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EXHIBIT 2.04
MASTER DISTRIBUTION AGREEMENT
BETWEEN
ESS TECHNOLOGY, INC.
AND
VIALTA, INC.
EFFECTIVE AS OF
AUGUST 20, 2001
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MASTER DISTRIBUTION AGREEMENT
This Master Distribution Agreement (this "AGREEMENT") is entered into as
of August 20, 2001, between ESS Technology, Inc., a California corporation ("ESS
TECHNOLOGY"), and Vialta, Inc., a Delaware corporation ("VIALTA"). Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to
such terms in ARTICLE VI hereof. ESS Technology and Vialta are sometimes
referred to herein individually as a "party" or collectively as the "parties."
RECITALS
WHEREAS, ESS Technology currently owns approximately 56% of the issued
and outstanding capital stock of Vialta;
WHEREAS, the Board of Directors of ESS Technology has determined that it
is appropriate and desirable on the terms and conditions contemplated hereby to
distribute to the holders of its common stock, by means of a pro rata
distribution, approximately 50,581,892 of the shares of Vialta Class A common
stock owned by ESS Technology (the "DISTRIBUTION"); and
WHEREAS, the parties intend in this Agreement, including the Exhibits
and Schedules hereto, to set forth the principal arrangements between them
regarding the Distribution.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth below, the parties hereto, intending to be
legally bound, agree as follows:
ARTICLE I
DISTRIBUTION
SECTION 1.1 DISTRIBUTION DATE. Unless otherwise provided in this
Agreement, or in any agreement to be executed in connection with this Agreement,
the effective time and date of agreement in connection with the Distribution
shall be 12:01 a.m., Pacific Time, August 21, 2001 or such other date as may be
fixed by the Board of Directors of ESS Technology (the "Distribution Date").
SECTION 1.2 CLOSING OF TRANSACTIONS. Unless otherwise provided herein,
the closing of the transactions contemplated in ARTICLE II shall occur by the
lodging of each of the executed instruments of transfer, assumptions of
liability, undertakings, agreements, instruments or other documents executed or
to be executed with both ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP ("▇▇▇▇▇▇"), ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich LLP
("▇▇▇▇ ▇▇▇▇"), ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, to be
held in escrow for delivery as provided in SECTION 1.3 of this Agreement.
SECTION 1.3 EXCHANGE OF SECRETARY'S CERTIFICATES. Upon receipt of a
certificate of the Secretary or an Assistant Secretary of ESS Technology in the
form attached to this Agreement as EXHIBIT A, Orrick shall deliver to Vialta on
behalf of ESS Technology all of the items required to be delivered by ESS
Technology hereunder pursuant to SECTION 2.1 of this Agreement and each such
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item shall be deemed to be delivered to Vialta as of the Distribution Date upon
delivery of such certificate. Upon receipt of a certificate of the Secretary or
an Assistant Secretary of Vialta in the form attached to this Agreement as
EXHIBIT B, ▇▇▇▇ ▇▇▇▇ shall deliver to ESS Technology on behalf of Vialta all of
the items required to be delivered by Vialta pursuant to SECTION 2.2 hereunder
and each such item shall be deemed to be delivered to ESS Technology as of the
Distribution Date upon receipt of such certificate.
ARTICLE II
DOCUMENTS AND ITEMS TO BE DELIVERED ON OR BEFORE THE DISTRIBUTION DATE
SECTION 2.1 DOCUMENTS TO BE DELIVERED BY ESS TECHNOLOGY. On or before
the Distribution Date, ESS Technology will deliver, or will cause its
appropriate Subsidiaries to deliver, to Vialta all of the following items and
agreements (collectively, together with all agreements and documents
contemplated by such agreements, the "ANCILLARY AGREEMENTS"):
(a) A duly executed Master Technology Ownership and License
Agreement substantially in the form attached hereto as EXHIBIT C;
(b) A duly executed Employee Matters Agreement substantially in
the form attached hereto as EXHIBIT D;
(c) A duly executed Tax Sharing and Indemnity Agreement
substantially in the form attached hereto as EXHIBIT E;
(d) A duly executed Real Estate Matters Agreement substantially
in the form attached hereto as EXHIBIT F;
(e) A duly executed Master Confidential Disclosure Agreement
substantially in the form attached hereto as EXHIBIT G;
(f) A duly executed Master Transitional Services Agreement
substantially in the form attached hereto as EXHIBIT H;
(g) Resignations of each person who is an officer or director of
any member of the Vialta Group immediately prior to the Distribution Date, but
who will be an officer, director or employee of only ESS Technology from and
after the Distribution Date; and
(h) Such other agreements, documents or instruments as the
parties may agree are necessary or desirable in order to achieve the purposes
hereof, including, without limitation, all Transitional Service Schedules to the
Master Transitional Services Agreement and those documents referred to in
SECTION 4.2.
SECTION 2.2 DOCUMENTS TO BE DELIVERED BY VIALTA. As of the Distribution
Date, Vialta will or will cause its appropriate Subsidiaries to deliver to ESS
Technology all of the following:
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(a) In each case where Vialta is a party to any agreement or
instrument referred to in SECTION 2.1, a duly executed counterpart of such
agreement or instrument; and
(b) Resignations of each person who is an officer or director of
any member of the ESS Technology Group immediately prior to the Distribution
Date, but who will be an officer, director or employee of only Vialta from and
after the Distribution Date.
ARTICLE III
THE DISTRIBUTION AND ACTIONS PENDING THE DISTRIBUTION
SECTION 3.1 TRANSACTIONS PRIOR TO THE DISTRIBUTION. Subject to the
conditions specified in SECTION 3.3 and SECTION 3.4, ESS Technology and Vialta
shall use their reasonable commercial efforts to consummate the Distribution.
Such efforts shall include, but not necessarily be limited to, those specified
in this SECTION 3.1
(a) Registration Statement. Vialta, with the cooperation and
assistance of ESS Technology, shall register its Class A and Class B common
stock under SECTION 12 of the Securities Exchange Act of 1934 (the "EXCHANGE
ACT") by filing a Form 10 Registration Statement, and such amendments or
supplements thereto, as may be necessary in order to cause the same to become
and remain effective as required by law, including, but not limited to, filing
such amendments to the Form 10 Registration Statement as may be required by the
Securities and Exchange Commission (the "COMMISSION") or federal, state or
foreign securities laws. ESS Technology and Vialta shall also cooperate in
preparing and filing with the Commission any registration statements or
amendments thereof which are required to reflect the establishment of, or
amendments to, any employee benefit and other plans necessary or appropriate in
connection with the Distribution or the other transactions contemplated by this
Agreement.
(b) Information Statement. ESS Technology and Vialta shall
prepare and mail, prior to the Distribution Date, to the holders of common stock
of ESS Technology, such information concerning Vialta and the Distribution and
such other matters as ESS Technology and Vialta shall reasonably determine are
necessary and as may be required by law. ESS Technology and Vialta will prepare,
and Vialta will, to the extent required under applicable law, file with the
Commission any such documentation which ESS Technology and Vialta reasonably
determine is necessary or desirable to effectuate the Distribution, and ESS
Technology and Vialta shall each use its reasonable commercial efforts to obtain
all necessary approvals from the Commission with respect thereto as soon as
practicable.
