UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended September 27, 2002
Commission file number 1-5560
SKYWORKS SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2302115
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 SYLVAN ROAD, WOBURN, MASSACHUSETTS 01801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 376-3000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12B-2).
[X] Yes [ ] No
The aggregate market value of the Registrant's voting stock held by
non-affiliates of the Registrant (based on the closing price as reported on the
Nasdaq National Market on December 4, 2002) was approximately $1.4 billion.
Shares of voting stock held by each officer and director and by each shareowner
affiliated with a director have been excluded from this calculation because such
persons may be deemed to be affiliates. This determination of officer or
affiliate status is not necessarily a conclusive determination for other
purposes. The number of outstanding shares of the Registrant's Common Stock, par
value $0.25 per share, as of December 4, 2002 was 137,899,732.
The Exhibit Index is located on page 88.
Page 1 of 88 pages.
SKYWORKS SOLUTIONS, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED SEPTEMBER 27, 2002
TABLE OF CONTENTS
Part I Page No.
Item 1: Business 3
Item 2: Properties 9
Item 3: Legal Proceedings 10
Item 4: Submission of Matters to a Vote of Security Holders 10
Part II
Item 5: Market for the Registrant's Common Equity and Related Stockholder 10
Matters
Item 6: Selected Financial Data 11
Item 7: Management's Discussion and Analysis of Financial Condition and 13
Results of Operations
Item 7A: Quantitative and Qualitative Disclosures About Market Risk 36
Item 8: Financial Statements and Supplementary Data 37
Item 9: Changes in and Disagreements with Accountants on Accounting and 65
Financial Disclosure
Part III
Item 10: Directors and Executive Officers of the Registrant 66
Item 11: Executive Compensation 68
Item 12: Security Ownership of Certain Beneficial Owners and Management 73
and Related Stockholder Matters
Item 13: Certain Relationships and Related Transactions 75
Item 14: Controls and Procedures 77
Part IV
Item 15: Exhibits, Financial Statement Schedules, and Reports on Form 8-K 78
Signatures 83
Certifications 85
Skyworks Solutions, Inc. and Subsidiaries
ITEM 1 BUSINESS
SUMMARY
Skyworks Solutions, Inc. ("Skyworks" or the "Company") is a leading wireless
semiconductor company focused exclusively on radio frequency (RF) and complete
cellular system solutions for mobile communications applications. We offer
front-end modules, RF subsystems and cellular systems to top wireless handset
and infrastructure customers.
From the radio to the baseband, we have developed one of the industry's broadest
product portfolio including leadership switches and power amplifier modules.
Additionally, we offer a highly integrated direct conversion transceiver and
have launched a comprehensive cellular system for next generation handsets.
With our extensive portfolio and significant systems-level expertise, Skyworks
is the ideal partner for both top-tier wireless manufacturers and new market
entrants who demand simplified architectures, faster development cycles and
fewer overall suppliers.
Skyworks was formed through the merger ("Merger") of the wireless communications
business of Conexant Systems, Inc. ("Conexant") and Alpha Industries, Inc.
("Alpha") on June 25, 2002. Following the Merger, Alpha changed its corporate
name to Skyworks Solutions, Inc. We are headquartered in Woburn, Massachusetts,
and have executive offices in Irvine, California. We have design, engineering,
manufacturing, marketing, sales and service facilities throughout North America,
Europe, and the Asia/Pacific region. Our Internet address is
www.skyworksinc.com. We make available on our Internet website free of charge
our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K, and amendments to those reports as soon as practicable after we
electronically file such material with the SEC. The information contained in our
website is not incorporated by reference in this Annual Report on Form 10-K.
RECENT DEVELOPMENTS
On November 13, 2002, Skyworks successfully closed a private placement of $230
million of 4.75 percent convertible subordinated notes due 2007. These notes can
be converted into 110.4911 shares of common stock per $1,000 principal balance,
which is the equivalent of a conversion price of approximately $9.05 per share.
The net proceeds from the note offering were principally used to prepay debt
owed to Conexant under a financing agreement entered into with Conexant
immediately following the Merger. The payments to Conexant retired $105 million
of the $150 million note relating to the purchase of Conexant's semiconductor
assembly, module manufacturing and test facility located in Mexicali, Mexico,
and certain related operations ("Mexicali Operations") and repaid the $65
million principal amount outstanding as of November 13, 2002 under the loan
facility, dissolving the $100 million facility and resulting in the release of
Conexant's security interest in the assets and properties of the Company.
In connection with the prepayment by the Company of $105 million of the $150
million note owed to Conexant relating to the purchase of the Mexicali
Operations, the remaining $45 million principal balance on the note was
exchanged for new 15% convertible debt securities with a maturity date of June
30, 2005. These notes can be converted into the Company's common stock at a
conversion rate based on the applicable conversion price, which is subject to
adjustment based on, among other things, the market price of the Company's
common stock. Based on this adjustable conversion price, the Company expects
that the maximum number of shares that could be issued under the note is
approximately 7.1 million shares, subject to adjustment for stock splits and
other similar dilutive occurrences.
In addition to the retirement of $170 million in principal amount of
indebtedness owing to Conexant, we also retained approximately $53 million of
net proceeds of the private placement to support our working capital needs.
INDUSTRY BACKGROUND
We believe that cellular services and personal communications services are
increasingly expanding to offer more than just traditional voice services, with
emerging mobile communications technologies offering consumers and businesses
wireless access to data and information across a wide range of applications.
High-speed mobile access has the potential to dramatically enhance use of the
Internet, thereby facilitating the growth of electronic commerce. At the center
of these developments are the continuing evolution of the mobile phone and the
corresponding growth of the wireless communications infrastructure.
The cellular handset market has grown considerably over the past five years with
unit sales of approximately 400 million units in 2001, according to Gartner
Dataquest, a market research firm, up 500% from 1996 levels. As additional
wireless cellular capacity became available, an intensely competitive pricing
environment for wireless services developed at the same time that lower-priced,
feature-rich mobile phones were being introduced, contributing substantially to
the growth of new subscribers. We expect this trend to continue, enabling
further wireless expansion and increased market penetration worldwide. Market
penetration measures the portion of users or subscribers within the entire
population of a specified geographic area. In the
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Skyworks Solutions, Inc. and Subsidiaries
United States, market research firm EMC forecasts a growth in wireless
penetration from approximately 46% in 2001 to almost 75% by 2005. On a worldwide
basis, market penetration of wireless phones was just 16% in 2001 and could
approach 30% by 2005, based on data from EMC. We believe that this anticipated
dramatic market growth will create significant demand for wireless handsets as
well as for wireless infrastructure equipment to meet future network capacity
requirements.
New mobile phones with improved battery life and expanded features are being
introduced at a rapid rate, made possible by significant technological advances
that render earlier models obsolete after only one or two years. According to
market research firm Strategy Analytics, roughly half of the 2001 worldwide
cellular handset sales were replacements of previous models. We expect this
replacement market to continue contributing to the growth of the digital
cellular handset industry, led by the transition to next generation services,
such as CDMA2000, GPRS and EDGE wireless standards, which support wireless data
capacity. We anticipate that transition to third-generation services, which will
enable even higher bandwidth applications, including streaming video, digital
audio and digital camera functionality, should further bolster the replacement
market. Additionally, in emerging markets where wireline infrastructure is
inadequate or limited, we believe that digital wireless networks are providing a
viable and economic alternative that can be rapidly deployed.
In response to this rapidly changing market, handset original equipment
manufacturers, or OEMs, are significantly shortening product development cycles,
seeking simplified architectures and streamlining manufacturing processes.
Traditional OEMs are shifting to low-cost suppliers around the world. In turn,
original design manufacturers and contract manufacturers, who lack RF and
systems-level expertise, are entering the high volume mobile phone market to
support OEMs as well as to develop handset platforms of their own. Original
design manufacturers and contract manufacturers can manage low-cost
manufacturing and assembly of handsets, freeing OEMs to focus on the higher
value marketing and distribution aspects of their business. Established handset
manufacturers and new market entrants alike are demanding complete semiconductor
system solutions that include the radio frequency system, all baseband
processing, protocol stack and user interface software, plus comprehensive
reference designs and development platforms. With these solutions, traditional
handset OEMs can accelerate time-to-market cycles with lower investments in
engineering and system design. These solutions also enable original design
manufacturers to enter the high volume handset market without the need to make
significant investments in RF and systems-level expertise.
Similarly, cellular and personal communications services network operators are
developing and deploying next generation services. These service providers are
incorporating packet-switching capability in their networks to deliver data
communications and Internet access to digital cellular and other wireless
devices. Over the long-term, service providers are seeking to establish a global
network that can be accessed by subscribers at any time, anywhere in the world
and that can provide subscribers with multimedia services. To meet this goal,
OEMs who supply wireless infrastructure base stations to network operators are
increasingly relying on mobile communications semiconductor suppliers who can
provide highly integrated radio frequency and mixed signal processing
functionality.
Additionally, as service providers migrate cellular subscribers to data
intensive next generation 2.5G and 3G applications, base stations that transmit
and receive signals in the backbone of cellular and personal communications
services systems will be under further capacity constraints. To meet the related
demand, OEMs will be challenged to increase base station transceiver performance
and functionality, while reducing size, power consumption and overall system
costs.
We believe that these market trends create a potentially significant opportunity
for a broad-based wireless semiconductor supplier with a comprehensive product
portfolio supported by specialized wireless manufacturing process technologies
and a full range of systems-level expertise.
BUSINESS OVERVIEW
Skyworks is a leading wireless semiconductor company focused exclusively on RF
and complete cellular system solutions for mobile communications applications.
We offer front-end modules, RF subsystems and cellular systems to top wireless
handset and infrastructure customers. Skyworks operates in one business segment,
which designs, develops, manufactures and markets proprietary semiconductor
products and system solutions for manufacturers of wireless communication
products.
Skyworks possesses a broad wireless technology capability and one of the most
complete wireless communications product portfolios, coupled with customer
relationships with virtually all major handset and infrastructure manufacturers.
Our product portfolio includes almost every key semiconductor found within a
digital cellular handset, including:
- switches and filters (components that switch signals and incorporate
filtering functionality);
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Skyworks Solutions, Inc. and Subsidiaries
- power amplifier (PA) modules (devices that amplify a signal to
provide sufficient energy for it to reach the base station);
- RF transceivers (devices that perform radio frequency transmit and
receive functions);
- synthesizers (devices used to tune to the correct channel to receive
the RF signal from the base station);
- mixed signal processors (devices that convert analog signals into
digital signals);
- digital signal processors (DSP) (digital devices that act as the
cellular handset's central processor);
- audio (components that enable voice communication);
- physical interface DSP firmware (channel coding and equalization
software);
- network access software (protocol stack supporting encoding and
decoding); and
- MMI/applications (user interface software).
The following diagram illustrates our products that are used in a digital
cellular handset:
[SEMICONDUCTOR GRAPHIC DIAGRAM]
HIGHLY INTEGRATED SEMICONDUCTORS
Filter Receiver Mixed Signal
Switch Synthesizer DSP
PA Module Transmitter Audio
Physical Interface Network Access MMI/
DSP Firmware Software Applications
COMPLETE SYSTEM SOFTWARE
Skyworks also offers a broad product portfolio addressing next generation
wireless infrastructure applications, including amplifier drivers, ceramic
resonators, couplers and detectors, filters, synthesizers and front-end
receivers. These components support a variety of radio frequency and mixed
signal processing functions within the wireless infrastructure.
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Skyworks Solutions, Inc. and Subsidiaries
We have a comprehensive radio frequency and mixed signal processing and
packaging portfolio, extensive circuit design libraries and a proven track
record in component and system design. We believe that these capabilities
position us to address the growing need of wireless infrastructure manufacturers
for base station products with increased transceiver performance and
functionality with reduced size, power consumption and overall system costs.
OUR STRATEGY
Skyworks' vision is to become the leading supplier of wireless semiconductor
solutions. Key elements in our strategy include:
LEVERAGING CORE TECHNOLOGIES
Skyworks deploys technology building blocks such as radio frequency integrated
circuits, analog/mixed-signal processing cores and digital baseband engines as
well as software across multiple product platforms. We believe that this
approach enables creation of economies of scale in research and development and
facilitates a reduction in the time-to-market for key products.
INCREASING INTEGRATION LEVELS
High levels of integration enhance the benefits of our products by reducing
production costs through fewer external components, reduced board space and
improved system assembly yields. By combining all of the necessary
communications functions for a complete system solution, Skyworks can deliver
additional semiconductor content, thereby offering existing and potential
customers more compelling and cost-effective solutions.
CAPTURING AN INCREASING AMOUNT OF SEMICONDUCTOR CONTENT
We enable our customers to start with individual components as necessary, and
then migrate up the product integration ladder. We believe that our highly
integrated solutions will enable these customers to speed time-to-market while
focusing their resources on product differentiation through a broader range of
more sophisticated, next-generation features.
DIVERSIFYING CUSTOMER BASE
Skyworks supports virtually every wireless handset OEM including Motorola, Inc.,
Nokia Corporation, Samsung Electronics Co. and Sony/Ericsson as well as emerging
original development manufacturers (ODMs) and contract manufacturers such as
BenQ, Compal, Flextronics and Quanta. With the industry's move towards
outsourcing, we believe that we are particularly well-positioned to address the
growing needs of new market entrants who seek RF and system-level integration
expertise.
DELIVERING OPERATIONAL EXCELLENCE
The Skyworks operations team leverages best-in-class manufacturing technologies
and enables highly integrated modules as well as system-level solutions. We are
focused on achieving the industry's shortest cycle times, highest yields and
ultimately the lowest cost structure.
BUILDING INDUSTRY PARTNERSHIPS
Skyworks will vertically integrate where it can differentiate or will otherwise
enter alliances and partnerships for leading-edge capabilities. These
partnerships and alliances are designed to ensure product leadership and
competitive advantage in the marketplace. For example, we recently licensed LSI
Logic's digital signal processor core to support future GSM/GPRS baseband
products. Additionally, we work with Advanced Wireless Semiconductor Company
(AWSC), Jazz Semiconductor, Inc. and United Microelectronics Corporation (UMC)
on a foundry basis.
MARKETING AND DISTRIBUTION
Our products are primarily sold through a direct Skyworks sales force. This team
is globally deployed across all major regions. In some markets we supplement our
direct sales effort with independent manufacturers' representatives, assuring
broader coverage of territories and customers. We also utilize distribution
partners, some of which are franchised globally with others specific to North
American markets.
We maintain an internal marketing organization that is responsible for
developing sales and advertising literature, print media such as product
announcements and catalogs, as well as a variety of web based content. Skyworks'
sales engagement begins at the earliest stages in a customer design. We strive
to provide close technical collaboration with our customers at the inception of
a new program. This partnership allows our team to facilitate customer-driven
solutions, which leverage the unique strength of our portfolio while providing
high value and greatly reduced time-to-market.
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Skyworks Solutions, Inc. and Subsidiaries
We believe that the technical and complex nature of our products and markets
demands an extraordinary commitment to close ongoing relationships with our
customers. As such, we strive to expand the scope of our customer relationship
to include design, engineering, manufacturing, purchasing and project management
staff. We also employ a collaborative approach in developing these partnerships
by combining the support of our design teams, applications engineers,
manufacturing personnel, sales and marketing staff and senior management.
We believe that maintaining frequent and interactive contact with our customers
is paramount to our continuous efforts to provide world-class sales and service
support. By listening and responding to feedback, we are able to mobilize
actions to raise the level of customer satisfaction, improve our ability to
anticipate future product needs, and enhance our understanding of key market
dynamics. We are confident that diligence in following this path will position
Skyworks to participate in numerous opportunities for growth in the future.
CUSTOMERS
During fiscal year 2002, Samsung Electronics Co. and Motorola, Inc. accounted
for 38% and 12%, respectively, of the Company's total net revenues from
customers other than Conexant. During fiscal year 2001, Samsung Electronics Co.
and Nokia Corporation accounted for 44% and 12%, respectively, of the Company's
total net revenues from customers other than Conexant. As of September 30, 2002
Samsung Electronics Co. accounted for approximately 27% of the Company's gross
accounts receivable. The foregoing percentages are based on sales representing
the Mexicali Operations' and the wireless business of Conexant's sales for the
full fiscal year during 2001 and the fiscal 2002 pre-Merger period through June
25, 2002, and sales of Skyworks, the combined company, for the post-Merger
period from June 26, 2002 through the end of the fiscal year.
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
We own or license numerous United States and foreign patents and patent
applications related to our products, our manufacturing operations and processes
and other activities. In addition, we own a number of trademarks and service
marks applicable to certain of our products and services. We believe that
intellectual property, including patents, patent applications and licenses,
trade secrets and trademarks are of material importance to our business. We rely
on patent, copyright, trademark, trade secret and other intellectual property
laws, as well as nondisclosure and confidentiality agreements and other methods,
to protect our proprietary technologies, devices, algorithms and processes. In
addition to protecting our proprietary technologies and processes, we strive to
strengthen our intellectual property portfolio to enhance our ability to obtain
cross-licenses of intellectual property from others, to obtain access to
intellectual property we do not possess and to more favorably resolve potential
intellectual property claims against us. We believe that our technological
position depends primarily on our ability to develop new innovative products
through the technical competence of our engineering personnel.
COMPETITIVE CONDITIONS
We compete on the basis of time-to-market; new product innovation: overall
product quality and performance; price; compliance with industry standards;
strategic relationships with customers: and protection of our intellectual
property. Certain competitors may be able to adapt more quickly than we can to
new or emerging technologies and changes in customer requirements, or may be
able to devote greater resources to the development, promotion and sale of their
products than we can.
Current and potential competitors also have established or may establish
financial or strategic relationships among themselves or with our customers,
resellers or other third parties. These relationships may affect our customers'
purchasing decisions. Accordingly, it is possible that new competitors or
alliances among competitors could emerge and rapidly acquire significant market
share. We cannot provide assurances that we will be able to compete successfully
against current and potential competitors.
RESEARCH AND DEVELOPMENT
Our products and markets are subject to continued technological advances.
Recognizing the importance of such technological advances, we maintain a high
level of research and development activities. We maintain close collaborative
relationships with many of our customers to help identify market demands and
target our development efforts to meet those demands. Our design centers are
strategically located around the world to be in close proximity to our customers
and to take advantage of key technical and engineering talent worldwide. We are
focusing our development efforts on new products, design tools and manufacturing
processes using our core technologies.
Our research and development expenditures for fiscal 2002, 2001 and 2000 were
$132.6 million, $111.1 million and $91.6 million, respectively.
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Skyworks Solutions, Inc. and Subsidiaries
RAW MATERIALS
Raw materials for our products and manufacturing processes are generally
available from several sources. It is our policy not to depend on a sole source
of supply. However, there are limited situations where we procure certain
components and services for our products from single or limited sources. We
purchase materials and services against long-term agreements or on individual
purchase orders. We do not carry significant inventories and do not have any
additional long-term supply contracts with our suppliers. We believe we have
adequate sources for the supply of raw materials and components for our
manufacturing needs with suppliers located around the world. Raw wafers and
other raw materials used in the production of our CMOS products are available
from several suppliers.
Under a supply agreement entered into with Conexant in connection with the
Merger, we will receive wafer fabrication, wafer probe and certain other
services from Jazz Semiconductor, Inc., a Newport Beach, California foundry
joint venture between Conexant and The Carlyle Group. Pursuant to our supply
agreement with Conexant, we are initially obligated to obtain certain minimum
volume levels from Jazz Semiconductor based on a contractual agreement between
Conexant and Jazz Semiconductor. Our expected minimum purchase obligations under
this supply agreement are anticipated to be approximately $64 million, $39
million and $13 million in fiscal 2003, 2004 and 2005. We estimate that our
minimum purchase obligation under this agreement will result in excess costs of
approximately $5.1 million and we have recorded this liability and charged cost
of sales in fiscal 2002.
BACKLOG
Our sales are made primarily pursuant to standard purchase orders for delivery
of products, with such purchase orders officially acknowledged by us according
to our own terms and conditions. Due to industry practice, which allows
customers to cancel orders with limited advance notice to us prior to shipment,
we believe that backlog as of any particular date is not a reliable indicator of
our future revenue levels.
ENVIRONMENTAL REGULATIONS
Federal, state and local requirements relating to the discharge of substances
into the environment, the disposal of hazardous wastes, and other activities
affecting the environment have had, and will continue to have, an impact on our
manufacturing operations. Thus far, compliance with environmental requirements
and resolution of environmental claims have been accomplished without material
effect on our liquidity and capital resources, competitive position or financial
condition.
We believe that our expenditures for environmental capital investment and
remediation necessary to comply with present regulations governing environmental
protection and other expenditures for the resolution of environmental claims
will not have a material adverse effect on our liquidity and capital resources,
competitive position or financial condition. We cannot assess the possible
effect of compliance with future requirements.
CYCLICALITY; SEASONALITY
The semiconductor industry is highly cyclical and is characterized by constant
and rapid technological change. Product obsolescence, price erosion, evolving
technical standards, and shortened product life cycles may contribute to wide
fluctuations in product supply and demand. These and other factors, together
with changes in general economic conditions, may cause significant upturns and
downturns in the industry, and in our business. Periods of industry downturns --
as we experienced in fiscal 2001 -- have been characterized by diminished
product demand, production overcapacity, excess inventory levels and accelerated
erosion of average selling prices. These factors may cause substantial
fluctuations in our revenues and our operational performance. We have
experienced these cyclical fluctuations in our business in the past and may
experience cyclical fluctuations in the future.
Sales of our products are subject to seasonal fluctuation and periods of
increased demand in end-user consumer applications, such as mobile handsets.
This generally occurs in the last calendar quarter ending in December. Sales of
semiconductor products and system solutions used in these products generally
increase just prior to this quarter and continue at a higher level through the
end of the calendar year.
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Skyworks Solutions, Inc. and Subsidiaries
GEOGRAPHIC INFORMATION
Net revenues from customers other than Conexant by geographic area are presented
based upon the country of destination. Net revenues from customers other than
Conexant by geographic area are as follows (in thousands):
YEARS ENDED SEPTEMBER 30,
------------------------------------
2002 2001 2000
-------- -------- --------
United States ..................... $ 32,760 $ 18,999 $ 32,726
Other Americas .................... 4,615 5,455 8,146
-------- -------- --------
Total Americas ............ 37,375 24,454 40,872
South Korea ........................ 237,681 142,459 167,269
Other Asia-Pacific ................. 114,974 23,898 46,255
-------- -------- --------
Total Asia-Pacific ........ 352,655 166,357 213,524
Europe, Middle East and Africa ..... 28,314 24,691 58,587
-------- -------- --------
$418,344 $215,502 $312,983
======== ======== ========
Although we sell the vast majority of our products into the Asia-Pacific region,
end products that our customers develop may ultimately be shipped worldwide. For
example, if we sell a power amplifier module to a customer in South Korea, we
record the sale within the South Korea account although that customer, in turn,
may integrate that module into a product sold to a service provider (its
customer) in Africa, China, Europe, the Middle East, the Americas or within
South Korea. Accordingly, our revenues by geography do not correlate to end
handset demand by region.
Long-lived assets principally consist of property, plant and equipment, goodwill
and intangible assets. Long-lived assets by geographic area are as follows (in
thousands):
SEPTEMBER 30,
--------------------------------
2002 2001
---------- ----------
Assets
United States .................... $1,063,163 $ 44,539
Mexico ........................... 52,730 126,730
Canada ........................... 387 58,373
Other ............................ 3,236 1,285
---------- ----------
$1,119,516 $ 230,927
========== ==========
EMPLOYEES
As of September 27, 2002, the Company employed approximately 4,000 persons.
Approximately 1,100 employees in Mexico are covered by collective bargaining
agreements. Management believes that its current relations with employees are
good.
We believe our future success will depend in large part upon our continued
ability to attract, motivate, develop and retain highly skilled and dedicated
employees.
ITEM 2 PROPERTIES
We own and lease manufacturing facilities and other real estate properties in
the United States and a number of foreign countries. We own and lease
approximately 865,000 square feet and 316,000 square feet of office and
manufacturing space, respectively. In addition, we lease approximately 142,000
square feet of sales office and design center space with approximately 43% of
this space located in foreign countries. We are headquartered in Woburn,
Massachusetts and have executive offices in Irvine, California. The following
table sets forth our principal facilities measuring 50,000 square feet or more:
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Skyworks Solutions, Inc. and Subsidiaries
LOCATION OWNED/LEASED FUNCTION
- -------- ------------ --------
Mexicali, Mexico Owned Assembly and test facility
Irvine, California Leased Office space
Woburn, Massachusetts Owned Corporate headquarters, manufacturing
Haverhill, Massachusetts Owned Design engineering, manufacturing, assembly and
testing, office space
Newport Beach, California Leased Office space
Newbury Park, California Leased Office space, manufacturing
Newbury Park, California Owned Manufacturing
Adamstown, Maryland Owned Manufacture electrical ceramic product components,
occupied by subsidiary
During the first quarter of fiscal 2003, we relocated our Haverhill,
Massachusetts operations to our Woburn, Massachusetts facility. Our facility in
Haverhill is currently on the market for sale. We also moved our operations from
our Newport Beach facilities to Irvine, California during the first quarter of
fiscal 2003. Both of these actions are part of our consolidation effort to
minimize costs. Based on this information, we believe that the above facilities
are in good repair, meet our existing needs adequately and operate at reasonable
levels of capacity.
Certain of our facilities, including our California and Mexicali, Mexico
facilities, are located near major earthquake fault lines. We maintain no
earthquake insurance with respect to these facilities.
ITEM 3 LEGAL PROCEEDINGS
From time to time various lawsuits, claims and proceedings have been, and may in
the future be, instituted or asserted against Skyworks, including those
pertaining to patent infringement, intellectual property, environmental, product
liability, safety and health, employment and contractual matters. In addition,
in connection with the Merger, Skyworks has assumed responsibility for all then
current and future litigation (including environmental and intellectual property
proceedings) against Conexant or its subsidiaries in respect of the operations
of Conexant's wireless business. The outcome of litigation cannot be predicted
with certainty and some lawsuits, claims or proceedings may be disposed of
unfavorably to Skyworks. Intellectual property disputes often have a risk of
injunctive relief which, if imposed against Skyworks, could materially and
adversely affect the financial condition or results of operations of Skyworks.
Additionally, the semiconductor industry is characterized by vigorous protection
and pursuit of intellectual property rights. From time to time, third parties
have asserted and may in the future assert patent, copyright, trademark and
other intellectual property rights to technologies that are important to our
business and have demanded and may in the future demand that we license their
technology.
On June 8, 2002 Skyworks Technologies, Inc. ("STI"), filed a complaint in the
United States District Court, in the Central District of California, Southern
Division, alleging trademark infringement, false designation of origin, unfair
competition, and false advertising by the Company. Without a material impact to
the financial statements, the Company reached an agreement on this matter with
STI, which includes a release of all pending claims and an arrangement for
mutual coexistence using the name Skyworks.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the quarter
ended September 27, 2002.
PART II
ITEM 5 MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
Our common stock is traded on the Nasdaq National Market under the symbol SWKS.
The following table sets forth the range of high and low sale prices for our
common stock for the periods indicated. The merger of the wireless business of
Conexant with Alpha and the acquisition of the Mexicali Operations
("Washington/Mexicali") was completed on June 25, 2002. Market
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Skyworks Solutions, Inc. and Subsidiaries
price range information for periods on and after June 26, 2002 reflects sale
prices for the common stock of the combined company, and market price range
information for all periods on and prior to June 25, 2002 reflects prices for
the common stock of Alpha on the Nasdaq National Market under the symbol AHAA.
Washington/Mexicali was not publicly traded prior to the Merger. The number of
stockholders of record of Skyworks as of December 4, 2002 was approximately
48,381.
Neither Skyworks nor its corporate predecessor, Alpha, have paid cash dividends
on common stock since an Alpha dividend made in fiscal 1986, and Skyworks does
not anticipate paying cash dividends in the foreseeable future. Our expectation
is to retain all of our earnings to finance future growth.
HIGH LOW
==================================================================
FISCAL YEAR ENDED SEPTEMBER 27, 2002:
First quarter .......................... $30.05 $16.55
Second quarter ......................... 22.92 15.25
Third quarter, until June 25,
2002 ................................... 16.97 5.56
Third quarter, on and after June 26,
2002 ................................... 5.70 4.99
Fourth quarter ......................... 5.90 2.90
FISCAL YEAR ENDED SEPTEMBER 28, 2001:
First quarter .......................... $54.00 $24.75
Second quarter ......................... 35.94 13.94
Third quarter .......................... 29.70 13.56
Fourth quarter ......................... 40.36 18.72
==================================================================
ITEM 6 SELECTED FINANCIAL DATA
You should read the data set forth below in conjunction with Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our consolidated financial statements and related notes
appearing elsewhere in this Annual Report on Form 10-K. The Company's fiscal
year ends on the Friday closest to September 30. Fiscal years 2002, 2001 and
2000 each comprised 52 weeks and ended on September 27, September 28 and
September 29, respectively. For convenience, the consolidated financial
statements have been shown as ending on the last day of the calendar month. The
selected consolidated financial data set forth below as of September 30, 2002
and 2001 and for the fiscal years 2002, 2001 and 2000 have been derived from our
audited consolidated financial statements and are included elsewhere in this
Annual Report on Form 10-K. The selected combined financial data set forth below
as of September 30, 2000, 1999 and 1998 and for the fiscal years 1999 and 1998
have been derived from our combined financial statements that are not included
in this Annual Report on Form 10-K.
Because the Merger was accounted for as a reverse acquisition, a purchase of
Alpha by Washington/Mexicali, the historical financial statements of
Washington/Mexicali became the historical financial statements of Skyworks after
the Merger. The historical information provided below does not include the
historical financial results of Alpha for periods prior to June 25, 2002, the
date the Merger was consummated. The historical financial information may not be
indicative of the Company's future performance and does not reflect what the
results of operations and financial position prior to the Merger would have been
had Washington/Mexicali operated independently of Conexant during the periods
presented prior to the Merger or had the results of Alpha been combined with
those of Washington/Mexicali during the periods presented prior to the Merger.
11
Skyworks Solutions, Inc. and Subsidiaries
FISCAL YEAR
2002(1) 2001 2000 1999 1998
====================================================================================================================================
(IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
Net revenues:
Third parties ............................... $ 418,344 $ 215,502 $ 312,983 $ 176,015 $ 79,066
Conexant .................................... 39,425 44,949 65,433 40,400 33,205
----------- ----------- ----------- ----------- -----------
Total net revenues ....................... 457,769 260,451 378,416 216,415 112,271
----------- ----------- ----------- ----------- -----------
Cost of goods sold (2):
Third parties ............................... 294,149 268,749 207,450 96,699 44,503
Conexant .................................... 37,459 42,754 62,720 37,840 33,350
----------- ----------- ----------- ----------- -----------
Total cost of goods sold .............. 331,608 311,503 270,170 134,539 77,853
----------- ----------- ----------- ----------- -----------
Gross margin .................................... 126,161 (51,052) 108,246 81,876 34,418
Operating expenses:
Research and development .................... 132,603 111,053 91,616 66,457 56,748
Selling, general and administrative ......... 50,178 51,267 52,422 27,202 21,211
Amortization of intangible assets (4)........ 12,929 15,267 5,327 -- --
Purchased in process research and
development (5)............................ 65,500 -- 24,362 -- --
Special charges (3) ......................... 116,321 88,876 -- 1,432 220
----------- ----------- ----------- ----------- -----------
Total operating expenses .................. 377,531 266,463 173,727 95,091 78,179
----------- ----------- ----------- ----------- -----------
Operating loss .................................. (251,370) (317,515) (65,481) (13,215) (43,761)
Interest expense ................................ (4,227) -- -- -- --
Other income (expense), net ..................... (56) 210 142 (54) 1,559
----------- ----------- ----------- ----------- -----------
Loss before income taxes ........................ (255,653) (317,305) (65,339) (13,269) (42,202)
Provision (benefit) for income taxes ............ (19,589) 1,619 1,140 1,646 1,082
----------- ----------- ----------- ----------- -----------
Net loss ........................................ $ (236,064) $ (318,924) $ (66,479) $ (14,915) $ (43,284)
=============================================================================
BALANCE SHEET DATA:
Working capital ................................. $ 79,769 $ 60,540 $ 135,649 $ 55,374 $ 17,831
Total assets .................................... 1,346,912 314,287 501,553 291,909 203,313
Long-term liabilities ........................... 184,309 3,806 3,767 3,335 2,063
Shareholders' equity ............................ 1,014,976 287,661 466,416 275,568 187,196
- ----------
12
Skyworks Solutions, Inc. and Subsidiaries
(1) The Merger was completed on June 25, 2002. Financial statements for
periods prior to June 26, 2002 represent Washington/Mexicali's
combined results and financial condition. Financial statements for
periods after June 26, 2002 represent the consolidated results and
financial condition of Skyworks, the combined company.
(2) In fiscal 2001, the Company recorded $58.7 million of inventory
write-downs.
(3) In fiscal 2002, the Company recorded special charges of $116.3
million, principally related to the impairment of the assembly and
test machinery and equipment and the related facility in Mexicali,
Mexico, and the write-off of goodwill and other intangible assets
related to the fiscal 2000 acquisition of Philsar Semiconductor Inc.
In fiscal 2001, the Company recorded special charges of $88.9
million, principally related to the impairment of certain wafer
fabrication assets and restructuring activities.
(4) In fiscal 2000, Philsar Semiconductor Inc. was acquired and as a
result of the acquisition, during fiscal 2002, 2001 and 2000, the
Company recorded $12.9 million, $15.3 million and $5.3 million,
respectively, in amortization of goodwill and other
acquisition-related intangible assets.
(5) In fiscal 2002 and fiscal 2000 the Company recorded purchased
in-process research and development charges of $65.5 million and
$24.4 million, respectively, related to the Merger and the
acquisition of Philsar Semiconductor Inc., respectively.
ITEM 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
On December 16, 2001, Alpha, Conexant and Washington Sub, Inc. ("Washington"), a
wholly owned subsidiary of Conexant, entered into a definitive agreement
providing for the combination of Conexant's wireless business with Alpha. Under
the terms of the agreement, Conexant would spin off its wireless business into
Washington, including its gallium arsenide wafer fabrication facility located in
Newbury Park, California, but excluding certain assets and liabilities, to be
followed immediately by the Merger of this wireless business into Alpha with
Alpha as the surviving entity in the Merger. The Merger was completed on June
25, 2002. Following the Merger, Alpha changed its corporate name to Skyworks
Solutions, Inc.
Immediately following completion of the Merger, the Company purchased the
Mexicali Operations for $150 million. For financial accounting purposes, the
sale of the Mexicali Operations by Conexant to Skyworks was treated as if
Conexant had contributed the Mexicali Operations to Washington as part of the
spin-off, and the $150 million purchase price was treated as a return of capital
to Conexant. Accordingly, our consolidated financial results include the assets,
liabilities, operating results and cash flows of the Washington business and the
Mexicali Operations for all periods presented, and also include the results of
operations of Alpha from June 25, 2002, the date of acquisition. The Washington
business and the Mexicali Operations are collectively referred to as
Washington/Mexicali. References to the "Company" refer to Washington/Mexicali
for all periods prior to June 26, 2002 and to the combined company following the
Merger.
The Merger was accounted for as a reverse acquisition whereby Washington was
treated as the acquirer and Alpha as the acquiree, primarily because Conexant
shareholders owned a majority, approximately 67 percent, of the Company upon
completion of the Merger. Under a reverse acquisition, the purchase price of
Alpha was based upon the fair market value of Alpha common stock for a
reasonable period of time before and after the announcement date of the Merger
and the fair value of Alpha stock options. The purchase price of Alpha was
allocated to the assets acquired and liabilities assumed by Washington, as the
acquiring company for accounting purposes, based upon their estimated fair
market value at the acquisition date. Because the Merger was accounted for as a
purchase of Alpha, the historical financial statements of Washington/ Mexicali
became the historical financial statements of the Company after the Merger.
Because the historical financial statements of the Company after the Merger do
not include the historical financial results of Alpha for periods prior to June
26, 2002, the financial statements may not be indicative of future results of
operations or the historical results that would have resulted if the Merger had
occurred at the beginning of a historical financial period.
Skyworks' fiscal year ends on the Friday closest to September 30. Fiscal years
2002, 2001 and 2000 each comprised 52 weeks and ended on September 27, September
28 and September 29, respectively. For convenience, the consolidated financial
statements have been shown as ending on the last day of the calendar month.
Accordingly, references to September 30, 2002, 2001 and 2000 contained in this
discussion refer to the actual fiscal year-end of the Company.
13
Skyworks Solutions, Inc. and Subsidiaries
Skyworks is a leading wireless semiconductor company focused on providing
front-end modules, radio frequency subsystems and complete system solutions to
wireless handset and infrastructure customers worldwide. We offer a
comprehensive family of components and RF subsystems, and also provide complete
antenna-to-microphone semiconductor solutions that support advanced 2.5G and 3G
services.
We have entered into various agreements with Conexant providing for the supply
of gallium arsenide wafer fabrication and assembly and test services to
Conexant, initially at substantially the same volumes as historically obtained
by Conexant from Washington/Mexicali. We have also entered into agreements with
Conexant providing for the supply to us of transition services by Conexant and
silicon-based wafer fabrication services by Jazz Semiconductor, Inc., a Newport
Beach, California foundry joint venture between Conexant and The Carlyle Group
to which Conexant contributed its Newport Beach wafer fabrication facility.
Historically, Washington/Mexicali obtained a portion of its silicon-based
semiconductors from the Newport Beach wafer fabrication facility. Pursuant to
our supply agreement with Conexant, we are initially obligated to obtain certain
minimum volume levels from Jazz Semiconductor based on a contractual agreement
between Conexant and Jazz Semiconductor.
The wireless communications semiconductor industry is highly cyclical and is
characterized by constant and rapid technological change, rapid product
obsolescence and price erosion, evolving standards, short product life cycles
and wide fluctuations in product supply and demand. Our operating results have
been, and our operating results may continue to be, negatively affected by
substantial quarterly and annual fluctuations and market downturns due to a
number of factors, such as changes in demand for end-user equipment, the timing
of the receipt, reduction or cancellation of significant customer orders, the
gain or loss of significant customers, market acceptance of our products and our
customers' products, our ability to develop, introduce and market new products
and technologies on a timely basis, availability and cost of products from
suppliers, new product and technology introductions by competitors, changes in
the mix of products produced and sold, intellectual property disputes, the
timing and extent of product development costs and general economic conditions.
In the past, average selling prices of established products have generally
declined over time and this trend is expected to continue in the future.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Among the significant estimates affecting our consolidated
financial statements are those relating to allowances for doubtful accounts,
inventories, long-lived assets, income taxes, warranties, restructuring costs
and other contingencies. We regularly evaluate our estimates and assumptions
based upon historical experience and various other factors that we believe to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. To the extent actual results differ
from those estimates, our future results operations may be affected. We believe
the following critical accounting policies affect our more significant judgments
and estimates used in the preparation of our consolidated financial statements.
Revenue Recognition -- Revenues from product sales are recognized upon shipment
and transfer of title, in accordance with the shipping terms specified in the
arrangement with the customer. Revenue recognition is deferred in all instances
where the earnings process is incomplete. Certain product sales are made to
electronic component distributors under agreements allowing for price protection
and/or a right of return on unsold products. A reserve for sales returns and
allowances for non-distributor customers is recorded based on historical
experience or specific identification of an event necessitating a reserve.
Development revenue is recognized when services are performed and has not been
significant for any of the periods presented.
Inventories -- We assess the recoverability of inventories through an on-going
review of inventory levels in relation to sales backlog and forecasts, product
marketing plans and product life cycles. When the inventory on hand exceeds the
foreseeable demand, we write down the value of those excess inventories. We sell
our products to communications equipment OEMs that have designed our products
into equipment such as cellular handsets. These design wins are gained through a
lengthy sales cycle, which includes providing technical support to the OEM
customer. Moreover, once a customer has designed a particular supplier's
components into a cellular handset, substituting another supplier's components
requires substantial design changes which involve significant cost, time, effort
and risk. In the event of the loss of business from existing OEM customers, we
may be unable to secure new customers for our existing products without first
achieving new design wins. Consequently, when the quantities of inventory on
hand exceed forecasted demand from existing OEM customers into whose products
our products have been designed, we generally will be unable to sell our excess
inventories to others, and the net realizable value of such inventories is
generally estimated to be zero. The amount of the write-down is the excess of
historical cost over estimated realizable value (generally zero). Once
established, these write-downs are considered permanent adjustments to the cost
basis of the excess inventory. Demand for our products may fluctuate
significantly over time, and actual demand and market conditions may be more or
less favorable than those projected by management. In the event that actual
demand is lower than originally projected, additional inventory write-downs may
be required.
Impairment of long-lived assets -- Long-lived assets, including fixed assets,
goodwill and intangible assets, are continually monitored and are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of any such asset may not be recoverable. The determination of
recoverability is based on an estimate of undiscounted cash flows expected to
result from the use of an asset and its eventual disposition. The estimate of
cash flows is based upon, among other
14
Skyworks Solutions, Inc. and Subsidiaries
things, certain assumptions about expected future operating performance. Our
estimates of undiscounted cash flows may differ from actual cash flows due to,
among other things, technological changes, economic conditions, changes to our
business model or changes in our operating performance. If the sum of the
undiscounted cash flows (excluding interest) is less than the carrying value, we
recognize an impairment loss, measured as the amount by which the carrying value
exceeds the fair value of the asset. Fair value is determined using discounted
cash flows.
Deferred income taxes -- We have provided a valuation allowance related to our
substantial United States deferred tax assets. If sufficient evidence of our
ability to generate sufficient future taxable income in certain tax
jurisdictions becomes apparent, we may be required to reduce our valuation
allowance, which may result in income tax benefits in our statement of
operations. Reduction of a portion of the valuation allowance may be applied to
reduce the carrying value of goodwill. The portion of the valuation allowance
for deferred tax assets for which subsequently recognized tax benefits may be
applied to reduce goodwill related to the purchase consideration of the Merger
is approximately $24 million. We evaluate the realizability of the deferred tax
assets and assess the need for a valuation allowance quarterly. In fiscal 2002,
the Company recorded a tax benefit of approximately $23 million related to the
impairment of our Mexicali assets. A valuation allowance has not been
established because the Company believes that the related deferred tax asset
will be recovered during the carry forward period.
