alpha or any of its
Subsidiaries, except (i) Liens expressly set forth in the notes to Alpha's
audited consolidated financial statements as of April 1, 2001 included in
the Alpha Filed SEC Reports, (ii) Liens consisting of zoning or planning
restrictions, easements, permits or other restrictions or limitations on
the use of real property or irregularities in title thereto which do not
materially detract from the value of, or impair the use of, such property
by Alpha and its Subsidiaries, (iii) Liens for current taxes, assessments
or governmental charges or levies on property not yet due or which are
being contested in good faith and for which appropriate reserves in
accordance with GAAP have been created and (iv) Liens which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Alpha and its Subsidiaries.
SECTION 5.2 REPRESENTATIONS AND WARRANTIES OF CONEXANT. Except
as set forth in the Conexant Disclosure Schedule delivered by Conexant to
Alpha prior to the execution of this Agreement (the "Conexant Disclosure
Schedule") (each section of which, to the extent specified therein,
qualifies the correspondingly numbered representation and warranty or
covenant of Conexant contained herein and, to the extent
22
it is apparent on the face of such disclosure that such disclosure qualifies
another representation and warranty of Conexant contained herein, such other
representation and warranty of Conexant), Conexant represents and warrants to
Alpha as follows:
(a) Organization, Standing and Power; Subsidiaries.
(i) Conexant and each Subsidiary of Conexant engaged in
the Washington Business (as defined in the Distribution Agreement) is
a corporation or other organization duly organized, validly existing
and in good standing (where applicable) under the laws of its
jurisdiction of incorporation or organization, except where the
failure to be so organized, existing and in good standing,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Washington Business. Each of
the Washington Companies (as defined in Section 10.11) has the
requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted and as
it will be conducted through the Effective Time, except where the
failure to have such power and authority, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect on the Washington Business, and is duly qualified and
in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties
makes such qualification necessary, other than in such jurisdictions
where the failure so to qualify or to be in good standing,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Washington Business. The copies
of the certificate of incorporation and by-laws of Conexant which
were previously furnished or made available to Alpha are true,
complete and correct copies of such documents as in effect on the
date of this Agreement.
(ii) Washington is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Delaware. Washington is a direct wholly-owned subsidiary of Conexant.
The copies of the certificate of incorporation and by-laws of
Washington which were previously furnished or made available to Alpha
are true, complete and correct copies of such documents as in effect
on the date of this Agreement.
(iii) Section 5.2(a)(iii) of the Conexant Disclosure
Schedule sets forth a list of the Washington Companies which as of
the date of this Agreement would be Significant Subsidiaries of
Washington (as defined in Rule 1-02 of Regulation S-X of the SEC) if
the Distribution had occurred immediately prior to the date hereof
(the "Washington Significant Subsidiaries"). All the outstanding
shares of capital stock of, or other equity interests in, each
Washington Significant Subsidiary have been validly issued and are
fully paid and nonassessable and are
23
P
owned directly or indirectly by Conexant, free and clear of all material
Liens and free of any other material restriction (including any
restriction on the right to vote, sell or otherwise dispose of such
capital stock or other equity interests, but excluding restrictions under
the Securities Act). None of the Washington Companies directly or
indirectly owns any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity (other than Subsidiaries of Conexant) that is or
would reasonably be expected to be material to the Washington Business
taken as a whole.
(b) Capital Structure.
(i) The authorized capital stock of Conexant consists of
1,000,000,000 shares of Common Stock, par value $1.00 per share (the
"Conexant Common Stock"), and 25,000,000 shares of preferred stock,
without par value (the "Conexant Preferred Stock"), 1,500,000 shares
of which are designated as "Series A Junior Participating Preferred
Stock" and one share of which is designated as "Series B Voting
Preferred Stock". As of November 30, 2001, (A) 254,423,819 shares of
Conexant Common Stock and (B) one share of Conexant Preferred Stock
designated as "Series B Voting Preferred Stock" were issued and
outstanding and no other shares of capital stock of Conexant were
issued and outstanding. As of November 30, 2001, 84,082,811 shares of
Conexant Common Stock were reserved for issuance upon exercise of
options outstanding under Conexant Stock Plans. As of November 30,
2001, no shares of Conexant Common Stock were held as treasury
shares. Since November 30, 2001 to the date of this Agreement, no
shares of capital stock of Conexant or any other securities of
Conexant have been issued other than shares of Conexant Common Stock
(and accompanying Conexant Rights (as defined below)) issued pursuant
to (w) the Conexant Systems, Inc. Retirement Savings Plan and the
Conexant Systems, Inc. Hourly Employees Savings Plan, (x) options or
rights outstanding as of November 30, 2001 under Conexant Stock Plans
and (y) the exchange or retraction of Exchangeable Shares of Philsar
Semiconductor Inc. All issued and outstanding shares of capital stock
of Conexant are duly authorized, validly issued, fully paid and
nonassessable, and no class of capital stock of Conexant is entitled
to preemptive rights. There are outstanding as of the date hereof no
options, warrants or other rights to acquire capital stock from
Conexant other than (w) rights (the "Conexant Rights") distributed to
the holders of Conexant Common Stock pursuant to the Rights Agreement
dated as of November 30, 1998, as amended as of December 9, 1999,
between Conexant and ChaseMellon Shareholder Services, L.L.C., as
Rights Agent (the "Conexant Rights Agreement"), (x) options and other
rights to acquire Conexant Common Stock
24
from Conexant ("Conexant Stock Options") representing in the aggregate the
right to purchase 51,394,095 shares of Conexant Common Stock under the
Conexant Stock Plans, (y) $94,849,000 aggregate principal amount of
Conexant's 4 1/4% Convertible Subordinated Notes due 2006 and $615,000,000
aggregate principal amount of Conexant's 4% Convertible Subordinated
Notes due 2007 which are, on the date hereof, convertible into
Conexant Common Stock at exercise prices of $23.098 and $108,
respectively, per share (collectively, the "Conexant Convertible
Notes") and (z) Exchangeable Shares of Philsar Semiconductor Inc.
which are exchangeable into, or subject to retraction in exchange
for, an aggregate of 357,640 shares of Conexant Common Stock. Section
5.2(b) of the Conexant Disclosure Schedule sets forth a complete and
correct list as of a recent date of all outstanding Conexant Stock
Options and the exercise prices thereof.
(ii) On the date hereof, the authorized capital stock of
Washington consists of 1,000 shares of Washington Common Stock, all
of which are issued and outstanding.
(iii) Except as otherwise set forth in this Section
5.2(b) or as provided for in the Reorganization Agreements, as of the
date of this Agreement, there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which Conexant or any member of the Washington Group
(as defined in the Distribution Agreement) is a party or by which any
of them is bound obligating any of Conexant or any member of the
Washington Group to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting
securities of Conexant or any member of the Washington Group or
obligating Conexant or any member of the Washington Group to issue,
grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking. As of the
date of this Agreement, there are no outstanding obligations of
Conexant or any member of the Washington Group to repurchase, redeem
or otherwise acquire any shares of capital stock of Conexant or any
member of the Washington Group.
(c) Authority; No Conflicts.
(i) Conexant has all requisite corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby, subject to further action of the
Board of Directors of Conexant to establish the Record Date and the
Distribution Date (each as defined in the Distribution Agreement) and
provided that the effectiveness of the declaration of the
Distribution by the Board of Directors of Conexant is subject to the
satisfaction of the conditions set forth in the Distribution
Agreement. The execution and
25
delivery of this Agreement and the Reorganization Agreements by Conexant
and the consummation by Conexant of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action on
the part of Conexant, subject to further action of the Board of Directors
of Conexant to establish the Record Date and the Distribution Date and
provided that the effectiveness of the declaration of the
Distribution by the Board of Directors of Conexant is subject to the
satisfaction of the conditions set forth in the Distribution
Agreement. This Agreement and the Distribution Agreement have been,
and the other Reorganization Agreements will be, duly executed and
delivered by Conexant and, assuming the due authorization and valid
execution and delivery of this Agreement by Alpha, constitute or will
constitute valid and binding agreements of Conexant, enforceable
against Conexant in accordance with their respective terms, except as
such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and similar
Applicable Laws relating to or affecting creditors generally or by
general equity principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(ii) Washington has all requisite corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Washington and the consummation by Washington of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Washington. Conexant, as
the sole stockholder of Washington, has duly approved and adopted
this Agreement and the Merger and has duly approved the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Washington and constitutes a valid and binding agreement
of Washington, enforceable against Washington in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and
similar Applicable Laws relating to or affecting creditors generally
and by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(iii) The execution and delivery by Conexant and
Washington of this Agreement and the Distribution Agreement do not,
the execution and delivery by Conexant and Washington of the other
Reorganization Agreements will not, and the consummation by Conexant
and Washington of the Contribution, the Distribution, the Merger and
the other transactions contemplated hereby and thereby will not
result in a Violation pursuant to: (A) any provision of the
certificate of incorporation or by-laws or similar organizational
documents of Conexant, Washington or any Washington Significant
Subsidiary or (B) except as, individually or in the aggregate, would
not reasonably be expected to have a
26
Material Adverse Effect on the Washington Business or, to the Knowledge
of Conexant, the Combined Company and its Subsidiaries following the
Merger, subject to obtaining or making the Conexant Necessary Consents (as
defined in paragraph (iv) below), (I) any Contract included in the
Washington Assets or by which any of the properties or assets included in
the Washington Assets is bound, or (II) any permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to any of the Washington Companies or
the properties or assets included in the Washington Assets.
(iv) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity or
any other Person is required by or with respect to Conexant or any
Subsidiary of Conexant in connection with the execution and delivery
of this Agreement and the Reorganization Agreements by Conexant or
Washington or the consummation by Conexant or Washington of the
Contribution, the Distribution and the Merger and the other
transactions contemplated hereby and thereby, except for those
required under or in relation to (A) the HSR Act, (B) state
securities or "blue sky" laws, (C) the Securities Act, (D) the
Exchange Act, (E) the DGCL with respect to the filing of the
Certificate of Merger with the Delaware Secretary, (F) the rules and
regulations of Nasdaq, (G) antitrust or other competition laws of
other jurisdictions, (H) the further action of the Board of Directors
of Conexant to establish the Record Date and the Distribution Date,
and the effectiveness of the declaration of the Distribution by the
Board of Directors of Conexant (which is subject to the satisfaction
of the conditions set forth in the Distribution Agreement) and (I)
such consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to make or obtain,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Washington Business. Consents,
approvals, orders, authorizations, registrations, declarations and
filings required under or in relation to any of the foregoing clauses
(A) through (H) or set forth in Section 5.2(c)(iv) of the Conexant
Disclosure Schedule are hereinafter referred to as the "Conexant
Necessary Consents".
(v) The Board of Directors of Conexant, by resolutions
duly adopted by a unanimous vote of those in attendance at a meeting
duly called and held, a quorum being present, has duly (i) determined
that this Agreement is advisable and in the best interests of
Conexant and its stockholders and (ii) approved this Agreement and
the Distribution Agreement and the transactions contemplated hereby
and thereby. The Board of Directors of Washington, by resolutions
duly adopted by a unanimous vote at a meeting duly called and held,
or by action by unanimous written consent, has duly (i) determined
that this Agreement is advisable and in the best interests of
Washington and its
27
stockholders and (ii) approved this Agreement and the transactions
contemplated hereby.
(d) Reports and Financial Statements.
(i) No member of the Washington Group is subject to the
periodic reporting requirements of the Exchange Act. With respect to
the Washington Business, none of the registration statements,
prospectuses, reports, schedules, forms, statements and other
documents required to be filed by Conexant and its Subsidiaries with
the SEC since January 1, 2000 (collectively, including all exhibits
thereto, the "Conexant SEC Reports"), as of their respective dates
(or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading.
(ii) Included in Section 5.2(d)(ii) of the Conexant
Disclosure Schedule are a special purpose statement as of September
30, 2001 of tangible assets and liabilities to be contributed by
Conexant and its Subsidiaries to the Washington Group (together with
the notes thereto, the "Unaudited Special Purpose Statement of
Tangible Net Assets") and a special purpose product line contribution
statement with respect to the Washington Business for the year ended
September 30, 2001 (together with the notes thereto, and collectively
with the Unaudited Special Purpose Statement of Tangible Net Assets,
the "Washington Financial Statements"). The Washington Financial
Statements fairly present, in all material respects, the tangible
assets and liabilities to be contributed by Conexant and its
Subsidiaries to the Washington Group as of September 30, 2001 and the
product line contribution of the Washington Business for the year
ended September 30, 2001.
(iii) Except as disclosed in the Conexant SEC Reports
filed and publicly available prior to the date hereof (the "Conexant
Filed SEC Reports") or in the Washington Financial Statements, since
September 30, 2001, Conexant and its Subsidiaries have not incurred
any liabilities that are of a nature that would be required to be
disclosed on a statement of assets and liabilities of the Washington
Business or in the footnotes thereto prepared in conformity with
GAAP, other than liabilities incurred in the ordinary course of
business or that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the
Washington Business.
28
(e) Information Supplied.
(i) None of the information supplied or to be supplied by
Conexant or Washington for inclusion or incorporation by reference in
(A) the Form S-4 will, at the time the Form S-4 is filed with the
SEC, at any time it is amended or supplemented or at the time it
becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading and (B) the Proxy Statement/Prospectus will, on the
date it is first mailed to Conexant stockholders or Alpha
stockholders or at the time of the Alpha Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under
which they were made, not misleading.
(ii) Notwithstanding the foregoing provisions of this
Section 5.2(e), no representation or warranty is made by Conexant
with respect to statements made or incorporated by reference in the
Form S-4 or the Proxy Statement/Prospectus based on information
supplied by Alpha for inclusion or incorporation by reference
therein, or based on information which is not included or
incorporated by reference in such documents but which should have
been disclosed pursuant to Section 5.1(e).
(f) Litigation; Compliance with Laws.
(i) Except as set forth in the Conexant Filed SEC Reports
or in the Washington Financial Statements, there is no suit, action,
proceeding or regulatory investigation pending or, to the Knowledge
of Conexant, threatened, against or affecting any of the Washington
Companies or any property or asset included in the Washington Assets
which, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect on the Washington Business, nor is
there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against any of the
Washington Companies which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on the
Washington Business.