(c) Other Matters. ESS Technology and Vialta shall consult with
each other and their financial advisors regarding the timing, pricing and other
material matters with respect to the Distribution.
(d) Blue Sky. ESS Technology and Vialta shall take all such
actions as may be necessary or appropriate under the securities or blue sky laws
of the United States (and any comparable laws under any foreign jurisdiction) in
connection with the Distribution.
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(e) OTC Bulletin Board. Vialta shall use its reasonable
commercial efforts to (i) to make its Class A Common Stock an OTCBB-eligible
security (pursuant to NASD Rule 6530) and (ii) to assist an eligible market
maker in the submission of any forms or filings required by the NASD in order to
permit the reporting of trades of Vialta's Class A Common Stock on the OTC
Bulletin Board service.
SECTION 3.2 THE DISTRIBUTION.
(a) Delivery of Shares for Distribution. Subject to SECTION 3.3
hereof, on or prior to the date the Distribution is effective (the "DISTRIBUTION
DATE"), ESS Technology will deliver to the distribution agent (the "DISTRIBUTION
AGENT") to be appointed by ESS Technology to distribute to the shareholders of
ESS Technology approximately 50,581,892 shares of Class A common stock of Vialta
held by ESS Technology pursuant to the Distribution for the benefit of holders
of record of common stock of ESS Technology on the Record Date, a single stock
certificate, endorsed by ESS Technology in blank, representing that number of
shares equal to:
(i) the product of (x) the number of shares of ESS
Technology common stock outstanding on the Record Date multiplied by (y) the
Distribution Ratio; plus
(ii) the number of shares of ESS Technology common stock
equal to the number of holders of ESS Technology common stock on the Record
Date;
and shall cause the transfer agent for the shares of common stock of ESS
Technology to instruct the Distribution Agent to distribute on the Distribution
Date the appropriate number of such shares of Class A common stock of Vialta to
each such holder or designated transferee or transferees of such holder.
(b) Distribution Ratio. The "DISTRIBUTION RATIO" shall be equal
to a fraction:
(i) the numerator of which is
(1) the number of shares of Class A common stock of
Vialta beneficially owned by ESS Technology on the Record Date; reduced by
(2) the number of holders of options to purchase
ESS Technology common stock on the Record Date; and reduced by
(3) the number of holders of ESS Technology common
stock on the Record Date; and
(ii) the denominator of which is
(1) the number of shares of common stock of ESS
Technology outstanding on the Record Date; plus
(2) the number of options to purchase ESS
Technology common stock on the Record Date.
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(c) Delivery of Shares for Vialta Nonstatutory Stock Option Plan.
Subject to SECTION 3.3 hereof, as soon as practicable after the Distribution
Date, ESS Technology will deliver to Vialta a single stock certificate, endorsed
by ESS Technology in blank, representing that number of shares equal to:
(i) the product of (x) the number of shares subject to
options to purchase shares of ESS Technology common stock outstanding on the
Record Date multiplied by (y) the Distribution Ratio; plus
(ii) the number of shares of ESS Technology common stock
equal to the number of holders of options to purchase ESS Technology common
stock outstanding on the Record Date;
in order that Vialta may reserve such shares for issuance under its 2001
Nonstatutory Stock Option Plan.
(d) Shares Received. Subject to SECTIONS 3.3 and 3.5, each holder
of common stock of ESS Technology on the Record Date (or such holder's
designated transferee or transferees) will be entitled to receive in the
Distribution a number of shares of Class A common stock of Vialta equal to the
number of shares of common stock of ESS Technology held by such holder on the
Record Date multiplied by a fraction (x) the numerator of which is (i) the
number of shares of Class A common stock of Vialta beneficially owned by ESS
Technology on the Record Date as reduced by (ii) the number of holders of
options to purchase ESS Technology common stock on the Record Date reduced by
(iii) the number of ESS Technology shareholders on the Record Date and (y) the
denominator of which is (i) the number of shares of common stock of ESS
Technology outstanding on the Record Date plus (ii) the number of options to
purchase ESS Technology common stock on the Record Date.
(e) Obligation to Provide Information. Vialta and ESS Technology,
as the case may be, will provide to the Distribution Agent all share
certificates and any information required in order to complete the Distribution
on the basis specified above.
(f) Conditions. ESS Technology and Vialta shall take all
reasonable steps necessary and appropriate to cause the conditions set forth in
SECTION 3.3 to be satisfied and to effect the Distribution on the Distribution
Date.
SECTION 3.3 CONDITIONS TO DISTRIBUTION. The parties hereto shall use
their reasonable commercial efforts to effect the Distribution on August 21,
2001, or as soon thereafter as practicable. The obligations of the parties to
consummate the Distribution shall be conditioned on the satisfaction, or written
waiver by ESS Technology, of the following conditions:
(a) Government Approvals. Any material governmental approvals and
consents necessary to consummate the Distribution shall have been obtained and
be in full force and effect;
(b) Registration Statement. The Form 10 Registration Statement
shall have been filed and become effective, and there shall be no stop-order in
effect with respect thereto.
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(c) OTC Bulletin Board. Trades in the common stock of Vialta
shall be permitted to be reported on the OTCBB.
(d) No Legal Restraints. No order, injunction or decree issued by
any court or agency of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Distribution or any of the other
transactions contemplated by this Agreement shall be in effect.
(e) Other Actions. Such other actions as the parties hereto may,
based upon the advice of counsel, reasonably request to be taken prior to the
Distribution in order to assure the successful completion of the Distribution
shall have been taken.
(f) No Termination. This Agreement shall not have been
terminated.
SECTION 3.4 SOLE DISCRETION OF ESS TECHNOLOGY. ESS Technology currently
intends to complete the Distribution by August 21, 2001. ESS Technology shall,
in its sole and absolute discretion, determine the date of the consummation of
the Distribution and all terms of the Distribution, including, without
limitation, the form, structure and terms of any transaction(s) and/or
offering(s) to effect the Distribution and the timing of and conditions to the
consummation of the Distribution. In addition, ESS Technology may at any time
and from time to time until the completion of the Distribution modify or change
the terms of the Distribution, including, without limitation, by accelerating or
delaying the timing of the consummation of all or part of the Distribution.
Vialta shall cooperate with ESS Technology in all respects to accomplish the
Distribution and shall, at ESS Technology's direction, promptly take any and all
actions necessary or desirable to effect the Distribution, including, without
limitation, the registration under the Securities Act of the Class A and B
common stock of Vialta on an appropriate registration form or forms to be
designated by ESS Technology. ESS Technology shall select any investment
banker(s) and manager(s) in connection with the Distribution, as well as any
financial printer, solicitation and/or exchange agent and outside counsel for
ESS Technology; provided, however, that nothing herein shall prohibit Vialta
from engaging its own financial, legal, accounting and other advisors in
connection with the Distribution.