Warranties -- Reserves for estimated product warranty costs are provided at the
time revenue is recognized. Although we engage in extensive product quality
programs and processes, our warranty obligation is affected by product failure
rates and costs incurred to rework or replace defective products. Should actual
product failure rates or costs differ from estimates, additional warranty
reserves could be required, which could reduce our gross margins.
Allowance for doubtful accounts -- We maintain allowances for doubtful accounts
for estimated losses resulting from the inability of our customers to make
required payments. If the financial condition of our customers were to
deteriorate, our actual losses may exceed our estimates, and additional
allowances would be required.
RESULTS OF OPERATIONS
GENERAL
In fiscal 2002, our revenues from product sales to third parties increased
approximately 94% from fiscal 2001, as a result of renewed demand for our
wireless product portfolio. The increased demand is partially due to reduction
in the level of excess channel inventories that had adversely affected the
digital cellular handset markets during fiscal 2001. Revenues attributable to
Alpha, post Merger, included in fiscal 2002 were approximately $36 million.
During 2002 the Company consolidated facilities, reduced its work force and
continued to implement cost saving initiatives. In addition, increased revenues
and improved utilization of our manufacturing facilities contributed to an
improvement in operating results in fiscal 2002. Cost of goods sold for fiscal
2002 was adversely affected by a charge of $5.1 million in connection with
expected losses for certain wafer fabrication commitments made under a supply
agreement with Conexant whereby we are initially obligated to obtain certain
minimum volume levels from Jazz Semiconductor, Inc. Cost of goods sold for
fiscal 2002 also reflects approximately $3.1 million of additional costs related
to the Merger.
15
Skyworks Solutions, Inc. and Subsidiaries
During fiscal 2001, we -- like many of our customers and competitors -- were
adversely impacted by a broad slowdown affecting the wireless communications
sector, including most of the end-markets for our products. Our net revenues for
fiscal 2001 reflected deterioration in the digital cellular handset market
resulting from excess channel inventories due to a slowdown in demand for mobile
phones and a slower transition to next-generation phones. The effect of weakened
end-customer demand was compounded by higher than normal levels of component
inventories among manufacturer, subcontractor and distributor customers. The
overall slowdown in the wireless communications markets also affected our gross
margins and operating income. Cost of goods sold for fiscal 2001 was adversely
affected by the significant underutilization of manufacturing capacity. Cost of
goods sold for fiscal 2001 also reflects $58.7 million of inventory write-downs
across our product portfolio resulting from the sharply reduced end-customer
demand for digital cellular handsets.
EXPENSE REDUCTION AND RESTRUCTURING INITIATIVES
During fiscal 2002, the Company reduced its workforce through involuntary
severance programs and recorded restructuring charges of approximately $3.0
million for costs related to the workforce reduction and the consolidation of
certain facilities. The charges were based upon estimates of the cost of
severance benefits for affected employees and lease cancellation, facility
sales, and other costs related to the consolidation of facilities. Substantially
all amounts accrued for these actions are expected to be paid within one year.
In fiscal 2001, we implemented a number of expense reduction and restructuring
initiatives to more closely align our cost structure with the then-current
business environment. The cost reduction initiatives included workforce
reductions, temporary shutdowns of manufacturing facilities and significant
reductions in capital spending.
Through involuntary severance programs and attrition, we reduced our workforce
in fiscal 2001 by approximately 250 employees (principally in our manufacturing
operations). In addition, we periodically idled our Newbury Park, California
wafer fabrication facility and, for a portion of fiscal 2001, implemented a
reduced workweek at our Mexicali facility.
We recorded restructuring charges of $2.7 million in fiscal 2001 related to the
workforce reductions completed through September 30, 2001. The restructuring
initiatives and other expense reduction actions resulted in a quarterly
reduction of operating expenses of approximately $4.8 million for the fourth
quarter of fiscal 2001 as compared with the second quarter of fiscal 2001.
ASSET IMPAIRMENTS
During the third quarter of fiscal 2002, the Company recorded a $66.0 million
charge for the impairment of the assembly and test machinery and equipment and
related facility in Mexicali, Mexico. The impairment charge was based on a
recoverability analysis prepared by management as a result of a significant
downturn in the market for test and assembly services for non-wireless products
and the related impact on our current and projected outlook.
The Company experienced a severe decline in factory utilization at its Mexicali
facility for non-wireless products and projected decreasing revenues and new
order volume. Management believed these factors indicated that the carrying
value of the assembly and test machinery and equipment and related facility may
have been impaired and that an impairment analysis should be performed. In
performing the analysis for recoverability, management estimated the future cash
flows expected to result from the manufacturing activities at the Mexicali
facility over a ten-year period. The estimated future cash flows were based on a
gradual phase-out of services sold to Conexant and modest volume increases
consistent with management's view of the outlook for the business, partially
offset by declining average selling prices. The declines in average selling
prices were consistent with historical trends and management's decision to
reduce capital expenditures for future capacity expansion. Since the estimated
undiscounted cash flows were less than the carrying value (approximately $100
million based on historical cost) of the related assets, it was concluded that
an impairment loss should be recognized. The impairment charge was determined by
comparing the estimated fair value of the related assets to their carrying
value. The fair value of the assets was determined by computing the present
value of the estimated future cash flows using a discount rate of 24%, which
management believed was commensurate with the underlying risks associated with
the projected future cash flows. We believe the assumptions used in the
discounted cash flow model represented a reasonable estimate of the fair value
of the assets. The write down established a new cost basis for the impaired
assets.
During the third quarter of fiscal 2002, the Company recorded a $45.8 million
charge for the write-off of goodwill and other intangible assets associated with
our May 2000 acquisition of Philsar Semiconductor Inc. ("Philsar"). Philsar was
a developer
16
Skyworks Solutions, Inc. and Subsidiaries
of radio frequency semiconductor solutions for personal wireless connectivity,
including emerging standards such as Bluetooth, and radio frequency components
for third-generation (3G) digital cellular handsets. Management determined that
the Company would not support the technology associated with the Philsar
Bluetooth business. Accordingly, this product line has been discontinued and the
employees associated with the product line have either been severed or relocated
to other operations. As a result of the actions taken, management determined
that the remaining goodwill and other intangible assets associated with the
Philsar acquisition had been impaired.
Goodwill and intangible assets resulting from the Merger will be tested for
impairment following the guidelines established in SFAS 142,which addresses
financial accounting and reporting for acquired goodwill and other intangible
assets. We will adopt SFAS 142 in the beginning of our 2003 fiscal year, and are
required to perform a transitional impairment test for goodwill upon adoption.
We may be required to record a substantial transitional impairment charge as a
result of adopting SFAS 142. The carrying value of goodwill and intangible
assets, subject to the transitional impairment test, is approximately $907.5
million at September 30, 2002.
During the third quarter of fiscal 2001, the Company recorded an $86.2 million
charge for the impairment of the manufacturing facility and related wafer
fabrication machinery and equipment at the Company's Newbury Park, California
facility. This impairment charge was based on a recoverability analysis prepared
by management as a result of the dramatic downturn in the market for wireless
communications products and the related impact on the then-current and projected
business outlook of the Company. Through the third quarter of fiscal 2001, the
Company experienced a severe decline in factory utilization at the Newbury Park
wafer fabrication facility and decreasing revenues, backlog, and new order
volume. Management believed these factors, together with its decision to
significantly reduce future capital expenditures for advanced process
technologies and capacity beyond the then-current levels, indicated that the
value of the Newbury Park facility may have been impaired and that an impairment
analysis should be performed. In performing the analysis for recoverability,
management estimated the future cash flows expected to result from the
manufacturing activities at the Newbury Park facility over a ten-year period.
The estimated future cash flows were based on modest volume increases consistent
with management's view of the outlook for the industry, partially offset by
declining average selling prices. The declines in average selling prices were
consistent with historical trends and management's decision to focus on existing
products based on the current technology. Since the estimated undiscounted cash
flows were less than the carrying value (approximately $106 million based on
historical cost) of the related assets, it was concluded that an impairment loss
should be recognized. The impairment charge was determined by comparing the
estimated fair value of the related assets to their carrying value. The fair
value of the assets was determined by computing the present value of the
estimated future cash flows using a discount rate of 30%, which management
believed was commensurate with the underlying risks associated with the
projected cash flows. The Company believes the assumptions used in the
discounted cash flow model represented a reasonable estimate of the fair value
of the assets. The write-down established a new cost basis for the impaired
assets.
YEARS ENDED SEPTEMBER 30, 2002, 2001 AND 2000
The following table sets forth the results of our operations expressed as a
percentage of net revenues for the fiscal years below:
2002 2001 2000
------ ------ ------
Net revenues ............................ 100.0% 100.0% 100.0%
Cost of goods sold ...................... 72.4 119.6 71.4
------ ------ ------
Gross margin ............................ 27.6 (19.6) 28.6
Operating expenses:
Research and development .............. 29.0 42.6 24.2
Selling, general and administrative ... 11.0 19.7 13.9
Amortization of intangible assets ..... 2.8 5.9 1.4
Purchased in-process research and
development ........................ 14.3 -- 6.4
Special charges ....................... 25.4 34.1 --
------ ------ ------
Total operating expenses ........... 82.5 102.3 45.9
------ ------ ------
Operating loss .......................... (54.9) (121.9) (17.3)
Other income (expense), net ............. (0.9) 0.1 --
------ ------ ------
Loss before income taxes ................ (55.8) (121.8) (17.3)
Provision (benefit) for income taxes .... (4.3) 0.7 0.3
------ ------ ------
Net loss ................................ (51.6)% (122.5)% (17.6)%
====== ------ ======
17
Skyworks Solutions, Inc. and Subsidiaries
NET REVENUES
YEARS ENDED SEPTEMBER 30,
--------------------------------------------------------------
2002 CHANGE 2001 CHANGE 2000
--------- ------ --------- ------ ---------
(in thousands)
Net revenues:
Third parties . $ 418,344 94.1% $ 215,502 (31.1)% $ 312,983
Conexant ...... 39,425 (12.3)% 44,949 (31.3)% 65,433
--------- ---- --------- ---- ---------
$ 457,769 75.8% $ 260,451 (31.2)% $ 378,416
========= ==== ========= ==== =========
We market and sell our semiconductor products and system solutions to leading
OEMs of communication electronics products, third-party original design
manufacturers, or ODMs, and contract manufacturers and indirectly through
electronic components distributors. Samsung Electronics Co. accounted for 38%,
44% and 28% of net revenues from customers other than Conexant for the fiscal
years ended September 30, 2002, 2001 and 2000 respectively. Motorola, Inc.
accounted for 12% of net revenues from customers other than Conexant for the
fiscal year ended September 30, 2002. Revenues derived from customers other than
Conexant located in the Americas region decreased from 11% and 13% in 2001 and
2000, respectively, to 9% in fiscal 2002. Revenues derived from customers other
than Conexant located in the Asia-Pacific region increased from 77% and 68% in
2001 and 2000, respectively, to 84% in fiscal 2002. Revenues derived from
customers other than Conexant located in the Europe/Middle East/Africa region
decreased from 12% and 19% in 2001 and 2000, respectively, to 7% in fiscal 2002.
The foregoing percentages are based on sales representing Washington/Mexicali
sales for the full fiscal year during 2002, 2001 and 2000 and including sales of
Skyworks for the post-Merger period from June 26, 2002 through the end of the
fiscal year.
We recognize revenues from product sales directly to our customers and to
distributors upon shipment and transfer of title. Provision for sales returns is
made at the time of sale based on experience. An insignificant portion of
product sales are made to electronic component distributors under agreements
allowing for price protection and/or a right of return on unsold products.
Revenues from product sales to customers other than Conexant, which represented
91%, 83% and 83% of total net revenues for the fiscal years 2002, 2001 and 2000,
respectively, increased 94% in 2002 principally reflecting increased sales of
GSM products, including power amplifier modules and complete cellular systems.
We also experienced increased demand for our power amplifier modules for CDMA
and TDMA applications from a number of our key customers. Revenues attributable
to Alpha, post Merger, included in fiscal 2002 were approximately $36 million.
Revenues from product sales to customers other than Conexant decreased 31% when
comparing fiscal 2001 to fiscal 2000 principally resulting from the significant
decrease in demand throughout the industry during this period.
Revenues from wafer fabrication and semiconductor assembly and test services
provided to Conexant represented 9%, 17% and 17% of total revenues for fiscal
2002, 2001 and 2000, respectively. The decrease in 2002 when compared to the
prior years is primarily attributable to lower demand for assembly and test
services from Conexant's Mindspeed Technologies and broadband access businesses
due to the broad slowdown affecting most of the communications electronics
end-markets for Conexant's products.
GROSS MARGIN
YEARS ENDED SEPTEMBER 30,
-------------------------------------
2002 2001 2000
-------- -------- --------
(in thousands)
Gross margin:
Third parties ...................... $124,195 $(53,247) $105,533
% of net revenues from third parties 30% (25)% 34%
Conexant ........................... $ 1,966 $ 2,195 $ 2,713
% of net revenues from Conexant .... 5% 5% 4%
Gross margin represents net revenues less cost of goods sold. Cost of goods sold
consists primarily of purchased materials, labor and overhead (including
depreciation) associated with product manufacturing, royalty and other
intellectual property
18
Skyworks Solutions, Inc. and Subsidiaries
costs, warranties and sustaining engineering expenses pertaining to products
sold. Cost of goods sold also includes allocations from Conexant through June
25, 2002 of manufacturing cost variances, process engineering and other
manufacturing costs which are not included in our unit costs but are expensed as
incurred.
The improvement in gross margin from third party sales for fiscal 2002, compared
with fiscal 2001, reflects increased revenues, improved utilization of our
manufacturing facilities and a decrease in depreciation expense that resulted
from the write-down of the Newbury Park wafer fabrication assets in the third
quarter of fiscal 2001 and the Mexicali facility assets in the third quarter of
2002. The effect of the write-down of the Newbury Park wafer fabrication assets
and the Mexicali facility assets on fiscal 2002 gross margin was approximately
$10.5 million and $5.5 million, respectively. Although recent revenue growth has
increased the level of utilization of our manufacturing facilities, these
facilities continue to operate below optimal capacity and underutilization
continues to adversely affect our unit cost of goods sold and gross margin.
Gross margin for fiscal 2002 was also adversely impacted by additional warranty
costs of $14.0 million. The additional warranty costs were the result of an
agreement with a major customer for the reimbursement of costs the customer
incurred in connection with the failure of a product when used in a certain
adverse environment. Although we developed and sold the product to the customer
pursuant to mutually agreed-upon specifications, the product experienced unusual
failures when used in an environment in which the product had not been
previously tested. The product has since been modified and no additional costs
are expected to be incurred in connection with this issue. In addition, under a
wafer fabrication supply agreement with Conexant, we are initially obligated to
obtain certain minimum volume levels from Jazz Semiconductor, Inc. based on a
contractual agreement between Conexant and Jazz Semiconductor. We originally
estimated our obligation under this agreement would result in excess costs of
approximately $13.2 million when recorded as a liability and charged to cost of
sales in the third quarter of fiscal 2002. During the fourth quarter of fiscal
2002, we reevaluated this obligation and reduced our liability and cost of sales
by approximately $8.1 million in the quarter. Gross margin for the year ended
September 30, 2002 benefited by approximately $12.5 million as a result of the
sale of inventories having a historical cost of $12.5 million that were written
down to a zero cost basis during fiscal year 2001; such sales resulted from
sharply increased demand beginning in the fourth quarter of fiscal 2001 that was
not anticipated at the time of the write-downs. Gross margin for fiscal 2001 was
adversely affected by inventory write-downs of approximately $58.7 million,
partially offset by approximately $4.5 million of subsequent sales of
inventories written down to a zero cost basis.
The inventory write-downs recorded in fiscal 2001 resulted from the sharply
reduced end-customer demand we experienced, primarily associated with our radio
frequency components, as a result of the rapidly changing demand environment for
digital cellular handsets during that period. As a result of these market
conditions, we experienced a significant number of order cancellations and a
decline in the volume of new orders, beginning in the fiscal 2001 first quarter
and becoming more pronounced in the second quarter.
During fiscal 2002, we sold an additional $12.5 million of inventories
previously written down to a zero cost basis. As of September 30, 2002, we
continued to hold inventories with an original cost of approximately $5.4
million which were previously written down to a zero cost basis. We currently
intend to hold these remaining inventories and will sell these inventories if we
experience renewed demand for these products. While there can be no assurance
that we will be able to do so, if we are able to sell a portion of the
inventories that are carried at zero cost basis, our gross margins will be
favorably affected. To the extent that we do not experience renewed demand for
the remaining inventories, they will be scrapped as they become obsolete.
Approximately $1.8 million and $34.5 million of inventories that were carried at
zero cost basis were scrapped during fiscal 2002 and 2001, respectively.
19
Skyworks Solutions, Inc. and Subsidiaries
Under supply agreements entered into with Conexant in connection with the
Merger, we will receive wafer fabrication, wafer probe and certain other
services from Jazz Semiconductor's Newport Beach, California foundry, and we
will provide wafer fabrication, wafer probe, final test and other services to
Conexant at our Newbury Park facility, in each case, for a three-year period
after the Merger. We will also provide semiconductor assembly and test services
to Conexant at our Mexicali facility.
During the term of one of our supply agreements with Conexant, our unit cost of
goods supplied by Jazz Semiconductor Inc.'s Newport Beach foundry will continue
to be affected by the level of utilization of the Newport Beach foundry joint
venture's wafer fabrication facility and other factors outside our control.
Pursuant to the terms of this supply agreement with Conexant, we are committed
to obtain a minimum level of service from Jazz Semiconductor, Inc., a Newport
Beach, California foundry joint venture between Conexant and The Carlyle Group
to which Conexant contributed its Newport Beach wafer fabrication facility. We
estimate that our obligation under this agreement will result in excess costs of
approximately $5.1 million and we have recorded this liability in the current
period. In addition, our costs will be affected by the extent of our use of
outside foundries and the pricing we are able to obtain. During periods of high
industry demand for wafer fabrication capacity, we may have to pay higher prices
to secure wafer fabrication capacity.
RESEARCH AND DEVELOPMENT
YEARS ENDED SEPTEMBER 30,
----------------------------------------------------------------
2002 CHANGE 2001 CHANGE 2000
-------- -------- -------- -------- --------
(in thousands)
Research and development $132,603 19% $111,053 21% $ 91,616
% of net revenues ...... 29% 43% 24%
Research and development expenses consist principally of direct personnel costs,
costs for pre-production evaluation and testing of new devices and design and
test tool costs. Research and development expenses also include allocated costs
for shared research and development services provided by Conexant through June
25, 2002, principally in the areas of advanced semiconductor process
development, design automation and advanced package development, for the benefit
of several of Conexant's businesses.
The increase in research and development expenses in fiscal 2002 compared to
fiscal 2001 primarily reflects the opening of a new design center in Le Mans,
France and higher headcount and personnel-related costs. Subsequent to the first
quarter of fiscal 2001, we expanded customer support engagements as well as
development efforts targeting semiconductor solutions using the CDMA2000, GSM,
General Packet Radio Services, or GPRS, and third-generation, or 3G, wireless
standards in both the digital cellular handset and infrastructure markets.
During fiscal 2001, the Company focused its research and development investment
principally on wireless communications applications such as next generation
power amplifiers, radio frequency subsystems and cellular systems. In
particular, the Company has focused a significant amount of research and
development resources in developing complete network protocol stacks and user
interface software in support of its cellular systems initiative. The increase
in research and development expenses for fiscal 2001 primarily reflects higher
headcount and personnel-related costs to support the Company's expanded
development efforts and the accelerated launch of new products. The higher
fiscal 2001 research and development expenses also include costs of
approximately $5.6 million resulting from the acquisition of Philsar in fiscal
2000.
Under transition services agreements with Conexant entered into in connection
with the Merger, Conexant will continue to perform various research and
development services for us at actual cost generally until December 31, 2002,
unless the parties otherwise agree. To the extent we use these services
subsequent to the expiration of the specified term, the pricing is subject to
negotiation.
SELLING, GENERAL AND ADMINISTRATIVE
YEARS ENDED SEPTEMBER 30,
-------------------------------------------------------------
2002 CHANGE 2001 CHANGE 2000
------- ------- ------- ------- -------
(in thousands)
Selling, general and administrative $50,178 (2)% $51,267 (2)% $52,422
% of net revenues ................. 11% 20% 14%
Selling, general and administrative expenses include personnel costs, sales
representative commissions, advertising and other marketing costs. Selling,
general and administrative expenses also include allocated general and
administrative expenses from
20
Skyworks Solutions, Inc. and Subsidiaries
Conexant through June 25, 2002 for a variety of shared functions, including
legal, accounting, treasury, human resources, real estate, information systems,
customer service, sales, marketing, field application engineering and other
corporate services.
The decrease in selling, general and administrative expenses in fiscal 2002
compared to fiscal 2001 and in fiscal 2001 compared to fiscal 2000 primarily
reflects lower headcount and personnel-related costs resulting from the expense
reduction and restructuring actions initiated during fiscal 2001 and lower
provisions for uncollectible accounts receivable.
Under the transition services agreement, Conexant will continue to perform
various services for us at actual cost until December 31, 2002, unless the
parties otherwise agree. To the extent we use these services subsequent to the
expiration of the specified term, the pricing is subject to negotiation.
AMORTIZATION OF INTANGIBLE ASSETS
YEARS ENDED SEPTEMBER 30,
-----------------------------------------------------------
2002 CHANGE 2001 CHANGE 2000
------- ------- ------- ------- -------
(in thousands)
Amortization of intangible assets $12,929 (15)% $15,267 nm $ 5,327
% of net revenues ............... 3% 6% 1%
nm = not meaningful
In 2002, the Company recorded $36.4 million of intangible assets related to the
Merger consisting of developed technology, customer relationships and a
trademark. These assets are being amortized over their estimated useful lives
(principally ten years).
We will adopt SFAS 142 in the beginning of our 2003 fiscal year, and are
required to perform a transitional impairment test for goodwill upon adoption.
We may be required to record a substantial transitional impairment charge as a
result of adopting SFAS 142. The carrying value of goodwill and intangible
assets, subject to the transitional impairment test, is approximately $907.5
million at September 30, 2002.
In connection with the fiscal 2000 acquisition of Philsar, we recorded an
aggregate of $78.2 million of identified intangible assets and goodwill. These
assets have been amortized over their estimated useful lives (principally five
years). During the third quarter of fiscal 2002, the Company recorded a $45.8
million charge for the write-off of goodwill and other intangible assets
associated with our acquisition of the Philsar Bluetooth business. Management
has determined that the Company will not support the technology associated with
the Philsar Bluetooth business. Accordingly, this product line has been
discontinued and the employees associated with the product line have either been
severed or relocated to other operations. As a result of the actions taken,
management determined that the remaining goodwill and other intangible assets
associated with the Philsar acquisition had been impaired. The Philsar write-off
resulted in a decrease in amortization expense in fiscal 2002.
The increase in amortization of intangible assets in fiscal 2001 compared to
fiscal 2000 is the result of the Philsar acquisition in 2000 and the associated
amortization of the recorded goodwill and intangible assets that were related to
this transaction.
PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT
In connection with the Merger in the third quarter of fiscal 2002, $65.5 million
was allocated to purchased in-process research and development and expensed
immediately upon completion of the acquisition (as a charge not deductible for
tax purposes) because the technological feasibility of certain products under
development had not been established and no future alternative uses existed.
Prior to the Merger, Alpha was in the process of developing new technologies in
its semiconductor and ceramics segments. The objective of the in-process
research and development effort was to develop new semiconductor processes,
ceramic materials and related products to satisfy customer requirements in the
wireless and broadband markets. The following table summarizes the significant
assumptions underlying the valuations of the Alpha in-process research and
development (IPR&D) at the time of acquisition.
21
Skyworks Solutions, Inc. and Subsidiaries
Estimated costs to Discount rate
(in millions) Date Acquired IPRD complete projects applied to IPRD
------------- ----- ------------------ ---------------
Alpha June 25, 2002 $65.5 $10.3 30%
The semiconductor segment was involved in several projects that have been
aggregated into the following categories based on the respective technologies:
Power Amplifier
Power amplifiers are designed and manufactured for use in different
types of wireless handsets. The main performance attributes of these
amplifiers are efficiency, power output, operating voltage and
distortion. Current research and development is focused on expanding
the offering to all types of wireless standards, improving
performance by process and circuit improvements and offering a
higher level of integration.
Control Products
Control products consist of switches and switch filters that are
used in wireless applications for signal routing. Most applications
are in the handset market enabling multi-mode, multi-band handsets.
Current research and development is focused on performance
improvement and cost reduction by reducing chip size and increasing
functionality.
Broadband
The products in this grouping consist of radio frequency (RF) and
millimeter wave semiconductors and components designed and
manufactured specifically to address the needs of high-speed,
wireline and wireless network access. Current and long-term research
and development is focused on performance enhancement of speed and
bandwidth as well as cost reduction and integration.
Silicon Diode
These products use silicon processes to fabricate diodes for use in
a variety of RF and wireless applications. Current research and
development is focused on reducing the size of the device, improving
performance and reducing cost.
Ceramics
The ceramics segment was involved in projects that relate to the
design and manufacture of ceramic-based components such as
resonators and filters for the wireless infrastructure market.
Current research and development is focused on performance
enhancements through improved formulations and electronic designs.
The material risks associated with the successful completion of the in-process
technology are associated with the Company's ability to successfully finish the
creation of viable prototypes and successful design of the chips, masks and
manufacturing processes required. The Company expects to benefit from the
in-process projects as the individual products that contain the in-process
technology are put into production and sold to end-users. The release dates for
each of the products within the product families are varied. The fair value of
the in-process research and development was determined using the income
approach. Under the income approach, the fair value reflects the present value
of the projected cash flows that are expected to be generated by the products
incorporating the in-process research and development, if successful.
The projected cash flows were discounted to approximate fair value. The discount
rate applicable to the cash flows of each project reflects the stage of
completion and other risks inherent in each project. The weighted average
discount rate used in the valuation of in-process research and development was
30 percent. The IPR&D projects were expected to commence generating cash flows
in fiscal 2003.
Special Charges
Asset Impairments
During the third quarter of fiscal 2002, the Company recorded a $66.0 million
charge for the impairment of the assembly and test machinery and equipment and
related facility in Mexicali, Mexico. The impairment charge was based on a
recoverability analysis prepared by management as a result of a significant
downturn in the market for test and assembly services for non-wireless products
and the related impact on the Company's current and projected outlook.
The Company has experienced a severe decline in factory utilization at its
Mexicali facility for non-wireless products and projected decreasing revenues
and new order volume. Management believes these factors indicated that the
carrying value of the assembly and test machinery and equipment and related
facility may have been impaired and that an impairment analysis should be
performed. In performing the analysis for recoverability, management estimated
the future cash flows expected to result from the manufacturing activities at
the Mexicali facility over a ten-year period. The estimated future cash flows
were based on a gradual phase-out of services sold to Conexant and modest volume
increases consistent with management's view of the outlook for the business,
partially offset by declining average selling prices. The declines in average
selling prices are consistent with historical trends and management's decision
to reduce capital expenditures for future capacity expansion. Since the
estimated undiscounted cash flows were less than the carrying value
(approximately $100 million based on historical cost) of the related assets, it
was concluded that an impairment loss should be recognized. The impairment
charge was determined by comparing the estimated fair value of the related
assets to their carrying value. The fair value of the assets was determined by
computing the present value of the estimated future cash flows using a discount
rate of 24%, which management believed was commensurate with the underlying
risks associated with the projected future cash flows. The Company believes the
assumptions used in the discounted cash flow model represented a reasonable
estimate of the fair value of the assets. The write down established a new cost
basis for the impaired assets.
During the third quarter of fiscal 2002, the Company recorded a $45.8 million
charge for the write-off of goodwill and other intangible assets associated with
our fiscal 2000 acquisition of the Philsar Bluetooth business. Management has
determined that the Company will not support the technology associated with the
Philsar Bluetooth business. Accordingly, this product line will be discontinued
and the employees associated with the product line have either been severed or
relocated to other operations. As a result of the actions taken, management
determined that the remaining goodwill and other intangible assets associated
with the Philsar acquisition had been impaired.
During the third quarter of fiscal 2001, the Company recorded an $86.2 million
charge for the impairment of the manufacturing facility and related wafer
fabrication machinery and equipment at the Company's Newbury Park, California
facility. This impairment charge was based on a recoverability analysis prepared
by management as a result of the dramatic downturn in the market for wireless
communications products and the related impact on the then-current and projected
business outlook of the Company. Through the third quarter of fiscal 2001, the
Company experienced a severe decline in factory utilization at the Newbury Park
wafer fabrication facility and decreasing revenues, backlog, and new order
volume. Management believed these factors, together with its decision to
significantly reduce future capital expenditures for advanced process
technologies and capacity beyond the then-current levels, indicated that the
value of the Newbury Park facility may have been impaired and that an impairment
analysis should be performed. In performing the analysis for recoverability,
management estimated the future cash flows expected to result from the
manufacturing activities at the Newbury Park facility over a ten-year period.
The estimated future cash flows were based on modest volume increases consistent
with management's view of the outlook for the industry, partially offset by
declining average selling prices. The declines in average selling prices are
consistent with historical trends and management's decision to focus on existing
products based on the current technology. Since the estimated undiscounted cash
flows were less than the carrying value (approximately $106 million based on
historical cost) of the related assets, it was concluded that an impairment loss
should be recognized. The impairment charge was determined by comparing the
estimated fair value of the related assets to their carrying value. The fair
value of the assets was determined by computing the present value of the
estimated future cash flows using a discount rate of 30%, which management
believed was commensurate with the underlying risks associated with the
projected cash flows. The Company believes the assumptions used in the
discounted cash flow model represented a reasonable estimate of the fair value
of the assets. The write-down established a new cost basis for the impaired
assets.
Restructuring Charges
During fiscal 2002, the Company reduced its workforce through involuntary
severance programs and recorded restructuring charges of approximately $3.0
million for costs related to the workforce reduction and the consolidation of
certain facilities. The charges were based upon estimates of the cost of
severance benefits for affected employees and lease cancellation, facility
sales, and other costs related to the consolidation of facilities. Substantially
all amounts accrued for these actions are expected to be paid within one year.
During fiscal 2001, Washington/Mexicali reduced its workforce by approximately
250 employees, including approximately 230 employees in manufacturing
operations. Restructuring charges of $2.7 million were recorded for such actions
and were based upon estimates of the cost of severance benefits for the affected
employees. Substantially all amounts accrued for these actions are expected to
be paid within one year.
Activity and liability balances related to the fiscal 2001 and fiscal 2002
restructuring actions are as follows (in thousands):
Fiscal 2002 Fiscal 2002
Fiscal 2001 workforce facility closings
actions reductions and other Total
------- ---------- --------- -----
Charged to costs and expenses................. $ 2,667
Cash payments................................. (1,943)
Restructuring balance, September 30, 2001..... 724 $ -- $ -- $ 724
Charged to costs and expenses................. 65 2,923 97 3,085
Cash payments................................. (789) (2,225) (13) (3,027)
--------- --------- ----------- ---------
Restructuring balance, September 30, 2002..... $ -- $ 698 $ 84 $ 782
========= ========= =========== =========
In addition, the Company assumed approximately $7.8 million of restructuring
reserves from Alpha in connection with the Merger. On September 27, 2002 this
balance was $6.7 million and substantially all amounts accrued are expected to
be paid within one year.
OTHER INCOME (EXPENSE), NET
Other income (expense), net is comprised primarily of interest expense, interest
income on invested cash balances, gains/losses on the sale of assets, foreign
exchange gains/losses and other non-operating income and expense items. The
decrease to $4.3 million of other expense, net in fiscal 2002 from $0.2 million
of other income, net in fiscal 2001 is principally the result of
22
Skyworks Solutions, Inc. and Subsidiaries
approximately $4.1 million of additional interest expense related to the
short-term note to Conexant for the Mexicali facility purchase.
PROVISION FOR INCOME TAXES
The net operating loss carryforwards and other tax benefits relating to the
historical operations of Washington/Mexicali were retained by Conexant in the
spin-off transaction, and will not be available to be utilized in our future
separate tax returns. As a result of our history of operating losses and the
expectation of future operating results, we determined that it is more likely
than not that historic and current year income tax benefits will not be realized
except for certain future deductions associated with Mexicali in the
post-spin-off period. Consequently, no United States income tax benefit has been
recognized relating to the U.S. operating losses. As of September 30, 2002, we
have established a valuation allowance against all of our net U.S. deferred tax
assets. Deferred tax assets have been recognized for foreign operations when
management believes they will be recovered during the carry forward period.
The provision (benefit) for income taxes for fiscal 2002, 2001 and 2000 consists
of foreign income taxes incurred by foreign operations. We do not expect to
recognize any income tax benefits relating to future operating losses generated
in the United States until management determines that such benefits are more
likely than not to be realized. In 2002, the Company recorded a tax benefit of
approximately $23 million related to the impairment of our Mexicali assets.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents at September 30, 2002, 2001 and 2000 totaled $53.4
million, $2.0 million and $4.2 million, respectively. Working capital at
September 30, 2002 was approximately $79.8 million compared to $60.5 million at
September 30, 2001. Annualized inventory turns were approximately 6.9 for the
fourth quarter of fiscal 2002. Additionally, days sales outstanding included in
accounts receivable for the fourth quarter of fiscal 2002 was approximately 57
days.
Cash used in operating activities was $99.1 million for fiscal 2002, reflecting
a net loss of $236.1 million, offset by non-cash charges (depreciation and
amortization, asset impairments and an in-process research and development
charge) of $216.6 million and a net increase in the non-cash components of
working capital of approximately $79.6 million. During 2002 the Company
consolidated facilities, reduced its work force and continued to implement cost
saving initiatives. In addition, increased revenues and improved utilization of
our manufacturing facilities contributed to improved operating results in fiscal
2002.
Cash provided by investing activities for fiscal 2002 consisted of capital
expenditures of $29.4 million and dividends to Conexant of $3.1 million offset
by cash received of $67.1 million as a result of the Merger and $35.4 million
from the sale of short-term investments acquired in the Merger. The capital
expenditures for fiscal 2002 reflect a significant reduction from annual capital
expenditures in fiscal 2001, a key component of the cost reduction initiatives
implemented in fiscal 2002.
Cash provided by financing activities for fiscal 2002 principally consisted of
net transfers from Conexant, pre-Merger, of $50.4 million and $30.0 million of
proceeds from borrowings against the revolving credit facility with Conexant.
On September 30, 2002, the Company had $150 million in short-term promissory
notes payable to Conexant pursuant to a financing agreement entered into in
connection with the purchase of the Mexicali Operations. The notes were secured
by the assets and properties of the Company. Unless paid earlier at the option
of the Company or pursuant to mandatory prepayment provisions contained in the
financing agreement with Conexant, fifty percent of the principal portion of the
short-term promissory notes was due on March 24, 2003, and the remaining fifty
percent of the notes was due on June 24, 2003. Interest on these notes was
payable quarterly at a rate of 10% per annum for the first ninety days following
June 25, 2002, 12% per annum for the next ninety days and 15% per annum
thereafter. Because the Company refinanced these notes, the principal amount was
classified on September 30, 2002 as a long-term note payable. In addition, on
September 30, 2002 the Company had available a short-term $100 million loan
facility from Conexant under the financing agreement to fund the Company's
working capital and other requirements. $75 million of this facility became
available on or after July 10, 2002, and the remaining $25 million balance of
the facility would have become available if the Company had more than $150
million of eligible domestic receivables. The entire principal of any amounts
borrowed under the facility was due on June 24, 2003. There were $30 million of
borrowings as of September 30, 2002 under this facility. Because the Company
refinanced the amounts borrowed under this loan facility, the principal amount
was classified on September 30, 2002 as a long-term note payable.
On November 13, 2002, Skyworks successfully closed a private placement of $230
million of 4.75 percent convertible subordinated notes due 2007. These notes can
be converted into 110.4911 shares of common stock per $1,000 principal balance,
which is the equivalent of a conversion price of approximately $9.05 per share.
The net proceeds from the note offering were principally used to prepay debt
owed to Conexant
23
Skyworks Solutions, Inc. and Subsidiaries
under the financing agreement. The payments to Conexant retired $105 million of
the $150 million note relating to the purchase of the Mexicali Operations and
repaid the $65 million principal amount outstanding as of November 13, 2002
under the loan facility, dissolving the $100 million facility and resulting in
the release of Conexant's security interest in all assets and properties of the
Company.
In connection with the prepayment by the Company of $105 million of the $150
million note owed to Conexant relating to the purchase of the Mexicali
Operations, the remaining $45 million principal balance of the note was
exchanged for new 15% convertible debt securities with a maturity date of June
30, 2005. These notes can be converted into the Company's common stock at a
conversion rate based on the applicable conversion price, which is subject to
adjustment based on, among other things, the market price of the Company's
common stock. Based on this adjustable conversion price, the Company expects
that the maximum number of shares that could be issued under the note is
approximately 7.1 million shares, subject to adjustment for stock splits and
other similar dilutive occurrences.
In addition to the retirement of $170 million in principal amount of
indebtedness owing to Conexant, Skyworks also retained approximately $53 million
of net proceeds of the private placement to support our working capital needs.
Cash used in operating activities was $89.4 million and $53.8 million for fiscal
2001 and 2000, respectively. Operating cash flows for fiscal 2001 and 2000
reflect net losses of $318.9 million and $66.5 million, respectively, offset by
non-cash charges (depreciation and amortization, asset impairments and an
in-process research and development charge) of $220.8 million and $98.1 million,
respectively, and a net decrease in the non-cash components of working capital
of approximately $8.7 million and a net increase of $85.4 million, respectively.
Cash used in investing activities for fiscal 2001 consisted of capital
expenditures of $51.1 million. The capital expenditures for fiscal 2002 reflect
a significant reduction from annual capital expenditures in fiscal 2001, a key
component of the cost reduction initiatives implemented in fiscal 2002. Cash
used in investing activities for fiscal 2000 consisted of capital expenditures
of $100.4 million partially offset by cash received of $7.7 million in the
acquisition of Philsar. The capital expenditures for fiscal 2001 reflect a
significant reduction from annual capital expenditures in fiscal 2000, a key
component of the cost reduction initiatives implemented in fiscal 2001.
Cash provided by financing activities consisted of net transfers from Conexant
of $138.3 million and $148.7 million for fiscal 2001 and 2000, respectively.
Historically, Conexant has managed cash on a centralized basis. Cash receipts
associated with Washington/Mexicali's business were generally collected by
Conexant, and Conexant generally made disbursements on behalf of
Washington/Mexicali.
During fiscal years 1998 through 2001, we made a series of capital investments
which increased the capacity of our Newbury Park gallium arsenide wafer
fabrication facility. We made these investments to support then-current and
anticipated future growth in sales of our wireless communications products, such
as power amplifiers, that use the gallium arsenide process. During the same
period, we made a series of capital investments at our Mexicali facility to
expand our integrated circuit assembly capacity, including the addition of
assembly lines using surface mount technology processes for the production of
multi-chip modules, which the Mexicali facility principally produces for us. The
capital investments also increased the Mexicali facility's test capacity,
including radio frequency capable equipment for testing wireless communications
products. We invested in the Mexicali facility to support then-current and
anticipated future growth in sales of our wireless communications products and
to support increasing demand for assembly and test services from Conexant.
Capital investments for the Newbury Park wafer fabrication facility totaled $0.7
million, $27.3 million and $35.5 million during fiscal 2002, fiscal 2001 and
fiscal 2000, respectively. A significant portion of the fiscal 2001 capital
investments were made to continue or complete capital investment programs that
we had initiated during fiscal 2000. During the second quarter of fiscal 2001,
in response to the broad slowdown affecting the wireless communications sector,
including us and Conexant, we sharply curtailed our capital expenditure
programs.
Although reduced capital expenditures are a key component of the cost reduction
initiatives, a focused program of capital expenditures will be required to
sustain our current manufacturing capabilities. We may also consider acquisition
opportunities to extend our technology portfolio and design expertise and to
expand our product offerings.
24
Skyworks Solutions, Inc. and Subsidiaries
Following is a summary of consolidated debt and lease obligations at September
30, 2002 (see Notes 5 and 9 of the consolidated financial statements), in
thousands:
OBLIGATION TOTAL 1-3 YEARS 4-5 YEARS THEREAFTER
-------- --------- --------- ----------
Debt ..................................... $180,168 $ 45,168 $135,000 $ --
Operating leases ......................... 40,215 19,350 9,212 11,653
-------- -------- -------- --------
Total debt and operating lease obligations $220,383 $ 64,518 $144,212 $ 11,653
======== ======== ======== ========
Under supply agreements entered into with Conexant in connection with the
Merger, the Company's expected minimum purchase obligations will be
approximately $64 million, $39 million and $13 million in fiscal 2003, 2004 and
2005, respectively. These agreements are related to wafer fabrication, wafer
probe and certain other services the Company will receive from Jazz
Semiconductor's Newport Beach, California foundry. With the exception of $5.1
million related to fiscal 2003 purchase obligations, which has been accrued in
fiscal 2002, we currently anticipate meeting each of the annual minimum purchase
obligations under the three-year supply agreement with Conexant.
Based on the closing of the private placement, the debt refinancing with
Conexant and current trends, the Company expects to generate sufficient
operating cash to meet our short-term and long-term cash requirements.
OTHER MATTERS
Inflation did not have a significant impact upon our results of operations
during the three-year period ended September 27, 2002.
In July 2001, the Financial Accounting Standards Board (FASB) issued Statements
No. 141, "Business Combinations" (SFAS No. 141), and No. 142, "Goodwill and
Other Intangibles" (SFAS No. 142). SFAS No. 141 requires the use of the purchase
method of accounting and eliminates the use of the pooling-of-interest method of
accounting for business combinations. SFAS No. 141 also requires that the
Company recognize acquired intangible assets apart from goodwill if the acquired
intangible assets meet certain criteria. SFAS No. 141 applies to all business
combinations initiated after June 30, 2001 and for purchase business
combinations completed on or after July 1, 2001. The Company has adopted the
provisions of SFAS No. 141. Upon adoption of SFAS No. 142, the Company is
required to evaluate its existing intangible assets and goodwill that were
acquired in purchase business combinations, and to make any necessary
reclassifications in order to conform with the new classification criteria in
SFAS No. 141 for recognition separate from goodwill. The Company will be
required to reassess the useful lives and residual values of all intangible
assets acquired, and make any necessary amortization period adjustments by the
end of the first interim period after adoption. If an intangible asset is
identified as having an indefinite useful life, the Company will be required to
test the intangible asset for impairment in accordance with the provisions of
SFAS No. 142 within the first interim period. Impairment is measured as the
excess of carrying value over the fair value of an intangible asset with an
indefinite life. Any impairment loss will be measured as of the date of adoption
and recognized as the cumulative effect of a change in accounting principle in
the first interim period.
