Registration Statement No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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Conexant Systems, Inc.
(Exact name of registrant as specified in its charter)
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DELAWARE 25-1799439
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4311 Jamboree Road
Newport Beach, California 92660-3095
(Address of Principal Executive Offices) (Zip Code)
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Conexant Systems, Inc. Retirement Savings Plan
(Full title of the plan)
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DWIGHT W. DECKER
Chairman and Chief Executive Officer
Conexant Systems, Inc.
4311 Jamboree Road
Newport Beach, California 92660-3095
(Name and address of agent for service)
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(949) 483-4600
(Telephone number, including area code, of agent for service)
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Copy to:
PETER R. KOLYER, Esq.
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, New York 10112
(212) 408-5100
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Calculation of Registration Fee
<TABLE>
<CAPTION>
------------------------------------ ----------------- --------------------------- ---------------------------- ================
Amount to be Proposed maximum offering Proposed maximum aggregate Amount of
Title of securities to be registered price per unit (1) offering price (1) registration
registered fee
------------------------------------ ----------------- --------------------------- ---------------------------- ----------------
<S> <C> <C> <C> <C>
Common Stock, par value $1 per
share (including the associated
Preferred Share Purchase Rights) 1,500,000 shares $10.62 $15,930,000 $4,429
(2)..............
------------------------------------ ----------------- --------------------------- ---------------------------- ----------------
<FN>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(h) under the Securities Act of 1933, as amended (the
"Securities Act"), based on (a) the book value as of September 30, 1998 of
the net assets held or to be received by the Registrant in the initial
transaction in which the Registrant's securities registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), pursuant
to the Registrant's Registration Statement on Form 10, as amended (File No.
000-24923), will be issued, divided by (b) the number of shares of Common
Stock estimated to be outstanding after such initial issuance.
(2) In addition, pursuant to Rule 416(c) under the Securities Act, this
Registration Statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the employee benefit plan described herein.
</FN>
</TABLE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following document, which has been filed with the Securities and
Exchange Commission (the "Commission"), is incorporated herein by reference and
made a part hereof:
Registration Statement on Form 10, as amended, filed pursuant to
Section 12(g) of the Exchange Act, by Conexant Systems, Inc. (the
"Company") in File No. 000-24923 (the "Form 10"). The description of
the Company's Common Stock is contained in Item 11 of the Form 10.
All documents subsequently filed by the Company and the Conexant
Systems, Inc. Retirement Savings Plan (the "Plan") pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold, shall be deemed to be
incorporated herein by reference and be a part hereof from the date of filing of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes that
statement. Any such statement so modified or superseded shall not constitute a
part of this Registration Statement, except as so modified or superseded.
ITEM 4. DESCRIPTION OF SECURITIES.
This Item is not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
This Item is not applicable.
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<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware General Corporation Law (the "DGCL") permits Delaware
corporations to eliminate or limit the monetary liability of directors for
breach of their fiduciary duty of care, subject to certain limitations. The
Company's Restated Certificate of Incorporation provides that Company directors
are not liable to the Company or its shareowners for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Company or its shareowners, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for willful or negligent violation of the laws governing
the payment of dividends or the purchase or redemption of stock or (iv) for any
transaction from which a director derived an improper personal benefit.
The DGCL provides for indemnification of directors, officers, employees
and agents subject to certain limitations. The Company's Amended By-Laws and the
appendix thereto provide for the indemnification of directors, officers,
employees and agents of the Company to the extent permitted by Delaware law. It
is expected that the Company's directors and officers will be insured against
certain liabilities for actions taken in such capacities, including liabilities
under the Securities Act.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
This Item is not applicable.
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<PAGE>
ITEM 8. EXHIBITS.
4.1 Restated Certificate of Incorporation of the Company.
4.2 Amended By-Laws of the Company.
4.3 Specimen certificate for the Company's Common Stock, par value $1
per share, filed as Exhibit 4.3 to the Form 10, is incorporated
herein by reference.
4.4 Rights Agreement, dated as of November 30, 1998, by and between the
Company and ChaseMellon Shareholder Services, L.L.C., as rights
agent.
4.5 Conexant Systems, Inc. Retirement Savings Plan.
5.1 Opinion of Chadbourne & Parke LLP as to the legality of any newly
issued shares of Common Stock of the Company covered by this
Registration Statement.
5.2 In lieu of an opinion concerning compliance with the requirements of
the Employee Retirement Income Security Act of 1974, as amended, or
a determination letter of the Internal Revenue Service (the "IRS")
that the Plan is qualified under Section 401 of the Internal Revenue
Code, the Company hereby undertakes to submit the Plan and any
amendment thereto to the IRS in a timely manner and to make all
changes required by the IRS in order to qualify the Plan.
23.1 Consent of Deloitte & Touche LLP, independent auditors, set forth on
Page II-8 of this Registration Statement.
23.2 Consent of Chadbourne & Parke LLP, contained in its opinion filed as
Exhibit 5.1 to this Registration Statement.
24 Power of Attorney authorizing certain persons to sign this
Registration Statement on behalf of certain directors and officers
of the Company.
II-3
<PAGE>
ITEM 9. UNDERTAKINGS.
A. The Company hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
provided, however, that clauses (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by
those clauses is contained in periodic reports filed with or furnished
to the Commission by the Company pursuant to Section 13 or 15(d) of the
Exchange Act that are incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Company's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each
filing of the Plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
B. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of
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<PAGE>
the Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
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<PAGE>
SIGNATURES
THE REGISTRANT. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF
1933, THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT
MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-8 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED IN THE CITY OF NEWPORT BEACH, STATE OF CALIFORNIA, ON THE 11TH
DAY OF DECEMBER, 1998.
CONEXANT SYSTEMS, INC.
By /s/ Dwight W. Decker
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(DWIGHT W. DECKER, CHAIRMAN AND
CHIEF EXECUTIVE OFFICER)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED ON THE 11TH DAY OF DECEMBER, 1998 BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
SIGNATURE TITLE
--------- -----
DWIGHT W. DECKER* Chairman of the Board and Chief Executive Officer
(principal executive officer) and Director
DONALD R. BEALL* Director
RICHARD M. BRESSLER* Director
F. CRAIG FARRILL* Director
JERRE L. STEAD* Director
BALAKRISHNAN S. IYER* Senior Vice President and Chief Financial Officer
(principal financial officer)
STEVEN M. THOMSON* Vice President and Controller
(principal accounting officer)
*By /s/ Dwight W. Decker
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(DWIGHT W. DECKER, ATTORNEY-IN-FACT)**
** By authority of the power of attorney filed as Exhibit 24 to this
Registration Statement.
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<PAGE>
THE PLAN. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933,
THE PLAN HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF
BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEWPORT BEACH,
STATE OF CALIFORNIA, ON THE 11TH DAY OF DECEMBER, 1998.
CONEXANT SYSTEMS, INC.
RETIREMENT SAVINGS PLAN
By /s/ William C. Tipton
------------------------------------------
(WILLIAM C. TIPTON, PLAN ADMINISTRATOR)
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<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of Conexant Systems, Inc. on Form S-8 for the Conexant Systems, Inc.
Retirement Savings Plan, of our report dated November 4, 1998 on the combined
financial statements and financial statement schedule of the semiconductor
systems business of Rockwell International Corporation, appearing in the
Registration Statement on Form 10 (File No. 000-24923), as amended, of Conexant
Systems, Inc. We also consent to the reference to us under the heading "Experts"
in the Plan Prospectus.
DELOITTE & TOUCHE LLP
Costa Mesa, California
December 7, 1998
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<PAGE>
EXHIBIT INDEX
Exhibit
Number Page
- ------ ----
4.1 Restated Certificate of Incorporation of the Company.
4.2 Amended By-Laws of the Company.
4.3 Specimen certificate for the Company's Common Stock,
par value $1 per share, filed as Exhibit 4.3 to the
Form 10, is incorporated herein by reference.
4.4 Rights Agreement, dated as of November 30, 1998, by
and between the Company and ChaseMellon Shareholder
Services, L.L.C., as rights agent.
4.5 Conexant Systems, Inc. Retirement Savings Plan.
5.1 Opinion of Chadbourne & Parke LLP as to the legality
of any newly issued shares of Common Stock of the
Company covered by this Registration Statement.
5.2 In lieu of an opinion concerning compliance with the
requirements of the Employee Retirement Income Security
Act of 1974, as amended, or a determination letter of
the Internal Revenue Service (the "IRS") that the Plan
is qualified under Section 401 of the Internal Revenue
Code, the Company hereby undertakes to submit the Plan
and any amendment thereto to the IRS in a timely manner
and to make all changes required by the IRS in order to
qualify the Plan.
23.1 Consent of Deloitte & Touche LLP, independent auditors,
set forth on Page II-8 of this Registration Statement.
23.2 Consent of Chadbourne & Parke LLP, contained in its
opinion filed as Exhibit 5.1 to this Registration
Statement.
24 Power of Attorney authorizing certain persons to sign
this Registration Statement on behalf of certain
directors and officers of the Company.
Exhibit 4.1
RESTATED CERTIFICATE OF INCORPORATION
OF
CONEXANT SYSTEMS, INC.
FIRST: The name of the Corporation is Conexant Systems, Inc.
SECOND: The Corporation's registered office in the State of Delaware is located
at 1209 Orange Street, in the City of Wilmington, County of New Castle. The name
and address of its registered agent is The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801.
THIRD: The nature of the business, or objects or purposes to be transacted,
promoted or carried on, are: To engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware.
FOURTH: The total number of shares of all classes of stock which the Corporation
shall have the authority to issue is 525,000,000, of which 25,000,000 shares
without par value are to be of a class designated Preferred Stock and
500,000,000 shares of the par value of $1 each are to be of a class designated
Common Stock.
In this Article Fourth, any reference to a section or paragraph, without further
attribution, within a provision relating to a particular class of stock is
intended to refer solely to the specified section or paragraph of the other
provisions relating to the same class of stock.
COMMON STOCK
The Common Stock shall have the following voting powers, designations,
preferences and relative, participating, optional and other special rights,
and qualifications, limitations or restrictions thereof:
1. Dividends. Whenever the full dividends upon any outstanding Preferred
Stock for all past dividend
<PAGE>
periods shall have been paid and the full dividends thereon for the
then current respective dividend periods shall have been paid, or
declared and a sum sufficient for the respective payments thereof set
apart, the holders of shares of the Common Stock shall be entitled to
receive such dividends and distributions in equal amounts per share,
payable in cash or otherwise, as may be declared thereon by the Board
of Directors from time to time out of assets or funds of the
Corporation legally available therefor.
2. Rights on Liquidation. In the event of any liquidation,
dissolution or winding-up of the Corporation, whether voluntary or
involuntary, after the payment or setting apart for payment to the
holders of any outstanding Preferred Stock of the full preferential
amounts to which such holders are entitled as herein provided or
referred to, all of the remaining assets of the Corporation shall
belong to and be distributable in equal amounts per share to the
holders of the Common Stock. For purposes of this paragraph 2, a
consolidation or merger of the Corporation with any other
corporation, or the sale, transfer or lease of all or substantially
all its assets shall not constitute or be deemed a liquidation,
dissolution or winding-up of the Corporation.
3. Voting. Except as otherwise provided by the laws of the State of
Delaware or by this Article Fourth, each share of Common Stock shall
entitle the holder thereof to one vote.
PREFERRED STOCK
The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized to provide for
the issuance of shares of Preferred Stock in series and, by filing a
certificate pursuant to the applicable law of the State of Delaware
(hereinafter referred to as a "Preferred Stock Designation"), to
establish from time to time the number of shares to be included in
each such series, and to fix the designation, powers, preferences and
rights of the shares of each such series and the qualifications,
limitations and restrictions thereof. The authority of the Board of
2
<PAGE>
Directors with respect to each series shall include, but not be
limited to, determination of the following:
(a) the designation of the series, which may be by
distinguishing number, letter or title;
(b) the number of shares of the series, which number the
Board of Directors may thereafter (except where otherwise
provided in the Preferred Stock Designation) increase or
decrease (but not below the number of shares thereof then
outstanding);
(c) whether dividends, if any, shall be cumulative or
noncumulative and the dividend rate of the series;
(d) the dates at which dividends, if any, shall be payable;
(e) the redemption rights and price or prices, if any, for
shares of the series;
(f) the terms and amount of any sinking fund provided for
the purchase or redemption of shares of the series;
(g) the amounts payable on shares of the series in the
event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the
Corporation;
(h) whether the shares of the series shall be convertible
into shares of any other class or series, or any other
security, of the Corporation or any other corporation, and,
if so, the specification of such other class or series or
such other security, the conversion price or prices or rate
or rates, any adjustments thereof, the date or dates as of
which such shares shall be convertible and all other terms
and conditions upon which such conversion may be made;
(i) restrictions on the issuance of shares of the same
series or of any other class or series; and
3
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(j) the voting rights, if any, of the holders of shares of
the series.
Except as may be provided in this Certificate of Incorporation or in
a Preferred Stock Designation, the Common Stock shall have the
exclusive right to vote for the election of directors and for all
other purposes, and holders of Preferred Stock shall not be entitled
to receive notice of any meeting of shareowners at which they are not
entitled to vote. The number of authorized shares of Preferred Stock
may be increased or decreased (but not below the number of shares
thereof then outstanding) by the affirmative vote of the holders of a
majority of the outstanding Common Stock, without a vote of the
holders of the Preferred Stock, or of any series thereof, unless a
vote of any such holders is required pursuant to any Preferred Stock
Designation.
The Corporation shall be entitled to treat the person in whose name
any share of its stock is registered as the owner thereof for all
purposes and shall not be bound to recognize any equitable or other
claim to, or interest in, such share on the part of any other person,
whether or not the Corporation shall have notice thereof, except as
expressly provided by applicable law.
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
1. Designation and Amount. A series of Preferred Stock, without par
value, is hereby created and shall be designated as "Series A Junior
Participating Preferred Stock" (the "Series A Preferred Stock") and
the number of shares constituting the Series A Preferred Stock shall
be 1,500,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a
number less than the number of shares then outstanding plus the
number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into
Series A Preferred Stock.
4
<PAGE>
2. Dividends and Distributions.
2.1. Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any similar stock) ranking prior and superior
to the Series A Preferred Stock with respect to dividends, the
holders of shares of Series A Preferred Stock, in preference to the
holders of Common Stock and of any other junior stock of the
Corporation, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the second Monday of
March, June, September and December in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the
first issuance of a share or fraction of a share of Series A
Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1 or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share
amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since
the immediately preceding Quarterly Dividend Payment Date or, with
respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Preferred
Stock. In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such
case the amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the
denominator of which is the number of
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<PAGE>
shares of Common Stock that were outstanding immediately prior to
such event.
2.2. The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph 2.1 immediately
after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1 per share on the Series A Preferred
Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
2.3. Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless
the date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among
all such shares at the time outstanding. The Board of Directors may
fix a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
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<PAGE>
3. Voting Rights. The holders of shares of Series A Preferred Stock
shall have the following voting rights:
3.1. Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the
shareowners of the Corporation. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which
holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
3.2. Except as otherwise provided herein, in any other Preferred
Stock Designation creating a series of Preferred Stock or any similar
stock, or by law, the holders of shares of Series A Preferred Stock
and the holders of shares of Common Stock and any other capital stock
of the Corporation having general voting rights shall vote together
as one class on all matters submitted to a vote of shareowners of the
Corporation.
3.3. Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
4. Certain Restrictions.
4.1. Whenever quarterly dividends or other dividends or distributions
payable on the Series A
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Preferred Stock as provided in paragraph 2 are in arrears, thereafter
and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding
shall have been paid in full, the Corporation shall not:
(a) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock;
(b) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except
dividends paid ratably on the Series A Preferred Stock and
all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(c) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or
winding up) to the Series A Preferred Stock; or
(d) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or
any shares of stock ranking on a parity with the Series A
Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall
determine
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<PAGE>
in good faith will result in fair and equitable treatment
among the respective series or classes.
4.2. The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could,
under subparagraph (c) of paragraph 4.1, purchase or otherwise
acquire such shares at such time and in such manner.
5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock subject to the
conditions and restrictions on issuance set forth herein or in any
other Preferred Stock Designation creating a series of Preferred
Stock or any similar stock or as otherwise required by law.
6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall
be made (i) to the holders of shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock unless, prior thereto, the holders of
shares of Series A Preferred Stock shall have received $100 per
share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such
payment, provided that the holders of shares of Series A Preferred
Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal
to 100 times the aggregate amount to be distributed per share to
holders of shares of Common Stock, or (ii) to the holders of shares
of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred
Stock, except distributions made ratably on the Series A Preferred
Stock and all such parity stock in proportion to the total amounts to
which
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the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the aggregate amount to which holders
of shares of Series A Preferred Stock were entitled immediately prior
to such event under the proviso in clause (i) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding
immediately prior to such event.
7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into
other stock or securities, cash and/or any other property, then in
any such case each share of Series A Preferred Stock shall at the
same time be similarly exchanged or changed into an amount per share,
subject to the provision for adjustment hereinafter set forth, equal
to 100 times the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may be, into which
or for which each share of Common Stock is changed or exchanged. In
the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such
case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series A Preferred Stock shall be
adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately
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<PAGE>
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such
event.
8. No Redemption. The shares of Series A Preferred Stock shall not be
redeemable.
9. Rank. The Series A Preferred Stock shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all
series of any other class of the Corporation's Preferred Stock.
10. Amendment. The Certificate of Incorporation of the Corporation
shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A
Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least two-thirds of the
outstanding shares of Series A Preferred Stock, voting together as a
single class.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: The private property of the shareowners of the Corporation shall not be
subject to the payment of corporate debts to any extent whatever.
SEVENTH: Subject to the rights of the holders of any series of Preferred Stock
to elect additional directors under specified circumstances, the number of
directors of the Corporation shall be fixed from time to time exclusively by the
Board of Directors pursuant to a resolution adopted by a majority of the whole
Board. A director need not be a shareowner. The election of directors of the
Corporation need not be by ballot unless the by-laws so require.
The directors, other than those who may be elected by the holders of any series
of Preferred Stock or any other series or class of stock, as provided herein or
in any Preferred Stock Designation, shall be divided into three classes, as
nearly equal in number as possible. One class of directors shall be initially
elected for a term expiring at the annual meeting of shareowners to be held in
2000, another class shall be initially elected for a term expiring at the annual
meeting of shareowners to be held in 2001, and another class shall be initially
11
<PAGE>
elected for a term expiring at the annual meeting of shareowners to be held in
2002. Members of each class shall hold office until their successors are duly
elected and qualified. At each annual meeting of the shareowners of the
Corporation, commencing with the 2000 annual meeting, the successors of the
class of directors whose term expires at that meeting shall be elected by a
plurality vote of all votes cast for the election of directors at such meeting
to hold office for a term expiring at the annual meeting of shareowners held in
the third year following the year of their election.
Subject to the rights of the holders of any series of Preferred Stock, and
unless the Board of Directors otherwise determines, newly created directorships
resulting from any increase in the authorized number of directors or any
vacancies on the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause may be filled
only by a majority vote of the directors then in office, though less than a
quorum, and directors so chosen shall hold office for a term expiring at the
annual meeting of shareowners at which the term of office of the class to which
they have been elected expires and until such director's successor shall have
been duly elected and qualified. No decrease in the number of authorized
directors constituting the whole Board of Directors shall shorten the term of
any incumbent director.
Subject to the rights of the holders of any series of Preferred Stock or any
other series or class of stock, as provided herein or in any Preferred Stock
Designation, to elect additional directors under specific circumstances, any
director may be removed from office at any time, but only for cause and only by
the affirmative vote of the holders of at least 80 percent of the voting power
of the then outstanding capital stock of the Corporation (the "Capital Stock")
entitled to vote generally in the election of directors (the "Voting Stock"),
voting together as a single class.
No director of the Corporation shall be liable to the Corporation or its
shareowners for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its shareowners, (ii) for acts or omissions not in good faith or
which involve
12
<PAGE>
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit. This paragraph shall not
eliminate or limit the liability of a director for any act or omission occurring
prior to the effective date of its adoption. No repeal or modification of this
paragraph, directly or by adoption of an inconsistent provision of this
Certificate of Incorporation, by the shareowners of the Corporation shall be
effective with respect to any cause of action, suit, claim or other matter that,
but for this paragraph, would accrue or arise prior to such repeal or
modification.
EIGHTH: Unless otherwise determined by the Board of Directors, no holder of
stock of the Corporation shall, as such holder, have any right to purchase or
subscribe for any stock of any class which the Corporation may issue or sell,
whether or not exchangeable for any stock of the Corporation of any class or
classes and whether out of unissued shares authorized by the Certificate of
Incorporation of the Corporation as originally filed or by any amendment thereof
or out of shares of stock of the Corporation acquired by it after the issue
thereof.
NINTH: Whenever a compromise or arrangement is proposed between this Corporation
and its creditors or any class of them and/or between this Corporation and its
shareowners or any class of them, any court of equitable jurisdiction within the
State of Delaware may, on the application in a summary way of this Corporation
or of any creditor or shareowner thereof, or on the application of any receiver
or receivers appointed for this Corporation under the provisions of section 291
of Title 8 of the Delaware Code or on the application of trustees in dissolution
or of any receiver or receivers appointed for this Corporation under the
provisions of section 279 of Title 8 of the Delaware Code order a meeting of the
creditors or class of creditors, and/or of the shareowners or class of
shareowners of this Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
shareowners or class of shareowners of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as consequence of such
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<PAGE>
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the shareowners or class of shareowners, of this Corporation, as the case
may be, and also on this Corporation.
TENTH:
1. Amendment of Certificate of Incorporation. From time to time any of the
provisions of the Certificate of Incorporation may be amended, altered or
repealed, and other provisions authorized by the statutes of the State of
Delaware at the time in force may be added or inserted in the manner at the time
prescribed by said statutes, and all rights at any time conferred upon the
shareowners of the Corporation by its Certificate of Incorporation are granted
subject to the provisions of this Article Tenth. Notwithstanding anything
contained in this Certificate of Incorporation to the contrary, the affirmative
vote of the holders of at least 80% of the voting power of the then outstanding
Voting Stock, voting together as a single class, shall be required to amend or
repeal Article Seventh, this Article Tenth or Article Twelfth or adopt any
provision inconsistent with any of the foregoing articles.
2. By-laws. The Board of Directors is expressly authorized to make, alter, amend
and repeal the by-laws of the Corporation, in any manner not inconsistent with
the laws of the State of Delaware or of the Certificate of Incorporation of the
Corporation, subject to the power of the holders of the Capital Stock to alter
or repeal the by-laws made by the Board of Directors; provided, that any such
amendment or repeal by shareowners shall require the affirmative vote of the
holders of at least 80% of the voting power of the then outstanding Voting
Stock, voting together as a single class.
ELEVENTH: The shareowner vote required to approve Business Combinations (as
hereinafter defined) shall be as set forth in this Article Eleventh.
1. Higher Vote for Business Combinations. In addition to any
affirmative vote required by law, this Certificate of Incorporation
or the by-laws of the Corporation, and except as otherwise expressly
14
<PAGE>
provided in Section 2 of this Article Eleventh, a Business
Combination shall not be consummated without the affirmative vote of
the holders of at least 80% of the voting power of the then
outstanding shares of the Voting Stock, voting together as a single
class. Such affirmative vote shall be required notwithstanding the
fact that no vote may be required, or that a lesser percentage or
separate class vote may be specified, by law or in any agreement with
any national securities exchange or otherwise.
2. When Higher Vote Is Not Required. The provisions of Section 1 of
this Article Eleventh shall not be applicable to a Business
Combination if the conditions specified in either of the following
paragraphs A or B are met.
A. Approval by Continuing Directors. The Business
Combination shall have been approved by at least two-thirds
of the Continuing Directors (as hereinafter defined),
whether such approval is made prior to or subsequent to the
date on which the Interested Shareowner (as hereinafter
defined) became an Interested Shareowner (the
"Determination Date").
B. Price and Procedure Requirements. Each of the seven
conditions specified in the following subparagraphs (i)
through (vii) shall have been met:
(i) The aggregate amount of the cash and the Fair
Market Value (as hereinafter defined) as of the
date of the consummation of the Business
Combination (the "Consummation Date") of any
consideration other than cash to be received per
share by holders of Common Stock in such Business
Combination shall be an amount at least equal to
the higher amount determined under clauses (a)
and (b) below (the requirements of this paragraph
B(i) shall be applicable with respect to all
shares of Common Stock outstanding, whether or
not the Interested Shareowner has previously
acquired any shares of the Common Stock): (a) the
15
<PAGE>
highest per share price (including any brokerage
commissions, transfer taxes and soliciting
dealers' fees) paid by or on behalf of the
Interested Shareowner for any shares of Common
Stock acquired beneficially by it (1) within the
two-year period immediately prior to the first
public announcement of the proposal of the
Business Combination (the "Announcement Date") or
(2) in the transaction in which it became an
Interested Shareowner, whichever is higher, plus
interest compounded annually from the
Determination Date through the Consummation Date
at the prime rate of interest of Morgan Guaranty
Trust Company of New York (or of such other major
bank headquartered in New York City selected by
at least two-thirds of the Continuing Directors)
from time to time in effect in New York City,
less the aggregate amount of any cash dividends
paid, and the Fair Market Value of any dividends
paid in other than cash, per share of Common
Stock from the Determination Date through the
Consummation Date in an amount up to but not
exceeding the amount of such interest payable per
share of Common Stock; and (b) the Fair Market
Value per share of Common Stock on the
Announcement Date or on the Determination Date,
whichever is higher.
(ii) The aggregate amount of the cash and the
Fair Market Value as of the Consummation Date of
any consideration other than cash to be received
per share by holders of shares of any class or
series of outstanding Capital Stock, other than
the Common Stock, in such Business Combination
shall be an amount at least equal to the highest
amount determined under clauses (a), (b) and (c)
below (the requirements of this paragraph B(ii)
shall be applicable with respect to all shares of
every class or series of outstanding Capital
Stock, other than the Common Stock, whether or
not the Interested Shareowner has previously
acquired any
16
<PAGE>
shares of a particular class or series of Capital
Stock):
(a) the highest per share price
(including any brokerage commissions,
transfer taxes and soliciting dealers'
fees) paid by or on behalf of the
Interested Shareowner for any shares
of such class or series of Capital
Stock acquired beneficially by it (1)
within the two-year period immediately
prior to the Announcement Date or (2)
in the transaction in which it became
an Interested Shareowner, whichever is
higher, plus interest compounded
annually from the Determination Date
through the Consummation Date at the
prime rate of interest of Morgan
Guaranty Trust Company of New York (or
of such other major bank headquartered
in New York City selected by at least
two-thirds of the Continuing
Directors) from time to time in effect
in New York City, less the aggregate
amount of any cash dividends paid, and
the Fair Market Value of any dividends
paid in other than cash, per share of
such class or series of Capital Stock
from the Determination Date through
the Consummation Date in an amount up
to but not exceeding the amount of
such interest payable per share of
such class or series of Capital Stock;
and
(b) the Fair Market Value per share of
such class or series of Capital Stock
on the Announcement Date or on the
Determination Date, whichever is
higher; and
(c) the highest preferential amount
per share to which the holders of
shares of such class or series of
Capital Stock would be entitled in the
event of any voluntary or involuntary
liquidation, dissolution or winding up
of the affairs of the
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<PAGE>
Corporation, regardless of whether the
Business Combination to be consummated
constitutes such an event.