SECTION 3.5 FRACTIONAL SHARES. No fractional shares will be issued. As
soon as practicable after the Record Date, ESS Technology shall direct the
Distribution Agent to determine the number of whole shares allocable to each
holder of record or beneficial owner of common stock of ESS Technology as of the
Record Date determined by rounding up fractional shares to the nearest whole
share. ESS Technology and the Distribution Agent shall use their reasonable
commercial efforts to aggregate the shares of common stock of ESS Technology
that may be held by any beneficial owner thereof through more than one account
in determining the fractional share allocable to such beneficial owner.
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ARTICLE IV
COVENANTS AND OTHER MATTERS
SECTION 4.1 OTHER AGREEMENTS. In addition to the specific agreements,
documents and instruments that are Exhibits to this Agreement, ESS Technology
and Vialta agree to execute or cause to be executed by the appropriate parties
and deliver, as appropriate, such other agreements, instruments and documents as
may be necessary or desirable in order to effect the purposes of this Agreement
and the Ancillary Agreements.
SECTION 4.2 AGREEMENT FOR EXCHANGE OF INFORMATION. Each of ESS
Technology and Vialta agrees to provide, or cause to be provided, to each other,
at any time before or after the Distribution Date, as soon as reasonably
practicable after written request therefor, any Information in the possession or
under the control of such party that the requesting party reasonably needs (i)
to comply with reporting, disclosure, filing or other requirements imposed on
the requesting party (including under applicable securities laws) by a
Governmental Authority having jurisdiction over the requesting party, (ii) for
use in any other judicial, regulatory, administrative or other proceeding or in
order to satisfy audit, accounting, claims, regulatory, litigation or other
similar requirements, (iii) to comply with its obligations under this Agreement
or any Ancillary Agreement or (iv) in connection with the ongoing businesses of
ESS Technology or Vialta, as the case may be; provided, however, that in the
event that any party determines that any such provision of Information could be
commercially detrimental, violate any law or agreement, or waive any
attorney-client privilege, the parties shall take all reasonable measures to
permit the compliance with such obligations in a manner that avoids any such
harm or consequence.
(a) Internal Accounting Controls; Financial Information. Until
the seventh anniversary of the Distribution Date, (i) each party shall maintain
in effect at its own cost and expense adequate systems and controls for its
business to the extent necessary to enable the other party to satisfy its
reporting, accounting, audit and other obligations, and (ii) each party shall
provide, or cause to be provided, to the other party and its Subsidiaries in
such form as such requesting party shall request, at no charge to the requesting
party, all financial and other data and information as the requesting party
determines necessary or advisable in order to prepare its financial statements
and reports or filings with any Governmental Authority.
(b) Ownership of Information. Any Information owned by a party
that is provided to a requesting party pursuant to this SECTION 4.2 shall be
deemed to remain the property of the providing party. Unless specifically set
forth herein, nothing contained in this Agreement shall be construed as granting
or conferring rights of license or otherwise in any such Information.
(c) Record Retention. To facilitate the possible exchange of
Information pursuant to this SECTION 4.2 and other provisions of this Agreement
after the Distribution Date, each party agrees to use its reasonable commercial
efforts to retain all tax, employee and financial Information in their
respective possession or control on the Distribution Date for seven years after
the Distribution Date. No party will destroy, or permit any of its Subsidiaries
to destroy, any Information that exists on the Distribution Date (other than
Information that is permitted to be destroyed under the current record retention
policy of such party) without first using its reasonable
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commercial efforts to notify the other party of the proposed destruction and
giving the other party the opportunity to take possession of such Information
prior to such destruction.
(d) Limitation of Liability. No party shall have any liability to
any other party in the event that any Information exchanged or provided pursuant
to this SECTION 4.2 is found to be inaccurate, in the absence of willful
misconduct by the party providing such Information. No party shall have any
liability to any other party if any Information is destroyed or lost after
reasonable commercial efforts by such party to comply with the provisions of
SECTION 4.2(c).
(e) Other Agreements Providing For Exchange of Information. The
rights and obligations granted under this SECTION 4.2 are subject to any
specific limitations, qualifications or additional provisions on the sharing,
exchange or confidential treatment of Information set forth in this Agreement
and any Ancillary Agreement.
(f) Production of Witnesses; Records; Cooperation. After the
Distribution Date, except in the case of a legal or other proceeding by one
party against another party (which shall be governed by such discovery rules as
may be applicable under SECTION 4.6 or otherwise), each party hereto shall use
its reasonable commercial efforts to make available to each other party, upon
written request, the former, current and future directors, officers, employees,
other personnel and agents of such party as witnesses and any books, records or
other documents within its control or which it otherwise has the ability to make
available, to the extent that any such person (giving consideration to business
demands of such directors, officers, employees, other personnel and agents) or
books, records or other documents may reasonably be required in connection with
any legal, administrative or other proceeding in which the requesting party may
from time to time be involved, regardless of whether such legal, administrative
or other proceeding is a matter with respect to which indemnification may be
sought hereunder. The requesting party shall bear all costs and expenses in
connection therewith.
SECTION 4.3 AUDITORS AND AUDITS; ANNUAL AND QUARTERLY STATEMENTS AND
ACCOUNTING. Each party agrees that, for so long as ESS Technology is required by
any governmental entity or regulatory body to include Vialta's results of
operations and financial position in ESS Technology's financial reports,
including but not limited to its audited financial statements:
(a) Selection of Auditors. Vialta shall not select an accounting
firm other than a nationally recognized accounting firm to serve as its (and its
Subsidiaries') independent certified public accountants ("VIALTA'S AUDITORS")
for purposes of providing an opinion on its consolidated financial statements
without ESS Technology's prior written consent (which shall not be unreasonably
withheld).
(b) Date of Auditors' Opinion and Quarterly Reviews. Vialta shall
use its reasonable commercial efforts to enable the Vialta Auditors to complete
their audit such that they will date their opinion on Vialta's audited annual
financial statements on the same date that ESS Technology's independent
certified public accountants ("ESS TECHNOLOGY'S AUDITORS") date their opinion on
ESS Technology's audited annual financial statements, and to enable ESS
Technology to meet its timetable for the printing, filing and public
dissemination of ESS Technology's annual financial statements. Vialta shall use
its reasonable commercial efforts to enable the Vialta Auditors
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to complete their quarterly review procedures such that they will provide
clearance on Vialta's quarterly financial statements on the same date that ESS
Technology's Auditors provide clearance on ESS Technology's quarterly financial
statements.