In connection with SFAS No. 142's transitional goodwill impairment evaluation,
the Statement requires the Company to perform an assessment of whether there is
an indication that goodwill is impaired as of the date of adoption. To
accomplish this, the Company must identify its reporting units and determine the
carrying value of each reporting unit by assigning the assets and liabilities,
including the existing goodwill and intangible assets, to those reporting units
as of October 1, 2002. The Company will then have up to six months from October
1, 2002 to determine the fair value of each reporting unit and compare it to the
carrying amount of the reporting unit. To the extent the carrying amount of a
reporting unit exceeds the fair value of the reporting unit, an indication
exists that the reporting unit goodwill may be impaired and the Company must
perform the second step of the transitional impairment test. The second step is
required to be completed as soon as possible, but no later than the end of the
year of adoption. In the second step, the Company must compare the implied fair
value of the reporting unit goodwill with the carrying amount of the reporting
unit goodwill, both of which would be measured as of the date of adoption. The
implied fair value of goodwill is determined by allocating the fair value of the
reporting unit to all of the assets (recognized and unrecognized) and
liabilities of the reporting unit in a manner similar to a purchase price
allocation, in accordance with SFAS No. 141. The residual fair value after this
allocation is the implied fair value of the reporting unit goodwill. Any
transitional impairment loss will be recognized as the cumulative effect of a
change in accounting principle in the Company's statement of operations. We may
be required to record a substantial transitional impairment charge as a result
of adopting SFAS No. 142. Management is assessing the impact that adoption of
SFAS No. 142 will have on the Company's financial statements. The carrying value
of goodwill and intangible assets, subject to the transitional impairment test,
is approximately $907.5 million at September 30, 2002.
In August 2001, the Financial Accounting Standards Board issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets," which
supersedes previous guidance on financial accounting and reporting for the
impairment or disposal of long-lived assets and for segments of a business to be
disposed of. Adoption of SFAS No. 144 is required no later than the beginning of
fiscal 2003. Management does not expect the adoption of SFAS No. 144 to have a
significant impact on our financial position or results of operations. However,
future impairment reviews may result in charges against earnings to write-down
the value of long-lived assets.
In April 2002 the FASB issued SFAS No. 145, "Rescission of FASB Statement No.'s
4, 44, and 64, Amendment of FASB Statement No. 13 and Technical Corrections",
effective for fiscal years beginning May 15, 2002 or later. It rescinds SFAS No.
4, "Reporting Gains and Losses From Extinguishments of Debt", SFAS No. 64,
"Extinguishments of Debt to Satisfy Sinking-Fund Requirements", and SFAS No. 44,
"Accounting for Intangible Assets of Motor Carriers". This Statement also amends
SFAS No. 13, "Accounting for Leases" to eliminate an inconsistency between the
required accounting for sale-leaseback transactions and the required accounting
for certain lease modifications that have economic effects that are similar to
sale-leaseback transactions. This Statement also amends other existing
authoritative pronouncements to make various technical corrections, clarify
meanings or describe their applicability under changed conditions. We do not
believe the impact of adopting SFAS No. 145 will have a material impact on our
financial statements.
In June 2002 the FASB issued SFAS No. 146, "Accounting for Costs Associated With
Exit or Disposal Activities". SFAS No. 146 requires companies to recognize costs
associated with exit or disposal activities when they are incurred rather than
at the date of commitment to an exit or disposal plan. This statement is
effective for exit or disposal activities initiated after December 31, 2002. We
are assessing the impact that adoption of SFAS No. 146 will have on our
financial statements.
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Skyworks Solutions, Inc. and Subsidiaries
FORWARD-LOOKING STATEMENTS
This report and other documents we have filed with the SEC contain
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Some of the forward-looking
statements can be identified by the use of forward-looking terms such as
"believes," "expects," "may," "will," "should," "could," "seek," "intends,"
"plans," "estimates," "anticipates" or other comparable terms. Forward-looking
statements involve inherent risks and uncertainties. A number of important
factors could cause actual results to differ materially from those in the
forward-looking statements. We urge you to consider the risks and uncertainties
discussed below and elsewhere in this report and in the other documents filed
with the SEC in evaluating our forward-looking statements. We have no plans to
update our forward-looking statements to reflect events or circumstances after
the date of this report. We caution readers not to place undue reliance upon any
such forward-looking statements, which speak only as of the date made.
CERTAIN BUSINESS RISKS
WE HAVE RECENTLY INCURRED SUBSTANTIAL OPERATING LOSSES AND ANTICIPATE FUTURE
LOSSES.
Our operating results have been adversely affected by a global economic slowdown
and an abrupt decline in demand for many of the end-user products that
incorporate wireless communications semiconductor products and system solutions.
As a result, we incurred substantial operating losses during the twelve-month
period ended September 27, 2002. We expect that reduced end-customer demand,
underutilization of our manufacturing capacity, changes in our revenue mix and
other factors will continue to adversely affect our operating results in the
near term. In order to become profitable, we must achieve substantial revenue
growth and we will face an environment of uncertain demand in the markets for
our products. We cannot assure you as to whether or when we will become
profitable or whether we will be able to sustain such profitability, if
achieved.
WE OPERATE IN THE HIGHLY CYCLICAL WIRELESS COMMUNICATIONS SEMICONDUCTOR
INDUSTRY, WHICH IS SUBJECT TO SIGNIFICANT DOWNTURNS.
The wireless communications semiconductor industry is highly cyclical and is
characterized by constant and rapid technological change, rapid product
obsolescence and price erosion, evolving technical standards, short product life
cycles and wide fluctuations in product supply and demand. From time to time
these and other factors, together with changes in general economic conditions,
cause significant upturns and downturns in the industry. Periods of industry
downturns, as we experienced through most of calendar year 2001, have been
characterized by diminished product demand, production overcapacity, high
inventory levels and accelerated erosion of average selling prices. These
factors, and in particular the level of demand for digital cellular handsets,
may cause substantial fluctuations in our revenues and results of operations. We
have experienced these cyclical fluctuations in our business and may experience
cyclical fluctuations in the future. During the late 1990's and extending into
2000, the wireless communications semiconductor industry enjoyed unprecedented
growth, benefiting from the rapid expansion of wireless communication services
worldwide and increased demand for digital cellular handsets. During calendar
year 2001, we were adversely impacted by a global economic slowdown and an
abrupt decline in demand for many of the end-user products that incorporate our
respective wireless communications semiconductor products and system solutions,
particularly digital cellular handsets. The impact of weakened end-customer
demand was compounded by higher than normal levels of inventories among our
original equipment manufacturer, or OEM, subcontractor and distributor
customers. We expect that reduced end-customer demand, underutilization of our
manufacturing capacity, changes in revenue mix and other factors will continue
to adversely affect our operating results in the near term.
WE ARE SUBJECT TO INTENSE COMPETITION.
The wireless communications semiconductor industry in general and the markets in
which we compete in particular are intensely competitive. We compete with U.S.
and international semiconductor manufacturers that are both larger and smaller
than us in terms of resources and market share. We currently face significant
competition in our markets and expect that intense price and product competition
will continue. This competition has resulted and is expected to continue to
result in declining average selling prices for our products. We also anticipate
that additional competitors will enter our markets as a result of growth
opportunities in communications electronics, the trend toward global expansion
by foreign and domestic competitors and technological and public policy changes.
We believe that the principal competitive factors for semiconductor suppliers in
our market include, among others:
- time-to-market;
- new product innovation;
26
Skyworks Solutions, Inc. and Subsidiaries
- product quality, reliability and performance;
- price;
- compliance with industry standards;
- strategic relationships with customers; and
- protection of intellectual property.
We cannot assure you that we will be able to successfully address these factors.
Many of our competitors have advantages over us, including:
- longer presence in key markets;
- greater name recognition;
- ownership or control of key technology or intellectual property; and
- greater financial, sales and marketing, manufacturing, distribution,
technical or other resources.
As a result, certain competitors may be able to adapt more quickly than we can
to new or emerging technologies and changes in customer requirements or may be
able to devote greater resources to the development, promotion and sale of their
products than we can.
Current and potential competitors have established or may establish financial or
strategic relationships among themselves or with our customers, resellers or
other third parties. These relationships may affect customers' purchasing
decisions. Accordingly, it is possible that new competitors or alliances among
competitors could emerge and rapidly acquire significant market share. We cannot
assure you that we will be able to compete successfully against current and
potential competitors.
OUR SUCCESS DEPENDS UPON OUR ABILITY TO DEVELOP NEW PRODUCTS AND REDUCE COSTS IN
A TIMELY MANNER.
The markets into which we sell demand cutting-edge technologies and new and
innovative products. Our operating results depend largely on our ability to
continue to introduce new and enhanced products on a timely basis. Successful
product development and introduction depends on numerous factors, including:
- the ability to anticipate customer and market requirements and
changes in technology and industry standards;
- the ability to define new products that meet customer and market
requirements;
- the ability to complete development of new products and bring
products to market on a timely basis;
- the ability to differentiate our products from offerings of our
competitors; and
- overall market acceptance of our products.
We cannot assure you that we will have sufficient resources to make the
substantial investment in research and development in order to develop and bring
to market new and enhanced products in a timely manner. We will be required
continually to evaluate expenditures for planned product development and to
choose among alternative technologies based on our expectations of future market
growth. We cannot assure you that we will be able to develop and introduce new
or enhanced wireless communications semiconductor products in a timely and
cost-effective manner, that our products will satisfy customer requirements or
achieve market acceptance or that we will be able to anticipate new industry
standards and technological changes. We also cannot assure you that we will be
able to respond successfully to new product announcements and introductions by
competitors.
In addition, prices of established products may decline, sometimes
significantly, over time. We believe that to remain competitive we must continue
to reduce the cost of producing and delivering existing products at the same
time that we develop and introduce new or enhanced products. We cannot assure
you that we will be able to continue to reduce the cost of our products to
remain competitive.
WE MAY NOT BE ABLE TO KEEP ABREAST OF THE RAPID TECHNOLOGICAL CHANGES IN OUR
MARKETS.
The demand for our products can change quickly and in ways we may not
anticipate. Our markets generally exhibit the following characteristics:
- rapid technological developments;
- rapid changes in customer requirements;
27
Skyworks Solutions, Inc. and Subsidiaries
- frequent new product introductions and enhancements;
- short product life cycles with declining prices over the life cycle
of the product; and
- evolving industry standards.
Our products could become obsolete or less competitive sooner than anticipated
because of a faster than anticipated change in one or more of the technologies
related to our products or in market demand for products based on a particular
technology, particularly due to the introduction of new technology that
represents a substantial advance over current technology. Currently accepted
industry standards are also subject to change, which may contribute to the
obsolescence of our products.
WE MAY NOT BE ABLE TO ATTRACT AND RETAIN QUALIFIED PERSONNEL NECESSARY FOR THE
DESIGN, DEVELOPMENT, MANUFACTURE AND SALE OF OUR PRODUCTS. OUR SUCCESS COULD BE
NEGATIVELY AFFECTED IF KEY PERSONNEL LEAVE.
Our success depends on our ability to continue to attract, retain and motivate
qualified personnel, including executive officers and other key management and
technical personnel. As the source of our technological and product innovations,
our key technical personnel represent a significant asset. The competition for
management and technical personnel is intense in the semiconductor industry. We
cannot assure you that we will be able to attract and retain qualified
management and other personnel necessary for the design, development,
manufacture and sale of our products. We may have particular difficulty
attracting and retaining key personnel during periods of poor operating
performance, given, among other things, the use of equity-based compensation by
us and our competitors. The loss of the services of one or more of our key
employees or our inability to attract, retain and motivate qualified personnel,
could have a material adverse effect on our ability to operate our business.
IF OEMS OF COMMUNICATIONS ELECTRONICS PRODUCTS DO NOT DESIGN OUR PRODUCTS INTO
THEIR EQUIPMENT, WE WILL HAVE DIFFICULTY SELLING THOSE PRODUCTS. MOREOVER, A
"DESIGN WIN" FROM A CUSTOMER DOES NOT GUARANTEE FUTURE SALES TO THAT CUSTOMER.
Our products will not be sold directly to the end-user but will be components of
other products. As a result, we will rely on OEMs of wireless communications
electronics products to select our products from among alternative offerings to
be designed into their equipment. Without these "design wins" from OEMs, we
would have difficulty selling our products. Once an OEM designs another
supplier's product into one of its product platforms, it is more difficult for
us to achieve future design wins with that OEM product platform because changing
suppliers involves significant cost, time, effort and risk on the part of that
OEM. Also, achieving a design win with a customer does not ensure that we will
receive significant revenues from that customer. Even after a design win, the
customer is not obligated to purchase our products and can choose at any time to
reduce or cease use of our products, for example, if its own products are not
commercially successful, or for any other reason. We may be unable to achieve
design wins or to convert design wins into actual sales.
BECAUSE OF THE LENGTHY SALES CYCLES OF MANY OF OUR PRODUCTS, WE MAY INCUR
SIGNIFICANT EXPENSES BEFORE WE GENERATE ANY REVENUES RELATED TO THOSE PRODUCTS.
Our customers may need three to six months to test and evaluate our products and
an additional three to six months to begin volume production of equipment that
incorporates our products. The lengthy period of time required increases the
possibility that a customer may decide to cancel or change product plans, which
could reduce or eliminate our sales to that customer. As a result of this
lengthy sales cycle, we may incur significant research and development, and
selling, general and administrative expenses before we generate the related
revenues for these products, and we may never generate the anticipated revenues
if our customer cancels or changes its product plans.
UNCERTAINTIES INVOLVING THE ORDERING AND SHIPMENT OF OUR PRODUCTS COULD
ADVERSELY AFFECT OUR BUSINESS.
Our sales will typically be made pursuant to individual purchase orders and not
under long-term supply arrangements with our customers. Our customers may cancel
orders prior to shipment. Additionally, we will sell a portion of our products
through distributors, some of whom will have rights to return unsold products.
We may purchase and manufacture inventory based on estimates of customer demand
for our products, which is difficult to predict. This difficulty may be
compounded when we sell to OEMs indirectly through distributors or contract
manufacturers, or both, as our forecasts of demand will then be based on
estimates provided by multiple parties. In addition, our customers may change
their inventory practices on short notice for any reason. The cancellation or
deferral of product orders, the return of previously sold products, or
overproduction due to the failure of anticipated orders to materialize, could
result in us holding excess or obsolete inventory, which could result in
inventory write-downs.
28
Skyworks Solutions, Inc. and Subsidiaries
OUR RELIANCE ON A SMALL NUMBER OF CUSTOMERS FOR A LARGE PORTION OF OUR SALES
COULD HAVE A MATERIAL ADVERSE EFFECT ON THE RESULTS OF OUR OPERATIONS.
A significant portion of our sales are concentrated among a limited number of
customers. If we lost one or more of these major customers, or if one or more
major customers significantly decreased its orders of our products, our business
would be materially and adversely affected. Sales to Samsung Electronics Co. and
to Motorola, Inc. represented approximately 38% and 12%, respectively, of net
revenues from customers other Conexant during fiscal 2002 on a historical basis
(such sales representing Washington/Mexicali sales for the fiscal year through
June 25, 2002, and sales of Skyworks, the combined company, for the post-merger
period from June 26, 2002 through the end of the fiscal year). Our future
operating results will depend on the success of these customers and other
customers and our success in selling products to them.
WE FACE A RISK THAT CAPITAL NEEDED FOR OUR BUSINESS WILL NOT BE AVAILABLE WHEN
WE NEED IT.
We may need to obtain sources of financing in the future. After giving effect to
the net proceeds we received in our private placement of 4.75 percent
convertible subordinated notes due 2007 and our debt refinancing with Conexant,
we believe that our existing sources of liquidity, together with cash expected
to be generated from operations, will be sufficient to fund our research and
development, capital expenditure, working capital and other financing
requirements for at least the next twelve months.
However, we cannot assure you that the capital required to fund these expenses
will be available in the future. Conditions existing in the U.S. capital markets
when the Company seeks financing will affect our ability to raise capital, as
well as the terms of any financing. The Company may not be able to raise enough
capital to meet our capital needs on a timely basis or at all. Failure to obtain
capital when required would have a material adverse effect on the Company.
In addition, any strategic investments and acquisitions that we may make to help
us grow our business may require additional capital resources. We cannot assure
you that the capital required to fund these investments and acquisitions will be
available in the future.
OUR MANUFACTURING PROCESSES ARE EXTREMELY COMPLEX AND SPECIALIZED.
Our manufacturing operations are complex and subject to disruption due to causes
beyond our control. The fabrication of integrated circuits is an extremely
complex and precise process consisting of hundreds of separate steps. It
requires production in a highly controlled, clean environment. Minor impurities,
errors in any step of the fabrication process, defects in the masks used to
print circuits on a wafer or a number of other factors can cause a substantial
percentage of wafers to be rejected or numerous die on each wafer not to
function.
Our operating results are highly dependent upon our ability to produce
integrated circuits at acceptable manufacturing yields. Our operations may be
affected by lengthy or recurring disruptions of operations at any of our
production facilities or those of our subcontractors. These disruptions may
include electrical power outages, fire, earthquake, flooding or other natural
disasters. Disruptions of our manufacturing operations could cause significant
delays in shipments until we are able to shift the products from an affected
facility or subcontractor to another facility or subcontractor.
In the event of these types of delays, we cannot assure you that the required
alternative capacity, particularly wafer production capacity, would be available
on a timely basis or at all. Even if alternative wafer production capacity is
available, we may not be able to obtain it on favorable terms, which could
result in higher costs and/or a loss of customers. We may be unable to obtain
sufficient manufacturing capacity to meet demand, either at our own facilities
or through external manufacturing or similar arrangements with others.
Due to the highly specialized nature of the gallium arsenide integrated circuit
manufacturing process, in the event of a disruption at the Newbury Park,
California or Woburn, Massachusetts semiconductor wafer fabrication facilities,
alternative gallium arsenide production capacity would not be immediately
available from third-party sources. These disruptions could have a material
adverse effect on our business, financial condition and results of operations.
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Skyworks Solutions, Inc. and Subsidiaries
WE MAY NOT BE ABLE TO ACHIEVE MANUFACTURING YIELDS THAT CONTRIBUTE POSITIVELY TO
OUR GROSS MARGIN AND PROFITABILITY.
Minor deviations or perturbations in the manufacturing process can cause
substantial manufacturing yield loss, and in some cases, cause production to be
suspended. Manufacturing yields for new products initially tend to be lower as
we complete product development and commence volume manufacturing, and typically
increase as we bring the product to full production. Our forward product pricing
includes this assumption of improving manufacturing yields and, as a result,
material variances between projected and actual manufacturing yields will have a
direct effect on our gross margin and profitability. The difficulty of
forecasting manufacturing yields accurately and maintaining cost competitiveness
through improving manufacturing yields will continue to be magnified by the
increasing process complexity of manufacturing semiconductor products. Our
manufacturing operations will also face pressures arising from the compression
of product life cycles, which will require us to manufacture new products faster
and for shorter periods while maintaining acceptable manufacturing yields and
quality without, in many cases, reaching the longer-term, high-volume
manufacturing conducive to higher manufacturing yields and declining costs.
WE ARE DEPENDENT UPON THIRD PARTIES FOR THE MANUFACTURE, ASSEMBLY AND TEST OF
OUR PRODUCTS.
We rely upon independent wafer fabrication facilities, called foundries, to
provide silicon-based products and to supplement our gallium arsenide wafer
manufacturing capacity. There are significant risks associated with reliance on
third-party foundries, including:
- the lack of ensured wafer supply, potential wafer shortages and
higher wafer prices;
- limited control over delivery schedules, manufacturing yields,
production costs and product quality; and
- the inaccessibility of, or delays in obtaining access to, key
process technologies.
Although we have long-term supply arrangements to obtain additional external
manufacturing capacity, the third-party foundries we use may allocate their
limited capacity to the production requirements of other customers. If we choose
to use a new foundry, it will typically take an extended period of time to
complete the qualification process before we can begin shipping products from
the new foundry. The foundries may experience financial difficulties, be unable
to deliver products to us in a timely manner or suffer damage or destruction to
their facilities, particularly since some of them are located in earthquake
zones. If any disruption of manufacturing capacity occurs, we may not have
alternative manufacturing sources immediately available. We may therefore
experience difficulties or delays in securing an adequate supply of our
products, which could impair our ability to meet our customers' needs and have a
material adverse effect on our operating results.
We also intend to utilize subcontractors to package, assemble and test a portion
of our products. Because we rely on others to package, assemble or test our
products, we are subject to many of the same risks as are described above with
respect to foundries.
WE ARE DEPENDENT UPON THIRD PARTIES FOR THE SUPPLY OF RAW MATERIALS AND
COMPONENTS.
We believe we have adequate sources for the supply of raw materials and
components for our manufacturing needs with suppliers located around the world.
However, we are currently dependent on two suppliers for epitaxial wafers used
in the gallium arsenide semiconductor manufacturing processes at our
manufacturing facilities. Nevertheless, while we historically have not
experienced any significant difficulties in obtaining an adequate supply of raw
materials, including epitaxial wafers, and components necessary for our
manufacturing operations, we cannot assure you that we will not lose a
significant supplier or that a supplier will be able to meet performance and
quality specifications or delivery schedules.
Under a supply agreement entered into with Conexant in connection with the
Merger, we receive wafer fabrication, wafer probe and certain other services
from Jazz Semiconductor, Inc., a Newport Beach, California foundry joint venture
between Conexant and The Carlyle Group. Pursuant to our supply agreement with
Conexant, we are initially obligated to obtain certain minimum volume levels
from Jazz Semiconductor based on a contractual agreement between Conexant and
Jazz Semiconductor. Our expected minimum purchase obligations under this supply
agreement are anticipated to be approximately $64 million, $39 million and $13
million in fiscal 2003, 2004 and 2005. We estimate that our minimum purchase
obligation under this agreement will result in excess costs of approximately
$5.1 million and we have recorded this liability and charged cost of sales in
fiscal 2002.
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Skyworks Solutions, Inc. and Subsidiaries
WE ARE SUBJECT TO THE RISKS OF DOING BUSINESS INTERNATIONALLY.
Historically, a substantial majority of the Company's net revenues from
customers other than Conexant were derived from customers located outside the
United States, primarily countries located in the Asia-Pacific region and
Europe. In addition, we have suppliers located outside the United States and
third-party packaging, assembly and test facilities and foundries located in the
Asia-Pacific region. Our international sales and operations are subject to a
number of risks inherent in selling and operating abroad. These include, but are
not limited to, risks regarding:
- currency exchange rate fluctuations;
- local economic and political conditions;
- disruptions of capital and trading markets;
- restrictive governmental actions (such as restrictions on transfer
of funds and trade protection measures, including export duties and
quotas and customs duties and tariffs);
- changes in legal or regulatory requirements;
- limitations on the repatriation of funds;
- difficulty in obtaining distribution and support;
- the laws and policies of the United States and other countries
affecting trade, foreign investment and loans, and import or export
licensing requirements;
- tax laws; and
- limitations on our ability under local laws to protect our
intellectual property.
Because our international sales are denominated in U.S. dollars our products
could become less competitive in international markets if the value of the U.S.
dollar increases relative to foreign currencies. Moreover, we may be
competitively disadvantaged relative to our competitors located outside the
United States who may benefit from a devaluation of their local currency. We
cannot assure you that the factors described above will not have a material
adverse effect on our ability to increase or maintain our international sales.
OUR OPERATING RESULTS MAY BE NEGATIVELY AFFECTED BY SUBSTANTIAL QUARTERLY AND
ANNUAL FLUCTUATIONS AND MARKET DOWNTURNS.
Our revenues, earnings and other operating results have fluctuated in the past
and our revenues, earnings and other operating results may fluctuate in the
future. These fluctuations are due to a number of factors, many of which are
beyond our control. These factors include, among others:
- changes in end-user demand for the products (principally digital
cellular handsets) manufactured and sold by our customers;
- the effects of competitive pricing pressures, including decreases in
average selling prices of our products;
- production capacity levels and fluctuations in manufacturing yields;
- availability and cost of products from our suppliers;
- the gain or loss of significant customers;
- our ability to develop, introduce and market new products and
technologies on a timely basis;
- new product and technology introductions by competitors;
- changes in the mix of products produced and sold;
- market acceptance of our products and our customers;
- intellectual property disputes;
- seasonal customer demand;
- the timing of receipt, reduction or cancellation of significant
orders by customers; and
- the timing and extent of product development costs.
The foregoing factors are difficult to forecast, and these, as well as other
factors, could materially adversely affect our quarterly or annual operating
results. If our operating results fail to meet the expectations of analysts or
investors, it could materially and adversely affect the price of our common
stock.
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Skyworks Solutions, Inc. and Subsidiaries
OUR GALLIUM ARSENIDE SEMICONDUCTORS MAY NOT CONTINUE TO BE COMPETITIVE WITH
SILICON ALTERNATIVES.
We manufacture and sell gallium arsenide semiconductor devices and components,
principally power amplifiers and switches. The production of gallium arsenide
integrated circuits is more costly than the production of silicon circuits. As a
result, we must offer gallium arsenide products that provide superior
performance to that of silicon for specific applications to be competitive with
their respective silicon products. If we do not continue to offer products that
provide sufficiently superior performance to justify the cost differential, our
operating results may be materially and adversely affected. It is expected that
the costs of producing gallium arsenide integrated circuits will continue to
exceed the costs associated with the production of silicon circuits. The costs
differ because of higher costs of raw materials for gallium arsenide and higher
unit costs associated with smaller sized wafers and lower production volumes.
Silicon semiconductor technologies are widely-used process technologies for
certain integrated circuits and these technologies continue to improve in
performance. We cannot assure you that we will continue to identify products and
markets that require performance superior to that offered by silicon solutions.
WE MAY BE SUBJECT TO CLAIMS OF INFRINGEMENT OF THIRD-PARTY INTELLECTUAL PROPERTY
RIGHTS OR DEMANDS THAT WE LICENSE THIRD-PARTY TECHNOLOGY, WHICH COULD RESULT IN
SIGNIFICANT EXPENSE AND PREVENT US FROM USING OUR TECHNOLOGY.
The semiconductor industry is characterized by vigorous protection and pursuit
of intellectual property rights. From time to time, third parties have asserted
and may in the future assert patent, copyright, trademark and other intellectual
property rights to technologies that are important to our business and have
demanded and may in the future demand that we license their technology. At the
present time, we are in discussions with a third party who claims we are
infringing certain of their intellectual property rights. The third party has
filed a complaint in this matter but has not yet served Skyworks with the
complaint. Although we believe that these claims are without merit, we are in
discussions with this party to avoid litigation. The third party has indicated
its willingness to resolve these claims without litigation if this third party
were to proceed with litigation, we are prepared to vigorously defend against
these claims. Moreover, we believe that the patent infringement claims that were
asserted would impact only a limited number of our RF IC product line which
presently accounts for less than 5% of our annualized revenues.
Any litigation to determine the validity of claims that our products infringe or
may infringe these rights, including claims arising from our contractual
indemnification of our customers, regardless of their merit or resolution, could
be costly and divert the efforts and attention of our management and technical
personnel. Regardless of the merits of any specific claim, we cannot assure you
that we would prevail in litigation because of the complex technical issues and
inherent uncertainties in intellectual property litigation. If litigation were
to result in an adverse ruling, we could be required to:
- pay substantial damages;
- cease the manufacture, import, use, sale or offer for sale of
infringing products or processes;
- discontinue the use of infringing technology;
- expend significant resources to develop non-infringing technology;
and
- license technology from the third party claiming infringement, which
license may not be available on commercially reasonable terms.
IF WE ARE NOT SUCCESSFUL IN PROTECTING OUR INTELLECTUAL PROPERTY RIGHTS, IT MAY
HARM OUR ABILITY TO COMPETE.
We rely on patent, copyright, trademark, trade secret and other intellectual
property laws, as well as nondisclosure and confidentiality agreements and other
methods, to protect our proprietary technologies, devices, algorithms and
processes. In addition, we often incorporate the intellectual property of our
customers, suppliers or other third parties into our designs, and we have
obligations with respect to the non-use and non-disclosure of such third-party
intellectual property. In the future, it may be necessary to engage in
litigation or like activities to enforce our intellectual property rights, to
protect our trade secrets or to determine the validity and scope of proprietary
rights of others, including our customers. This could require us to expend
significant resources and to divert the efforts and attention of our management
and technical personnel from our business operations. We cannot assure you that:
- the steps we take to prevent misappropriation, infringement,
dilution or other violation of our intellectual property or the
intellectual property of our customers, suppliers or other third
parties will be successful;
- any existing or future patents, copyrights, trademarks, trade
secrets or other intellectual property rights will not be
challenged, invalidated or circumvented; or
- any of the measures described above would provide meaningful
protection.
32
Skyworks Solutions, Inc. and Subsidiaries
Despite these precautions, it may be possible for a third party to copy or
otherwise obtain and use our technology without authorization, develop similar
technology independently or design around our patents. If any of our patents
fails to protect our technology, it would make it easier for our competitors to
offer similar products, potentially resulting in loss of market share and price
erosion. In addition, effective patent, copyright, trademark and trade secret
protection may be unavailable or limited for certain technologies and in certain
foreign countries.
OUR SUCCESS DEPENDS, IN PART, ON OUR ABILITY TO EFFECT SUITABLE INVESTMENTS,
ALLIANCES AND ACQUISITIONS, AND WE MAY HAVE DIFFICULTY INTEGRATING COMPANIES WE
ACQUIRE. SKYWORKS' MERGER WITH THE WIRELESS BUSINESS OF CONEXANT PRESENTS SUCH
RISKS.
Although we intend to invest significant resources in internal research and
development activities, the complexity and rapidity of technological changes and
the significant expense of internal research and development make it impractical
for us to pursue development of all technological solutions on our own. On an
ongoing basis, we intend to review investment, alliance and acquisition
prospects that would complement our product offerings, augment our market
coverage or enhance our technological capabilities. However, we cannot assure
you that we will be able to identify and consummate suitable investment,
alliance or acquisition transactions in the future. Moreover, if we consummate
such transactions, they could result in:
- issuances of equity securities dilutive to our stockholders;
- large one-time write-offs;
- the incurrence of substantial debt and assumption of unknown
liabilities;
- the potential loss of key employees from the acquired company;
- amortization expenses related to intangible assets; and
- the diversion of management's attention from other business
concerns.
Additionally, in periods following an acquisition, we will be required to
evaluate goodwill and acquisition-related intangible assets for impairment. When
such assets are found to be impaired, they will be written down to estimated
fair value, with a charge against earnings.
Integrating acquired organizations and their products and services may be
difficult, expensive, time-consuming and a strain on our resources and our
relationship with employees and customers and ultimately may not be successful.
WE MAY BE RESPONSIBLE FOR PAYMENT OF A SUBSTANTIAL AMOUNT OF U.S. FEDERAL INCOME
AND OTHER TAXES UPON CERTAIN EVENTS.
In connection with Conexant's spin-off of its wireless business prior to the
Merger, Conexant sought and received a ruling from the Internal Revenue Service
to the effect that certain transactions related to and including the spin-off
qualified as a reorganization and as tax-free for U.S. federal income tax
purposes. While the tax ruling generally is binding on the Internal Revenue
Service, the continuing validity of the ruling is subject to certain factual
representations and assumptions. In connection with the Merger we entered into a
tax allocation agreement with Conexant that generally provides, among other
things, that we will be responsible for certain taxes imposed on various persons
(including Conexant) as a result of either:
- the failure of certain spin-off transactions to qualify as a
reorganization for U.S. federal income tax purposes, or
- the failure of certain spin-off transactions to qualify as tax-free
to Conexant for certain U.S. federal income tax purposes,
if such failure is attributable to certain actions or transactions by or in
respect of Skyworks (including our subsidiaries) or our stockholders, such as
the acquisition of stock of Skyworks by a third party at a time and in a manner
that would cause such failure. In addition, the tax allocation agreement
provides that we will be responsible for various other tax obligations and for
compliance with various representations, statements, and conditions made in the
course of obtaining the tax ruling referenced above and in connection with the
tax allocation agreement. Our obligations under the tax allocation agreement
have been limited by a letter agreement dated November 6, 2002 entered into in
connection with our debt refinancing with Conexant. Nevertheless, if we do not
carefully monitor our compliance with the requirements imposed as a result of
the spin-off and related transactions and our responsibilities under the tax
allocation agreement, we might inadvertently trigger an obligation to
33
Skyworks Solutions, Inc. and Subsidiaries
indemnify certain persons (including Conexant) pursuant to the tax allocation
agreement or other obligations under such agreement. In addition, our indemnity
obligations could discourage or prevent a third party from making a proposal to
acquire Skyworks.
If we were required to pay any of the taxes described above, the payment could
be very substantial and have a material adverse effect on our business,
financial condition, results of operations and cash flow.
In addition, it is expected that the interest payments we are required to make
on the $45 million principal amount of 15% convertible senior subordinated notes
due June 30, 2005 issued to Conexant will not be deductible for U.S. federal
income tax purposes. Our inability to offset our interest expense from these
obligations against other income may increase our tax liability currently and in
future years.
Further, the terms of the 15% convertible senior subordinated notes due June 30,
2005 issued to Conexant require us to pay the principal due at the maturity date
or upon certain acceleration events in a number of shares of our common stock
equal to the principal due at such time divided by the applicable conversion
price on such date. If the fair market value of our common stock on such date is
less than the applicable conversion price of such notes, we may recognize
cancellation of indebtedness income for federal income tax purposes equal to the
excess of the principal amount of such notes due at such time over the fair
market value of the common stock issued by us to satisfy our obligations under
the notes.
CERTAIN PROVISIONS IN OUR ORGANIZATIONAL DOCUMENTS AND DELAWARE LAW MAY MAKE IT
DIFFICULT FOR SOMEONE TO ACQUIRE CONTROL OF US.
We have certain anti-takeover measures that may affect our common stock. Our
certificate of incorporation, our by-laws and the Delaware General Corporation
Law contain several provisions that would make more difficult an acquisition of
control of us in a transaction not approved by our board of directors. Our
certificate of incorporation and by-laws include provisions such as:
- the division of our board of directors into three classes to be
elected on a staggered basis, one class each year;
- the ability of our board of directors to issue shares of preferred
stock in one or more series without further authorization of
stockholders;
- a prohibition on stockholder action by written consent;
- elimination of the right of stockholders to call a special meeting
of stockholders;
- a requirement that stockholders provide advance notice of any
stockholder nominations of directors or any proposal of new business
to be considered at any meeting of stockholders;
- a requirement that the affirmative vote of at least 66 2/3% of our
shares be obtained to amend or repeal any provision of our by-laws
or the provision of our certificate of incorporation relating to
amendments to our by-laws;
- a requirement that the affirmative vote of at least 80% of our
shares be obtained to amend or repeal the provisions of our
certificate of incorporation relating to the election and removal of
directors, the classified board or the right to act by written
consent;
- a requirement that the affirmative vote of at least 80% of our
shares be obtained for business combinations unless approved by a
majority of the members of the board of directors and, in the event
that the other party to the business combination is the beneficial
owner of 5% or more of our shares, a majority of the members of
board of directors in office prior to the time such other party
became the beneficial owner of 5% or more of our shares;
- a fair price provision; and
- a requirement that the affirmative vote of at least 90% of our
shares be obtained to amend or repeal the fair price provision.
In addition to the provisions in our certificate of incorporation and by-laws,
Section 203 of the Delaware General Corporation Law generally provides that a
corporation shall not engage in any business combination with any interested
stockholder during the three-year period following the time that such
stockholder becomes an interested stockholder, unless a majority of the
directors then in office approves either the business combination or the
transaction that results in the stockholder becoming an interested stockholder
or specified stockholder approval requirements are met.
WE MAY BE LIABLE FOR PENALTIES UNDER ENVIRONMENTAL LAWS, RULES AND REGULATIONS,
WHICH COULD ADVERSELY IMPACT OUR BUSINESS.
We have used, and will continue to use, a variety of chemicals and compounds in
manufacturing operations and have been and will continue to be subject to a wide
range of environmental protection regulations in the United States. While we
have not experienced any material adverse effect on our operations as a result
of such regulations, we cannot assure you that current or future regulations
would not have a material adverse effect on our business, financial condition
and results of operations. Environmental regulations often require parties to
fund remedial action regardless of fault. Consequently, it is often difficult to
estimate the future impact of environmental matters, including potential
liabilities. We cannot assure you that the amount of expense and capital
expenditures that might be required to satisfy environmental liabilities, to
complete remedial actions and to continue to comply with applicable
environmental laws will not have a material adverse effect on our business,
financial condition and results of operations.
34
Skyworks Solutions, Inc. and Subsidiaries
WE WILL ADOPT NEW ACCOUNTING POLICIES IN FISCAL 2003 THAT COULD NEGATIVELY
IMPACT OUR EARNINGS FOR THAT YEAR.
In our fiscal year 2003, which began on September 28, 2002, we must adopt SFAS
No. 142 "Goodwill and Other Intangible Assets." This policy will require us to
evaluate the goodwill and intangible assets with indefinite lives that we report
on our balance sheet for potential impairment using a fair value method. If we
determine that our goodwill and other intangible assets with indefinite lives
are impaired, we will be required to report non-cash charges to our earnings in
fiscal year 2003 in the amount of such impairment. At September 27, 2002, we
reported goodwill and intangible assets of $940,686,000. As a result, the
adoption of SFAS No. 142 may result in asset write-downs on our balance sheet
and significant non-cash charges to earnings in fiscal 2003. Management is
assessing the impact that adoption of SFAS 142 will have on our financial
statements.
OUR STOCK PRICE HAS BEEN VOLATILE AND MAY FLUCTUATE IN THE FUTURE.
The trading price of our common stock may fluctuate significantly. This price
may be influenced by many factors, including:
- our performance and prospects;
- the performance and prospects of our major customers;
- the depth and liquidity of the market for our common stock;
- investor perception of us and the industry in which we operate;
- changes in earnings estimates or buy/sell recommendations by
analysts;
- general financial and other market conditions; and
- domestic and international economic conditions.
Public stock markets have experienced, and are currently experiencing, extreme
price and trading volume volatility, particularly in the technology sectors of
the market. This volatility has significantly affected the market prices of
securities of many technology companies for reasons frequently unrelated to or
disproportionately impacted by the operating performance of these companies.
These broad market fluctuations may adversely affect the market price of our
common stock.
In addition, fluctuations in our stock price and our price-to-earnings multiple
may have made our stock attractive to momentum, hedge or day-trading investors
who often shift funds into and out of stocks rapidly, exacerbating price
fluctuations in either direction particularly when viewed on a quarterly basis.
OUR DEBT SERVICE OBLIGATIONS MAY ADVERSELY AFFECT OUR CASH FLOW.
For so long as the 4.75 percent convertible subordinated notes we issued in a
private placement in November 2002 remain outstanding, we will have debt service
obligations on the notes of approximately $10,925,000 per year in interest
payments. In addition, we have extended the maturity of certain outstanding debt
under a financing agreement with Conexant, as amended, which bears interest at a
rate of 15% per year. If we issue other debt securities in the future, our debt
service obligations will increase. If we are unable to generate sufficient cash
to meet these obligations and must instead use our existing cash or investments,
we may have to reduce or curtail other activities of our business.
We intend to fulfill our debt service obligations from cash generated by our
operations, if any, and from our existing cash and investments. If necessary,
among other alternatives, we may add lease lines of credit to finance capital
expenditures and we may obtain other long-term debt, lines of credit and other
financing.
Our indebtedness could have significant negative consequences, including:
- increasing our vulnerability to general adverse economic and
industry conditions;
- limiting our ability to obtain additional financing;
- requiring the dedication of a substantial portion of any cash flow
from operations to service our indebtedness, thereby reducing the
amount of cash flow available for other purposes, including capital
expenditures;
35
Skyworks Solutions, Inc. and Subsidiaries
- limiting our flexibility in planning for, or reacting to, changes in
our business and the industry in which we compete; and
- placing us at a possible competitive disadvantage to less leveraged
competitors and competitors that have better access to capital
resources.
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our financial instruments include cash and cash equivalents, short-term debt and
long-term debt. Our main investment objective is the preservation of investment
capital. Consequently, we invest with only high-credit-quality issuers and we
limit the amount of our credit exposure to any one issuer. We do not use
derivative instruments for speculative or investment purposes.
Our cash and cash equivalents are not subject to significant interest rate risk
due to the short maturities of these instruments. As of September 27, 2002, the
carrying value of our cash and cash equivalents approximates fair value.
Our long-term debt consists of a ten-year $960,000 loan from the State of
Maryland under the Community Development Block Grant program. Quarterly payments
are due through December 2003 and represent principal plus interest at 5% of the
unamortized balance. Our short-term debt on September 27, 2002 consists of the
current portion of this loan. In addition, because we refinanced the note
payable to Conexant for the acquisition of the Mexicali Operations and our loan
facility with Conexant, the principal amount of $180 million was classified as
long-term debt on September 27, 2002. We do not believe that we have significant
cash flow exposure on our short-term or long-term debt.