(ii) Except as, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on the
Washington Business, the Washington Companies hold all permits,
licenses, franchises, variances, exemptions, orders and approvals of
all Governmental Entities which are necessary for the operation of
the Washington Business, taken as a whole (the
29
"Washington Permits"), and no suspension or cancellation of any of the
Washington Permits is pending or, to the Knowledge of Conexant,
threatened, except for suspensions or cancellations which, individually or
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect on the Washington Business. The Washington Companies are in
compliance with the terms of the Washington Permits, except where the
failure so to comply, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Washington
Business. None of the Washington Companies is in violation of, and
the Washington Companies have not received any notices of violations
with respect to, any Applicable Laws, except for violations which,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Washington Business.
(g) Absence of Certain Changes or Events. Except as set forth
in the Conexant Filed SEC Reports or in the Washington Financial
Statements, since September 30, 2001, the Washington Companies have
conducted the Washington Business only in the ordinary course, consistent
with past practice. Except as set forth in the Conexant Filed SEC Reports,
since September 30, 2001, there has not been any event, change,
circumstance or development which, individually or in the aggregate, has
had, or would reasonably be expected to have, a Material Adverse Effect on
the Washington Business. Since September 30, 2001 through the date of this
Agreement, none of the Washington Companies has taken any action that, if
taken during the period from the date of this Agreement through the
Effective Time, would constitute a breach of Section 6.2 (other than
Section 6.2(a)(i)). Washington has not conducted any activities other than
in connection with the organization of Washington, the negotiation,
execution and performance of this Agreement and the Reorganization
Agreements and the consummation of the transactions contemplated hereby and
thereby.
(h) Environmental Matters. Except as set forth in the Conexant
Filed SEC Reports or in the Washington Financial Statements and except as,
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect on the Washington Business, (i) the operations of
the Washington Companies have been and are in compliance with all
applicable Environmental Laws and with all Washington Permits required by
applicable Environmental Laws, (ii) there are no pending or, to the
Knowledge of Conexant, threatened, Actions under or pursuant to
Environmental Laws against the Washington Companies or involving any real
property currently owned or formerly owned, or currently or formerly
operated or leased, by the Washington Companies and (iii) to the Knowledge
of Conexant, the Washington Companies are not subject to any Environmental
Liabilities and no facts, circumstances or conditions relating to, arising
from, associated with or attributable to any real property currently or
formerly owned, operated or leased by the Washington Companies or
operations thereon would reasonably be expected to result in Environmental
Liabilities for the Washington
306
Companies. The representations and warranties in this Section 5.2(h) constitute
the sole representations and warranties of Conexant concerning environmental
matters in this Agreement.
(i) Intellectual Property. Except as set forth in the Conexant
Filed SEC Reports or in the Washington Financial Statements and except as
would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on the Washington Business: (i) the Washington
Companies own, or are licensed to use (in each case, free and clear of any
Liens), all Intellectual Property used in or necessary for the conduct of
the Washington Business as currently conducted; (ii) to the Knowledge of
Conexant, the use of any Intellectual Property by the Washington Companies
does not infringe on or otherwise violate the rights of any Person; (iii)
the use of Intellectual Property by or on behalf of the Washington
Companies is in accordance with any applicable license pursuant to which
the Washington Companies acquired the right to use any Intellectual
Property; (iv) to the Knowledge of Conexant, no Person is challenging,
infringing on or otherwise violating any right of the Washington Companies
with respect to any Intellectual Property owned by and/or licensed to the
Washington Companies; and (v) Conexant does not have any Knowledge of any
pending claim, order or proceeding with respect to any use of Intellectual
Property by the Washington Companies and, to the Knowledge of Conexant, no
Intellectual Property owned and/or licensed by the Washington Companies is
being used or enforced in a manner that would reasonably be expected to
result in the abandonment, cancellation or unenforceability of such
Intellectual Property.
(j) Title to Properties. Each of the Washington Companies has
good and valid title to, or, in the case of leased properties and assets,
valid leasehold interests in, all of the tangible properties and assets
that are Washington Assets, except where the failure to have such good and
valid title, or valid leasehold interest, would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Washington Business.
(k) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in
connection with any of the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Conexant or any of its
Subsidiaries, except Credit Suisse First Boston Corporation (the "Conexant
Financial Advisor"), whose fees and expenses will be paid by Conexant in
accordance with Conexant's agreement with such firm.
(l) Opinion of Conexant Financial Advisor. Conexant has
received the opinion of the Conexant Financial Advisor, dated the date of
this Agreement, to the
31
effect that, as of such date, the Exchange Ratio is fair, from a financial point
of view, to holders of Conexant Common Stock.
(m) Taxes.
(i) Each of the Washington Companies has timely filed or
has caused to be timely filed all Tax returns or reports required to
be filed by it with respect to Taxes for which the Washington Group
will have liability following the Time of Distribution pursuant to
the Tax Allocation Agreement, or requests for extensions to file such
returns or reports have been timely filed, granted and have not
expired, and all such returns and reports are complete and correct,
except to the extent that such failures to file, to have extensions
granted that remain in effect or to be complete or correct,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Washington Business. The
Washington Companies have paid or caused to be paid all Taxes shown
as due on such returns, other than Taxes for which the Conexant Group
will have liability following the Time of Distribution pursuant to
the Tax Allocation Agreement.
(ii) No deficiencies for any Taxes have been proposed,
asserted or assessed in writing against the Washington Companies that
are not adequately reserved for, except for deficiencies that,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Washington Business and
deficiencies with respect to Taxes for which Conexant will have
liability following the Time of Distribution pursuant to the Tax
Allocation Agreement. The U.S. federal income Tax returns required to
be filed with respect to Taxes for which the Washington Group will
have liability following the Time of Distribution pursuant to the Tax
Allocation Agreement have been either examined by and settled with
the IRS or closed by virtue of the applicable statute of limitations
and no requests for waivers of the time to assess any such Taxes are
pending.
(iii) None of Conexant or its Subsidiaries has taken any
action, and Conexant has no Knowledge of any fact, agreement, plan or
other circumstance, that is reasonably likely to prevent the Merger
from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
(iv) No member of the Washington Group is a party to any
Tax sharing or Tax indemnity agreements (other than agreements
between or among members of the Washington Group) that will be in
effect after the Time of Distribution.
32
(v) Within the past five years, no member of the
Washington Group has been a "distributing corporation" or a
"controlled corporation" in a distribution intended to qualify under
Section 355(a) of the Code.
(vi) Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect
on the Washington Business, no member of the Washington Group is
obligated to make any payments, or is a party to any contract that
could obligate it to make any payments, that would not be deductible
by reason of Section 162(m) or Section 280G of the Code.
(vii) No member of the Washington Group has agreed to
make, or is required to make, any material adjustment under Section
481(a) of the Code or any similar provision of state, local or
foreign law by reason of a change in accounting methods or otherwise.
(n) Certain Contracts. As of the date hereof, none of the
Washington Companies is a party to or bound by (i) any non-competition
agreement or any other Contract that will be binding on any member of the
Washington Group following the Time of Distribution that limits or
otherwise restricts the Washington Companies or any of their respective
affiliates or any successor thereto, or that would, after the Effective
Time, to the Knowledge of Conexant, limit or restrict the Combined Company
or any of its Subsidiaries or any of their respective affiliates or any
successor thereto, from engaging or competing in any line of business in
any geographic area, which agreements or other Contracts, individually or
in the aggregate, would reasonably be expected to have a Material Adverse
Effect on the Combined Company and its Subsidiaries, after giving effect to
the Merger or (ii) any employee benefit plan, employee contract or any
other material Contract that will be binding on any member of the
Washington Group following the Time of Distribution, pursuant to which any
benefits will arise or be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement. All material Contracts that will be included in the
Washington Assets are valid and binding on the Washington Companies, as
applicable, and in full force and effect except to the extent they have
previously expired in accordance with their terms or if the failure to be
valid, binding and in full force and effect, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Washington Business. None of the Washington Companies has
Knowledge of, or has received notice of, any violation or default under
(nor to their Knowledge does there exist any condition which with the
passage of time or the giving of notice would cause such a violation or
default under) the provisions of any Contract of the Washington Companies
that will be included in the Washington Assets, except for violations or
defaults which,
33
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Washington Business.
(o) Employee Benefits.
(i) With respect to each Washington Plan, except for
Washington Plans the liabilities under which, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect on the Washington Business, Conexant has made
available to Alpha a true, correct and complete copy of: (A) all plan
documents, trust agreements, and insurance contracts and other
funding vehicles; (B) the three most recent Annual Reports (Form 5500
Series) and accompanying schedules and exhibits, if any; (C) the
current summary plan description and any material modifications
thereto, if any (in each case, whether or not required to be
furnished under ERISA); (D) the three most recent annual financial
reports, if any; (E) the three most recent actuarial reports, if any;
(F) the most recent determination letter from the IRS, if any; and
(G) the annual compliance testing under Sections 401(a) through 416
of the Code for the three most recently completed plan years, if any.
(ii) With respect to each Washington Plan, Conexant and
its Subsidiaries have complied with, and are now in compliance with,
all provisions of ERISA, the Code and all other Applicable Laws and
regulations applicable to such Washington Plans and each Washington
Plan has been administered in accordance with its terms, in each case
except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Washington
Business. Each Washington Plan that is required by ERISA to be funded
is fully funded in accordance with reasonable actuarial assumptions,
except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Washington
Business.
(iii) All Washington Plans subject to the Applicable Laws
of any jurisdiction outside of the United States (A) have been
maintained in accordance with all applicable requirements, (B) if
they are intended to qualify for special tax treatment meet all
requirements for such treatment, and (C) if they are intended to be
funded and/or book-reserved are fully funded and/or book-reserved, as
appropriate, based upon reasonable actuarial assumptions, in each
case except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the
Washington Business.
(iv) None of the Washington Companies has any liability
under or obligation to any Multiemployer Plan that will be included
in the Washington Liabilities.
34
(p) Labor Relations. As of the date of this Agreement, (i) none
of the Washington Companies is a party to any collective bargaining
agreement, (ii) except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Washington
Business, no labor organization or group of employees of the Washington
Business has made a pending demand for recognition or certification, and
there are no representation or certification proceedings or petitions
seeking a representation proceeding presently pending or, to the Knowledge
of Conexant, threatened to be brought or filed, with the National Labor
Relations Board or any other domestic or foreign labor relations tribunal
or authority and (iii) except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Washington Business, there are no organizing activities, strikes, work
stoppages, slowdowns, lockouts, arbitrations or grievances, or other labor
disputes pending or, to the Knowledge of Conexant, threatened against or
involving any of the Washington Companies.
(q) Insurance. The Washington Companies maintain insurance
coverage with reputable insurers in such amounts and covering such risks as
is deemed reasonably appropriate for its business (taking into account the
cost and availability of such insurance).
(r) Liens. No Liens exist on any of the Washington Assets,
except (i) Liens expressly set forth in the Washington Financial
Statements, (ii) Liens consisting of zoning or planning restrictions,
easements, permits or other restrictions or limitations on the use of real
property or irregularities in title thereto which do not materially detract
from the value of, or impair the use of, such property in the Washington
Business, (iii) Liens for current taxes, assessments or governmental
charges or levies on property not yet due or which are being contested in
good faith and for which appropriate reserves in accordance with GAAP have
been created and (iv) Liens which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Washington Business.
(s) Ownership of Alpha Common Stock. Conexant, together with
its affiliates and associates (as those terms are defined in Rule 12b-2
promulgated under the Exchange Act), is not the beneficial owner of 5% or
more of the outstanding shares of Alpha Common Stock. For purposes of this
Section 5.2(s), a Person shall be deemed to be the "beneficial owner" of
Alpha Common Stock if such Person, directly or indirectly, controls the
voting of such Alpha Common Stock or has any options, warrants, conversion
or other rights to acquire such Alpha Common Stock.
35
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 6.1 COVENANTS OF ALPHA. During the period from the date
of this Agreement and continuing until the Effective Time, Alpha agrees as
to itself and its Subsidiaries that (except as required or otherwise
expressly contemplated or permitted by this Agreement or Section 6.1
(including its subsections) of the Alpha Disclosure Schedule or as required
by a Governmental Entity or to the extent that Conexant shall otherwise
consent in writing, which consent shall not be unreasonably withheld or
delayed):
(a) Ordinary Course.
(i) Alpha and its Subsidiaries shall carry on their
respective businesses in the ordinary course, in substantially the
same manner as heretofore conducted, and shall use all reasonable
efforts to preserve intact their present business organizations, keep
available the services of their current officers and other key
employees and preserve their relationships with customers, suppliers
and others having business dealings with them to the end that their
ongoing businesses shall not be materially impaired at the Effective
Time; provided, however, that no action by Alpha or its Subsidiaries
with respect to matters specifically addressed by any other provision
of this Section 6.1 shall be deemed a breach of this Section
6.1(a)(i) unless such action would constitute a breach of one or more
of such other provisions.
(ii) Other than in connection with acquisitions permitted
by Section 6.1(e) or investments permitted by Section 6.1(g), Alpha
shall not, and shall not permit any of its Subsidiaries to, (A) enter
into any new material line of business or (B) incur or commit to any
capital expenditures or any obligations or liabilities in connection
with any capital expenditures other than capital expenditures and
obligations or liabilities in connection therewith incurred or
committed to in the ordinary course of business consistent with past
practice.
(b) Dividends; Changes in Share Capital. Alpha shall not, and
shall not permit any of its Subsidiaries to, and shall not propose to, (i)
declare or pay any dividends on or make other distributions (whether in
cash, stock or property) in respect of any of its capital stock, except for
dividends by any direct or indirect wholly-owned Subsidiaries of Alpha,
(ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in
lieu of or in substitution for, shares of its capital stock, except for any
such transaction by a wholly-
36
owned Subsidiary of Alpha which remains a wholly-owned Subsidiary after
consummation of such transaction or (iii) repurchase, redeem or otherwise
acquire any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock.