(c) Annual and Quarterly Financial Statements. Vialta shall
provide to ESS Technology on a timely basis all Information that ESS Technology
reasonably requires to meet its schedule for the preparation, printing, filing,
and public dissemination of ESS Technology's annual and quarterly financial
statements. Without limiting the generality of the foregoing, Vialta will
provide all required financial Information with respect to Vialta and its
Subsidiaries to Vialta's Auditors in a sufficient and reasonable time and in
sufficient detail to permit Vialta's Auditors to take all steps and perform all
reviews necessary to provide sufficient assistance to ESS Technology's Auditors
with respect to Information to be included or contained in ESS Technology's
annual and quarterly financial statements. Similarly, ESS Technology shall
provide to Vialta on a timely basis all Information that Vialta reasonably
requires to meet its schedule for the preparation, printing, filing and public
dissemination of Vialta's annual and quarterly financial statements. Without
limiting the generality of the foregoing, ESS Technology will provide all
required financial Information with respect to ESS Technology and its
Subsidiaries to ESS Technology's Auditors in a sufficient and reasonable time
and in sufficient detail to permit ESS Technology's Auditors to take all steps
and perform all reviews necessary to provide sufficient assistance to Vialta's
Auditors with respect to Information to be included or contained in Vialta's
annual and quarterly financial statements.
(d) Identity of Personnel Performing the Annual Audit and
Quarterly Reviews. Vialta shall authorize Vialta's Auditors to make available to
ESS Technology's Auditors both the personnel who performed or are performing the
annual audits and quarterly reviews of Vialta and work papers related to the
annual audits and quarterly reviews of Vialta, in all cases within a reasonable
time prior to Vialta's Auditors' opinion date, so that ESS Technology's Auditors
are able to perform the procedures they consider necessary to take
responsibility for the work of Vialta's Auditors as it relates to ESS
Technology's Auditors' report on ESS Technology's financial statements, all
within sufficient time to enable ESS Technology to meet its timetable for the
printing, filing and public dissemination of ESS Technology's annual and
quarterly statements. Similarly, ESS Technology shall authorize ESS Technology's
Auditors to make available to Vialta's Auditors both the personnel who performed
or are performing the annual audits and quarterly reviews of ESS Technology and
work papers related to the annual audits and quarterly reviews of ESS
Technology, in all cases within a reasonable time prior to ESS Technology's
Auditors' opinion date, so that Vialta's Auditors are able to perform the
procedures they consider necessary to take responsibility for the work of ESS
Technology's Auditors as it relates to Vialta's Auditors' report on Vialta's
statements, all within sufficient time to enable Vialta to meet its timetable
for the printing, filing and public dissemination of Vialta's annual and
quarterly financial statements.
(e) Access to Books and Records. Vialta shall provide ESS
Technology's internal auditors and their designees access to Vialta's and its
Subsidiaries' books and records so that ESS Technology may conduct reasonable
audits relating to the financial statements provided by Vialta pursuant hereto
as well as to the internal accounting controls and operations of Vialta and its
Subsidiaries. Similarly, ESS Technology shall provide Vialta's internal auditors
and their designees
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access to ESS Technology's and its Subsidiaries' books and records so that
Vialta may conduct reasonable audits relating to the financial statements
provided by ESS Technology pursuant hereto as well as to the internal accounting
controls and operations of ESS Technology and its Subsidiaries.
(f) Notice of Change in Accounting Principles. Vialta shall give
ESS Technology as much prior notice as reasonably practical of any proposed
determination of, or any significant changes in, its accounting estimates or
accounting principles from those in effect on the Distribution Date. Vialta will
consult with ESS Technology and, if requested by ESS Technology, Vialta will
consult with ESS Technology's independent public accountants with respect
thereto. ESS Technology shall give Vialta as much prior notice as reasonably
practical of any proposed determination of, or any significant changes in, its
accounting estimates or accounting principles from those in effect on the
Distribution Date.
(g) Conflict with Third-Party Agreements. Nothing in SECTIONS 4.2
and 4.3 shall require Vialta to violate any agreement with any third parties
regarding the confidentiality of confidential and proprietary Information
relating to that third party or its business.
SECTION 4.4 CONSISTENCY WITH PAST PRACTICES. At all times prior to the
Distribution Date, ESS Technology will cause Vialta to continue its research and
development efforts, ship products, make payments, maintain properties, manage
distribution channels and otherwise conduct business in the ordinary course,
consistent with past practices.
SECTION 4.5 PAYMENT OF EXPENSES. Except as otherwise provided in this
Agreement, the Ancillary Agreements or any other agreement between the parties
relating to the Distribution, all costs and expenses of the parties hereto in
connection with the Distribution (excluding internal costs and expenses of
Vialta) shall be paid by ESS Technology.
SECTION 4.6 DISPUTE RESOLUTION. Resolution of any and all disputes,
claims and causes of action of any nature whatsoever (collectively, "DISPUTES"),
arising from or in connection with this Agreement, shall be exclusively governed
by and settled in accordance with the provisions of this SECTION 4.6.
(a) Negotiation. The parties shall make a good faith attempt to
resolve any Dispute arising out of or relating to this Agreement through
informal negotiation between appropriate representatives from each of ESS
Technology and Vialta. If at any time either party feels that such negotiations
are not leading to a resolution of the Dispute, such party may send a notice to
the other party describing the Dispute and requesting a meeting of the senior
executives from each party. Within ten (10) business days after such notice is
given, each party shall select appropriate senior executives (e.g., director or
V.P. level) of each party who shall have the authority to resolve the matter and
shall meet to attempt in good faith to negotiate a resolution of the Dispute
prior to pursuing other available remedies. During the course of negotiations
under this SECTION 4.6(a), all reasonable requests made by one party to the
other for information, including requests for copies of relevant documents, will
be honored. The specific format for such negotiations will be left to the
discretion of the designated negotiating senior executives but may include the
preparation of agreed upon statements of fact or written statements of position
furnished to the other party. In the event that any Dispute arising out of or
related to this Agreement is not
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settled by the parties within thirty (30) days after the first meeting of the
negotiating senior executives, either party may commence litigation with respect
to the Dispute. However, except as provided below in SECTION 4.6(b), neither
party shall commence litigation against the other party to resolve the Dispute
(i) until the parties try in good faith to settle the Dispute by negotiation for
at least thirty (30) days after the first meeting of the negotiating senior
executives or (ii) until forty (40) days after notice of a Dispute is given by
either party to the other party, whichever occurs first.
(b) Proceedings. Any Dispute regarding the following is not
required to be negotiated prior to seeking relief from a court of competent
jurisdiction: breach of any obligation of confidentiality; infringement,
misappropriation, or misuse of any intellectual property right; or any other
claim where interim relief from the court is sought to prevent serious and
irreparable injury to a party. However, the parties shall make a good faith
effort to negotiate such Dispute, according to SECTION 4.6(a), while such court
action is pending.
(c) Continuity of Service and Performance. Unless otherwise
agreed in writing, the parties will continue to provide service and honor all
other commitments under this Agreement and each Ancillary Agreement during the
course of dispute resolution pursuant to the provisions of this SECTION 4.6 with
respect to all matters not subject to such dispute, controversy or claim.
SECTION 4.7 GOVERNMENTAL APPROVALS. To the extent that the Distribution
requires any Governmental Approvals, the parties will use their reasonable
commercial efforts to obtain any such Governmental Approvals.