36
Skyworks Solutions, Inc. and Subsidiaries
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Company for the
fiscal year ended September 30, 2002 are included herewith:
(1) Independent Auditors' Reports............................... Pages 38 through 39
(2) Consolidated Balance Sheets at September 30, 2002,
2001 and 2000............................................... Page 40
(3) Consolidated Statement of Operations for the Years
Ended September 30, 2002, 2001 and 2000..................... Page 41
(4) Consolidated Statements of Stockholders' Equity for the
Years Ended September 30, 2002, 2001 and 2000............... Page 42
(5) Consolidated Statements of Cash Flows for the Years
Ended September 30, 2002, 2001 and 2000..................... Page 43
(6) Notes to Consolidated Financial Statements.................. Pages 44 through 65
37
Skyworks Solutions, Inc. and Subsidiaries
Independent Auditors' Report
The Board of Directors and Stockholders
Skyworks Solutions, Inc.:
We have audited the accompanying consolidated balance sheet of Skyworks
Solutions, Inc. and subsidiaries as of September 30, 2002 and the related
consolidated statement of operations, stockholders' equity and cash flows for
the year then ended. We have also audited the financial statement schedule for
the year ended September 30, 2002. These consolidated financial statements and
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Skyworks Solutions,
Inc. and subsidiaries at September 30, 2002, and the results of their operations
and their cash flows for the year ended September 30, 2002 in conformity with
accounting principles generally accepted in the United States of America. Also,
in our opinion, the related financial statement schedule for the year ended
September 30, 2002, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
KPMG LLP
Boston, Massachusetts
November 15, 2002
38
Skyworks Solutions, Inc. and Subsidiaries
Independent Auditors' Report
The Board of Directors and Stockholders
Skyworks Solutions, Inc.:
We have audited the accompanying consolidated balance sheet of Skyworks
Solutions, Inc. and subsidiaries (formerly the combined balance sheet of the
Washington Business and the Mexicali Operations of Conexant Systems, Inc.) as of
September 30, 2001, and the related consolidated statements of operations,
stockholders' equity (formerly Conexant's net investment and comprehensive
income), and cash flows for the years ended September 30, 2000 and 2001. Our
audits also included the financial statement schedule listed in the Index at
Item 15 for the years ended September 30, 2000 and 2001. These financial
statements and the financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and the financial statements schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes addressing the accounting principles used and
significant estimates made by the management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Skyworks Solutions, Inc. and
subsidiaries (formerly the Washington Business and the Mexicali Operations of
Conexant Systems, Inc.) at September 30, 2001, and the results of their
operations and their cash flows for the years ended September 30, 2000 and
2001, in conformity with accounting principles generally accepted in the United
States of America. Also, in our opinion, such financial statement schedule when
considered in relation to the basic financial statements taken as a whole
presents fairly, in all material respects, the information set forth therein.
DELOITTE & TOUCHE LLP
Costa Mesa, California
February 14, 2002
39
Skyworks Solutions, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
SEPTEMBER 30,
ASSETS 2002 2001
----------- -----------
CURRENT ASSETS:
Cash and cash equivalents ..................................................... $ 53,358 $ 1,998
Receivables, net of allowance for doubtful accounts of
$1,324 and $3,206 .......................................................... 94,425 40,754
Inventories ................................................................... 55,643 37,383
Other current assets .......................................................... 23,970 3,225
----------- -----------
Total current assets .................................................. 227,396 83,360
Property, plant and equipment, less accumulated depreciation and amortization
of $305,709 and $284,879 ..................................................... 143,773 169,547
Goodwill and intangible assets, less accumulated amortization of $915 and $20,594 940,686 57,606
Deferred tax asset .............................................................. 22,487 --
Other assets .................................................................... 12,570 3,774
----------- -----------
Total assets .......................................................... $ 1,346,912 $ 314,287
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt .......................................... $ 129 $ --
Accounts payable .............................................................. 45,350 2,653
Accrued compensation and benefits ............................................. 17,585 12,363
Other current liabilities ..................................................... 84,563 7,804
----------- -----------
Total current liabilities ............................................. 147,627 22,820
Long-term debt, less current maturities ......................................... 180,039 --
Long-term liabilities ........................................................... 4,270 3,806
----------- -----------
Total liabilities ..................................................... 331,936 26,626
Commitments and contingencies ................................................... -- --
STOCKHOLDERS' EQUITY:
Preferred stock, no par value: 25,000 authorized; no shares issued .............. -- --
Common stock, $0.25 par value: 525,000 shares authorized; 137,589 shares issued
and outstanding at September 30, 2002......................................... 34,397 --
Additional paid-in capital ...................................................... 1,150,856 --
Accumulated deficit ............................................................. (170,193) --
Unearned compensation, net of accumulated amortization of $53 ................... (84) --
Conexant's net investment ....................................................... -- 287,661
----------- -----------
Total stockholders' equity ............................................ 1,014,976 287,661
----------- -----------
Total liabilities and stockholders' equity ............................ $ 1,346,912 $ 314,287
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
40
Skyworks Solutions, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
YEARS ENDED SEPTEMBER 30,
2002 2001 2000
--------- --------- ---------
Net revenues:
Third parties ....................................... $ 418,344 $ 215,502 $ 312,983
Conexant ............................................ 39,425 44,949 65,433
--------- --------- ---------
Total net revenues .......................... 457,769 260,451 378,416
--------- --------- ---------
Cost of goods sold:
Third parties ....................................... 294,149 268,749 207,450
Conexant ............................................ 37,459 42,754 62,720
--------- --------- ---------
Total cost of goods sold .................... 331,608 311,503 270,170
--------- --------- ---------
Gross margin .......................................... 126,161 (51,052) 108,246
Operating expenses:
Research and development ............................ 132,603 111,053 91,616
Selling, general and administrative ................. 50,178 51,267 52,422
Amortization of intangible assets ................... 12,929 15,267 5,327
Purchased in-process research and development ....... 65,500 -- 24,362
Special charges ..................................... 116,321 88,876 --
--------- --------- ---------
Total operating expenses .................... 377,531 266,463 173,727
--------- --------- ---------
Operating loss ........................................ (251,370) (317,515) (65,481)
Interest expense ...................................... (4,227) -- --
Other income (expense), net ........................... (56) 210 142
--------- --------- ---------
Loss before income taxes .............................. (255,653) (317,305) (65,339)
Provision (benefit) for income taxes .................. (19,589) 1,619 1,140
--------- --------- ---------
Net loss .............................................. $(236,064) $(318,924) $ (66,479)
========= ========= =========
Pro forma net loss per share, basic and diluted
(unaudited) (1) ....................................... $ (1.72)
=========
Pro forma number of weighted-average shares used in per
share computation (unaudited) (1) ..................... 137,416
=========
(1) See Note 2 to the consolidated financial statements
The accompanying notes are an integral part of these consolidated financial
statements.
41
Skyworks Solutions, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
ACCUMULATED
OTHER
COMMON STOCK ADDITIONAL CONEXANT'S COMPREHENSIVE
PAID-IN NET INCOME ACCUMULATED UNEARNED
SHARES PAR VALUE CAPITAL INVESTMENT (LOSS) DEFICIT COMPENSATION
------ --------- ------- ---------- ------ -------- ------------
Balance at September 30, 1999 -- -- -- 275,746 (178) -- --
Net loss -- -- -- (66,479) -- -- --
Foreign currency translation
adjustment -- -- -- -- 126 -- --
Contribution of business acquired by
Conexant -- -- -- 108,495 -- -- --
Net transfers from Conexant -- -- -- 148,706 -- -- --
------- ------- ----------- -------- -------- --------- -----
Balance at September 30, 2000 -- -- -- 466,468 (52) -- --
Net loss -- -- -- (318,924) -- -- --
Foreign currency translation
adjustment -- -- -- -- (232) -- --
Contribution of additional assets
related to business acquired -- -- -- 2,058 -- -- --
Net transfers from Conexant -- -- -- 138,343 -- -- --
------- ------- ----------- -------- -------- --------- -----
Balance at September 30, 2001 -- -- -- 287,945 (284) -- --
Net loss -- -- -- (66,280) -- (170,193) --
Foreign currency translation
adjustment -- -- -- -- 409 -- --
Net transfers from Conexant -- -- -- 50,404 -- -- --
Dividend (1) -- -- -- (204,716) -- -- --
Recapitalization as a result of
purchase accounting under a reverse
acquisition 137,368 34,342 1,149,965 (67,353) (125) -- (137)
Issuance of common shares to
401(k) plan 129 31 513 -- -- -- --
Exercise of stock options 26 7 35 -- -- -- --
Employee stock purchase plan 66 17 313 -- -- -- --
Amortization of unearned compensation -- -- -- -- -- -- 53
Compensation expense -- -- 30 -- -- -- --
------- ------- ----------- -------- -------- --------- -----
Balance at September 30, 2002 137,589 $34,397 $ 1,150,856 $ -- $ -- $(170,193) $ (84)
======= ======= =========== ======== ======== ========= =====
(1) The dividend to Conexant represents the payment for the Mexicali
operations ($150 million), the net assets retained by Conexant in
connection with the spin-off, primarily accounts receivable net of
accounts payable, and the assumption of certain Conexant liabilities by
the Company.
The accompanying notes are an integral part of these consolidated financial
statements.
42
Skyworks Solutions, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
YEARS ENDED SEPTEMBER 30,
2002 2001 2000
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ................................................... $ (236,064) $ (318,924) $ (66,479)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation .......................................... 47,695 58,708 61,710
Amortization of intangible assets ..................... 12,878 15,267 5,327
Amortization of deferred compensation ................. 53 -- --
Contribution of common shares to Savings and
Retirement Plan ...................................... 874 -- --
Compensation expense .................................. 30 -- --
Deferred income taxes ................................. (23,117) -- --
Provision for (recoveries of) losses on accounts
Receivable ........................................... (1,178) (468) 3,538
In-process research and development charge ............ 65,500 -- 24,362
Inventory provisions .................................. 2,704 60,978 3,132
Asset impairments ..................................... 111,817 86,209 --
Loss on sale of assets ................................ 209 80 4
Changes in assets and liabilities net of acquisition:
Receivables ........................................... (84,924) 27,276 (39,846)
Inventories ........................................... (4,413) (8,378) (65,150)
Accounts payable ...................................... 36,635 (2,547) 1,961
Accrued expenses and other current liabilities ........ (19,471) (6,003) 14,210
Other ................................................. (8,322) (1,604) 3,401
----------- ----------- -----------
Net cash used in operating activities ............... (99,094) (89,406) (53,830)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ....................................... (29,412) (51,118) (100,424)
Cash and cash equivalents of acquired business ............. 67,102 -- 7,655
Sale of short-term investments ............................. 35,422 -- --
Dividend to Conexant ....................................... (3,070) -- --
----------- ----------- -----------
Net cash provided by (used in) investing activities . 70,042 (51,118) (92,769)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net transfers from Conexant ................................ 50,404 138,343 148,706
Short-term note to Conexant ................................ 30,000 -- --
Payments on notes payable .................................. (34) -- --
Exercise of stock options .................................. 42 -- --
----------- ----------- -----------
Net cash provided by financing activities ............ 80,412 138,343 148,706
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents ....... 51,360 (2,181) 2,107
Cash and cash equivalents at beginning of period ........... 1,998 4,179 2,072
----------- ----------- -----------
Cash and cash equivalents at end of period ................. $ 53,358 $ 1,998 $ 4,179
=========== =========== ===========
Supplemental disclosure of non-cash activities:
Acquisition of Alpha Industries, Inc. ...................... $ 1,183,105 $ -- $ --
=========== =========== ===========
Dividend to Conexant ....................................... $ 201,646 $ -- $ --
=========== =========== ===========
Supplemental cash flow disclosures:
Taxes paid ................................................. $ 832 $ -- $ --
=========== =========== ===========
Interest paid .............................................. $ 323 $ -- $ --
=========== =========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
43
Skyworks Solutions, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
On December 16, 2001, Alpha Industries, Inc. ("Alpha"), Conexant Systems,
Inc. ("Conexant") and Washington Sub, Inc. ("Washington"), a wholly owned
subsidiary of Conexant, entered into a definitive agreement providing for
the combination of Conexant's wireless business with Alpha. Under the
terms of the agreement, Conexant would spin off its wireless business into
Washington, including its gallium arsenide wafer fabrication facility
located in Newbury Park, California, but excluding certain assets and
liabilities, to be followed immediately by a merger (the "Merger") of this
wireless business into Alpha with Alpha as the surviving entity in the
merger. This merger was completed on June 25, 2002. Following the merger,
Alpha changed its corporate name to Skyworks Solutions, Inc (the
"Company", "Skyworks").
Immediately following completion of the Merger, the Company purchased
Conexant's semiconductor assembly, module manufacturing and test facility
located in Mexicali, Mexico, and certain related operations ("Mexicali
Operations") for $150 million. For financial accounting purposes, the sale
of the Mexicali Operations by Conexant to Skyworks Solutions was treated
as if Conexant had contributed the Mexicali Operations to Washington as
part of the spin-off, and the $150 million purchase price was treated as a
return of capital to Conexant. The accompanying consolidated financial
statements include the assets, liabilities, operating results and cash
flows of the Washington business and the Mexicali Operations for all
periods presented, and the results of operations of Alpha from June 25,
2002, the date of acquisition. For purposes of these combined financial
statements, the Washington business and the Mexicali Operations are
collectively referred to as Washington/Mexicali.
The Merger has been accounted for as a reverse acquisition whereby
Washington was treated as the acquirer and Alpha as the acquiree,
primarily because Conexant shareholders owned a majority, approximately 67
percent, of the Company upon completion of the merger. Under a reverse
acquisition, the purchase price of Alpha was based upon the fair market
value of Alpha common stock for a reasonable period of time before and
after the announcement date of the Merger and the fair value of Alpha
stock options. The purchase price of Alpha was allocated to the assets
acquired and liabilities assumed by Washington, as the acquiring company
for accounting purposes, based upon their estimated fair market value at
the acquisition date. Because the Merger was accounted for as a purchase
of Alpha, the historical financial statements of Washington/ Mexicali
became the historical financial statements of the Company after the
Merger. Since the historical financial statements of the Company after the
Merger do not include the historical financial results of Alpha for
periods prior to June 25, 2002, the financial statements may not be
indicative of future results of operations or the historical results that
would have resulted if the Merger had occurred at the beginning of a
historical financial period.
The Company is a leading wireless semiconductor company focused on
providing front-end modules, radio frequency (RF) subsystems,
semiconductor components and complete system solutions to wireless handset
and infrastructure customers worldwide. The Company offers a comprehensive
family of components and RF subsystems, and also provides complete
antenna-to-microphone semiconductor solutions that support advanced 2.5G
and 3G services.
Basis of Presentation:
The combined financial statements prior to the Merger were prepared using
Conexant's historical basis in the assets and liabilities and the
historical operating results of Washington/Mexicali during each respective
period. The Company believes the assumptions underlying the financial
statements are reasonable. However, we cannot assure you that the
financial information included herein reflects the combined assets,
liabilities, operating results and cash flows of the Company in the future
or what they would have been had Washington/Mexicali been a separate
stand-alone entity and independent of Conexant during the periods
presented.
Under purchase accounting, the operating results of the acquirer
(Washington/Mexicali) are included for all periods being presented,
whereas the operating results of the acquiree (Alpha) are included only
after the date of acquisition (June 25, 2002) through the end of the
period. Therefore, the historical financial information included herein
does not necessarily reflect the combined assets, liabilities, operating
results and cash flows of the Company in the future.
Conexant used a centralized approach to cash management and the financing
of its operations. Cash deposits from Washington/Mexicali were transferred
to Conexant on a regular basis and were netted against Conexant's net
44
Skyworks Solutions, Inc. and Subsidiaries
investment. As a result, none of Conexant's cash, cash equivalents,
marketable securities or debt was allocated to Washington/Mexicali in the
financial statements. Cash and cash equivalents in the financial
statements, prior to the acquisition, represented amounts held by certain
foreign operations of Washington/Mexicali. Changes in equity represented
funding from Conexant for working capital and capital expenditure
requirements after giving effect to Washington/ Mexicali's transfers to
and from Conexant for its cash flows from operations through June 25,
2002.
Historically, Conexant provided financing for Washington/Mexicali and
incurred debt at the parent level. The financial statements of
Washington/Mexicali did not include an allocation of Conexant's debt or
the related interest expense. Therefore, the financial statements do not
necessarily reflect the financial position and results of operations of
Washington/ Mexicali had it been an independent company as of the dates,
and for the periods, presented.
The financial statements also include allocations of certain Conexant
operating expenses for research and development, legal, accounting,
treasury, human resources, real estate, information systems, distribution,
customer service, sales, marketing, engineering and other corporate
services provided by Conexant, including executive salaries and other
costs. The operating expense allocations have been determined on bases
that management considered to be reasonable reflections of the utilization
of services provided to, or the benefit received by, Washington/Mexicali.
Management believes that the expenses allocated to Washington/Mexicali are
representative of the operating expenses that would have been incurred had
Washington/Mexicali operated as an independent company.
After the spin-off and the Merger, the Company is performing these
functions using its own resources or purchased services, including
services obtained from Conexant pursuant to a transition services
agreement which expires on December 31, 2002 unless extended by mutual
agreement.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation:
The financial statements include the accounts of the Company and its
subsidiaries. All significant intercompany accounts and transactions have
been eliminated in consolidation.
Fiscal Year:
The Company's fiscal year ends on the Friday closest to September 30.
Fiscal years 2002, 2001 and 2000 each comprised 52 weeks and ended on
September 27, September 28 and September 29, respectively. For
convenience, the consolidated financial statements have been shown as
ending on the last day of the calendar month.
Use of Estimates:
The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the
amounts reported in the combined financial statements and accompanying
notes. Among the significant estimates affecting the financial statements
are those related to inventories, long-lived assets and income taxes. On
an ongoing basis, management reviews its estimates based upon currently
available information. Actual results could differ materially from those
estimates.
The combined financial statements have been prepared using Conexant's
historical basis in the assets and liabilities and the historical
operating results of Washington/Mexicali during each respective period.
The Company believes the assumptions underlying the financial statements
are reasonable. However, we cannot assure you that the financial
information included herein reflects the combined assets, liabilities,
operating results and cash flows of the Company in the future or what they
would have been had Washington/Mexicali been a separate stand-alone entity
and independent of Conexant during the periods presented.
Revenue Recognition:
Revenues from product sales are recognized upon shipment and transfer of
title, in accordance with the shipping terms specified in the arrangement
with the customer. Revenue recognition is deferred in all instances where
the earnings process is incomplete. Certain product sales are made to
electronic component distributors under agreements allowing for price
protection and/or a right of return on unsold products. A reserve for
sales returns and allowances for non-distributor customers is recorded
based on historical experience or specific identification of an event
necessitating a reserve. Development revenue is recognized when services
are performed and was not significant for any of the periods presented.
45
Skyworks Solutions, Inc. and Subsidiaries
Research and Development Expenditures:
Research and development costs are expensed as incurred.
Cash and Cash Equivalents:
Cash and cash equivalents include cash deposited in demand deposits at
banks and highly liquid investments with original maturities of 90 days or
less.
Bad Debt:
The Company maintains allowances for doubtful accounts for estimated
losses resulting from the inability of its customers to make required
payments. If the financial condition of the Company's customers were to
deteriorate, resulting in an impairment of their ability to make future
payments, additional allowances may be required.
Inventories:
Inventories are stated at the lower of cost, determined on a first-in,
first-out basis, or market. The Company provides for estimated
obsolescence or unmarketable inventory based upon assumptions about future
demand and market conditions. The recoverability of inventories is
assessed through an on-going review of inventory levels in relation to
sales backlog and forecasts, product marketing plans and product life
cycles. When the inventory on hand exceeds the foreseeable demand
(generally over six months), the value of such inventory that is not
expected to be sold at the time of the review is written down. The amount
of the write-down is the excess of historical cost over estimated
realizable value (generally zero). Once established, these write-downs are
considered permanent adjustments to the cost basis of the excess
inventory. If actual demand and market conditions are less favorable than
those projected by management, additional inventory write downs may be
required.
Property, Plant and Equipment:
Property, plant and equipment are carried at cost. Depreciation is
calculated using the straight-line method for financial reporting and
accelerated methods for tax purposes. Significant renewals and betterments
are capitalized and replaced units are written off. Maintenance and
repairs, as well as renewals of a minor amount, are expensed as incurred.
Estimated useful lives used for depreciation purposes are 5 to 30 years
for buildings and improvements and 3 to 10 years for machinery and
equipment. Leasehold improvements are depreciated over the life of the
associated lease.
Goodwill and Intangible Assets:
Goodwill and intangible assets are principally the result of the Merger
with Washington/Mexicali completed on June 25, 2002 and a business
acquisition completed in fiscal 2000. The Company adopted the provisions
of Statement of Financial Accounting Standards (SFAS) No. 141, Business
Combinations as of July 1, 2001. Goodwill and intangible assets determined
to have an indefinite useful life acquired in a purchase business
combination completed after June 30, 2001, but before SFAS No. 142,
Goodwill and Other Intangible Assets, is adopted in full, are not
amortized. Goodwill and intangible assets acquired in business
combinations completed before July 1, 2001 continued to be amortized.
Business acquisitions are accounted for by assigning the purchase price to
tangible and intangible assets and liabilities, including purchased
in-process research and development (IPRD) projects, which have not yet
reached technological feasibility and have no alternative future use.
Assets acquired and liabilities assumed are recorded at their estimated
fair values; the excess of the purchase price over the net assets acquired
is recorded as goodwill. The value of IPRD is immediately charged to
expense upon completion of the acquisition. Developed technology, customer
relationships and other intangibles are amortized on a straight-line basis
over their estimated useful lives (principally 10 years).
Income Taxes:
The Company uses the asset and liability method of accounting for income
taxes. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the estimated future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases.
This method also requires the recognition of future tax benefits such as
net operating loss carryforwards, to the extent that realization of such
benefits is more likely than not. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of
a change in tax rates is recognized in income in the period that includes
the enactment date.
The carrying value of the Company's net deferred tax assets assumes that
the Company will be able to generate sufficient future taxable income in
certain tax jurisdictions, based on estimates and assumptions. If these
estimates and related assumptions change in the future, the Company may be
required to record additional valuation allowances against its deferred
tax assets resulting in additional income tax expense in the Company's
consolidated statement of operations. Management evaluates the
realizability of the deferred tax assets and assesses the adequacy of the
valuation allowance quarterly. Likewise, in the event that the Company was
to determine that it would be able to realize its deferred tax assets in
the future in excess of its net recorded amount, an adjustment to the
deferred tax assets would increase income or decrease the carrying value
of goodwill in the period such determination was made.
Concentrations:
46
Skyworks Solutions, Inc. and Subsidiaries
Financial instruments that potentially subject the Company to
concentration of credit risk consist principally of trade accounts
receivable. Trade receivables are primarily derived from sales to
manufacturers of communications and consumer products. Ongoing credit
evaluations of customers' financial condition are performed and
collateral, such as letters of credit and bank guarantees, are required
whenever deemed necessary. The following customers accounted for 10% or
more of trade receivables from customers other than Conexant:
SEPTEMBER 30,
2002 2001
------ ------
Samsung Electronics Co....... 27% 63%
Motorola, Inc................ -- 13%
The following customers accounted for 10% or more of net revenues from customers
other than Conexant:
YEARS ENDED SEPTEMBER 30,
2002 2001 2000
------ ------ ------
Samsung Electronics Co....... 38% 44% 28%
Motorola, Inc................ 12% --
Nokia Corporation............ -- 12%
Ericsson..................... -- -- 18%
LG Electronics............... -- 10%
The foregoing percentages are based on sales representing Washington/Mexicali
sales for the full fiscal year during 2002, 2001 and 2000 and including sales of
Skyworks for the post-Merger period from June 26, 2002 through the end of the
fiscal year.
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of:
The Company accounts for impairment of long-lived assets in accordance
with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of." This statement requires that
long-lived assets, goodwill and certain identifiable intangibles be
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison
of the carrying amount of an asset to undiscounted future net cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by
which the carrying amount of the assets exceeds the fair value of the
assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.
Product Warranties:
Warranties are offered on the sale of certain products and an accrual is
recorded for estimated claims at the time of the sale. Such accruals are
based on historical experience and management's estimate of future claims.
Foreign Currency Translation and Remeasurement:
The foreign operations of the Company are subject to exchange rate
fluctuations and foreign currency transaction costs. The functional
currency for our foreign operations is the U.S. dollar. Inventories,
property, plant and equipment; goodwill and intangible assets; costs of
goods sold; and depreciation and amortization are remeasured from the
foreign currency into U.S. dollars at historical exchange rates; other
accounts are translated at current exchange rates. Gains and losses
resulting from these remeasurements are included in income. Gains and
losses resulting from foreign currency transactions are recognized
currently in income.
Stock Option Plans:
The Company accounts for its stock-based compensation under the provisions
of Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" and related interpretations and provides disclosure
related to its stock-based compensation under the provisions of SFAS No.
123, "Accounting for Stock-Based Compensation."
Earnings Per Share:
47
Skyworks Solutions, Inc. and Subsidiaries
Prior to the Merger with Alpha Industries, Inc., Conexant's wireless
business had no separate capitalization, therefore a calculation cannot
be performed for weighted average shares outstanding to then calculate
earnings per share. Pro forma basic earnings per share is calculated by
dividing net income (loss) by the assumed pro forma weighted average
number of common shares outstanding in fiscal 2002. Pro forma weighted
average number of shares outstanding is calculated assuming the Merger
had been consummated at the beginning of fiscal 2002. Pro forma diluted
earnings per share includes the dilutive effect of stock options, if
their effect is dilutive, using the treasury stock method. Options to
purchase approximately 31.3 million shares were outstanding but not
included in the computation of diluted earnings per share as the net loss
for the fiscal year ended September 30, 2002 would have made their effect
anti-dilutive.
Comprehensive (Loss) Income:
The Company accounts for comprehensive (loss) income in accordance with
the provisions of SFAS No. 130, "Reporting Comprehensive Income." SFAS No.
130 is a financial statement presentation standard, which requires the
Company to disclose non-owner changes included in equity but not included
in net income or loss. Comprehensive loss presented in the combined
financial statements of Conexant's net investment consists of
Washington/Mexicali's net loss and foreign currency translation
adjustments prior to the Merger. The foreign currency translation
adjustments are not recorded net of any tax effect, as management does not
expect to incur any tax liability or benefit related thereto. Accumulated
other comprehensive loss, prior to the Merger, is included in Conexant's
net investment in the combined balance sheets.
Supplemental Cash Flow Information:
Conexant made all income tax payments, prior to the Merger, on behalf of
the Washington/Mexicali business.
Recent Accounting Pronouncements:
In July 2001, the Financial Accounting Standards Board (FASB) issued
Statements No. 141, "Business Combinations" (SFAS No. 141), and No. 142,
"Goodwill and Other Intangibles" (SFAS No. 142). SFAS No. 141 requires the
use of the purchase method of accounting and eliminates the use of the
pooling-of-interest method of accounting for business combinations. SFAS
No. 141 also requires that the Company recognize acquired intangible
assets apart from goodwill if the acquired intangible assets meet certain
criteria. SFAS No. 141 applies to all business combinations initiated
after June 30, 2001 and for purchase business combinations completed on or
after July 1, 2001. The Company has adopted the provisions of SFAS No.
141. Upon adoption of SFAS No. 142, the Company is required to evaluate
its existing intangible assets and goodwill that were acquired in purchase
business combinations, and to make any necessary reclassifications in
order to conform with the new classification criteria in SFAS No. 141 for
recognition separate from goodwill. The Company will be required to
reassess the useful lives and residual values of all intangible assets
acquired, and make any necessary amortization period adjustments by the
end of the first interim period after adoption. If an intangible asset is
identified as having an indefinite useful life, the Company will be
required to test the intangible asset for impairment in accordance with
the provisions of SFAS No. 142 within the first interim period. Impairment
is measured as the excess of carrying value over the fair value of an
intangible asset with an indefinite life. Any impairment loss will be
measured as of the date of adoption and recognized as the cumulative
effect of a change in accounting principle in the first interim period.
In connection with SFAS No. 142's transitional goodwill impairment
evaluation, the Statement requires the Company to perform an assessment of
whether there is an indication that goodwill is impaired as of the date of
adoption. To accomplish this, the Company must identify its reporting
units and determine the carrying value of each reporting unit by assigning
the assets and liabilities, including the existing goodwill and intangible
assets, to those reporting units as of October 1, 2002. The Company will
then have up to six months from October 1, 2002 to determine the fair
value of each reporting unit and compare it to the carrying amount of the
reporting unit. To the extent the carrying amount of a reporting unit
exceeds the fair value of the reporting unit, an indication exists that
the reporting unit goodwill may be impaired and the Company must perform
the second step of the transitional impairment test. The second step is
required to be completed as soon as possible, but no later than the end of
the year of adoption. In the second step, the Company must compare the
implied fair value of the reporting unit goodwill with the carrying amount
of the reporting unit goodwill, both of which would be measured as of the
date of adoption. The implied fair value of goodwill is determined by
allocating the fair value of the reporting unit to all of the assets
(recognized and unrecognized) and liabilities of the reporting unit in a
manner similar to a purchase price allocation, in accordance with SFAS No.
141. The residual fair value after this allocation is the implied fair
value of the reporting unit goodwill. Any transitional impairment loss
will be recognized as the cumulative effect of a change in accounting
principle in the Company's statement of operations. The Company may be
required to record a substantial transitional impairment charge as a
result of adopting SFAS No. 142. The carrying value of goodwill and
intangible assets, subject to the transitional impairment test, is
approximately $907.5 million at September 30, 2002. Management is
assessing the impact that adoption of SFAS No. 142 will have on our
financial statements.
In August 2001, the Financial Accounting Standards Board issued SFAS No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
which supersedes previous guidance on financial accounting and reporting
for the impairment or disposal of long-lived assets and for segments of a
business to be disposed of. Adoption of SFAS 144 is required no later than
the beginning of fiscal 2003. Management does not expect the adoption of
SFAS 144 to have a significant impact on our financial position or results
of operations. However, future impairment reviews may result in charges
against earnings to write down the value of long-lived assets.
In April 2002 the FASB issued SFAS No. 145, "Rescission of FASB Statement
No.'s 4, 44, and 64, Amendment of FASB Statement No. 13 and Technical
Corrections", effective for fiscal years beginning May 15, 2002 or later.
It rescinds SFAS No. 4, "Reporting Gains and Losses From Extinguishments
of Debt", SFAS No. 64, "Extinguishments of Debt to Satisfy Sinking-Fund
Requirements", and SFAS No. 44, "Accounting for Intangible Assets of Motor
Carriers". This Statement also amends SFAS No. 13, "Accounting for Leases"
to eliminate an inconsistency between the required accounting for
sale-leaseback transactions and the required accounting for certain lease
modifications that have economic effects that are similar to
sale-leaseback transactions. This Statement also amends other existing
authoritative pronouncements to make various technical corrections,
clarify meanings or describe their applicability under changed conditions.
The Company does not believe the impact of adopting SFAS No. 145 will have
a material impact on its financial statements.
In June 2002 the FASB issued SFAS No. 146, "Accounting for Costs
Associated With Exit or Disposal Activities". SFAS No. 146 requires
companies to recognize costs associated with exit or disposal activities
when they are incurred rather than at the date of commitment to an exit or
disposal plan. This statement is effective for exit or disposal
48
Skyworks Solutions, Inc. and Subsidiaries
activities initiated after December 31, 2002. We are assessing the impact
that adoption of SFAS No. 146 will have on our financial statements.
NOTE 3 BUSINESS COMBINATIONS
MERGER WITH CONEXANT SYSTEMS, INC.'S WIRELESS BUSINESS
On December 16, 2001, Alpha, Conexant and Washington, a wholly owned
subsidiary of Conexant, entered into a definitive agreement providing for
the combination of Conexant's wireless business with Alpha. Under the
terms of the agreement, Conexant would spin off its wireless business into
Washington, including its gallium arsenide wafer fabrication facility
located in Newbury Park, California, but excluding certain assets and
liabilities, to be followed immediately by the Merger of this wireless
business into Alpha with Alpha as the surviving entity in the Merger. The
Merger was completed on June 25, 2002. Following the Merger, Alpha changed
its corporate name to Skyworks Solutions, Inc.
Immediately following completion of the Merger, the Company purchased the
Mexicali Operations for $150 million. For financial accounting purposes,
the sale of the Mexicali Operations by Conexant to Skyworks Solutions was
treated as if Conexant had contributed the Mexicali Operations to
Washington as part of the spin-off, and the $150 million purchase price
was treated as a return of capital to Conexant.
The Merger has been accounted for as a reverse acquisition whereby
Washington was treated as the acquirer and Alpha as the acquiree,
primarily because Conexant shareholders owned a majority, approximately 67
percent, of the Company upon completion of the Merger. Under a reverse
acquisition, the purchase price of Alpha was based upon the fair market
value of Alpha common stock for a reasonable period of time before and
after the announcement date of the merger and the fair value of Alpha
stock options. The purchase price of Alpha was allocated to the assets
acquired and liabilities assumed by Washington, as the acquiring company
for accounting purposes, based upon their estimated fair market value at
the acquisition date. Because the Merger was accounted for as a purchase
of Alpha, the historical financial statements of Washington/Mexicali
became the historical financial statements of the Company after the
merger. Since the historical financial statements of the Company after the
Merger do not include the historical financial results of Alpha for
periods prior to June 25, 2002, the financial statements may not be
indicative of future results of operations or the historical results that
would have resulted if the Merger had occurred at the beginning of a
historical financial period.
In connection with the Merger, the Company identified duplicate facilities
resulting in a write-down of fixed assets with historical carrying values
of $92.4 million to $20.2 million, a reduction in workforce of
approximately 210 employees at a cost of $4.8 million and facility exit or
closing costs of $3.1 million. The effects of these actions are reflected
in the purchase price allocation below.
49
Skyworks Solutions, Inc. and Subsidiaries
The total purchase price was valued at approximately $1.2 billion and is
summarized as follows:
(IN THOUSANDS)
Fair market value of Alpha common stock .......... $1,054,111
Fair value of Alpha stock options ................ 95,388
Estimated transaction costs of acquirer .......... 33,606
----------
Total ....................................... $1,183,105
==========
The purchase price was allocated as follows:
(IN THOUSANDS)
Working capital ............................... $ 119,478
Property, plant and equipment ................. 58,700
Amortized intangible assets ................... 34,082
Unamortized intangible assets ................. 2,300
Goodwill ...................................... 905,219
In-process research and development ........... 65,500
Long-term debt ................................ (73)
Other long-term liabilities ................... (2,236)
Deferred compensation ......................... 135
-----------
Total .................................... $ 1,183,105
===========
The allocation of the purchase price is subject to revision, which is not
expected to be material, based on the final valuation of plant, property
and equipment acquired.
The following unaudited pro forma financial information presents the
consolidated operations of the Company as if the June 25, 2002 Merger had
occurred as of the beginning of the periods presented. This information
gives effect to certain adjustments including increased amortization of
intangibles and increased interest expense related to debt issued in
conjunction with the Merger. In-process research and development of $65.5
million and other Merger-related expenses of $28.8 million have been
excluded from the pro forma results as they are non-recurring and not
indicative of normal operating results. This information is provided for
illustrative purposes only, and is not necessarily indicative of the
operating results that would have occurred had the Merger been consummated
at the beginnings of the periods presented, nor is it necessarily
indicative of any future operating results.
(in thousands, except per share data) YEARS ENDED SEPTEMBER 30,
2002 2001
--------- ---------
Net revenue .......................... $ 543,091 $ 458,352
Net loss ............................. $(301,684) $(328,981)
Net loss per share (basic and diluted) $ (2.20)
=========
In connection with the Merger in the third quarter of fiscal
2002, $65.5 million was allocated to purchased in-process
research and development and expensed immediately upon
completion of the acquisition (as a charge not deductible for
tax purposes) because the technological feasibility of certain
products under development had not been established and no
future alternative uses existed.
Prior to the Merger, Alpha was in the process of developing
new technologies in its semiconductor and ceramics segments.
The objective of the in-process research and development
effort was to develop new semiconductor processes, ceramic
materials and related products to satisfy customer
requirements in the wireless and broadband markets. The
following table summarizes the significant assumptions
underlying the valuations of the Alpha in-process research and
development (IPR&D) at the time of acquisition.
Estimated costs to Discount rate
(in millions) Date Acquired IPRD complete projects applied to IPRD
------------- ---- ----------------- ---------------
Alpha June 25, 2002 $65.5 $10.3 30%
The semiconductor segment was involved in several projects
that have been aggregated into the following categories based
on the respective technologies:
Power Amplifier
Power amplifiers are designed and manufactured for use in
different types of wireless handsets. The main performance
attributes of these amplifiers are efficiency, power output,
operating voltage and distortion. Current research and
development is focused on expanding the offering to all types
of wireless standards, improving performance by process and
circuit improvements and offering a higher level of
integration.
Control Products
Control products consist of switches and switch filters that
are used in wireless applications for signal routing. Most
applications are in the handset market enabling multi-mode,
multi-band handsets. Current research and development is
focused on performance improvement and cost reduction by
reducing chip size and increasing functionality.
Broadband
The products in this grouping consist of radio frequency (RF)
and millimeter wave semiconductors and components designed and
manufactured specifically to address the needs of high-speed,
wireline and wireless network access. Current and long-term
research and development is focused on performance enhancement
of speed and bandwidth as well as cost reduction and
integration.
Silicon Diode
These products use silicon processes to fabricate diodes for
use in a variety of RF and wireless applications. Current
research and development is focused on reducing the size of
the device, improving performance and reducing cost.
Ceramics
The ceramics segment was involved in projects that relate to
the design and manufacture of ceramic-based components such as
resonators and filters for the wireless infrastructure market.
Current research and development is focused on performance
enhancements through improved formulations and electronic
designs.
The material risks associated with the successful completion of the
in-process technology are associated with the Company's ability to
successfully finish the creation of viable prototypes and successful
design of the chips, masks and manufacturing processes required. The
Company expects to benefit from the in-process projects as the individual
products that contain the in-process technology are put into production
and sold to end-users. The release dates for each of the products within
the product families are varied. The fair value of the in-process research
and development was determined using the income approach. Under the income
approach, the fair value reflects the present value of the projected cash
flows that are expected to be generated by the products incorporating the
in-process research and development, if successful.
The projected cash flows were discounted to approximate fair value. The
discount rate applicable to the cash flows of each project reflects the
stage of completion and other risks inherent in each project. The weighted
average discount rate used in the valuation of in-process research and
development was 30 percent. The IPR&D projects were expected to commence
generating cash flows in fiscal 2003.
CONEXANT'S ACQUISITION OF PHILSAR SEMICONDUCTOR INC.
In May 2000, Conexant acquired Philsar Semiconductor Inc. ("Philsar"),
which became a part of Conexant's wireless communications business. This
acquisition has been accounted for as a contribution to the wireless
business by Conexant and such contribution has been recorded in Conexant's
net investment in the combined financial statements. Philsar was a
developer of radio frequency semiconductor solutions for personal wireless
connectivity, including emerging standards such as Bluetooth, and radio
frequency components for third-generation (3G) digital cellular handsets.
To effect the acquisition of Philsar, all of the then-outstanding capital
stock of Philsar was exchanged for Philsar securities exchangeable at the
option of the holders into an aggregate of approximately 2.5 million
shares of Conexant common stock (including 248,000 exchangeable shares
issued in fiscal 2001 upon the expiration of an indemnification period).
The outstanding Philsar stock options were converted into options to
purchase an additional 525,000 shares of Conexant common stock.
50
Skyworks Solutions, Inc. and Subsidiaries
The total value of the consideration for the Philsar acquisition was
$110.0 million. The value of the consideration paid was based on market
prices of Conexant common stock at the time of announcement of the
acquisition or, in the case of the additional consideration, at the time
of resolution of the contingency. The value of the options converted (an
average fair value of $36.12 per share) was determined using the
Black-Scholes option pricing model, based upon their various exercise
prices (which ranged from $5.47 to $9.41) and remaining contractual lives
(ranging from 1.4 to 9.8 years) and the following additional assumptions:
estimated volatility of 60%, risk-free interest rate of 5.9% and no
dividend yield). The value of the consideration has been allocated among
the assets and liabilities acquired, including identified intangible
assets and IPRD, based upon estimated fair values. The excess of the value
of the consideration over the net assets acquired was allocated to
goodwill. The tangible assets acquired totaled $8.0 million, net of
liabilities of $2.2 million, and included $7.7 million in cash. The total
goodwill associated with this acquisition was $71.4 million and such
amount is not deductible for tax purposes.
In connection with the acquisition of Philsar, $24.4 million was allocated
to IPRD and expensed immediately upon completion of the acquisition (as a
charge not deductible for tax purposes) because the technological
feasibility of products under development had not been established and no
future alternative uses existed. The fair value of the IPRD was determined
using the income approach. Under the income approach, expected future
after-tax cash flows from each of the projects or product families
(projects) under development are estimated and discounted to their net
present value at an appropriate risk-adjusted rate of return. Each project
was analyzed to determine the technological innovations included in the
project; the existence and utilization of core technology; the complexity,
cost and time to complete the remaining development efforts; the existence
of any alternative future use or current technological feasibility; and
the stage of completion in development.
Future cash flows for each project used in the income approach were
estimated based on forecasted revenues and costs, taking into account the
expected life cycles of the products and the underlying technology,
relevant market sizes and industry trends. The projected revenues used in
the income approach were the revenues expected to be generated upon
completion of the IPRD projects and the beginning of commercial sales, as
estimated by management. The projections assume that the projects will be
successful and that the products' development and commercialization meet
management's estimated time schedule. The projected gross margins and
operating expenses reflect the costs expected to be incurred for
production, marketing, and ongoing development of the product families as
estimated by management. The IPRD projects were expected to commence
generating net cash inflows in fiscal 2001.
The projects were then classified as developed technology, IPRD or future
development. The estimated future cash flows for each were discounted to
approximate fair value. Discount rates of 30% for IPRD and 25% for
developed technology were derived from a weighted-average cost of capital
analysis, adjusted upward to reflect additional risks inherent in the
development process, including the probability of achieving technological
success and market acceptance. The IPRD charge includes the fair value of
the portion of IPRD completed as of the date of acquisition. The fair
values assigned to IPRD to-be-completed and future development are
included in goodwill. Management is responsible for the amounts determined
for IPRD, as well as developed technology, and believes the amounts are
representative of fair values and do not exceed the amounts an independent
party would pay for these projects.
The results of operations of Philsar are included in the combined
financial statements from the date of acquisition. The pro forma combined
statement of operations data for fiscal 2000 below assumes that the
acquisition of Philsar had been completed as of the beginning of the
fiscal year and includes amortization of goodwill and identified
intangible assets from that date. However, the impact of the charge for
IPRD has been excluded. This pro forma data is presented for informational
purposes only, and is not necessarily indicative of the results of future
operations nor of the results that would have been achieved had the
acquisition of Philsar taken place at the beginning of fiscal 2000.
(Unaudited, in thousands) 2000
---------
Net revenues .............................. $ 379,161
Net loss .................................. $ (62,326)
During the third quarter of fiscal 2002, the Company recorded a $45.8
million charge for the write-off of goodwill and other intangible assets
associated with our fiscal 2000 acquisition of the Philsar Bluetooth
business. Management has determined that the Company will not support the
technology associated with the Philsar Bluetooth business.