(c) Issuance of Securities. Alpha shall not, and shall not
permit any of its Subsidiaries to, issue, deliver, sell, pledge or
otherwise encumber, or authorize or propose the issuance, delivery, sale,
pledge or encumbrance of, any shares of its capital stock of any class, any
Alpha Voting Debt or any securities convertible into or exercisable for, or
any rights, warrants, calls or options to acquire, any such shares or Alpha
Voting Debt, or enter into any commitment, arrangement, undertaking or
agreement with respect to any of the foregoing, other than (i) the issuance
of Alpha Common Stock upon the exercise of Alpha Stock Options outstanding
on the date hereof in accordance with their present terms or pursuant to
Alpha Stock Options or other stock based awards granted pursuant to clause
(ii) below, (ii) the granting of Alpha Stock Options or other stock based
awards under the Alpha Stock Plans in a manner consistent with Alpha's
established policies and guidelines in effect on the date hereof relating
to the granting of Alpha Stock Options or other stock based awards or (iii)
issuances by a wholly-owned Subsidiary of Alpha of capital stock of such
Subsidiary to such Subsidiary's parent or another wholly-owned Subsidiary
of Alpha.
(d) Governing Documents. Except to the extent required to
comply with its obligations hereunder or with Applicable Laws, Alpha shall
not amend or propose to so amend its certificate of incorporation, by-laws
or other governing documents.
(e) No Acquisitions. Alpha shall not, and shall not permit any
of its Subsidiaries to, acquire or agree to acquire by merger or
consolidation, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, limited liability entity, joint venture,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any material assets (excluding the acquisition
of assets used in the operations of the business of Alpha and its
Subsidiaries in the ordinary course consistent with past practice, which
assets do not constitute a business unit, division or all or substantially
all of the assets of the transferor); provided, however, that the foregoing
shall not prohibit (x) internal reorganizations or consolidations involving
existing Subsidiaries of Alpha or (y) the creation of new direct or
indirect wholly-owned Subsidiaries of Alpha organized to conduct or
continue activities otherwise permitted by this Agreement.
(f) No Dispositions. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of Alpha or (ii) as may be
required by or in
37
conformance with Applicable Laws in order to permit or facilitate the
consummation of the transactions contemplated hereby, Alpha shall not, and shall
not permit any of its Subsidiaries to, sell, lease, license or otherwise
encumber or subject to any Lien or otherwise dispose of, or agree to sell,
lease, license or otherwise encumber or subject to any Lien or otherwise dispose
of, any of its assets (including capital stock of Subsidiaries of Alpha but
excluding inventory and obsolete equipment in the ordinary course of business
consistent with past practice).
(g) Investments; Indebtedness. Alpha shall not, and shall not
permit any of its Subsidiaries to, (i) make any loans, advances or capital
contributions to, or investments in, any other Person, other than (A) loans
or investments by Alpha or a Subsidiary of Alpha to or in Alpha or a
Subsidiary of Alpha, (B) pursuant to any contract or other legal obligation
of Alpha or any of its Subsidiaries as in effect at the date of this
Agreement, (C) employee loans or advances for travel, business, relocation
or other reimbursable expenses made in the ordinary course of business, (D)
loans, advances, capital contributions or investments which in the
aggregate do not exceed the amount specified in Section 6.1(g) of the Alpha
Disclosure Schedule or (E) loans, advances, capital contributions or
investments in the ordinary course of business which are not, individually
or in the aggregate, material to Alpha and its Subsidiaries taken as a
whole or (ii) create, incur, assume or suffer to exist any indebtedness,
issuances of debt securities, guarantees, loans or advances not in
existence as of the date of this Agreement except in the ordinary course of
business which are not, individually or in the aggregate, material to Alpha
and its Subsidiaries taken as a whole. Without limiting Alpha's covenants
contained in this Section 6.1, Alpha will consult with Conexant in any
efforts by Alpha to obtain financing with respect to Alpha's obligations
under the Facility Sale Agreement, provided that Conexant's consent in
writing, which shall not be unreasonably withheld or delayed, shall be
required prior to Alpha agreeing or committing to such financing. Conexant
will cooperate with and reasonably assist Alpha, at Alpha's expense, in
Alpha's efforts to obtain such financing.
(h) Tax-Free Qualification. Alpha shall use its reasonable best
efforts not to, and shall use its reasonable best efforts not to permit any
of its Subsidiaries to, take any action (including any action otherwise
permitted by this Section 6.1) that would prevent or impede the
Contribution and Distribution from qualifying as a reorganization under
Sections 355 and 368 of the Code or the Merger from qualifying as a
reorganization under Section 368 of the Code.
(i) Compensation. Except (x) as set forth in Section 6.1(c),
(y) as required by Applicable Laws or by the terms of any collective
bargaining agreement or other agreement currently in effect between Alpha
or any Subsidiary of Alpha and any executive officer or employee thereof or
(z) in the ordinary course of business, Alpha shall not increase the amount
of compensation or employee benefits of any director,
38
officer or employee of Alpha or any Subsidiary or business unit of Alpha, pay
any pension, retirement, savings or profit-sharing allowance to any employee
that is not required by any existing plan or agreement, enter into any Contract
with any of its employees regarding his or her employment, compensation or
benefits, increase or commit to increase any employee benefits, issue any
additional Alpha Stock Options, adopt or amend or make any commitment to adopt
or amend any Alpha Plan or make any contribution, other than regularly scheduled
contributions, to any Alpha Plan. Alpha shall not accelerate the vesting of, or
the lapsing of restrictions with respect to, any stock options or other
stock-based compensation, except as required by Applicable Laws or in the
ordinary course of business or in accordance with this Agreement, and any option
committed to be granted or granted after the date hereof shall not accelerate as
a result of the approval or consummation of any transaction contemplated by this
Agreement. Notwithstanding the foregoing, Alpha may, without Conexant's consent
but only after consultation with Conexant, enter into retention or other similar
agreements with employees of Alpha on terms, and with such number of employees,
as are substantially comparable to the severance or other similar agreements to
be entered into between the Washington Companies and their employees.
(j) Accounting Methods; Income Tax Elections. Except as
disclosed in the Alpha Filed SEC Reports, as required by a Governmental
Entity or as required by changes in GAAP as concurred in by Alpha's
independent public accountants, Alpha shall not make any material change in
its methods of accounting in effect at April 1, 2001. Alpha shall not, and
shall not permit its Subsidiaries to, (i) change its fiscal year or (ii)
make any material Tax election or settle or compromise any material income
Tax liability, other than in the ordinary course of business consistent
with past practice.
(k) Certain Agreements and Arrangements. Alpha shall not, and
shall not permit any of its Subsidiaries to, enter into any Contracts that
limit or otherwise restrict Alpha or any of its Subsidiaries or any of
their respective affiliates or any successor thereto, or that would, after
the Effective Time, limit or restrict the Combined Company or any of its
Subsidiaries or any of their respective affiliates or any successor
thereto, from engaging or competing in any line of business in any
geographic area which agreements or arrangements, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect
on the Combined Company and its Subsidiaries following the Merger.
(l) No Related Actions. Alpha will not, and will not permit any
of its Subsidiaries to, agree or commit to do any of the foregoing actions.
SECTION 6.2 COVENANTS OF CONEXANT AND WASHINGTON. During the
period from the date of this Agreement and continuing until the Effective
Time, Conexant, as to the Washington Companies, and Washington each agrees
that (except for
39
the Contribution, the Distribution, as required or otherwise expressly
contemplated or permitted by this Agreement, the Reorganization Agreements or
Section 6.2 (including its subsections) of the Conexant Disclosure Schedule or
as required by a Governmental Entity or to the extent that Alpha shall otherwise
consent in writing, which consent shall not be unreasonably withheld or
delayed):
(a) Ordinary Course.
(i) The Washington Companies shall carry on the
Washington Business in the ordinary course, in substantially the same
manner as heretofore conducted, and shall use all reasonable efforts
to preserve intact their present business organizations, keep
available the services of their current officers and other key
employees of the Washington Business and preserve their relationships
with customers, suppliers and others having business dealings with
them to the end that the Washington Business shall not be materially
impaired at the Effective Time; provided, however, that no action by
the Washington Companies with respect to matters specifically
addressed by any other provision of this Section 6.2 shall be deemed
a breach of this Section 6.2(a)(i) unless such action would
constitute a breach of one or more of such other provisions.
(ii) Other than in connection with acquisitions permitted
by Section 6.2(e) or investments permitted by Section 6.2(g), the
Washington Companies shall not (A) enter into any new material line
of business that would be part of the Washington Business or (B)
incur or commit to any capital expenditures or any obligations or
liabilities in connection with any capital expenditures other than
capital expenditures and obligations or liabilities in connection
therewith incurred or committed to in the ordinary course of business
consistent with past practice.
(b) Dividends; Changes in Share Capital. The members of the
Washington Group shall not, and shall not propose to, declare any dividends
on or make other distributions (whether in cash, stock or property) in
respect of any of their capital stock that will be payable after the
Effective Time, except for dividends payable entirely to members of the
Washington Group. Prior to the Time of Distribution, Conexant will not, and
following the Time of Distribution and prior to the Effective Time,
Washington will not, (i) split, combine or reclassify any of its capital
stock or issue or authorize or propose the issuance of any other securities
of Conexant or Washington, as the case may be, in respect of, in lieu of or
in substitution for, shares of its capital stock or (ii) repurchase, redeem
or otherwise acquire any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock.
40
(c) Issuance of Securities.
(i) Prior to the Time of Distribution, Conexant shall not
issue, deliver, sell, pledge or otherwise encumber, or authorize or
propose the issuance, delivery, sale, pledge or encumbrance of, any
shares of Conexant Common Stock or any securities convertible into or
exercisable for, or any rights, warrants, calls or options to
acquire, any such shares, or enter into any commitment, arrangement,
undertaking or agreement with respect to any of the foregoing, other
than (A) the issuance of Conexant Common Stock (and the associated
Conexant Rights) (w) pursuant to the Conexant Systems, Inc.
Retirement Savings Plan and the Conexant Systems, Inc. Hourly
Employees Savings Plan, (x) upon the exercise of Conexant Stock
Options outstanding on the date hereof in accordance with their
present terms or pursuant to Conexant Stock Options or other stock
based awards granted pursuant to clause (B) below, (y) upon
conversion of the Conexant Convertible Notes or (z) pursuant to the
exchange or retraction of Exchangeable Shares of Philsar
Semiconductor Inc., (B) the granting of Conexant Stock Options or
other stock based awards under the Conexant Stock Plans in a manner
consistent with Conexant's established policies and guidelines in
effect on the date hereof relating to the granting of Conexant Stock
Options or other stock based awards or (C) issuances in accordance
with the Conexant Rights Agreement.
(ii) Following the Time of Distribution and prior to the
Effective Time, no member of the Washington Group will issue,
deliver, sell, pledge or otherwise encumber, or authorize or propose
the issuance, delivery, sale, pledge or encumbrance of, any shares of
its capital stock of any class or any securities convertible into or
exercisable for, or any rights, warrants, calls or options to
acquire, any such shares, or enter into any commitment, arrangement,
undertaking or agreement with respect to any of the foregoing, other
than (A) the granting of options to purchase Washington Common Stock
upon conversion of Conexant Stock Options in connection with the
Distribution in accordance with the Employee Matters Agreement or (B)
issuances by a wholly-owned Subsidiary of Washington of capital stock
of such Subsidiary to such Subsidiary's parent or another
wholly-owned Subsidiary of Washington.
(d) Governing Documents. Except to the extent required to
comply with its obligations hereunder or under the Reorganization
Agreements or with Applicable Laws, Washington shall not amend or propose
to so amend its certificate of incorporation, by-laws or other governing
documents.
(e) No Acquisitions. The Washington Companies shall not acquire
or agree to acquire by merger or consolidation, or by purchasing a
substantial equity interest
41
in or a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, limited liability entity, joint
venture, association or other business organization or division thereof or
otherwise acquire or agree to acquire any material assets (excluding the
acquisition of assets used in the operations of the Washington Business in the
ordinary course consistent with past practice, which assets do not constitute a
business unit, division or all or substantially all of the assets of the
transferor), in each case, that would be part of the Washington Business;
provided, however, that the foregoing shall not prohibit (x) internal
reorganizations or consolidations involving existing Subsidiaries of Conexant or
(y) the creation of new direct or indirect wholly-owned Subsidiaries of Conexant
organized to conduct or continue activities otherwise permitted by this
Agreement.
(f) No Dispositions. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of Conexant (with respect to
which, to the extent involving Washington Assets or Washington Liabilities,
Conexant shall reasonably consult with Alpha) or (ii) as may be required by
or in conformance with Applicable Laws in order to permit or facilitate the
consummation of the transactions contemplated hereby or by the
Reorganization Agreements, the Washington Companies shall not sell, lease,
license or otherwise encumber or subject to any Lien or otherwise dispose
of, or agree to sell, lease, license or otherwise encumber or subject to
any Lien or otherwise dispose of, any Assets that would constitute
Washington Assets if the Distribution Date were the date hereof (including
capital stock of members of the Washington Group, but excluding inventory
and obsolete equipment in the ordinary course of business consistent with
past practice).
(g) Investments; Indebtedness. The Washington Companies shall
not (i) make any loans, advances or capital contributions to, or
investments in, any other Person that will be included in the Washington
Assets, other than (A) loans or investments by a member of the Washington
Group to or in another member of the Washington Group, (B) pursuant to any
contract or other legal obligation of any of the Washington Companies as in
effect at the date of this Agreement, (C) employee loans or advances for
travel, business, relocation or other reimbursable expenses made in the
ordinary course of business, (D) loans, advances, capital contributions or
investments which in the aggregate do not exceed the amount specified in
Section 6.2(g) of the Conexant Disclosure Schedule or (E) loans, advances,
capital contributions or investments in the ordinary course of business
which are not, individually or in the aggregate, material to the Washington
Business taken as a whole or (ii) create, incur, assume or suffer to exist
any indebtedness, issuances of debt securities, guarantees, loans or
advances not in existence as of the date of this Agreement that will be
included in the Washington Liabilities except in the ordinary course of
business which are not, individually or in the aggregate, material to the
Washington Business taken as a whole.
42
(h) Tax-Free Qualification. Conexant and Washington shall use
their reasonable best efforts not to, and shall use their reasonable best
efforts not to permit any of their Subsidiaries to, take any action
(including any action otherwise permitted by this Section 6.2) that would
prevent or impede the Contribution and Distribution from qualifying as a
reorganization under Sections 355 and 368 of the Code or the Merger from
qualifying as a reorganization under Section 368 of the Code.