SECTION 4.8 REPRESENTATIONS AND WARRANTIES OF ESS TECHNOLOGY. ESS
Technology hereby represents and warrants to Vialta as follows:
(a) Organization, Good Standing and Qualification. ESS Technology
is a corporation duly organized, validly existing and in good standing under the
laws of the State of California and has all requisite corporate power and
authority to carry on its business as currently conducted. ESS Technology is
duly qualified to transact business and is in good standing in each jurisdiction
in which the failure to so qualify would have a material adverse effect on the
Vialta's business or properties.
(b) Corporate Power. ESS Technology has all requisite legal and
corporate power to (i) execute and deliver this Agreement, the Ancillary
Agreements and all applicable exhibits and schedules attached hereto and thereto
at such times as are contemplated by this Agreement and the Ancillary
Agreements; and (ii) perform its obligations hereunder and thereunder.
(c) Due Authorization Execution and Enforceability. The
execution, delivery and performance of this Agreement and the Ancillary
Agreements by ESS Technology have been duly authorized by all necessary
corporate or other actions, ESS Technology has duly and validly executed and
delivered this Agreement and the Ancillary Agreements, and this Agreement and
the Ancillary Agreements are the legal, valid and binding obligations of ESS
Technology, enforceable against ESS Technology in accordance with their
respective terms subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
general equity principles.
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SECTION 4.9 REPRESENTATIONS AND WARRANTIES OF VIALTA. Vialta hereby
represents and warrants to ESS Technology as follows:
(a) Organization, Good Standing and Qualification. Vialta is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as currently conducted.
(b) Corporate Power. Vialta has all requisite legal and corporate
power to (i) execute and deliver this Agreement, the Ancillary Agreements and
all applicable exhibits and schedules attached hereto and thereto at such times
as are contemplated by this Agreement and the Ancillary Agreements; and (ii)
perform its obligations hereunder and thereunder.
(c) Due Authorization Execution and Enforceability. The
execution, delivery and performance of this Agreement and the Ancillary
Agreements by Vialta have been duly authorized by all necessary corporate or
other actions, Vialta has duly and validly executed and delivered this Agreement
and the Ancillary Agreements, and this Agreement and the Ancillary Agreements
are the legal, valid and binding obligations of Vialta, enforceable against
Vialta in accordance with their respective terms subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equity principles.
SECTION 4.10 COOPERATION IN OBTAINING NEW AGREEMENTS. ESS Technology
understands that, prior to the Distribution Date, Vialta has derived benefits
under certain agreements between ESS Technology and third parties, which
agreements are not being assigned to Vialta in connection with the Distribution.
Upon the request of Vialta, ESS Technology agrees to make introductions to
appropriate Vialta personnel to ESS Technology's contacts at such third parties,
and agrees to provide reasonable assistance to Vialta, at ESS Technology's own
expense, so that Vialta may obtain agreements from such third parties under
substantially equivalent terms and conditions, including financial terms and
conditions, that apply to ESS Technology. Such assistance may include, but is
not limited to, (i) requesting and encouraging such third parties to enter into
such agreements with Vialta, (ii) attending meetings and negotiating sessions
with Vialta and such third parties, and (iii) participating in buying
consortiums with Vialta. If there are any agreements between ESS Technology and
third parties that are being assigned to Vialta by ESS Technology in connection
with the Distribution, ESS Technology agrees to assist Vialta in seeking and
obtaining the consent of such third parties to such assignment.
SECTION 4.11 INSURANCE MATTERS.
(a) Vialta Insurance Coverage After the Record Date. From and
after the Record Date, Vialta shall be responsible for obtaining and maintaining
insurance programs for its risk of loss and such insurance arrangements shall be
separate and apart from ESS' insurance programs. Notwithstanding the foregoing,
ESS, upon the request of Vialta, shall use all reasonable efforts to assist
Vialta in the transition to its own separate insurance programs from and after
the Record Date, and shall provide Vialta with any information that is in the
possession of ESS and would in any way facilitate Vialta's ability to either
obtain insurance coverages for Vialta or to assist Vialta in preventing
unintended self-insurance, in whatever form.
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(b) Cooperation and Agreement not to Release Carriers. Each of
ESS and Vialta will share such information as is reasonably necessary in order
to permit the other to manage and conduct its insurance matters in an orderly
fashion. Each of ESS and Vialta, at the request of the other, shall cooperate
with and use reasonable efforts to assist the other in recoveries for claims
made under any insurance policy for the benefit of any insured party, and
neither ESS nor Vialta, nor any of their Subsidiaries, shall take any action
which would intentionally jeopardize or otherwise interfere with either party's
ability to collect any proceeds payable pursuant to any insurance policy. Except
as otherwise contemplated by this Distribution Agreement or any Ancillary
Agreement, after the Record Date, neither ESS nor Vialta shall (and shall ensure
that no member of their respective Groups shall), without the consent of the
other, provide any insurance carrier with a release, or amend, modify or waive
any rights under any such policy or agreement, if such release, amendment,
modification or waiver would adversely affect any rights or potential rights of
any member of the other Group thereunder. However, nothing in this Section
4.11(b) shall (i) preclude any member of any Group from presenting any claim or
from exhausting any policy limit, (ii) require any member of any Group to pay
any premium or other amount or to incur any Liability, or (iii) require any
member of any Group to renew, extend or continue any policy in force.
(c) Procedures With Respect to Insured Vialta Liabilities.
(i) Insurance Pursuit. ESS shall obtain Vialta's prior
approval, which approval shall not be unreasonably withheld, prior to
independently pursuing insurance recoveries from Insurance Policies for Insured
Vialta Liabilities. All such efforts shall be at ESS's sole cost and expense.
(ii) Management of Claims. Except as otherwise
inconsistent with the provisions of any applicable Insurance Policy, the defense
of claims, suits or actions giving rise to potential or actual Insured Vialta
Liabilities will be managed (in conjunction with ESS's insurers, as appropriate)
by the representative of Vialta that would have had responsibility for managing
such claims, suits or actions had such Insured Vialta Liabilities been Vialta
Liabilities.
(d) Procedures With Respect to Insured ESS Liabilities.
(i) Insurance Pursuit. Vialta shall obtain ESS' prior
approval, which approval shall not be unreasonably withheld, prior to pursuing
insurance recoveries from Insurance Policies for Insured ESS Liabilities. All
such efforts shall be at Vialta's sole cost and expense.
(ii) Management of Claims. Except as otherwise
inconsistent with the provisions of any applicable Insurance Policy, the defense
of claims, suits or actions giving rise to potential or actual Insured ESS
Liabilities will be managed (in conjunction with Vialta's insurers, as
appropriate) by the representative of ESS that would have had responsibility for
managing such claims, suits or actions had such Insured ESS Liabilities been ESS
Liabilities.
(e) Cooperation. ESS and Vialta will cooperate with each other in
all respects, and they shall execute any additional documents which are
reasonably necessary, to effectuate the provisions of this Section 4.11.