51
Skyworks Solutions, Inc. and Subsidiaries
Accordingly, this product line will be discontinued and the employees
associated with the product line have either been severed or relocated to
other operations. As a result of the actions taken, management determined
that the remaining goodwill and other intangible assets associated with
the Philsar acquisition had been impaired.
NOTE 4 SUPPLEMENTAL FINANCIAL STATEMENT DATA
Inventories consisted of the following (in thousands):
SEPTEMBER 30,
2002 2001
------- -------
Raw materials .................. $ 9,377 $ 3,626
Work-in-process ................ 32,639 19,164
Finished goods ................. 13,627 14,593
------- -------
$55,643 $37,383
======= =======
Cost of goods sold for fiscal 2001 includes inventory write-downs of $58.7
million. These write-downs resulted from the sharply reduced end-customer
demand experienced for digital cellular handsets in fiscal 2001. As a
result of these market conditions, the Company experienced a significant
number of order cancellations and a decline in the volume of new orders
during fiscal 2001. The inventories written down during fiscal 2001
principally consisted of power amplifiers and radio frequency subsystem
components which, in many cases, had been purchased or manufactured to
satisfy expected customer demand.
The assessment of the recoverability of inventories, and the amounts of
any write-downs, is based on currently available information and
assumptions about future demand and the market conditions. Demand for
products may fluctuate significantly over time, and actual demand and
market conditions may be more or less favorable than those projected by
management. In the event that actual demand is lower than originally
projected, additional inventory write-downs may be required.
Some or all of the inventories which have been written down may be
retained and made available for sale. In the event that actual demand is
higher than originally projected, a portion of these inventories may be
able to be sold in the future. Inventories which have been written-down
and are identified as obsolete are generally scrapped.
Property, plant and equipment consist of the following (in thousands):
SEPTEMBER 30,
2002 2001
--------- ---------
Land .................................... $ 11,578 $ 8,336
Land and leasehold improvements ......... 6,583 11,730
Buildings ............................... 72,457 18,285
Machinery and equipment ................. 341,702 396,268
Construction in progress ................ 17,162 19,807
--------- ---------
449,482 454,426
Accumulated depreciation and amortization (305,709) (284,879)
--------- ---------
$ 143,773 $ 169,547
========= =========
52
Skyworks Solutions, Inc. and Subsidiaries
Goodwill and intangible assets consist of the following (in thousands):
SEPTEMBER 30,
2002 2001
--------- ---------
Goodwill ......................... $ 905,219 $ 71,412
Developed technology ............. 21,260 5,995
Customer relationships ........... 12,700 --
Trademark ........................ 2,300 --
Other ............................ 122 793
--------- ---------
941,601 78,200
Accumulated depreciation and amortization (915) (20,594)
--------- ---------
$ 940,686 $ 57,606
========= =========
Other current assets consist of the following (in thousands):
SEPTEMBER 30,
2002 2001
------- -------
Prepaid expenses ............... $17,050 $ --
Other .......................... 6,920 3,225
------- -------
$23,970 $ 3,225
======= =======
Other current liabilities consist of the following (in thousands):
SEPTEMBER 30,
2002 2001
------- -------
Accrued merger expenses .................. $42,764 $ --
Product warranty accrual ................. 13,372 3,414
Restructuring charges and exit costs ..... 7,436 --
Accrued take or pay obligations .......... 5,143 --
Other .................................... 15,848 4,390
------- -------
$84,563 $ 7,804
======= =======
NOTE 5 BORROWING ARRANGEMENTS AND COMMITMENTS
LONG-TERM DEBT
Long-term debt consisted of the following (in thousands):
SEPTEMBER 30,
2002 2001
-------- ------
Conexant Mexicali note ............................. $150,000 $ --
Conexant revolving credit line used ................ 30,000 --
CDBG Grant ......................................... 168 --
-------- ------
180,168 --
Less - current maturities ...................... 129 --
-------- ------
$180,039 $ --
======== ======
On September 30, 2002, the Company had $150 million in short-term promissory
notes payable to Conexant pursuant to a financing agreement entered into in
connection with the purchase of the Mexicali Operations. The notes were secured
by the assets and properties of the Company. Unless paid earlier at the option
of the Company or pursuant to mandatory prepayment provisions contained in the
financing agreement with Conexant, fifty percent of the principal portion of the
short-term promissory notes was due on March 24, 2003, and the remaining fifty
percent of the notes was due on June 24, 2003. Interest on these notes was
payable quarterly at a rate of 10% per annum for the first ninety days following
June 25, 2002, 12% per annum for the next ninety days and 15% per annum
thereafter. Because the Company refinanced these notes, the principal amount was
classified on September 30, 2002 as a long-term note payable. In addition, on
September 30, 2002 the Company had available a short-term $100 million loan
facility from Conexant under the financing agreement to fund the
53
Skyworks Solutions, Inc. and Subsidiaries
Company's working capital and other requirements. $75 million of this facility
became available on or after July 10, 2002, and the remaining $25 million
balance of the facility would have become available if the Company had more than
$150 million of eligible domestic receivables. The entire principal of any
amounts borrowed under the facility was due on June 24, 2003. There were $30
million of borrowings as of September 30, 2002 under this facility. Because the
Company refinanced the amounts borrowed under this loan facility, the principal
amount was classified on September 30, 2002 as a long-term note payable.
On November 13, 2002, Skyworks successfully closed a private placement of $230
million of 4.75 percent convertible subordinated notes due 2007. These notes can
be converted into 110.4911 shares of common stock per $1,000 principal balance,
which is the equivalent of a conversion price of approximately $9.05 per share.
The net proceeds from the note offering were principally used to prepay debt
owed to Conexant under the financing agreement. The payments to Conexant retired
$105 million of the $150 million note relating to the purchase of the Mexicali
Operations and repaid the $65 million principal amount outstanding as of
November 13, 2002 under the loan facility, dissolving the $100 million facility
and resulting in the release of Conexant's security interest in all assets and
properties of the Company.
In connection with the prepayment by the Company of $105 million of the $150
million note owed to Conexant relating to the purchase of the Mexicali
Operations, the remaining $45 million principal balance was exchanged for a new
15% convertible debt security with a maturity date of June 30, 2005. These
notes can be converted into the Company's common stock at a conversion rate
based on the applicable conversion price, which is subject to adjustment based
on, among other things, the market price of the Company's common stock. Based
on this adjustable conversion price, the Company expects that the maximum
number of shares that could be issued under the note is approximately 7.1
million shares, subject to adjustment for stock splits and other similar
dilutive occurrences.
The Company obtained a ten-year $960,000 loan from the State of Maryland under
the Community Development Block Grant program. Quarterly payments are due
through December 2003 and represent principal plus interest at 5% of the
unamortized balance.
Aggregate annual maturities of long-term debt are as follows (in thousands):
FISCAL YEAR
-----------
2003 ...................................... $ 129
2004 ...................................... 39
2005 ...................................... 45,000
2006 ...................................... --
2007 ...................................... 135,000
--------
$180,168
========
NOTE 6 INCOME TAXES
Loss before income taxes consisted of the following components (in thousands):
YEARS ENDED SEPTEMBER 30,
---------------------------------------
2002 2001 2000
--------- --------- ---------
United States .... $(151,214) $(323,642) $ (67,995)
Foreign .......... (104,439) 6,337 2,656
--------- --------- ---------
$(255,653) $(317,305) $ (65,339)
========= ========= =========
54
Skyworks Solutions, Inc. and Subsidiaries
The provision for income taxes from continuing operations consists of the
following (in thousands):
YEARS ENDED SEPTEMBER 30,
-----------------------------------
2002 2001 2000
-------- -------- --------
Current tax expense
Federal ........................ $ -- $ -- $ --
Foreign ........................ 3,506 1,619 1,140
State .......................... -- -- --
-------- -------- --------
3,506 1,619 1,140
Deferred tax expense (benefit)
Federal ........................ -- -- --
Foreign ........................ (23,095) -- --
State .......................... -- -- --
-------- -------- --------
(23,095) -- --
Net income tax expense (benefit) $(19,589) $ 1,619 $ 1,140
======== ======== ========
The actual income tax expenses (benefits) reported from operations are
different than those which would have been computed by applying the
federal statutory tax rate to income (loss) before income tax expenses
(benefits). A reconciliation of income tax expense (benefit) as computed
at the U.S. Federal statutory income tax rate to the provision for income
tax expense (benefit) as follows (in thousands):
YEARS ENDED SEPTEMBER 30,
---------------------------------------
2002 2001 2000
--------- --------- ---------
Tax (benefit) expense at U.S. statutory rate .... $ (89,479) $(111,057) $ (22,869)
Foreign tax rate difference ..................... 3,529 (599) 210
Nondeductible amortization of intangible assets . 16,151 5,099 1,752
Nondeductible in-process research and development 22,925 -- 8,527
Pre-distribution loss not available to Skyworks . 21,968 -- --
Research and development credits ................ (711) (4,921) (3,937)
State income taxes, net of federal benefit ...... -- (11,672) (3,283)
Change in valuation allowance ................... 5,947 123,466 19,870
Other, net ...................................... 81 1,303 870
--------- --------- ---------
$ (19,589) $ 1,619 $ 1,140
========= ========= =========
55
Skyworks Solutions, Inc. and Subsidiaries
Deferred income tax assets and liabilities consist of the tax effects of
temporary differences related to the following (in thousands):
SEPTEMBER 30,
2002 2001
--------- ---------
Current:
Inventories .................................... $ 14,352 $ 31,836
Deferred revenue ............................... 258 2,779
Accrued compensation and benefits .............. 1,914 1,872
Product returns, allowances and warranty ....... 8,097 3,686
Restructuring .................................. 5,475 --
Deferred state taxes ........................... -- (1,822)
Other - net .................................... 523 1,470
--------- ---------
Current deferred income taxes ............. 30,619 39,821
--------- ---------
Long-term:
Property, plant and equipment .................. 25,712 30,876
Intangible assets .............................. (13,029) (2,337)
Retirement benefits and deferred compensation .. 931 1,299
Net operating loss carryforwards ............... 27,003 125,456
Federal tax credits ............................ 3,904 16,918
State investment credits ....................... 2,672 4,801
Restructuring .................................. 28,297 --
Deferred state taxes ........................... -- (10,071)
Other - net .................................... (416) 531
--------- ---------
Long-term deferred income taxes ........... 75,074 167,473
--------- ---------
Total deferred income taxes ............. 105,693 207,294
--------- ---------
Valuation allowance ..................... (83,206) (207,294)
--------- ---------
Net deferred tax assets ................. $ 22,487 $ --
========= =========
Based upon a history of significant operating losses, management has determined
that it is more likely than not that historic and current year income tax
benefits will not be realized except for certain future deductions associated
with the Mexicali Operations in the post-Merger period. Consequently, no United
States income tax benefit has been recognized relating to the U.S. operating
losses. As of September 30, 2002, we have established a valuation allowance
against all of our net U.S. deferred tax assets. The net change in the valuation
allowance is principally due to Conexant retaining certain tax attributes, i.e.
federal and state net operating loss and credit carryovers. Reduction of a
portion of the valuation allowance may be applied to reduce the carrying value
of goodwill. The portion of the valuation allowance for deferred tax assets for
which subsequently recognized tax benefits will be applied to reduce goodwill
related to the purchase consideration of the Merger with Alpha is approximately
$24 million. Deferred tax assets have been recognized for foreign operations
when management believes they will be recovered during the carry forward period.
We do not expect to recognize any income tax benefits relating to future
operating losses generated in the United States until management determines that
such benefits are more likely than not to be realized. In 2002, the Company
recorded a tax benefit of approximately $23 million related to the impairment of
our Mexicali assets. A valuation allowance has not been established because the
Company believes that the related deferred tax asset will be recovered during
the carry forward period.
To the extent that Washington/Mexicali had filed separate tax returns as of
September 30, 2001, the U.S. federal net operating loss carryforwards would have
been approximately $316.3 million, which would expire at various dates through
2021, and aggregate state net operating loss carryforwards would have been
approximately $295.3 million, which would expire at various dates through 2011.
Washington/Mexicali would also have had U.S. Federal and state research and
development tax credit carryforwards of approximately $11.5 million and $5.4
million, respectively. The U.S. Federal tax credits would expire at various
dates through 2021, while the state credits would have no expiration date.
California Manufacturers' Investment Credits of approximately $4.8 million would
expire at various dates through 2009. These tax attributes include certain
amounts that were retained by Conexant and are not available to be utilized in
the separate tax returns of the combined company subsequent to the Merger and
the combined company's purchase of the Mexicali Operations.
The research and development credits and the net operating losses shown above
that relate to periods prior to the Merger are calculated as if
Washington/Mexicali had filed separate tax returns. These tax attributes include
certain amounts that were retained by Conexant and are not available to be
utilized in the separate tax returns of the combined company subsequent to the
Merger and the combined company's purchase of the Mexicali Operations.
56
Skyworks Solutions, Inc. and Subsidiaries
As of September 30, 2002, the Company has U.S. federal net operating loss
carryforwards of approximately $71.1 million which will expire at various dates
through 2022 and aggregate state net operating loss carryforwards of
approximately $33.4 million which will expire at various dates through 2007. The
Company also has U.S. federal and state income tax credit carryforwards of
approximately $5.7 million. The U.S. federal tax credits expire at various dates
through 2022. The use of the pre-Merger net operating loss and tax credit
carryovers from Alpha will be limited due to statutory tax restrictions
resulting from the Merger and related changes in ownership. The annual limit on
the utilization of pre-merger net operating losses has been estimated at $14
million. Pre-Merger credits would also be subject to the tax equivalent of the
annual net operating loss limitation.
As part of the spin-off and the Merger, Washington, Conexant and Alpha entered
into a tax allocation agreement which provides, among other things, for the
allocation between Conexant and the combined company of certain tax liabilities
relating to the Washington Business. In general, Conexant assumed and is
responsible for tax liabilities of the Washington Business and Washington for
periods prior to the Merger and the combined company has assumed and is
responsible for tax liabilities of the Washington Business for periods after the
Merger. Skyworks' obligations under the tax allocation agreement have been
limited by the letter agreement dated November 6, 2002 entered into as part of
the debt refinancing with Conexant.
NOTE 7 STOCKHOLDERS' EQUITY
COMMON STOCK
The Company is authorized to issue (1) 525,000,000 shares of common stock, par
value $0.25 per share, and (2) 25,000,000 shares of preferred stock, without par
value.
Holders of the Company's common stock are entitled to such dividends as may be
declared by the Company's board of directors out of funds legally available for
such purpose. Dividends may not be paid on common stock unless all accrued
dividends on preferred stock, if any, have been paid or declared and set aside.
In the event of the Company's liquidation, dissolution or winding up, the
holders of common stock will be entitled to share pro rata in the assets
remaining after payment to creditors and after payment of the liquidation
preference plus any unpaid dividends to holders of any outstanding preferred
stock.
Each holder of the Company's common stock is entitled to one vote for each such
share outstanding in the holder's name. No holder of common stock is entitled to
cumulate votes in voting for directors. The Company's second amended and
restated certificate of incorporation provides that, unless otherwise determined
by the Company's board of directors, no holder of common stock has any
preemptive right to purchase or subscribe for any stock of any class which the
Company may issue or sell.
At September 30, 2002 the Company had 137,589,146 shares of common stock issued
and outstanding.
PREFERRED STOCK
The Company's second amended and restated certificate of incorporation permits
the Company to issue up to 25,000,000 shares of preferred stock in one or more
series and with rights and preferences that may be fixed or designated by the
Company's board of directors without any further action by the Company's
stockholders. The designation, powers, preferences, rights and qualifications,
limitations and restrictions of the preferred stock of each series will be fixed
by the certificate of designation relating to such series, which will specify
the terms of the preferred stock.
At September 30, 2002 the Company had no shares of preferred stock issued and
outstanding.
STOCK OPTIONS
The Company has stock option plans under which employees may be granted options
to purchase common stock. Options are generally granted with exercise prices at
not less than the fair market value on the grant date, generally vest over four
years and expire ten years after the grant date. As of September 27, 2002, a
total of 24.1 million shares are authorized for grant under the Company's
long-term incentive plans. The number of common shares reserved for granting of
future awards was 15.9 million at September 30, 2002.
In connection with Conexant's spin-off of Washington, options to purchase shares
of Conexant common stock were adjusted so that immediately following the
spin-off, option holders held options to purchase shares of Conexant common
stock and options to purchase Washington common stock. In connection with the
Merger, those options to purchase shares of Washington common stock were
converted into options to purchase the Company's common stock, par value $0.25
per share. The terms of options to purchase the Company's common stock will be
governed by the Washington Sub, Inc. 2002 Stock Option Plan, which was assumed
by Skyworks in the Merger and which provides that such options will generally
have the same terms and conditions applicable to the original Conexant options.
These options are included in the following schedules and options related to
non-employees are disclosed separately below.
57
Skyworks Solutions, Inc. and Subsidiaries
A summary of stock option transactions follows (shares in thousands):
WEIGHTED AVERAGE
EXERCISE PRICE OF
SHARES SHARES UNDER PLAN
------ -----------------
Balance outstanding prior to the close
of the Merger -- $ --
-------
Recapitalization as a result of the Merger:
Alpha options assumed 8,277 18.97
Conexant options assumed 23,188 20.80
Balance outstanding at June 25, 2002 31,465 $ 20.32
-------
Granted 998 4.69
Exercised (20) 2.08
Cancelled (1,111) 23.35
-------
Balance outstanding at September 30, 2002 31,332 $ 19.73
=======
Options exercisable at the end of each fiscal year (shares in thousands):
WEIGHTED AVERAGE
SHARES EXERCISE PRICE
------ --------------
2002 ................................................. 16,080 $19.86
The following table summarizes information concerning currently outstanding and
exercisable options as of September 30, 2002 (shares in thousands):
WEIGHTED
AVERAGE WEIGHTED
REMAINING AVERAGE WEIGHTED
RANGE OF EXERCISE NUMBER CONTRACTUAL OUTSTANDING OPTIONS AVERAGE EXERCISE
PRICES OUTSTANDING LIFE (YEARS) OPTION PRICE EXERCISABLE PRICE
------ ----------- ------------ ------------ ----------- -----
$ 0.00 - $9.99 4,056 6.5 $ 6.15 1,529 $ 5.18
$10.00 - $19.99 13,157 5.7 $15.82 7,671 $16.03
$20.00 - $29.99 10,333 6.7 $21.97 5,025 $21.83
$30.00 - $39.99 2,431 5.9 $36.20 1,197 $36.69
$40.00 - $59.99 1,111 7.1 $45.05 525 $45.11
$60.00 - $210.35 244 4.6 $82.41 133 $83.39
------ ------ ------ ------ ------
31,332 6.1 $19.73 16,080 $19.86
====== ====== ====== ====== ======
58
Skyworks Solutions, Inc. and Subsidiaries
RESTRICTED STOCK AWARDS
The Company's long-term incentive plans provide for awards of restricted shares
of common stock and other stock-based incentive awards to officers and other
employees and certain non-employees. Restricted stock awards are subject to
forfeiture if employment terminates during the prescribed retention period
(generally within two years of the date of award) or, in certain cases, if
prescribed performance criteria are not met. The fair value of restricted stock
awards is charged to expense over the vesting period. There were not any
restricted stock grants in fiscal 2002.
STOCK OPTION PLANS FOR DIRECTORS AND OTHER
DIRECTORS
The Company has three stock option plans for non-employee directors -- the 1994
Non-Qualified Stock Option Plan, the 1997 Non-Qualified Stock Option Plan and
the Directors' 2001 Stock Option Plan. Under the three plans, a total of 826,000
shares have been authorized for option grants. The three plans have
substantially similar terms and conditions and are structured to provide options
to non-employee directors as follows: a new director receives a total of 45,000
options upon becoming a member of the Board; and continuing directors receive
15,000 options after each Annual Meeting of Shareholders. Under these plans, the
option price is the fair market value at the time the option is granted.
Beginning in fiscal 2001, all options granted become exercisable 25% per year
beginning one year from the date of grant. Options granted prior to fiscal 2001
become exercisable at a rate of 20% per year beginning one year from the date of
grant. During fiscal 2002, 180,000 options were granted under these plans at a
weighted average price $6.31. At September 30, 2002, a total of 522,000 options,
net of cancellations, have been granted under these three plans. During fiscal
2002, no options were exercised under these plans. At September 30, 2002,
522,000 shares were outstanding and 256,500 shares were exercisable.
Non-employee directors of the Company are also eligible to receive option grants
under the Company's 1996 Long-Term Incentive Plan.
NON-EMPLOYEES RELATED TO THE MERGER
In connection with the Merger, as of September 30, 2002 non-employees, excluding
directors, held 18,184,701 options at a weighted average price of $20.49.
Effective June 25, 2002, a significant portion of Conexant's options outstanding
were converted to Skyworks' options of equivalent value. The conversion of
Conexant options into Skyworks' options was done in such a manner that (1) the
aggregate intrinsic value of the options immediately before and after the
exchange is the same, (2) the ratio of the exercise price per option to the
market value per option is not reduced, and (3) the vesting provisions and
options period of the replacement Skyworks' options are the same as the original
vesting terms and option period of the Conexant options.
EMPLOYEE STOCK PURCHASE PLAN
The Company maintains a domestic and an international employee stock purchase
plan. Under these plans, eligible employees may purchase common stock through
payroll deductions of up to 10% of compensation. The price per share is the
lower of 85% of the market price at the beginning or end of each six-month
offering period. The plans provide for purchases by employees of up to an
aggregate of 900,000 shares through December 31, 2006. The Company dissolved its
employee stock purchase plan during the fourth quarter of fiscal 2002 and
implemented a plan with substantially similar terms. Shares of 65,668 were
purchased under this plan in fiscal 2002.
ACCOUNTING FOR STOCK-BASED COMPENSATION
The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" and related interpretations in accounting for its
stock option and employee stock purchase plans. Had compensation cost for the
Company's stock option and stock purchase plans been determined based upon the
fair value at the grant date for awards under these plans consistent with the
methodology prescribed under SFAS No. 123, "Accounting for Stock-based
Compensation," the Company's net (loss) income would have been as follows:
Pro forma information regarding net loss is required by SFAS No. 123. This
information is required to be determined as if stock-based awards to employees
had been accounted for under the fair value method of that Statement. Had
compensation cost for stock option awards to employees of the Company been
determined based on the fair value at the grant date for awards in
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Skyworks Solutions, Inc. and Subsidiaries
fiscal 2002 the pro forma net loss would have been approximately $236.6 million.
For purposes of pro forma disclosures under SFAS No. 123, the estimated fair
value of the options is assumed to be amortized to expense over the options'
vesting period. The fair value of the options granted has been estimated at the
date of the grant using the Black-Scholes option pricing model with the
following assumptions:
2002
--------
Expected volatility .......................... 70%
Risk free interest rate ...................... 2.2%
Dividend yield ............................... --
Expected option life (years) ................. 4.5
Weighted average fair value of options granted 1.87
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require input of highly
subjective assumptions, including the expected stock price volatility. Because
options held by employees and directors have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in the opinion
of management, the existing models do not necessarily provide a reasonable
measure of the fair value of these options.
STOCK WARRANTS
In connection with the Merger, the Company issued to Jazz Semiconductor, Inc. a
warrant to purchase 1,017,900 shares of Skyworks common stock at a price of
$24.02 per share. This warrant becomes exercisable in increments of 25% as of
June 25, 2002, March 11, 2003, September 11, 2003 and March 11, 2004. The
Company applied the Black-Scholes model to determine the fair value estimate and
approximately $0.2 million was included in fiscal 2002 selling, general and
administrative expenses related to this item. The warrant expires on January 20,
2005.
NOTE 8 EMPLOYEE BENEFIT PLAN
The Company maintains a 401(k) plan covering substantially all of its employees.
All of the Company's employees who are at least 21 years old are eligible to
receive a Company contribution. Discretionary Company contributions are
determined by the Board of Directors and may be in the form of cash or the
Company's stock. The Company contributes a match of 100% of the first 4%. For
fiscal 2002, the Company contributed 128,836 shares of the Company's common
stock valued at $0.6 million to fund the Company's obligation under the 401(k)
plan in fiscal 2002.
Conexant sponsors various benefit plans for its eligible employees, including a
401(k) retirement savings plan, a retirement medical plan and a pension plan.
Expenses allocated from Conexant under these employee benefit plans for
Washington/Mexicali participants prior to the Merger were $1.0 million for
fiscal 2002 and $1.3 million for both fiscal 2000 and 2001, respectively.
NOTE 9 COMMITMENTS
The Company has various operating leases primarily for computer equipment and
buildings. Rent expense amounted to $7.1 million, $4.9 million and $3.7 million
in fiscal 2002, 2001 2000, respectively. Purchase options may be exercised at
various times for some of these leases. Future minimum payments under these
noncancelable leases are as follows (in thousands):
FISCAL YEAR
-----------
2003 ........................................................ $ 6,927
2004 ........................................................ 6,799
2005 ........................................................ 5,624
2006 ........................................................ 4,755
2007 ........................................................ 4,457
Thereafter.................................................... 11,653
----------
$ 40,215
==========
Under supply agreements entered into with Conexant in connection with the
Merger, we will receive wafer fabrication, wafer probe and certain other
services from Jazz Semiconductor's Newport Beach, California foundry, and we
will provide wafer
60
Skyworks Solutions, Inc. and Subsidiaries
fabrication, wafer probe, final test and other services to Conexant at our
Newbury Park facility, in each case, for a three-year period after the Merger.
We will also provide semiconductor assembly and test services to Conexant at our
Mexicali facility.
During the term of one of our supply agreements with Conexant, our unit cost of
goods supplied by Jazz Semiconductor Inc.'s Newport Beach foundry will continue
to be affected by the level of utilization of the Newport Beach foundry joint
venture's wafer fabrication facility and other factors outside our control.
Pursuant to the terms of this supply agreement with Conexant, we are committed
to obtain a minimum level of service from Jazz Semiconductor, Inc., a Newport
Beach, California foundry joint venture between Conexant and The Carlyle Group
to which Conexant contributed its Newport Beach wafer fabrication facility. The
Company's expected minimum purchase obligations under the supply agreement will
be approximately $64 million, $39 million and $13 million in fiscal 2003, 2004
and 2005, respectively. The Company estimated its obligation under this
agreement would result in excess costs of approximately $13.2 million, which was
recorded as a liability and charged to cost of sales in the third quarter of
Fiscal 2002. During the fourth quarter of fiscal 2002, the Company reevaluated
this obligation and reduced its liability and cost of sales by approximately
$8.1 million in the quarter. With the exception of $5.1 million related to
fiscal 2003 purchase obligations, which has been accrued in fiscal 2002, the
Company currently anticipates meeting each of the annual minimum purchase
obligations under the supply agreement with Conexant.
NOTE 10 CONTINGENCIES
Various lawsuits, claims and proceedings have been or may be instituted or
asserted against the Company including those pertaining to product liability,
intellectual property, environmental, safety and health, and employment matters.
Management believes these are adequately provided for or will result in no
significant additional liability to the Company.
On June 8, 2002 Skyworks Technologies, Inc. ("STI"), filed a complaint in the
United States District Court, in the Central District of California, Southern
Division, alleging trademark infringement, false designation of origin, unfair
competition, and false advertising by the Company. Without a material impact to
the financial statements, the Company reached an agreement on this matter with
STI, which includes a release of all pending claims and an arrangement for
mutual coexistence using the name Skyworks.
The semiconductor industry is characterized by vigorous protection and pursuit
of intellectual property rights. From time to time, third parties have asserted
and may in the future assert patent, copyright, trademark and other intellectual
property rights to technologies that are important to our business and have
demanded and may in the future demand that we license their technology.
The Company has assumed responsibility for all then current and future
litigation (including environmental and intellectual property proceedings)
against Conexant or its subsidiaries in respect of the operations of Conexant's
wireless business in connection with the Merger.
The outcome of litigation cannot be predicted with certainty and some lawsuits,
claims or proceedings may be disposed of unfavorably to the Company. Many
intellectual property disputes have a risk of injunctive relief and there can be
no assurance that a license will be granted. Injunctive relief could materially
and adversely affect the financial condition or results of operations of the
Company. Based on its evaluation of matters which are pending or asserted, and
taking into account any reserves for such matters, management believes the
disposition of such matters will not have a material adverse effect on the
financial condition or results of operations of the Company.
NOTE 11 SPECIAL CHARGES
ASSET IMPAIRMENTS
During the third quarter of fiscal 2002, the Company recorded a $66.0 million
charge for the impairment of the assembly and test machinery and equipment and
related facility in Mexicali, Mexico. The impairment charge was based on a
recoverability analysis prepared by management as a result of a significant
downturn in the market for test and assembly services for non-wireless products
and the related impact on the Company's current and projected outlook.
The Company has experienced a severe decline in factory utilization at its
Mexicali facility for non-wireless products and projected decreasing revenues
and new order volume. Management believes these factors indicated that the
carrying value of the assembly and test machinery and equipment and related
facility may have been impaired and that an impairment analysis should be
performed. In performing the analysis for recoverability, management estimated
the future cash flows expected to result from the manufacturing activities at
the Mexicali facility over a ten-year period. The estimated future cash flows
were based on a gradual phase-out of services sold to Conexant and modest volume
increases consistent with management's view of the outlook for the business,
partially offset by declining average selling prices. The declines in average
selling prices are consistent with historical trends and management's decision
to reduce capital expenditures for future capacity expansion. Since the
estimated undiscounted cash flows were less than the carrying value
(approximately $100 million based on historical cost) of the related assets, it
was concluded that an impairment loss should be recognized. The impairment
charge was determined by comparing the estimated fair value of the related
assets to their carrying value. The fair value of the assets was determined by
computing the present value of the estimated future cash flows using a discount
rate of 24%, which
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Skyworks Solutions, Inc. and Subsidiaries
management believed was commensurate with the underlying risks associated with
the projected future cash flows. The Company believes the assumptions used in
the discounted cash flow model represented a reasonable estimate of the fair
value of the assets. The write down established a new cost basis for the
impaired assets.
During the third quarter of fiscal 2002, the Company recorded a $45.8 million
charge for the write-off of goodwill and other intangible assets associated with
our fiscal 2000 acquisition of the Philsar Bluetooth business. Management has
determined that the Company will not support the technology associated with the
Philsar Bluetooth business. Accordingly, this product line will be discontinued
and the employees associated with the product line have either been severed or
relocated to other operations. As a result of the actions taken, management
determined that the remaining goodwill and other intangible assets associated
with the Philsar acquisition had been impaired.
During the third quarter of fiscal 2001, the Company recorded an $86.2 million
charge for the impairment of the manufacturing facility and related wafer
fabrication machinery and equipment at the Company's Newbury Park, California
facility. This impairment charge was based on a recoverability analysis prepared
by management as a result of the dramatic downturn in the market for wireless
communications products and the related impact on the then-current and projected
business outlook of the Company. Through the third quarter of fiscal 2001, the
Company experienced a severe decline in factory utilization at the Newbury Park
wafer fabrication facility and decreasing revenues, backlog, and new order
volume. Management believed these factors, together with its decision to
significantly reduce future capital expenditures for advanced process
technologies and capacity beyond the then-current levels, indicated that the
value of the Newbury Park facility may have been impaired and that an impairment
analysis should be performed. In performing the analysis for recoverability,
management estimated the future cash flows expected to result from the
manufacturing activities at the Newbury Park facility over a ten-year period.
The estimated future cash flows were based on modest volume increases consistent
with management's view of the outlook for the industry, partially offset by
declining average selling prices. The declines in average selling prices are
consistent with historical trends and management's decision to focus on existing
products based on the current technology. Since the estimated undiscounted cash
flows were less than the carrying value (approximately $106 million based on
historical cost) of the related assets, it was concluded that an impairment loss
should be recognized. The impairment charge was determined by comparing the
estimated fair value of the related assets to their carrying value. The fair
value of the assets was determined by computing the present value of the
estimated future cash flows using a discount rate of 30%, which management
believed was commensurate with the underlying risks associated with the
projected cash flows. The Company believes the assumptions used in the
discounted cash flow model represented a reasonable estimate of the fair value
of the assets. The write-down established a new cost basis for the impaired
assets.
RESTRUCTURING CHARGES
During fiscal 2002, the Company reduced its workforce through involuntary
severance programs and recorded restructuring charges of approximately $3.0
million for costs related to the workforce reduction and the consolidation of
certain facilities. The charges were based upon estimates of the cost of
severance benefits for affected employees and lease cancellation, facility
sales, and other costs related to the consolidation of facilities. Substantially
all amounts accrued for these actions are expected to be paid within one year.
During fiscal 2001, Washington/Mexicali reduced its workforce by approximately
250 employees, including approximately 230 employees in manufacturing
operations. Restructuring charges of $2.7 million were recorded for such actions
and were based upon estimates of the cost of severance benefits for the affected
employees. Substantially all amounts accrued for these actions are expected to
be paid within one year.
Activity and liability balances related to the fiscal 2001 and fiscal 2002
restructuring actions are as follows (in thousands):
Fiscal 2002 Fiscal 2002
Fiscal 2001 workforce facility closings
actions reductions and other Total
------- ---------- --------- -----
Charged to costs and expenses................. $ 2,667
Cash payments................................. (1,943)
Restructuring balance, September 30, 2001..... 724 $ --- $ --- $ 724
Charged to costs and expenses................. 65 2,923 97 3,085
Cash payments................................. (789) (2,225) (13) (3,027)
---------- ---------- ------------ ----------
Restructuring balance, September 30, 2002..... $ --- $ 698 $ 84 $ 782
========= ========= =========== =========
In addition, the Company assumed approximately $7.8 million of restructuring
reserves from Alpha in connection with the Merger. On September 27, 2002 this
balance was $6.7 million and substantially all amounts accrued are expected to
be paid within one year.
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Skyworks Solutions, Inc. and Subsidiaries
NOTE 12 RELATED PARTY TRANSACTIONS
Historically, a significant portion of Conexant's semiconductor product assembly
and test function has been performed by the Mexicali Operations. In addition,
Conexant has purchased certain semiconductor products from the Newbury Park
wafer fabrication facility included in Conexant's wireless business. Revenues
and related costs of goods sold for products manufactured in the Newbury Park
wafer fabrication facility and assembled and tested by the Mexicali Operations
for Conexant have been separately presented in the combined statements of
operations.
The Company has entered into various agreements with Conexant providing for the
supply of gallium arsenide wafer fabrication and assembly and test services to
Conexant, initially at substantially the same volumes as historically obtained
by Conexant from Washington/Mexicali. The Company has also entered into
agreements with Conexant providing for the supply to the Company of transition
services by Conexant and silicon-based wafer fabrication services by Jazz
Semiconductor, Inc., the Newport Beach, California foundry joint venture between
Conexant and The Carlyle Group to which Conexant contributed its Newport Beach
wafer fabrication facility. Historically, Washington/Mexicali has obtained a
portion of its silicon-based semiconductors from the Newport Beach wafer
fabrication facility. Pursuant to the supply agreement with Conexant, the
Company is initially obligated to obtain certain minimum volume levels from Jazz
Semiconductor based on a contractual agreement between Conexant and Jazz
Semiconductor. Our expected minimum purchase obligations under this supply
agreement are anticipated to be approximately $64 million, $39 million and $13
million in fiscal 2003, 2004 and 2005, respectively. The Company estimates that
its minimum purchase obligation under this agreement will result in excess costs
of approximately $5.1 million and has recorded this liability and charged to
cost of sales in fiscal 2002.
Under transition services agreements with Conexant entered into in connection
with the Merger, Conexant will continue to perform various research and
development services for the Company at actual cost generally until December 31,
2002, unless the parties otherwise agree. To the extent the Company uses these
services subsequent to the expiration of the specified term, the pricing is
subject to negotiation.
NOTE 13 SEGMENT INFORMATION
The Company operates in one business segment, which designs, develops,
manufactures and markets proprietary semiconductor products and system solutions
for manufacturers of wireless communication products.
The Company has adopted SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information." SFAS No. 131 establishes standards for the
way public business enterprises report information about operating segments in
annual financial statements and in interim reports to shareholders. The method
for determining what information to report is based on the way that management
organizes the segments within the Company for making operating decisions and
assessing financial performance. In evaluating financial performance, management
uses sales and operating profit as the measure of the segments' profit or loss.
Based on the guidance in SFAS No. 131, the Company has one operating segment for
financial reporting purposes.
Geographic Information
Net revenues from customers other than Conexant by geographic area are presented
based upon the country of destination. Net revenues from customers other than
Conexant by geographic area are as follows (in thousands):
YEARS ENDED SEPTEMBER 30,
------------------------------------
2002 2001 2000
-------- -------- --------
United States ..................... $ 32,760 $ 18,999 $ 32,726
Other Americas .................... 4,615 5,455 8,146
-------- -------- --------
Total Americas ............ 37,375 24,454 40,872
South Korea ........................ 237,681 142,459 167,269
Other Asia-Pacific ................. 114,974 23,898 46,255
-------- -------- --------
Total Asia-Pacific ........ 352,655 166,357 213,524
Europe, Middle East and Africa ..... 28,314 24,691 58,587
-------- -------- --------
$418,344 $215,502 $312,983
======== ======== ========
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Skyworks Solutions, Inc. and Subsidiaries
Long-lived assets principally consist of property, plant and equipment, goodwill
and intangible assets. Long-lived assets by geographic area are as follows (in
thousands):
SEPTEMBER 30,
--------------------------------
2002 2001
---------- ----------
Assets
United States .................... $1,063,163 $ 44,539
Mexico ........................... 52,730 126,730
Canada ........................... 387 58,373
Other ............................ 3,236 1,285
---------- ----------
$1,119,516 $ 230,927
========== ==========
NOTE 14 QUARTERLY FINANCIAL DATA (UNAUDITED)
(In thousands, except per share data)
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER YEAR
=========================================================================================================
FISCAL 2002
Sales ................ $ 93,760 $ 100,356 $ 112,980 $ 150,673 $ 457,769
Gross profit ......... 15,954 29,433 20,063 60,711 126,161
Net loss ............. (34,297) (18,339) (181,945) (1,483) (236,064)
Per share data (1)
Net loss basic ... -- -- (1.33) (0.01) (1.72)
Net loss diluted . -- -- (1.33) (0.01) (1.72)
FISCAL 2001
Sales ................ $ 85,496 $ 57,503 $ 51,045 $ 66,407 $ 260,451
Gross profit ......... (7,020) (46,426) (12,414) 14,808 (51,052)
Net loss ............. (53,964) (100,160) (142,425) (22,375) (318,924)
=========================================================================================================
(1) Earnings per share calculations for each of the quarters are based
on the weighted average number of shares outstanding and included
common stock equivalents in each period. Prior to the Merger with
Alpha Industries, Inc., Conexant's wireless business had no separate
capitalization, therefore a calculation cannot be performed for
weighted average shares outstanding to then calculate earnings per
share.
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Skyworks Solutions, Inc. and Subsidiaries
NOTE 15 SUBSEQUENT EVENT
On November 13, 2002, the Company successfully closed a private placement of
$230 million of 4.75 percent convertible subordinated notes due 2007. These
notes can be converted into 110.4911 shares of common stock per $1,000 principal
balance, which is the equivalent of a conversion price of approximately $9.05
per share. The net proceeds from the note offering were principally used to
prepay debt owed to Conexant under a financing agreement entered into with
Conexant immediately following the Merger. The payments to Conexant retired $105
million of the $150 million note relating to the purchase of the Mexicali
Operations and repaid the $65 million principal amount outstanding as of
November 13, 2002 under the loan facility, dissolving the $100 million facility
and resulting in the release of Conexant's security interest in all assets and
properties of the Company.
In connection with the prepayment by the Company of $105 million of the $150
million note owed to Conexant relating to the purchase of the Mexicali
Operations, the remaining $45 million principal balance on the note was
exchanged for new 15% convertible debt securities with a maturity date of June
30, 2005. These notes can be converted into the Company's common stock at a
conversion rate based on the applicable conversion price, which is subject to
adjustment based on, among other things, the market price of the Company's
common stock. Based on this adjustable conversion price, the Company expects
that the maximum number of shares that could be issued under the note is
approximately 7.1 million shares, subject to adjustment for stock splits and
other similar dilutive occurrences.
In addition to the retirement of $170 million in principal amount of
indebtedness owing to Conexant, the Company also retained approximately $53
million of net proceeds of the private placement to support its working capital
needs.
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Alpha's independent accountant was KPMG LLP ("KPMG") and Washington/Mexicali's
independent accountant was Deloitte & Touche LLP ("Deloitte & Touche"). KPMG has
continued to serve as the Company's independent accountant after consummation of
the Merger. Because the Merger is being accounted for as a reverse acquisition,
the financial statements of Washington/Mexicali constitute the financial
statements of the Company as of the consummation of the Merger. Therefore, upon
the consummation of the Merger on June 25, 2002, there was a change in the
independent accountant for the Company's financial statements from Deloitte &
Touche to KPMG, and accordingly, Deloitte & Touche was dismissed as the
Company's independent accountant.
The reports of Deloitte & Touche on Washington/Mexicali's financial statements
for the fiscal years ended September 30, 2000 and 2001 did not contain an
adverse opinion or a disclaimer of opinion, nor were such reports qualified or
modified as to uncertainty, audit scope or accounting principles. The decision
to change accountants was approved by the Board of Directors.
During Washington/Mexicali's fiscal years ended September 30, 2000 and September
30, 2001 and through the subsequent interim period to June 25, 2002,
Washington/Mexicali did not have any disagreement with Deloitte & Touche on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure that, if not resolved to Deloitte & Touche's
satisfaction, would have caused Deloitte & Touche to make reference to the
subject matter of the disagreement in connection with its report. During that
time, there were no "reportable events" as set forth in Item 304(a)(1)(v)(A)-(D)
of Regulation S-K ("Regulation S-K") adopted by the SEC.
KPMG (or its predecessors) has been the Alpha's independent accountant since
1975 and Alpha has regularly consulted KPMG (or its predecessors) since that
time. Washington/Mexicali, as the continuing reporting entity for accounting
purposes, has not consulted KPMG during Washington/Mexicali's last two fiscal
years and through the interim period to June 25, 2002 regarding any of the
matters specified in Item 304(a)(2) of Regulation S-K.