(i) Compensation. Except (x) as set forth in Section 6.2(c),
(y) as required by Applicable Laws or by the terms of any collective
bargaining agreement or other agreement currently in effect between any of
the Washington Companies and any Washington Employee or (z) in the ordinary
course of business, none of the Washington Companies shall increase the
amount of compensation or employee benefits of any director or any
Washington Employee, pay any pension, retirement, savings or profit-sharing
allowance to any Washington Employee that is not required by any existing
plan or agreement, enter into any Contract with any Washington Employee
regarding his or her employment, compensation or benefits, increase or
commit to increase any employee benefits for Washington Employees, issue
any additional Conexant Stock Options, adopt or amend or make any
commitment to adopt or amend any Washington Plan or make any contribution,
other than regularly scheduled contributions, to any Washington Plan for
the benefit of Washington Employees. The Washington Companies shall not
accelerate the vesting of, or the lapsing of restrictions with respect to,
any stock options or other stock-based compensation, except as required by
Applicable Laws or in the ordinary course of business or in accordance with
this Agreement, and any option committed to be granted or granted after the
date hereof shall not accelerate as a result of the approval or
consummation of any transaction contemplated by this Agreement.
Notwithstanding the foregoing, the Washington Companies may, without
Alpha's consent but only after consultation with Alpha, enter into
retention or other similar agreements with employees of the Washington
Business on terms, and with such number of employees, as are substantially
comparable to the severance or other similar agreements currently in effect
or to be entered into between Alpha and its employees.
(j) Accounting Methods; Income Tax Elections. Except as
disclosed in Conexant Filed SEC Reports or the Washington Financial
Statements, as required by a Governmental Entity or as required by changes
in GAAP as concurred in by their independent public accountants, the
Washington Business shall not make any material change in its methods of
accounting in effect at September 30, 2001. No member of the Washington
Group will (i) change its fiscal year or (ii) make any material Tax
election or settle or compromise any material income Tax liability with
respect to matters that will be a liability of the Washington Group after
the Time of Distribution pursuant to the Tax Allocation Agreement, other
than in the ordinary course of business consistent with past practice.
43
(k) Certain Agreements and Arrangements. Except as contemplated
by the Reorganization Agreements, the Washington Companies shall not enter
into any Contracts that will bind any member of the Washington Group after
the Time of Distribution that limit or otherwise restrict any of the
Washington Companies or any of their respective affiliates or any successor
thereto, or that would, after the Effective Time, limit or restrict the
Combined Company or any of its Subsidiaries or any of their respective
affiliates or any successor thereto, from engaging or competing in any line
of business in any geographic area, which agreements or arrangements,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Combined Company and its Subsidiaries
following the Merger.
(l) No Washington Business Activities. Prior to the Effective
Time, Washington will not conduct any activities other than in connection
with the organization of Washington, the negotiation and execution of this
Agreement, the Reorganization Agreements, the Mexican Stock and Asset
Purchase Agreement dated as of the date hereof between Conexant and Alpha
(the "Facility Sale Agreement"), the U.S. Asset Purchase Agreement dated as
of the date hereof between Conexant and Alpha (the "U.S. Asset Purchase
Agreement"), the Facility Services Agreement to be entered into prior to
the Effective Time between Conexant and Alpha (the "Facility Services
Agreement"), the Newport Supply Agreement, the Newbury Supply Agreement and
the consummation of the transactions contemplated hereby and thereby.
(m) No Related Actions. None of Conexant or its Subsidiaries
(as to the Washington Companies) or Washington will agree or commit to do
any of the foregoing actions.
SECTION 6.3 REPORTS; SEC REPORTS. Each of Conexant (with
respect to the Washington Business) and Alpha shall (a) confer on a regular
and frequent basis with the other and (b) report to the other (to the
extent permitted by law or regulation or any applicable confidentiality
agreement) on operational matters. Each of Conexant (with respect to the
Washington Business) and Alpha shall file all reports required to be filed
by each of them with the SEC between the date of this Agreement and the
Effective Time and shall deliver to the other parties copies of all such
reports promptly after the same are filed.
SECTION 6.4 CONTROL OF OTHER PARTY'S BUSINESS. Nothing
contained in this Agreement shall give Conexant, directly or indirectly,
the right to control or direct Alpha's operations prior to the Effective
Time. Nothing contained in this Agreement shall give Alpha, directly or
indirectly, the right to control or direct the operations of the Washington
Business prior to the Effective Time. Prior to the Effective Time, each of
Conexant and Alpha shall exercise, consistent with the terms and conditions
of this Agreement, complete control and supervision over its respective
operations.
44
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 PREPARATION OF PROXY STATEMENT; STOCKHOLDERS MEETING.
(a) As promptly as reasonably practicable following the date
hereof, Alpha and Conexant shall prepare and Alpha shall file with the SEC
proxy materials which shall constitute the Proxy Statement/Prospectus to be
mailed to Alpha's stockholders in connection with the Alpha Stockholders
Meeting (such proxy statement/prospectus, and any amendments or supplements
thereto, the "Proxy Statement/Prospectus") and Conexant and Alpha shall
prepare and Alpha shall file with the SEC a registration statement on Form
S-4 with respect to the issuance of Alpha Common Stock in the Merger (the
"Form S-4"). The Proxy Statement/Prospectus will be included in and will
constitute a part of the Form S-4 as Alpha's prospectus and will be mailed
to Conexant's stockholders as an Information Statement in connection with
the Distribution. The Form S-4 and the Proxy Statement/Prospectus will
comply as to form in all material respects with the requirements of the
Exchange Act and the Securities Act and the rules and regulations of the
SEC thereunder. Alpha shall use reasonable best efforts to have the Proxy
Statement/Prospectus cleared by the SEC as promptly as reasonably
practicable after filing with the SEC, to have the Form S-4 declared
effective by the SEC as promptly as reasonably practicable after filing
with the SEC and to keep the Form S-4 effective as long as is necessary to
consummate the Merger and the transactions contemplated thereby. Alpha
shall, as promptly as practicable after receipt thereof, provide to
Conexant copies of any written comments and advise Conexant of any oral
comments with respect to the Proxy Statement/Prospectus and the Form S-4
received from the SEC. Alpha shall provide Conexant with a reasonable
opportunity to review and comment on any amendment or supplement to the
Form S-4 or the Proxy Statement/Prospectus prior to filing such with the
SEC, and with a copy of all such filings made with the SEC. Notwithstanding
any other provision herein to the contrary, no amendment or supplement
(including by incorporation by reference) to the Proxy Statement/Prospectus
or the Form S-4 shall be made without the approval of both Conexant and
Alpha, which approval shall not be unreasonably withheld or delayed. Alpha
will use reasonable best efforts to cause the Proxy Statement/Prospectus to
be mailed to Alpha's stockholders, and Conexant will use reasonable best
efforts to cause the Proxy Statement/Prospectus to be mailed to Conexant's
stockholders, in each case as promptly as practicable after the Proxy
Statement/Prospectus is cleared by the SEC and the Form S-4 is declared
effective under the Securities Act. Alpha shall also take any action (other
than qualifying to do business in any jurisdiction in which it is not now
so qualified or to file a general consent to service of process) required
to be taken under any applicable state securities laws in connection with
the issuance of Alpha Common Stock
45
in the Merger and Alpha and Conexant shall furnish all information concerning
Alpha, Washington and Conexant and the holders of Conexant Common Stock as may
be reasonably requested in connection with any such action. Alpha will advise
Conexant, promptly after it receives notice thereof, of the time when the Form
S-4 has become effective, the issuance of any stop order with respect to the
Form S-4, the suspension of the qualification of the Alpha Common Stock issuable
in connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Proxy Statement/Prospectus or the Form
S-4. If at any time prior to the Effective Time any information relating to
Alpha or Washington, or any of their respective affiliates, officers or
directors, should be discovered by Alpha or Conexant which should be set forth
in an amendment or supplement to the Form S-4 or the Proxy Statement/Prospectus
so that any of such documents would not include any misstatement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, the party which discovers such information shall promptly notify the
other parties hereto and, to the extent required by Applicable Laws, an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and disseminated to the stockholders of Alpha and
Conexant.
(b) Alpha shall duly take all lawful action to call, give
notice of, convene and hold a meeting of its stockholders on a date
determined in accordance with the mutual agreement of Alpha and Conexant
(the "Alpha Stockholders Meeting") for the purpose of obtaining the
Required Alpha Vote with respect to the transactions contemplated by this
Agreement and shall take all lawful action to solicit the approval and
adoption of this Agreement and the Merger by the Required Alpha Vote, and
the Board of Directors of Alpha shall recommend approval and adoption of
this Agreement and the Merger by the stockholders of Alpha to the effect as
set forth in Section 5.1(f) (the "Alpha Recommendation"), and shall not
withdraw, modify or qualify (or propose to withdraw, modify or qualify)
such recommendation (a "Change in the Alpha Recommendation"); provided,
however, that the Board of Directors of Alpha may make a Change in the
Alpha Recommendation pursuant to Section 7.5. Notwithstanding any Change in
the Alpha Recommendation, this Agreement shall be submitted to the
stockholders of Alpha at the Alpha Stockholders Meeting for the purpose of
approving and adopting this Agreement and the Merger, and nothing contained
herein shall be deemed to relieve Alpha of such obligation.
SECTION 7.2 COMBINED COMPANY BOARD OF DIRECTORS AND MANAGEMENT.
At or prior to the Effective Time, the parties will take all action
necessary to effectuate the provisions of Sections 1.8 and 1.9.
SECTION 7.3 ACCESS TO INFORMATION. Upon reasonable notice, each
of Conexant and Alpha shall (and shall cause its Subsidiaries to) afford to
the officers,
46
employees, accountants, counsel, financial advisors and other representatives of
the other reasonable access during normal business hours, during the period
prior to the Effective Time, to all its books, records, properties, plants and
personnel (in the case of Conexant and its Subsidiaries, only with respect to
the Washington Business) and, during such period, such party shall (and shall
cause its Subsidiaries to) furnish promptly to the other party all information
concerning it and its business, properties and personnel (as to Conexant and its
Subsidiaries, only with respect to the Washington Business) as such other party
may reasonably request; provided, however, that either party may restrict the
foregoing access to the extent that (i) any Applicable Laws or Contract requires
such party or its Subsidiaries to restrict or prohibit access to any such
properties or information or (ii) the information is subject to confidentiality
obligations to a third party. The parties will hold any such information
obtained pursuant to this Section 7.3 in confidence in accordance with, and will
otherwise be subject to, the provisions of the Mutual Confidentiality Agreement
dated September 28, 2001 between Conexant and Alpha (as it may be amended or
supplemented, the "Confidentiality Agreement"). Any investigation by either
Alpha or Conexant shall not affect the representations and warranties contained
herein or the conditions to the respective obligations of the parties to
consummate the Merger.
SECTION 7.4 REASONABLE BEST EFFORTS.
(a) Subject to the terms and conditions of this Agreement, each
party will use its reasonable best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, and to assist and cooperate
with the other parties in doing or causing to be done, all things
necessary, proper or advisable under this Agreement and Applicable Laws to
consummate the Merger and the other transactions contemplated by this
Agreement as soon as practicable after the date hereof, including (i)
taking all reasonable actions to cause the conditions set forth in Article
VIII to be satisfied as promptly as reasonably practicable; (ii) preparing
and filing as promptly as practicable all documentation to effect all
necessary applications, notices, petitions and filings and to obtain as
promptly as practicable the Tax Ruling, all Alpha Necessary Consents and
Conexant Necessary Consents and all other consents, waivers, licenses,
orders, registrations, approvals, permits, rulings, authorizations and
clearances necessary or advisable to be obtained from any third party
and/or any Governmental Entity in order to consummate the Merger or any of
the other transactions contemplated by this Agreement (collectively, the
"Required Approvals") and (iii) taking all reasonable steps as may be
necessary to obtain all Required Approvals. In furtherance and not in
limitation of the foregoing, each party hereto agrees to make (i) an
appropriate filing of a Notification and Report Form pursuant to the HSR
Act with respect to the transactions contemplated hereby as promptly as
practicable after the date hereof, (ii) appropriate filings, if any are
required, with the European Commission and/or other foreign regulatory
authorities in accordance with applicable competition, merger control,
antitrust, investment or similar
47
Applicable Laws, and (iii) all other necessary filings with other Governmental
Entities relating to the Merger, and, in each case, to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to such Applicable Laws or by such authorities and to use
reasonable best efforts to cause the expiration or termination of the applicable
waiting periods under the HSR Act and the receipt of the Required Approvals
under such other Applicable Laws or from such authorities as soon as
practicable. Notwithstanding the foregoing, nothing in this Section 7.4 shall
require any of Alpha and its Subsidiaries, Conexant and its Subsidiaries,
Washington and its Subsidiaries or the Combined Company and its Subsidiaries to
sell, hold separate or otherwise dispose of any assets of Alpha, Conexant,
Washington, the Combined Company or their respective Subsidiaries (including the
capital stock of any Subsidiary) or conduct their business in a specified
manner, or agree to do so, whether as a condition to obtaining any approval from
a Governmental Entity or any other Person or for any other reason, if such sale,
holding separate or other disposition or the conduct of their business in a
specified manner is not conditioned on the Closing or, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect on the
Combined Company and its Subsidiaries, after giving effect to the Merger (or,
only with respect to Conexant and its Subsidiaries, to have a Material Adverse
Effect on Conexant and its Subsidiaries, after giving effect to the
Distribution).
(b) Each of Alpha, on the one hand, and Conexant and
Washington, on the other hand, shall, in connection with the efforts
referenced in Section 7.4(a) to obtain all Required Approvals, use its
reasonable best efforts to (i) cooperate in all respects with each other in
connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a
private party, (ii) promptly inform the other party of any communication
received by such party from, or given by such party to, the Antitrust
Division of the Department of Justice (the "DOJ"), the Federal Trade
Commission (the "FTC") or any other Governmental Entity and of any material
communication received or given in connection with any proceeding by a
private party, in each case regarding any of the transactions contemplated
hereby, and (iii) permit the other party to review any communication given
by it to, and consult with each other in advance of any meeting or
conference with, the DOJ, the FTC or any such other Governmental Entity or,
in connection with any proceeding by a private party, with any other
Person, and to the extent appropriate or permitted by the DOJ, the FTC or
such other applicable Governmental Entity or other Person, give the other
party the opportunity to attend and participate in such meetings and
conferences.