(iii) The consideration to be received by holders
of a particular class or series of outstanding
Capital Stock (including Common Stock) shall be
in cash or in the same form as previously has
been paid by or on behalf of the Interested
Shareowner in its direct or indirect acquisition
of beneficial ownership of shares of such class
or series of Capital Stock. If the consideration
so paid for shares of any class or series of
Capital Stock varied as to form, the form of
consideration for such class or series of Capital
Stock shall be either cash or the form used to
acquire beneficial ownership of the largest
number of shares of such class or series of
Capital Stock previously acquired by the
Interested Shareowner.
(iv) After such Interested Shareowner has become
an Interested Shareowner and prior to the
consummation of such Business Combination, such
Interested Shareowner shall not have become the
beneficial owner of any additional shares of
Capital Stock except as part of the transaction
that results in such Interested Shareowner
becoming an Interested Shareowner and except in a
transaction that, after giving effect thereto,
would not result in any increase in the
Interested Shareowner's percentage beneficial
ownership of any class or series of Capital
Stock; and, except as approved by at least
two-thirds of the Continuing Directors: (a) there
shall have been no failure to declare and pay at
the regular date therefor any full quarterly
dividends (whether or not cumulative) payable in
accordance with the terms of any outstanding
Capital Stock; (b) there shall have been no
reduction in the annual rate of dividends paid on
the Common Stock (except as necessary to
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<PAGE>
reflect any stock split, stock dividend or
subdivision of the Common Stock); and (c) there
shall have been an increase in the annual rate of
dividends paid on the Common Stock as necessary
to reflect any reclassification (including any
reverse stock split), recapitalization,
reorganization or any similar transaction which
has the effect of reducing the number of
outstanding shares of Common Stock.
(v) After such Interested Shareowner has become
an Interested Shareowner, such Interested
Shareowner shall not have received the benefit,
directly or indirectly (except proportionately as
a shareowner of the Corporation), of any loans,
advances, guarantees, pledges or other financial
assistance or any tax credits or other tax
advantages provided by the Corporation, whether
in anticipation of or in connection with such
Business Combination or otherwise.
(vi) A proxy or information statement describing
the proposed Business Combination and complying
with the requirements of the Securities Exchange
Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions
replacing such Act, rules or regulations) shall
be mailed to all shareowners of the Corporation
at least 30 days prior to the consummation of
such Business Combination (whether or not such
proxy or information statement is required to be
mailed pursuant to such Act or subsequent
provisions). The proxy or information statement
shall contain on the first page thereof, in a
prominent place, any statement as to the
advisability of the Business Combination that the
Continuing Directors, or any of them, may choose
to make and, if deemed advisable by at least
two-thirds of the Continuing Directors, the
opinion of an investment banking firm selected
for and on behalf of the
19
<PAGE>
Corporation by at least two-thirds of the
Continuing Directors as to the fairness of the
terms of the Business Combination from a
financial point of view to the holders of the
outstanding shares of Capital Stock other than
the Interested Shareowner and its Affiliates or
Associates (as hereinafter defined).
(vii) Such Interested Shareowner shall not have
made any material change in the Corporation's
business or equity capital structure without the
approval of at least two-thirds of the Continuing
Directors.
Any Business Combination to which Section 1 of this Article
Eleventh shall not apply by reason of this Section 2 shall
require only such affirmative vote as is required by law,
any other provision of this Certificate of Incorporation,
the by-laws of the Corporation or any agreement with any
national securities exchange.
3. Certain Definitions. For the purposes of this Article Eleventh:
A. A "Business Combination" shall mean:
(i) any merger or consolidation of the
Corporation or any Subsidiary (as hereinafter
defined) with (i) any Interested Shareowner or
(ii) any other corporation (whether or not itself
an Interested Shareowner) which is, or after such
merger or consolidation would be, an Affiliate or
Associate of an Interested Shareowner; or
(ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction
or a series of transactions) to or with any
Interested Shareowner or any Affiliate or
Associate of any Interested Shareowner involving
any assets or securities of the Corporation, any
Subsidiary or any Interested Shareowner or any
Affiliate or Associate
20
<PAGE>
of any Interested Shareowner having an aggregate
Fair Market Value of $25,000,000 or more; or
(iii) the adoption of any plan or proposal for
the liquidation or dissolution of the Corporation
proposed by or on behalf of any Interested
Shareowner or any Affiliate or Associate of any
Interested Shareowner; or
(iv) any reclassification of securities
(including any reverse stock split), or
recapitalization of the Corporation, or any
merger or consolidation of the Corporation with
any of its Subsidiaries or any other transaction
(whether or not with or into or otherwise
involving an Interested Shareowner) that has the
effect, directly or indirectly, of increasing the
proportionate share of any class or series of
Capital Stock, or any securities convertible into
Capital Stock or into equity securities of any
Subsidiary, that is beneficially owned by any
Interested Shareowner or any Affiliate or
Associate of any Interested Shareowner; or
(v) any agreement, contract, arrangement or other
understanding providing for any one or more of
the actions specified in clauses (i) through (iv)
above.
B. A "person" shall mean any individual, firm, corporation or other
entity and shall include any group composed of any person and any
other person with whom such person or any Affiliate or Associate of
such person has any agreement, arrangement or understanding, directly
or indirectly, for the purpose of acquiring, holding, voting or
disposing of Capital Stock.
C. "Interested Shareowner" shall mean any person (other than the
Corporation or any Subsidiary and other than any profit-sharing,
employee stock ownership or other employee benefit plan of the
Corporation, any Subsidiary or Rockwell
21
<PAGE>
International Corporation or any trustee of or fiduciary with respect
to any such plan when acting in such capacity) who or which:
(i) is the beneficial owner of Voting Stock
having 10% or more of the votes entitled to be
cast by the holders of all then outstanding
shares of Voting Stock; or
(ii) is an Affiliate or Associate of the
Corporation and at any time within the two-year
period immediately prior to the date in question
was the beneficial owner of Voting Stock having
10% or more of the votes entitled to be cast by
the holders of all then outstanding shares of
Voting Stock; or
(iii) is an assignee of or has otherwise
succeeded to any shares of Voting Stock which
were at any time within the two-year period
immediately prior to the date in question
beneficially owned by any Interested Shareowner,
if such assignment or succession shall have
occurred in the course of a transaction or series
of transactions not involving a public offering
within the meaning of the Securities Act of 1933;
provided, however, that Rockwell International Corporation shall not
be an Interested Shareowner as a result of its ownership of Capital
Stock of the Corporation prior to the distribution of the shares of
Capital Stock of the Corporation to the holders of capital stock of
Rockwell International Corporation (the "Distribution").
D. A person shall be a "beneficial owner" of any Capital Stock:
(i) which such person or any Affiliate or
Associate of such person beneficially owns,
directly or indirectly; or
(ii) which such person or any Affiliate or
Associate of such person has, directly
22
<PAGE>
or indirectly, (a) the right to acquire (whether
such right is exercisable immediately or only
after the passage of time), pursuant to any
agreement, arrangement or understanding or upon
the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (b)
the right to vote pursuant to any agreement,
arrangement or understanding; or
(iii) which are beneficially owned, directly or
indirectly, by any other person with which such
person or any Affiliate or Associate of such
person has any agreement, arrangement or
understanding for the purpose of acquiring,
holding, voting or disposing of any shares of
Capital Stock.
E. For the purposes of determining whether a person is an Interested
Shareowner pursuant to paragraph C of this Section 3, the number of
shares of Capital Stock deemed to be outstanding shall include shares
deemed owned by the Interested Shareowner through application of
paragraph D of this Section 3 but shall not include any other shares
of Capital Stock that may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
F. "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect
on November 19, 1998 (the term "registrant" in such Rule 12b-2
meaning in this case the Corporation).
G. "Subsidiary" means any corporation of which a majority of any
class of equity security is beneficially owned by the Corporation;
provided, however, that for the purposes of the definition of
Interested Shareowner set forth in paragraph C of this Section 3, the
term "Subsidiary" shall mean only a corporation of which a majority
of each class of equity security is beneficially owned by the
Corporation.
23
<PAGE>
H. "Continuing Director" means any member of the Board of Directors
of the Corporation (the "Board") who is not an Affiliate or Associate
or representative of the Interested Shareowner and was a member of
the Board prior to the time that the Interested Shareowner became an
Interested Shareowner, and any successor of a Continuing Director who
is not an Affiliate or Associate or representative of the Interested
Shareowner and is recommended or elected to succeed a Continuing
Director by at least two-thirds of the Continuing Directors then
members of the Board.
I. "Fair Market Value" means: (i) in the case of cash, the amount of
such cash; (ii) in the case of stock, the highest closing sale price
during the 30-day period immediately preceding the date in question
of a share of such stock on the Composite Tape for New York Stock
Exchange-Listed Stocks, or, if such stock is not quoted on the
Composite Tape, on the New York Stock Exchange, or, if such stock is
not listed on such Exchange, on the principal United States
securities exchange registered under the Securities Exchange Act of
1934 on which such stock is listed, or, if such stock is not listed
on any such exchange, the highest closing bid quotation with respect
to a share of such stock during the 30-day period immediately
preceding the date in question on the National Association of
Securities Dealers, Inc. Automated Quotations System or any system
then in use, or if no such quotations are available, the fair market
value on the date in question of a share of such stock as determined
in good faith by at least two-thirds of the Continuing Directors; and
(iii) in the case of property other than cash or stock, the fair
market value of such property on the date in question as determined
in good faith by at least two-thirds of the Continuing Directors.
J. In the event of any Business Combination in which the Corporation
survives, the phrase "consideration other than cash to be received"
as used in paragraphs B(i) and (ii) of Section 2 of this Article
Eleventh shall include the shares of Common Stock and/or the shares
of any other class or series of Capital Stock retained by the holders
of such shares.
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<PAGE>
4. Powers of Continuing Directors. Any determination as to compliance
with this Article Eleventh, including without limitation (A) whether
a person is an Interested Shareowner, (B) the number of shares of
Capital Stock or other securities beneficially owned by any person,
(C) whether a person is an Affiliate or Associate of another, (D)
whether the requirements of paragraph B of Section 2 have been met
with respect to any Business Combination, and (E) whether the assets
that are the subject of any Business Combination have, or the
consideration to be received for the issuance or transfer of
securities by the Corporation or any Subsidiary in any Business
Combination has, an aggregate Fair Market Value of $25,000,000 or
more shall be made only upon action by not less than two-thirds of
the Continuing Directors of the Corporation; and the good faith
determination of at least two-thirds of the Continuing Directors on
such matters shall be conclusive and binding for all the purposes of
this Article Eleventh.
5. No Effect on Fiduciary Obligations. Nothing contained in this
Article Eleventh shall be construed to relieve the Board of Directors
or any Interested Shareowner from any fiduciary obligation imposed by
law.
6. Amendment, Repeal, etc. Notwithstanding any other provisions of
this Certificate of Incorporation or the by-laws of the Corporation
(and notwithstanding the fact that a lesser percentage or separate
class vote may be specified by law, this Certificate of Incorporation
or the by-laws of the Corporation), the affirmative vote of the
holders of at least 80% of the voting power of the then outstanding
shares of Voting Stock, voting together as a single class, shall be
required to amend or repeal, or adopt any provisions inconsistent
with, this Article Eleventh; provided, however, that the preceding
provisions of this Section 6 shall not apply to any amendment to this
Article Eleventh, and such amendment shall require only such
affirmative vote as is required by law and any other provisions of
this Certificate of Incorporation or the by-laws of the Corporation,
if such amendment shall have been approved by at least two-thirds of
the members
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<PAGE>
of the Board who are persons who would be eligible to serve as
Continuing Directors.
TWELFTH: From and after the time of the Distribution, any action required or
permitted to be taken by the shareowners shall be taken only at an annual or
special meeting of such shareowners and not by consent in writing. Special
meetings of the shareowners for any purpose or purposes shall be called only by
the Board of Directors pursuant to a resolution adopted by a majority of the
whole Board.
26
Exhibit 4.2
BY-LAWS
OF
CONEXANT SYSTEMS, INC.
ARTICLE I.
OFFICES
SECTION 1. REGISTERED OFFICE IN DELAWARE; RESIDENT AGENT. The address
of the Corporation's registered office in the State of Delaware and the name and
address of its resident agent in charge thereof are as filed with the Secretary
of State of the State of Delaware.
SECTION 2. OTHER OFFICES. The Corporation may also have an office or
offices at such other place or places either within or without the State of
Delaware as the Board of Directors may from time to time determine or the
business of the Corporation requires.
ARTICLE II.
MEETINGS OF SHAREOWNERS
SECTION 1. PLACE OF MEETINGS. All meetings of the shareowners of the
Corporation shall be held at such place, within or without the State of
Delaware, as may from time to time be designated by resolution passed by the
Board of Directors.
SECTION 2. ANNUAL MEETING. An annual meeting of the shareowners for the
election of directors and for the transaction of such other proper business,
notice of which was given in the notice of meeting, shall be held on a date and
at a time as may from time to time be designated by resolution passed by the
Board of Directors.
SECTION 3. SPECIAL MEETINGS. A special meeting of the shareowners for
any purpose or purposes shall be called only by the Board of Directors pursuant
to a resolution adopted by a majority of the whole Board.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by law,
written notice of each meeting of the shareowners, whether annual or special,
shall be
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mailed, postage prepaid, not less than ten nor more than sixty days before the
date of the meeting, to each shareowner entitled to vote at such meeting, at the
shareowner's address as it appears on the records of the Corporation. Every such
notice shall state the place, date and hour of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is called. Notice
of any adjourned meeting of the shareowners shall not be required to be given,
except when expressly required by law.
SECTION 5. LIST OF SHAREOWNERS. The Secretary shall, from information
obtained from the transfer agent, prepare and make, at least ten days before
every meeting of shareowners, a complete list of the shareowners entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each shareowner and the number of shares registered in the name of each
shareowner. Such list shall be open to the examination of any shareowner, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any shareowner
who is present. The stock ledger shall be the only evidence as to who are the
shareowners entitled to examine the stock ledger, the list referred to in this
section or the books of the Corporation, or to vote in person or by proxy at any
meeting of shareowners.
SECTION 6. QUORUM. At each meeting of the shareowners, the holders of a
majority of the issued and outstanding stock of the Corporation present either
in person or by proxy shall constitute a quorum for the transaction of business
except where otherwise provided by law or by the Certificate of Incorporation or
by these by-laws for a specified action. Except as otherwise provided by law, in
the absence of a quorum, a majority in interest of the shareowners of the
Corporation present in person or by proxy and entitled to vote shall have the
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until shareowners holding the requisite amount of
stock shall be present or represented. At any such adjourned meeting
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at which a quorum may be present, any business may be transacted which might
have been transacted at a meeting as originally called, and only those
shareowners entitled to vote at the meeting as originally called shall be
entitled to vote at any adjournment or adjournments thereof. The absence from
any meeting of the number of shareowners required by law or by the Certificate
of Incorporation or by these by-laws for action upon any given matter shall not
prevent action at such meeting upon any other matter or matters which may
properly come before the meeting, if the number of shareowners required in
respect of such other matter or matters shall be present.
SECTION 7. ORGANIZATION. At every meeting of the shareowners the
Chairman of the Board, or in the absence of the Chairman of the Board, a
director or an officer of the Corporation designated by the Board, shall act as
Chairman of the meeting. The Secretary, or, in the Secretary's absence, an
Assistant Secretary, shall act as Secretary at all meetings of the shareowners.
In the absence from any such meeting of the Secretary and the Assistant
Secretaries, the Chairman may appoint any person to act as Secretary of the
meeting.
SECTION 8. NOTICE OF SHAREOWNER BUSINESS AND NOMINATIONS.
(A) Annual Meetings of Shareowners. (1) Nominations of persons
for election to the Board of Directors of the Corporation and the proposal of
business to be considered by the shareowners may be made at an annual meeting of
shareowners (a) pursuant to the Corporation's notice of meeting, (b) by or at
the direction of the Board of Directors or (c) by any shareowner of the
Corporation who was a shareowner of record at the time of giving of notice
provided for in this by-law, who is entitled to vote at the meeting and who
complies with the notice procedures set forth in this by-law.
(2) For nominations or other business to be properly
brought before an annual meeting by a shareowner pursuant to clause (c) of
paragraph (A)(1) of this by-law, the shareowner must have given timely notice
thereof in writing to the Secretary of the Corporation and such other business
must otherwise be a proper matter for shareowner action. To be timely, a
shareowner's
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notice shall be delivered to the Secretary at the principal executive offices of
the Corporation not later than the close of business on the 90th day nor earlier
than the close of business on the 120th day prior to the first anniversary of
the preceding year's annual meeting; provided, however, that in the case of the
annual meeting to be held in 2000 or in the event that the date of the annual
meeting is more than 30 days before or more than 60 days after such anniversary
date, notice by the shareowner to be timely must be so delivered not earlier
than the close of business on the 120th day prior to such annual meeting and not
later than the close of business on the later of the 90th day prior to such
annual meeting or the 10th day following the day on which public announcement of
the date of such meeting is first made by the Corporation. In no event shall the
public announcement of an adjournment of an annual meeting commence a new time
period for the giving of a shareowner's notice as described above. Such
shareowner's notice shall set forth (a) as to each person whom the shareowner
proposes to nominate for election or reelection as a director all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors in an election contest, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and Rule 14a-11 thereunder
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected); (b) as to any other
business that the shareowner proposes to bring before the meeting, a brief
description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such shareowner and the beneficial owner, if any, on whose
behalf the proposal is made; and (c) as to the shareowner giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal is made
(i) the name and address of such shareowner, as they appear on the Corporation's
books, and of such beneficial owner and (ii) the class and number of shares of
the Corporation which are owned beneficially and of record by such shareowner
and such beneficial owner.
Notwithstanding anything in the second sentence of paragraph
(A)(2) of this by-law to the contrary, in the event that the number of directors
to be elected to
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the Board of Directors of the Corporation is increased and there is no public
announcement by the Corporation naming all of the nominees for director or
specifying the size of the increased Board of Directors at least 70 days prior
to the first anniversary of the preceding year's annual meeting, a shareowner's
notice required by this by-law shall also be considered timely, but only with
respect to nominees for any new positions created by such increase, if it shall
be delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the 10th day following the
day on which such public announcement is first made by the Corporation.
(B) Special Meetings of Shareowners. Only such business shall
be conducted at a special meeting of shareowners as shall have been brought
before the meeting pursuant to the Corporation's notice of meeting. Nominations
of persons for election to the Board of Directors may be made at a special
meeting of shareowners at which directors are to be elected pursuant to the
Corporation's notice of meeting (a) by or at the direction of the Board of
Directors or (b) provided that the Board of Directors has determined that
directors shall be elected at such meeting, by any shareowner of the Corporation
who is a shareowner of record at the time of giving of notice provided for in
this by-law, who shall be entitled to vote at the meeting and who complies with
the notice procedures set forth in this by-law. In the event the Corporation
calls a special meeting of shareowners for the purpose of electing one or more
directors to the Board of Directors, any such shareowner may nominate a person
or persons (as the case may be), for election to such position(s) as specified
in the Corporation's notice of meeting, if the shareowner's notice required by
paragraph (A)(2) of this by-law shall be delivered to the Secretary at the
principal executive offices of the Corporation not earlier than the close of
business on the 120th day prior to such special meeting and not later than the
close of business on the later of the 90th day prior to such special meeting or
the 10th day following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting. In no event shall the public
announcement of an adjournment of a special meeting commence a new time period
for the giving of a shareowner's notice as described above.
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(C) General. (1) Only such persons who are nominated in
accordance with the procedures set forth in this by-law shall be eligible to
serve as directors and only such business shall be conducted at a meeting of
shareowners as shall have been brought before the meeting in accordance with the
procedures set forth in this by-law. Except as otherwise provided by law, the
Certificate of Incorporation or these by-laws, the Chairman of the meeting shall
have the power and duty to determine whether a nomination or any business
proposed to be brought before the meeting was made or proposed, as the case may
be, in accordance with the procedures set forth in this by-law and, if any
proposed nomination or business is not in compliance with this by-law, to
declare that such defective proposal or nomination shall be disregarded.
(2) For purposes of this by-law, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this by-law, a
shareowner shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this by-law. Nothing in this by-law shall be deemed to affect any
rights (i) of shareowners to request inclusion of proposals in the Corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the
holders of any series of Preferred Stock to elect directors under specified
circumstances.
SECTION 9. BUSINESS AND ORDER OF BUSINESS. At each meeting of the
shareowners such business may be transacted as may properly be brought before
such meeting, except as otherwise provided by law or in these by-laws. The order
of business at all meetings of the shareowners shall be as determined by the
Chairman of the meeting, unless otherwise determined by a majority in interest
of the shareowners present in person or by proxy at such meeting and entitled to
vote thereat.
SECTION 10. VOTING. Except as otherwise provided by law, the
Certificate of Incorporation or
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these by-laws, each shareowner shall at every meeting of the shareowners be
entitled to one vote for each share of stock held by such shareowner. Any vote
on stock may be given by the shareowner entitled thereto in person or by proxy
appointed by an instrument in writing, subscribed (or transmitted by electronic
means and authenticated as provided by law) by such shareowner or by the
shareowner's attorney thereunto authorized, and delivered to the Secretary;
provided, however, that no proxy shall be voted after three years from its date
unless the proxy provides for a longer period. Except as otherwise provided by
law, the Certificate of Incorporation or these by-laws, at all meetings of the
shareowners, all matters shall be decided by the vote (which need not be by
ballot) of a majority in interest of the shareowners present in person or by
proxy and entitled to vote thereat, a quorum being present.
ARTICLE III.
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The property, affairs and business of the
Corporation shall be managed by or under the direction of its Board of
Directors.
SECTION 2. NUMBER, QUALIFICATIONS, AND TERM OF OFFICE. Subject to the
rights of the holders of any series of Preferred Stock to elect additional
directors under specified circumstances, the number of directors of the
Corporation shall be fixed from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by a majority of the whole Board. A
director need not be a shareowner.
The directors, other than those who may be elected by the holders of
any series of Preferred Stock or any other series or class of stock, as provided
herein or in any Preferred Stock Designation (as defined in the Certificate of
Incorporation), shall be divided into three classes, as nearly equal in number
as possible. One class of directors shall be initially elected for a term
expiring at the annual meeting of shareowners to be held in 2000, another class
shall be initially elected for a term expiring at the annual meeting of
shareowners to be held in 2001, and another class shall be initially elected for
a term expiring at the annual meeting of shareowners to be held in 2002. Members
of each class
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shall hold office until their successors are elected and shall have qualified.
At each annual meeting of the shareowners of the Corporation, commencing with
the 2000 annual meeting, the successors of the class of directors whose term
expires at that meeting shall be elected by a plurality vote of all votes cast
for the election of directors at such meeting to hold office for a term expiring
at the annual meeting of shareowners held in the third year following the year
of their election.
SECTION 3. ELECTION OF DIRECTORS. At each meeting of the shareowners
for the election of directors, at which a quorum is present, the directors shall
be elected by a plurality vote of all votes cast for the election of directors
at such meeting.
SECTION 4. QUORUM AND MANNER OF ACTING. A majority of the members of
the Board of Directors shall constitute a quorum for the transaction of business
at any meeting, and the act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the Board of Directors
unless otherwise provided by law, the Certificate of Incorporation or these
by-laws. In the absence of a quorum, a majority of the directors present may
adjourn any meeting from time to time until a quorum shall be obtained. Notice
of any adjourned meeting need not be given. The directors shall act only as a
board and the individual directors shall have no power as such.
SECTION 5. PLACE OF MEETINGS. The Board of Directors may hold its
meetings at such place or places within or without the State of Delaware as the
Board may from time to time determine or as shall be specified or fixed in the
respective notices or waivers of notice thereof.
SECTION 6. FIRST MEETING. Promptly after each annual election of
directors, the Board of Directors shall meet for the purpose of organization,
the election of officers and the transaction of other business, at the same
place as that at which the annual meeting of shareowners was held or as
otherwise determined by the Board. Notice of such meeting need not be given.
Such meeting may be held at any other time or place which shall be specified in
a notice given as hereinafter provided for special meetings of the Board of
Directors.
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SECTION 7. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such places and at such times as the Board shall from time to
time determine. If any day fixed for a regular meeting shall be a legal holiday
at the place where the meeting is to be held, then the meeting which would
otherwise be held on that day shall be held at the same hour on the next
succeeding business day not a legal holiday. Notice of regular meetings need not
be given.
SECTION 8. SPECIAL MEETINGS; NOTICE. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board and shall
be called by the Chairman of the Board or the Secretary at the written request
of three directors. Notice of each such meeting stating the time and place of
the meeting shall be given to each director by mail, telephone, other electronic
transmission or personally. If by mail, such notice shall be given not less than
five days before the meeting; and if by telephone, other electronic transmission
or personally, not less than two days before the meeting. A notice mailed at
least two weeks before the meeting need not state the purpose thereof except as
otherwise provided in these by-laws. In all other cases the notice shall state
the principal purpose or purposes of the meeting. Notice of any meeting of the
Board need not be given to a director, however, if waived by the director in
writing before or after such meeting or if the director shall be present at the
meeting, except when the director attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened.
SECTION 9. ORGANIZATION. At each meeting of the Board of Directors, the
Chairman of the Board, or, in the absence of the Chairman of the Board, a
director or an officer of the Corporation designated by the Board shall act as
Chairman. The Secretary, or, in the Secretary's absence, any person appointed by
the Chairman, shall act as Secretary of the meeting.
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SECTION 10. ORDER OF BUSINESS. At all meetings of the Board of
Directors, business shall be transacted in the order determined by the Board.
SECTION 11. RESIGNATIONS. Any director of the Corporation may resign at
any time by giving written notice to the Chairman of the Board or the Secretary
of the Corporation. The resignation of any director shall take effect at the
time specified therein, and unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective.
SECTION 12. COMPENSATION. Each director shall be paid such
compensation, if any, as shall be fixed by the Board of Directors.
SECTION 13. INDEMNIFICATION. (A) The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation), by reason of the fact that such person is or was a
director, officer, employee or agent of the Corporation or any of its
majority-owned subsidiaries or is or was serving at the request of the
Corporation as a director, officer, employee or agent (except in each of the
foregoing situations to the extent any agreement, arrangement or understanding
of agency contains provisions that supersede or abrogate indemnification under
this section) of another corporation or of any partnership, joint venture,
trust, employee benefit plan or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which such
person reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any
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criminal action or proceeding, had reasonable cause to believe that his
or her conduct was unlawful.