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Skyworks Solutions, Inc. and Subsidiaries
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information with respect to our directors
and executive officers during fiscal 2002:
Dwight W. Decker (3) 52 Chairman of the Board
David J. Aldrich (3) 45 President, Chief Executive Officer and Director
Paul E. Vincent 55 Vice President, Treasurer, Secretary and Chief Financial Officer
Kevin D. Barber 42 Senior Vice President, Operations
Liam K. Griffin 36 Vice President, Sales and Marketing
George M. LeVan 56 Vice President, Human Resources
Donald R. Beall (2) 63 Director
Moiz M. Beguwala (2) 56 Director
Timothy R. Furey (2) 44 Director
Balakrishnan S. Iyer (1) 46 Director
Thomas C. Leonard (1) 68 Director
David J. McLachlan (3) 64 Director
(1) Class I Director whose term expires at the 2002 Annual Meeting of our
Stockholders
(2) Class II Director whose term expires at the 2003 Annual Meeting of our
Stockholders
(3) Class III Director whose term expires at the 2004 Annual Meeting of our
Stockholders
DWIGHT W. DECKER, age 52, has been Chairman of the Board since June 2002. Mr.
Decker has also served as chairman of the board and Chief Executive Officer of
Conexant since November 1998. He served as senior vice president of Rockwell
International Corporation (electronic controls and communications) and
president, Rockwell Semiconductor Systems from July 1998 to December 1998;
Senior Vice President of Rockwell and president, Rockwell Semiconductor Systems
(now Conexant) and Electronic Commerce from March 1997 to July 1998; and
President, Rockwell Semiconductor Systems from October 1995 to March 1997. Mr.
Decker has been a director of Conexant since its incorporation in 1996.
DAVID J. ALDRICH, age 45, has served as Chief Executive Officer, President and
Director since April 2000. From September 1999 to April 2000, Mr. Aldrich served
as President and Chief Operating Officer. From May 1996 to May 1999, when he was
appointed Executive Vice President, Mr. Aldrich served as Vice President and
General Manager of the semiconductor products segment. Mr. Aldrich joined us in
1995 as our Vice President, Chief Financial Officer and Treasurer. From 1989 to
1995, Mr. Aldrich held senior management positions at M/A-COM, Inc., a developer
and manufacturer of radio frequency and microwave semiconductors, components and
IP networking solutions, including Manager Integrated Circuits Active Products,
Corporate Vice President Strategic Planning, Director of Finance and
Administration and Director of Strategic Initiatives with the Microelectronics
Division.
PAUL E. VINCENT, age 55, joined us as Controller in 1979 and has been Vice
President and Chief Financial Officer since January 1997. Mr. Vincent was
elected Secretary in September 1999. Prior to joining us, Mr. Vincent worked at
Applicon Incorporated and, prior to that, Arthur Andersen & Co. Mr. Vincent is a
CPA.
KEVIN D. BARBER, age 42, has served as Senior Vice President, Operations since
June 2002. Mr. Barber served as Senior Vice President, Operations of Conexant
from February 2001 to June 2002; Vice President, Internal Manufacturing from
August 2000 to February 2001; Vice President, Device Manufacturing from March
1999 to August 2000; Vice President, Strategic
66
Skyworks Solutions, Inc. and Subsidiaries
Sourcing from November 1998 to March 1999; and Director, Material Sourcing of
Rockwell Semiconductor Systems (now Conexant) from May 1997 to November 1998.
LIAM K. GRIFFIN, age 36, has served as Vice President, Sales and Marketing since
August 2001. Previously, Mr. Griffin was employed by Vectron International, a
division of Dover Corp., as Vice President of Worldwide Sales from 1997 to 2001,
and as Vice President of North American sales from 1995 to 1997. His prior
experience included positions as a marketing manager at AT&T Microelectronics,
Inc. and product and process engineer at AT&T Network Systems.
GEORGE M. LEVAN, age 56, has served as Vice President, Human Resources since
June 2002. Previously, Mr. LeVan served as Director, Human Resources, from 1991
to 2002 and has managed our human resource department since joining us in 1982.
Prior to 1982, he held human resource positions at Data Terminal Systems, Inc.,
W.R. Grace & Co., Compo Industries, Inc. and RCA.
DONALD R. BEALL, age 63, has been a Director since June 2002. He served as a
director of Rockwell International Corporation from February 1978 to February
2001. He was Chairman of the Board of Rockwell from February 1988 to February
1998 and Chief Executive Officer of Rockwell from February 1988 to September
1997. Mr. Beall has also been a director of Conexant since 1998 and of Rockwell
Collins, Inc., an avionics and communications company since June 2001. In
addition to being a director of Rockwell Collins and Conexant, Mr. Beall is a
director of The Procter & Gamble Company and a former director of Amoco
Corporation, ArvinMeritor, Inc., Rockwell and The Times Mirror Company. He is a
trustee of California Institute of Technology, a member of the Foundation Board
of Trustees at the University of California, Irvine and an overseer of the
Hoover Institution. He is also a member of The Business Council and numerous
professional, civic and entrepreneurial organizations.
MOIZ M. BEGUWALA, age 56, has been a Director since June 2002. He is an
executive employee of Conexant. He served as Senior Vice President and General
Manager Wireless Communications of Conexant from January 1999 to June 2002.
Prior to Conexant's spin-off from Rockwell International Corporation, Mr.
Beguwala served as Vice President and General Manager Wireless Communications
Division, Rockwell Semiconductor Systems, Inc. from October 1998 to December
1998; Vice President and General Manager Personal Computing Division, Rockwell
Semiconductor Systems, Inc. from January 1998 to October 1998; and Vice
President, Worldwide Sales, Rockwell Semiconductor Systems, Inc. from October
1995 to January 1998.
TIMOTHY R. FUREY, age 44, has been a Director since 1998. He also serves as
chief executive officer of MarketBridge, a privately-owned sales and marketing
strategy and technology professional services firm, since 1991. Prior to 1991,
Mr. Furey held a variety of consulting positions with Boston Consulting Group,
Strategic Planning Associates, Kaiser Associates and the Marketing Science
Institute.
BALAKRISHNAN S. IYER, age 46, has been a Director since June 2002. He also has
served as Senior Vice President and Chief Financial Officer of Conexant since
December 1998 and as a director of Conexant since February 2002. Prior to
joining Conexant, Mr. Iyer served as senior vice president and chief financial
officer of VLSI Technology Inc. Prior to that, he was corporate controller for
Cypress Semiconductor Corp. and Director of Finance for Advanced Micro Devices.
THOMAS C. LEONARD, age 68, has been a Director since August 1996. From April
2000 until June 2002 he served as Chairman of the Board. From September 1999 to
April 2000, he served as Chief Executive Officer. From July 1996 to September
1999, he served as President and Chief Executive Officer. Mr. Leonard joined us
in 1992 as a Division General Manager and was elected a Vice President in 1994.
Mr. Leonard has over thirty years' experience in the microwave industry, having
held a variety of executive and senior level management and marketing positions
at M/A-COM, Inc., Varian Associates, Inc. and Sylvania. Mr. Leonard is a
director of the Massachusetts Telecommunications Council.
DAVID J. MCLACHLAN, age 64, has been a Director since 2000. He also was the
Executive Vice President and Chief Financial Officer of Genzyme Corporation, a
biotechnology company, from 1989 to 1999. Mr. McLachlan is currently a senior
adviser to Genzyme's chairman and chief executive officer. Prior to joining
Genzyme, Mr. McLachlan served as Vice President, Finance of Adams-Russell
Company, an electronic component supplier and cable television franchise owner.
Mr. McLachlan also serves on the boards of directors of Dyax Corporation, a
biotechnology company, and HEARx, Ltd., a hearing care services company.
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Skyworks Solutions, Inc. and Subsidiaries
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 (a) of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and executive officers to file reports of holdings and
transactions of securities of the Company with the SEC. Based on Company
records, and other information, the Company believes that all SEC filing
requirements applicable to its directors and executive officers with respect to
the Company's fiscal year ended September 27, 2002 were met, except that (i)
George M. LeVan, upon his appointment as an executive officer of the Company,
failed to timely file one Form 3, and (ii) Dwight W. Decker, the Chairman of the
Board, filed an amended Form 3 to disclose ownership of certain options to
purchase shares of the Company's common stock that were not reflected on his
original Form 3.
ITEM 11 EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table presents information about total compensation received
during the last three completed fiscal years by the Chief Executive Officer and
the four next most highly compensated persons serving as executive officers for
the periods indicated, except as noted in the footnotes below (the "Named
Executives").
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
AWARDS
ANNUAL COMPENSATION RESTRICTED SECURITIES
NAME AND PRINCIPAL FISCAL STOCK UNDERLYING ALL OTHER
POSITION YEAR (1) SALARY BONUS AWARDS (#) OPTION (#) COMPENSATION (2)
-------- ------ ----- ---------- ---------- ----------------
David J. Aldrich .................... 2002-S $174,462 $ -- -- 475,000
President and Chief Executive Officer 2002 $351,154 $ -- -- 160,000 $ 8,922
2001 $336,615 $ -- -- 150,000 $ 8,550
2000 $278,269 $284,800 -- 120,000 $ 6,839
Kevin D. Barber ..................... 2002(3) $253,846 $ -- -- 84,552 $ 7,685
Senior Vice President, Operations ... 2001(3) $232,766 $ 74,850 -- 14,304 $ 26,711(4)
2000(3) $185,099 $ -- -- 12,280 $ 6,345
Liam K. Griffin ..................... 2002-S $115,885 $ -- -- 100,000
Vice President, Sales and Marketing . 2002 $130,039 $ 25,000 (5) -- 100,000 $ 1,062
Richard Langman ..................... 2002-S $118,728 $ -- -- 60,000
Vice President, Ceramic Products and 2002 $244,731 $ -- -- 45,000 $ 7,369
President of Trans-Tech, Inc. ....... 2001 $223,846 -- 42,000 $ 5,169
2000 $223,269 $ 173,000 -- 20,000 $ 63,620(6)
Paul E. Vincent ..................... 2002-S $112,431 $ -- -- 90,000
Vice President and .................. 2002 $226,385 $ -- -- 50,000 $ 8,956
Chief Financial Officer ............. 2001 $217,462 $ -- -- 60,000 $ 9,681
2000 $190,192 $186,400 -- 50,000 $ 8,571
(1) References to 2002-S refer to the period beginning March 29, 2002 and
ending September 27, 2002. References to the Company's 2002, 2001 and 2000
fiscal years refer to the fiscal years of Alpha ended March 31, 2002,
April 1, 2001 and April 2, respectively. In connection with the Merger on
June 25, 2002, the Company changed its fiscal year-end from the Sunday
closest to March 31 to the Friday closest to September 30.
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Skyworks Solutions, Inc. and Subsidiaries
(2) "All Other Compensation" includes service awards and the Company's
contributions to the executive officer's 401(k) plan account (including
contributions for the fourth quarter of each fiscal year, which were
included in the year of accrual but not distributed until the subsequent
fiscal year).
(3) Mr. Barber joined the Company as an executive officer in connection with
the Merger on June 25, 2002. Prior to June 25, 2002, Mr. Barber was an
executive officer of Washington/Mexicali. References to the fiscal year
for Mr. Barber refer to the fiscal year of Skyworks ending September 27,
2002 and the prior fiscal years of Washington/Mexicali ended September
2001, and September 2000.
(4) Includes Washington/Mexicali's and Skyworks' contributions to the
executive officer's 401(k), and a $21,154 cashout of accrued vacation.
(5) In connection with his joining the Company in July 2001, Mr. Griffin
received a sign-on bonus and a grant of Company stock options.
(6) Includes $42,384 for relocation expenses paid to Mr. Langman during 2000.
The following tables provide information about stock options granted and
exercised by each of the Named Executives in fiscal 2002 and the value of
options held by each at September 27, 2002:
OPTION GRANTS IN LAST FISCAL YEAR
Number of Percent of Potential Realizable
Securities Total Value at Assumed
Underlying Options Exercise Annual Rates of Stock
Options Granted to or Base Price Appreciation for
Granted Employees in Price Expiration Option Term
Name (#) Fiscal Year ($ / Share) Date 5% 10%
- ---- --- ----------- ----------- ---- -- ---
David J. Aldrich 175,000 5.13 $12.65 4/25/2012 $1,392,215 $3,528,147
300,000 8.80 $ 4.99 6/26/2012 $ 941,455 $2,385,832
Kevin D. Barber 75,000 2.20 $ 4.99 6/26/2012 $ 235,364 $ 596,458
Liam K. Griffin 50,000 1.47 $12.65 4/25/2012 $ 397,776 $1,008,042
50,000 1.47 $ 4.99 6/26/2012 $ 156,909 $ 397,639
Richard Langman 45,000 1.32 $12.65 4/25/2012 $ 357,998 $ 907,238
15,000 0.44 $ 4.99 6/26/2012 $ 47,073 $ 119,292
Paul E. Vincent 50,000 1.47 $12.65 4/25/2012 $ 397,776 $1,008,042
40,000 1.17 $ 4.99 6/26/2012 $ 125,527 $ 318,111
The options vest at a rate of 25% per year commencing one year after the date of
grant, provided the holder of the option remains employed by the Company.
Options may not be exercised beyond three months after the holder ceases to be
employed by the Company, except in the event of termination by reason of death,
retirement or permanent disability, in which event the option may be exercised
for specific periods not exceeding one year following termination. The assumed
annual rates of stock price appreciation stated in the table are dictated by
regulations of the Securities and Exchange Commission, and are compounded
annually for the full term of the options; actual outcomes may differ.
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Skyworks Solutions, Inc. and Subsidiaries
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
Number of Securities Value of Unexercised
Shares Underlying In-The-Money
Acquired On Value Unexercised Options at Options at
Exercise Realized September 27, 2002 (#) September 27, 2002 ($)
--------------------------- ----------------------------
(#) ($) Exercisable Unexercisable Exercisable Unexercisable
--- --- ----------- ------------- ----------- -------------
David J. Aldrich -- $ -- 256,000 733,000 $ 116,736 $ 14,670
Kevin D. Barber -- $ -- 44,694 126,609 $ -- $ --
Liam K. Griffin -- $ -- 25,000 175,000 $ -- $ --
Richard Langman -- $ -- 156,250 122,750 $ 272,000 $ --
Paul E. Vincent -- $ -- 88,500 189,500 $ 52,704 $ 11,736
The values of unexercised options in the foregoing table are based on the
difference between the $4.77 closing price of Skywork's common stock at
September 27, 2002, the end of the 2002 fiscal year, on the Nasdaq National
Market, and the respective option exercise price.
EXECUTIVE COMPENSATION
Our executives are eligible for awards of nonqualified stock options, incentive
stock options and restricted stock awards under our applicable stock option
plans. These stock options plans are administered by the Compensation Committee
of the Board of Directors. Generally, the exercise price at which an executive
may purchase Skyworks' common stock pursuant to a stock option is the fair
market value of Skyworks' common stock on the date of grant. Stock options are
granted subject to restrictions on vesting, with equal portions of the total
grant generally vesting over a period of four years. Our stock options are
subject to forfeiture (after certain grace periods) upon termination of
employment, retirement, disability or death. Restricted stock awards involve the
issuance of shares of common stock which may not be transferred or otherwise
encumbered, subject to certain exceptions, for varying amounts of time, and
which will be forfeited, in whole or in part, if the executive terminates his or
her employment with Skyworks. No restricted stock awards were made in fiscal
2002; stock option grants to the Named Executives during the fiscal year are
discussed above under the caption "Option Grants in Last Fiscal Year".
Senior executives of the Company are also eligible to receive target incentive
compensation under which a percentage of each executive's total cash
compensation is tied to the accomplishment of specific financial objectives
during the 2002 fiscal year. As a result of a challenging economic and business
environment during the fiscal year, the Company did not achieve the annual
performance targets set by the Board of Directors, and no incentive bonuses were
paid to senior executives with respect to fiscal 2002. Senior executives also
may participate in the Company's Executive Compensation Plan (the "Executive
Compensation Plan"), an unfunded, non-qualified deferred compensation plan,
under which participants may defer a portion of their compensation. Deferred
amounts are held in a trust. Participants defer recognizing taxable income on
the amount held for their benefit until the amounts are paid. The Company, in
its sole discretion, may make additional contributions to the accounts of
participants. Participants normally receive the deferred amounts upon
retirement. Special rules are provided for distributions in the case of a
participant's death or disability, a change in control of the Company, early
retirement, and unforeseen emergencies. The Named Executives each participated
in the Executive Compensation Plan during the 2002 fiscal year. The Company did
not make any discretionary contributions to their accounts during fiscal 2002.
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Skyworks Solutions, Inc. and Subsidiaries
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
developing and making recommendations with respect to executive compensation.
The Compensation Committee determines the compensation to be paid to the Chief
Executive Officer of Skyworks and each of the Company's executives who report
directly to him (the "Senior Executives").
The objective of the Compensation Committee in determining the type and amount
of executive compensation is to provide a level of compensation that allows
Skyworks to attract and retain superior talent, to achieve its business
objectives, and to align the financial interests of the Senior Executives with
the stockholders of Skyworks. The elements of compensation for the Senior
Executives are base salary, short-term cash incentives, long-term stock-based
incentives and retirement plans.
Compensation for Skyworks' Chief Executive Officer and the other Senior
Executives, including salary and short- and long-term incentives, is established
at levels competitive with the compensation of comparable executives in similar
companies. The Compensation Committee periodically utilizes studies from
independent compensation experts on executive compensation in comparable high
technology and semiconductor companies. Based on these studies, the Compensation
Committee establishes base salaries, and target incentive bonuses and stock
option compensation, so as to set the combined value near the median of the
range indicated by the studies. In establishing individual compensation, the
Compensation Committee considers the individual experience and performance of
the executive, as well as the performance of Skyworks. The Compensation
Committee also considers the recommendations of the Chief Executive Officer
regarding the salaries of the other Senior Executives.
Short-term incentive compensation for each Senior Executive is established
annually by the Compensation Committee, by tying a portion of each Senior
Executive's total cash compensation to the accomplishment of specific financial
objectives. The Compensation Committee established aggressive forward-looking
incentive targets for Skyworks' Senior Executives for fiscal 2002. As a result
of a challenging business environment in that time period, the Company did not
achieve these targets. Taking this and other factors into account, no short-term
incentive compensation was awarded to Skyworks' Senior Executives for fiscal
2002.
Long-term, stock-based compensation has been provided to Senior Executives under
Skyworks' long-term incentive plan ("the LTIP"). Under the LTIP, the
Compensation Committee has, in the past, awarded nonqualified stock options, and
incentive stock options. It also has the ability to offer restricted stock
awards. Restricted stock awards involve the issuance of shares of common stock
that may not be transferred or otherwise encumbered, subject to certain
exceptions, for varying amounts of time, and which will be forfeited, in whole
or in part, if the employee terminates his or her employment with Skyworks.
These programs are intended to tie the value of the Senior Executive's
compensation to the long-term value of Skyworks' common stock.
Skyworks also permits executives and other employees to purchase Skyworks common
stock at a discount through the Company's Employee Stock Purchase Plan.
Skyworks' executives may also participate in the Company's 401(k) Plan, under
which Skyworks' employer contribution has in recent years been made in the form
of Skyworks common stock.
The stock ownership afforded under the LTIP, the Employee Stock Purchase Plan
and the 401(k) Plan encourages Skyworks' executives to acquire, long-term stock
ownership positions, and helps to align the executives' interests with
stockholders' interests.
A final component of executive compensation provides executives with a means to
defer recognition of income. Executives designated by the Compensation Committee
may participate in the Skyworks Executive Compensation Plan, which is discussed
under "Executive Compensation Plan" in the Proxy Statement.
The Compensation Committee established the compensation of Mr. Aldrich,
President and Chief Executive Officer, under the same criteria used to determine
the compensation of the other Senior Executives, as described above. Mr.
Aldrich's compensation was linked to Skyworks' performance during the fiscal
year by structuring a substantial portion of his compensation in the form of
stock options and a target incentive bonus based on the accomplishment of
specific financial objectives. Mr. Aldrich's total compensation plan for fiscal
2002 was in the middle range of those for chief executive officers of similar
companies, according to studies prepared by independent compensation
consultants. During fiscal 2002, Mr. Aldrich received a salary of $360,000 and
options to purchase 475,000 shares of common stock at the fair market value of
Skyworks common stock on the dates of the option grants. As a result of the
challenging business environment that persisted during the fiscal year, Skyworks
did not exceed the performance targets that the Board had established in Mr.
Aldrich's compensation plan, and no incentive bonus was awarded to Mr. Aldrich
for fiscal 2002.
Section 162(m) of the Internal Revenue Code limits the tax deductibility by a
publicly held corporation of compensation in excess of $1 million paid to
certain of its executive officers. However, this deduction limitation does not
apply to certain "qualified performance-based compensation" within the meaning
of the Internal Revenue Code and the regulations promulgated thereunder. The
Compensation Committee has considered the limitations on deductions imposed by
Section 162(m), and it is The Compensation Committee's intention to structure
executive compensation to minimize the application of the deduction limitations
of Section 162(m) insofar as consistent with the Compensation Committee's
overall compensation objectives.
Based on the recommendations of the Compensation Committee, Skyworks has entered
into severance agreements with certain Senior Executives. Such agreements do not
guarantee salary, position or benefits, but provide salary continuation and
other benefits in the event of a termination after a change in control or
certain other terminations, as described under the heading "Employment and
Severance Agreements" in this Form 10-K.
THE COMPENSATION COMMITTEE
Donald R. Beall, Chairman
Timothy Furey
COMPENSATION OF DIRECTORS
Directors who are not employees of Skyworks are paid a quarterly retainer of
$7,500 plus an additional $1,000 for each Board meeting attended in person or
$500 for each Board meeting attended by telephone. Directors who serve as
chairman of a committee of the Board of Directors receive an additional
quarterly retainer of $625, and those who serve on a committee but are not
chairman receive an additional quarterly retainer of $312.50. In addition, each
new non-employee director receives an option to purchase 45,000 shares of common
stock immediately following the earlier of Skyworks' Annual Meeting of
Stockholders at which the director is first elected by the stockholders or
following his initial appointment by the Board of Directors. In addition,
following each Annual Meeting of Stockholders each director who is continuing in
office or re-elected receives an option to purchase 15,000 shares of common
stock. The exercise price of stock options granted to directors is the fair
market value on the day of grant. During fiscal 2001 and prior years, option
grants to directors were made from the 1994 and 1997 Non-Qualified Stock Option
Plans for Non-Employee Directors. Stock option grants to directors for fiscal
2002 were made under the 2001 Directors' Stock Option Plan. Non-employee
directors of the Company are also eligible to receive option grants under the
Company's 1996 Long-Term Incentive Plan.
In connection with the Merger and their appointment to the Board of Directors,
each of Messrs. Beall, Beguwala, Decker and Iyer were granted an option to
purchase 45,000 shares of common stock on June 25, 2002 at the fair market value
thereof under our Directors' 2001 Stock Option Plan.
In connection with the Merger and their continued service on the Board of
Directors, each of Messrs. Furey, Leonard and McLachlan were granted an option
to purchase 45,000 shares of common stock on August 1, 2002 at the fair market
value thereof under our 1996 Long-Term Incentive Plan. Messrs. Furey, Leonard
and McLachlan were not granted any options to purchase shares of common stock
under our Directors' 2001 Stock Option Plan during the fiscal year ended
September 27, 2002.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company does not have any employment agreements with any of the Named
Executives. The Company has severance agreements with the Messrs. Aldrich,
Langman and Vincent under which each is entitled to receive various benefits in
the event that his employment is terminated within two years after a change in
control of Alpha, or if his employment is terminated by Alpha at any time
without good cause. In these cases, the officer will receive two years of salary
continuation, and all of the officer's stock options will vest immediately. Mr.
Aldrich's severance agreement provides that he is also entitled to various
benefits in the event he voluntarily terminates his employment for certain
reasons. The term of these agreements is indefinite.
STOCK PERFORMANCE GRAPH
The following graph shows the change in Skyworks' cumulative total stockholder
return for the last five fiscal years, based upon the market price of Skyworks'
common stock, compared with: (i) the cumulative total return on the Standard &
Poor's 500 Index and (ii) the Standard & Poor's 500 Semiconductor Index. The
graph assumes a total initial investment of $100 as of September 27, 1997, and
shows a "Total Return" that assumes reinvestment of dividends, if any, and is
based on market capitalization at the beginning of each period.
[TOTAL SHAREHOLDER RETURNS LINE GRAPH]
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Skyworks Solutions, Inc. and Subsidiaries
ANNUAL RETURN PERCENTAGE TABLE
Years Ended September 30,
Company/Index 1998 1999 2000 2001 2002
------------- ---- ---- ---- ---- ----
Skyworks Solutions, Inc. (38.5) 643.8 20.8 (43.1) (76.6)
S&P 500 Index (9.1) 27.8 13.3 (26.6) (20.5)
S&P 500 Semiconductors (13.3) 93.5 31.3 (60.1) (36.4)
INDEXED RETURNS TABLE
Years Ended September 30,
Company/Index Base Period
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
Skyworks Solutions, Inc. 100 61.5 457.4 552.4 314.1 73.5
S&P 500 Index 100 109.1 139.4 157.9 115.9 92.1
S&P 500 Semiconductors 100 86.7 167.8 220.2 86.5 55.0
The stock price information shown on the above stock performance graph, annual
return percentage table and indexed returns table are not necessarily indicative
of future price performance. Information used on the graph and in the tables was
obtained from Standard & Poor's, a source believed to be reliable, but the
Company is not responsible for any errors or omissions in such information.
Skyworks' common stock is traded on the Nasdaq National Market under the symbol
"SWKS". Prior to June 25, 2002 Skyworks' common stock was traded on the Nasdaq
National Market under the symbol "AHAA".
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Mr. Beall and
Mr. Furey, each of whom are outside directors. No member of this committee was
at any time during the past fiscal year an officer or employee of the Company,
was formerly an officer of the Company or any of its subsidiaries, or had any
employment relationship with the Company. During the last fiscal year, none of
the Company's executive officers served as:
- a member of the compensation committee (or other committee of the
board of directors performing equivalent functions or, in the
absence of any such committee, the entire board of directors) of
another entity, one of whose executive officers served on the
Compensation Committee of the Company;
- a director of another entity one of whose executive officers served
on the Compensation Committee of the Company; or
- a member of the compensation committee (or other committee of the
board of directors performing equivalent functions or, in the
absence of any such committee, the entire board of directors) of
another entity, one of whose executive officers served as a director
of the Company.
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Skyworks Solutions, Inc. and Subsidiaries
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth the beneficial ownership of the Company's common
stock as of December 04, 2002 by the following individuals or entities: (i) each
person who beneficially owns 5% or more of the outstanding shares of the
Company's common stock as of December 4, 2002; (ii) the Named Executives; (iii)
each director and nominee for director; and (iv) all current executive officers
and directors of the Company, as a group.
Beneficial ownership is determined in accordance with the rules of the SEC. As
of December 4, 2002, there were 137,899,732 shares of Skyworks common stock
issued and outstanding.
In computing the number of shares of Company common stock beneficially owned by
a person and the percentage ownership of that person, shares of Company common
stock that will be subject to options held by that person that are currently
exercisable or that are exercisable within 60 days of January 10, 2002 are
deemed outstanding. These shares are not, however, deemed outstanding for the
purpose of computing the percentage ownership of any other person.
Number of Shares
Names and Addresses of Beneficial Owners (1) Beneficially Owned (2) Percent of Class
- ----------------------------------------- ---------------------- ----------------
David J. Aldrich 311,224(3) (*)
Kevin D. Barber 63,888(3)(4) (*)
Donald R. Beall 469,682(4)(5) (*)
Moiz M. Beguwala 328,388(4) (*)
Dwight W. Decker 1,186,578(4) (*)
Timothy R. Furey 77,250 (*)
Liam K. Griffin 26,954(3) (*)
Balakrishnan Iyer 300,801(4) (*)
Richard Langman 169,555 (*)
Thomas C. Leonard 100,951(3) (*)
George M. LeVan 53,228(3) (*)
David J. McLachlan 28,850(2) (*)
Paul E. Vincent 162,563(3) (*)
All directors and executive officers as a group 3,279,912(3)(4)(5) 2.38%
*Less than 1%
(1) Each person's address is the address of the Company. Unless
otherwise noted, shareholders have sole voting and investment power
with respect to shares, except to the extent such power may be
shared by a spouse or otherwise subject to applicable community
property laws.
(2) Includes the number of shares of Company common stock that will be
subject to options held by that person that are currently
exercisable or exercisable within 60 days of January 10, 2002 (the
"Current Options"), as follows: Aldrich - 256,000 shares under
Current Options; Barber - 60,440 shares under Current Options; Beall
- 246,231 shares under Current Options; Beguwala - 316,348 shares
under Current Options; Decker - 1,140,218 shares under Current
Options; Furey - 77,250 shares under Current Options; Griffin -
25,000 shares under Current Options; Iyer - 295,314 shares under
Current Options; Leonard - 37,500 shares under Current Options;
LeVan - 44,384 shares under Current Options; McLachlan - 26,250
shares under Current Options; Vincent - 88,500 shares under Current
Options; all directors and executive officers as a group - 2,613,434
shares under Current Options.
(3) Includes shares held in the Company's 401(k) savings plan.
(4) Includes shares held in savings plan(s) of Conexant Systems, Inc.,
and/or Rockwell Automation, Inc., which arose out of the
distribution in the Merger of Skyworks' shares for shares of
Conexant Systems, Inc. held in those plans.
(5) Excludes 101,151 shares held in trust for Mr. Beall's adult son not
living in his household for which Mr. Beall disclaims beneficial
ownership.
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Skyworks Solutions, Inc. and Subsidiaries
EQUITY COMPENSATION PLAN INFORMATION
The Company maintains nine equity compensation plans under which our equity
securities are authorized for issuance to our employees and/or directors:
- - the 1986 Long-Term Incentive Plan;
- - the 1994 Non-Qualified Stock Option Plan;
- - the 1996 Long-Term Incentive Plan;
- - the 1997 Non-Qualified Stock Option Plan;
- - the 1999 Employee Long-Term Incentive Plan;
- - the Directors' 2001 Stock Option Plan;
- - the Non-Qualified Employee Stock Purchase Plan;
- - the 2002 Employee Stock Purchase Plan; and
- - the Washington Sub, Inc. 2002 Stock Option Plan.
Except for the Non-Qualified Employee Stock Purchase Plan, the 2002 Employee
Stock Purchase Plan, the 1999 Employee Long-Term Incentive Plan and the
Washington Sub, Inc. 2002 Stock Option Plan, each of the foregoing equity
compensation plans was approved by our stockholders. The following table
presents information about these plans as of September 27, 2002.
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
FUTURE ISSUANCE UNDER
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE EQUITY COMPENSATION
BE ISSUED UPON EXERCISE EXERCISE PRICE OF PLANS (EXCLUDING
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, SECURITIES REFLECTED IN
PLAN CATEGORY WARRANTS, AND RIGHTS WARRANTS AND RIGHTS COLUMN (A))
------------- -------------------- ------------------- -----------
(A) (B) (C)
--- --- ---
Equity compensation
plans approved by
security holders........ 10,433,271 $16.90 1,655,616(1)
Equity compensation
plans not approved by
security holders........ 20,898,564 $21.13 14,274,082(2)
Total........ 31,331,835 $19.73 15,929,698
(1) No further grants will be made under the 1986 Long-Term Incentive Plan, the
1994 Non-Qualified Stock Option Plan and the 1997 Non-Qualified Stock Option
Plan.
(2) No further grants may be made under the Washington Sub Inc. 2002 Stock
Option Plan.
1999 EMPLOYEE LONG-TERM INCENTIVE PLAN
The purposes of the Company's 1999 Employee Long-term Incentive Plan (the "1999
Employee Plan") are (i) to provide long-term incentives and rewards to those
employees of the Company and its subsidiaries, other than officers and
non-employee directors, who are in a position to contribute to the long-term
success and growth of the Company and its subsidiaries, (ii) to assist the
Company in retaining and attracting employees with requisite experience and
ability, and (iii) to associate more closely the interests of such employees
with those of the Company's stockholders. The 1999 Employee Plan provides for
the grant of non-qualified stock options to purchase shares of the Company's
common stock. The term of these options may not exceed ten years. The 1999
Employee Plan contains provisions which permit restrictions on vesting or
transferability, as well as continued exercisability upon a participant's
termination of employment with the Company, of options granted thereunder. The
1999 Employee Plan provides for full acceleration of the vesting of options
granted thereunder upon a "change in control" of the Company, as defined in the
1999 Employee Plan. The Board of Directors generally may amend, suspend or
terminate the 1999 Employee Plan in whole or in part at any time; provided that
any amendment which affects outstanding options be consented to by the holder of
the options.
WASHINGTON SUB, INC. 2002 STOCK OPTION PLAN
The Washington Sub, Inc. 2002 Stock Option Plan (the "Washington Sub Plan")
became effective on June 25, 2002 in connection with the Merger. At the time of
the spin-off of Conexant's wireless business, outstanding Conexant options
granted pursuant to certain Conexant stock incentive plans were adjusted so that
following the spin-off and Merger each holder of a Conexant option held (i)
options to purchase shares of Conexant common stock and (ii) options to purchase
shares of Skyworks common stock. The purpose of the Washington Sub Plan is to
provide a means for the Company to perform its obligations with respect to these
adjusted stock options. The only participants in the Washington Sub Plan are
those persons who, at the time of the Merger, held outstanding options granted
pursuant to certain Conexant stock option plans. No further options to purchase
shares of Skyworks common stock will be granted under the Washington Sub Plan.
The Washington Sub Plan contains a number of sub-plans, which contain terms and
conditions that are applicable to certain portions of the options subject to the
Washington Sub Plan, depending upon the Conexant stock option plan from which
the Skyworks options granted under the Washington Sub Plan were derived. The
outstanding options under the Washington Sub Plan generally have the same terms
and conditions as the original Conexant options from which they are derived.
Most of the sub-plans of the Washington Sub Plan contain provisions related to
the effect of a participant's termination of employment with the Company, if
any, and/or with Conexant on options granted pursuant to such sub-plan. Several
of the sub-plans under the Washington Sub Plan contain specific provisions
related to a change in control of the Company.
NON-QUALIFIED ESPP & 2002 ESPP
The Company also maintains a Non-Qualified Employee Stock Purchase Plan and a
2002 Employee Stock Purchase Plan to provide employees of the Company and
participating subsidiaries with an opportunity to acquire a proprietary interest
in the Company through the purchase, by means of payroll deductions, of shares
of the Company's common stock at a discount from the market price of the common
stock at the time of purchase. The Non-Qualified Employee Stock Purchase Plan is
intended for use primarily by employees of the Company located outside the
United States. Under the plans, eligible employees may purchase common stock
through payroll deductions of up to 10% of compensation. The price per share is
the lower of 85% of the market price at the beginning or end of each six-month
offering period. The Company intends to seek approval for its 2002 Employee
Stock Purchase Plan at its next Annual Meeting of Stockholders.
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Skyworks Solutions, Inc. and Subsidiaries
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Skyworks was formed through the Merger of the wireless communications business
of Conexant, which it spun-off immediately prior to the Merger, with Alpha. The
Merger was completed on June 25, 2002. Immediately following the Merger,
Skyworks purchased the Mexicali Operations from Conexant for an aggregate
purchase price of $150 million. Following the Merger, Alpha changed its
corporate name to Skyworks Solutions, Inc.
In connection with the Merger, Skyworks and Conexant have engaged in various
transactions, including, without limitation, the transactions referred to
elsewhere in this annual report and in the consolidated financial statements and
related notes thereto of Skyworks contained herein. Skyworks also has
established ongoing arrangements and agreements with Conexant, the more
significant of which are described below.
FINANCING ARRANGEMENTS AND SENIOR NOTES
In connection with our acquisition from Conexant of the Mexicali Operations, we
and certain of our subsidiaries entered into a financing agreement, dated as of
June 25, 2002, with Conexant. Pursuant to the terms of the financing agreement,
in payment for the Mexicali Operations, we and certain of our subsidiaries,
issued short-term promissory notes to Conexant in the aggregate principal amount
of $150 million. In addition, Conexant made a short-term $100 million loan
facility available to us under the financing agreement to fund working capital
and other requirements. $75 million of this facility became available on or
after July 10, 2002, and the remaining $25 million balance of the facility would
have become available if we had more than $150 million of eligible domestic
receivables. Interest on the short-term promissory notes and the loan facility
was payable at a rate of 10% per annum for the first ninety days following June
25, 2002, 12% per annum for the next ninety days and 15% per annum thereafter.
Unless paid earlier at the option of the Company or pursuant to mandatory
prepayment provisions contained in the financing agreement with Conexant, fifty
percent of the principal of the short-term promissory notes would become due on
March 24, 2003 and the remaining fifty percent, as well as the entire principal
amount of any amounts borrowed under the loan facility, would become due on June
24, 2003. There were $30 million of borrowings as of September 27, 2002 under
this facility. The promissory notes and the loan facility were secured by our
assets and properties.
Pursuant to our private placement of $230 million aggregate principal amount of
4.75% convertible subordinated notes due in 2007, which closed on November 12,
2002, we and Conexant entered into a refinancing agreement, and we, certain of
our subsidiaries and Conexant executed an amendment to the original financing
agreement with Conexant, each dated as of November 6, 2002. Pursuant to the
refinancing agreement and the amended financing agreement, of the net cash
proceeds received from the private placement, we paid Conexant (i) $105 million
to prepay, in part, the short-term promissory notes issued to Conexant, leaving
a principal balance of $45 million due on such notes, and (ii) $65 million to
prepay in full and retire the loan facility. Upon retiring the loan facility,
all security interests, liens and mortgages presently held by Conexant on our
assets and properties were released, and the financing agreement with Conexant,
as amended, was terminated.
The remaining $45 million principal amount of the short-term promissory notes
was exchanged for an interim 15% convertible debt security with a maturity date
of June 30, 2005. This debt security was then promptly exchanged for an equal
principle amount of 15% convertible senior subordinated notes due June 30, 2005,
issued under an indenture entered into by us and Wachovia Bank, National
Association, as trustee (the "Senior Notes"). We may redeem the Senior Notes in
whole or in part, at any time after May 12, 2004, subject to a redemption
premium of 3% of the then outstanding principal amount thereof. Under the terms
of the Senior Notes, Conexant has the right to convert the outstanding principal
amount thereof (or any portion thereof) into a number of shares of our common
stock equal to the principal amount of the Senior Notes to be so converted,
divided by the applicable conversion price, as determined pursuant to the terms
of the Senior Notes. Upon maturity, the Senior Notes are payable in shares of
our common stock based on the applicable conversion price as of the maturity
date, although interest on the Senior Notes, as well as the outstanding
principal if certain events of default occur, is payable by us in cash. The
initial conversion price of the Senior Notes is $7.87 per share, subject to
adjustment as follows. In the event that the market price of our common stock is
generally below the applicable conversion price, the holders of the Senior Notes
would be entitled to receive upon conversion of the Senior Notes shares of our
common stock in an amount equal to the principal amount of the Senior Notes
being converted divided by the market price of our common stock, provided that
in no event will the number of shares issued exceed 125% of the number of shares
that the holders would have received at the conversation price. The conversion
price is also subject to adjustment pursuant to anti-dilution provisions.
We also entered into a registration rights agreement with Conexant, which will
provide for the registration under the Securities Act of 1933, as amended, of
the resale by Conexant (or any transferee thereof) of the Senior Notes and the
shares of our common stock underlying the Senior Notes. We have agreed to
maintain the registration statement contemplated by the registration rights
agreement effective and available for use until December 31, 2005, subject to
certain limitations.
TAX ALLOCATION AGREEMENT
At the time of the Merger, we entered into a tax allocation agreement with
Conexant, which provides for the allocation of all responsibilities, liabilities
and benefits relating to or affecting all forms of taxation between us and our
affiliates and Conexant and its affiliates. In general, Conexant assumed and is
responsible for tax liabilities of the wireless business for periods prior to
the Merger and we assumed and are responsible for tax liabilities of the
wireless business for periods after the Merger. Subsequent to the execution of
the tax allocation agreement, and in connection with the refinancing agreement
and amended financing agreement with Conexant, we entered into a letter
agreement on November 6, 2002 with Conexant that amends the tax allocation
agreement to limit our indemnification obligations under the tax allocation
agreement to a reduced set of circumstances that could trigger such
indemnification. However, the tax allocation agreement continues to provide that
we will be responsible for various other tax obligations and for compliance with
various representations and covenants made under the tax allocation agreement.
TRANSITION SERVICES AGREEMENT
In connection with the Merger, we entered into a transition services agreement
with Conexant on June 25, 2002 under which we and Conexant will provide to the
other certain specified services, most of which run through December 31, 2002,
subject to extension by mutual agreement. The services provided by Conexant
under the agreement include:
- accounting and payroll;
- finance and treasury;
- engineering and design services;
- platform technology and other support for our Newbury Park facility;
- human resources;
- information technology;
75
Skyworks Solutions, Inc. and Subsidiaries
- sales;
- other support services, including global trade, shipping, storage
and logistics services;
- manufacturing quality and reliability;
- facilities; and
- material management and printed wire board assembly services.
In addition, we will provide certain services to Conexant, including services
related to:
- engineering and design services for Conexant's broadband access
products;
- human resources;
- product testing and package qualification consulting; and
- facilities, including environmental consulting services.
The price to be paid by us and Conexant for these services is generally based on
the actual cost of providing such services, including out of pocket expenses.
INFORMATION TECHNOLOGY SERVICES AGREEMENT
On June 25, 2002, in connection with the Merger, we entered into an information
technology service agreement with Conexant under which Conexant provides to us a
variety of information technology services that Conexant previously provided to
its wireless communications division. These services generally are to be
provided in six month increments until either party elects to terminate the
agreement or certain specific services are provided thereunder. Payments to
Conexant for the services rendered under the agreement generally consist of a
base fee per month, plus an additional monthly service fee depending on the
particular services rendered by Conexant. We and Conexant have agreed to review
the fee structure each year during the term of the agreement.
The services provided by Conexant under the agreement include:
- data center operations management;
- remote-site support;
- information technology infrastructure services;
- programming services; and
- applications support.
MEXICALI TRANSITION SERVICES AGREEMENT
Under a mexicali transition services agreement dated as of June 25, 2002 with
Conexant, we and Conexant will provide certain transition services to each other
with respect to the Mexicali Operations. These services generally will be
provided until December 31, 2002, unless otherwise mutually agreed. The price
for the services will be the actual cost, including out-of pocket expenses, of
providing the services. The services covered under the agreement include:
- general accounting support;
- metrology services and test equipment support;
- thermal mechanical analysis and measurement of packages;
- electrical analysis and measurement for packages; and
- electromagnetic impulse measurement and certification services.