(c) In furtherance and not in limitation of the covenants of
the parties contained in Section 7.4(a) and Section 7.4(b), if any
administrative or judicial action or proceeding, including any proceeding
by a private party, is instituted (or threatened to be instituted)
challenging any transaction contemplated by this Agreement as violative of
any Applicable Laws, or if any statute, rule, regulation, executive order,
decree,
48
injunction or administrative order is enacted, entered, promulgated or enforced
by a Governmental Entity which would make the Merger or the other transactions
contemplated hereby illegal or would otherwise prohibit or materially impair or
delay the consummation of the Merger or the other transactions contemplated
hereby, each of Conexant and Alpha shall cooperate in all respects with each
other and use its respective reasonable best efforts, including, subject to the
last sentence of Section 7.4(a), selling, holding separate or otherwise
disposing of any assets of Alpha or its Subsidiaries or the Washington Companies
(including the capital stock of any Subsidiary) or conducting their business (in
the case of Conexant, only with respect to the Washington Business) in a
specified manner, or agreeing to do so, to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the Merger or the other transactions contemplated by this
Agreement and to have such statute, rule, regulation, executive order, decree,
injunction or administrative order repealed, rescinded or made inapplicable so
as to permit consummation of the transactions contemplated by this Agreement.
Notwithstanding the foregoing or any other provision of this Agreement, nothing
in this Section 7.4 shall limit a party's right to terminate this Agreement
pursuant to Section 9.1(b) or Section 9.1(c) so long as such party has complied
with its obligations under this Section 7.4.
(d) Each of Alpha, Conexant and Washington shall cooperate with
each other in obtaining opinions of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
LLP, counsel to Alpha, and ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel to Conexant and
Washington, to satisfy the conditions set forth in Section 8.2(c) and
Section 8.3(c). In connection therewith, each of Alpha and Conexant shall
deliver to such counsel customary representation letters in form and
substance reasonably satisfactory to such counsel.
SECTION 7.5 ACQUISITION PROPOSALS.
(a) Without limiting Alpha's other obligations under this
Agreement (including under Article VI hereof), Alpha agrees that from and
after the date of this Agreement until the earlier of the Effective Time or
the termination of this Agreement in accordance with Article IX, neither it
nor any of its Subsidiaries shall, and it shall use its reasonable best
efforts to cause its and its Subsidiaries' officers, directors, employees,
agents and representatives (including any investment banker, attorney or
accountant retained by it or any of its Subsidiaries) not to, directly or
indirectly, (i) initiate, solicit, encourage or knowingly facilitate
(including by way of furnishing information) any inquiries or the making of
any proposal or offer with respect to, or a transaction to effect, any
Alpha Acquisition Proposal (as defined below), (ii) have any discussions
with or provide any confidential information or data to any Person relating
to an Alpha Acquisition Proposal, or engage in any negotiations concerning
an Alpha Acquisition
49
Proposal, or knowingly facilitate any effort or attempt to make or implement an
Alpha Acquisition Proposal, (iii) approve or recommend, or propose publicly to
approve or recommend, any Alpha Acquisition Proposal or (iv) approve or
recommend, or propose to approve or recommend, or execute or enter into, any
letter of intent, agreement in principle, merger agreement, acquisition
agreement, option agreement or other similar agreement related to any Alpha
Acquisition Proposal.
(b) For purposes of this Agreement, "Alpha Acquisition
Proposal" means any inquiry, proposal or offer from any Person with respect
to (A) a merger, reorganization, share exchange, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving Alpha or any of its Significant Subsidiaries (as
defined in Rule 1-02 of Regulation S-X of the SEC), (B) any purchase or
sale or other disposition of 20% or more of the consolidated assets
(including stock of its Subsidiaries) of Alpha and its Subsidiaries, taken
as a whole, or (C) any purchase or sale of, or tender or exchange offer
for, or similar transaction with respect to, the equity securities of Alpha
that, if consummated, would result in any Person (or the stockholders of
such Person) beneficially owning securities representing 20% or more of the
total voting power of Alpha (or of the surviving parent entity in such
transaction) or any of its Significant Subsidiaries, including in the case
of each of clauses (A) through (C), any single or multi-step transaction or
series of related transactions (other than a proposal or offer made by
Conexant or a Subsidiary thereof).
(c) Notwithstanding anything in this Agreement to the contrary,
Alpha or its Board of Directors shall be permitted to (i) to the extent
applicable, comply with Rule 14d-9 and Rule 14e-2 promulgated under the
Exchange Act with regard to an Alpha Acquisition Proposal, (ii) effect a
Change in the Alpha Recommendation or (iii) engage in any discussions or
negotiations with, or provide any information to, any Person in response to
an unsolicited bona fide written Alpha Acquisition Proposal by any such
Person (which has not been withdrawn) in order to be informed with respect
thereto in order to make any determination permitted in clause (ii), if and
only to the extent that, in any such case referred to in clause (ii) or
(iii), (A) the Alpha Stockholders Meeting shall not have occurred, (B) it
has received an unsolicited bona fide written Alpha Acquisition Proposal
from a third party (which has not been withdrawn) and (x) in the case of
clause (ii) above, its Board of Directors concludes in good faith that such
Alpha Acquisition Proposal constitutes a Superior Alpha Proposal and (y) in
the case of clause (iii) above, its Board of Directors concludes in good
faith that there is a reasonable likelihood that such Alpha Acquisition
Proposal would constitute a Superior Alpha Proposal, (C) its Board of
Directors, after consultation with its outside counsel, determines in good
faith that such action is required by its fiduciary duties to stockholders
under Applicable Laws as a result of such Alpha Acquisition Proposal, (D)
in the case of clause (ii) above, it shall provide Conexant immediate
written notice of such action, (E) prior to providing any information or
data to any Person in connection
50
with an Alpha Acquisition Proposal by any such Person, it receives from such
Person an executed confidentiality agreement containing terms substantially the
same as the Confidentiality Agreement and (F) prior to providing any information
or data to any Person or entering into discussions or negotiations with any
Person, it notifies Conexant promptly of such inquiries, proposals or offers
received by, any such information requested from, or any such discussions or
negotiations sought to be initiated or continued with, such Person or any of its
representatives indicating, in connection with such notice, the name of such
Person and the material terms and conditions of any inquiries, proposals or
offers, and furnishes to Conexant a copy of any such written inquiry, proposal
or offer. Alpha agrees that it will promptly keep Conexant informed of the
status and terms of any such proposals or offers and the status and terms of any
such discussions or negotiations and will promptly provide Conexant with any
such written proposals or offers. Alpha agrees that it will, and will cause its
officers, directors and representatives to, immediately cease and cause to be
terminated any activities, discussions or negotiations existing as of the date
of this Agreement with any Persons conducted heretofore with respect to any
Alpha Acquisition Proposal, and request the return or destruction of all
non-public information furnished in connection therewith. Alpha agrees that it
will use reasonable best efforts to promptly inform its directors, officers, key
employees, agents and representatives of the obligations undertaken by Alpha in
this Section 7.5. Nothing in this Section 7.5 shall (x) permit Alpha to
terminate this Agreement (except as specifically provided in Article IX) or (y)
affect any other obligation of Alpha or Conexant under this Agreement. Alpha
shall not submit to the vote of its stockholders any Alpha Acquisition Proposal
other than the Merger.
(d) For purposes of this Agreement, "Superior Alpha Proposal"
means a bona fide written Alpha Acquisition Proposal (for purposes of this
definition of "Superior Alpha Proposal", references to 20% in the
definition of "Alpha Acquisition Proposal" shall be deemed to be references
to 50%) made by a Person other than a party hereto which is on terms which
the Board of Directors of Alpha in good faith concludes (following receipt
of the advice of its financial advisors), taking into account, among other
things, all legal, financial, regulatory and other aspects of the proposal
and the Person making the proposal, (x) would, if consummated, result in a
transaction that is more favorable to its stockholders (in their capacities
as stockholders), from a financial point of view, than the transactions
contemplated by this Agreement and (y) is reasonably likely to be
completed.
(e) Without limiting Conexant's other obligations under this
Agreement (including under Article VI hereof), Conexant agrees that from
and after the date of this Agreement until the earlier of the Effective
Time or the termination of this Agreement in accordance with Article IX,
neither it nor any of its Subsidiaries shall, and it shall use its
reasonable best efforts to cause its and its Subsidiaries' officers,
directors, employees, agents and representatives (including any investment
banker, attorney or
51
accountant retained by it or any of its Subsidiaries) not to, directly or
indirectly, (i) initiate, solicit, encourage or knowingly facilitate (including
by way of furnishing information) any inquiries or the making of any proposal or
offer with respect to, or a transaction to effect, any Washington Acquisition
Proposal (as defined below), (ii) have any discussions with or provide any
confidential information or data to any Person relating to a Washington
Acquisition Proposal, or engage in any negotiations concerning a Washington
Acquisition Proposal, or knowingly facilitate any effort or attempt to make or
implement a Washington Acquisition Proposal, (iii) approve or recommend, or
propose publicly to approve or recommend, any Washington Acquisition Proposal or
(iv) approve or recommend, or propose to approve or recommend, or execute or
enter into, any letter of intent, agreement in principle, merger agreement,
acquisition agreement, option agreement or other similar agreement related to
any Washington Acquisition Proposal.
(f) For purposes of this Agreement, "Washington Acquisition
Proposal" means any inquiry, proposal or offer from any Person with respect
to any purchase or sale or other disposition of 20% or more of the
consolidated assets (including stock of subsidiaries) of the Washington
Business, including any single or multi-step transaction or series of
related transactions (other than a proposal or offer made by Alpha or a
Subsidiary thereof).
SECTION 7.6 EMPLOYEE BENEFITS MATTERS.
(a) Continuation and Comparability of Benefits. Subject to the
Employee Matters Agreement, from and after the Effective Time, the employee
benefit plans established or assumed by Washington pursuant to the Employee
Matters Agreement and the Alpha Plans in effect as of the date of this
Agreement and at the Effective Time shall remain in effect with respect to
Washington Participants (as defined in the Employee Matters Agreement) and
employees and former employees of Alpha and its Subsidiaries (collectively,
the "Combined Company Employees"), covered by such plans at the Effective
Time, until such time as the Combined Company shall otherwise determine,
subject to Applicable Laws and the terms of such plans. Prior to the
Effective Time, or as soon as reasonably practicable thereafter, Conexant
and Alpha shall cooperate in reviewing, evaluating and analyzing the
Washington Plans and the Alpha Plans with a view towards developing
appropriate new benefit plans for Combined Company Employees. It is the
intention of Conexant and Alpha, to the extent permitted by Applicable
Laws, to develop new benefit plans prior to the Effective Time or as soon
as reasonably practicable after the Effective Time which, among other
things, (i) treat similarly situated employees on a substantially
equivalent basis, taking into account all relevant factors, including
duties, geographic location, tenure, qualifications and abilities and (ii)
do not discriminate between Combined Company Employees who were covered by
Washington Plans, on the one hand, and those covered by Alpha Plans, on the
other, at
52
the Effective Time. Nothing in this Section 7.6 shall be interpreted as
preventing the Combined Company from amending, modifying or terminating any
employee benefit plans established or assumed by Washington pursuant to the
Employee Matters Agreement or any Alpha Plan or other contract, arrangement,
commitment or understanding, in accordance with its terms and Applicable Laws.
(b) Pre-Existing Limitations; Deductibles; Service Credit. With
respect to any employee benefit plans in which any Combined Company
Employees who were employees of Conexant or Alpha (or their Subsidiaries)
prior to the Effective Time first become eligible to participate on or
after the Effective Time, and in which the Combined Company Employees did
not participate prior to the Effective Time (the "New Combined Company
Plans"), the Combined Company shall: (A) waive all pre-existing conditions,
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Combined Company Employees and their
eligible dependents under any New Combined Company Plans in which such
employees may be eligible to participate after the Effective Time, except
to the extent such pre-existing conditions, exclusions or waiting periods
would apply under the analogous Washington Plan or Alpha Plan, as the case
may be; (B) provide each Combined Company Employee and their eligible
dependents with credit for any co-payments and deductibles paid prior to
the Effective Time under a Washington Plan or an Alpha Plan (to the same
extent such credit was given under the analogous employee benefit plan
prior to the Effective Time) in satisfying any applicable deductible or
out-of-pocket requirements under any New Combined Company Plans in which
such employees may be eligible to participate after the Effective Time; and
(C) recognize all service of the Combined Company Employees with Conexant
and Alpha, and their respective affiliates, for purposes of eligibility to
participate, vesting credit, entitlement to benefits and, other than with
respect to defined benefit pension plans, benefit accrual, in any New
Combined Company Plan in which such employees may be eligible to
participate after the Effective Time, to the extent such service is taken
into account under the applicable New Combined Company Plan; provided that
the foregoing shall not apply to the extent it would result in duplication
of benefits.
SECTION 7.7 Fees and Expenses. Subject to Section 9.2(c) of
this Agreement and Section 4.09 of the Distribution Agreement, whether or
not the Merger is consummated, all Expenses (as defined below) incurred in
connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such Expenses, except Expenses
incurred in connection with the filing, printing and mailing of the Form
S-4 and the Proxy Statement/Prospectus, which shall be shared equally by
Alpha and Conexant. As used in this Agreement, "Expenses" means all
out-of-pocket expenses (including all fees and expenses of counsel,
accountants, investment bankers, experts and consultants to a party hereto
and its affiliates) incurred by a party or on its behalf in connection with
or related to the authorization, preparation, negotiation,
53
execution and performance of this Agreement and the transactions contemplated
hereby, including the preparation, printing, filing and mailing of the Form S-4
and the Proxy Statement/Prospectus and the solicitation of stockholder approval
and all other matters related to the transactions contemplated hereby.