(B) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that such person is or was a
director, officer, employee or agent of the Corporation or any of its
majority-owned subsidiaries, or is or was serving at the request of the
Corporation as a director, officer, employee or agent (except in each of the
foregoing situations to the extent any agreement, arrangement or understanding
of agency contains provisions that supersede or abrogate indemnification under
this section) of another corporation or of any partnership, joint venture,
trust, employee benefit plan or other enterprise against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit if such person acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery of Delaware or such other court shall deem
proper.
(C) To the extent that a director, officer, employee or agent
of the Corporation or any of its majority-owned subsidiaries has been successful
on the merits or otherwise in defense of any action, suit or proceeding referred
to in subsections (A) and (B), or in defense of any claim, issue or matter
therein, such person shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by or on behalf of such person in
connection therewith. If any such person is not wholly successful in any such
action, suit or proceeding but is successful, on the merits or otherwise, as to
one or more but less than all claims, issues or matters therein, the Corporation
shall
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indemnify such person against all expenses (including attorneys' fees) actually
and reasonably incurred by or on behalf of such person in connection with each
claim, issue or matter that is successfully resolved. For purposes of this
subsection and without limitation, the termination of any claim, issue or matter
by dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter.
(D) Notwithstanding any other provision of this section, to
the extent any person is a witness in, but not a party to, any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person is or was a director, officer, employee or agent of
the Corporation or any of its majority-owned subsidiaries, or is or was serving
at the request of the Corporation as a director, officer, employee or agent
(except in each of the foregoing situations to the extent any agreement,
arrangement or understanding of agency contains provisions that supersede or
abrogate indemnification under this section) of another corporation or of any
partnership, joint venture, trust, employee benefit plan or other enterprise,
such person shall be indemnified against all expenses (including attorneys'
fees) actually and reasonably incurred by or on behalf of such person in
connection therewith.
(E) Indemnification under subsections (A) and (B) shall be
made only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because such person has met the applicable standard of conduct set
forth in subsections (A) and (B). Such determination shall be made (1) if a
Change of Control (as hereinafter defined) shall not have occurred, (a) with
respect to a person who is a present or former director or officer of the
Corporation, (i) by the Board of Directors by a majority vote of the
Disinterested Directors (as hereinafter defined), even though less than a
quorum, or (ii) if there are no Disinterested Directors or, even if there are
Disinterested Directors, a majority of such Disinterested Directors so directs,
by (x) Independent Counsel (as hereinafter defined) in a written opinion to the
Board of Directors, a copy of which shall be delivered to the claimant, or (y)
the shareowners of the Corporation; or (b) with respect to a person who is not a
present or former director or officer of the
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Corporation, by the chief executive officer of the Corporation or by such other
officer of the Corporation as shall be designated from time to time by the Board
of Directors; or (2) if a Change of Control shall have occurred, by Independent
Counsel selected by the claimant in a written opinion to the Board of Directors,
a copy of which shall be delivered to the claimant, unless the claimant shall
request that such determination be made by or at the direction of the Board of
Directors (in the case of a claimant who is a present or former director or
officer of the Corporation) or by an officer of the Corporation authorized to
make such determination (in the case of a claimant who is not a present or
former director or officer of the Corporation), in which case it shall be made
in accordance with clause (1) of this sentence. Any claimant shall be entitled
to be indemnified against the expenses (including attorneys' fees) actually and
reasonably incurred by such claimant in cooperating with the person or entity
making the determination of entitlement to indemnification (irrespective of the
determination as to the claimant's entitlement to indemnification) and, to the
extent successful, in connection with any litigation or arbitration with respect
to such claim or the enforcement thereof.
(F) If a Change of Control shall not have occurred, or if a
Change of Control shall have occurred and a director, officer, employee or agent
requests pursuant to clause (2) of the second sentence in subsection (E) that
the determination as to whether the claimant is entitled to indemnification be
made by or at the direction of the Board of Directors (in the case of a claimant
who is a present or former director or officer of the Corporation) or by an
officer of the Corporation authorized to make such determination (in the case of
a claimant who is not a present or former director or officer of the
Corporation), the claimant shall be conclusively presumed to have been
determined pursuant to subsection (E) to be entitled to indemnification if (1)
in the case of a claimant who is a present or former director or officer of the
Corporation, (a)(i) within fifteen days after the next regularly scheduled
meeting of the Board of Directors following receipt by the Corporation of the
request therefor, the Board of Directors shall not have resolved by majority
vote of the Disinterested Directors to submit such determination to (x)
Independent Counsel for its determination or (y) the shareowners for their
determination at the next annual
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meeting, or any special meeting that may be held earlier, after such receipt,
and (ii) within sixty days after receipt by the Corporation of the request
therefor (or within ninety days after such receipt if the Board of Directors in
good faith determines that additional time is required by it for the
determination and, prior to expiration of such sixty-day period, notifies the
claimant thereof), the Board of Directors shall not have made the determination
by a majority vote of the Disinterested Directors, or (b) after a resolution of
the Board of Directors, timely made pursuant to clause (a)(i)(y) above, to
submit the determination to the shareowners, the shareowners meeting at which
the determination is to be made shall not have been held on or before the date
prescribed (or on or before a later date, not to exceed sixty days beyond the
original date, to which such meeting may have been postponed or adjourned on
good cause by the Board of Directors acting in good faith), or (2) in the case
of a claimant who is not a present or former director or officer of the
Corporation, within sixty days after receipt by the Corporation of the request
therefor (or within ninety days after such receipt if an officer of the
Corporation authorized to make such determination in good faith determines that
additional time is required for the determination and, prior to expiration of
such sixty-day period, notifies the claimant thereof), an officer of the
Corporation authorized to make such determination shall not have made the
determination; provided, however, that this sentence shall not apply if the
claimant has misstated or failed to state a material fact in connection with his
or her request for indemnification. Such presumed determination that a claimant
is entitled to indemnification shall be deemed to have been made (I) at the end
of the sixty-day or ninety-day period (as the case may be) referred to in clause
(1)(a)(ii) or (2) of the immediately preceding sentence or (II) if the Board of
Directors has resolved on a timely basis to submit the determination to the
shareowners, on the last date within the period prescribed by law for holding
such shareowners meeting (or a postponement or adjournment thereof as permitted
above).
(G) Expenses (including attorneys' fees) incurred in defending
a civil, criminal, administrative or investigative action, suit or proceeding
shall be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding to a present or former
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director or officer of the Corporation, promptly after receipt of a request
therefor stating in reasonable detail the expenses incurred, and to a person who
is not a present or former director or officer of the Corporation as authorized
by the chief executive officer of the Corporation or such other officer of the
Corporation as shall be designated from time to time by the Board of Directors;
provided that in each case the Corporation shall have received an undertaking by
or on behalf of the present or former director, officer, employee or agent to
repay such amount if it shall ultimately be determined that such person is not
entitled to be indemnified by the Corporation as authorized in this section.
(H) The Board of Directors shall establish reasonable
procedures for the submission of claims for indemnification pursuant to this
section, determination of the entitlement of any person thereto and review of
any such determination. Such procedures shall be set forth in an appendix to
these by-laws and shall be deemed for all purposes to be a part hereof.
(I) For purposes of this section,
(1) "Change of Control" means any of the following occurring
at any time after the distribution of the shares of capital stock of the
Corporation to the holders of capital stock of Rockwell International
Corporation (the "Distribution"):
(a) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (i) the then outstanding shares of common
stock of the Corporation (the "Outstanding Corporation Common Stock") or (ii)
the combined voting power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of directors (the
"Outstanding Corporation Voting Securities"); provided, however, that for
purposes of this subparagraph (a), the following acquisitions shall not
constitute a Change of Control: (w) any acquisition directly from the
Corporation, (x) any acquisition by the Corporation, (y) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Corporation, Rockwell International Corporation or any corporation controlled by
the
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Corporation or Rockwell International Corporation or (z) any acquisition
pursuant to a transaction which complies with clauses (i), (ii) and (iii) of
subsection (c) of this Paragraph 13(I)(1); or
(b) Individuals who, as of the date of the Distribution,
constitute the Board of Directors (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board of Directors; provided, however,
that any individual becoming a director subsequent to that date whose election,
or nomination for election by the Corporation's shareowners, was approved by a
vote of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board of Directors; or
(c) Consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets of the
Corporation or the acquisition of assets of another entity (a "Corporate
Transaction"), in each case, unless, following such Corporate Transaction, (i)
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities immediately prior to such Corporate
Transaction beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns the Corporation or all or
substantially all of the Corporation's assets either directly or through one or
more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Corporate Transaction, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities, as the case may be,
(ii) no Person (excluding any employee
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benefit plan (or related trust) of the Corporation, of Rockwell International
Corporation or of such corporation resulting from such Corporate Transaction)
beneficially owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership
existed prior to the Corporate Transaction and (iii) at least a majority of the
members of the board of directors of the corporation resulting from such
Corporate Transaction were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board of Directors,
providing for such Corporate Transaction; or
(d) Approval by the Corporation's shareowners of a complete
liquidation or dissolution of the Corporation.
(2) "Disinterested Director" means a director of the
Corporation who is not and was not a party to an action, suit or proceeding in
respect of which indemnification is sought by a director, officer, employee or
agent.
(3) "Independent Counsel" means a law firm, or a
member of a law firm, that (i) is experienced in matters of corporation law;
(ii) neither presently is, nor in the past five years has been, retained to
represent the Corporation, the director, officer, employee or agent claiming
indemnification or any other party to the action, suit or proceeding giving rise
to a claim for indemnification under this section, in any matter material to the
Corporation, the claimant or any such other party; and (iii) would not, under
applicable standards of professional conduct then prevailing, have a conflict of
interest in representing either the Corporation or such director, officer,
employee or agent in an action to determine the Corporation's or such person's
rights under this section.
(J) The indemnification and advancement of expenses herein
provided, or granted pursuant hereto, shall not be deemed exclusive of any other
rights to which any of those indemnified or eligible for advancement of expenses
may be entitled under any agreement, vote of shareowners or Disinterested
Directors
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or otherwise, both as to action in such person's official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such person.
Notwithstanding any amendment, alteration or repeal of this section or any of
its provisions, or of any of the procedures established by the Board of
Directors pursuant to subsection (H) hereof, any person who is or was a
director, officer, employee or agent of the Corporation or any of its
majority-owned subsidiaries or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation or
of any partnership, joint venture, employee benefit plan or other enterprise
shall be entitled to indemnification in accordance with the provisions hereof
and thereof with respect to any action taken or omitted prior to such amendment,
alteration or repeal except to the extent otherwise required by law.
(K) No indemnification shall be payable pursuant to this
section with respect to any action against the Corporation commenced by an
officer, director, employee or agent unless the Board of Directors shall have
authorized the commencement thereof or unless and to the extent that this
section or the procedures established pursuant to subsection (H) shall
specifically provide for indemnification of expenses relating to the enforcement
of rights under this section and such procedures.
ARTICLE IV.
COMMITTEES
SECTION 1. APPOINTMENT AND POWERS. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees, each committee to consist of two or more directors of the
Corporation, which, to the extent provided in said resolution or in these
by-laws and not inconsistent with Section 141 of the Delaware General
Corporation Law, as amended, shall have and may exercise the powers of the Board
of Directors in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to all papers which
may require it. Such committee or committees shall have such
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name or names as may be determined from time to time by resolution adopted by
the Board of Directors.
SECTION 2. TERM OF OFFICE AND VACANCIES. Each member of a committee
shall continue in office until a director to succeed him or her shall have been
elected and shall have qualified, or until he or she ceases to be a director or
until he or she shall have resigned or shall have been removed in the manner
hereinafter provided. Any vacancy in a committee shall be filled by the vote of
a majority of the whole Board of Directors at any regular or special meeting
thereof.
SECTION 3. ALTERNATES. The Board of Directors may, by resolution passed
by a majority of the whole Board, designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee.
SECTION 4. ORGANIZATION. Unless otherwise provided by the Board of
Directors, each committee shall appoint a chairman. Each committee shall keep a
record of its acts and proceedings and report the same from time to time to the
Board of Directors.
SECTION 5. RESIGNATIONS. Any regular or alternate member of a committee
may resign at any time by giving written notice to the Chairman of the Board or
the Secretary of the Corporation. Such resignation shall take effect at the time
of the receipt of such notice or at any later time specified therein, and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 6. REMOVAL. Any regular or alternate member of a committee may
be removed with or without cause at any time by resolution passed by a majority
of the whole Board of Directors at any regular or special meeting.
SECTION 7. MEETINGS. Regular meetings of each committee, of which no
notice shall be necessary, shall be held on such days and at such places as the
chairman of the committee shall determine or as shall be fixed by a resolution
passed by a majority of all the members of such committee. Special meetings of
each committee will be called by the Secretary at the request of any two members
of such committee, or in such other manner as may
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be determined by the committee. Notice of each special meeting of a committee
shall be mailed to each member thereof at least two days before the meeting or
shall be given personally or by telephone or other electronic transmission at
least one day before the meeting. Every such notice shall state the time and
place, but need not state the purposes of the meeting. No notice of any meeting
of a committee shall be required to be given to any alternate.
SECTION 8. QUORUM AND MANNER OF ACTING. Unless otherwise provided by
resolution of the Board of Directors, a majority of a committee (including
alternates when acting in lieu of regular members of such committee) shall
constitute a quorum for the transaction of business and the act of a majority of
those present at a meeting at which a quorum is present shall be the act of such
committee. The members of each committee shall act only as a committee and the
individual members shall have no power as such.
SECTION 9. COMPENSATION. Each regular or alternate member of a
committee shall be paid such compensation, if any, as shall be fixed by the
Board of Directors.
ARTICLE V.
OFFICERS
SECTION 1. OFFICERS. The officers of the Corporation shall be a
Chairman of the Board of Directors, who shall be chosen from the members of the
Board of Directors, one or more Vice Presidents (one or more of whom may be
Executive Vice Presidents, Senior Vice Presidents or otherwise as may be
designated by the Board), a Secretary and a Treasurer, all of whom shall be
elected by the Board of Directors. Any two or more offices may be held by the
same person. The Board of Directors may also from time to time elect such other
officers as it deems necessary.
SECTION 2. TERM OF OFFICE. Each officer shall hold office until his or
her successor shall have been duly elected and qualified in his or her stead, or
until his or her death or until he or she shall have resigned or shall have been
removed in the manner hereinafter provided.
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SECTION 3. ADDITIONAL OFFICERS; AGENTS. The Chairman of the Board may
from time to time appoint and remove such additional officers and agents as may
be deemed necessary. Such persons shall hold office for such period, have such
authority, and perform such duties as in these by-laws provided or as the
Chairman of the Board may from time to time prescribe. The Board of Directors or
the Chairman of the Board may from time to time authorize any officer to appoint
and remove agents and employees and to prescribe their powers and duties.
SECTION 4. SALARIES. Unless otherwise provided by resolution passed by
a majority of the whole Board, the salaries of all officers elected by the Board
of Directors shall be fixed by the Board of Directors.
SECTION 5. REMOVAL. Except where otherwise expressly provided in a
contract authorized by the Board of Directors, any officer may be removed,
either with or without cause, by the vote of a majority of the Board at any
regular or special meeting or, except in the case of an officer elected by the
Board, by any superior officer upon whom the power of removal may be conferred
by the Board or by these by-laws.
SECTION 6. RESIGNATIONS. Any officer elected by the Board of Directors
may resign at any time by giving written notice to the Chairman of the Board or
the Secretary. Any other officer may resign at any time by giving written notice
to the Chairman of the Board. Any such resignation shall take effect at the date
of receipt of such notice or at any later time specified therein, and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 7. VACANCIES. A vacancy in any office because of death,
resignation, removal or otherwise, shall be filled for the unexpired portion of
the term in the manner provided in these by-laws for regular election or
appointment to such office.
SECTION 8. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the
Board of Directors shall be chief executive officer of the Corporation and,
subject to the control of the Board of Directors, shall have general and overall
charge of the business and affairs of the Corporation and of its officers. The
Chairman of the Board shall keep the Board of Directors appropriately informed
on the business and affairs of the Corporation. The Chairman of the Board
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shall preside at all meetings of the shareowners and the Board of Directors and
shall enforce the observance of the rules of order for the meetings of the Board
of Directors and the shareowners and the by-laws of the Corporation.
SECTION 9. EXECUTIVE AND SENIOR VICE PRESIDENTS. One or more Executive
or Senior Vice Presidents shall, subject to the control of the Chairman of the
Board, have lead accountability for components or functions of the Corporation
as and to the extent designated by the Chairman of the Board. Each Executive or
Senior Vice President shall keep the Chairman of the Board appropriately
informed on the business and affairs of the designated components or functions
of the Corporation.
SECTION 10. VICE PRESIDENTS. The Vice Presidents shall perform such
duties as may from time to time be assigned to them or any of them by the
Chairman of the Board.
SECTION 11. SECRETARY. The Secretary shall keep or cause to be kept in
books provided for the purpose the minutes of the meetings of the shareowners,
of the Board of Directors and of any committee constituted pursuant to Article
IV of these by-laws. The Secretary shall be custodian of the corporate seal and
see that it is affixed to all documents as required and attest the same. The
Secretary shall perform all duties incident to the office of Secretary and such
other duties as from time to time may be assigned to him or her.
SECTION 12. ASSISTANT SECRETARIES. At the request of the Secretary, or
in the Secretary's absence or disability, the Assistant Secretary designated by
the Secretary shall perform all the duties of the Secretary and, when so acting,
shall have all the powers of, and be subject to all the restrictions upon, the
Secretary. The Assistant Secretaries shall perform such other duties as from
time to time may be assigned to them.
SECTION 13. TREASURER. The Treasurer shall have charge of and be
responsible for the receipt, disbursement and safekeeping of all funds and
securities of the Corporation. The Treasurer shall deposit all such funds in the
name of the Corporation in such banks, trust companies or other depositories as
shall be selected in accordance with the provisions of these by-laws. From time
to time and whenever requested to do so, the Treasurer shall render statements
of the condition of the
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finances of the Corporation to the Board of Directors. The Treasurer shall
perform all the duties incident to the office of Treasurer and such other duties
as from time to time may be assigned to him or her.
SECTION 14. ASSISTANT TREASURERS. At the request of the Treasurer, or
in the Treasurer's absence or disability, the Assistant Treasurer designated by
the Treasurer shall perform all the duties of the Treasurer and, when so acting,
shall have all the powers of, and be subject to all the restrictions upon, the
Treasurer. The Assistant Treasurers shall perform such other duties as from time
to time may be assigned to them.
SECTION 15. CERTAIN AGREEMENTS. The Board of Directors shall have power
to authorize or direct the proper officers of the Corporation, on behalf of the
Corporation, to enter into valid and binding agreements in respect of
employment, incentive or deferred compensation, stock options, and similar or
related matters, notwithstanding the fact that a person with whom the
Corporation so contracts may be a member of its Board of Directors. Any such
agreement may validly and lawfully bind the Corporation for a term of more than
one year, in accordance with its terms, notwithstanding the fact that one of the
elements of any such agreement may involve the employment by the Corporation of
an officer, as such, for such term.
ARTICLE VI.
AUTHORIZATIONS
SECTION 1. CONTRACTS. The Board of Directors, except as in these
by-laws otherwise provided, may authorize any officer, employee or agent of the
Corporation to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the Corporation, and such authority may be general
or confined to specific instances.
SECTION 2. LOANS. No loan shall be contracted on behalf of the
Corporation and no negotiable paper shall be issued in its name, unless
authorized by the Board of Directors.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes or
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other evidences of indebtedness issued in the name of the Corporation shall be
signed by such officer or officers, employee or employees, of the Corporation as
shall from time to time be determined in accordance with authorization of the
Board of Directors.
SECTION 4. DEPOSITS. All funds of the Corporation shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies or other depositories as the Board of Directors may from time to time
designate, or as may be designated by any officer or officers of the Corporation
to whom such power may be delegated by the Board, and for the purpose of such
deposit the officers and employees who have been authorized to do so in
accordance with the determinations of the Board may endorse, assign and deliver
checks, drafts, and other orders for the payment of money which are payable to
the order of the Corporation.
SECTION 5. PROXIES. Except as otherwise provided in these by-laws or in
the Certificate of Incorporation, and unless otherwise provided by resolution of
the Board of Directors, the Chairman of the Board or any other officer may from
time to time appoint an attorney or attorneys or agent or agents of the
Corporation, in the name and on behalf of the Corporation, to cast the votes
which the Corporation may be entitled to cast as a shareowner or otherwise in
any other corporation any of whose stock or other securities may be held by the
Corporation, at meetings of the holders of the stock or other securities of such
other corporations, or to consent in writing to any action by such other
corporation, and may instruct the person or persons so appointed as to the
manner of casting such vote or giving such consent, and may execute or cause to
be executed in the name and on behalf of the Corporation and under its corporate
seal, or otherwise, all such written proxies or other instruments as such
officer may deem necessary or proper in the premises.
ARTICLE VII.
SHARES AND THEIR TRANSFER
SECTION 1. SHARES OF STOCK. Certificates for shares of the stock of the
Corporation shall be in such form as shall be approved by the Board of
Directors. They shall be numbered in the order of their issue, by
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class and series, and shall be signed by the Chairman of the Board or a Vice
President, and the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary, of the Corporation. If a share certificate is countersigned
(1) by a transfer agent other than the Corporation or its employee, or (2) by a
registrar other than the Corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
share certificate shall have ceased to be such officer, transfer agent, or
registrar before such certificate is issued, it may be issued by the Corporation
with the same effect as if such person were such officer, transfer agent, or
registrar at the date of issue. The Board of Directors may by resolution or
resolutions provide that some or all of any or all classes or series of the
shares of stock of the Corporation shall be uncertificated shares.
Notwithstanding the preceding sentence, every holder of uncertificated shares,
upon request, shall be entitled to receive from the Corporation a certificate
representing the number of shares registered in such shareowner's name on the
books of the Corporation.
SECTION 2. RECORD OWNERSHIP. A record of the name and address of each
holder of the shares of the Corporation, the number of shares held by such
shareowner, the number or numbers of any share certificate or certificates
issued to such shareowner and the number of shares represented thereby, and the
date of issuance of the shares held by such shareowner shall be made on the
Corporation's books. The Corporation shall be entitled to treat the holder of
record of any share of stock (including any holder registered in a book-entry or
direct registration system maintained by the Corporation or a transfer agent or
a registrar designated by the Board of Directors) as the holder in fact thereof
and accordingly shall not be bound to recognize any equitable or other claim to
or interest in such share on the part of any other person, whether or not it
shall have express or other notice thereof, except as required by law.
SECTION 3. TRANSFER OF STOCK. Shares of stock shall be transferable on
the books of the Corporation by the holder of record of such stock in person or
by such person's attorney or other duly constituted representative, pursuant to
applicable law and such rules and regulations as the Board of Directors shall
from time
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to time prescribe. Any shares represented by a certificate shall be transferable
upon surrender of such certificate with an assignment endorsed thereon or
attached thereto duly executed and with such guarantee of signature as the
Corporation may reasonably require.
SECTION 4. LOST, STOLEN AND DESTROYED CERTIFICATES. The Corporation may
issue a new certificate of stock or may register uncertificated shares, if then
authorized by the Board of Directors, in the place of any certificate
theretofore issued by it, alleged to have been lost, stolen or destroyed, and
the Corporation may require the owner of the lost, stolen or destroyed
certificate, or such person's legal representative, to give the Corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate, the
issuance of such new certificate or the registration of such uncertificated
shares.
SECTION 5. TRANSFER AGENT AND REGISTRAR; REGULATIONS. The Corporation
shall, if and whenever the Board of Directors shall so determine, maintain one
or more transfer offices or agencies, each in charge of a transfer agent
designated by the Board of Directors, where the shares of the stock of the
Corporation shall be directly transferable, and also one or more registry
offices, each in charge of a registrar designated by the Board of Directors,
where such shares of stock shall be registered, and no certificate for shares of
the stock of the Corporation, in respect of which a registrar and transfer agent
shall have been designated, shall be valid unless countersigned by such transfer
agent and registered by such registrar. The Board of Directors may also make
such additional rules and regulations as it may deem expedient concerning the
issue, transfer and registration of shares of stock of the Corporation and
concerning the registration of pledges of uncertificated shares.
SECTION 6. FIXING RECORD DATE. For the purpose of determining the
shareowners entitled to notice of or to vote at any meeting of shareowners or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the
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purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty nor less than ten days before
the date of such meeting, nor more than sixty days prior to any other action. If
no record date is fixed (1) the record date for determining shareowners entitled
to notice of or to vote at a meeting of shareowners shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held and (2) the record date for determining shareowners
for any other purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto. A determination of
shareowners of record entitled to notice of or to vote at a meeting of
shareowners shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
SECTION 7. EXAMINATION OF BOOKS BY SHAREOWNERS. The Board of Directors
shall, subject to the laws of the State of Delaware, have power to determine
from time to time, whether and to what extent and under what conditions and
regulations the accounts and books of the Corporation, or any of them, shall be
open to the inspection of the shareowners; and no shareowner shall have any
right to inspect any book or document of the Corporation, except as conferred by
the laws of the State of Delaware, unless and until authorized so to do by
resolution of the Board of Directors or of the shareowners of the Corporation.
ARTICLE VIII.
NOTICE
SECTION 1. MANNER OF GIVING WRITTEN NOTICE. Any notice in writing
required by law or by these by-laws to be given to any person may be delivered
personally, may be transmitted by electronic means or may be given by depositing
the same in the post office or letter box in a postpaid envelope addressed to
such person at such address as appears on the books of the Corporation. Notice
by mail shall be deemed to be given at the time when the same shall be mailed,
and notice by other means shall be deemed given when actually delivered (and in
the
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case of notice transmitted by electronic means, when authenticated if and as
required by law).
SECTION 2. WAIVER OF NOTICE. Whenever any notice is required to be
given to any person, a waiver thereof by such person in writing or transmitted
by electronic means (and authenticated if and as required by law), whether
before or after the time stated therein, shall be deemed equivalent thereto.
ARTICLE IX.
SEAL
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal" and
"Delaware".
ARTICLE X.
FISCAL YEAR
The fiscal year of the Corporation shall begin on the first day of October in
each year.
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APPENDIX
PROCEDURES FOR SUBMISSION AND
DETERMINATION OF CLAIMS FOR INDEMNIFICATION PURSUANT TO
ARTICLE III, SECTION 13 OF THE BY-LAWS.
SECTION 1. PURPOSE. The Procedures for Submission and Determination of
Claims for Indemnification Pursuant to Article III, Section 13 of the by-laws
(the "Procedures") are to implement the provisions of Article III, Section 13 of
the by-laws of the Corporation (the "by-laws") in compliance with the
requirement of subsection (H) thereof.