NEWPORT BEACH SUPPLY AGREEMENT
Under our Newport Beach wafer supply and services agreement entered into with
Conexant on June 25, 2002, we will obtain through Conexant silicon-based
semiconductor products supplied by Jazz Semiconductor, Inc., a Newport Beach,
California foundry joint venture between Conexant and The Carlyle Group to which
Conexant contributed its Newport Beach wafer fabrication facility. These
services will be provided for a three-year period. Pursuant to the terms of this
supply agreement with Conexant, we are committed to obtain a minimum level of
service from Jazz Semiconductor, Inc., based on a contractual agreement between
Conexant and Jazz Semiconductor. The volume for wafers during these three years
has been pre-calculated based on our anticipated wafer fabrication needs. The
pricing under the agreement is established at Conexant's cost for the first
year, at the median of Conexant's cost and market price for the second year, and
at market price for the third year. Our expected minimum purchase obligations
under this supply agreement are anticipated to be approximately $64 million, $39
million and $13 million in fiscal 2003, 2004 and 2005, respectively. We estimate
that our obligation under this agreement will result in excess costs of
approximately $5.1 million and we have recorded this liability in the current
period.
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Skyworks Solutions, Inc. and Subsidiaries
NEWBURY PARK SUPPLY AGREEMENT
Under a Newbury Park wafer supply and services agreement entered into with
Conexant on June 25, 2002, we will provide services to Conexant for both
production and prototypes of semiconductor products at our Newbury Park,
California wafer fabrication facility, including services related to:
- semiconductor wafer fabrication;
- semiconductor wafer probe;
- final test; and
- die processing.
These services generally will be provided for a term of three years with
additional one-year renewal terms as may be mutually agreed. The pricing for
wafers has been fixed for the three years based on our mutual agreement, and is
based on cost plus 50% markup.
MEXICALI SUPPLY AGREEMENT
Under a Mexicali device supply and services agreement entered into with Conexant
on June 25, 2002, we will provide Conexant with certain semiconductor
processing, packaging and testing services, including:
- assembly services;
- final testing;
- post-test processing; and
- shipping.
During the term of the agreement, Conexant will have the right to purchase
products manufactured through the use of technologies developed and qualified
for full-scale production at the Mexicali facility at the time of the agreement
and, upon mutual agreement, products manufactured through the use of any new
technologies in development at the Mexicali facility at the time of the
agreement, but not yet qualified for full scale production. These services will
be performed at our Mexicali, Mexico facility and, upon mutual agreement, at
other facilities approved by Skyworks. These services generally will be provided
for a term of three years with additional one-year renewal terms as may be
mutually agreed. The pricing for the first year has been fixed based generally
on the yielded assembly cost of the particular materials. The pricing for the
second year will either be a result of: (i) a 5% reduction from year one, or
(ii) the actual cost at the end of year one. Pricing for the third year will be
negotiated between the parties.
RELATED PARTY TRANSACTIONS OF THE COMPANY
As part of the terms of the Merger, four designees of Conexant - Messrs. Beall,
Beguwala, Decker and Iyer - were appointed to the Skyworks Board of Directors,
joining four members who had been serving on the Board having been previously
elected by the stockholders of Alpha. Each of the four Conexant designees to the
Board continues to have a business relationship with Conexant. Mr. Decker
currently serves as the chief executive officer, as well as the chairman of the
board, of Conexant. Mr. Iyer serves as senior vice president and chief financial
officer of Conexant. Mr. Beguwala is a current employee, as well as a former
executive officer, of Conexant. Mr. Beall is a non-employee director of
Conexant.
Information concerning severance agreements with the Named Executives and
certain option grants made to directors of the Company is described at Item 11,
above. There are no other relationships or transactions reportable under the
regulations of the Securities and Exchange Commission.
ITEM 14 CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures
Under the supervision and with the participation of our management, including
our President and Chief Executive Officer and Chief Financial Officer, we
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rule 13a-14(c) under the Exchange Act) as
of a date (the "Evaluation Date") within 90 days prior to the filing date of
this report. Based upon that evaluation, the President and Chief Executive
Officer and Chief Financial Officer concluded that, as of the Evaluation Date,
our disclosure controls and procedures were effective in timely alerting them to
the
77
Skyworks Solutions, Inc. and Subsidiaries
material information relating to us (or our consolidated subsidiaries) required
to be included in our periodic SEC filings. In designing and evaluating the
disclosure controls and procedures, our management recognized that any controls
and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and our
management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.
(b) Changes in internal controls.
There were no significant changes made in our internal controls during the
period covered by this report or, to our knowledge, in other factors that could
significantly affect these controls subsequent to the date of our evaluation.
ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Index to Financial Statements
The financial statements filed as part of this report are listed on
the index appearing on page 37.
2. Index to Financial Statement Schedules
The following financial statement schedule is filed as part of this
report (page reference is to this report):
Schedule II Valuation and Qualifying Accounts...............Page 87
All other required schedule information is included in the Notes to
Consolidated Financial Statements or is omitted because it is either
not required or not applicable.
3. Exhibits
No. Description
--- -----------
2.a Agreement and Plan of Reorganization, dated as of
December 16, 2001, as amended as of April 12, 2002, by
and among the Company, Washington Sub, Inc. and Conexant
Systems, Inc. (15)
2.b Contribution and Distribution Agreement, dated as of
December 16, 2001, as amended as of June 25, 2002, by
and between Washington Sub, Inc. and Conexant Systems,
Inc. (14)
2.c Mexican Stock Purchase Agreement, dated as of June 25,
2002, by and between the Company and Conexant Systems,
Inc. (14)
2.d Amended and Restated Mexican Asset Purchase Agreement,
dated as of June 25, 2002, by and between the Company
and Conexant Systems, Inc. (14)
2.e U.S. Asset Purchase Agreement, dated as of December 16,
2001, by and between the Company and Conexant Systems,
Inc. (14)
3.a Amended and Restated Certificate of Incorporation **
3.b Second Amended and Restated By-laws **
4.a Specimen Certificate of Common Stock (1)
4.b Loan and Security Agreement, dated December 15, 1993, by
and between Trans-Tech, Inc. and County Commissioners of
Frederick County (10)
4.c Indenture, dated as of November 12, 2002, by and between
the Company and State Street Bank and Trust Company (as
Trustee)**
4.d Form of 4.75% Convertible Subordinated Note of the
Company **
78
Skyworks Solutions, Inc. and Subsidiaries
4.e Indenture, dated as of November 20, 2002, by and between
the Company and Wachovia Bank, National Association (as
Trustee)**
4.f Form of 15% Senior Convertible Note of the Company **
10.a Skyworks Solutions, Inc., 1986 Long-Term Incentive Plan
as amended (2)*
10.b Skyworks Solutions, Inc., Long-Term Compensation Plan
dated September 24, 1990 (3); amended March 28, 1991
(4); and as further amended October 27, 1994 (5)*
10.c Severance Agreement, dated April 1, 2001, between the
Company and David J. Aldrich (6)*
10.d Severance Agreement, dated January 14, 1997, between the
Company and Richard Langman (18)*
10.e Consulting Agreement, dated August 13, 1992, between the
Company and Sidney Topol (7)*
10.f Skyworks Solutions, Inc. 1994 Non-Qualified Stock Option
Plan for Non-Employee Directors (2)*
10.g Skyworks Solutions, Inc. Executive Compensation Plan
dated January 1, 1995 and Trust for the Skyworks
Solutions, Inc. Executive Compensation Plan dated
January 3, 1995 (5)*
10.h Severance Agreement, dated September 4, 1998, between
the Company and Paul E. Vincent (8)*
10.i Skyworks Solutions, Inc. 1997 Non-Qualified Stock Option
Plan for Non-Employee Directors (9)*
10.j Skyworks Solutions, Inc. 1996 Long-Term Incentive Plan
(11)*
10.k Skyworks Solutions, Inc. Directors' 2001 Stock Option
Plan (12)*
10.l Skyworks Solutions, Inc. 1999 Employee Long-Term
Incentive Plan, as amended September 25, 2002 **
10.m Washington Sub Inc., 2002 Stock Option Plan (16)*
10.n Skyworks Solutions, Inc. Non-Qualified Employee Stock
Purchase Plan **
10.o Form of Stockholders Agreement, dated as of December 16,
2001, entered into between each of the directors and
certain executive officers of the Company as of the date
thereof and Conexant Systems, Inc. (19)
10.p Warrant, dated as of June 25, 2002, issued to Jazz
Semiconductor, Inc. (17)
10.q Newport Beach Wafer Supply and Services Agreement, dated
as of June 25, 2002, by and between the Company and
Conexant Systems, Inc. **
10.r Information Technology Service Agreement, dated as of
June 25, 2002, by and between the Company and Conexant
Systems, Inc. **
10.s Financing Agreement, dated as of June 25, 2002, by and
among the Company, certain of its subsidiaries and
Conexant Systems, Inc. (14)
10.t Tax Allocation Agreement, dated as of June 25, 2002, by
and among the Company, Conexant Systems, Inc. and
Washington Sub, Inc. (14)
10.u Employee Matters Agreement, dated as of June 25, 2002,
by and among the Company, Conexant Systems, Inc. and
Washington Sub, Inc. (14)
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Skyworks Solutions, Inc. and Subsidiaries
10.v Mexicali Device Supply and Services Agreement, dated as
of June 25, 2002, by and between the Company and
Conexant Systems, Inc. +**
10.w Newbury Park Wafer Supply and Services Agreement, dated
as of June 25, 2002, by and between the Company and
Conexant Systems, Inc. +**
10.x Refinancing Agreement, dated as of November 6, 2002, by
and among the Company, certain of its subsidiaries and
Conexant Systems, Inc. (13)
10.y First Amendment of Financing Agreement, dated as of
November 6, 2002, by and among the Company, certain of
its subsidiaries and Conexant Systems, Inc. (13)
10.z Letter Agreement, dated as of November 6, 2002, by and
between the Company and Conexant Systems, Inc. (13)
10.aa Registration Rights Agreement, dated as of November 12,
2002, by and among the Company and Credit Suisse First
Boston (as representative for the several purchasers) **
10.bb Registration Rights Agreement, dated as of November 12,
2002, by and between the Company and Conexant Systems,
Inc. **
10.cc Skyworks Solutions, Inc. 2002 Employee Stock Purchase
Plan * **
11 Statement regarding computation of per share earnings.
(See Note 1 to the Consolidated Financial Statements)
21 Subsidiaries of the Company
23.a Consent of KPMG LLP
23.b Consent of Deloitte & Touche LLP
99 Certification pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
* Management contract or compensatory plan
** Filed herewith
+ Confidential Treatment requested for certain portions of this Agreement which
have been omitted and filed separately with the Securities and Exchange
Commission.
(1) Incorporated by reference to the exhibit filed with our Registration
Statement on Form S-3 filed on July 15, 2002 (File No. 333-92394).
(2) Incorporated by reference to the exhibit filed with our Quarterly
Report on Form 10-Q for the fiscal quarter ended October 2, 1994.
(3) Incorporated by reference to the exhibit filed with our Annual
Report on Form 10-K for the fiscal year ended March 29, 1992.
(4) Incorporated by reference to the exhibit filed with our Quarterly
Report on Form 10-Q for the fiscal quarter ended June 27, 1993.
(5) Incorporated by reference to the exhibit filed with our Annual
Report on Form 10-K for the fiscal year ended April 2, 1995.
(6) Incorporated by reference to the exhibit filed with our Quarterly
Report on Form 10-Q for the fiscal quarter ended July 1, 2001.
(7) Incorporated by reference to the exhibit filed with our Annual
Report on Form 10-K for the fiscal year ended April 3, 1994.
(8) Incorporated by reference to the exhibit filed with our Quarterly
Report on Form 10-Q for the fiscal quarter ended September 27, 1998.
(9) Incorporated by reference to the exhibit filed with our Annual
Report on Form 10-K for the fiscal year ended March 29, 1998.
(10) Incorporated by reference to the exhibit filed with our Quarterly
Report on Form 10-Q for the fiscal quarter ended July 3,1994.
(11) Incorporated by reference to the exhibit filed with our Annual
Report on Form 10-K for the fiscal year ended April 1, 2001.
(12) Incorporated by reference to the exhibit filed with our Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 2001.
(13) Incorporated by reference to the exhibits filed with our Current
Report on Form 8-K dated November 6, 2002.
(14) Incorporated by reference to the exhibits filed with our Current Report on
Form 8-K dated June 25, 2002.
(15) Incorporated by reference to Annex A filed with our Registration Statement
on Form S-4, as amended, filed on May 10, 2002 (File No. 333-83768).
(16) Incorporated by reference to exhibit filed with our Registration Statement
on Form S-3 filed on July 15, 2002 (File No. 333-92394).
(17) Incorporated by reference to the exhibit filed with our Registration
Statement on Form S-3 filed on August 30, 2002 (File No. 333-99015).
(18) Incorporated by reference to the exhibit filed with our Annual Report on
Form 10-K for the fiscal year ended March 30, 1997.
(19) Incorporated by reference to the exhibit filed with our Registration
Statement on Form S-4, as amended, filed on May 3, 2002 (File No.
333-83768)
(b) Reports on Form 8-K
On June 28, 2002, a Form 8-K was filed which served to announce (i)
the completion of our merger with the wireless communications
division of Conexant Systems, Inc., (ii) the change in our
independent auditors, and (iii) the execution of a financing
arrangement with Conexant Systems, Inc.
On August 15, 2002, a Form 8-K/A was filed which served to amend the
previous filing on June 28, 2002 that announced the completion of
our merger with the wireless communications division of Conexant
Systems, Inc. and which served to announce a change in our fiscal
year.
On November 6, 2002, a Form 8-K was filed which served to
incorporate by reference the Company's press releases dated November
5, 2002 and November 6, 2002 relating to a private placement of
convertible subordinated notes of the Company. The notes are
convertible at the option of the holders into common stock of the
Company at a conversion price of $9.05, subject to adjustment.
On November 8, 2002, a Form 8-K was filed which served to provide
details relating to the Company's private placement of convertible
subordinated notes.
On November 8, 2002, a Form 8-K was filed which served to provide
pro forma consolidated financial information for the nine months
ended June 30, 2002 as if the Merger and the subsequent acquisition
by Skyworks of the Mexicali operation had occurred on October 1,
2001.
On November 12, 2002, a Form 8-K/A was filed which served to amend
the previous filing on November 8, 2002 that provided pro forma
financial information.
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Skyworks Solutions, Inc. and Subsidiaries
(c) Exhibits
The exhibits required by Item 601 of Regulation S-K are filed
herewith and incorporated by reference herein. The response to this
portion of Item 15 is submitted under Item 15 (a) (3).
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Skyworks Solutions, Inc. and Subsidiaries
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
SKYWORKS SOLUTIONS, INC.
BY: /S/ DAVID J. ALDRICH
----------------------------------
DAVID J. ALDRICH, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Date: December 20, 2002
BY: /S/ PAUL E. VINCENT
----------------------------------
PAUL E. VINCENT, CHIEF FINANCIAL
OFFICER, TREASURER AND SECRETARY
Date: December 20, 2002
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Skyworks Solutions, Inc. and Subsidiaries
POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers and directors of Skyworks Solutions, Inc.,
hereby severally constitute and appoint David J. Aldrich and Paul E. Vincent,
and each of them singly, our true and lawful attorneys, with full power to them
and each of them singly, to sign for us and in our names in the capacities
indicated below, any amendments to this Annual Report on Form 10-K, and
generally to do all things in our names and on our behalf in such capacities to
enable Skyworks Solutions, Inc. to comply with the provisions of the Securities
Exchange Act of 1934, as amended, and all the requirements of the Securities
Exchange Commission.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on December 20, 2002.
Signature and Title Signature and Title
------------------- -------------------
/s/ DWIGHT W. DECKER /s/ DONALD R. BEALL
- -------------------------------- -----------------------------
Dwight W. Decker Donald R. Beall
Chairman of the Board Director
/s/ DAVID J. ALDRICH /s/ MOIZ M. BEGUWALA
- -------------------------------- -----------------------------
David J. Aldrich Moiz M. Beguwala
Chief Executive Officer Director
President and Director
/s/ PAUL E. VINCENT /s/ TIMOTHY R. FUREY
- -------------------------------- -----------------------------
Paul E. Vincent Timothy R. Furey
Chief Financial Officer Director
Treasurer
Principal Accounting Officer
Secretary /s/ BALAKRISHNAN S. IYER
-----------------------------
Balakrishnan S. Iyer
Director
/s/ THOMAS C. LEONARD
-----------------------------
Thomas C. Leonard
Director
/s/ DAVID J. MCLACHLAN
-----------------------------
David J. McLachlan
Director
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Skyworks Solutions, Inc. and Subsidiaries
CERTIFICATIONS
I, David J. Aldrich, President and Chief Executive Officer of Skyworks
Solutions, Inc. (the "Company"), certify that:
1. I have reviewed this annual report on Form 10-K of the Company;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this annual report (the "Evaluation Date"); and
c) Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: December 20, 2002
By: /s/ David J. Aldrich
----------------------------------------
David J. Aldrich
President and Chief Executive Officer
85
Skyworks Solutions, Inc. and Subsidiaries
CERTIFICATIONS
I, Paul E. Vincent, Chief Financial Officer, Treasurer and Secretary of Skyworks
Solutions, Inc. (the "Company"), certify that:
1. I have reviewed this annual report on Form 10-K of the Company;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
d) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this annual
report is being prepared;
e) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this annual report (the "Evaluation Date"); and
f) Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
functions):
c) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
d) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: December 20, 2002
By: /s/ Paul E. Vincent
----------------------------------------
Paul E. Vincent
Chief Financial Officer, Treasurer and Secretary
86
Skyworks Solutions, Inc. and Subsidiaries
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
CHARGED
TO COSTS
BEGINNING AND ENDING
DESCRIPTION BALANCE EXPENSES (1) DEDUCTIONS OTHER(3) BALANCE
=========================================================================================================================
Year Ended September 30, 2000
Allowance for doubtful accounts ............. $ 406 $ 3,538 $ (152) $ -- $ 3,792
Reserve for sales returns ................... $ 1,125 $ 55 $ (646) $ -- $ 534
Allowance for excess and obsolete inventories $ 5,967 $ 3,132 $ -- $ -- $ 9,099
Year Ended September 30, 2001
Allowance for doubtful accounts ............. $ 3,792 $ (468) $ (118) $ -- $ 3,206
Reserve for sales returns ................... $ 534 $ 4,055 $ -- $ -- $ 4,589
Allowance for excess and obsolete inventories $ 9,099 $ 2,286(2) $ -- $ -- $11,385
Year Ended September 30, 2002
Allowance for doubtful accounts ............. $ 3,206 $ (512) $ (575) $ (795) $ 1,324
Reserve for sales returns ................... $ 4,589 $ 7,616 $(7,199) $3,510 $ 8,516
Allowance for excess and obsolete inventories $11,385 $ 6,225 $(3,092) $6,100 $20,618
(1) Additions charged to costs and expenses in the allowance for
doubtful accounts reflect credit balances recorded in fiscal 2001,
resulting from reductions in the allowance account associated with
overall collections experience more favorable than previously
estimated. Deductions in the allowance for doubtful accounts reflect
amounts written off.
(2) Amount excludes inventory write-downs of $58.7 million charged to
cost of goods sold relating to inventory that was written down to a
zero cost basis.
(3) Amounts include Alpha's allowance for doubtful accounts, reserve for
sales returns and allowances for excess and absolute inventories
balances of $1.2 million, $3.5 million and $6.1 million,
respectively, which were assumed on June 25, 2002 in connection with
the Merger. In addition, Conexant retained Washington/Mexicali's
accounts receivable and allowance for doubtful accounts balances as
of June 25, 2002. Washington/Mexicali's allowance for doubtful
accounts balance at June 25, 2002 was $2.0 million.
87
EXHIBIT INDEX
No. Description
--- -----------
3.a Amended and Restated Certificate of Incorporation **
3.b Second Amended and Restated By-laws **
4.c Indenture, dated as of November 12, 2002, by and between
the Company and State Street Bank and Trust Company (as
Trustee)**
4.d Form of 4.75% Convertible Subordinated Note of the
Company **
4.e Indenture, dated as of November 20, 2002, by and between
the Company and Wachovia Bank, National Association (as
Trustee)**
4.f Form of 15% Senior Convertible Note of the Company **
10.l Skyworks Solutions, Inc. 1999 Employee Long-Term
Incentive Plan, as amended September 25, 2002 **
10.n Skyworks Solutions, Inc. Non-Qualified Employee Stock
Purchase Plan **
10.q Newport Beach Wafer Supply and Services Agreement, dated
as of June 25, 2002, by and between the Company and
Conexant Systems, Inc. **
10.r Information Technology Service Agreement, dated as of
June 25, 2002, by and between the Company and Conexant
Systems, Inc. **
10.v Mexicali Device Supply and Services Agreement, dated as
of June 25, 2002, by and between the Company and
Conexant Systems, Inc. +**
10.w Newbury Park Wafer Supply and Services Agreement, dated
as of June 25, 2002, by and between the Company and
Conexant Systems, Inc. +**
10.aa Registration Rights Agreement, dated as of November 12,
2002, by and among the Company and Credit Suisse First
Boston (as representative for the several purchasers) **
10.bb Registration Rights Agreement, dated as of November 12,
2002, by and between the Company and Conexant Systems,
Inc. **
10.cc Skyworks Solutions, Inc. 2002 Employee Stock Purchase
Plan **
11 Statement regarding computation of per share earnings.
(See Note 1 to the Consolidated Financial Statements)
21 Subsidiaries of the Company
23.a Consent of KPMG LLP
23.b Consent of Deloitte & Touche LLP
99 Certification pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
* Management contract or compensatory plan
** Filed herewith
+ Confidential Treatment requested for certain portions of this Agreement which
have been omitted and filed separately with the Securities and Exchange
Commission.
Exhibit 3.a
RESTATED CERTIFICATE OF INCORPORATION
OF SKYWORKS SOLUTIONS, INC.
AS AMENDED
FIRST: The name of the Corporation is
Skyworks Solutions, Inc.
SECOND: The Corporation's registered office in the State of Delaware is
located at 2711 Centerville Road, Suite 400, City of Wilmington, County of New
Castle. The name and address of its registered agent is The Prentice-Hall
Corporation System, Inc., 2711 Centerville Road, Suite 400, City of Wilmington,
County of New Castle.
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 the
State of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is 550,000,000, of which (i)
525,000,000 shares of the par value of $.25 each are to be of a class designated
Common Stock (the "Common Stock") and (ii) 25,000,000 shares without par value
are to be of a class designated Preferred Stock (the "Preferred 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. Subject to the rights of the holders of Preferred
Stock, 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 to creditors and 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 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;
2
(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
(j) the voting rights, if any, of the holders of shares of the
series; provided, that, except as otherwise provided by the laws of the
State of Delaware, no share of Preferred Stock of any series shall be
entitled to more than one vote per share of Preferred Stock.
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
stockholders 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 shares of all classes of stock of the Corporation
entitled to vote for the election of directors, considered for the purposes of
this Article Fourth as one class of 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.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: The private property of the stockholders of the Corporation shall
not be subject to the payment of corporate debts to any extent whatever.
SEVENTH: The number of directors shall be fixed from time to time
exclusively by the Board of Directors pursuant to a resolution adopted by a
majority of the total
3
number of authorized directors (whether or not there exist any vacancies in
previously authorized directorships at the time any such resolution is presented
to the Board of Directors for adoption). At the 1983 annual meeting of
stockholders, the directors shall be divided into three classes, as nearly equal
in number as possible, with the term of office of the first class to expire at
the 1984 annual meeting of stockholders, the term of office of the second class
to expire at the 1985 annual meeting of stockholders and the term of office of
the third class to expire at the 1986 annual meeting of stockholders. At each
annual meeting of stockholders following such initial classification and
election, directors elected to succeed those directors whose terms expire shall
be elected for a term of office to expire at the third succeeding annual meeting
of stockholders after their election, unless, by reason of any intervening
changes in the authorized number of directors, the board shall designate one or
more of the then expiring directorships as directorships of another class in
order more nearly to achieve equality of number of directors among the classes.
Notwithstanding the rule that the three classes shall be as nearly equal
in number of directors as possible, in the event of any change in the authorized
number of directors, each director then continuing to serve as such shall
nevertheless continue as a director of the class of which he is a member until
the expiration of his current term, or his prior death, resignation or removal.
If any newly created directorship may, consistently with the rule that the three
classes shall be as nearly equal in number of directors as possible, be
allocated to one of two or more classes, the Board of Directors shall allocate
it to that of the available classes whose term of office is due to expire at the
earliest date following such allocation.
Vacancies resulting from any increase in the authorized number of
directors or any vacancies in 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 stockholders at which the term of office of
the class to which they have been elected expires. No decrease in the number of
authorized 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 a majority of the shares of all
classes of stock of the Corporation entitled to vote for the election of
directors, considered for the purposes of this Article Seventh as one class of
stock.
No director of the Corporation shall be liable to the Corporation or its
stockholders 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 stockholders, (ii) for
4
acts or omissions not in good faith or which involve 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. No repeal or modification of this paragraph, directly
or by adoption of an inconsistent provision of this Certificate of
Incorporation, by the stockholders 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 stockholders 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 stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of section 291 of the General Corporation Law of the State of
Delaware (the "GCL") 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 the GCL order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders 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 stockholders or class of stockholders 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 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
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
TENTH:
1. AMENDMENT OF CERTIFICATE OF INCORPORATION. The corporation
reserves the right to amend, alter, change or repeal any provision
contained in this Certificate of Incorporation, in the manner hereafter
set forth, and all rights conferred upon stockholders herein are granted
subject to this reservation.
5
A. Except as provided in paragraphs 1(B) and (2) of this Article
Tenth and in Article Eleventh, any provision of this
Certificate of Incorporation may be amended, altered, changed
or repealed in the manner now or hereafter prescribed by the
statutes of the State of Delaware.
B. Notwithstanding any of the provisions of this Certificate of
Incorporation or any provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any
affirmative vote of holders of any particular class or series
of stock of the Corporation required by law or this Certificate
of Incorporation, the affirmative vote of the holders of at
least the following percentages of the shares of all classes of
stock of the Corporation entitled to vote for the election of
directors, considered for this purpose as one class of stock,
shall be required to amend, alter, change or repeal, or to
adopt any provisions inconsistent with, the indicated
provisions of this Certificate of Incorporation:
(i) 80% in the case of Article Seventh or Article
Thirteenth; and
(ii) 90% in the case of Article Twelfth.
The foregoing paragraphs 1(B)(i) and (ii) of this Article Tenth may
not be amended so as to alter the stockholder vote required by
either such paragraph or to adopt any provisions inconsistent with
these provisions, except by an amendment that is itself approved by
the affirmative vote of the holders of at least the percentage of
all shares of all classes of stock of the Corporation as is required
to amend the provision or provisions of this Certificate of
Incorporation to which such amendment relates.
2. BY-LAWS. The Board of Directors is expressly authorized to adopt,
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 capital stock of the Corporation to adopt, alter or repeal the By-laws
made by the Board of Directors; provided, that any such adoption,
amendment or repeal by stockholders shall require the affirmative vote of
the holders of at least 66 2/3% of the shares of all classes of stock of
the Corporation entitled to vote for the election of directors,
considered for this purpose as one class of stock. This paragraph 2 of
Article Tenth may not be amended so as to alter the stockholder vote
specified hereby, nor may any provisions inconsistent with these
provisions be adopted, except by an amendment that is itself approved by
the affirmative vote of the holders of at least 66 2/3% of
6
the shares of all classes of stock of the Corporation entitled to vote
for the election of directors, considered for this purpose as one class
of stock.
ELEVENTH:
1. Except as set forth in paragraph 2 of this Article Eleventh, the
affirmative vote or consent of the holders of 80% of the shares of all
classes of stock of the Corporation entitled to vote for the election of
directors, considered for the purposes of this Article as one class,
shall be required (a) for the adoption of any agreement for the merger or
consolidation of the Corporation with or into any Other Corporation (as
hereinafter defined), or (b) to authorize any sale, lease, exchange,
mortgage, pledge or other disposition of all, or substantially all of the
assets of the Corporation or any Subsidiary (as hereinafter defined) to
any Other Corporation, or (c) to authorize the issuance or transfer by
the Corporation of any Substantial Amount (as hereinafter defined) of
securities of the Corporation in exchange for the securities or assets of
any Other Corporation. Such affirmative vote or consent shall be in
addition to the vote or consent of the holders of the stock of the
Corporation otherwise required by law, the Certificate of Incorporation
of the Corporation or any agreement or contract to which the Corporation
is a party.
2. The provisions of paragraph 1 of this Article Eleventh shall not
be applicable to any transaction described therein if such transaction is
approved by resolution of the Board of Directors of the Corporation;
provided that a majority of the members of the Board of Directors voting
for the approval of such transaction were duly elected and acting members
of the Board of Directors prior to the time any such Other Corporation
may have become a Beneficial Owner (as hereinafter defined) of 5% or more
of the shares of stock of the Corporation entitled to vote for the
election of directors.
3. For the purposes of paragraph 2 of this Article, the Board of
Directors shall have the power and duty to determine for the purposes of
this Article Eleventh, on the basis of information known to such Board,
if and when any Other Corporation is the Beneficial Owner of 5% or more
of the outstanding shares of stock of the Corporation entitled to vote
for the election of directors. Any such determination shall be conclusive
and binding for all purposes of this Article Eleventh.
4. As used in this Article Eleventh, the following terms shall have
the meanings indicated:
"Other Corporation" means any person, firm, corporation or other
entity, other than a subsidiary of the Corporation.
"Subsidiary" means any corporation in which the Corporation owns,
directly or indirectly, more than 50% of the voting securities.
7
"Substantial Amount" means any securities of the Corporation having
a then fair market value of more than $500,000.
An Other Corporation (as defined above) shall be deemed to be the
"Beneficial Owner" of stock if such Other Corporation or any "affiliate"
or "associate" of such Other Corporation (as those terms are defined in
Rule 12b-2 promulgated under the Securities Exchange Act of 1934 (15
U.S.C. 78 aaa et seq.), as amended from time to time), directly or
indirectly, controls the voting of such stock or has any options,
warrants, conversion or other rights to acquire such stock.
5. This Article Eleventh may not be amended, revised or revoked, in
whole or in part, except by the affirmative vote or consent of the
holders of 80% of the shares of all classes of stock of the Corporation
entitled to vote for the election of directors, considered for the
purposes of this Article Eleventh as one class of stock.
TWELFTH:
1. The following definitions shall apply for the purpose of this
Article Twelfth only:
A. "Announcement Date" shall mean the date of first public
announcement of the proposal of a Business Combination.
B. "Business Combination" shall mean:
(i) any merger or consolidation of the Corporation or
any Subsidiary with (a) any Related Person, or (b)
any other corporation (whether or not itself a
Related Person) which is, or after such merger or
consolidation would be, an Affiliate of a Related
Person; or
(ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or
a series of transactions) to or with any Related
Person or any Affiliate of any Related Person of any
assets of the Corporation or any Subsidiary having
an aggregate Fair Market Value of $500,000 or more;
or
(iii) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of
transactions) of any securities of the Corporation
or any Subsidiary to any Related Person or any
Affiliate of any Related Person in exchange for
cash, securities or other property (or a combination
thereof) having an aggregate Fair Market Value of
$500,000 or more; or
(iv) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation
proposed by or on behalf of any Related Person or
any Affiliate of any Related Person; or
8
(v) 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 the Related Person) which has
the effect, directly or indirectly, of increasing
the proportionate share of the outstanding shares of
any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or
indirectly owned by any Related Person or any
Affiliate of any Related Person.
C. "Consideration Received" shall mean the amount of cash and the
Fair Market Value, as of the Consummation Date, of
consideration other than cash received by the stockholder. In
the event of any Business Combination in which the Corporation
survives, the consideration other than cash shall include
shares of any class of outstanding Voting Stock retained by the
holders of such shares.
D. "Consummation Date" shall mean the date upon which the Business
Combination is consummated.
E. "Continuing Director" shall mean any member of the Board of
Directors of the Corporation who is unaffiliated with the
Related Person and who was a member of the Board of Directors
prior to the time that the Related Person became a Related
Person, and any successor of a Continuing Director who is
unaffiliated with the Related Person and is recommended to
succeed a Continuing Director by a majority of the Continuing
Directors then on the Board of Directors.
F. "Determination Date" shall mean the date upon which a Related
Person became a Related Person.
G. "Exchange Act" shall mean the Securities Exchange Act of 1934
as in effect on May 1, 1983.
H. "Fair Market Value" shall mean: (i) 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
principal United States securities exchange registered under
the Exchange Act 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
9
stock during the 30-day period 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 by the
Board of Directors in good faith; and (ii) in the case of
property other than cash or stock, the fair market value of
such property on the date in question as determined by the
Board of Directors in good faith.
I. "Related Person" shall mean any individual, firm, corporation
or other entity (other than the Corporation or any Subsidiary)
which, together with its Affiliates and Associates (as such
terms are defined in Rule 12b-2 under the Exchange Act) and
with any other individual, firm, corporation or other entity
(other than the Corporation or any Subsidiary) with which it or
they have any agreement, arrangement or understanding with
respect to acquiring, holding or disposing of Voting Stock,
beneficially owns (as defined in Rule 13d-3 of the Exchange
Act, except that such term shall include any Voting Stock which
such person has the right to acquire, whether or not such right
may be exercised within 60 days), directly or indirectly, more
than twenty percent of the voting power of the outstanding
Voting Stock.
J. "Subsidiary" shall mean any corporation in which a majority of
the capital stock entitled to vote generally in the election of
directors is owned, directly or indirectly, by the Corporation.
K. "Voting Stock" shall mean all of the then outstanding shares of
the capital stock of the Corporation entitled to vote generally
in the election of directors.
2. In addition to the affirmative vote otherwise required by law or
any provision of this Certificate of Incorporation (including without
limitation Article Eleventh), except as otherwise provided in paragraph
3, any Business Combination shall require the affirmative vote of the
holders of 90% of all Voting Stock, voting together as a single class.
Such affirmative vote shall be required notwithstanding any other
provision of this Certificate of Incorporation or any provision of law or
of any agreement with any national securities exchange which might
otherwise permit a lesser vote or no vote, and such affirmative vote
shall be required in addition to any affirmative vote
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of the holders of any particular class or series of the Voting Stock
required by law or by this Certificate of Incorporation.
3. The provisions of paragraph 2 of this Article Twelfth shall not
be applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative vote as is required by
law, any other provision of this Certificate of Incorporation (including
Article Eleventh), or any agreement with any national securities
exchange, if, in the case of a Business Combination that does not involve
any Consideration Received by the stockholders of the Corporation, solely
in their respective capacities as stockholders of the Corporation, the
condition specified in the following paragraph A is met, or, in the case
of any other Business Combination, the conditions specified in either of
the following paragraphs A and B are met:
A. The Business Combination shall have been approved by a majority
of the Continuing Directors, it being understood that this
condition shall not be capable of satisfaction unless there is
at least one Continuing Director.
B. All of the following conditions shall have been met:
(i) The form of the Consideration Received by holders of
shares of a particular class of outstanding Voting
Stock shall be in cash or in the same form as the
Related Person has paid for shares of such class of
Voting Stock within the two-year period ending on
and including the Determination Date. If, within
such two-year period, the Related Person has paid
for shares of any class of Voting Stock with varying
forms of consideration, the form of Consideration
Received per share by holders of shares of such
class of Voting Stock shall be either cash or the
form used to acquire the largest number of shares of
such class of Voting Stock acquired by the Related
Person within such two-year period.
(ii) The aggregate amount of Consideration Received per
share by holders of each class of Voting Stock in
such Business Combination shall be at least equal to
the higher of the following (it being intended that
the requirements of this paragraph B(ii) shall be
required to be met with respect to every such class
of Voting Stock outstanding, whether or not the
Related Person has previously acquired any shares of
that particular class of Voting Stock):
(a) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes
and soliciting dealers' fees)
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paid by the Related Person for any shares of that
class of Voting Stock acquired by it within the
two-year period immediately prior to the
Announcement Date or in the transaction in which it
became a Related Person, whichever is higher; or
(b) the Fair Market Value per share of such class of
Voting Stock on the Announcement Date; or
(c) in the case of any class of preferred stock, the
highest preferential amount per share to which the
holders of shares of such class of Voting Stock are
entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up
of the Corporation.
(iii) After such Related Person has become a Related
Person and prior to the consummation of such
Business Combination: (a) except as approved by a
majority of the Continuing Directors, there shall
have been no failure to declare and pay at the
regular date therefor any full quarterly dividends
(whether or not cumulative) on any outstanding
preferred stock; (b) there shall have been (I) no
reduction in the annual rate of dividends paid on
the Common Stock (except as necessary to reflect any
subdivision of the Common Stock), except as approved
by a majority of the Continuing Directors, and (II)
an increase in such annual rate of dividends 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 the Common Stock, unless the failure so to
increase such annual rate is approved by a majority
of the Continuing Directors; and (c) such Related
Person shall have not become the beneficial owner of
any newly issued share of Voting Stock directly or
indirectly from the Corporation except as part of
the transaction which results in such Related Person
becoming a Related Person.
(iv) After such Related Person has become a Related
Person, such Related Person shall not have received
the benefit, directly or indirectly (except
proportionately, solely in such Related Person's
capacity as a stockholder 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.
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(v) A proxy or information statement describing the
proposed Business Combination and complying with the
requirements of the Exchange Act and the rules and
regulations thereunder (or any subsequent provisions
replacing such act, rules or regulations) shall be
mailed to all stockholders 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 the Exchange Act or subsequent
provisions). Such proxy or information statement
shall contain on the front thereof, prominently
displayed, any recommendation as to the advisability
or inadvisability of the Business Combination which
the Continuing Directors, or any of them, may have
furnished in writing to the Board of Directors.
4. A majority of the total number of authorized directors (whether
or not there exist any vacancies in previously authorized directorships
at the time any determination is to be made by the Board of Directors)
shall have the power and duty to determine, on the basis of information
known to them after reasonable inquiry, all facts necessary to determine
compliance with this Article Twelfth including, without limitation, (1)
whether a person is a Related Person, (2) the number of shares of Voting
Stock beneficially owned by any person, (3) whether the applicable
conditions set forth in paragraph (2) of Section C have been met with
respect to any Business Combination, and (4) whether the assets which are
the subject of any Business Combination or the Consideration Received for
the issuance or transfer of securities by the Corporation or any
Subsidiary in any Business Combination have an aggregate Fair Market
Value of $500,000 or more.
5. Nothing contained in this Article Twelfth shall be construed to
relieve any Related Person from any fiduciary obligation imposed by law.
THIRTEENTH: Any action required or permitted to be taken by the
stockholders of the Corporation must be effected at an annual or special meeting
of stockholders of the Corporation and may not be effected by any consent in
writing by such stockholders.
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Exhibit 3.b
SECOND AMENDED AND RESTATED
BY-LAWS OF
SKYWORKS SOLUTIONS, 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 STOCKHOLDERS
SECTION 1 Place of Meetings. All meetings of the stockholders 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. The Board of Directors may, in its sole discretion,
determine that the meetings shall not be held at any place, but may instead be
held solely by means of remote communication.
SECTION 2 Annual Meeting. An annual meeting of the stockholders 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 stockholders 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 stockholders, whether annual or special,
shall be mailed, postage prepaid, or sent by electronic transmission, not less
than ten nor more than sixty days before the date of the meeting, to each
stockholder entitled to vote at such meeting, at the stockholder's address as it
appears on the records of the Corporation. Every such notice shall state the
place, date and hour of the meeting, the means of remote communications, if any,
by which stockholders and proxy holders may be deemed to be present in person or
by proxy and vote at such 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 stockholders shall not be required to be given, except when
expressly required by law.
SECTION 5 List of Stockholders. The Secretary shall, from information
obtained from the transfer agent, prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the
meeting: (a) on a reasonably accessible electronic network, provided that the
information required to gain access to such list is provided with the notice of
the meeting, or (b) during ordinary business hours, at the principal place of
business of the Corporation. In the event that the Corporation determines to
make the list available on an electronic network, the Corporation may take
reasonable steps to ensure that such information is available only to
stockholders of the Corporation. If the meeting is to be held at a specified
place, then the list shall be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present. If the meeting is to be held solely by means of remote
communication, then the list shall also be open to the examination of any
stockholder during the whole time of the meeting on a reasonably accessible
electronic network, and the information required to access the list shall be
provided with the notice of the meeting. The stock ledger shall be the only
evidence as to who are the stockholders 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 stockholders.
SECTION 6 Quorum. At each meeting of the stockholders, 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 stockholders 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 stockholders holding the requisite amount of
stock shall be present or represented. At any such adjourned meeting 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 stockholders
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 stockholders 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 stockholders required in respect of such other matter
or matters shall be present.
SECTION 7 Organization. At every meeting of the stockholders the
Chief Executive Officer, or in the absence of the Chief Executive Officer, 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 stockholders.
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 Stockholder Business and Nominations.
(A) Annual Meetings of Stockholders. (1) Nominations of persons
for election to the Board of Directors of the Corporation and the proposal of
business to be considered by the stockholders may be made at an annual meeting
of stockholders (a) pursuant to the Corporation's notice of meeting, (b) by or
at the direction of the Board of Directors or (c) by any stockholder of the
Corporation who was a stockholder 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 stockholder pursuant to clause (c) of
paragraph (A)(1) of
2
this By-law, the stockholder 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 stockholder action. To be timely, a stockholder's 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 2003 or in the event that the date of the annual
meeting is more than 30 days before or after such anniversary date, notice by
the stockholder 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 stockholder's notice as described above. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder 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-ll 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
stockholder 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
stockholder and the beneficial owner, if any, on whose behalf the proposal is
made; and (c) as to the stockholder 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 stockholder, 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 stockholder 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 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 100
days prior to the first anniversary of the preceding year's annual meeting, a
stockholder'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 Stockholders. Only such business shall
be conducted at a special meeting of stockholders 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 stockholders 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 stockholder of the
Corporation who is a stockholder 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 stockholders for the purpose of
electing one or more directors to the Board of Directors, any stockholder who
shall be entitled to vote at the meeting may nominate a person or
3
persons (as the case may be), for election to such position(s) as specified in
the Corporation's notice of meeting, if the stockholder'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 stockholder's notice as described above.