SECTION 7.8 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
(a) The Combined Company shall (i) indemnify and hold harmless,
and provide advancement of expenses to, all past and present directors,
officers and employees of Alpha and its Subsidiaries (in all of their
capacities as such), to the same extent such persons are indemnified or
have the right to advancement of expenses as of the date of this Agreement
by Alpha pursuant to Alpha's certificate of incorporation, by-laws and
indemnification agreements, if any, in existence on the date hereof with
any such directors, officers and employees of Alpha and its Subsidiaries
for acts or omissions occurring at or prior to the Effective Time
(including for acts or omissions occurring in connection with the approval
of this Agreement and the consummation of the transactions contemplated
hereby) and (ii) cause to be maintained for a period of six years after the
Effective Time the current policies of directors' and officers' liability
insurance and fiduciary liability insurance maintained by Alpha (provided
that the Combined Company may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which are, in the
aggregate, no less advantageous to the insured than the current policies
maintained by Alpha) with respect to claims arising from facts or events
that occurred on or before the Effective Time; provided, however, that in
no event shall the Combined Company be required to expend in any one year
an amount in excess of 200% of the annual premiums (on a per capita basis)
currently paid by Alpha for such insurance; and, provided, further, that if
the annual premiums of such insurance coverage exceed such amount, the
Combined Company shall be obligated to obtain a policy with the greatest
coverage available for a cost not exceeding such amount.
(b) The Combined Company shall (i) indemnify and hold harmless,
and provide advancement of expenses to, all past and present directors,
officers and employees of the Washington Companies (in all of their
capacities as such), to the same extent such persons are indemnified or
have the right to advancement of expenses as of the date of this Agreement
by Conexant pursuant to Conexant's certificate of incorporation, by-laws
and indemnification agreements, if any, in existence on the date hereof
with any such directors, officers and employees of the Washington Companies
for acts or omissions occurring at or prior to the Effective Time
(including for acts or omissions occurring in connection with the approval
of this Agreement and the consummation of the transactions contemplated
hereby) and (ii) maintain in effect for each of the applicable persons
referred to in clause (i) for a period of six years after the Effective
Time policies of directors' and officers' liability insurance and fiduciary
liability insurance of at least the same coverage and amounts as, and
containing terms and
54
conditions which are, in the aggregate, no less advantageous to the insured
than, the current policies of directors' and officers' liability insurance
maintained by Conexant, with respect to claims arising from facts or events that
occurred on or before the Effective Time; provided, however, that in no event
shall the Combined Company be required to expend in any one year an amount in
excess of 200% of the annual premiums (on a per capita basis) currently paid by
Conexant for such insurance; and, provided, further, that if the annual premiums
of such insurance coverage exceed such amount, the Combined Company shall be
obligated to obtain a policy with the greatest coverage available for a cost not
exceeding such amount.
(c) The provisions of this Section 7.8 are intended to be for
the benefit of and shall be enforceable by each indemnified or insured
party referred to above in this Section 7.8.
SECTION 7.9 PUBLIC ANNOUNCEMENTS. Alpha and Conexant each shall
use reasonable best efforts to develop a joint communications plan and each
party shall use reasonable best efforts (i) to ensure that all press
releases and other public statements with respect to the transactions
contemplated hereby shall be consistent with such joint communications
plan, and (ii) unless otherwise required by Applicable Laws or by
obligations pursuant to any listing agreement with or rules of any
securities exchange or automated quotation system, to consult with each
other before issuing any press release or, to the extent practicable,
otherwise making any public statement with respect to this Agreement or the
transactions contemplated hereby.
SECTION 7.10 ACCOUNTING MATTERS.
(a) Alpha shall use reasonable best efforts to cause to be
delivered to Conexant two letters from Alpha's independent public
accountants, one dated approximately the date on which the Form S-4 shall
become effective and one dated the Closing Date, each addressed to Alpha,
Conexant and Washington, in form and substance reasonably satisfactory to
Conexant and reasonably customary in scope and substance for comfort
letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
(b) Conexant shall use reasonable best efforts to cause to be
delivered to Alpha two letters from Washington's independent public
accountants, one dated approximately the date on which the Form S-4 shall
become effective and one dated the Closing Date, each addressed to
Conexant, Alpha and Washington, in form and substance reasonably
satisfactory to Alpha and reasonably customary in scope and substance for
comfort letters delivered by independent public accountants in connection
with registration statements similar to the Form S-4.
55
SECTION 7.11 LISTING OF SHARES OF ALPHA COMMON STOCK. Alpha
shall prior to the Effective Time use reasonable best efforts to cause the
shares of Alpha Common Stock to be issued in the Merger and the shares of
Alpha Common Stock to be reserved for issuance upon exercise of the
Converted Options to be approved for listing on the Nasdaq National Market
System prior to the Closing Date.
SECTION 7.12 AFFILIATES. Not less than 45 days prior to the
Effective Time, Conexant shall deliver to Alpha a letter identifying all
persons who, in the judgment of Conexant, may be deemed at the time this
Agreement is submitted for approval by Conexant as the sole stockholder of
Washington, "affiliates" of Washington for purposes of Rule 145 under the
Securities Act and applicable SEC rules and regulations, and such list
shall be updated as necessary to reflect changes from the date of delivery
thereof. Conexant shall use reasonable best efforts to cause each person
identified on such list to deliver to Alpha not less than 30 days prior to
the Effective Time, a written agreement substantially in the form attached
hereto as Exhibit H (an "Affiliate Agreement").
SECTION 7.13 SECTION 16 MATTERS. Prior to the Effective Time,
Alpha shall take all such steps as may be required to cause any
acquisitions or dispositions of Alpha Common Stock (including derivative
securities with respect to Alpha Common Stock) resulting from the
transactions contemplated by this Agreement by each individual who is or
will be subject to the reporting requirements of Section 16(a) of the
Exchange Act with respect to Alpha to be exempt under Rule 16b-3
promulgated under the Exchange Act, such steps to be taken in accordance
with applicable SEC rules and regulations and interpretations of the SEC
staff.
SECTION 7.14 TAKEOVER STATUTES. If any "fair price",
"moratorium", "control share acquisition" or other form of antitakeover
statute or regulation shall become applicable to the transactions
contemplated hereby, each of Conexant, Alpha and Washington and their
respective Boards of Directors shall use all reasonable efforts to grant
such approvals and take such actions as are reasonably necessary so that
the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate
or minimize the effects of such statute or regulation on the transactions
contemplated hereby.
SECTION 7.15 ADVICE OF CHANGES. Each of Conexant and Alpha
shall as promptly as reasonably practicable after becoming aware thereof
advise the others of (a) any representation or warranty made by it
contained in this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any such representation or warranty
that is not so qualified becoming untrue or inaccurate in any material
respect, (b) the failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or
satisfied by it under this
56
Agreement or (c) any change or event (i) having, or which would, individually or
in the aggregate, reasonably be expected to have, in the case of Alpha, a
Material Adverse Effect on Alpha and its Subsidiaries, and, in the case of
Conexant, a Material Adverse Effect on the Washington Business, or (ii) which
has resulted, or which, insofar as can reasonably be foreseen, would result, in
any of the conditions set forth in Article VIII not being satisfied; provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
SECTION 7.16 SHAREHOLDERS AGREEMENT. Concurrently with the
execution and delivery of this Agreement, each of the directors and
executive officers of Alpha set forth on Exhibit I shall execute and
deliver a Shareholders Agreement, substantially in the form attached hereto
as Exhibit J (the "Shareholders Agreement").
SECTION 7.17 TAX RULING. In connection with the Distribution,
Conexant shall use its reasonable best efforts in seeking, as promptly as
practicable, the Tax Ruling. Prior to filing with the Internal Revenue
Service (the "IRS"), Conexant shall furnish Alpha with a draft of the
ruling request letter with respect to the Tax Ruling and of any substantive
supplemental submission in respect thereof. Alpha may review and provide
any comments on such drafts and Conexant shall reasonably consider any
comments provided in a reasonably prompt manner by Alpha. Conexant shall
keep Alpha fully informed of the status of the Tax Ruling request. At
Conexant's request, Alpha shall cooperate with and use its reasonable best
efforts to assist Conexant in connection with the Tax Ruling request. At
Alpha's reasonable request, Conexant shall cooperate with Alpha and use its
reasonable best efforts to seek to obtain, as promptly as practicable, any
supplemental Tax Ruling or other guidance from the IRS.
SECTION 7.18 OPTION ACCELERATION.
(a) Except with respect to the acceleration of the vesting and
the extension of the exercise period of the Alpha Stock Options set forth
in Section 7.18 of the Alpha Disclosure Schedule, Alpha will take all
action necessary to prevent the acceleration of the vesting of, or the
lapsing of restrictions with respect to, any stock options, restricted
stock or other stock-based compensation (including the Alpha Stock Options,
and whether granted under the Alpha Stock Plans or otherwise) as a result
of the approval or consummation of any transaction contemplated by this
Agreement.
(b) Washington will take all action necessary to prevent the
acceleration of the vesting of, or the lapsing of restrictions with respect
to, any stock options, restricted stock or other stock-based compensation
(including the Washington Options and any Converted Options into which they
may be converted hereunder, and whether granted under the Conexant Stock
Plans, the Washington Stock Plans or
57
otherwise) as a result of the approval or consummation of any transaction
contemplated by this Agreement.
SECTION 7.19 EMPLOYMENT AND SEVERANCE ARRANGEMENTS. Except with
respect to the acceleration of the vesting and the extension of the
exercise period of the Alpha Stock Options set forth in Section 7.18 of the
Alpha Disclosure Schedule, Alpha will take all action necessary to ensure
that no officer, director or other employee of Alpha or any of its
Subsidiaries will become entitled to receive any change of control or other
payment or benefit under any employment, severance or other agreement with
Alpha or any of its Subsidiaries, including those agreements set forth on
Exhibit E, that may otherwise arise as a result of the approval or
consummation of any transaction contemplated by this Agreement.
SECTION 7.20 TRANSITION SERVICES AGREEMENT. Promptly following
the date hereof, Alpha and Conexant will discuss the scope, nature, term
and pricing of the transition services to be provided by Conexant to Alpha
following the Effective Time pursuant to the Transition Services Agreement.
Alpha and Conexant will negotiate in good faith with respect thereto and
prior to the Effective Time will enter into the Transition Services
Agreement in a form reasonably satisfactory to Alpha and Conexant. The
Transition Services Agreement will provide that either party may terminate
any services provided under the Transition Services Agreement upon such
prior written notice as the parties shall mutually agree prior to the
Effective Time.
ARTICLE VIII
CONDITIONS PRECEDENT
SECTION 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of Washington and Alpha to effect the
Merger are subject to the satisfaction or waiver prior to the Effective
Time of the following conditions:
(a) Stockholder Approval. Alpha shall have obtained the
Required Alpha Vote.
(b) No Injunctions or Restraints, Illegality. No Applicable
Laws shall have been adopted, promulgated or enforced by any Governmental
Entity, and no temporary restraining order, preliminary or permanent
injunction or other order issued by a court or other Governmental Entity of
competent jurisdiction (an "Injunction") shall be in effect, having the
effect of making the Merger illegal or otherwise prohibiting consummation
of the Merger.
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(c) No Pending Governmental Actions. No proceeding initiated by
any Governmental Entity seeking, and which is reasonably likely to result
in the granting of, an Injunction shall be pending.
(d) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired.
(e) EU Antitrust. If required, Alpha and Conexant shall have
received in respect of the Merger and any matters arising therefrom
confirmation by way of a determination from the European Commission under
Regulation 4064/89 (with or without the initiation of proceedings under
Article 6(1)(c) thereof) that the Merger and any matters arising therefrom
are compatible with the common market.
(f) Governmental and Regulatory Approvals. Other than the
filings provided for under Section 1.2 and filings pursuant to the HSR Act
and, if required, the EC Merger Regulation (which are addressed in Section
8.1(d) and Section 8.1(e)), all consents, approvals, orders or
authorizations of, actions of, filings and registrations with and notices
to any Governmental Entity (i) required of Alpha, Conexant, Washington or
any of their Subsidiaries to consummate the Merger and the other
transactions contemplated hereby, the failure of which to be obtained or
taken would reasonably be expected to have a Material Adverse Effect on the
Combined Company and its Subsidiaries, taken together after giving effect
to the Merger or (ii) set forth in Section 8.1(f) of the Alpha Disclosure
Schedule or Section 8.1(f) of the Conexant Disclosure Schedule shall have
been obtained and shall be in full force and effect.
(g) Nasdaq Listing. The shares of Alpha Common Stock to be
issued in the Merger and to be reserved for issuance in connection with the
Merger shall have been approved for listing on the Nasdaq National Market
System.
(h) Effectiveness of the Form S-4. The Form S-4 shall have been
declared effective by the SEC under the Securities Act and no stop order
suspending the effectiveness of the Form S-4 shall then be in effect and no
proceedings for that purpose shall be pending before or threatened by the
SEC.
(i) Pre-Merger Transactions. The Contribution and the
Distribution shall have been consummated in accordance with the terms of
this Agreement and the Distribution Agreement (which includes additional
conditions to such consummation) and in all material respects in accordance
with the Tax Ruling, provided that the failure of the Contribution and the
Distribution to be consummated shall not be a condition to the obligations
of a party whose breach (or breach by an Affiliate thereof) of the
Distribution Agreement has been the cause of, or resulted in, such failure.
59
(j) Tax Ruling. Conexant shall have received the Tax Ruling and
the Tax Ruling shall be in full force and effect and shall not have been
modified or amended in any respect adversely affecting the Tax consequences
set forth therein.
(k) Mexicali Conditions. Each condition to the closing of the
Facility Sale Agreement set forth in Article VI thereof (other than in
Section 6.4 thereof) shall have been satisfied.
SECTION 8.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF ALPHA. The
obligation of Alpha to effect the Merger is subject to the satisfaction or
waiver by Alpha prior to the Effective Time of the following additional
conditions:
(a) Representations and Warranties. Each of the representations
and warranties of Conexant set forth in this Agreement and in Section
2.01(d)(i) of the Distribution Agreement shall be true and correct (without
giving effect to any qualification or limitation as to materiality or
Material Adverse Effect set forth therein), in each case as of the date of
this Agreement and (except to the extent that such representations and
warranties speak solely as of another date) as of the Closing Date as
though made on and as of the Closing Date, except where the failure of such
representations and warranties to be true and correct would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Washington Business, and Alpha shall have received a
certificate of Conexant executed by an executive officer of Conexant to
such effect.