SECTION 2. DEFINITIONS. For purposes of these Procedures:
(A) All terms that are defined in Article III, Section 13 of the
by-laws shall have the meanings ascribed to them therein when used in these
Procedures unless otherwise defined herein.
(B) "Expenses" include all reasonable attorneys' fees, court costs,
transcript costs, fees of experts, witness fees, travel expenses, duplicating
costs, printing and binding costs, telephone charges, postage, delivery service
fees, and all other disbursements or expenses of the types customarily incurred
in connection with prosecuting, defending, preparing to prosecute or defend,
investigating, or being or preparing to be a witness in, a Proceeding; and shall
also include such retainers as counsel may reasonably require in advance of
undertaking the representation of an indemnitee in a Proceeding.
(C) "Indemnitee" includes any person who was or is, or is threatened to
be made, a witness in or a party to any Proceeding by reason of the fact that
such person is or was a director, officer, employee or agent of the Corporation
or any of its majority-owned subsidiaries or is or was serving at the request of
the Corporation as a director, officer, employee or agent (except in each of the
foregoing situations to the extent any agreement, arrangement or understanding
of agency contains provisions that supersede or abrogate indemnification under
Article III, Section 13 of the by-laws) of another corporation or of any
partnership,
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joint venture, trust, employee benefit plan or other enterprise.
(D) "Proceeding" includes any action, suit, arbitration, alternative
dispute resolution mechanism, investigation, administrative hearing or any other
proceeding, whether civil, criminal, administrative or investigative, except one
initiated by an Indemnitee unless the Board of Directors shall have authorized
the commencement thereof.
SECTION 3. SUBMISSION AND DETERMINATION OF CLAIMS.
(A) To obtain indemnification or advancement of Expenses under Article
III, Section 13 of the by-laws, an Indemnitee shall submit to the Secretary of
the Corporation a written request therefor, including therein or therewith such
documentation and information as is reasonably available to the Indemnitee and
is reasonably necessary to permit a determination as to whether and what extent
the Indemnitee is entitled to indemnification or advancement of Expenses, as the
case may be. The Secretary shall, promptly upon receipt of a request for
indemnification, advise the Board of Directors (if the Indemnitee is a present
or former director or officer of the Corporation) or the officer of the
Corporation authorized to make the determination as to whether an Indemnitee is
entitled to indemnification (if the Indemnitee is not a present or former
director or officer of the Corporation) thereof in writing if a determination in
accordance with Article III, Section 13(E) of the by-laws is required.
(B) Upon written request by an Indemnitee for indemnification pursuant
to Section 3(A) hereof, a determination with respect to the Indemnitee's
entitlement thereto in the specific case, if required by the by-laws, shall be
made in accordance with Article III, Section 13(E) of the by-laws, and, if it is
so determined that the Indemnitee is entitled to indemnification, payment to the
Indemnitee shall be made within ten days after such determination. The
Indemnitee shall cooperate with the person, persons or entity making such
determination, with respect to the Indemnitee's entitlement to indemnification,
including providing to such person, persons or entity upon reasonable advance
request any documentation or information which is not
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privileged or otherwise protected from disclosure and which is reasonably
available to the Indemnitee and reasonably necessary to such determination.
(C) If entitlement to indemnification is to be made by Independent
Counsel pursuant to Article III, Section 13(E) of the by-laws, the Independent
Counsel shall be selected as provided in this Section 3(C). If a Change of
Control shall not have occurred, the Independent Counsel shall be selected by
the Board of Directors, and the Corporation shall give written notice to the
Indemnitee advising the Indemnitee of the identity of the Independent Counsel so
selected. If a Change of Control shall have occurred, the Independent Counsel
shall be selected by the Indemnitee (unless the Indemnitee shall request that
such selection be made by the Board of Directors, in which event the immediately
preceding sentence shall apply), and the Indemnitee shall give written notice to
the Corporation advising it of the identity of the Independent Counsel so
selected. In either event, the Indemnitee or the Corporation, as the case may
be, may, within seven days after such written notice of selection shall have
been given, deliver to the Corporation or to the Indemnitee, as the case may be,
a written objection to such selection. Such objection may be asserted only on
the ground that the Independent Counsel so selected does not meet the
requirements of "Independent Counsel" as defined in Article III, Section 13 of
the by-laws, and the objection shall set forth with particularity the factual
basis of such assertion. If such written objection is made, the Independent
Counsel so selected may not serve as Independent Counsel unless and until a
court has determined that such objection is without merit. If, within twenty
days after the next regularly scheduled Board of Directors meeting following
submission by the Indemnitee of a written request for indemnification pursuant
to Section 3(A) hereof, no Independent Counsel shall have been selected and not
objected to, either the Corporation or the Indemnitee may petition the Court of
Chancery of the State of Delaware or other court of competent jurisdiction for
resolution of any objection which shall have been made by the Corporation or the
Indemnitee to the other's selection of Independent Counsel and/or for the
appointment as Independent Counsel of a person selected by the Court or by such
other person as the Court shall designate, and the person with respect to whom
an objection is favorably resolved or the person so appointed shall act as
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Independent Counsel under Article III, Section 13(E) of the by-laws. The
Corporation shall pay any and all reasonable fees and expenses (including
without limitation any advance retainers reasonably required by counsel) of
Independent Counsel incurred by such Independent Counsel in connection with
acting pursuant to Article III, Section 13(E) of the by-laws, and the
Corporation shall pay all reasonable fees and expenses (including without
limitation any advance retainers reasonably required by counsel) incident to the
procedures of Article III, Section 13(E) of the by-laws and this Section 3(C),
regardless of the manner in which Independent Counsel was selected or appointed.
Upon the delivery of its opinion pursuant to Article III, Section 13 of the
by-laws or, if earlier, the due commencement of any judicial proceeding or
arbitration pursuant to Section 4(A)(3) of these Procedures, Independent Counsel
shall be discharged and relieved of any further responsibility in such capacity
(subject to the applicable standards of professional conduct then prevailing).
(D) If a Change of Control shall have occurred, in making a
determination with respect to entitlement to indemnification under the by-laws,
the person, persons or entity making such determination shall presume that an
Indemnitee is entitled to indemnification under the by-laws if the Indemnitee
has submitted a request for indemnification in accordance with Section 3(A)
hereof, and the Corporation shall have the burden of proof to overcome that
presumption in connection with the making by any person, persons or entity of
any determination contrary to that presumption.
SECTION 4. REVIEW AND ENFORCEMENT OF DETERMINATION.
(A) In the event that (1) advancement of Expenses is not timely made
pursuant to Article III, Section 13(G) of the by-laws, (2) payment of
indemnification is not made pursuant to Article III, Section 13(C) or (D) of the
by-laws within ten days after receipt by the Corporation of written request
therefor, (3) a determination is made pursuant to Article III, Section 13(E) of
the by-laws that an Indemnitee is not entitled to indemnification under the
by-laws, (4) the determination of entitlement to indemnification is to be made
by Independent Counsel pursuant to Article III,
32
<PAGE>
Section 13(E) of the by-laws and such determination shall not have been made and
delivered in a written opinion within ninety days after receipt by the
Corporation of the written request for indemnification, or (5) payment of
indemnification is not made within ten days after a determination has been made
pursuant to Article III, Section 13(E) of the by-laws that an Indemnitee is
entitled to indemnification or within ten days after such determination is
deemed to have been made pursuant to Article III, Section 13(F) of the by-laws,
the Indemnitee shall be entitled to an adjudication in an appropriate court of
the State of Delaware, or in any other court of competent jurisdiction, of the
Indemnitee's entitlement to such indemnification or advancement of Expenses.
Alternatively, the Indemnitee, at his or her option, may seek an award in
arbitration to be conducted by a single arbitrator pursuant to the rules of the
American Arbitration Association. The Indemnitee shall commence such proceeding
seeking an adjudication or an award in arbitration within one year following the
date on which the Indemnitee first has the right to commence such proceeding
pursuant to this Section 4(A). The Corporation shall not oppose the Indemnitee's
right to seek any such adjudication or award in arbitration.
(B) In the event that a determination shall have been made pursuant to
Article III, Section 13(E) of the by-laws that an Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant to
this Section 4 shall be conducted in all respects as a de novo trial, or
arbitration, on the merits and the Indemnitee shall not be prejudiced by reason
of that adverse determination. If a Change of Control shall have occurred, the
Corporation shall have the burden of proving in any judicial proceeding or
arbitration commenced pursuant to this Section 4 that the Indemnitee is not
entitled to indemnification or advancement of Expenses, as the case may be.
(C) If a determination shall have been made or deemed to have been made
pursuant to Article III, Section 13(E) or (F) of the by-laws that an Indemnitee
is entitled to indemnification, the Corporation shall be bound by such
determination in any judicial proceeding or arbitration commenced pursuant to
this Section 4, absent (1) a misstatement or omission of a material fact in
connection with the Indemnitee's request for
33
<PAGE>
indemnification, or (2) a prohibition of such indemnification under applicable
law.
(D) The Corporation shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 4 that the
procedures and presumptions of these Procedures are not valid, binding and
enforceable, and shall stipulate in any such judicial proceeding or arbitration
that the Corporation is bound by all the provisions of these Procedures.
(E) In the event that an Indemnitee, pursuant to this Section 4, seeks
to enforce the Indemnitee's rights under, or to recover damages for breach of,
Article III, Section 13 of the by-laws or these Procedures in a judicial
proceeding or arbitration, the Indemnitee shall be entitled to recover from the
Corporation, and shall be indemnified by the Corporation against, any and all
expenses (of the types described in the definition of Expenses in Section 2 of
these Procedures) actually and reasonably incurred in such judicial proceeding
or arbitration, but only if the Indemnitee prevails therein. If it shall be
determined in such judicial proceeding or arbitration that the Indemnitee is
entitled to receive part but not all of the indemnification or advancement of
Expenses sought, the expenses incurred by the Indemnitee in connection with such
judicial proceeding or arbitration shall be appropriately prorated.
SECTION 5. AMENDMENTS. These Procedures may be amended at any time and
from time to time in the same manner as any by-law of the Corporation in
accordance with the Certificate of Incorporation; provided, however, that
notwithstanding any amendment, alteration or repeal of these Procedures or any
provision hereof, any Indemnitee shall be entitled to utilize these Procedures
with respect to any claim for indemnification arising out of any action taken or
omitted prior to such amendment, alteration or repeal except to the extent
otherwise required by law.
34
Exhibit 4.4
- --------------------------------------------------------------------------------
CONEXANT SYSTEMS, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C., as
Rights Agent
Rights Agreement
Dated as of November 30, 1998
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
Section 1. Certain Definitions.............................................2
Section 2. Appointment of Rights Agent.....................................8
Section 3. Issue of Right Certificates.....................................8
Section 4. Form of Right Certificates.....................................13
Section 5. Countersignature and Registration..............................13
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates......................................15
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.................................................17
Section 8. Cancellation and Destruction of Right Certificates.............19
Section 9. Availability of Preferred Shares...............................20
Section 10. Preferred Shares Record Date...................................21
Section 11. Adjustment of Purchase Price, Number of Shares
or Number of Rights............................................22
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares...............................................39
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power........................................40
Section 14. Fractional Rights and Fractional Shares........................42
Section 15. Rights of Action...............................................45
Section 16. Agreement of Right Holders.....................................46
Section 17. Right Holder Not Deemed a Shareowner...........................47
Section 18. Concerning the Rights Agent....................................47
<PAGE>
Page
----
Section 19. Merger or Consolidation or Change of Name
of Rights Agent................................................49
Section 20. Duties of Rights Agent.........................................50
Section 21. Change of Rights Agent.........................................55
Section 22. Issuance of New Right Certificates.............................57
Section 23. Redemption.....................................................57
Section 24. Exchange.......................................................59
Section 25. Notice of Certain Events.......................................62
Section 26. Notices........................................................64
Section 27. Supplements and Amendments.....................................66
Section 28. Successors.....................................................67
Section 29. Benefits of this Agreement.....................................67
Section 30. Severability...................................................67
Section 31. Governing Law..................................................68
Section 32. Counterparts...................................................68
Section 33. Descriptive Headings...........................................68
Exhibit A - Form of Right Certificate
ii
<PAGE>
RIGHTS AGREEMENT
Agreement, dated as of November 30, 1998, between Conexant
Systems, Inc., a Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C. (the "Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (a "Right") for each
Common Share (as hereinafter defined) of the Company to be issued in the
distribution of Common Shares of the Company (the "Spin-Off") by Rockwell
International Corporation, a Delaware corporation ("Rockwell"), to Rockwell's
shareowners, each Right representing the right to purchase one one-hundredth of
a Preferred Share (as hereinafter defined), upon the terms and subject to the
conditions herein set forth, and has further authorized and directed the
issuance of one Right with respect to each Common Share of the Company that
shall become outstanding between the effective date of the Spin-Off (the "Record
Date") and the earliest of the Distribution Date, the Redemption Date and the
Final Expiration Date (as such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
<PAGE>
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person,
shall be the Beneficial Owner (as such term is hereinafter defined) of
20% or more of the Common Shares of the Company then outstanding, but
shall not include the Company, any Subsidiary (as such term is
hereinafter defined) of the Company, any employee benefit plan of
Rockwell, the Company or any Subsidiary of the Company, or any entity
holding Common Shares for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of an acquisition of Common Shares by the Company
which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 20%
or more of the Common Shares of the Company then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of 20% or
more of the Common Shares of the Company then outstanding by reason of
share
2
<PAGE>
purchases by the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional Common Shares of
the Company (other than an acquisition that does not directly or
indirectly increase the proportionate share of the Common Shares of the
Company beneficially owned by such Person), then such Person shall be
deemed to be an "Acquiring Person". Notwithstanding the foregoing, if
the Board of Directors of the Company determines in good faith that a
Person who would otherwise be an "Acquiring Person", as defined
pursuant to the foregoing provisions of this paragraph (a), has become
such inadvertently, and such Person divests as promptly as practicable
a sufficient number of Common Shares so that such Person would no
longer be an "Acquiring Person", as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed
to be an "Acquiring Person" for any purposes of this Agreement.
Notwithstanding the foregoing provisions of this paragraph (a),
Rockwell shall not be deemed to be an Acquiring Person as a result of
its ownership of capital stock of the Company prior to the Spin-Off.
3
<PAGE>
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to have "Beneficial Ownership" of and to "beneficially
own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether
such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and
between underwriters and selling group members with respect to
a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights (other
than the Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered pursuant
to a tender or exchange offer made by or on behalf of such
Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or
exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person
shall
4
<PAGE>
not be deemed the Beneficial Owner of, or to beneficially own,
any security if the agreement, arrangement or understanding to
vote such security (1) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations promulgated under the
Exchange Act and (2) is not also then reportable on Schedule
13D under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any
of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements
5
<PAGE>
with and between underwriters and selling group members with
respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to Section l(c)(ii)(B)) or
disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding", when used with reference
to a Person's Beneficial Ownership of securities of the Company, shall
mean the number of such securities then issued and outstanding together
with the number of such securities not then actually issued and
outstanding which such Person would be deemed to own beneficially
hereunder.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in New York are
authorized or obligated by law or executive order to close.
(e) "close of business" on any given date shall mean 5:00
P.M., New York City time, on such date; provided, however, that if such
date is not a Business
6
<PAGE>
Day it shall mean 5:00 P.M., New York City time, on the next succeeding
Business Day.
(f) "Common Shares" when used with reference to the Company
shall mean the shares of Common Stock (as such term is hereinafter
defined). "Common Shares" when used with reference to any Person other
than the Company shall mean the capital stock (or equity interest) with
the greatest voting power of such other Person or, if such other Person
is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.
(g) "Common Stock" shall mean the Common Stock, par value $1
per share, of the Company.
(h) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(i) "Final Expiration Date" shall have the meaning set forth
in Section 7 hereof.
(j) "Person" shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger or otherwise)
of such entity.
(k) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, without par value, of the Company having
the rights and
7
<PAGE>
preferences set forth in the Certificate of Incorporation of the
Company.
(l) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(m) "Shares Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such.
(n) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting
equity securities or equity interest is owned, directly or indirectly,
by such Person.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as
it may deem necessary or desirable.
Section 3. Issue of Right Certificates. (a) Until the earlier
of (i) the tenth day after the Shares Acquisition Date or (ii) the tenth
Business Day (or such later date as may be determined by action of the Board of
Directors prior to such time as any Person becomes an
8
<PAGE>
Acquiring Person) after the date of the commencement by any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company or any entity holding Common Shares
for or pursuant to the terms of any such plan) of, or of the first public
announcement of the intention of any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares for or pursuant to
the terms of any such plan) to commence, a tender or exchange offer the
consummation of which would result in any Person becoming the Beneficial Owner
of Common Shares aggregating 20% or more of the then outstanding Common Shares
(the earlier of such dates being herein referred to as the "Distribution Date"),
(x) the Rights will be attached to (subject to the provisions of Section 3(b)
hereof) the Common Shares (whether in book-entry, uncertificated or certificated
form) issued and outstanding and the Rights will be owned by the registered
holders of the Common Shares and will not be evidenced by separate Right
Certificates, and (y) any transfer of Common Shares (or any interest therein,
including the creation of a security interest) will also effect a transfer of
the associated Rights (or the equivalent interest therein) and
9
<PAGE>
neither the Rights nor any interest therein may be transferred otherwise than by
transfer of the associated Common Shares (or the equivalent interest therein).
As soon as practicable after the Distribution Date, the Company will prepare and
execute, the Rights Agent will countersign, and the Company will send or cause
to be sent (and the Rights Agent will, if requested, send) by first-class,
insured, postage-prepaid mail, to each record holder of Common Shares as of the
close of business on the Distribution Date, at the address of such holder shown
on the records of the Company, a Right Certificate, in substantially the form of
Exhibit A hereto (a "Right Certificate"), evidencing one Right for each Common
Share so held, subject, in the case of Common Shares held in uncertificated form
on the Distribution Date, to the rights provided by law to a registered pledgee
whose security interest has been duly registered with the Company. As of the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) Until the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date, certificates for Common Shares
shall have impressed on, printed on, written on or otherwise affixed to them
substantially the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights
10
<PAGE>
Agreement between Conexant Systems, Inc. and ChaseMellon Shareholder
Services, L.L.C., dated as of November 30, 1998 (the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive
offices of Conexant Systems, Inc. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. Conexant Systems, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement without charge after receipt
of a written request therefor. Under certain circumstances, as set
forth in the Rights Agreement, Rights issued to any Person who becomes
an Acquiring Person (as defined in the Rights Agreement) may become
null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
(c) Until the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date, confirmations and account
statements sent to holders of Common Shares in book-entry form and initial
transaction statements relating to the registration, pledge or release from
pledge of Common Shares in uncertificated form shall have impressed on, printed
on, written on or otherwise affixed to them substantially the following legend:
11
<PAGE>
The shares of the Common Stock, par value $1 per share, of Conexant
Systems, Inc. to which this statement relates also evidence and entitle
the holder thereof to certain Rights as set forth in a Rights Agreement
between Conexant Systems, Inc. and ChaseMellon Shareholder Services,
L.L.C., dated as of November 30, 1998 (the "Rights Agreement"), the
terms of which are hereby incorporated herein by reference and a copy
of which is on file at the principal executive offices of Conexant
Systems, Inc. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and
will no longer be evidenced by the shares to which this statement
relates. Conexant Systems, Inc. will mail to the holder of the shares
to which this statement relates and any registered pledgee of
uncertificated shares a copy of the Rights Agreement without charge
after receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, Rights issued to
any Person who becomes an Acquiring Person (as defined in the Rights
Agreement) may become null and void.
With respect to Common Shares in book-entry form for which there has been sent a
confirmation or account statement and Common Shares in uncertificated form for
which there has been sent an initial transaction statement containing the
foregoing legend, until the Distribution Date, the Rights associated with such
Common Shares shall be evidenced by such Common Shares alone, and the
registration of transfer or pledge, or the release from pledge, of any such
Common Shares shall also constitute the registration of transfer or pledge, or
the release from pledge, as the case may be, of the Rights associated with such
Common Shares.
12
<PAGE>
(d) In the event that the Company purchases or acquires any
Common Shares after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Shares shall be deemed canceled and retired
so that the Company shall not be entitled to exercise any Rights associated with
the Common Shares which are no longer outstanding.
Section 4. Form of Right Certificates. Subject to the
provisions of Section 22 hereof, the Right Certificates (and the forms of
election to purchase Preferred Shares and of assignment to be printed on the
reverse thereof) shall be substantially the same as Exhibit A hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, any of its Vice
13
<PAGE>
Presidents, or its Treasurer, either manually or by facsimile signature, shall
have affixed thereto the Company's seal or a facsimile thereof, and shall be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be
countersigned by the Rights Agent, either manually or by facsimile signature,
and shall not be valid for any purpose unless countersigned. In case any officer
of the Company who shall have signed any of the Right Certificates shall cease
to be such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Right Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at an office designated for
14
<PAGE>
such purpose (the "Designated Office"), books for registration and transfer of
the Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, DestroySection 6. Transfer, Split Up, Combination
and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. Subject to the provisions of Section 14 hereof, at any time after
the close of business on the Distribution Date, and at or prior to the close of
business on the earlier of the Redemption Date or the Final Expiration Date, any
Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section 11(a)(ii) hereof
or that have been exchanged pursuant to Section 24 hereof) may be transferred,
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder of the Rights evidenced thereby to
purchase a like number of one one-hundredths of a Preferred Share as the Right
Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall
15
<PAGE>
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the Designated Office of the Rights Agent. Thereupon
the Rights Agent shall countersign and deliver to the person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security satisfactory to them, and, at the Company's request, reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Right Certificate
if mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered holder in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
16
<PAGE>
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights. (a) Each Right (other than Rights that have become void pursuant to
Section 11(a)(ii) hereof or that have been exchanged pursuant to Section 24
hereof) shall initially entitle the registered holder thereof to purchase one
one-hundredth of a Preferred Share, subject to adjustment from time to time as
provided in Section 11 or 13 hereof. The purchase price (the "Purchase Price")
for each one one-hundredth of a Preferred Share purchasable pursuant to the
exercise of a Right shall initially be $75.00, and shall be subject to
adjustment from time to time as provided in Section 11 or 13 hereof and shall be
payable in lawful money of the United States of America in accordance with
paragraph (c) below.
(b) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein) in
whole or in part at any time after the Distribution Date upon surrender of the
Right Certificate evidencing such Rights, with the form of election to purchase
on the reverse side thereof duly executed, to the Rights Agent at the Designated
Office of the Rights Agent, together with payment of the Purchase Price for each
one one-hundredth of a Preferred Share as to which the Rights are exercised, at
or prior to the earliest
17
<PAGE>
of (i) the close of business on the tenth anniversary of the Record Date (the
"Final Expiration Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the "Redemption Date"), or (iii) the time at
which such Rights are exchanged as provided in Section 24 hereof.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the shares to be purchased and
an amount equal to any applicable transfer tax required to be paid by the holder
of the Rights evidenced by such Right Certificate in accordance with Section 9
hereof by certified check, cashier's check or money order payable to the order
of the Company, the Rights Agent shall thereupon promptly (i) (A) requisition
from any transfer agent of the Preferred Shares certificates for the number of
Preferred Shares to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B) requisition from the
depositary agent depositary receipts representing such number of one
one-hundredths of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company
hereby directs the
18
<PAGE>
depositary agent to comply with such request, (ii) when appropriate, requisition
from the Company the amount of cash to be paid in lieu of issuance of fractional
shares in accordance with Section 14 hereof, (iii) after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of the Rights evidenced by such Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, deliver such cash to or upon
the order of the registered holder of the Rights evidenced by such Right
Certificate.
(d) In case the registered holder of the Rights evidenced by
any Right Certificate shall exercise less than all the Rights evidenced thereby,
a new Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of such
Rights or to his duly authorized assigns, subject to the provisions of Section
14 hereof.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the
19
<PAGE>
Rights Agent, shall be canceled by it, and no Right Certificates shall be issued
in lieu thereof except as expressly permitted by any of the provisions of this
Rights Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Right Certificates
to the Company, or shall, at the written request of the Company, destroy such
canceled Right Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Availability of Preferred Shares. The Company
covenants and agrees that it will cause to be reserved and kept available out of
its authorized and unissued Preferred Shares or any Preferred Shares held in its
treasury, the number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 7 hereof.
The Company covenants and agrees that it will take all such action as may be
necessary to ensure that all Preferred Shares delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such Preferred Shares
(subject to payment of the Purchase Price), be duly and
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validly authorized and issued and fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Rights or the Right
Certificates or of any Preferred Shares upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Rights or Right Certificates to a person
other than, or the issuance or delivery of certificates or depositary receipts
for the Preferred Shares in a name other than that of, the registered holder of
the Rights evidenced by Right Certificates surrendered for exercise or to issue
or to deliver any certificates or depositary receipts for Preferred Shares upon
the exercise of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Rights at the time of surrender of the
related Right Certificates) or until it has been established to the Company's
reasonable satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date1. Each Person in
whose name any Preferred Shares are issued upon the exercise of Rights shall for
all purposes be deemed to
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have become the holder of record of such Preferred Shares on, and the date of
issuance of such Preferred Shares and the date of any certificate for such
Preferred Shares shall be, the date upon which the Right Certificate evidencing
such Rights was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Shares transfer books
of the Company are closed, such Person shall be deemed to have become the record
holder of such shares on, and the date of issuance of such Preferred Shares and
the date of any such certificate shall be, the next succeeding Business Day on
which the Preferred Shares transfer books of the Company are open. Prior to the
exercise of any Rights, the holder thereof shall not be entitled to any rights
of a holder of Preferred Shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number of Preferred Shares covered by
each Right and the
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number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
Record Date (A) declare a dividend on the Preferred Shares payable in Preferred
Shares, (B) subdivide the outstanding Preferred Shares, (C) combine the
outstanding Preferred Shares into a smaller number of Preferred Shares or (D)
issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue of such
23
<PAGE>
dividend, subdivision, combination or reclassification; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in the event any
Person becomes an Acquiring Person, each registered holder of a Right shall
thereafter have a right to receive, upon exercise thereof at a price equal to
the then current Purchase Price multiplied by the number of one one-hundredths
of a Preferred Share for which a Right is then exercisable, in accordance with
the terms of this Agreement and in lieu of Preferred Shares, such number of
shares of Common Stock as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable and dividing that product by (y) 50%
of the then current per share market price of the Common Stock (determined
pursuant to Section 11(d) hereof) on the date of the occurrence of such event.
In the event that any Person shall become an Acquiring Person and the Rights
shall then be outstanding, the Company shall not take any action which would
eliminate or diminish the benefits intended to be afforded by the Rights.