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15
(f) No Assignment or Waiver. This Agreement shall not be
considered as an attempted assignment of any policy of insurance or as a
contract of insurance and shall not be construed to waive any right or remedy of
any member of the ESS Group or the Vialta Group in respect of any Insurance
Policy or any other contract or policy of insurance.
(g) No Liability. Vialta does hereby, for itself and as agent for
each other member of the Vialta Group, agree that no member of the ESS Group
shall have any Liability whatsoever as a result of the insurance policies and
practices of ESS and its Subsidiaries as in effect at any time after the
Distribution Date, including without limitation as a result of the level or
scope of any such insurance, the creditworthiness of any insurance carrier, the
terms and conditions of any policy, the adequacy or timeliness of any notice to
any insurance carrier with respect to any claim or potential claim or otherwise.
(h) Further Agreements. The Parties acknowledge that they intend
to allocate financial obligations without violating any laws regarding
insurance, self-insurance or other financial responsibility. If it is determined
that any action undertake pursuant to this Distribution Agreement or any
Ancillary Agreement is violative of any insurance, self-insurance or related
financial responsibility law or regulation, the parties agree to work together
to do whatever is necessary to comply with such law or regulation while trying
to accomplish, as much as possible, the allocation of financial obligations as
intended in this Distribution Agreement and any Ancillary Agreement.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 LIMITATION OF LIABILITY. IN NO EVENT SHALL ANY MEMBER OF THE
ESS Technology GROUP OR Vialta GROUP BE LIABLE TO ANY OTHER MEMBER OF THE ESS
Technology GROUP OR Vialta GROUP FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT,
INCIDENTAL OR PUNITIVE DAMAGES OR LOST PROFITS, HOWEVER CAUSED AND ON ANY THEORY
OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT,
WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
SECTION 5.2 ENTIRE AGREEMENT. This Agreement, the other Ancillary
Agreements and the Exhibits and Schedules referenced or attached hereto and
thereto, constitute the entire agreement between the parties with respect to the
subject matter hereof and shall supersede all prior written and oral and all
contemporaneous oral agreements and understandings with respect to the subject
matter hereof.
SECTION 5.3 GOVERNING LAW. This Agreement shall be construed in
accordance with and all Disputes hereunder shall be governed by the laws of the
State of California, excluding its conflict of law rules. The Superior Court of
Santa ▇▇▇▇▇ County and/or the United States District Court for the Northern
District of California, San ▇▇▇▇ Division, shall have jurisdiction and venue
over all Disputes between the parties that are permitted to be brought in a
court of law pursuant to SECTION 4.6 above.
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SECTION 5.4 TERMINATION. This Agreement and all Ancillary Agreements may
be terminated and the Distribution abandoned at any time prior to the
Distribution Date by and in the sole discretion of ESS Technology without the
approval of Vialta. In the event of termination pursuant to this SECTION 5.4, no
party shall have any liability of any kind to the other party.
SECTION 5.5 NOTICES. Any notice, demand, offer, request or other
communication required or permitted to be given by either party pursuant to the
terms of this Agreement shall be in writing and shall be deemed effectively
given the earlier of (i) when received, (ii) when delivered personally, (iii)
one (1) Business Day after being delivered by facsimile (with receipt of
appropriate confirmation), (iv) one (1) Business Day after being deposited with
a nationally recognized overnight courier service or (v) four (4) days after
being deposited in the U.S. mail, First Class with postage prepaid, and
addressed to the attention of:
If to ESS Technology, Inc.:
ESS Technology, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Vialta:
Vialta, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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ESS Technology and Vialta may substitute a different address or facsimile
number, from time to time, if such substitute is provided to the intended notice
recipient in writing by notice given in the manner provided in this SECTION 5.5.
SECTION 5.6 COUNTERPARTS. This Agreement, including the Schedules and
Exhibits hereto and the other documents referred to herein, may be executed via
facsimile or otherwise in counterparts, each of which shall be deemed to be an
original but all of which shall constitute one and the same agreement.
SECTION 5.7 BINDING EFFECT; ASSIGNMENT. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective legal
representatives and successors, and nothing in this Agreement, express or
implied, is intended to confer upon any other Person any rights or remedies of
any nature whatsoever under or by reason of this Agreement. This Agreement may
be enforced separately by each member of the ESS Technology Group and each
member of the Vialta Group. Except as herein specifically provided to the
contrary, neither party may assign this Agreement or any rights or obligations
hereunder, without the prior written consent of the other party, and any such
assignment shall be void; provided, however, either party (or its permitted
successive assignees or transferees hereunder) may assign or transfer this
Agreement as a whole without consent to an entity that succeeds to all or
substantially all of the business or assets of such party to which this
Agreement relates.
SECTION 5.8 SEVERABILITY. The parties hereto have negotiated and
prepared the terms of this Agreement in good faith with the intent that each and
every one of the terms, covenants and conditions herein be binding upon and
inure to the benefit of the respective parties. Accordingly, if any one or more
of the terms, provisions, promises, covenants or conditions of this Agreement or
the application thereof to any person or circumstance shall be adjudged to any
extent invalid, unenforceable, void or voidable for any reason whatsoever by a
court of competent jurisdiction, such provision shall be as narrowly construed
as possible, and each and all of the remaining terms, provisions, promises,
covenants and conditions of this Agreement or their application to other persons
or circumstances shall not be affected thereby and shall be valid and
enforceable to the fullest extent permitted by law. To the extent this Agreement
is in violation of applicable law, then the parties agree to negotiate in good
faith to amend the Agreement, to the extent possible consistent with its
purposes, to conform to law.
SECTION 5.9 WAIVER OF BREACH. The waiver by either party hereto of a
breach or violation of any provision of this Agreement shall not operate as, or
be construed to constitute, a waiver of any subsequent breach of the same or
another provision hereof.
SECTION 5.10 AMENDMENT AND EXECUTION. This Agreement and amendments
hereto shall be in writing and executed in multiple copies via facsimile or
otherwise on behalf of ESS Technology and Vialta by their respective duly
authorized officers and representatives. Each multiple copy shall be deemed an
original, but all multiple copies together shall constitute one and the same
instrument.
SECTION 5.11 DESCRIPTIVE HEADINGS. The headings contained in this
Agreement, in any Exhibit or Schedule hereto and in the table of contents to
this Agreement are for reference purposes
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only and shall not affect in any way the meaning or interpretation of this
Agreement. Any capitalized term used in any Schedule or Exhibit but not
otherwise defined therein, shall have the meaning assigned to such term in this
Agreement. When a reference is made in this Agreement to an Article or a
Section, Exhibit or Schedule, such reference shall be to an Article or Section
of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated.
SECTION 5.12 GENDER AND NUMBER. Whenever the context of this Agreement
requires, the gender of all words herein shall include the masculine, feminine
and neuter, and the number of all words herein shall include the singular and
plural.
SECTION 5.13 ADDITIONAL ASSURANCES. Except as may be specifically
provided herein to the contrary, the provisions of this Agreement shall be
self-operative and shall not require further agreement by the parties; provided,
however, at the request of either party, the other party shall execute such
additional instruments and take such additional acts as are reasonable, and as
the requesting party may reasonably deem necessary, to effectuate this
Agreement.