(b) Performance of Obligations of Conexant and Washington. Each
of Conexant and Washington shall have performed or complied with all
agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date that are qualified as to
materiality or Material Adverse Effect and shall have performed or complied
in all material respects with all other agreements and covenants required
to be performed by it under this Agreement at or prior to the Closing Date
that are not so qualified, and Alpha shall have received a certificate of
Conexant executed by an executive officer of Conexant to such effect.
(c) Tax Opinion. Alpha shall have received an opinion from
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, dated the Closing Date, to the
effect that, on the basis of facts, representations and assumptions,
including the validity of the Tax Ruling, set forth in such opinion which
are consistent with the state of facts existing at the Effective Time, the
Merger will constitute a reorganization under Section 368 of the Code.
(d) Net Assets Statement. Conexant shall have delivered the
Special Purpose Statement of Tangible Net Assets in accordance with Section
2.01(d)(ii) of the Distribution Agreement.
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(e) Mexicali Conditions. Each condition to the closing of the
Facility Sale Agreement set forth in Section 7.2 thereof shall have been
satisfied.
(f) Ancillary Agreements. The Employee Matters Agreement and
the Tax Allocation Agreement shall have been executed and delivered by
Conexant and Washington and the Facility Services Agreement, the Newport
Supply Agreement, the Newbury Supply Agreement and the Transition Services
Agreement shall have been executed and delivered by Conexant.
SECTION 8.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF WASHINGTON.
The obligation of Washington to effect the Merger is subject to the
satisfaction or waiver by Conexant prior to the Effective Time of the
following additional conditions:
(a) Representations and Warranties. Each of the representations
and warranties of Alpha set forth in this Agreement shall be true and
correct (without giving effect to any qualification or limitation as to
materiality or Material Adverse Effect set forth therein), in each case as
of the date of this Agreement and (except to the extent that such
representations and warranties speak solely as of another date) as of the
Closing Date as though made on and as of the Closing Date, except where the
failure of such representations and warranties to be true and correct would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Alpha and its Subsidiaries, and Conexant shall
have received a certificate of Alpha executed by an executive officer of
Alpha to such effect.
(b) Performance of Obligations of Alpha. Alpha shall have
performed or complied with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that
are qualified as to materiality or Material Adverse Effect and shall have
performed or complied in all material respects with all other agreements
and covenants required to be performed by it under this Agreement at or
prior to the Closing Date that are not so qualified, and Conexant shall
have received a certificate of Alpha executed by an executive officer of
Alpha to such effect.
(c) Tax Opinion. Conexant and Washington shall have received an
opinion from ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, dated the Closing Date, to the effect
that, on the basis of facts, representations and assumptions, including the
validity of the Tax Ruling, set forth in such opinion which are consistent
with the state of facts existing at the Effective Time, the Merger will
constitute a reorganization under Section 368 of the Code.
(d) Employment and Severance Arrangements. Conexant shall have
received written evidence reasonably satisfactory to Conexant that Alpha
has taken all action necessary to ensure that no officer, director or other
employee of Alpha or any of
61
its Subsidiaries has received or will become entitled to receive any change of
control or other payment or benefit under any employment, severance or other
agreement with Alpha or any of its Subsidiaries (except with respect to the
acceleration of the vesting and the extension of the exercise period of the
Alpha Stock Options set forth in Section 7.18 of the Alpha Disclosure Schedule),
including those agreements set forth on Exhibit E, that may otherwise arise as a
result of the approval or consummation of any transaction contemplated by this
Agreement.
(e) Mexicali Condition. Each condition to the closing of the
Facility Sale Agreement set forth in Section 7.1 thereof shall have been
satisfied.
(f) Ancillary Agreements. The Employee Matters Agreement, the
Tax Allocation Agreement, the Facility Services Agreement, the Newport
Supply Agreement, the Newbury Supply Agreement and the Transition Services
Agreement shall have been executed and delivered by Alpha.
ARTICLE IX
TERMINATION AND AMENDMENT
SECTION 9.1 TERMINATION. This Agreement may be terminated at
any time prior to the Effective Time, by action taken or authorized by the
Board of Directors of the terminating party or parties, and except as
provided below, whether before or after approval of the matters presented
in connection with the Merger by the stockholders of Alpha:
(a) by mutual written consent of Conexant and Alpha;
(b) by either Conexant or Alpha if the Effective Time
shall not have occurred on or before September 30, 2002 (the
"Termination Date"); provided, however, that the right to terminate
this Agreement under this Section 9.1(b) shall not be available to
any party whose failure to fulfill in any material respect any
obligation under this Agreement (including such party's obligations
set forth in Section 7.4) has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before the Termination
Date;
(c) by either Conexant or Alpha if any Governmental Entity
(i) shall have issued an order, decree or ruling or taken any other
action (which such party shall have used its reasonable best efforts
to resist, resolve or lift, as applicable, in accordance with
Section 7.4) permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement, and such
order,
62
decree, ruling or other action shall have become final and
nonappealable or (ii) shall have failed to issue an order, decree or
ruling, or to take any other action, necessary to fulfill any
conditions set forth in subsections 8.1(d) and (e), and the failure
to issue such order, decree, ruling or take such action shall have
become final and nonappealable; provided, however, that the right to
terminate this Agreement under this Section 9.1(c) shall not be
available to any party whose failure to comply with Section 7.4 has
been the cause of, or resulted in, such action or inaction;
(d) by either Conexant or Alpha if the approval by the
stockholders of Alpha required for the consummation of the Merger
shall not have been obtained by reason of the failure to obtain the
Required Alpha Vote upon the taking of such vote at a duly held
meeting of stockholders of Alpha or at any adjournment thereof;
(e) by Conexant, if (i) Alpha's Board of Directors shall
have (A) failed to make the Alpha Recommendation, (B) withdrawn the
Alpha Recommendation, (C) modified or qualified the Alpha
Recommendation in any manner adverse to Conexant or Washington or (D)
failed to confirm the Alpha Recommendation within five Business Days
of Conexant's request to do so (or resolved or proposed to take any
such action referred to in clause (A), (B), (C) or (D)), in each
case, whether or not permitted by the terms hereof, (ii) Alpha shall
have breached its obligations under this Agreement by reason of a
failure to call and hold the Alpha Stockholders Meeting in accordance
with Section 7.1(b) or a failure to prepare and mail to its
stockholders the Proxy Statement/Prospectus in accordance with
Section 7.1(a) or (iii) a tender or exchange offer relating to
securities of Alpha shall have been commenced by a Person
unaffiliated with Conexant, and Alpha shall not have sent to its
stockholders pursuant to Rule 14e-2 under the Exchange Act, within
ten Business Days after such tender or exchange offer is first
published, sent or given, a statement that Alpha recommends rejection
of such tender or exchange offer;
(f) by Conexant, if Alpha shall have breached or failed to
perform any of its representations, warranties, covenants or other
agreements contained in this Agreement, such that the conditions set
forth in Section 8.3(a) or Section 8.3(b) are not capable of being
satisfied on or before the Termination Date; or
(g) by Alpha, if Conexant or Washington shall have breached
or failed to perform any of its representations, warranties,
covenants or other agreements contained in this Agreement, such that
the conditions set forth in Section 8.2(a) or Section 8.2(b) are not
capable of being satisfied on or before the Termination Date.
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SECTION 9.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either
Conexant or Alpha as provided in Section 9.1, this Agreement shall
forthwith become void and there shall be no liability or obligation on the
part of Alpha, Conexant or Washington or their respective officers or
directors under this Agreement, except that (i) the provisions of Section
5.1(m), Section 5.2(k), the second sentence of Section 7.3, Section 7.7,
this Section 9.2 and Article X shall survive such termination, and (ii)
notwithstanding anything to the contrary contained in this Agreement
(including Section 7.7), none of Alpha, Conexant or Washington shall be
relieved or released from any liabilities or damages arising out of its
willful breach of any provision of this Agreement.
(b) If:
(i) (A) (x) either Conexant or Alpha shall terminate this
Agreement pursuant to Section 9.1(b) without the Alpha Stockholder
Meeting having occurred or pursuant to Section 9.1(d) or (y) Conexant
shall terminate this Agreement pursuant to Section 9.1(f) as a result
of any intentional breach or failure to perform by Alpha (unless
covered by clause (ii) below), and
(B) at any time after the date of this Agreement and
before such termination an Alpha Acquisition Proposal shall have been
publicly announced or, in the case of termination of this Agreement
pursuant to Section 9.1(b) or Section 9.1(f), publicly announced or
otherwise communicated to the senior management, Board of Directors
or stockholders of Alpha, and
(C) within nine months of such termination Alpha or any
of its Subsidiaries enters into a definitive agreement with respect
to, or consummates, any Alpha Acquisition Proposal (for purposes of
this clause (C), references to 20% in the definition of "Alpha
Acquisition Proposal" shall be deemed to be references to 50%); or
(ii) Conexant shall terminate this Agreement pursuant to
Section 9.1(e);
then Alpha shall promptly, but in no event later than the date of such
termination (or in the case of clause (i), if later, the date Alpha or its
Subsidiary enters into such agreement with respect to or consummates such
Alpha Acquisition Proposal), pay Conexant an amount equal to Forty-Five
Million dollars ($45,000,000), by wire transfer of immediately available
funds.
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(c) The parties acknowledge that the agreements contained in
this Section 9.2 are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, the parties would not
enter into this Agreement; accordingly, if Conexant or Alpha fails promptly
to pay any amount due pursuant to this Section 9.2, and, in order to obtain
such payment, the other party commences a suit which results in a judgment
against such party for the fee set forth in this Section 9.2, such party
shall pay to the other party its costs and expenses (including attorneys'
fees and expenses) in connection with such suit, together with interest on
the amount of the fee from the date such payment is required to be made
until the date such payment is actually made at the prime rate of Citibank,
N.A. in effect on the date such payment was required to be made. The
parties agree that any remedy or amount payable pursuant to this Section
9.2 shall not preclude any other remedy or amount payable hereunder, and
shall not be an exclusive remedy, for any willful breach of any provision
of this Agreement.
SECTION 9.3 AMENDMENT. This Agreement may be amended by the
parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with this Agreement and the Merger by the stockholders of Alpha,
but, after any such approval, no amendment shall be made which by law or in
accordance with the rules of any relevant stock exchange or automated
quotation system requires further approval by such stockholders without
such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
SECTION 9.4 EXTENSION; WAIVER. At any time prior to the
Effective Time, the parties hereto, by action taken or authorized by their
respective Boards of Directors, may, to the extent legally allowed, (i)
extend the time for the performance of any of the obligations or other acts
of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties of other parties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of
the agreements or conditions of other parties contained herein or in any
document delivered pursuant hereto. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in
a written instrument signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
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ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS. None of the representations, warranties,
covenants and other agreements in this Agreement or in any certificate
delivered pursuant to this Agreement, including any rights arising out of
any breach of such representations, warranties, covenants and other
agreements, shall survive the Effective Time, except for those covenants
and agreements contained herein and therein that by their terms apply or
are to be performed in whole or in part after the Effective Time.
SECTION 10.2 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed duly given (a) on the
date of delivery if delivered personally, (b) upon confirmation of receipt
if delivered by telecopy or telefacsimile, (c) on the first Business Day
following the date of dispatch if delivered by a recognized next-day
courier service, or (d) on the fifth Business Day following the date of
mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder shall be delivered as set
forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice:
(a) if to Conexant or Washington to
Conexant Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
Senior Vice President, General
Counsel and Secretary
with a copy to
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
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(b) if to Alpha to
Alpha Industries, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer
with a copy to
Alpha Industries, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
General Counsel
SECTION 10.3 INTERPRETATION. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of or Exhibit or Schedule to this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed
to be followed by the words "without limitation".
SECTION 10.4 COUNTERPARTS. This Agreement may be executed in
two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have
been signed by each of the parties and delivered to the other parties, it
being understood that the parties need not sign the same counterpart.
SECTION 10.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
(a) This Agreement, the Confidentiality Agreement, the
Reorganization Agreements, the Facility Sale Agreement, the U.S. Asset
Purchase Agreement, the Facility Services Agreement, the Newport Supply
Agreement, the Newbury Supply Agreement and the exhibits and schedules
hereto and thereto and the other agreements and instruments of the parties
delivered in connection herewith and therewith constitute the entire
agreement and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter
hereof and thereof.
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(b) This Agreement shall be binding upon and inure solely to
the benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement, other than Section 7.8 (which is intended to be for the benefit
of the Persons covered thereby).
SECTION 10.6 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware (without
giving effect to choice of law principles thereof).
SECTION 10.7 SEVERABILITY. If any provision of this Agreement
or the application thereof to any Person or circumstance is determined by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof, or the application of such provision to
Persons or circumstances other than those as to which it has been held
invalid or unenforceable, shall remain in full force and effect and shall
in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon any such
determination, the parties shall negotiate in good faith in an effort to
agree upon a suitable and equitable substitute provision to effect the
original intent of the parties.
SECTION 10.8 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto, in whole or in part (whether by operation of law or
otherwise), without the prior written consent of the other parties, and any
attempt to make any such assignment without such consent shall be null and
void. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
SECTION 10.9 SUBMISSION TO JURISDICTION; WAIVERS. Each of
Alpha, Conexant and Washington irrevocably agrees that any legal action or
proceeding with respect to this Agreement, the transactions contemplated
hereby, any provision hereof, the breach, performance, validity or
invalidity hereof or for recognition and enforcement of any judgment in
respect hereof brought by another party hereto or its successors or
permitted assigns may be brought and determined in any federal or state
court located in the State of Delaware, and each of Alpha, Conexant and
Washington hereby irrevocably submits with regard to any such action or
proceeding for itself and in respect to its property, generally and
unconditionally, to the exclusive jurisdiction of the aforesaid courts.
Each of Alpha, Conexant and Washington hereby irrevocably waives, and
agrees not to assert, by way of motion, as a defense, counterclaim or
otherwise, in any action or proceeding with respect to this Agreement, the
transactions contemplated hereby, any provision hereof or the breach,
performance, enforcement, validity or invalidity hereof,
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(a) any claim that it is not personally subject to the jurisdiction of the
above-named courts for any reason other than the failure to lawfully serve
process, (b) that it or its property is exempt or immune from jurisdiction of
any such court or from any legal process commenced in such courts (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise), and (c) to the
fullest extent permitted by Applicable Laws, that (i) the suit, action or
proceeding in any such court is brought in an inconvenient forum, (ii) the venue
of such suit, action or proceeding is improper and (iii) this Agreement, or the
subject matter hereof, may not be enforced in or by such courts.