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<PAGE>
From and after the occurrence of such event, any Rights that
are or were acquired or beneficially owned by any Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) shall be void and any holder of
such Rights shall thereafter have no right to exercise such Rights under any
provision of this Agreement. No Right Certificate shall be issued pursuant to
Section 3 hereof that evidences Rights beneficially owned by an Acquiring Person
(or any Associate or Affiliate of such Acquiring Person) whose Rights would be
void pursuant to the preceding sentence thereof and any Right Certificate
evidencing Rights beneficially owned by any such Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) shall be void; no Right
Certificate shall be issued at any time upon the transfer of any Rights to an
Acquiring Person (or any Associate or Affiliate of such Acquiring Person) whose
Rights would be void pursuant to the preceding sentence or to any nominee of
such Acquiring Person, Associate or Affiliate; and any Right Certificate
delivered to the Rights Agent for transfer to an Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) whose Rights would be void
pursuant to the preceding sentence shall be canceled.
(iii) In the event that there shall not be sufficient shares
of Common Stock issued but not outstanding
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<PAGE>
or authorized but unissued to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), the Company shall take all such
action as may be necessary to authorize additional shares of Common Stock for
issuance upon exercise of the Rights. In the event the Company shall, after good
faith effort, be unable to take all such action as may be necessary to authorize
such additional shares of Common Stock, the Company shall substitute, for each
share of Common Stock that would otherwise be issuable upon exercise of a Right,
a number of Preferred Shares or fraction thereof such that the current per share
market price of one Preferred Share multiplied by such number or fraction is
equal to the current per share market price of one share of Common Stock as of
the date of issuance of such Preferred Shares or fraction thereof.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
26
<PAGE>
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
then current per share market price (as defined in Section 11(d)) of the
Preferred Shares on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares outstanding on such record date plus the
number of Preferred Shares which the aggregate offering price of the total
number of Preferred Shares and/or equivalent preferred shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price and the denominator
of which shall be the number of Preferred Shares outstanding on such record date
plus the number of additional Preferred Shares and/or equivalent preferred
shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. In case such subscription price may
27
<PAGE>
be paid in a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent. Preferred Shares owned by or held for
the account of the Company shall not be deemed outstanding for the purpose of
any such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior
28
<PAGE>
to such record date by a fraction, the numerator of which shall be the then
current per share market price of the Preferred Shares on such record date, less
the fair market value (as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent) of the portion of the assets or evidences of indebtedness so
to be distributed or of such subscription rights or warrants applicable to one
Preferred Share and the denominator of which shall be such current per share
market price of the Preferred Shares; provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. Such adjustments shall be made successively whenever such
a record date is fixed; and in the event that such distribution is not so made,
the Purchase Price shall be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the purpose
of this Section 11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the
29
<PAGE>
30 consecutive Trading Days (as such term is hereinafter defined) immediately
prior to but not including such date; provided, however, that in the event that
the current per share market price of the Security is determined during a period
following the announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or securities
convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of 30 Trading Days
after but not including the ex-dividend date for such dividend or distribution,
or the record date for such subdivision, combination or reclassification, then,
and in each such case, the current per share market price shall be appropriately
adjusted to reflect the current market price per share equivalent of such
Security; and provided, further, that in the event that the current per share
market price of the shares of Common Stock is determined as of a date prior to
the expiration of 30 Trading Days following the Record Date, the current per
share market price of the Common Stock shall be deemed to be the average of the
daily closing prices per share of Common Stock for the period of Trading Days
commencing with the Record Date and ending immediately prior to such date. The
closing price of a Security for each day shall be the last
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<PAGE>
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the Security is
not listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the The Nasdaq Stock
Market, Inc. National Market System ("Nasdaq") or such other system then in use,
or, if on any such date the Security is not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Security selected by the Board of Directors
of the Company. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the Security is listed or admitted to
trading is open for the transaction of business or, if the Security is not
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<PAGE>
listed or admitted to trading on any national securities exchange, a Business
Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the Preferred
Shares are not publicly traded, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be the current per share market
price of the Common Stock as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by one hundred. If
neither the shares of Common Stock nor the Preferred Shares are publicly held or
so listed or traded, "current per share market price" shall mean the fair value
per share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried
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<PAGE>
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 shall be made to the nearest cent or to the nearest one
one-millionth of a Preferred Share or one ten-thousandth of any other share or
security as the case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no later than
the earlier of (i) three years from the date of the transaction which requires
such adjustment or (ii) the date of the expiration of the right to exercise any
Rights.
(f) If as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than Preferred
Shares, thereafter the number of such other shares so receivable upon exercise
of any Right shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10 and 13 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price
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<PAGE>
hereunder shall evidence the right to purchase, at the adjusted Purchase Price,
the number of one one-hundredths of a Preferred Share purchasable from time to
time hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a Preferred Share (calculated to the nearest one
one-millionth of a Preferred Share) obtained by (i) multiplying (x) the number
of one one-hundredths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in substitution
for any adjustment in the number of one one-hundredths of a Preferred Share
purchasable upon the
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<PAGE>
exercise of a Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of one one-hundredths of a
Preferred Share for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to registered holders of Rights
on such record date Right Certificates evidencing, subject to Section 14 hereof,
the additional Rights to which such holders shall be entitled as
35
<PAGE>
a result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such registered holders in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be registered in
the names of the registered holders of the Rights on the record date specified
in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one one-hundredths
of a Preferred Share which were expressed in the initial Right Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of
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<PAGE>
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable Preferred Shares at such adjusted Purchase
Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the registered holder of any Right exercised after such
record date of the Preferred Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the Preferred Shares
and other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall determine
to be advisable in order that any consolidation or subdivision
37
<PAGE>
of the Preferred Shares, issuance wholly for cash of any Preferred Shares at
less than the current market price, issuance wholly for cash of Preferred Shares
or securities which by their terms are convertible into or exchangeable for
Preferred Shares, dividends on Preferred Shares payable in Preferred Shares or
issuance of rights, options or warrants referred to hereinabove in Section
11(b), hereafter made by the Company to holders of its Preferred Shares shall
not be taxable to such shareowners.
(n) In the event that at any time after the Record Date and
prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (A) the
number of one one-hundredths of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by multiplying the number
of one one-hundredths of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the number of Common Shares
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<PAGE>
outstanding immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event, and (B) each
Common Share outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11 or 13
hereof, the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common
Shares or the Preferred Shares a copy of such certificate and (c) mail a brief
summary thereof to each registered holder of a Right in accordance with Section
25 hereof. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall have no duty with
respect to and shall not be deemed to have knowledge of any adjustment unless
and until it shall have received such a certificate.
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<PAGE>
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. In the event, directly or indirectly, at any time after
a Person has become an Acquiring Person, (a) the Company shall consolidate with,
or merge with and into, any other Person, (b) any Person shall consolidate with
the Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or cash or any
other property, or (c) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly-owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that (i) each registered holder of a Right (except as otherwise provided herein)
shall thereafter have the right to receive, upon the exercise thereof at a price
equal to the then current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right is then
40
<PAGE>
exercisable, in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares of such other Person (including
the Company as successor thereto or as the surviving corporation) as shall equal
the result obtained by (A) multiplying the then current Purchase Price by the
number of one one-hundredths of a Preferred Share for which a Right is then
exercisable and dividing that product by (B) 50% of the then current per share
market price of the Common Shares of such other Person (determined pursuant to
Section 11(d) hereof) on the date of consummation of such consolidation, merger,
sale or transfer; (ii) the issuer of such Common Shares shall thereafter be
liable for, and shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be deemed to refer to such
issuer; and (iv) such issuer shall take such steps (including, but not limited
to, the reservation of a sufficient number of its Common Shares in accordance
with Section 9 hereof) in connection with such consummation as may be necessary
to assure that the provisions hereof shall thereafter be applicable, as nearly
as reasonably may be, in relation to its Common Shares thereafter deliverable
upon the exercise of the Rights. The
41
<PAGE>
Company shall not consummate any such consolidation, merger, sale or transfer
unless prior thereto the Company and such issuer shall have executed and
delivered to the Rights Agent a supplemental agreement so providing. The Company
shall not enter into any transaction of the kind referred to in this Section 13
if at the time of such transaction there are any rights, warrants, instruments
or securities outstanding or any agreements or arrangements which, as a result
of the consummation of such transaction, would eliminate or substantially
diminish the benefits intended to be afforded by the Rights. The provisions of
this Section 13 shall similarly apply to successive mergers or consolidations or
sales or other transfers.
Section 14. Fractional Rights and Fractional Shares. (a) The
Company shall not be required to issue fractions of Rights or to distribute
Right Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Rights with regard
to which such fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately prior to the
date
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<PAGE>
on which such fractional Rights would have been otherwise issuable. The closing
price for any day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by Nasdaq or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights, the fair value of
the Rights
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<PAGE>
on such date as determined in good faith by the Board of Directors of the
Company shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares (other than fractions
which are integral multiples of one one-hundredth of a Preferred Share).
Fractions of Preferred Shares in integral multiples of one one-hundredth of a
Preferred Share may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it; provided, that such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the Preferred
Shares represented by such depositary receipts. In lieu of fractional Preferred
Shares that are not integral multiples of one one-hundredth of a Preferred
Share, the Company shall pay to the registered holders of Rights at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Preferred Share. For the purposes of
this Section
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14(b), the current market value of a Preferred Share shall be the closing price
of a Preferred Share (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of such
exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect
of this Agreement, excepting the rights of action given to the Rights Agent
under Section 18 hereof, are vested in the respective registered holders of the
Rights and any registered holder of any Right, without the consent of the Rights
Agent or of the holder of any other Right, may, in his or her own behalf and for
his or her own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
his or her right to exercise the Rights registered in his or her name in the
manner provided in the Right Certificates and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at
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law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of the obligations of any Person subject to, this
Agreement.
Section 16. Agreement of Right Holders. Every holder of a
Right, by accepting the same, consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Rights are transferable
only on the registry books of the Rights Agent upon surrender of the
Right Certificates evidencing such Rights at the Designated Office of
the Rights Agent, duly endorsed or accompanied by a proper instrument
of transfer; and
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right is registered as the absolute owner
thereof (notwithstanding any notations of ownership or writing on the
Right Certificates evidencing such Rights or any certificate for the
associated Common Shares made by anyone other than the Company or the
Rights Agent) for all purposes
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<PAGE>
whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary, except as required by law.
Section 17. Right Holder Not Deemed a Shareowner. No holder,
as such, of any Right shall be entitled to vote, receive dividends or be deemed
for any purpose the holder of the Preferred Shares or any other securities of
the Company which may at any time be issuable on the exercise of such Rights,
nor shall anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right, as such, any of the rights of a shareowner
of the Company or any right to vote for the election of directors or upon any
matter submitted to shareowners at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareowners (except as provided in Section 25 hereof), or to
receive dividends or subscription rights, or otherwise, until such Right or
Rights shall have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements
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<PAGE>
incurred in the execution, delivery, administration and amendment of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, damage, judgment, fine, penalty, claim, demand, settlement,
cost or expense, incurred without negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights Agent
in connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of liability in
the premises. Anything to the contrary notwithstanding, in no event shall the
Rights Agent be liable for special, indirect, consequential or incidental loss
or damage of any kind whatsoever (including, without limitation, lost profits),
even if the Rights Agent has been advised of the likelihood of such loss or
damage.
The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or transfer, power of
attorney,
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<PAGE>
endorsement, affidavit, letter, instruction, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the stock
transfer or corporate trust powers of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto; provided, that such Person would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21 hereof. In case
at the time such successor Rights Agent shall succeed to the agency created by
this Agreement, any of the Right Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver
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<PAGE>
such Right Certificates so countersigned; and in case at that time any of the
Right Certificates shall not have been countersigned, any successor Rights Agent
may countersign such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
the Rights evidenced by such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases the Rights
evidenced by such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes only the duties and obligations expressly imposed by this Agreement
upon the following terms and
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conditions, by all of which the Company and the holders of Rights, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, any Vice
President, the Treasurer or the Secretary of the Company and delivered
to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by
it under the provisions of this Agreement in reliance upon such
certificate.
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(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement
or in the Right Certificates (except its countersignature thereof) or
be required to verify the same, but all such statements and recitals
are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except
its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this
Agreement or in any Right Certificate; nor shall it be responsible for
any change in the exercisability of the Rights (including the Rights
becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment
in the terms of the Rights (including the manner, method or amount
thereof) provided for in Section 3, 11, 13, 23
52
<PAGE>
or 24, or the ascertaining of the existence of facts that would require
any such change or adjustment (except with respect to the exercise of
Rights evidenced by Right Certificates after actual notice that such
change or adjustment is required); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization
or reservation of any Preferred Shares to be issued pursuant to this
Agreement or any Right Certificate or as to whether any Preferred
Shares will, when issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments
and assurances as may reasonably be required by the Rights Agent for
the carrying out or performing by the Rights Agent of the provisions of
this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, any Vice
President, the Secretary or the Treasurer of the Company, and to apply
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<PAGE>
to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered by
it in good faith in accordance with instructions of any such officer or
for any delay in acting while waiting for those instructions.
(h) The Rights Agent and any shareowner, affiliate, director,
officer or employee of the Rights Agent may buy, sell or deal in any of
the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as fully
and freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act,
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default, neglect or misconduct, provided reasonable care was exercised
in the selection and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares or Preferred Shares by registered or
certified mail, and to the registered holders of the Rights by first-class mail.
The Company may remove the Rights Agent or any successor Rights Agent upon 30
days' notice in writing, mailed to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent of the Common Shares or Preferred
Shares by registered or certified mail, and to the registered holders of the
Rights by first-class mail. If the Rights Agent shall resign or be removed or
shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the registered holder of a Right
(who shall, with such notice, submit his or her Right Certificate, if any, or
his
55
<PAGE>
or her certificate, if any, for the associated Common Shares for inspection by
the Company), then the registered holder of any Right Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by such a court,
shall be a Person, or an affiliate of such a Person, organized and doing
business under the laws of the United States or of the State of New York (or of
any other state of the United States so long as such corporation is authorized
to do business as a banking institution in the State of New York), in good
standing, having an office in the State of New York, which is authorized under
such laws to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not
56
<PAGE>
later than the effective date of any such appointment the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Shares or Preferred Shares, and mail a notice thereof in
writing to the registered holders of the Rights. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the Right
Certificates to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or property purchasable
upon exercise of a Right made in accordance with the provisions of this
Agreement.
Section 23. Redemption. (a) The Board of Directors of the
Company may, at its option, at any time prior to such time as any Person becomes
an Acquiring Person, redeem all but not less than all the then
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<PAGE>
outstanding Rights at a redemption price of $.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"). The redemption of the Rights by the
Board of Directors of the Company may be made effective at such time, on such
basis and with such conditions as the Board of Directors in its sole discretion
may establish.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights pursuant to paragraph (a) of
this Section 23, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption; provided, however, that the
failure to give, or any defect in, any such notice shall not affect the validity
of such redemption. Within 10 days after such action of the Board of Directors
ordering the redemption of the Rights, the Company shall mail a notice of
redemption to all the registered holders of the then outstanding Rights at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer
58
<PAGE>
agent for the Common Shares. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23 or in
Section 24 hereof, and other than in connection with the purchase of Common
Shares prior to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the
Company may, at its option, at any time after any Person becomes an Acquiring
Person, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the provisions
of Section 11(a)(ii) hereof) for shares of Common Stock at an exchange ratio of
one share of Common Stock per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the Record Date
(such exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after the Record Date if any Person (other than
the Company, any
59
<PAGE>
Subsidiary of the Company, any employee benefit plan of Rockwell, the Company or
any such Subsidiary, or any entity holding Common Shares for or pursuant to the
terms of any such plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of shares of Common Stock
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company shall
promptly mail a notice of any such exchange to all of the registered holders of
such Rights at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the
60
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exchange of the shares of Common Stock for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number of Rights (other
than Rights which have become void pursuant to the provisions of Section
11(a)(ii) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights. In the event
the Company shall, after good faith effort, be unable to take all such action as
may be necessary to authorize such additional shares of Common Stock, the
Company shall substitute, for each share of Common Stock that would otherwise be
issuable upon exchange of a Right, a number of Preferred Shares or fraction
thereof such that the current per share market price of one Preferred Share
multiplied by such number or fraction is equal to the current per share market
price of one share of Common Stock as of the date of issuance of such Preferred
Shares or fraction thereof.
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(d) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock, the
Company shall pay to the registered holders of the Rights with regard to which
such fractional shares of Common Stock would otherwise be issuable an amount in
cash equal to the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this paragraph (d), the current market value
of a whole share of Common Stock shall be the closing price of a share of Common
Stock (as determined pursuant to the second sentence of Section 11(d)(i) hereof)
for the Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
Section 25. Notice of Certain Events. (a) In case at any time
after the Record Date the Company shall propose (i) to pay any dividend payable
in stock of any class to the holders of its Preferred Shares or to make any
other distribution to the holders of its Preferred Shares (other than a regular
quarterly cash dividend), (ii) to offer to the holders of its Preferred Shares
rights or warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities, rights or
options, (iii) to effect any
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reclassification of its Preferred Shares (other than a reclassification
involving only the subdivision of outstanding Preferred Shares), (iv) to effect
any consolidation or merger into or with, or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person, (v) to effect the liquidation, dissolution or winding up of the
Company, or (vi) to declare or pay any dividend on the Common Shares payable in
Common Shares or to effect a subdivision, combination or consolidation of the
Common Shares (by reclassification or otherwise than by payment of dividends in
Common Shares), then, in each such case, the Company shall give to each
registered holder of a Right, in accordance with Section 26 hereof, a notice of
such proposed action, which shall specify the record date for the purposes of
such stock dividend, or distribution of rights or warrants, or the date on which
such reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, if any such
date is to be fixed,
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and such notice shall be so given in the case of any action covered by clause
(i) or (ii) above at least 10 days prior to the record date for determining
holders of the Preferred Shares for purposes of such action, and in the case of
any such other action, at least 10 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Common Shares and/or Preferred Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable thereafter give to
each registered holder of a Right, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii)
hereof.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Conexant Systems, Inc.
4311 Jamboree Road
Newport Beach, California 92660-3095
Attention: Corporate Secretary
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Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right to or on the Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
4 Station Square, 3rd Floor
Pittsburgh, Pennsylvania 15219
Attention: Manager of Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed to such
holder at the address of such holder as shown on the registry books of the
Company or the registry books of the holders of the Rights maintained by the
Rights Agent after the Distribution Date as herein provided. Any notice or
demand given prior to the Distribution Date by the Company or the Rights Agent
to the holders of the Rights shall also be given to any registered pledgee of
any uncertificated Common Share by first-class mail, postage prepaid, addressed
to such registered pledgee at the address of such registered pledgee as shown on
the registry books of the Company.
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Section 27. Supplements and Amendments. The Company may from
time to time supplement or amend this Agreement without the approval of any
holders of Rights in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, or to make any other provisions with respect to the Rights or
in regard to matters or questions arising hereunder which the Company may deem
necessary or desirable, any such supplement or amendment to be evidenced by a
writing signed by the Company and the Rights Agent; provided, however, that
nothing herein shall obligate the Rights Agent to execute such a supplement or
amendment if such supplement or amendment changes or increases the rights,
duties or obligations of the Rights Agent; and further provided that from and
after such time as any Person becomes an Acquiring Person, this Agreement shall
not be amended in any manner which would adversely affect the interests of the
holders of Rights. Without limiting the foregoing, the Company may at any time
prior to such time as any Person becomes an Acquiring Person amend this
Agreement to lower the thresholds set forth in Sections 1(a) and 3(a) to not
less than the greater of (i) the sum of .001% and the largest percentage of the
outstanding Common Shares then known by the Company to be beneficially owned by
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any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of Rockwell, the Company or any Subsidiary of the Company, or any
entity holding Common Shares for or pursuant to the terms of any such plan) and
(ii) 10%.
Section 28. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Rights any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights.
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this
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Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the day and year first
above written.
CONEXANT SYSTEMS, INC.
Attest:
By /s/ Edward T. Moen, II By /s/ Dwight W. Decker
---------------------------- --------------------------------
Assistant Secretary Chairman of the Board
and Chief Executive Officer
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C., as Rights Agent
Attest:
By /s/ Ron Lug By /s/ Derek R. Lenington
---------------------------- --------------------------------
Vice President Vice President
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Exhibit A
---------
Form of Right Certificate
Certificate No. R- _____ Rights
NOT EXERCISABLE AFTER ________, 2008 OR EARLIER IF REDEMPTION
OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT
$.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT.
Right Certificate
CONEXANT SYSTEMS, INC.
This certifies that ________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of November 30, 1998 (the "Rights Agreement"),
between Conexant Systems, Inc., a Delaware corporation (the "Company"), and
ChaseMellon Shareholder Services, L.L.C. (the "Rights Agent"), to purchase from
the Company at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 P.M., New York City time, on , 2008 at
the principal office of the Rights Agent, or at the office of its successor as
Rights Agent, one one-hundredth of a fully paid non-assessable share of Series A
Junior Participating Preferred Stock, without par value (the "Preferred
Shares"), of the Company, at a purchase price of $75.00 per one one-hundredth of
a Preferred Share (the "Purchase Price"), upon presentation and surrender of
this Right Certificate with the Form of Election to Purchase duly executed. The
number of Rights evidenced by this Right Certificate (and the number of one
one-hundredths of a Preferred Share which may be purchased upon exercise
thereof) set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of __________, 1998, based on the Preferred Shares as
constituted at such
A-1
<PAGE>
date. As provided in the Rights Agreement, the Purchase Price and the number of
one one-hundredths of a Preferred Share which may be purchased upon the exercise
of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Rights. Copies of the
Rights Agreement are on file at the principal executive offices of the Company
and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the Rights Agent, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like aggregate number
of Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If the
Rights evidenced by this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Right Certificate (i) may be redeemed by the Company at a
redemption price of $.01 per Right or (ii) may be exchanged in whole or in part
for Preferred Shares or shares of the Company's Common Stock, par value $1 per
share.
No fractional Preferred Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
A-2
<PAGE>
No holder of Rights evidenced by this Right Certificate shall
be entitled to vote or receive dividends or be deemed for any purpose the holder
of the Preferred Shares or of any other securities of the Company which may at
any time be issuable on the exercise thereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder of any
Rights evidenced hereby, as such, any of the rights of a shareowner of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareowners at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting shareowners (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised as provided
in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of ____________.
ATTEST: CONEXANT SYSTEMS, INC.
____________________ By:______________________
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
as Rights Agent
By:__________________________
Authorized Signature
A-3
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights evidenced by this Right
Certificate.)
FOR VALUE RECEIVED _______________________________ hereby
sells, assigns and transfers unto _____________________________________________
__________________________________________________________________________
(Please print name and address of transferee)
_____________________________________________________________ Rights evidenced
by this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint __________________ attorney,
to transfer the said Rights on the books of the within-named Company, with full
power of substitution.
Dated:________________
______________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States, in each case, participating in a Medallion
program approved by the Securities Transfer Association, Inc.
- ------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
______________________________
Signature
- ------------------------------------------------------------------------
A-4
<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise
Rights evidenced by the Right Certificate.)
To: Conexant Systems, Inc.
The undersigned hereby irrevocably elects to exercise
___________________ Rights evidenced by this Right Certificate to purchase the
Preferred Shares issuable upon the exercise of such Rights and requests that
certificates for such Preferred Shares be issued in the name of:
--------------------------------------
Please insert social security | |
or other identifying number | |
--------------------------------------
- ---------------------------------------------------------------------
(Please print name and address)
- ---------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced
by this Right Certificate, a new Right Certificate for the balance remaining of
such Rights shall be registered in the name of and delivered to:
--------------------------------------
Please insert social security | |
or other identifying number | |
--------------------------------------
- ---------------------------------------------------------------------
(Please print name and address)
- ---------------------------------------------------------------------
Dated: ____________
_______________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the
A-5
<PAGE>
National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or
correspondent in the United States, in each case,
A-6
<PAGE>
Form of Reverse Side of Right Certificate -- continued
------------------------------------------------------------------------
participating in a Medallion program approved by the
Securities Transfer Association, Inc.
-------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
______________________________
Signature
- --------------------------------------------------------------------------
NOTICE
------
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
A-7
Exhibit 4.5
CONEXANT SYSTEMS, INC.
RETIREMENT SAVINGS PLAN
(Effective as of January 1, 1999)
<PAGE>
CONEXANT SYSTEMS
RETIREMENT SAVINGS PLAN
ARTICLE I: DEFINITIONS
1.010 ACCOUNTS means a Participant's Pre-Tax Account, Post-Tax Account and
Company Contribution Account.
1.020 ACTUAL CONTRIBUTION PERCENTAGE shall mean, for each of the Highly
Compensated Employee Group and the Non-Highly Compensated Employee Group, the
average for each such Group of the percentages, calculated separately for each
Participant in such Group, which are obtained by dividing the amount of Post-Tax
Contributions each Participant has elected for a Plan Year pursuant to Sections
2.020(b) and 2.030(b) by the Participant's Compensation for that Plan Year.
1.030 ADMINISTRATIVE COMMITTEE means the committee appointed by the Plan
Committee and assigned responsibility under Section 6.030.
1.040 AFFILIATED COMPANY means Conexant Systems, Inc. and:
(a) any corporation incorporated under the laws of one of the United States
of America of which Conexant owns, directly or indirectly, eighty
percent (80%) or more of the combined voting power of all classes of
stock or eighty percent (80%) or more of the total value of the shares
of all classes of stock (all within the meaning of section 1563 of the
Code);
(b) any partnership or other business entity organized under such laws, of
which Conexant owns, directly or indirectly, eighty percent (80%) or
more of the voting power or eighty percent (80%) or more of the total
value (all within the meaning of section 414(c) of the Code); and
(c) any other company deemed to be an Affiliated Company by Conexant's
Board of Directors.
1.050 BASE COMPENSATION means the Participant's compensation, not in excess
of One Hundred and Sixty Thousand Dollars ($160,000) or such larger sum as may
be established pursuant to section 401(a)(17) of the Code, in any calendar year,
including lump sum merit awards, any amount which would be paid to the
Participant absent elections under Sections 2.020(a) and 2.030(a) or an election
to make elective employer contributions pursuant to a qualified cash or deferred
arrangement under a cafeteria plan meeting the requirements of section 125 of
the Code. Compensation shall not include compensation for overtime, extended
workweek compensation, night work or other premium pay, bonuses, any form of
extra, contingent or supplementary
<PAGE>
compensation (including, but not limited to, lump sum payments for unused
vacation) or compensation on the hourly payroll.
1.060 BASIC POST-TAX CONTRIBUTION means an amount contributed by a
Participant to the Plan through payroll deductions pursuant to the Participant's
elections under Sections 2.020(b) and 2.030(b).
1.070 BASIC PRE-TAX CONTRIBUTION means an amount contributed to the Plan on
behalf of a Participant pursuant to the Participant's elections under Sections
2.020(a) and 2.030(a).