SECTION 5.14 FORCE MAJEURE. Neither party shall be liable or deemed to
be in default for any delay or failure in performance under this Agreement or
other interruption of service deemed to result, directly or indirectly, from
acts of God, civil or military authority, acts of public enemy, war, accidents,
explosions, earthquakes, floods, failure of transportation, strikes or other
work interruptions by either party's employees, or any other similar cause
beyond the reasonable control of either party unless such delay or failure in
performance is expressly addressed elsewhere in this Agreement.
SECTION 5.15 CONFLICTING AGREEMENTS. In the event of conflict between
this Agreement and any Ancillary Agreement executed in connection herewith, the
provisions of such Ancillary Agreement shall prevail.
ARTICLE VI
DEFINITIONS
SECTION 6.1 ANCILLARY AGREEMENTS. "ANCILLARY AGREEMENTS" has the meaning
set forth in SECTION 2.1 hereof.
SECTION 6.2 BUSINESS DAY. "BUSINESS DAY" means a day other than a
Saturday, a Sunday or a day on which banking institutions located in the State
of California are authorized or obligated by law or executive order to close.
SECTION 6.3 CODE. "CODE" has the meaning set forth in the Recitals
hereof.
SECTION 6.4 COMMISSION. "COMMISSION" has the meaning set forth in
SECTION 3.1(a) hereof.
SECTION 6.5 DISPUTES. "DISPUTES" has the meaning set forth in SECTION
4.6 hereof.
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SECTION 6.6 DISTRIBUTION. "DISTRIBUTION" has the meaning set forth in
the Recitals hereof.
SECTION 6.7 DISTRIBUTION AGENT. "DISTRIBUTION AGENT" has the meaning set
forth in SECTION 3.2 hereof.
SECTION 6.8 DISTRIBUTION DATE. "DISTRIBUTION DATE" has the meaning set
forth in SECTION 3.2 hereof.
SECTION 6.9 DISTRIBUTION RATIO. "DISTRIBUTION RATIO" has the meaning set
forth in SECTION 3.2 hereof.
SECTION 6.10 ESS LIABILITIES. "ESS LIABILITIES" means any liability
arising from the action or inaction of any one or more members of the ESS
Technology Group.
SECTION 6.11 ESS TECHNOLOGY GROUP. "ESS TECHNOLOGY GROUP" means ESS
Technology and each Subsidiary of ESS Technology (other than any member of the
Vialta Group) immediately after the Distribution Date, and each Person that
becomes a Subsidiary of ESS Technology after the Distribution Date.
SECTION 6.12 ESS TECHNOLOGY'S AUDITORS. "ESS TECHNOLOGY'S AUDITORS" has
the meaning set forth in SECTION 4.3(b) hereof.
SECTION 6.13 EXCHANGE ACT. "EXCHANGE ACT" has the meaning set forth in
SECTION 3.1(a) hereof.
SECTION 6.14 FORM 10 REGISTRATION STATEMENT. "FORM 10 REGISTRATION
STATEMENT" shall mean the Form 10 Registration Statement described in SECTION
3.1(a) including any amendments or supplements thereto.
SECTION 6.15 GAAP. "GAAP" means generally accepted accounting principals
promulgated by the Financial Accounting Standards Board, in effect on the
Distribution Date, consistently applied.
SECTION 6.16 GOVERNMENTAL APPROVALS. "GOVERNMENTAL APPROVALS" means any
notices, reports or other filings to be made, or any consents, registrations,
approvals, permits or authorizations to be obtained from, any Governmental
Authority.
SECTION 6.17 GOVERNMENTAL AUTHORITY. "GOVERNMENTAL AUTHORITY" shall mean
any federal, state, local, foreign or international court, government,
department, commission, board, bureau, agency, official or other regulatory,
administrative or governmental authority.
SECTION 6.18 ▇▇▇▇ ▇▇▇▇. "▇▇▇▇ ▇▇▇▇" has the meaning set for in SECTION
1.2 hereof.
SECTION 6.19 INFORMATION. "INFORMATION" means information, whether or
not patentable or copyrightable, in written, oral, electronic or other tangible
or intangible forms, stored in any medium, including studies, reports, records,
books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications, drawings, blueprints, diagrams,
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models, prototypes, samples, flow charts, data, computer data, disks, diskettes,
tapes, computer programs or other software, marketing plans, customer names,
communications by or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or under their
direction (including attorney work product), and other technical, financial,
employee or business information or data.
SECTION 6.20 INSURANCE POLICIES. "INSURANCE POLICIES" means insurance
policies pursuant to which a Person makes a true risk transfer to an insurer.
Insured Vialta Liabilities
SECTION 6.21 INSURED VIALTA LIABILITIES. "INSURED VIALTA LIABILITIES"
means any Vialta Liabilities to the extent covered under the terms of ESS'
Insurance Policies.
SECTION 6.22 INSURED ESS LIABILITIES. "INSURED ESS LIABILITIES" means
any ESS Liabilities to the extent covered under the terms of Vialta's Insurance
Policies.
SECTION 6.23 LIABILITIES. "LIABILITIES" means all debts, liabilities,
guarantees, assurances, commitments and obligations, whether fixed, contingent
or absolute, asserted or unasserted, matured or unmatured, liquidated or
unliquidated, accrued or not accrued, known or unknown, due or to become due,
whenever or however arising (including, without limitation, whether arising out
of any contract or tort based on negligence or strict liability) and whether or
not the same would be required by generally accepted principles and accounting
policies to be reflected in financial statements or disclosed in the notes
thereto.
SECTION 6.24 PERSON. "PERSON" means an individual, a partnership, a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization and a governmental
entity or any department, agency or political subdivision thereof.
SECTION 6.25 RECORD DATE. "RECORD DATE" means the close of business on
the date to be determined by the Board of Directors of ESS Technology as the
record date for determining the shareholders of ESS Technology entitled to
receive shares of Class A common stock of Vialta in the Distribution.
SECTION 6.26 SUBSIDIARY. "SUBSIDIARY" means with respect to any
specified Person, any corporation, any limited liability company, any
partnership or other legal entity of which such Person or its Subsidiaries owns,
directly or indirectly, more than 50% of the stock or other equity interest
entitled to vote on the election of the members of the board of directors or
similar governing body.
SECTION 6.27 TRANSITIONAL SERVICE SCHEDULES. "TRANSITIONAL SERVICE
SCHEDULES" shall have the meaning set forth in Article 2 of the Master
Transitional Services Agreement.
SECTION 6.28 VIALTA'S AUDITORS. "VIALTA'S AUDITORS" has the meaning set
forth in SECTION 4.3(a) hereof.
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SECTION 6.29 VIALTA GROUP. "VIALTA GROUP" means Vialta and each
Subsidiary of Vialta immediately after the Distribution Date and each Person
that becomes a Subsidiary of Vialta after the Distribution Date.