SECTION 10.10 ENFORCEMENT. The parties agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms. It is
accordingly agreed that the parties shall be entitled to specific
performance of the terms hereof, this being in addition to any other remedy
to which they are entitled at law or in equity.
SECTION 10.11 DEFINITIONS. As used in this Agreement:
(a) "affiliate" means (except as specifically otherwise
defined), as to any Person, any other Person which, directly or indirectly,
controls, or is controlled by, or is under common control with, such
Person. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with")
means the possession, directly or indirectly, of the power to direct or
cause the direction of management or policies of a Person, whether through
the ownership of securities or partnership or other ownership interests, by
contract or otherwise.
(b) An "Alpha Plan" means any employee benefit plan, program,
policy, practice or other arrangement providing benefits to any current or
former employee, officer or director of Alpha or any of its Subsidiaries or
any beneficiary or dependent thereof that is sponsored or maintained by
Alpha or any of its Subsidiaries or to which Alpha or any of its
Subsidiaries contributes or is obligated to contribute, whether or not
written, including any employee benefit plan within the meaning of Section
3(3) of ERISA (whether or not such plan is subject to ERISA) and any bonus,
incentive, deferred compensation, vacation, stock purchase, stock option,
severance, employment, change of control or fringe benefit plan, or similar
program or agreement.
(c) "Alpha Stock Plans" means, collectively, the Alpha
Industries, Inc. 1986 Long-Term Incentive Plan; the Alpha Industries, Inc.
1999 Employee Long-Term Incentive Plan; the Alpha Industries, Inc.
Long-Term Compensation Plan; the Alpha Industries, Inc. 1994 Non-Qualified
Stock Option Plan for Non-Employee Directors; the Alpha Industries, Inc.
1997 Non-Qualified Stock Option Plan for Non-Employee Directors; the Alpha
Industries, Inc. 1996 Long-Term Incentive Plan; the Alpha
69
Industries, Inc. Directors' 2001 Stock Option Plan; and the Alpha Industries,
Inc. Employee Stock Purchase Plan.
(d) "Applicable Laws" means all applicable laws, statutes,
orders, rules, regulations, policies or guidelines promulgated, or
judgments, decisions or orders entered, by any Governmental Entity.
(e) "beneficial ownership" or "beneficially own" (except as
specifically otherwise defined) shall have the meaning under Section 13(d)
of the Exchange Act and the rules and regulations thereunder.
(f) "Board of Directors" means the Board of Directors of any
specified Person and any committees thereof.
(g) "Business Day" means a day other than a Saturday, a Sunday
or a day on which banks are required or authorized to close in the City of
New York.
(h) "Conexant Stock Plans" means, collectively, the Conexant
Systems, Inc. 2001 Employee Stock Purchase Plan; the Conexant Systems, Inc.
2001 Performance Share Plan; the Conexant Systems, Inc. 1999 Non-Qualified
Stock Purchase Plan; the Conexant Systems, Inc. 1998 Stock Option Plan; the
Conexant Systems, Inc. 1999 Long-Term Incentives Plan; the Conexant
Systems, Inc. 2000 Non-Qualified Stock Plan; the Conexant Systems, Inc.
Directors Stock Plan; the Istari Design, Inc. 1997 Stock Option Plan; the
Microcosm Communications Limited Stock Option Plan; the Maker
Communications, Inc. 1999 Stock Incentive Plan; the Maker Communications,
Inc. 1999 Non-Employee Director Stock Option Plan; the Maker
Communications, Inc. 1996 Stock Option Plan; the Applied Telecom, Inc. 2000
Non-Qualified Stock Option Plan; the Philsar Semiconductor Inc. Stock
Option Plan; the Sierra Imaging, Inc. 1996 Stock Option Plan; the HotRail,
Inc. 2000 Equity Plan; the HotRail, Inc. 1997 Equity Incentive Plan; the
Novanet Semiconductor Ltd. Employee Shares Option Plan; the NetPlane
Systems, Inc. Stock Option Plan; and the HyperXS Communications, Inc. 2000
Stock Option Plan.
(i) "Converted Option" means a Washington Option which has been
converted into an option to purchase shares of Alpha Common Stock pursuant
to the Merger.
(j) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
(k) "Known" or "Knowledge" means, (i) with respect to Conexant,
the knowledge of any of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇'▇▇▇▇▇▇, ▇▇▇▇
70
▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ after reasonable inquiry and (ii) with respect to
Alpha, the knowledge of any of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇
after reasonable inquiry.
(l) "Material Adverse Effect" means, with respect to any entity
or business (or group of entities or businesses taken as a whole), any
event, change, circumstance or development that is materially adverse to
(i) the ability of such entity or business (or group of entities or
businesses taken as a whole) (or, in the case of a Material Adverse Effect
with respect to the Washington Business, Conexant and its Subsidiaries) to
consummate the transactions contemplated by this Agreement or (ii) the
business, financial condition or results of operations of such entity or
business (or, if with respect thereto, of such group of entities or
businesses taken as a whole), other than, with respect to this clause (ii),
any (1) change in the stock price of such entity or business, in and of
itself, or (2) event, change, circumstance or development (A) resulting
from any action taken in connection with the transactions contemplated
hereby pursuant to the terms of this Agreement, (B) relating to the economy
or financial markets in general, (C) relating in general to the industries
in which such entity or business operates and not specifically relating to
such entity or business or (D) relating to any action or omission of
Conexant, Alpha or Washington or any Subsidiary of any of them taken with
the express prior written consent of the parties hereto.
(m) A "Multiemployer Plan" means any "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA.
(n) "Nasdaq" means The Nasdaq Stock Market, Inc.
(o) "Person" means an individual, corporation, limited
liability entity, partnership, association, trust, unincorporated
organization, other entity or group (as defined in the Exchange Act),
including any Governmental Entity.
(p) "Reorganization Agreements" means collectively, the
Distribution Agreement, the Employee Matters Agreement, the Tax Allocation
Agreement and the Transition Services Agreement.
(q) "Subsidiary" when used with respect to any Person means any
corporation or other organization, whether incorporated or unincorporated,
at least a majority of the securities or other interests of which having by
their terms ordinary voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or
controlled by such Person or by any one or more of its Subsidiaries, or by
such Person and one or more of its Subsidiaries.
71
(r) "Tax" (and, with correlative meaning, "Taxes" and
"Taxable") shall mean (i) any federal, state, local or foreign net income,
gross income, receipts, windfall profit, severance, property, production,
sales, use, license, excise, franchise, employment, payroll, withholding,
alternative or add-on minimum, ad valorem, transfer, stamp, or
environmental tax, or any other tax, customs, duty or other like assessment
or charge of any kind whatsoever, together with any interest or penalty,
addition to tax or additional amount imposed by any governmental authority;
(ii) any liability for payments of a type described in clause (i) as a
result of being a member of an affiliated, consolidated, combined or
unitary group; and (iii) any liability for the payment of any amounts as a
result of being party to a tax sharing arrangement or as a result of any
express or implied obligation to indemnify any Person with respect to the
payment of amounts of the type described in clause (i) or clause (ii).
(s) "Tax Ruling" means a private letter ruling issued by the
IRS in form and substance reasonably satisfactory to Conexant and Alpha
indicating that the Contribution and the Distribution will qualify as a
reorganization under Sections 355 and 368 of the Code.
(t) "Washington Companies" means, collectively, Conexant and
its Subsidiaries who are engaged in the Washington Business, in each case,
solely to the extent related to the Washington Business, it being
understood that the term "Washington Companies" shall not be deemed to
refer to Conexant and its Subsidiaries to the extent not related to the
Washington Business.
(u) "Washington Employee" means any employee or former employee
of the Washington Business with respect to whom a member of the Washington
Group will have liability pursuant to the Employee Matters Agreement.
(v) A "Washington Plan" means any employee benefit plan,
program, policy, practice or other arrangement providing benefits to any
Washington Participants or any beneficiary or dependent thereof that is
sponsored or maintained by Conexant or any of its Subsidiaries or to which
Conexant or any of its Subsidiaries contributes or is obligated to
contribute, whether or not written, including any employee benefit plan
within the meaning of Section 3(3) of ERISA (whether or not such plan is
subject to ERISA) and any bonus, incentive, deferred compensation,
vacation, stock purchase, stock option, severance, employment, change of
control or fringe benefit plan, or similar program or agreement.
Each of the following terms is defined in the Section of this
Agreement or the agreement set forth opposite such term:
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Term Section
---- -------
Actions.............................................. 5.1(j)
Affiliate Agreement.................................. 7.12
Agreement............................................ Preamble
Alpha................................................ Preamble
Alpha Acquisition Proposal........................... 7.5(b)
Alpha Common Stock................................... 1.4(a)
Alpha Disclosure Schedule............................ 5.1
Alpha Filed SEC Reports.............................. 5.1(d)(ii)
Alpha Financial Advisor.............................. 5.1(m)
Alpha Necessary Consents............................. 5.1(c)(iii)
Alpha Permits........................................ 5.1(h)(ii)
Alpha Recommendation................................. 7.1(b)
Alpha SEC Reports.................................... 5.1(d)(i)
Alpha Stock Options.................................. 5.1(b)(i)
Alpha Stockholders Meeting........................... 7.1(b)
Alpha Voting Debt.................................... 5.1(b)(ii)
Assets............................................... Distribution Agreement
By-Laws.............................................. 1.7
Certificate of Merger................................ 1.2(b)
Change in the Alpha Recommendation................... 7.1(b)
Closing.............................................. 1.2(a)
Closing Date......................................... 1.2(a)
Code................................................. Recitals
Combined Company..................................... Recitals
Combined Company Employees........................... 7.6(a)
Conexant............................................. Preamble
Conexant Common Stock................................ 5.2(b)(i)
Conexant Convertible Notes........................... 5.2(b)(i)
Conexant Disclosure Schedule......................... 5.2
Conexant Filed SEC Reports........................... 5.2(d)(iii)
Conexant Financial Advisor........................... 5.2(k)
Conexant Necessary Consents.......................... 5.2(c)(iv)
Conexant Preferred Stock............................. 5.2(b)(i)
Conexant Rights...................................... 5.2(b)(i)
Conexant Rights Agreement............................ 5.2(b)(i)
Conexant SEC Reports................................. 5.2(d)(i)
Conexant Stock Options............................... 5.2(b)(i)
Confidentiality Agreement............................ 7.3
Contract............................................. 5.1(c)(ii)
Contribution......................................... Recitals
73
Delaware Secretary................................... 1.2(b)
DGCL................................................. 1.1
Distribution......................................... Recitals
Distribution Agreement............................... Recitals
Distribution Date.................................... Distribution Agreement
DOJ.................................................. 7.4(b)
Effective Time....................................... 1.2(b)
Employee Matters Agreement........................... 4.1
Environmental Laws................................... 5.1(j)
Environmental Liabilities............................ 5.1(j)
Excess Alpha Shares.................................. 3.2(d)(ii)
Exchange Act......................................... 5.1(c)(iii)
Exchange Agent....................................... 3.1
Exchange Fund........................................ 3.1
Exchange Ratio....................................... 1.4(a)
Expenses............................................. 7.7
Facility Sale Agreement.............................. 6.2(l)
Facility Services Agreement.......................... 6.2(l)
Form S-4............................................. 7.1(a)
FTC.................................................. 7.4(b)
GAAP................................................. 5.1(d)(i)
Governmental Entity.................................. 5.1(c)(iii)
Hazardous Materials.................................. 5.1(j)
HSR Act.............................................. 5.1(c)(iii)
Injunction........................................... 8.1(b)
Intellectual Property................................ 5.1(k)
IRS.................................................. 7.17
Liens................................................ 5.1(a)(ii)
Merger............................................... Recitals
New Combined Company Plans........................... 7.6(b)
Newbury Supply Agreement............................. 4.1
Newport Supply Agreement............................. 4.1
Proxy Statement/Prospectus........................... 7.1(a)
Record Date.......................................... Distribution Agreement
Required Approvals................................... 7.4(a)
Required Alpha Vote.................................. 5.1(g)
Restated Certificate................................. 1.6
SEC.................................................. 5.1(a)(ii)
Securities Act....................................... 3.3
Shareholders Agreement............................... 7.16
74
Special Purpose Statement of
Tangible Net Assets.......................... Distribution Agreement
Superior Alpha Proposal.............................. 7.5(d)
Tax Allocation Agreement............................. 4.1
Termination Date..................................... 9.1(b)
Time of Distribution................................. Distribution Agreement
Transition Services Agreement........................ 4.1
Unaudited Special Purpose Statement of
Tangible Net Assets........................... 5.2(d)(ii)
U.S. Asset Purchase Agreement........................ 6.2(l)
Violation............................................ 5.1(c)(ii)
Washington........................................... Preamble
Washington Acquisition Proposal...................... 7.5(f)
Washington Assets.................................... Distribution Agreement
Washington Business.................................. Distribution Agreement
Washington Certificate............................... 1.4(b)
Washington Common Stock.............................. Recitals
Washington Financial Statements...................... 5.2(d)(ii)
Washington Group..................................... Distribution Agreement
Washington Liabilities............................... Distribution Agreement
Washington Option.................................... Employee Matters Agreement
Washington Participant............................... Employee Matters Agreement
Washington Permits................................... 5.2(f)(ii)
Washington Significant Subsidiaries.................. 5.2(a)(iii)
Washington Stock Plan................................ Employee Matters Agreement
Washington Subsidiaries.............................. Distribution Agreement
SECTION 10.12 DISCLOSURE SCHEDULE. The mere inclusion of an
item in the relevant Disclosure Schedule as an exception to a
representation, warranty or covenant shall not be deemed an admission by a
party that such item represents a material exception or material fact,
event or circumstance or that such item has had or would have a Material
Adverse Effect with respect to Conexant, Alpha, Washington, any Subsidiary
of the foregoing or the Washington Business, as applicable.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman of the Board and Chief
Executive Officer
WASHINGTON SUB, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman of the Board and Chief
Executive Officer
ALPHA INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
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