1.080 BENEFICIARY means the one or more persons or trusts designated by a
Participant pursuant to Article VII; provided, however, that, in the case of a
Participant who has been married for a one (1) year period and who dies prior to
complete distribution of his Accounts, the Beneficiary shall be deemed to be the
Participant's spouse regardless of any contrary designation, unless the
Participant has filed with the Plan Administrator a written designation of a
person or persons other than such spouse as Beneficiary or Beneficiaries. Such
written designation must be accompanied by a written consent of the
Participant's spouse or it is established to the satisfaction of the Plan
Administrator that such consent cannot be obtained because there is no spouse or
the spouse cannot be located or because of other circumstances permitted under
section 417(a)(2) of the Code. Such written consent (which must be witnessed by
a notary public who is not an Employee) shall be on a form furnished to the
Participant by the Plan Administrator and shall acknowledge the effect of such
consent. In the event the Participant has a new spouse to whom he has been
married for a one (1) year period, the designation of the prior spouse shall be
void and the new spouse shall be deemed to be the Participant's Beneficiary,
unless the Participant makes a written designation of a person or persons other
than the new spouse.
1.090 BOARD OF DIRECTORS means the Board of Directors of Conexant; provided,
however, that any action or determination under Sections 1.040, 1.110, 1.190,
2.060, 11.010 and 11.060 may be taken by any officer of the Company who is
authorized to do so by the Board of Directors.
1.100 CODE means the Internal Revenue Code of 1986, as from time to time
amended.
1.110 COMPANY means Conexant Systems, Inc., a Delaware corporation, and any
other entity to which the Board of Directors has extended this Plan.
1.120 COMPANY CONTRIBUTION ACCOUNT means a Plan Account with respect to a
Participant which is comprised of his Company Matching Contributions, as
adjusted for gains or losses related thereto.
1.130 COMPANY MATCHING CONTRIBUTIONS means the contributions made to the
Trust Fund by Conexant or an Affiliated Company pursuant to the provision of
Section 2.060.
1.140 COMPENSATION means the compensation of a Participant as is defined in
section 414(s) of the Code.
2
<PAGE>
1.150 CONEXANT means Conexant Systems, Inc., a Delaware corporation.
1.160 CONEXANT STOCK FUND A means the fund established by the Trustee for
receipt and holding of Company Matching Contributions.
1.170 CONEXANT STOCK FUND B means an Investment Fund established by the
Trustee and described in Appendix B.
1.180 EFFECTIVE DATE means January 1, 1999.
1.190 ELIGIBLE EMPLOYEE means any Employee (including any officer) employed
on a salary or weekly payroll of an Affiliated Company, or on the salary or
weekly payroll of a division, plant, office or location of an Affiliated
Company, to which the benefits of the Plan have been extended by the Board of
Directors. Eligible Employee shall not include any director of the Company not
otherwise so employed, nor any person not otherwise so employed who is
compensated by special fees or pursuant to a special contract or arrangement, or
on a commission basis, nor any person covered by a collective bargaining
agreement which does not provide for participation in the Plan.
1.200 ELIGIBLE RETIREMENT PLAN means:
(a) an individual retirement account described in section 408(a) of the
Code,
(b) an individual retirement annuity described in section 408(b) of the
Code,
(c) an annuity plan described in section 403(a) of the Code, or
(d) a qualified plan (which is a defined contribution plan) described in
section 401(a) of the Code,
which accepts an individual's eligible rollover distributions; provided,
however, that in the case of an eligible rollover distribution to a
Participant's surviving Spouse, only an individual retirement account or
individual retirement annuity described in (a) and (b) above shall be deemed to
be an Eligible Retirement Plan.
1.210 EMPLOYEE means any person who is employed by the Company or by an
Affiliated Company, including an Eligible Employee. "Employee" shall, to the
extent permitted by section 406 of the Code, be deemed to include any United
States citizen regularly employed by a foreign subsidiary or affiliate of the
Company.
1.220 ERISA means the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.
1.230 HARDSHIP means an immediate and heavy financial need of the Employee
for which the amount required is not reasonably available to the Employee from
other sources and which arises for one of the following reasons:
3
<PAGE>
(a) the purchase (excluding mortgage payments) or construction of a
principal residence for the Employee, or to prevent eviction from, or
foreclosure on the mortgage on, the Employee's principal residence;
(b) the incurring of obligations for
(1) tuition, related educational fees and room and board expenses for
post-secondary education for the Employee, his spouse or one or
more of his children or other dependents (as defined in section
152 of the Code) to be incurred during the twelve (12) month
period immediately following the date of his request for
distribution; or
(2) expenses not covered by insurance which either have been
previously incurred by the Employee for, or are necessary in order
for the Employee to obtain, medical care (as described in
section 213(d) of the Code) for himself, his spouse or one or more
of his dependents (as defined in section 152 of the Code);
(c) any other reason which is permitted under section 401(k)(2)(B)(i)(IV)
of the Code and is approved by the Administrative Committee.
1.240 HIGHLY COMPENSATED EMPLOYEE GROUP means those individuals who are
"highly compensated employees" within the meaning of section 414(q) of the Code.
The Plan Administrator may determine which Employees are "highly compensated
employees" for purposes of this Section in any manner permitted by the said
Code provision.
1.250 INVESTMENT FUND(S) means one or more of the investment vehicles
available to Participants as such investment vehicles are described in Appendix
B to this Plan.
1.260 LAYOFF means an involuntary severance of employment, other than a
discharge for cause.
1.270 NAMED FIDUCIARY means the Plan Committee, the Plan Administrator, the
Administrative Committee and the Trustee.
1.280 NON-HIGHLY COMPENSATED EMPLOYEE GROUP means Employees who are not in
the Highly Compensated Employee Group, as determined by the Plan Administrator.
1.290 PARTICIPANT means a person who has elected to participate in the Plan
in accordance with Article II; provided, however, that such term shall include a
person who no longer has an effective election under Article II only so long as
he retains an Account under the Plan.
1.300 PARTICIPANT CONTRIBUTIONS means a Participant's Basic Pre-Tax and Basic
Post-Tax Contributions and his Supplemental Pre-Tax and Supplemental Post-Tax
Contributions.
1.310 PLAN means this Conexant Systems, Inc. Retirement Savings Plan, as from
time to time amended.
4
<PAGE>
1.320 PLAN ADMINISTRATOR means the person from time to time so designated by
name or corporate office by the Board of Directors.
1.330 PLAN COMMITTEE means the Conexant Employee Benefit Plan Committee.
1.340 PLAN YEAR means each twelve-month period ending on the last day of
September.
1.350 POST-TAX CONTRIBUTION ACCOUNT means a Plan Account with respect to a
Participant which is comprised of his Basic and Supplemental Post-Tax
Contributions, as adjusted for gains or losses related thereto.
1.360 POST-TAX CONTRIBUTION PERCENTAGE LIMIT means the maximum contribution
percentage in each Plan Year for Highly Compensated Employee Group Participants
and shall be that percentage amount which does not exceed the greater of:
(a) the Actual Contribution Percentage for the Non-Highly Compensated
Employee Group, multiplied by one and twenty-five hundredths (1.25); or
(b) the lesser of
(1) an amount which does not exceed the Actual Contribution Percentage
for the Non-Highly Compensated Employee Group by more than two (2)
percentage points, or
(2) the Actual Contribution Percentage for the Non-Highly Compensated
Group, multiplied by two (2).
If a Participant who is a member of the Highly Compensated Employee Group is a
participant in any other plan established or maintained by an Affiliated Company
pursuant to which elective deferrals under a cash or deferred arrangement or
matching contributions, both as defined in section 401(m)(4) of the Code, or
employee contributions, are made, such other plan shall be deemed to be a part
of this Plan for the purpose of determining the Post-Tax Contribution Percentage
Limit with respect to that Participant.
1.370 PRE-TAX CONTRIBUTION ACCOUNT means a Plan Account with respect to a
Participant which is comprised of Basic and Supplemental Pre-Tax Contributions,
as adjusted for gains or losses related thereto.
1.380 ROLLOVER ACCOUNT mean a Plan Account described in Section 2.040(c)
which has is its purpose the holding of amounts which are received by the Plan
on a Participant's behalf as a Rollover Contribution or a Transfer Contribution.
1.390 ROLLOVER CONTRIBUTIONS mean the amounts described in Section 2.040
which are transferred to a Participant's Rollover Account pursuant to the terms
of subsection (b) of the said Section.
5
<PAGE>
1.400 SUPPLEMENTAL POST-TAX CONTRIBUTION means the amount contributed by a
Participant to the Plan through payroll deductions pursuant to Section 2.030(b).
1.410 SUPPLEMENTAL PRE-TAX CONTRIBUTIONS means the amounts contributed to the
Plan on behalf of a Participant pursuant to the Participant's election under
Section 2.030(a).
1.420 TRANSFER CONTRIBUTIONS means the amounts described in Section 2.040
which are transferred to a Participant's Account pursuant to the terms of
subsection (a) of the said Section.
1.430 TRUST AGREEMENT means the trust agreement entered into pursuant to
Article VIII of this Plan.
1.440 TRUST FUND means the fund, including the earnings thereon, held by the
Trustee for all contributions made under this Plan by Participants and the
Company.
1.450 TRUSTEE means the trustee or trustees of the trust described in Article
IX of this Plan.
1.460 VALUATION DATE means the any New York Stock Exchange trading day.
ARTICLE II: PARTICIPATION AND CONTRIBUTIONS
2.010 PARTICIPATION. An Eligible Employee shall be permitted to elect to
participate in the Plan as soon as is practicable following his commencement of
service with an Affiliated Company. To the extent administratively feasible, an
Eligible Employee's election to participate and contribute to the Plan shall
become effective on the first payroll payment date following his commencement of
service as an Eligible Employee and shall remain in effect so long as he
continues as an Employee, unless he elects otherwise.
2.020 BASIC CONTRIBUTIONS. An Eligible Employee who notifies the Company of
his election to become a Participant shall also take either or both of the
actions described in subsections (a) and (b) below:
(a) elect to defer receipt of an amount equal to 1% through 4% of his
regular Base Compensation (such deferral to be elected in whole
percentages), which amount shall be paid to the Plan as a Basic Pre-Tax
Contribution to his Pre-Tax Contribution Account;
(b) authorize having an deducted from his regular Base Compensation 1%
through 4% (such deduction to be authorized in whole percentages) and
then have the amount of such deduction (as adjusted for all applicable
taxes due on that amount) paid to the Plan as a Basic Post-Tax
Contribution to his Post-Tax Contribution Account;
provided, however, that the percentages elected to be deferred or deducted and
then made as Basic Pre-Tax and Basic Post-Tax Contributions shall together not
exceed 4% of the Participant's Base Compensation.
6
<PAGE>
2.030 SUPPLEMENTAL CONTRIBUTIONS. If a Participant has made the elections
and/or authorizations described in Section 2.010, he shall then be permitted to
take either or both of the actions described in subsections (a) and (b) below:
(a) elect to defer receipt of an amount equal to 5% through 15% of his
regular Base Compensation (such deferral to be elected in whole
percentages), which amount shall be paid to the Plan as a Supplemental
Pre-Tax Contribution to his Pre-Tax Contribution Account;
(b) authorize having an deducted from his regular Base Compensation 5%
through 15% (such deduction to be authorized in whole percentages) and
then have the amount of such deduction (as adjusted for all applicable
taxes due on that amount) paid to the Plan as a Supplemental Post-Tax
Contribution to his Post-Tax Contribution Account;
provided, however, that the percentages elected to be deferred or deducted and
then made as Supplemental Pre-Tax and Supplemental Post-Tax Contributions shall
together not exceed 11% of the Participant's Base Compensation.
2.040 TRANSFER AND ROLLOVER CONTRIBUTIONS. Transfers to this Plan of a
Participant's interest in another individual account plan shall be permitted in
the situations and pursuant to the requirements set forth below:
(a) A Participant who is presently an Eligible Employee but who formerly
though an Employee was not an Eligible Employee may cause his account
balances in any other individual account of the Company to be
transferred to this Plan. Such transferred account balances (which
shall be entirely in cash or, if such balances consist in whole or in
part of participant loans from the transferring plan, in cash and in
kind) shall constitute Transfer Contributions.
(b) A Participant who is an Eligible Employee may elect (by providing the
Plan Administrator with notice thereof) to have the entire amount
credited to his account in a qualified individual account plan of a
former employer transferred from such plan to this as a Rollover
Contribution, subject to the following:
(1) Such Rollover Contributions are eligible for receipt hereunder
only if they are derived entirely from employer contributions (and
earnings thereon) to a qualified profit sharing plan which were
contributed either pursuant to a qualified cash or deferred
arrangement under Code section 401(k) or as amounts in which the
Participant had a nonforfeitable interest and which were based
upon the amount of contributions in a qualified cash or deferred
arrangement.
(2) No portion of such Rollover Contributions may be derived from a
transfer from a qualified plan which at any time had permitted
benefit payments in the form of a life annuity.
7
<PAGE>
(c) Transfer and Rollover Contributions shall be credited to separate
Rollover Accounts, which shall be separate from the Participant's
Pre-Tax and Post-Tax Contribution Accounts and, as such, shall be
subject to investment elections which are separate from those
related to the Participant's Pre-Tax and Post-Tax Contribution
accounts, but which shall be subject to the same process as is set
forth in Article IV of this Plan.
(d) No Company Matching Contributions will be made under Section 2.060
with respect to the Transfer Contributions and Rollover Contributions
described in this Section.
2.050 CHANGES BETWEEN PRE-TAX AND POST-TAX CONTRIBUTIONS. A Participant shall
be permitted to elect to increase or decrease at any time (and as often as he
wishes) the rate of his Pre-Tax and Post-Tax Contributions. Any such increase or
decrease of the rate of the Participant's Pre-Tax and Post-Tax Contributions
shall be effective as soon as is reasonably possible after receipt by the Plan
Administrator of the Participant's election.
2.060 MATCHING CONTRIBUTIONS. The Company shall contribute to the Plan on
behalf of each Participant and out of its current or accumulated profits Company
Matching Contributions in such amounts and on such basis and in such form as are
set forth below:
(a) During the period commencing on the Effective Date and ending on
September 30, 1999:
Company Matching Contribution shall be credited to the Account of
each Participant in an amount equal to One Hundred Percent of the
Participant's Basic Pre-Tax and Basic Post-Tax Contributions and
One Hundred Percent of the first 2% of the Participant's
Supplemental Pre-Tax and Supplemental Post-Tax Contributions.
(b) Effective as of October 1, 1999:
[RESERVED]
(c) Contributions by the Company shall be in the form of the common stock
of Conexant Systems, Inc., but may in the discretion of the Board of
Directors, be in cash or in any combination of cash and the common
stock of Conexant Systems, Inc. The Company's Common Stock shall be
valued at the NASDAQ closing price on the Valuation Date immediately
preceding the date on which the contribution is made. The Company
Matching Contributions made hereunder, whether made in the form of
Conexant common stock or cash shall be directed to Conexant Stock Fund
A when contributed and, unless distributed to the Participant pursuant
to Section 6.020 or transferred to an Investment Fund pursuant to
Section 4.030 following a Participant's attainment of age fifty-nine
and one-half (59-1/2), shall remain, along with any dividends or other
earnings thereon, in Conexant Stock Fund A.
8
<PAGE>
(d) No Company Matching Contributions shall be made with respect to
Transfer Contributions or Rollover Contributions.
ARTICLE III: CONTRIBUTION LIMITATIONS
3.010 LIMITATIONS ON EMPLOYEE CONTRIBUTIONS.
(a) The aggregate amount in any calendar year of all of a Participant's:
(1) Basic and Supplemental Pre-Tax Contributions to this Plan;
(2) elective deferrals under any other cash or deferred arrangement
(as defined in section 402(g) of the Code); and
(3) elective employer contributions to any simplified employee pension
(as defined in and pursuant to sections 408(k)(1) and (6),
respectively, of the Code)
may not exceed Ten Thousand Dollars ($10,000), or such larger sum as
may be in effect under section 402(g)(5) of the Code.
(b) Prior to the beginning of, and periodically during, each Plan Year the
Plan Administrator shall cause a test to be conducted of Post-Tax
Contribution elections under Sections 2.020(b) and 2.030(b), as well as
of Company Matching Contributions under Section 2.060, in order to
determine whether the Average Contribution Percentage for the Highly
Compensated Employee Group exceeds the Post-Tax Contribution Percentage
Limit. If it is determined that the Post-Tax Contributions made for any
Plan Year by the Highly Compensated Employee Group would (if not
reduced) cause the Average Contribution Percentage of that Group to
exceed the Post-Tax Contribution Percentage Limit, the Plan
Administrator shall first reduce any Supplemental Post-Tax
Contributions and then the Basic Post-Tax Contributions elected by
Participants in the Highly Compensated Employee Group, so that the
Post-Tax Contribution Percentage Limit will not be exceeded for the
Plan Year. Such reduction shall be effective as of the first payroll
payment date in the month following such determination and shall be
made as set forth below:
(1) Participants in the Highly Compensated Employee Group who have
elected Supplemental Post-Tax Contributions in an amount equal to
15% of Base Compensation shall have their elections reduced to
14%. If, following the said reductions, the Post-Tax Contribution
Percentage Limit is still exceeded, Participants in the Highly
Compensated Employee Group who have elected Supplemental Post-Tax
Contributions in an amount equal to 14% of Base Compensation
(including any Participants in the Highly Compensated Employee
9
<PAGE>
Group whose elections were reduced under the terms of the
preceding sentence) shall have their elections reduced to 13%.
(2) If, following the reductions described in paragraph (1), the
Post-Tax Contribution Limit is still exceeded, Participants in the
Highly Compensated Employee Group who have elected Supplemental
Post-Tax Contributions in an amount equal to 13% of Base
Compensation shall have their elections reduced to 12%. If,
following the reductions described in the preceding sentence, the
Post-Tax Contribution Percentage Limit is still exceeded,
Participants in the Highly Compensated Employee Group who have
elected Supplemental Post-Tax Contributions in an amount equal to
12% of Base Compensation (including any Participants in the Highly
Compensated Employee Group whose elections were reduced under the
terms of the preceding sentence) shall have their elections
reduced to 11%.
(3) The process set forth in this subsection shall continue until the
Average Contribution Percentage for the Highly Compensated
Employee Group does not exceed the Post-Tax Contribution
Percentage Limit.
(c) Reductions in Basic or Supplemental Post-Tax Contributions pursuant to
subsection (b) of this Section shall remain in effect for the remainder
of the Plan Year, unless the Plan Administrator determines that changed
circumstances permit an increase of such Contributions, in which case
the Plan Administrator shall determine the amount by which such
Contributions may be increased for the balance of the Plan Year.
(d) If it shall be determined as a result of tests of contribution
elections pursuant to subsection (c) that there shall be `excess
aggregate contributions' (as defined in and determined pursuant to
section 401(m)(6) of the Code) in any Plan Year, such excess aggregate
contributions and all income allocable thereto shall be distributed,
or, if forfeitable, forfeited, in the manner and within the time
required by the said section 401(m)(6).
ARTICLE IV: PLAN INVESTMENTS
4.010 INVESTMENT ELECTIONS. In addition to the elections and authorizations
set forth in Article II, a Participant shall elect in which Investment Funds his
Participant Contributions, Rollover Contributions and Transfer Contributions are
to be invested; provided, however, that the Participant shall not be permitted
to have any of the said Contributions invested in Conexant Stock Fund A. Such
investments shall be elected by the Participant among the Investment Funds in
increments of five percent (5%), with the total of the elected percentage
increments equaling one hundred percent (100%). The Participant shall be
permitted to change on a daily basis any previous Investment Fund election or
elections he has made with regard to his Participant Contributions pursuant to
Section 4.010, except that he shall not be
10
<PAGE>
permitted to elect to have investment of his Participant Contributions changed
to Conexant Stock Fund A. The elections and changes to such elections which a
Participant makes pursuant to this Section shall be made by means of any method
(including whatever telephonic or electronic means are available and acceptable
to the Plan Administrator at the time the election or change is made by the
Participant), may be made at any time and shall be effective as of the New York
Stock Exchange closing immediately following the making of that election or
change.
4.020 FUND TRANSFERS - PARTICIPANT CONTRIBUTIONS. A Participant shall be
permitted to have the whole or portions of the value of his interest in the
Plan's Investment Funds (including Conexant Stock Fund B) which are attributable
to his own Participant Contributions transferred into one or more of the other
Investment Funds.
(a) Such transfers shall be effected in dollars or in increments of 5% of
the value of the Participant's interest in a transferring Fund, but in
no event shall such transfers be in amounts less than Two Hundred and
Fifty dollars ($250.00), except as follows:.
(1) If the balance of a Participant's interest in an Investment Fund
is in an amount which is less than Two Hundred and Fifty Dollars,
($250.00), the Participant may elect to have the entire balance of
his interest in the Fund transferred.
(2) The general percentage and dollar limitations set forth in this
Section which would be otherwise applicable shall not be
applicable if the transfer elected by the Participant is comprised
of all or a portion of his interest in Conexant Stock Fund B.
(b) Any transfer described in this Section shall be effective as of the New
York Stock Exchange closing immediately following the Participant's
election to make such transfer.
(c) All elections under this Section shall be irrevocable and shall not
affect the Participant's right to exercise any other election provided
by the Plan.
(d) Upon making a transfer election under this Section, the Participant
shall also either confirm or change his election under Section 4.010
with respect to future Pre-Tax and Post-Tax Contributions.
4.030 FUND TRANSFERS - COMPANY MATCHING CONTRIBUTIONS. A Participant who has
attained age fifty-nine and one-half (59-1/2), whether or not the Participant
has retired from his employment with the Company, shall be permitted to elect at
any time to have the total value or a portion (in dollar amount or in 5%
increments) of the total value of his interest in Conexant Stock Fund A
transferred to any one or more of the other Investment Funds. If a participant
who is still an Employee has made the election described in this Section, all
subsequent Company Matching Contributions, if any, will continue to be in
Conexant common stock and shall continue
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to be directed into Conexant Stock Fund A in the same manner as is described in
Section 2.060(c) above.
4.040 PARTICIPANT'S ACCOUNTS. Separate Participant Contribution, Rollover (if
applicable) and Company Contribution Accounts shall be established and
maintained by the Trustee to represent all amounts, adjusted for gains or losses
thereon, which have been contributed by or on behalf of a Participant as
Participant Contributions, Rollover Contributions, Transfer Contributions and
Company Matching Contributions. Such separate Accounts shall contain sufficient
information to permit a determination of the dollar balance of such
Participant's Accounts at any time and to permit, with respect to Conexant Stock
Funds A and B, a determination of the number of equivalent shares of Conexant
common stock held on the Participant's behalf. Each contribution on behalf of a
Participant to an Investment Fund and each payment made to a Participant from an
Investment Fund shall result in a credit or charge to the Account representing
the Participant's interest in such Fund. In addition, dividend proceeds on
Conexant common stock held in Conexant Stock Funds A and B shall be used for the
purchase, when possible, of additional shares of Conexant common stock for the
two Funds and, therefore, shall result in appropriate adjustments to the
balances in the said Funds and to the value of the Participant's interest in the
said Funds.
4.050 VALUATION AND PARTICIPANT STATEMENTS. As of each Valuation Date, an
amount equal to the fair market value of the Funds (other than dividends
received which are attributable to whole shares of Conexant common stock which
were or are to be transferred to Participant Accounts subsequent to the record
date for such dividend) shall be determined by the Trustee in such manner and on
such basis as it shall deem appropriate. After the end of each calendar year or
more frequently as the Plan Administrator shall determine, the Trustee shall
forward by mail to each Participant a statement, in such form as the Plan
Administrator deems appropriate, setting forth pertinent information relative to
each Participant's Accounts. Such statement shall, for all purposes, be deemed
to have been accepted as correct unless the Plan Administrator (or the Trustee,
as the case may be) is notified to the contrary by mail within sixty (60) days
of the mailing thereof to the Participant.
ARTICLE V: EMPLOYMENT TERMINATION BENEFITS
5.010 VESTING. Every Participant shall at all times be fully vested and have
a nonforfeitable interest in all of his Plan Accounts.
5.020 RETIREMENT, DEATH, LAYOFF, ETC. Subject to the provisions of Section
5.050, as soon as practicable after the occurrence of a Participant's
retirement, death, layoff, disability of a least six (6) months duration or
termination of employment, but not later than sixty (60) days after the end of
the Plan Year in which the event shall have occurred, a Participant or his
Beneficiary (in the case of the Participant's death) shall receive: all amounts
described in subsection (a) and (b). In the case, however, of Retirement, a
Participant who would otherwise receive a distribution pursuant to the preceding
sentence may nevertheless elect at any time prior to the effective date
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of the Retirement to remain in the Plan without any further contributions and
may elect to defer the Retirement distribution to a later date, which date shall
not be later than April 1 of the calendar year following the calendar year in
which the Participant attains age seventy and one-half (70-1/2). Distributions
to such Participants shall be made pursuant to the terms of this Section and
Section 5.030.
(a) With respect to Investment Funds other than the Conexant Stock Fund B
(which shall be subject to the Participant election set forth in
subsection (b)), the Participant shall receive the full dollar balance
of his Accounts in such Funds. Such balance shall be determined in the
manner provided in Section 5.030, by reference to the value of such
Participant's interest on the date of the Participant's retirement,
layoff or termination of employment, or, in the case of the
Participant's death or disability, on the date all documentation
necessary to effect distribution has been received by the Plan
Administrator or his delegate.
(b) With respect to Conexant Stock Funds A and B, the Participant shall, if
he should so elect, receive the full dollar balance of his Accounts in
such Funds in the manner described in the preceding subsection or in
shares of Conexant common stock equal in number to the maximum number
of whole shares of common stock which could be purchased at the closing
price of that common stock on the New York Stock Exchange -- Composite
Transactions listing on that date (or, in the event such date falls on
a day on which for any reason there are no trades of such stock
reflected on such listing, the last trading day preceding that date. In
addition, the Participant shall be paid in cash the value of any
partial shares of the said common stock and the amount of any cash
dividends received since that date which is attributable to the number
of whole shares of common stock distributed to him.
5.030 FORM OF DISTRIBUTIONS TO RETIRING PARTICIPANTS. Any Participant who is
eligible for and wishes to receive a distribution under Section 5.020 on account
of his retirement shall make an election concerning the form of distribution and
shall provide such election to the Plan Administrator or the Plan
Administrator's delegate prior to Retirement. The form of distributions such a
Participant may elect shall be in the form of either:
(a) a lump sum payment, or
(b) if value of the Participant's Accounts at the time of the distributions
is at least Ten Thousand Dollars ($10,000), ten (10) or fewer annual
installment payments, such installment payments to be equal to the
value of the Participant's Accounts as of the Valuation Date
immediately preceding distribution, divided by the number of
installments remaining at the time of each payment. The initial
installment payment shall be made as soon as is practicable after the
effective date of the Participant's election, with subsequent payments
during the elected installment payment period to be made as of the
annual anniversary date of the initial installment payment.