SECTION 6.30 VIALTA LIABILITIES. "VIALTA LIABILITIES" shall mean any
liabilities arising from the action or inaction of any one or more members of
the Vialta Group.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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WHEREFORE, the parties have signed this Master Distribution Agreement
effective as of the date first set forth above.
ESS TECHNOLOGY, INC. VIALTA, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇.▇. ▇▇▇▇
-------------------------------- --------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇ ▇.▇. ▇▇▇▇
----------------------------- -----------------------------
Title: President & CEO Title: Chairman & CEO
----------------------------- -----------------------------
23
EXHIBIT A
CERTIFICATE OF SECRETARY OF ESS TECHNOLOGY
As provided in the Master Distribution Agreement dated effective as of
August 20, 2001 between ESS Technology, Inc., a California corporation ("ESS
Technology"), and Vialta, Inc., a Delaware corporation (the "Agreement"), the
undersigned Secretary of ESS Technology hereby certifies that ESS Technology
directs ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & Sutcliffe, LLP, to make the deliveries and receipts
on behalf of ESS Technology as provided in SECTION 1.3 of the Agreement.
/s/ ▇▇▇▇▇ ▇▇▇▇
-----------------------------------
Secretary
Dated: August 20, 2001
24
EXHIBIT B
CERTIFICATE OF SECRETARY OF VIALTA
As provided in the Master Distribution Agreement dated effective as of
August 20, 2001 between ESS Technology, Inc., a California corporation, and
Vialta, Inc., a Delaware corporation ("Vialta") (the "Agreement"), the
undersigned Secretary of Vialta hereby certifies that Vialta directs ▇▇▇▇ ▇▇▇▇
▇▇▇▇ & Freidenrich LLP to make the deliveries and receipts on behalf of Vialta
as provided in SECTION 1.3 of the Agreement.
/s/ ▇▇▇▇ ▇.▇. ▇▇▇▇
-----------------------------------
Secretary
Dated: August 20, 2001
25
EXHIBIT C
MASTER TECHNOLOGY OWNERSHIP AND LICENSE AGREEMENT
26
EXHIBIT D
EMPLOYEE MATTERS AGREEMENT
27
EXHIBIT E
TAX SHARING AND INDEMNITY AGREEMENT
28
EXHIBIT F
REAL ESTATE MATTERS AGREEMENT
29
EXHIBIT G
MASTER CONFIDENTIAL DISCLOSURE AGREEMENT
30
EXHIBIT H
MASTER TRANSITIONAL SERVICES AGREEMENT
31
TABLE OF CONTENTS
Page
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ARTICLE I DISTRIBUTION..........................................................................1
Section 1.1 Distribution Date..........................................................1
Section 1.2 Closing of Transactions....................................................1
Section 1.3 Exchange of Secretary's Certificates.......................................1
ARTICLE II DOCUMENTS AND ITEMS TO BE DELIVERED ON OR BEFORE THE DISTRIBUTION DATE...............2
Section 2.1 Documents to Be Delivered By ESS Technology................................2
Section 2.2 Documents to Be Delivered by Vialta........................................2
ARTICLE III THE DISTRIBUTION AND ACTIONS PENDING THE DISTRIBUTION...............................3
Section 3.1 Transactions Prior to the Distribution.....................................3
Section 3.2 The Distribution...........................................................4
Section 3.3 Conditions to Distribution.................................................5
Section 3.4 Sole Discretion of ESS Technology..........................................6
Section 3.5 Fractional Shares..........................................................6
ARTICLE IV COVENANTS AND OTHER MATTERS..........................................................7
Section 4.1 Other Agreements...........................................................7
Section 4.2 Agreement For Exchange of Information......................................7
Section 4.3 Auditors and Audits; Annual and Quarterly Statements and Accounting........8
Section 4.4 Consistency with Past Practices...........................................10
Section 4.5 Payment of Expenses.......................................................10
Section 4.6 Dispute Resolution........................................................10
Section 4.7 Governmental Approvals....................................................11
Section 4.8 Representations and Warranties of ESS Technology..........................11
Section 4.9 Representations and Warranties of Vialta..................................12
Section 4.10 Cooperation in Obtaining New Agreements...................................12
Section 4.11 Insurance Matters.........................................................12
ARTICLE V MISCELLANEOUS........................................................................14
Section 5.1 Limitation of Liability...................................................14
Section 5.2 Entire Agreement..........................................................14
Section 5.3 Governing Law.............................................................14
Section 5.4 Termination...............................................................15
Section 5.5 Notices...................................................................15
Section 5.6 Counterparts..............................................................16
Section 5.7 Binding Effect; Assignment................................................16
Section 5.8 Severability..............................................................16
Section 5.9 Waiver of Breach..........................................................16
Section 5.10 Amendment and Execution...................................................16
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TABLE OF CONTENTS
(continued)
Page
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Section 5.11 Descriptive Headings......................................................16
Section 5.12 Gender and Number.........................................................17
Section 5.13 Additional Assurances.....................................................17
Section 5.14 Force Majeure.............................................................17
Section 5.15 Conflicting Agreements....................................................17
ARTICLE VI DEFINITIONS.........................................................................17
Section 6.1 Ancillary Agreements......................................................17
Section 6.2 Business Day..............................................................17
Section 6.3 Code......................................................................17
Section 6.4 Commission................................................................17
Section 6.5 Disputes..................................................................17
Section 6.6 Distribution..............................................................18
Section 6.7 Distribution Agent........................................................18
Section 6.8 Distribution Date.........................................................18
Section 6.9 Distribution Ratio........................................................18
Section 6.10 ESS Liabilities...........................................................18
Section 6.11 ESS Technology Group......................................................18
Section 6.12 ESS Technology's Auditors.................................................18
Section 6.13 Exchange Act..............................................................18
Section 6.14 Form 10 Registration Statement............................................18
Section 6.15 GAAP......................................................................18
Section 6.16 Governmental Approvals....................................................18
Section 6.17 Governmental Authority....................................................18
Section 6.18 ▇▇▇▇ ▇▇▇▇.................................................................18
Section 6.19 Information...............................................................18
Section 6.20 Insurance Policies........................................................19
Section 6.21 Insured Vialta Liabilities................................................19
Section 6.22 Insured ESS Liabilities...................................................19
Section 6.23 Liabilities...............................................................19
Section 6.24 Person....................................................................19
Section 6.25 Record Date...............................................................19
Section 6.26 Subsidiary................................................................19
Section 6.27 Transitional Service Schedules............................................19
Section 6.28 Vialta's Auditors.........................................................19
Section 6.29 Vialta Group..............................................................20
Section 6.30 Vialta Liabilities........................................................20
33
EXHIBITS
Exhibit A Certificate of Secretary of ESS Technology
Exhibit B Certificate of Secretary of Vialta
Exhibit C Master Technology Ownership and License Agreement
Exhibit D Employee Matters Agreement
Exhibit E Tax Sharing and Indemnity Agreement
Exhibit F Real Estate Matters Agreement
Exhibit G Master Confidential Disclosure Agreement
Exhibit H Master Transitional Services Agreement
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