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If a Participant who had previously retired and commenced receipt of installment
payments pursuant to subsection (b) returns to employment with the Company or an
Affiliated Company, such installment payments shall be suspended until the
Participant's subsequent retirement, at which time he would be permitted again
to make the election described therein. In the event that no election concerning
the form of Retirement distribution has been made by a retired Participant by
the end of the calendar year in which he has attained age seventy and one-half
(70-1/2), the distribution shall be made in a lump sum.
5.040 TERMINATION OF EMPLOYMENT FOR OTHER REASONS. Subject to Section 5.050,
distributions from this Plan to Participants for reasons other than the
Participant's retirement or, in the case of a Participant's death, distributions
to the Participant's Beneficiary, shall in all cases be made in lump sum and
shall be paid as soon as is practicable. If the Participant is reemployed as an
Employee, the Participant shall not have any further right to receive a
distribution of benefits as a result of his prior termination of employment.
5.050 PARTICIPANT'S CONSENT TO DISTRIBUTION OF BENEFITS. Notwithstanding any
other provisions of the Plan to the contrary, if the aggregate value of the
Accounts of a Participant who is no longer an Employee is in excess of Five
Thousand Dollars ($5,000.00) and the Participant has not attained age seventy
and one-half (70-1/2) at the time distribution of benefits under the Plan would
otherwise be made, no distribution of benefits under the Plan shall be made,
unless the Plan Administrator or his delegate shall first have obtained the
Participant's consent thereto. In the event such consent is not so obtained, the
Participant's Accounts shall be retained by the Plan and shall be maintained and
valued in accordance with Article IV. Distribution of the Participant's Accounts
pursuant to this Section shall be made following the date on which the
Participant's consent to such distribution is obtained or, if earlier, the date
on which the Participant attains age seventy and one-half (70-1/2) or dies, in
the same manner as if the Participant had terminated employment on such date.
5.060 TRANSFER OF DISTRIBUTION DIRECTLY TO ELIGIBLE RETIREMENT PLAN. If a
Participant, a Participant's spouse entitled to distribution as his Beneficiary
pursuant to Article VIII or a former spouse entitled to distribution pursuant to
Section 9.120(b) shall so request in writing, the Plan Administrator shall cause
all or a portion of the amounts (including shares of Conexant common stock) with
respect to which the Participant would be taxed under section 402 of the Code to
be transferred from the Trustee directly to the custodian of an Eligible
Retirement Plan specified by the Participant. Such request shall be made, in the
case of a Participant, at the time his consent to such distribution shall be
given to the Plan Administrator pursuant to Section 5.050, or at such later date
as the Plan Administrator shall permit, or, in the case of the Participant's
spouse or former spouse, at such time as the Plan Administrator shall determine.
Prior to effecting such a transfer the Plan Administrator shall have the
authority to require evidence reasonably satisfactory to him that the entity to
which such transfer is to be made is in fact an Eligible Retirement Plan and
that such Eligible Retirement Plan may receive the distribution in the forms
required under this Article.
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ARTICLE VI: WITHDRAWALS AND LOANS
6.010 WITHDRAWALS FROM ACCOUNTS BY PARTICIPANTS UNDER AGE 59-1/2.
(a) A Participant who has not yet attained age fifty-nine and one-half
(59-1/2) may elect while still employed to withdraw certain amounts
from his Accounts. As soon as practicable after the Company's receipt
of such an election, there shall be paid or transferred to such
Participant cash and, if applicable, stock from his Accounts in the
following order:
(1) first, from that portion of his Post-Tax Contributions Account
which is attributable to his Supplemental Post-Tax Contributions;
and
(2) second, from that portion of his Post-Tax Contribution Account
which is attributable to his Basic Post-Tax Contributions.
Withdrawals from a Participant's Pre-Tax Contribution Account prior to
his attainment of age fifty-nine and one-half (59-1/2) shall only be
permitted upon the occurrence of a Hardship and shall be administered
pursuant to Section 6.030. In addition, withdrawals from the
Participant's Company Contribution Account prior to his attainment of
age fifty-nine and one-half (59-1/2) shall not be permitted.
(b) Withdrawals pursuant to subsection (a) may be made by a Participant at
any time and with no minimum amount required, but shall be limited to
one withdrawal every six (6) months.
6.020 WITHDRAWAL FROM ACCOUNTS BY PARTICIPANTS OVER AGE 59-1/2.
(a) A Participant who has attained age fifty-nine and one-half (59-1/2)
while still employed by the Company may elect to withdraw any or all of
the amounts in his Accounts. A Participant making such an election
shall receive the amount of cash or, if applicable, stock to be
withdrawn from his Accounts in the following order:
(1) first, from that portion of his Post-Tax Contribution Account
which is attributable to his Supplemental Post-Tax Contributions;
(2) second, from that portion of his Post-Tax Contribution Account
which is attributable to his Basic Post-Tax Contributions;
(3) third, from that portion of his Pre-Tax Contribution Account which
is attributable to his Supplemental Pre-Tax Contributions;
(4) fourth, from that portion of his Pre-Tax Contribution Account,
which is attributable to his Basic Pre-Tax Contributions;
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(5) fifth, from that portion of his Company Contribution Account which
is attributable to Company Matching Contributions associated with
his Basic Post-Tax Contributions and his Supplemental Post-Tax
Contributions; and
(6) sixth, from that portion of his Company Contribution Account which
is attributable to Company Matching Contributions associated with
his Basic Pre-Tax Contributions and his Supplemental Pre-Tax
Contributions.
(b) Withdrawals pursuant to subsection (a) may be made by a Participant at
any time and with no minimum amount required, but shall be limited to
one withdrawal every three (3) months.
6.030 HARDSHIP WITHDRAWALS FROM PRE-TAX ACCOUNTS. Subject to any
restrictions the Plan Administrator may establish pursuant to Section 6.050,
a the following provisions may apply, in the event of the occurrence of a
Hardship.
(a) An Employee who has not attained age fifty-nine and one-half (59-1/2)
may request approval of the Administrative Committee to withdraw some
or all of the balance of his Pre-Tax Contribution Account, if the
Employee demonstrates that the withdrawal is required as a result of a
Hardship (including payment of any federal, state or local income taxes
and penalties reasonably anticipated to result from such Hardship
withdrawal).
(b) Any determination of the existence of Hardship, the reasonable
availability to the Employee of funds from other sources and the amount
necessary to be withdrawn on account of such Hardship shall be made by
the Administrative Committee on the basis of all relevant facts and
circumstances and in accordance with the provisions of this Section and
Section 1.230, as applied in a uniform and nondiscriminatory manner. In
making such determination, the Administrative Committee may, if it is
reasonable to do so in the light of all relevant and known facts and
circumstances, rely on the Employee's representation that the Hardship
cannot be relieved:
(1) through reimbursement or compensation by insurance or otherwise;
(2) by reasonable liquidation of the Employee's assets, to the extent
that such liquidation would not itself cause an immediate and
heavy financial need;
(3) by suspension of Participant Contributions to the Plan; or
(4) by other distributions (other than Hardship distributions) or
loans (which meet the requirements of section 72(p) of the Code)
from the Plan and any other plan maintained by an Affiliated
Company or by any former employer or by borrowing from commercial
sources at reasonable commercial rates.
(c) An individual who receives a Hardship distribution pursuant to this
Section prior to his attainment of age fifty-nine and one-half (59-1/2)
shall not be permitted to make any Participant Contributions to the
Plan during the twelve (12) months immediately
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following his receipt of the said Hardship distribution. In addition,
such Hardship distributions shall only be available to Participants
hereunder only once every six (6) months.
6.040 ALLOCATION OF WITHDRAWALS AMONG INVESTMENT FUNDS. Withdrawals pursuant
to the three preceding Sections shall be taken from the Employee's Accounts in
the Investment Funds in a pro rata fashion, based upon the relative size of such
Accounts; provided, however, that a Participant shall be permitted, if he so
desires, to designate the Investment Funds from which such withdrawals will be
taken.
6.050 LOANS. The Plan Administrator shall establish, and may from time to
time modify, procedures pursuant to which any Employee or other "party in
interest" (as defined in ERISA section 3(14)) may apply for and receive a loan
from the Plan, in an amount not exceeding the least of (a), (b), (c) or (d):
(a) the aggregate of the balances (including amounts attributable to
Rollover and Transfer Contributions) in the borrower's Pre-Tax and
Post-Tax Contribution Accounts;
(b) an amount which, when combined with all outstanding loans to the
borrower from all other plans of all Affiliated Companies, equals Fifty
Thousand Dollars ($50,000), reduced by the excess, if any, of
(1) the highest outstanding and unpaid balances of all prior loans to
the borrower from the Plan and such other plans during the twelve
(12) month period immediately preceding the date on which such
loan is made, over
(2) the outstanding balance of any loan to the borrower from the Plan
or such other plans on the date on which the loan is made;
(c) one-half (1/2) of the aggregate of the balances of the borrower's
Accounts; or
(d) such amount, not exceeding the amounts described in (a) through (c)
above, as the Plan Administrator shall determine.
All such loans shall be made available to all eligible Employees and other
parties in interest on a reasonably equivalent and non-discriminatory basis and
shall be governed by the provisions of Appendix A, as such Appendix is from time
to time constituted, pursuant to determination of the Plan Administrator.
6.060 TRANSFERS TO CERTAIN AFFILIATED COMPANY PLANS. A Participant who though
remaining an Employee is no longer an Eligible Employee may elect, if his
continuing employment is with an Affiliated Company to have the entire amount
credited to his Accounts in this Plan transferred to any qualified individual
account plan of the said Affiliated Company; provided, however, that such
transferred amount shall consist of and be limited to:
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(a) cash, in the case of amounts attributable to the Participant's interest
in Investment Funds other than Conexant Stock Fund B;
(b) Conexant common stock, in the case of amounts attributable to the
Participant's interest, if any, in Conexant Stock Funds A and B; and
(c) in the case of a Participant to whom a loan has been made pursuant to
Section 6.050, the Participant's loan.
6.070 TRANSFER OF DISTRIBUTION OR WITHDRAWAL TO ELIGIBLE RETIREMENT PLAN. If
a Participant entitled to a distribution under Article V or an in-service
withdrawal under this Article VI, shall so request in writing at the time his
election to receive such distribution or withdrawal is made or at such later
date as the Plan Administrator may permit, the Plan Administrator shall cause
all or a portion of the amounts (including shares of Common Stock) with respect
to which the Participant would be taxable under section 402 of the Code to be
transferred from the Trustee directly to the custodian of an Eligible Retirement
Plan specified by the Participant. Prior to effecting such transfer the Plan
Administrator shall require evidence reasonably satisfactory to him that the
entity to which such transfer is to be made is in fact an Eligible Retirement
Plan and that such Eligible Retirement Plan may receive the distribution in the
forms required under this Article VI.
ARTICLE VII: DEATH BENEFITS
7.010 DESIGNATION OF A BENEFICIARY. Subject to the provisions of
Section 1.080:
(a) If a Participant dies, payment of the benefits provided under this Plan
shall be made to such person or persons as he has designated as his
Beneficiary to receive such benefits in the event of his death.
(b) A Participant may change his designation of Beneficiary at any time by
filing with the Plan Administrator (or such other person as is
designated by the Plan Administrator) a request for such change. Such
change shall become effective only upon receipt of the request by the
Plan Administrator (or the Plan Administrator's delegate), but upon
such receipt, the change shall relate back to and be effective as of
the date the Participant signed such request; provided, however, that
the Plan Administrator, the other named fiduciaries and the Trust Fund
shall be not be liable in any way or to any degree for any payment made
to the Beneficiary designated before receipt of such request.
(c) If no designation is effective pursuant to this Article or if the Plan
Administrator or Trustee shall have any doubt as to the right of any
Beneficiary or if the Beneficiary shall predecease the Participant, the
amount of such benefits may be paid to the estate of the Participant,
in which event the Plan Administrator, such other named fiduciaries and
the Trust Fund shall be liable in any manner and to any degree with
respect to such payment.
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7.020 PAYMENT TO A BENEFICIARY. Upon receipt by the Plan Administrator (or
another person designated by him) of evidence satisfactory to such person of the
death of a Participant and of the identity and existence at the time of such
death of the Beneficiary, the Plan Administrator shall direct the Trustee to pay
the Participant's Accounts to such Beneficiary.
ARTICLE VIII: TRUST AGREEMENT
8.010 ESTABLISHMENT OF TRUST FUND. The property resulting from contributions
made on behalf of all Participants, including contributions made by the Company,
shall be held in a Trust Fund by a Trustee selected by the Plan Committee
pursuant to a Trust Agreement entered into between such Trustee and the Plan
Committee.
8.020 INVESTMENT FUNDS OF THE TRUST. The Trustee shall establish and maintain
as parts of the Trust Fund individual Investment Funds (which may be mutual
funds or collective funds, accounts or other similar investment vehicles), each
of which shall consist of and be identical to the individual Plan Investment
Funds described in Appendix B, as the said Appendix shall be from time to time
constituted. The said Investment Fund, as from time to time established and
maintained (including the investment objectives and general descriptions of the
forms of securities or other property held in such Funds) shall be as set forth
in the said Appendix B.
8.030 TRUSTEE'S POWERS AND AUTHORITY. Subject to the provisions of Section
9.050 concerning certain power and authority connected with the common stock of
Conexant, which shall be held in Conexant Stock Funds A and B, the Trustee shall
have full authority and discretion with respect to management of the assets of
the Trust Fund, including management of the assets of the individual Investment
Funds held thereunder.
8.040 STATUTORY LIMITS. In making all investments pursuant to this Plan,
the Trustee shall:
(a) be subject to applicable provisions of ERISA governing the exercise of
its fiduciary responsibilities on behalf of the Trust Fund and this
Plan, as well as to all applicable securities laws governing the
investments of the Trust Fund (including any investment companies or
mutual funds therein), but shall not be bound by any law or any court
doctrine of any state or jurisdiction limiting trust investments,
except as otherwise provided or permitted by ERISA;
(b) at all times give consideration to the cash requirements of the Plan;
and
(c) not cause the Plan to engage in any transaction constituting a
prohibited transaction under section 406 of ERISA.
8.050 DUTY OF TRUSTEE AS TO COMMON STOCK IN CONEXANT STOCK FUNDS A AND B.
Except as is otherwise provided in this Section:
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(a) the duty with respect to the voting, retention, and tendering of
Conexant common stock held in Conexant Stock Funds A and B shall be
solely that of the Trustee, to be exercised solely in the Trustee's
discretion.
(b) With respect to any matter as to which a vote of the outstanding shares
of Conexant common stock is solicited:
(1) The Trustee shall solicit the direction in writing of each
Participant, as to the manner in which voting rights of a Conexant
common stock held in or credited to Conexant Stock Funds A and B
with respect to such Participant as of the record date fixed for
determining the holders entitled to vote on such matter are to be
exercised, and the Trustee shall exercise the voting rights of
such shares with respect to such matter in accordance with the
last-dated timely written direction, if any, of such Participant.
(2) The Trustee, in its sole discretion, shall exercise voting rights
of shares of Conexant common stock held in Conexant Stock Funds A
and B as to which no timely direction has been received pursuant
to paragraph (1).
(c) In the event of any tender offer involving the common stock of the
Company:
(1) the Trustee shall solicit the direction in writing of each
Participant, as to the tendering or depositing of any shares of
Conexant common stock held in Conexant Stock Funds A and B with
respect to such Participant and, except as limited by subsection
(d) hereof, shall tender or deposit such shares pursuant to any
such tender offer in accordance with the last dated timely written
direction, if any, of such Participant; and
(2) the Trustee, in its sole discretion, shall have the duty, except
as limited by subsection (d) hereof, with respect to the
retention, tendering or depositing of shares of Conexant common
stock held in Conexant Stock Funds A or B as to which no timely
direction has been received pursuant to paragraph (1).
(d) Shares of Conexant common stock held in Conexant Stock Funds A and B
shall not be tendered or deposited by the Trustee pursuant to any such
until the earlier of:
(1) immediately preceding the scheduled expiration of the tender offer
pursuant to which such shares are to be tendered or deposited, or
(2) immediately preceding the expiration of the period during which
such shares of Conexant common stock will be taken up and paid for
on a pro rata basis pursuant to such tender offer, or
(3) the expiration of thirty (30) days from the date of the Trustee's
solicitation of Participants' written direction pursuant to
subsection (c)(1).
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(e) The duty with respect to the withdrawal, or other exercise of any right
of withdrawal, of shares of Conexant common stock held in Conexant
Stock Funds A and B which have been tendered or deposited pursuant to
any tender offer shall be solely that of the Trustee; provided that the
Trustee may solicit the direction in writing of each Participant with
respect to whom any such shares of common stock have been tendered or
deposited pursuant to any such tender offer as to the withdrawal of, or
other exercise of any right to withdraw, such shares of common stock
and, if such solicitation is made, the Trustee shall act in accordance
with the last dated timely written direction, if any, of each such
Participant. As used herein, the term "Tender Date" means the date on
which the Trustee tenders or deposits any shares of the Conexant common
stock representing the interest of such Participant in Conexant Stock
Fund A or B.
8.060 RIGHTS IN THE TRUST FUND. Nothing in the Plan or in the Trust Agreement
shall be deemed to confer any legal or equitable right or interest in the Trust
Fund in favor of any Participant, Beneficiary or other person, except to the
extent expressly provided in the Plan.
8.070 TAXES, FEES AND EXPENSES OF THE TRUSTEE.
(a) The reasonable fees and expenses of the Trustee (including the
reasonable expenses of the Trustee's counsel) shall be paid from the
Trust Fund and shall constitute a charge on the Trust Fund until so
paid; provided, however, that in no event shall the Trust Fund nor the
Company (unless the Company is specifically so directed by resolution
of the Company's Board of Directors) pay any such Trustee fees or
expenses:
(1) for preparation or prosecution of any action against the Company,
the Plan, any member of the Plan Committee or the Plan
Administrator, or
(2) for the defense or settlement of, or the satisfaction of a
judgment related to, any proceeding arising either out of any
alleged misfeasance or nonfeasance in any person's performance of
duties with respect to the Plan or out of any alleged wrongful act
against the Plan.
There shall be included in the reasonable expenses payable from the
Trust Fund any direct internal costs (which may include reimbursement
of compensation of Company Employees) associated with Plan operations
and administration, the payment of which shall be in conformity with
the requirements of Title I of ERISA. Neither the Plan Administrator
nor the members of the Plan Committee shall be compensated from the
Plan but may be compensated by the Company for services rendered on
behalf of the Plan.
(b) Brokerage fees, commissions, stock transfer taxes and other charges and
expenses incurred in connection with transactions relating to the
acquisition or disposition of property for or of the Trust Fund, or
distributions therefrom, shall be paid from the Trust Fund. Taxes, if
any, payable by the Trustee on the assets at any time held in the Trust
Fund or on the income thereof shall be paid from the Trust Fund.
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ARTICLE IX: ADMINISTRATION
9.010 GENERAL ADMINISTRATION. Authority to control and manage the operation
and administration of the Plan shall be vested in the Plan Committee except to
the extent that:
(a) the Plan Administrator or the Administrative Committee is allocated any
such authority under the Plan;
(b) the Trustee may, pursuant to Article VIII, be granted exclusive
authority and discretion to manage and control all or any portion of
the assets of the Plan;
(c) the Plan Committee, the Plan Administrator, the Administrative
Committee and the Trustee shall constitute ERISA named fiduciaries of
the Plan.
9.020 PLAN COMMITTEE. The Board of Directors shall, from time to time,
determine the size of the Plan Committee and appoint its individual members. The
Plan Committee shall act, with or without a meeting, in a manner consistent with
the rules and regulations adopted pursuant to Section 9.060(d).
9.030 PLAN COMMITTEE RECORDS. The Plan Committee shall keep such records and
data as it shall deem appropriate and it shall from time to time file with the
Board of Directors such reports as the latter may request. It shall be a
function of the Plan Committee to keep records of the assets of the Trust Fund,
based upon reports furnished by the Trustee, and the evaluations placed thereon
by the Committee shall be final and conclusive.
9.040 FUNDING POLICY. The Plan Committee shall be responsible for
determining a funding policy of the Plan and shall from time to time advise the
Trustee of such policy.
9.050 ALLOCATION AND DELEGATION OF DUTIES UNDER PLAN. The Plan Committee,
the Plan Administrator and the Administrative Committee shall each have the
following powers and authorities:
(a) to designate agents to carry out responsibilities relating to the Plan,
other than fiduciary responsibilities; and
(b) to employ such legal, consultant, medical, accounting, clerical and
other assistance as it may deem appropriate in carrying out the
provisions of this Plan including one or more persons to render advice
with regard to any responsibility any fiduciary may have under the
Plan.
9.060 PLAN COMMITTEE POWERS. In addition to any powers and authority
conferred on the Plan Committee elsewhere in the Plan or by law, the Plan
Committee shall have the following powers and authority:
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(a) to allocate fiduciary responsibilities, other than trustee
responsibilities (responsibilities under the Trust Agreement to manage
or control the Plan assets) to one or more members of the Plan
Committee or to the Plan Administrator and to designate one or more
persons (other than the Trustee) to carry out such fiduciary
responsibilities;
(b) to determine the manner in which the assets of this Plan, or any part
thereof, shall be disbursed by the Trustee, except as relates to the
making and retention of investments; and
(c) to establish rules and regulations from time to time for the conduct of
the Plan Committee's business and for the administration and
effectuation of its responsibilities under the Plan.
9.070 PLAN ADMINISTRATOR. In addition to any powers and authority conferred
on the Plan Administrator elsewhere in the Plan, the Plan Administrator shall
have the following powers and authority:
(a) to administer, interpret, construe and apply this Plan and to decide
all questions which may arise or which may be raised by any Employee,
Participant, Beneficiary, or other person whatsoever, and the actions
or decisions of the Plan Administrator in regard thereto, or in regard
to anything or matter otherwise within his discretion, shall be
conclusive and binding on all Employees, Participants, Beneficiaries,
and other persons whatsoever;
(b) to designate one or more persons, other than the Trustee, to carry out
fiduciary responsibilities (other than trustee responsibilities);
(c) to establish rules and regulations from time to time for the
administration and effectuation of his responsibilities under the Plan.
The Plan Administrator shall have such other responsibility as is designated by
ERISA as the responsibility of the administrator of the Plan and shall have such
other power and authority as is necessary to fulfill his responsibilities under
ERISA or under the Plan.
9.080 RELIANCE UPON DOCUMENTS AND OPINIONS. The members of the Plan Committee
and the Administrative Committee, the Plan Administrator, the Board of Directors
and the Company shall be entitled to rely upon any tables, valuations,
computations, estimates, certificates and reports furnished by any consultants
or consulting firms, opinions furnished by legal counsel and reports furnished
by the Trustee. The members of the Plan Committee, the Plan Administrator, the
Board of Directors and the Company shall be fully protected and shall not be
liable in any manner whatsoever, except as otherwise specifically provided by
law, for anything done or action taken or suffered in reliance upon any such
consultant, Trustee or counsel. Any and all such things done or such actions
taken or suffered by the Plan Committee, the Plan Administrator, the Board of
Directors and the Company shall be conclusive and binding on all Employees,
Participants, Beneficiaries, and other persons whatsoever except as otherwise
specifically provided by law. The Plan Committee and the Plan Administrator may,
but are not required to, rely upon all records of the Company with respect to
any matter or thing whatsoever,
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<PAGE>
and to the extent they rely thereon, such records shall be conclusive with
respect to all Employees, Participants, and Beneficiaries.
9.090 REQUIREMENT OF PROOF. The Plan Committee, the Plan Administrator, the
Administrative Committee, the Board of Directors or the Company may require
satisfactory proof of any matter under this Plan from or with respect to any
Employee, Participant, or Beneficiary, and no such person shall acquire any
rights or be entitled to receive any benefits under this Plan until such proof
shall be furnished as so required.
9.100 LIMITATION ON LIABILITY AND INDEMNIFICATION. Except as provided in Part
4 of Title 1 of ERISA, no person shall be subject to any liability with respect
to his duties under the Plan, unless he acts fraudulently or in bad faith. No
person shall be liable for any breach of fiduciary responsibility resulting from
the act or omission of any other fiduciary or any person to whom fiduciary
responsibilities have been allocated or delegated, except as provided in ERISA
sections 405(a) and 405(c)(2)(A) or (B). No action or responsibility shall be
deemed to be a fiduciary action or responsibility except to the extent required
by ERISA. To the extent permitted by law, the Company shall indemnify the Board
of Directors, the Plan Administrator, each member of the Plan Committee, each
member of the Administrative Committee and any other employee of the Company
with duties under the Plan against expenses (including any amount paid in
settlement) reasonably incurred by him in connection with any claims against him
by reason of his conduct (except for his willful misconduct) in the performance
of his duties under the Plan.
9.110 MAILING AND LAPSE OF PAYMENTS. All payments under the Plan shall be
delivered in person or mailed to the last address of the Participant (or, in the
case of the death of the Participant, to that of any other person entitled to
such payments under the terms of the Plan) furnished pursuant to Section 9.150
below. If the Plan Administrator cannot, by making a reasonably diligent attempt
by mail, locate either the Participant or his Beneficiary, as the case may be,
for a period of seven years, such Participant or Beneficiary shall be presumed
dead. If payment cannot be made alternately to the estate of either and no
surviving spouse, child, grandchild, parent, brother or sister of the
Participant or his Beneficiary are known to the Plan Administrator or the
Trustee or, if known, cannot with reasonable diligence be located, the amount
payable shall be retained by the Trustee until the amount can be distributed
pursuant to the provisions of this Plan or of applicable law.
9.120 NON-ALIENATION. No right or benefit provided for in the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance (including garnishment, attachment, execution or levy of any
kind or charge) and any attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber or charge the same shall be void; provided, however, that the
foregoing shall not apply to the creation, assignment, or recognition of a right
to any benefit payable with respect to a Participant pursuant to:
(a) a levy for federal income tax issued against the Participant by the
Internal Revenue Service; or
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(b) a domestic relations order, which the Plan Administrator determines is
a qualified domestic relations order under section 414(p) of the Code
and which requires that the order's alternate payee (as defined in the
said Code section) will be paid in a lump sum as soon as is practicable
following the order's issuance.
9.130 NOTICES AND COMMUNICATIONS. Each Participant shall be responsible for
furnishing the Plan Administrator with his current address and the correct
current name and address of his Beneficiary. All communications from
Participants shall be in the manner from time to time prescribed by the Plan
Administrator and shall be addressed or communicated (including telephonic
communications) to such entity or Company office as may be designated by the
Plan Administrator, and shall be deemed to have been given to the Company when
received by such entity or Company office. Each communication directed to a
Participant or Beneficiary shall be in writing and may be delivered in person or
by mail, in which latter event it shall be deemed to have been delivered and
received by him when so deposited in the United States Mail with postage prepaid
addressed to the Participant or Beneficiary at his last address of record with
the office designated by the Plan Administrator.
9.140 COMPANY RIGHTS. The Company's rights to discipline or discharge
Employees or to exercise its rights as to incidents and tenure of employment
shall not be affected in any manner by reason of the existence of the Trust
Agreement or the Plan, or any action taken under them.
9.150 PAYMENTS ON BEHALF OF INCOMPETENT PARTICIPANTS OR BENEFICIARIES. In the
event that the Plan Administrator or his designee shall find that any
Participant or Beneficiary to whom a benefit is payable under the terms of this
Plan is unable to care for his affairs because of illness or accident, is
otherwise mentally or physically incompetent, or unable to give a valid receipt,
the Plan Administrator may cause the payment becoming due to such Participant or
Beneficiary to be paid to another person for his benefit without responsibility
on the part of the Plan Administrator, the Plan Committee, the Administrative
Committee, the Company or the Trustee to follow the application of such payment.
Any such payment shall be a payment for the account of the Participant or
Beneficiary and shall operate as a complete discharge of all liability therefor
under this Plan of the Trustee, the Company, the Plan Administrator, the
Administrative Committee and the Plan Committee.
ARTICLE X: PARTICIPANT CLAIMS
10.010 REQUIREMENT TO FILE CLAIM. A Participant wishing a distribution or
withdrawal from the Plan must present a claim, in such manner and pursuant to
such procedure established by the Plan Administrator, with the person or entity
designated by the Plan Administrator. A claimant who fails to comply with the
manner and procedure designated by the Plan Administrator shall be deemed not to
have made such claim. The person or entity designated by the Plan Administrator
shall approve or deny in writing within thirty (30) days any claim which has
been so presented.
10.020 APPEAL OF DENIED CLAIM. A Participant whose claim has been denied as
set forth in Section 11.010 may appeal the denial to the Plan Administrator by
filing a written appeal within
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sixty (60) days of the date of the denial. The Participant or his representative
shall, for the purpose of preparation of such appeal, have the right to inspect
any document (including computerized records) relied upon by the Plan
Administrator's representative in denying the claim. The Plan Administrator or
his delegate shall make a final, full and fair review of any such decision which
is appealed. A decision which is not appealed within the time herein provided
shall be final and conclusive as to any matter which was presented to the person
making such decision.
ARTICLE XI: AMENDMENT, MERGERS, TERMINATION, ETC.
11.010 AMENDMENT. The Board of Directors may, at any time and from time to
time, amend this Plan in whole or in part. However, except as provided in
Section 14.040 below, no amendment shall be made the effect of which would be:
(a) to cause any contributions paid to the Trustee to be used for or
diverted to purposes other than providing benefits to the Participants
and their Beneficiaries, and defraying reasonable expenses of
administering the Plan, prior to satisfaction of all liabilities with
respect to Participants and their Beneficiaries;
(b) to have any retroactive effect so as to deprive any Participant or
Beneficiary of any benefit to which he would be entitled under this
Plan if his employment were terminated immediately before such
amendment; or
(c) to increase the responsibilities or liabilities of the Trustee without
its written consent.
11.020 TRANSFER OF ASSETS AND LIABILITIES. The Plan Committee at any time may,
in its sole discretion without the consent of the Participant or his
representative, cause the Trustee to segregate part of the assets of the Trust
Fund into one or more separate trust funds and designate a group of Participants
whose benefits shall be provided solely from each such segregated fund. The
Board of Directors may, in its sole discretion without the consent of any
Participant or his representative, establish a separate plan to cover any such
group of Participants. The initial terms and conditions of any such plan shall
be identical to the extent such terms and conditions affect the rights of
Participants under the Plan. Amendment to the Plan shall not be necessary to
carry out the provisions of this Section.
11.030 MERGER RESTRICTION. Notwithstanding any other provision in this Plan,
the Plan shall not in whole or in part merge or consolidate with, or transfer
its assets or liabilities to any other plan unless each affected Participant in
this Plan would (if the Plan then terminated) receive a benefit immediately
after the merger, consolidation, or transfer which is equal to or greater than
the benefit he would have been entitled to receive immediately before the
merger, consolidation, or transfer (if the Plan had then terminated).
11.040 SUSPENSION OF CONTRIBUTIONS. The Company may, without amendment of the
Plan and without the consent of any Participant or representative of any
Participant, suspend contributions to the Plan as to all or certain Participants
by action of the Board of Directors. In any event, the
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Company will suspend contributions at any time when the amount of any
contribution by it would be in excess of the earnings, including retained
earnings, of the Company. Upon a suspension, the Plan Committee may, in its sole
discretion permit the Trust Fund to continue to be held by the Trustee, or may
segregate one or more parts of the Trust Fund, as provided in Section 11.020.
11.050 DISCONTINUANCE OF CONTRIBUTIONS. The Company may, by action of the
Board of Directors, without amendment of the Plan and without the consent of any
Participant or representative of any Participant, discontinue such contributions
to the Plan as to all or certain Participants.
11.060 TERMINATION. The Company may terminate or partially terminate the Plan
at any time. Upon such termination or partial termination of the Plan, or upon a
complete discontinuance of contributions pursuant to Section 11.050, the
Accounts of each affected Participant shall remain fully vested and
nonforfeitable. In the event of termination or partial termination the Plan
Committee may, without the consent of any Participant or other person, permit
the Trustee to retain all or part of the Trust Fund or distribute all or part of
the Trust Fund to the Participants or their spouses or Beneficiaries.
ARTICLE XII: STATUTORY LIMITATIONS
12.010 ANNUAL LIMITS OF PARTICIPANTS' ACCOUNT INCREASES. This Article is
intended to conform the Plan to the requirements of section 415 of the Code, and
the regulations issued thereunder; and shall be administered and interpreted in
accordance with such requirements and regulations; and notwithstanding any
provision of this Plan to the contrary, no amount shall be credited to any
Participant's Account which is in excess of the limitation imposed by said
section 415, as from time to time amended or replaced. The amount allocated in
each calendar year to any Participant under the combination of defined
contribution plans of all Affiliated Companies cannot exceed the lesser of
$30,000 (or such larger amount as may be established under section 415(d)(1)(B)
of the Code to reflect an increase in the cost of living) or 25% of the
Participant's total compensation. For purposes of this limitation, the amount
allocated shall be deemed to be comprised of Company Matching Contributions and
the Participant's Pre-Tax and Post-Tax Contributions.
12.020 LIMITS AS TO COMBINED PLANS. In the case of a Participant who also is a
participant in a defined benefit pension plan which is or was maintained by the
Company or an Affiliated Company and to which section 415 of the Code applies,
the limitation set forth herein shall be further adjusted in compliance with
section 415(e) of the Code. In making such adjustment, the maximum benefit
allowable shall be paid hereunder before applying the limitations on the defined
benefit plan.
12.030 COMBINING SIMILAR PLANS. For purposes of this Article, all defined
contribution plans which are required to be aggregated under section 414(b) of
the Code shall be so aggregated and the limitation set forth herein shall be
applied to the total amounts allocated under all such plans.
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<PAGE>
ARTICLE XIII: TOP HEAVY PROVISIONS
13.010 DEFINITIONS. Solely for purposes of this Article, the following
special definitions shall apply:
(a) "TOP HEAVY PLAN" shall mean a qualified retirement plan, including this
Plan if applicable, which is included in, or which constitutes, an
Aggregation Group under which, as of the Determination Date, the sum of
the present values of accrued benefits for all Key Employees under all
defined benefit plans in the Aggregation Group and the aggregate of all
accounts of Key Employees under all defined contribution plans in the
Aggregation Group exceeds sixty percent (60%) of the sum of the present
values of accrued benefits under all such defined benefit plans and of
all accounts under all such defined contribution plans for all
participants under such plans.
(b) "KEY EMPLOYEE" shall mean each Employee or former Employee who has, at
any time during the five (5) year period ending on the Determination
Date, performed services for an Affiliated Company and who is, at any
time during the plan year ending on the Determination Date, or was,
during any one of the four plan years preceding the plan year ending on
the Determination Date, any one or more of the following:
(1) an officer of the Company having annual compensation greater than
fifty percent (50%) of the amount in effect under Code
section 415(b)(1)(A) for any plan year;
(2) one of the ten (10) persons having annual compensation from all
Affiliated Companies greater than the limitation in effect under
Code section 415(c)(1)(A) and owning (or considered as owning
within the meaning of Code section 318, as modified by Code
section 416(i)(B)(iii)), the largest interests in the Company;
(3) any person owning (or considered as owning within the meaning of
Code section 318, as modified by Code section 416(I)(B)(iii), more
than five percent (5%) of the outstanding stock of the Company
(or stock having more than five percent (5%) of the total combined
voting power of all stock of the Company) (a 5 Percent Owner"); or
(4) any person who has annual compensation of more than one hundred
fifty thousand dollars ($150,000) and would be described in
paragraph (3) above, if "one percent (1%)" was substituted for
"five percent (5%)".
For purposes of determining whether a person is an officer in paragraph
(1) above, in no event will more than fifty (50) Employees or, if less
than fifty (50) Employees, the greater of three (3) Employees or ten
percent (10%) of all Employees, be considered Key Employees solely by
reason of officer status. In addition, persons who are merely nominal
officers will not be treated as officers solely by reason of their
titles.
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(c) "DETERMINATION DATE" shall mean the last day of the immediately
preceding plan year or, in the case of the first plan year of any plan,
the last day of such plan year.
(d) "EMPLOYEE" shall mean not only an Employee as defined in Article I, but
shall also include any beneficiary of such Employee.
(e) "AGGREGATION GROUP" shall mean a group of plans (including this Plan)
maintained by one or more Affiliated Companies in which a Key Employee
is a participant or which is combined with this Plan in order to meet
the coverage and nondiscrimination requirements of Code sections 410
and 401(a)(4). The Aggregation Group shall also include those plans
other than this Plan which need not be aggregated with this Plan to
meet Code Requirements, but which are selected by the Company to be
part of a selective Aggregation Group which shall include this Plan if
the Aggregation Group would continue to meet the requirements of Code
sections 401(a)(4) and 410 with such plans being taken into account.
(f) "NON-KEY EMPLOYEE" shall mean any employee who is not a Key Employee.
Non-Key Employee shall also mean an employee who is a former Key
Employee.
(g) "COMPENSATION" shall mean compensation as described in section
415(c)(3) of the Code, including employer contributions made pursuant
to any salary reduction arrangement.
13.020 APPLICATION OF THIS ARTICLE. In the event that this Plan is or becomes
a Top Heavy Plan, the Plan, where aggregated with each other defined
contribution plan in the Aggregation Group in which a Key Employee is a
participant, shall provide a minimum allocation to the account of each
Participant who is not a Key Employee for each plan year to which these rules
apply equal to four percent (4%) of such Participant's Compensation.
ARTICLE XIV: MISCELLANEOUS
14.010 BENEFITS PAYABLE ONLY FROM TRUST FUND. All benefits payable hereunder
shall be provided solely from the trust, and the Company assumes no
responsibility for the acts of the Trustee, except as provided in the Trust
Agreement.
14.020 REQUIREMENT FOR RELEASE. Any payment to any Participant or a
Participant's present, future or former spouse or Beneficiary in accordance with
the provisions of this Plan shall, to the extent thereof, be in full
satisfaction of all claims against the Trustee and the Company, and the Trustee
may require such Participant or Beneficiary, as a condition precedent to such
payment to execute a receipt and release to such effect.
14.030 TRANSFERS OF STOCK. Transfers of Conexant common stock from the Trustee
pursuant to Article V or VI shall be made as soon as practicable, but neither
the Company, any Named Fiduciary nor the Trustee shall have any responsibility
for any decrease in the value of such common stock between the Valuation Date
used for determination of the number of shares
29
<PAGE>
to which the Participant is entitled and the date of transfer by the transfer
agent, nor, except as provided in Articles V and VI, shall the Participant
receive any dividends, rights, options or warrants on such stock other than
those payable to stockholders of record as of a date on or after the date of
transfer.
14.040 QUALIFICATION OF THE PLAN. ThE. The Company intends for the Plan to be
qualified and approved by the Internal Revenue Service under section 401(a) of
the Code and for Company Matching Contributions to be deductible by the Company
for federal income tax purposes. Continuation of the Plan is contingent upon and
subject to retaining such qualification and approval. Any modification or
amendment of the Plan or the Trust Agreement may be made retroactively by the
Company, if necessary or appropriate, to qualify or maintain the Plan and the
Trust as a plan and trust meeting the requirements of applicable sections of the
Code and of other federal and state laws, as are now or in the future may be in
effect. No contribution made by the Company may revert to the Company, unless
such contribution was the result of a good faith mistake of fact, in which case
such contribution may be returned to the Company within one (1) year to the
extent permitted by all applicable laws.
14.050 INTERPRETATION. The masculine gender shall include the feminine and the
singular shall include the plural unless the context clearly indicates
otherwise.
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APPENDIX A
PROCEDURES, TERMS AND CONDITIONS OF LOANS
ELIGIBILITY FOR LOANS. The individuals eligible to obtain loans from the Plan
("Borrowers") are limited to:
(1) Employees, and
(2) non-Employees who are "parties in interest" (as defined in section
3(14) of ERISA)
who have Plan Account balances. An Employee who wishes to obtain a loan must be
employed on an active payroll of an Affiliated Company at the time of the loan
application. A party in interest who is not an Employee will be eligible to
obtain a loan only if an agreement can be provided by the party's current
employer to deduct and remit the required loan repayments to the Savings Plan.
LIMITATION ON NUMBER AND MINIMUM AMOUNT OF LOANS. Only one (1) loan to a
Borrower will be permitted to be outstanding from all Company sponsored savings
plans at any one time. Each loan must be for a minimum of $1,000.
MAXIMUM AMOUNT OF LOAN. The amount which a Borrower will be permitted to borrow
from the Plan is based on the aggregate value of the Borrower's Accounts,
determined in accordance with the Plan, and may not exceed the least of the
amounts described in Section 6.050 of the Plan. The maximum amount of any loan
will be further limited to ensure that, after applying the appropriate interest
rate and taking into account all applicable deductions, the resulting periodic
repayments will not exceed the Borrower's net earnings. The deductions referred
to in the preceding sentence include statutory withholdings, deductions for
employee benefits and all pre-tax contributions to the Plan, but exclude credit
union, savings bond, charitable contribution and other similar deductions.
LOAN APPLICATIONS. Loan applications by prospective Borrowers will be made via
telephone to the Plan Administrator or such third party administrator as may be
designated by the Plan Administrator (either of whom is hereafter referred to as
the "Loan Administrator"). The Loan Administrator will then review the
telephonic application and determine eligibility for the loan. If the loan is
approved, the Loan Administrator will prepare and forward to the Borrower a
letter notifying the Borrower of the approval, together with a Truth in Lending
Statement and a check for the loan amount, all in form approved by the Plan
Administrator. The Borrower's endorsement of the loan check will be considered
to be the Borrower's agreement to the terms of the loan. Failure by the Borrower
to endorse the check within thirty (30) days after the date of the check will be
deemed to be a withdrawal by the Borrower of the loan application.
<PAGE>
SOURCE OF LOAN FUNDS. Each loan will be funded by withdrawing the required
amounts from the Plan Account(s) of the Borrower in the following order:
First -- from amounts in the Borrower's Post-Tax Contribution
Account attributable to his Basic Post-Tax
Contributions;
Second -- from amounts in the Borrower's Post-Tax Contribution
Account attributable to his Supplemental Post-Tax
Contributions;
Third -- from amounts in the Borrower's Contribution Accounts
attributable to his Rollover and Transfer
Contributions;
Fourth -- from amounts in the Borrower's Pre-Tax
Contribution Account attributable to his Basic
Pre-Tax Contributions;
Fifth -- from amounts in the Borrower's Post-Tax
Contribution Account attributable to his
Supplemental Pre-Tax Contributions.
Subject to the provisions of the following paragraph, the loan amount will be
funded by the Borrower's Investment Funds in the applicable Accounts on a pro
rata basis, based upon the relative size of the balance of each such Fund in his
Accounts.
DETERMINATION OF LOAN INTEREST RATE. The interest rate to be charged for loans
will be one percent (1%) over the prime rate stated by The Wall Street Journal
published on the last business day of each calendar quarter.
TERM OF LOANS. Loans will be permitted for terms of 12, 24, 36, 48 or 60 months
for loans other than those for the purpose of purchasing a primary residence,
which will be permitted for terms up to 120 months.
REPAYMENTS. Loan repayments by Employees will be deducted from the Employee's
pay check each pay period. If a pay check is insufficient to cover the full
amount of the loan repayment, no deduction will be made, and the repayment will
be deducted from the Employee's next pay check. Loan repayment schedules for
Borrowers who are not Employees will be developed on an individual basis, but
will parallel as closely as possible the loan repayment schedules for Employees.
PREPAYMENTS. The full unpaid balance of a loan may be prepaid at any time by a
Borrower. Partial prepayments in excess of scheduled payroll deductions will
not be accepted.
MISSED PAYMENTS. If any payment is not made, interest will continue to accrue on
such missed payment and subsequent payments will be applied first to accrued and
unpaid interest on the missed payment and then to principal. A notice will be
mailed to the last known address of the Borrower stating that if three (3)
consecutive months of payments are missed, the loan will be considered to be in
default.
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<PAGE>
TERMINATION OF EMPLOYMENT. If a Borrower who is an Employee terminates
employment or is on an unpaid leave of absence, or if a Borrower who is not an
Employee is no longer able to repay a loan through payroll deductions, the
Borrower may continue to make loan repayments by personal check. Such repayments
to the Plan will be made through the Loan Administrator at an address to be
provided to the Borrower by the Loan Administrator.
DEFAULT. A loan will be considered to be in default after three (3) consecutive
months of payments have been missed during the term of the loan or when a
Borrower revokes a payroll deduction authorization. In the event of such a
default, a distribution of the loan amount, including both unpaid principal and
accrued but unpaid interest, will be deemed to have occurred (as described in
sections 1.401(k)-1(d)(6)(ii) of the Treasury Regulations) and an information
return reflecting the tax consequences, if any, to the Borrower will be issued.
Upon the occurrence of an event permitting actual distribution of the Borrower's
Account pursuant to the provisions of Code section 401(k) (whether distribution
of the Borrower's entire Plan Account will actually be made or will be deferred
pursuant to applicable provisions of the Plan), the unpaid balance of a
defaulted loan will be charged off against the Borrower's Account. If no
distribution event has occurred, which would otherwise permit payment to the
Borrower under Code section 401(k), the unpaid balance of the loan will be
retained in the Account until such time as payment would be permitted under that
Code section, at which time the unpaid balance of the loan, including any
accrued and unpaid interest, will be charged off against the Borrower's Account.
3
<PAGE>
APPENDIX B
INVESTMENT FUNDS
The Investment Funds listed alphabetically below will consist of the types of
assets as are set forth in the description set forth herein and will be more
fully described, in the case of Funds other than Conexant Stock Fund B, in the
prospectus or Fund description associated with that Fund (copies of which will
at all times be available to Plan Participants):
o ASSET ALLOCATION FUND A (Fidelity 20% in Fidelity stock mutual
Freedom Income Fund) funds, 40% in Fidelity bond mutual
funds and 40% in Fidelity money
market mutual funds (percentages
are approximate).
o ASSET ALLOCATION FUND B (Fidelity 41% in Fidelity stock mutual
Freedom 2000 Fund) funds, 44% in Fidelity bond mutual
funds and 15% in Fidelity money
market mutual funds (percentages
are approximate). Percentage mix
will gradually become more
conservative over time.
o ASSET ALLOCATION FUND C (Fidelity 65% in Fidelity stock mutual
Freedom 2010 Fund) funds, 33% in Fidelity bond mutual
funds and 2% in Fidelity money
market mutual funds (percentages
are approximate). Percentage mix
will gradually become more
conservative over time.
o ASSET ALLOCATION FUND D (Fidelity 80% in Fidelity stock mutual funds
Freedom 2020 Fund) and 20% in Fidelity bond mutual
funds (percentages are
approximate). Percentage mix will
gradually become more conservative
over time.
o ASSET ALLOCATION FUND E (Fidelity 84% in Fidelity stock mutual
Freedom 2030 Fund) funds and 16% in Fidelity bond
mutual funds (percentages are
approximate). Percentage mix will
gradually become more conservative
over time.
o BOND INDEX FUND (Fidelity U.S. Bond Investment-grade (medium to high
Index Fund) quality) or above with maturities
of at least one year, including
U.S. Treasury and U.S. government
securities, corporate bonds,
asset-backed and mortgage-backed
securities and U.S.
dollar-denominated foreign
securities.
<PAGE>
o CONEXANT STOCK FUND B Conexant Systems, Inc. common
stock, cash and the proceeds and
income on such cash and common
stock.
o DIVIDEND GROWTH FUND (Fidelity Stocks of companies that have
Dividend Growth Fund) potential to increase the amount
of their dividends or to begin
paying them if none are being paid
now.
o EMERGING MARKETS FUND (Fidelity Primary investment focus is stock
Emerging Markets Fund) of companies in emerging markets,
with emphasis on countries with
relatively low GNPs compared to
the world's major economies, but
with potential for rapid growth.
o EQUITY & INCOME FUND (Fidelity Primary investment focus on
Equity-Income Fund) income-producing stocks, such as
common and preferred stocks, with
some limited focus on bonds
producing income (generally
avoiding securities without
proven earnings or credit).
o EQUITY INDEX FUND (Spartan(C) Primary investment focus on the
U.S. Equity Index Fund) 500 domestic companies that make
up the S&P 500 and in other
securities that are based on the
value of that Index.
o INTERNATIONAL FUND (Fidelity Primary focus is stocks of larger
Diversified International Fund) companies which are located
outside the United States and
which are viewed as being
undervalued.
o MID-CAP STOCK FUND (Fidelity Primary focus in stocks of
Mid-Cap Stock Fund) mid-size companies with
capitalizations within the range
of the Standard & Poors MidCap 400
(approximate capitalization of
$110 million to $5 billion).
o SMALL-CAP STOCK FUND (Fidelity Normally invests at least 65% of
Small-Cap Stock Fund) its assets in companies with
capitalizations similar to those
in the Russell 2000 Index.
o STABLE VALUE FUND (commingled pool Primarily invests in investment
of the Fidelity Group Trust for contracts providing a stated rate
Employee Benefit Plans - not a of interest which are offered by
mutual fund) major insurance companies, with
some investment in certain types
of fixed income securities to
provide daily liquidity.
2
Exhibit 5.1
Letterhead of Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, New York 10112
(212) 408-5100
December 11, 1998
Conexant Systems, Inc.
4311 Jamboree Road
Newport Beach, California 92660-3095
Dear Sirs:
In connection with the registration under the Securities Act
of 1933, as amended (the "Securities Act"), by Conexant Systems, Inc., a
Delaware corporation (the "Company"), of 1,500,000 shares (the "Shares") of
Common Stock, par value $1 per share, of the Company (including the associated
Preferred Share Purchase Rights, the "Common Stock"), to be issued from time to
time in connection with the Conexant Systems, Inc. Retirement Savings Plan (the
"Plan"), we advise as follows:
As counsel for the Company, we are familiar with the Restated
Certificate of Incorporation and Amended By-Laws of the Company, each as amended
to the date hereof, and we have reviewed (i) the Registration Statement on Form
S-8 to be filed by the Company under the Securities Act with respect to the
Shares to be issued from time to time in connection with the Plan (the
"Registration Statement") and (ii) the corporate proceedings taken by the
Company in connection with the authorization of the Shares to be issued from
time to time in connection with the Plan. We have also examined originals, or
copies certified to our satisfaction, of such corporate records of the Company
and other instruments, certificates of public officials and representatives of
the Company, and other documents as we have deemed necessary as a basis for the
opinion hereinafter expressed. In such examination, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity
<PAGE>
Conexant Systems, Inc. -2- December 11, 1998
with the originals of all documents submitted to us as copies. As to questions
of fact material to this opinion, we have, when relevant facts were not
independently established, relied upon certificates of officers of the Company
and appropriate public officials.
On the basis of the foregoing, and having regard for such
legal considerations as we deem relevant, we are of the opinion that when the
Registration Statement has become effective under the Securities Act, any Shares
issued by the Company in connection with the Plan, when delivered in accordance
with the provisions of the Plan, will, when so delivered, be legally and validly
issued, fully paid and non-assessable.
We express no opinion herein as to any laws other than the
laws of the State of New York, the General Corporation Law of the State of
Delaware and the Federal laws of the United States.
We hereby consent to the reference to us and our opinion in
the Registration Statement and to the filing of this opinion as an Exhibit to
the Registration Statement. We also hereby consent to the reference to this firm
under the caption "Tax Consequences" in the Prospectus constituting a part of
the Registration Statement.
Very truly yours,
CHADBOURNE & PARKE LLP
Exhibit 24
POWER OF ATTORNEY
I, the undersigned Director and/or Officer of Conexant Systems, Inc., a
Delaware corporation (the "Company"), hereby constitute DWIGHT W. DECKER,
BALAKRISHNAN S. IYER and PETER R. KOLYER, and each of them singly, my true and
lawful attorneys with full power to them and each of them to sign for me, and in
my name and in the capacity or capacities indicated below, (i) the Registration
Statement on Form S-3 or Form S-1 to be filed by the Company with the Securities
and Exchange Commission (the "Commission") for the purpose of registering under
the Securities Act of 1933, as amended (the "Securities Act"), securities to be
sold pursuant to the Company's 1998 Stock Option Plan, (ii) the Registration
Statement on Form S-8 to be filed by the Company with the Commission for the
purpose of registering under the Securities Act securities to be sold pursuant
to the Company's 1999 Long-Term Incentives Plan, and (iii) the Registration
Statement on Form S-8 to be filed by the Company with the Commission for the
purpose of registering under the Securities Act securities to be sold pursuant
to the Company's Savings Plan and, in each case, any and all amendments
(including post-effective amendments) and supplements thereto.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Dwight W. Decker Chairman of the Board and
------------------------------ Chief Executive Officer (principal
Dwight W. Decker executive officer) and Director November 30, 1998
/s/ Donald R. Beall
------------------------------
Donald R. Beall Director November 30, 1998
/s/ Richard M. Bressler
------------------------------
Richard M. Bressler Director November 30, 1998
/s/ F. Craig Farrill
------------------------------
F. Craig Farrill Director November 30, 1998
/s/ Jerre L. Stead
------------------------------
Jerre L. Stead Director November 30, 1998
<PAGE>
/s/ Balakrishnan S. Iyer Senior Vice President and
------------------------------ Chief Financial Officer
Balakrishnan S. Iyer (principal financial officer) November 30, 1998
/s/ Steven M. Thomson
------------------------------ Vice President and Controller
Steven M. Thomson (principal accounting officer) November 30, 1998
</TABLE>