(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
stockholders 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 stockholder 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 stockholders 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
stockholders 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 stockholders shall be as determined by the
Chairman of the meeting.
SECTION 10 Voting. Except as otherwise provided by law, the
Certificate of Incorporation or these By-laws, each stockholder shall at every
meeting of the stockholders be entitled to one vote for each share of stock held
by such stockholder. Any vote on stock may be given by the stockholder 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 stockholder or by the stockholder'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 stockholders, all matters shall be decided by
the vote (which need not be by ballot) of a majority in interest of the
stockholders present in person or by proxy and entitled to vote thereat, a
quorum being present.
4
SECTION 11 Participation at Meetings Held by Remote Communication. If
authorized by the Board of Directors in its sole discretion, and subject to such
guidelines and procedures as the Board of Directors may adopt, stockholders and
proxy holders not physically present at a meeting of stockholders may, by means
of remote communication: (A) participate in a meeting of stockholders; and (B)
be deemed present in person and vote at a meeting of stockholders whether such
meeting is to be held at a designated place or solely by means of remote
communication.
SECTION 12 Inspectors of Election. In advance of any meeting ,of
stockholders, the Board by resolution or the Chief Executive Officer shall
appoint one or more inspectors of election to act at the meeting and make a
written report thereof. One or more other persons may be designated as alternate
inspectors to replace any inspector who fails to act. If no inspector or
alternate is present, ready and willing to act at a meeting of stockholders, the
Chairman of the meeting shall appoint one or more inspectors to act at the
meeting. Unless otherwise required by law, inspectors may be officers, employees
or agents of the Corporation. Each inspector, before entering upon the discharge
of his or her duties, shall take and sign an oath faithfully to execute the
duties of inspector with strict impartiality and according to the best of his or
her ability. The inspector shall have the duties prescribed by law and shall
take charge of the polls and, when the vote is completed, shall make a
certificate of the result of the vote taken and of such other facts as may be
required by law.
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 stockholder.
The number of directors shall be fixed from time to time exclusively by
the Board of Directors pursuant to a resolution adopted by a majority of the
total number of authorized directors (whether or not there exist any vacancies
in previously authorized directorships at the time any such resolution is
presented to the Board of Directors for adoption). At the 1983 annual meeting of
stockholders, the directors shall be divided into three classes, as nearly equal
in number as possible, with the term of office of the first class to expire at
the 1984 annual meeting of stockholders, the term of office of the second class
to expire at the 1985 annual meeting of stockholders and the term of office of
the third class to expire at the 1986 annual meeting of stockholders. At each
annual meeting of stockholders following such initial classification and
election, directors elected to succeed those directors whose terms expire shall
be elected for a term of office to expire at the third succeeding annual meeting
of stockholders after their election, unless, by reason of any intervening
changes in the authorized number of directors, the board shall designate one or
more of the then expiring directorships as directorships of another class in
order more nearly to achieve equality of number of directors among the classes.
SECTION 3 Election of Directors. At each meeting of the stockholders
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.
5
SECTION 4 Chairman of the Board of Directors. The Board of Directors
may elect from among its members one director to serve at its pleasure as
Chairman of the Board.
SECTION 5 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 6 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 7 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 stockholders 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.
SECTION 8 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 9 Special Meetings; Notice. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board or the
Chief Executive Officer and shall be called by the Chairman of the Board, the
Chief Executive Officer or the Secretary of the Corporation 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 10 Organization. At each meeting of the Board of Directors,
the Chairman of the Board, or, in the absence of the Chairman of the Board, the
Chief Executive Officer, or, in his or her absence, 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, any person appointed by the
Chairman of the meeting, shall act as Secretary of the meeting.
SECTION 11 Order of Business. At all meetings of the Board of
Directors, business shall be transacted in the order determined by the Board.
6
SECTION 12 Resignations. Any director of the Corporation may resign at
any time by giving written notice to the Chairman of the Board, the Chief
Executive Officer 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 13 Compensation. Each director shall be paid such
compensation, if any, as shall be fixed by the Board of Directors.
SECTION 14 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 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'
7
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 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 stockholders of the Corporation; or (b) with respect to a person who is not
a present or former director or officer of the 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
8
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 stockholders for their determination at the next annual
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 stockholders, the stockholders 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
stockholders, on the last date within the period prescribed by law for holding
such stockholders 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 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:
9
(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 or any corporation controlled by the 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 stockholders, 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 benefit plan (or related trust) of the
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 stockholders of a
complete liquidation or dissolution of the Corporation.
10
(3) "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.
(4) "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 stockholders or Disinterested
Directors 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.
SECTION 15 Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, 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, trust, employee benefit plan or other enterprise
against any liability asserted against such person and incurred by such person
in any such capacity, or arising out of such person's status as such, whether or
not the Corporation would have the power or the obligation to indemnify such
person against such liability under the provisions of Section 14 of this Article
III.
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 (or in the case of a special-purpose committee, one or
11
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
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, the Chief Executive Officer 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 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.
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ARTICLE V
OFFICERS
SECTION 1 Officers. The officers of the Corporation shall be a Chief
Executive Officer, a President, 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.
SECTION 3 Additional Officers; Agents. The Chief Executive Officer or
the President 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 provided in these
By-laws or as the Chief Executive Officer or the President may from time to time
prescribe. The Board of Directors or the Chief Executive Officer or the
President 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,
the Chief Executive Officer, the President or the Secretary. Any other officer
may resign at any time by giving written notice to the Chief Executive Officer
or the President. 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 hi these By-laws for regular election or
appointment to such office.
SECTION 8 Chief Executive Officer. Subject to the control of the
Board of Directors, the Chief Executive Officer shall have general and overall
charge of the business and affairs of the Corporation and of its officers. The
Chief Executive Officer shall keep the Board of Directors appropriately informed
on the business and affairs of the Corporation. The Chief Executive Officer
shall preside at all meetings of the stockholders and shall enforce the
observance of the rules of order for the meetings of the stockholders and of the
By-laws of the Corporation.
13
SECTION 9 President. The President shall be the chief operating
officer of the Corporation and, subject to the control of the Chief Executive
Officer, shall direct and be responsible for the operation of the business and
affairs of the Corporation. The President shall keep the Chief Executive Officer
and the Board of Directors appropriately informed on the business and affairs of
the Corporation. In the case of the absence or disability of the Chief Executive
Officer, the President shall perform all the duties and functions and execute
all the powers of, and be subject to all the restrictions upon, the Chief
Executive Officer.
SECTION 10 Executive and Senior Vice Presidents. One or more Executive
or Senior Vice Presidents shall, subject to the control of the Chief Executive
Officer, have lead accountability for components or functions of the Corporation
as and to the extent designated by the Chief Executive Officer. Each Executive
or Senior Vice President shall keep the Chief Executive Officer appropriately
informed on the business and affairs of the designated components or functions
of the Corporation.
SECTION 11 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 Chief
Executive Officer.
SECTION 12 Secretary. The Secretary shall keep or cause to be kept in
books provided for the purpose the minutes of the meetings of the stockholders,
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 13 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 14 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 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 15 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 16 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
14
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 otherwise
provided in these By-laws, 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 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 Chief Executive Officer 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 stockholder 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 class and
series, and shall be signed by the Chief Executive Officer 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
15
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
stockholder'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
stockholder, the number or numbers of any share certificate or certificates
issued to such stockholder and the number of shares represented thereby, and the
date of issuance of the shares held by such stockholder 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 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.
16
SECTION 6 Fixing Record Date. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders 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 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 stockholders entitled to
notice of or to vote at a meeting of stockholders 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 stockholders
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
stockholders of record entitled to notice of or to vote at a meeting of
stockholders 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 Stockholders. 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 stockholders; and no stockholder
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 stockholders of the
Corporation.
ARTICLE VIII
NOTICE
SECTION 1 Manner of Giving Written Notice. (A) Any notice in writing
required by law or by these By-laws to be given to any person shall be effective
if delivered personally, 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 or by a form of electronic transmission consented
to by such person to whom the notice is to be given. Any such consent shall be
deemed revoked if (i) the Corporation is unable to deliver by electronic
transmission two consecutive notices given by the Corporation in accordance with
such consent and (ii) such inability becomes known to the Secretary or an
Assistant Secretary of the Corporation or to the transfer agent, or other person
responsible for the giving of notice; provided however, the inadvertent failure
to treat such inability as a revocation shall not invalidate any meeting or
other action.
(B) 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 case of notice transmitted by a form of
electronic transmission, such notice shall be deemed given (i) if by facsimile
telecommunication, when directed to a number at which the stockholder has
consented to receive notice; (ii) if by electronic mail, when directed to an
electronic mail address at which the stockholder has consented to receive
notice; (iii) if by a posting on an electronic network together with separate
notice to the stockholder of such specific posting, upon the later of (a) such
posting and (b) the giving of such separate notice; and (iv) if by any other
form of electronic transmission, when directed to the stockholder).
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
17
and as required by law), whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE IX
SEAL
SECTION 1 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 end on the Friday closest to
September 30 in each year.
18
APPENDIX
PROCEDURES FOR SUBMISSION
AND DETERMINATION OF CLAIMS FOR INDEMNIFICATION
PURSUANT TO ARTICLE III, SECTION 14 OF THE BY-LAWS.
SECTION 1 Purpose. The Procedures for Submission and Determination
of Claims for Indemnification Pursuant to Article III, Section 14 of the By-laws
(the "Procedures") are to implement the provisions of Article III, Section 14 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 14 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 14 of the By-laws) of
another corporation or of any partnership, 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 14 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 14(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 14(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
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 14(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 14 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 Independent Counsel under
Article III, Section 14(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
14(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 14(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 14 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
2
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 14 (G) of the By-laws, (2) payment of
indemnification is not made pursuant to Article III, Section 14(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 14(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, Section 14(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 14(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 14(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 14 (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 14 (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 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 14 of the
3
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.
4
Exhibit 4.c
EXECUTION COPY
================================================================================
SKYWORKS SOLUTIONS, INC.
Issuer
4 3/4% Convertible Subordinated Notes
Due November 15, 2007
--------------------
INDENTURE
Dated as of November 12, 2002
--------------------
STATE STREET BANK AND TRUST COMPANY
Trustee
================================================================================
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- -------
310(a)(1) ....................................... 8.10
(a)(2) ....................................... 8.10
(a)(3) ....................................... N.A.
(a)(4) ....................................... N.A.
(b) ....................................... 8.08; 8.10
(c) ....................................... N.A.
311(a) ....................................... 8.11
(b) ....................................... 8.11
(c) ....................................... N.A.
312(a) ....................................... 2.06
(b) ....................................... 12.03
(c) ....................................... 12.03
313(a) ....................................... 8.06
(b)(1) ....................................... N.A.
(b)(2) ....................................... 8.06
(c) ....................................... 12.02
(d) ....................................... 8.06
314(a) ....................................... 4.02; 12.02
(b) ....................................... N.A.
(c)(1) ....................................... 12.04
(c)(2) ....................................... 12.04
(c)(3) ....................................... N.A.
(d) ....................................... N.A.
(e) ....................................... 12.05
315(a) ....................................... 8.01
(b) ....................................... 8.05; 12.02
(c) ....................................... 8.01
(d) ....................................... 8.01
(e) ....................................... 7.11
316(a)(last sentence) ................................ 12.06
(a)(1)(A) ....................................... 7.05
(a)(1)(B) ....................................... 7.04
(a)(2) ....................................... N.A.
(b) ....................................... 7.07
317(a)(1) ....................................... 7.08
(a)(2) ....................................... 7.09
(b) ....................................... 2.05
318(a) ....................................... 12.01
N.A. means Not Applicable.
- ----------------------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
TABLE OF CONTENTS
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions................................................................... 1
SECTION 1.02. Other Definitions............................................................. 10
SECTION 1.03. Incorporation by Reference of Trust Indenture Act............................. 10
SECTION 1.04. Rules of Construction......................................................... 11
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating............................................................... 12
SECTION 2.02. Execution and Authentication.................................................. 13
SECTION 2.03. Registrar, Paying Agent and Conversion Agent.................................. 14
SECTION 2.04. Maintenance of Office or Agency............................................... 14
SECTION 2.05. Paying Agent To Hold Money in Trust........................................... 15
SECTION 2.06. Securityholder Lists.......................................................... 15
SECTION 2.07. Transfer and Exchange......................................................... 16
SECTION 2.08. Additional Transfer and Exchange Requirements................................. 17
SECTION 2.09. CUSIP Numbers................................................................. 25
SECTION 2.10. Replacement Securities........................................................ 26
SECTION 2.11. Outstanding Securities........................................................ 26
SECTION 2.12. Temporary Securities.......................................................... 27
SECTION 2.13. Cancellation.................................................................. 27
SECTION 2.14. Defaulted Interest............................................................ 27
ARTICLE 3
Redemption
SECTION 3.01. Optional Redemption........................................................... 28
SECTION 3.02. Notices to Trustee............................................................ 28
SECTION 3.03. Selection of Securities to Be Redeemed........................................ 28
SECTION 3.04. Notice of Redemption.......................................................... 29
SECTION 3.05. Effect of Notice of Redemption................................................ 30
SECTION 3.06. Deposit of Redemption Price................................................... 30
SECTION 3.07. Securities Redeemed in Part................................................... 31
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities......................................................... 31
SECTION 4.02. SEC Reports................................................................... 31
SECTION 4.03. Compliance Certificates....................................................... 33
SECTION 4.04 Further Instruments and Acts.................................................. 32
SECTION 4.05. Maintenance of Corporate Existence............................................ 32
SECTION 4.06. Payment of Additional Interest................................................ 32
SECTION 4.07. Purchase of Securities at Option of the Holder upon Change in Control......... 32
SECTION 4.08. Effect of Change in Control Purchase Notice................................... 36
SECTION 4.09. Deposit of Change in Control Purchase Price................................... 37
SECTION 4.10. Securities Purchased in Part.................................................. 38
SECTION 4.11. Compliance with Securities Laws upon Purchase of Securities................... 38
SECTION 4.12 Repayment to the Company...................................................... 38
ARTICLE 5
Conversion
SECTION 5.01. Conversion Privilege.......................................................... 38
SECTION 5.02. Conversion Procedure.......................................................... 39
SECTION 5.03. Fractional Shares............................................................. 41
SECTION 5.04. Taxes on Conversion........................................................... 41
SECTION 5.05. Company To Provide Stock...................................................... 41
SECTION 5.06. Adjustment of Conversion Price................................................ 42
SECTION 5.07. No Adjustment................................................................. 48
SECTION 5.08. Adjustment for Tax Purposes................................................... 49
SECTION 5.09. Notice of Adjustment.......................................................... 49
SECTION 5.10. Notice of Certain Transactions................................................ 49
SECTION 5.11. Effect of Reclassification, Consolidation, Merger or Sale on
Conversion Privilege.......................................................... 50
SECTION 5.12. Trustee's Disclaimer.......................................................... 51
SECTION 5.13. Voluntary Reduction........................................................... 51
ARTICLE 6
Successor Companies
SECTION 6.01. When Company May Merge or Transfer Assets..................................... 52
ARTICLE 7
Defaults and Remedies
SECTION 7.01. Events of Default............................................................. 53
SECTION 7.02. Acceleration.................................................................. 54
SECTION 7.03. Other Remedies................................................................ 55
SECTION 7.04. Waiver of Past Defaults....................................................... 55
SECTION 7.05. Control by Majority........................................................... 55
SECTION 7.06. Limitation on Suits........................................................... 56
SECTION 7.07. Rights of Holders to Receive Payment.......................................... 56
SECTION 7.08. Collection Suit by Trustee.................................................... 57
SECTION 7.09. Trustee May File Proofs of Claim.............................................. 57
SECTION 7.10. Priorities.................................................................... 57
SECTION 7.11. Undertaking for Costs......................................................... 58
ARTICLE 8
Trustee
SECTION 8.01. Duties of Trustee............................................................. 58
SECTION 8.02. Rights of Trustee............................................................. 60
SECTION 8.03. Individual Rights of Trustee.................................................. 61
SECTION 8.04. Trustee's Disclaimer.......................................................... 61
SECTION 8.05. Notice of Defaults............................................................ 61
SECTION 8.06. Reports by Trustee to Holders................................................. 61
SECTION 8.07. Compensation and Indemnity.................................................... 62
SECTION 8.08. Replacement of Trustee........................................................ 63
SECTION 8.09. Successor Trustee by Merger................................................... 64
SECTION 8.10. Eligibility; Disqualification................................................. 64
SECTION 8.11. Preferential Collection of Claims Against Company............................. 64
ARTICLE 9
Discharge of Indenture
SECTION 9.01. Satisfaction and Discharge of Indenture....................................... 65
SECTION 9.02. Application of Trust Money.................................................... 66
SECTION 9.03. Repayment to Company.......................................................... 66
SECTION 9.04. Reinstatement................................................................. 66
ARTICLE 10
Amendments
SECTION 10.01. Without Consent of Holders.................................................... 67
SECTION 10.02. With Consent of Holders....................................................... 67
SECTION 10.03. Compliance with Trust Indenture Act........................................... 69
SECTION 10.04. Revocation and Effect of Consents and Waivers................................. 69
SECTION 10.05. Notation on or Exchange of Securities......................................... 70
SECTION 10.06. Trustee To Sign Amendments.................................................... 70
SECTION 10.07. Payment for Consent........................................................... 70
ARTICLE 11
Subordination
SECTION 11.01. Agreement To Subordinate...................................................... 70
SECTION 11.02. Liquidation, Dissolution, Bankruptcy ......................................... 71
SECTION 11.03. Default on Senior Indebtedness................................................ 71
SECTION 11.04. Acceleration of Payment of Securities......................................... 73
SECTION 11.05. When Distribution Must Be Paid Over........................................... 73
SECTION 11.06. Subrogation................................................................... 73
SECTION 11.07. Relative Rights............................................................... 74
SECTION 11.08. Subordination May Not Be Impaired............................................. 74
SECTION 11.09. Rights of Trustee and Paying Agent............................................ 74
SECTION 11.10. Distribution or Notice to Representative...................................... 75
SECTION 11.11. Article 11 Not To Prevent Events of Default or Limit Right To Accelerate...... 75
SECTION 11.12. Trustee Entitled To Rely...................................................... 75
SECTION 11.13. Trustee To Effectuate Subordination........................................... 75
SECTION 11.14. Trustee Not Fiduciary for Holders of Senior Indebtedness...................... 76
SECTION 11.15. Reliance by Holders of Senior Indebtedness on Subordination Provisions........ 76
ARTICLE 12
Miscellaneous
SECTION 12.01. Trust Indenture Act Controls 76
SECTION 12.02. Notices....................................................................... 77
SECTION 12.03. Communication by Holders with Other Holders................................... 77
SECTION 12.04. Certificate and Opinion as to Conditions Precedent............................ 77
SECTION 12.05. Statement Required in Certificate of Opinion.................................. 78
SECTION 12.06. When Securities Disregarded................................................... 78
SECTION 12.07. Rules by Trustee, Paying Agent and Registrar.................................. 79
SECTION 12.08. Legal Holidays................................................................ 79
SECTION 12.09. Governing Law................................................................. 79
SECTION 12.10. No Recourse Against Others.................................................... 79
SECTION 12.11. Successors.................................................................... 79
SECTION 12.12. Multiple Originals............................................................ 79
SECTION 12.13. Table of Contents; Headings................................................... 79
Exhibit A - Form of Security
Exhibit 1 to Rule 144A/Regulation S Appendix
INDENTURE dated as of November 12, 2002,
between Skyworks Solutions, Inc., a Delaware
corporation (the "Company"), and State Street Bank
and Trust Company, a trust company organized under
the laws of the Commonwealth of Massachusetts, as
trustee hereunder (the "Trustee").
Both parties agree as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's 4
3/4% Convertible Subordinated Notes Due November 15, 2007 (the "Securities").
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Additional Interest" has the meaning specified in Section 5
of the Registration Rights Agreement. All references herein to interest accrued
or payable as of any date shall include any Additional Interest accrued or
payable as of such date as provided in the Registration Rights Agreement.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Applicable Procedures" means, with respect to any transfer or
exchange of beneficial ownership interests in a Global Security, the rules and
procedures of the Depositary that are applicable to such transfer or exchange.
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the
2
Securities, compounded annually) of the total obligations of the lessee for
rental payments during the remaining term of the lease included in such
Sale/Leaseback Transaction (including any period for which such lease has been
extended).
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligation" means an obligation that is
required to be classified and accounted for as a capital lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"Certificated Security" means a Security that is in
substantially the form attached hereto as Exhibit A and that does not include
the information or the schedule called for by footnotes 1, 3 and 4 thereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock of the Company, par
value $.25 per share, as it exists on the date of this Indenture and any shares
of any class or classes of capital stock of the Company resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which are
not
3
subject to redemption by the Company; provided, however, that if at any time
there shall be more than one resulting class, the shares of each class then so
issuable on conversion of Securities shall be substantially in the proportion
which the total number of shares of such class resulting from all such
reclassifications bears to the total number of shares of all such classes
resulting from such reclassifications.
"Company" means Skyworks Solutions, Inc., a Delaware
corporation, and its successors.
"Corporate Trust Office" means the principal corporate trust
office of the Trustee at 2 Avenue de Lafayette, 6th Floor, Boston Massachusetts,
02111, Attention: Corporate Trust Department, or such other office, designated
by the Trustee by written notice to the Company and approved by the Company, at
which at any particular time its corporate trust business shall be administered.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement designed
to protect such Person against fluctuations in currency values.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Designated Senior Indebtedness" means any Senior Indebtedness
of the Company which, at the date of determination, has an aggregate principal
amount outstanding of, or under which, at the date of determination, the holders
thereof are committed to lend up to, at least $10 million and is specifically
designated by the Company in the instrument evidencing or governing such Senior
Indebtedness as "Designated Senior Indebtedness" for purposes of this Indenture
and shall include the 15% Convertible Senior Subordinated Notes due June 30,
2005 of the Company and the 15% Convertible Notes due June 30, 2005 of the
Company, in each case without regard to the principal amount outstanding.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
4
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of November 12, 2002, including those
set forth in (1) the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants, (2) statements
and pronouncements of the Financial Accounting Standards Board, (3) such other
statements by such other entity as approved by a significant segment of the
accounting profession and (4) the rules and regulations of the SEC governing the
inclusion of financial statements (including pro forma financial statements) in
periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC.
"Global Security" means a permanent Global Security that is in
substantially the form attached hereto as Exhibit A and that includes the
information and schedule called for by footnotes 1, 3 and 4 thereof and which is
deposited with the Depositary or its custodian and registered in the name of the
Depositary or its nominee.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any other
Person or any obligation, direct or indirect, contingent or otherwise, of such
Person (1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness of such Person (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or (2) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning. The term "Guarantor" shall mean any
Person Guaranteeing any obligation.
"Hedging Obligations" of any Person means the obligations of
such Person pursuant to any Interest Rate Agreement or Currency Agreement.
5
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred
by such Person at the time it becomes a Subsidiary. The term "Incurrence" when
used as a noun shall have a correlative meaning. The accretion of principal of a
non-interest bearing or other discount security shall not be deemed the
Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication):
(1) the principal of and premium (if any) in respect of (A)
indebtedness of such Person for money borrowed and (B) indebtedness
evidenced by notes, debentures, bonds or other similar instruments for
the payment of which such Person is responsible or liable;
(2) all Capital Lease Obligations of such Person and all
Attributable Debt in respect of Sale/Leaseback Transactions entered
into by such Person;
(3) all obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale obligations
of such Person and all obligations of such Person under any title
retention agreement (but excluding trade accounts payable arising in
the ordinary course of business);
(4) all obligations of such Person for the reimbursement of
any obligor on any letter of credit, banker's acceptance or similar
credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in
clauses (1) through (3) above) entered into in the ordinary course of
business of such Person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the tenth Business Day following payment on
the letter of credit);
6
(5) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Capital Stock
of such Person;
(6) all obligations of the type referred to in clauses (1)
through (5) of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise, including
by means of any Guarantee;
(7) all obligations of the type referred to in clauses (1)
through (6) of other Persons secured by any Lien on any property or
asset of such Person (whether or not such obligation is assumed by such
Person), the amount of such obligation being deemed to be the lesser of
the value of such property or assets or the amount of the obligation so
secured; and
(8) to the extent not otherwise included in this definition,
Hedging Obligations of such Person.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date; provided, however, that
in the case of Indebtedness sold at a discount, the amount of such Indebtedness
at any time will be the accreted value thereof at such time.
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Interest Rate Agreement" means in respect of a Person any
interest rate swap agreement, interest rate cap agreement or other financial
agreement or arrangement designed to protect such Person against fluctuations in
interest rates.
"Issue Date" means the date on which the Securities are
originally issued.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or similar charge.
7
"Obligations" means with respect to any Indebtedness all
obligations for principal, premium, interest, penalties, fees, indemnifications,
reimbursements, and other amounts payable pursuant to the documentation
governing such Indebtedness.
"Officer" means the Chief Executive Officer, the President,
any Vice President, the Treasurer, the Corporate Controller or the Secretary of
the Company.
"Officer's Certificate" means a certificate signed by an
Officer.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any
Person, means Capital Stock of any class or classes (however designated) which
is preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of
such Person.
"principal" of a Security means the principal of the Security
plus the premium, if any, payable on the Security which is due or overdue or is
to become due at the relevant time.
"Refinance" means, in respect of any Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue other Indebtedness in exchange or replacement for, such indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated November 12, 2002 among the Company and Credit Suisse First
Boston Corporation, CIBC
8
World Markets Corp. and U.S. Bancorp Piper Jaffray Inc., as initial purchasers.
"Representative" means any trustee, agent or representative
(if any) for an issue of Senior Indebtedness; provided, however, that if and for
so long as any Senior Indebtedness lacks such a representative, then the
Representative for such Senior Indebtedness shall at all times be the holders of
a majority in outstanding principal amount of such Senior Indebtedness.
"Restricted Certificated Security" means a Certificated
Security which is a Transfer Restricted Security.
"Restricted Global Security" means a Global Security which is
a Transfer Restricted Security.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company transfers such
property to a Person and the Company leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to a
Global Security (as appointed by the Depository), or any successor Person
thereto and shall initially be the Trustee.
"Senior Indebtedness" means with respect to any Person all (1)
Indebtedness of such Person, whether outstanding on the Issue Date or thereafter
Incurred, and (2) all other Obligations of such Person (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to such Person whether or not post-filing interest is
allowed in such proceeding) in respect of Indebtedness described in clause (1)
above unless, in the case of clauses (1) and (2), in the instrument creating or
evidencing the same or
9
pursuant to which the same is outstanding, it is provided that such Indebtedness
or other Obligations are not superior in right of payment to the Securities;
provided, however, that Senior Indebtedness shall not include (1) any obligation
of such Person to any Subsidiary, (2) any liability for Federal, state, local or
other taxes owed or owing by such Person or (3) any accounts payable or other
liability to trade creditors arising in the ordinary course of business
(including guarantees thereof or instruments evidencing such liabilities).
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (1) such Person,
(2) such Person and one or more Subsidiaries of such Person or (3) one or more
Subsidiaries of such Person.
"TIA" means the Trust Indenture Act of 1939
(15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of this
Indenture.
"Trading Day" means, with respect to any security, each
Monday, Tuesday, Wednesday, Thursday and Friday, other than any day on which
securities are not generally traded on the principal exchange or market in which
such security is traded.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means any officer within the Corporate Trust
Office of the Trustee with direct
10
responsibility for the administration of this Indenture and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his or her knowledge and familiarity with the
particular subject.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Certificated Security" means a Certificated
Security that is not a Transfer Restricted Security.
"Unrestricted Global Security" means a Global Security that is
not a Transfer Restricted Security.
"Voting Stock" means any class or classes of Capital Stock
pursuant to which the holders thereof under ordinary circumstances have the
power to vote in the election of the board of directors, managers or trustees of
any Person, or other persons performing similar functions irrespective of
whether or not the Capital Stock of any other class or classes shall have, or
might have, voting power by reason of the happening of any contingency.
11
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- ---------
"Agent Members" ........................ 2.01(c)
"Bankruptcy Law" ....................... 7.01
"Blockage Notice" ...................... 11.03
"Change in Control"..................... 4.07(a)
"Change in Control Purchase Date"....... 4.07(a)
"Change in Control Purchase Notice"..... 4.07(c)
"Change in Control Purchase Price"...... 4.07(a)
"Closing Price"......................... 5.06(f)
"Conversion Agent"...................... 2.03
"Conversion Date"....................... 5.02
"Conversion Price"...................... 5.06
"Current Market Price Per Share"........ 5.06(f)
"Defaulted Interest".................... 2.10
"Depositary"............................ 2.01(b)
"Determination Date".................... 5.06(d)
"DTC"................................... 2.01(b)
"Expiration Date"....................... 5.06(e)
"Expiration Time"....................... 5.06(e)
"Event of Default" ..................... 7.01
"Legal Holiday" ........................ 12.08
"NNM"................................... 5.06(f)
"NYSE".................................. 5.06(f)
"Optional Redemption"................... 3.01
"Optional Redemption Date".............. 3.01
"Optional Redemption Price"............. 3.01
"pay the Securities" ................... 11.03
"Paying Agent" ......................... 2.03
"Payment Blockage Period" .............. 11.03
"Payment Default" ...................... 11.03
"Purchase Agreement..................... 2.01(a)
"Purchased Shares"...................... 5.06(e)
"QIB"................................... 2.08(b)(y)(2)
"Registrar"............................. 2.03
"Regulation S".......................... 2.01(b)
"Rule 144A"............................. 2.01(b)
"Successor Person" ..................... 6.01
"Transfer Certificate".................. 2.08(f)(1)
"Transfer Restricted Security".......... 2.08(f)(1)
"Triggering Distribution"............... 5.06(d)
"Unissued Shares"....................... 4.07(a)
12
SECTION 1.03. Incorporation by Reference of Trust Indenture
Act. The mandatory provisions of the TIA are incorporated by reference in and
made a part of this Indenture. The following TIA terms have the following
meanings:
"Commission" means the SEC;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the indenture securities means the Company any
other obligor on the securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to Indebtedness secured by a Lien merely by
virtue of its nature as unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be
13
the principal amount thereof that would be shown on a balance sheet of
the Company dated such date prepared in accordance with GAAP; and
(8) all references to any amount of interest or any other
amount payable on or with respect to any of the Securities shall be
deemed to include payment of any Additional Interest pursuant to the
Registration Rights Agreement.
ARTICLE 2
The Securities
SECTION 2.01. (a) Form and Dating. The Securities and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A, which is hereby incorporated in and expressly made part of this
Indenture. The Securities may have notations, legends or endorsements required
by law, stock exchange rule, agreements to which the Company is subject, if any,
or usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Company). The Securities are being offered and sold by the
Company pursuant to a Purchase Agreement dated November 6, 2002 (the "Purchase
Agreement"), among the Company and Credit Suisse First Boston Corporation, CIBC
World Markets Corp. and U.S. Bancorp Piper Jaffray. Each Security shall be dated
the date of its authentication. The terms of the Securities set forth in Exhibit
A are part of the terms of this Indenture.
(b) Restricted Global Securities. All of the Securities are
initially being offered and sold in reliance on Rule 144A ("Rule 144A")or in
reliance on Regulation S ("Regulation S") under the Securities Act and shall be
issued initially in the form of one or more Restricted Global Securities, which
shall be deposited on behalf of the purchasers of the Securities represented
thereby with the Trustee, at its Corporate Trust Office, as custodian for the
depositary, The Depository Trust Company ("DTC") (such depositary, or any
successor thereto, being hereinafter referred to as the "Depositary"), and
registered in the name of its nominee, Cede & Co., duly executed by the Company
and authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of the Restricted Global Security may from time to time be
increased or decreased by
14
adjustments made on the records of the Securities Custodian as hereinafter
provided, subject in each case to compliance with the Applicable Procedures.
(c) Global Securities in General. Each Global Security shall
represent such of the outstanding Securities as shall be specified therein and
each shall provide that it shall represent the aggregate amount of outstanding
Securities from time to time endorsed thereon and that the aggregate amount of
outstanding Securities represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges, redemptions, purchases or
conversions of such Securities. Any endorsement of a Global Security to reflect
the amount of any increase or decrease in the amount of outstanding Securities
represented thereby shall be made by the Securities Custodian in accordance with
the standing instructions and procedures existing between the Depositary and the
Securities Custodian.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary or under any Global Security,
and the Depositary (including, for this purpose, its nominee) may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner and Holder of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall (1) prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or (2) impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Security.
SECTION 2.02. Execution and Authentication. An Officer shall
sign the Securities for the Company by manual or facsimile signature.
Typographic and other minor defects in any facsimile signature shall not affect
the validity or enforceability of any Security which has been authenticated and
delivered by the Trustee.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
15
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
On the Issue Date, the Trustee shall authenticate and deliver
up to $230 million of 4 3/4% Convertible Subordinated Notes Due November 15,
2007, which will be represented by a Restricted Global Security.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands.
SECTION 2.03. Registrar, Paying Agent and Conversion Agent.
The Company shall maintain an office or agency where Securities may be presented
for registration of transfer or for exchange (the "Registrar"), an office or
agency where Securities may be presented for payment (the "Paying Agent") and
one or more offices or agencies where securities may be presented for conversion
(each, a "Conversion Agent"). The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company may have one or more
co-registrars and one or more additional paying agents. The term "Paying Agent"
includes any additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, co-registrar, Paying Agent or Conversion Agent not a party
to this Indenture, which shall incorporate the terms of the TIA. The agreement
shall implement the provisions of this Indenture that relate to such agent. The
Company shall notify the Trustee of the name and address of any such agent. If
the Company fails to maintain a Registrar, Paying Agent or Conversion Agent, the
Trustee shall act as such and shall be entitled to appropriate compensation
therefor pursuant to Section 8.07. The Company may act as Paying Agent,
Registrar, co-registrar, transfer agent or Conversion Agent.
16
The Company initially appoints the Trustee as Registrar,
Paying Agent and Conversion Agent in connection with the Securities.
SECTION 2.04. Maintenance of Office or Agency. The Company
shall maintain in the Borough of Manhattan, the City of New York, an office or
agency (which may be an office of the Trustee or an affiliate of the Trustee,
Registrar or co-registrar) where Securities may be surrendered for registration
of transfer or for exchange and where notices and demands to or upon the Company
in respect of the Securities and this Indenture may be served. Such office shall
initially be State Street Bank and Trust Company, N.A., located at 61 Broadway,
New York, New York 10005. The Company shall give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in the Borough of Manhattan, the City of New York for such purposes. The Company
shall give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.
SECTION 2.05. Paying Agent To Hold Money in Trust. Prior to
each due date of the principal and interest on any Security, the Company shall
deposit with the Paying Agent a sum sufficient to pay such principal and
interest when so becoming due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal of or interest on the Securities and
if the Paying Agent is different than the Trustee, shall notify the Trustee of
any default by the Company in making any such payment, and while any such
17
default continues, the Trustee may require the Paying Agent to pay all money
held by it to the Trustee. If the Company or a Subsidiary acts as Paying Agent,
it shall segregate the money held by it as Paying Agent and hold it as a
separate trust fund. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee and to account for any funds disbursed by
the Paying Agent. Upon complying with this Section, the Paying Agent shall have
no further liability for the money delivered to the Trustee.
SECTION 2.06. Securityholder Lists. The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.07. Transfer and Exchange. The Securities shall be
issued in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer. When a Security is presented to the
Registrar or a co-registrar with a request to register a transfer, the Registrar
shall register the transfer as requested if the requirements of this Indenture
are satisfied. When Securities are presented to the Registrar or a co-registrar
with a request to exchange them for an equal principal amount of Securities of
other denominations, the Registrar shall make the exchange as requested if the
same requirements are met. To permit registration of transfers and exchanges,
the Company shall execute and the Trustee shall authenticate Securities at the
Registrar's or co-registrar's request. The Company or the Registrar may require
payment by the Holder of a sum sufficient to pay all taxes, assessments or other
governmental charges in connection with any transfer or exchange pursuant to
this Section. The Company shall not be required to make and the Registrar need
not register transfers or exchanges of Securities selected for redemption
(except, in the case of Securities to be redeemed in part, the portion thereof
not to be redeemed) or any Securities for a period of 15 days before a selection
of Securities to be redeemed or 15 days before an interest payment date.
18
Prior to the due presentation for registration of transfer of
any Security, the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and (subject to the provisions of the Securities with
respect to record dates) interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the Company,
the Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
All Securities issued upon any transfer or exchange pursuant
to the terms of this Indenture will evidence the same debt and will be entitled
to the same benefits under this Indenture as the Securities surrendered upon
such transfer or exchange.
SECTION 2.08. Additional Transfer and Exchange Requirements.
(a) Transfer and Exchange of Global Securities.
(1) Certificated Securities shall be issued in exchange for
interests in the Global Securities only if (x) the Depositary notifies the
Company that it is unwilling or unable to continue as depositary for the Global
Securities or if it at any time ceases to be a "clearing agency" registered
under the Exchange Act, if so required by applicable law or regulation and a
successor depositary is not appointed by the Company within 90 days, (y) an
Event of Default has occurred and is continuing or (z) the Company, in its sole
discretion, notifies the Trustee in writing that it elects to cause the issuance
of Certificated Securities. In any such case, the Company shall execute, and the
Trustee shall, upon receipt of an order from the Company (which the Company
agrees to deliver promptly), authenticate and deliver Certificated Securities in
an aggregate principal amount equal to the principal amount of such Global
Securities in exchange therefor. Only Restricted Certificated Securities shall
be issued in exchange for beneficial interests in Restricted Global Securities,
and only Unrestricted Certificated Securities shall be issued in exchange for
beneficial interests in Unrestricted Global Securities. Certificated Securities
issued in exchange for beneficial interests in Global Securities shall be
registered in such names and shall be in such authorized
19
denominations as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver or cause to be delivered such Certificated Securities to the
persons in whose names such Securities are so registered. Such exchange shall be
effected in accordance with the Applicable Procedures.
(2) Notwithstanding any other provisions of this Indenture
other than the provisions set forth in Section 2.08(a)(1), a Global Security may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(b) Transfer and Exchange of Certificated Securities. In the
event that Certificated Securities are issued in exchange for beneficial
interests in Global Securities in accordance with Section 2.08(a)(1) of this
Indenture, on or after such event when Certificated Securities are presented by
a Holder to a Registrar with a request:
(x) to register the transfer of the Certificated Securities to
a person who will take delivery thereof in the form of Certificated
Securities only; or
(y) to exchange such Certificated Securities for an equal
principal amount of Certificated Securities of other authorized
denominations, such Registrar shall register the transfer or make the
exchange as requested if the requirements for such transaction under
this Indenture are satisfied;
provided, however, that the Certificated Securities presented or surrendered for
register of transfer or exchange:
(1) shall be duly endorsed or accompanied by an assignment
form and, if applicable, a transfer certificate each in the form included in
Exhibit A, and in a form satisfactory to the Registrar duly executed by the
Holder thereof or its attorney duly authorized in writing; and
20
(2) in the case of a Restricted Certificated Security, such
request shall be accompanied by the following additional information and
documents, as applicable:
(i) if such Restricted Certificated Security is being
delivered to the Registrar by a Holder for registration in the name of
such Holder, without transfer, or such Restricted Certificated Security
is being transferred to the Company or a Subsidiary of the Company, a
certification to that effect from such Holder (in substantially the
form set forth in the Transfer Certificate);
(ii) if such Restricted Certificated Security is being transferred to a
person the Holder reasonably believes is a qualified institutional
buyer as defined in Rule 144A ("QIB") in accordance with Rule 144A or
pursuant to an effective registration statement under the Securities
Act, a certification to that effect from such Holder (in substantially
the form set forth in the Transfer Certificate); or
(iii) if such Restricted Certificated Security is being transferred (x)
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144, (y) outside the United
States in an offshore transaction within the meaning of Regulation S
under the Securities Act in compliance with Rule 904 under the
Securities Act or (z)(A) pursuant to an exemption from the registration
requirements of the Securities Act (other than pursuant to Rule 144A,
Rule 144 or Rule 904), and (B) as a result, such Security shall cease
to be a "restricted security" within the meaning of Rule 144, a
certification to that effect from the Holder (in substantially the form
set forth in the Transfer Certificate) and, if the Company or such
Registrar so requests, an Opinion of Counsel, certificates and other
information reasonably acceptable to the Company and such Registrar to
the effect that such transfer is in compliance with the registration
requirements of the Securities Act.
(c) Transfer of a Beneficial Interest in a Restricted Global
Security for a Beneficial Interest in an Unrestricted Global Security. Any
person having a beneficial interest in a Restricted Global Security may upon
21
request, subject to the Applicable Procedures, transfer such beneficial interest
to a person who is required or permitted to take delivery thereof in the form of
an Unrestricted Global Security. Upon receipt by the Trustee of written
instructions, or such other form of instructions as is customary for the
Depositary, from the Depositary or its nominee on behalf of any person having a
beneficial interest in a Restricted Global Security and the following additional
information and documents in such form as is customary for the Depositary from
the Depositary or its nominee on behalf of the person having such beneficial
interest in the Restricted Global Security (all of which may be submitted by
facsimile or electronically):
(1) if such beneficial interest is being transferred pursuant
to an effective registration statement under the Securities Act, a
certification to that effect from the transferor (in substantially the
form set forth in the Transfer Certificate); or
(2) if such beneficial interest is being transferred (i)
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144, (ii) outside the United
States in an offshore transaction within the meaning of Regulation S
under the Securities Act in compliance with Rule 904 under the
Securities Act or (iii) (A) pursuant to an exemption from the
registration requirements of the Securities Act (other than pursuant to
Rule 144A, Rule 144 or Rule 904) and (B) as a result, such Security
shall cease to be a "restricted security" within the meaning of Rule
144, a certification to that effect from the transferor (in
substantially the form set forth in the Transfer Certificate) and, if
the Company or the Trustee so requests, an Opinion of Counsel,
certificates and other information reasonably acceptable to the Company
and the Trustee to the effect that such transfer is in compliance with
the registration requirements of the Securities Act, the Trustee, as a
Registrar and Securities Custodian, shall reduce or cause to be reduced
the aggregate principal amount of the Restricted Global Security by the
appropriate principal amount and shall increase or cause to be
increased the aggregate principal amount of the Unrestricted Global
Security by a like principal amount. Such transfer shall otherwise be
effected in accordance with the
22
Applicable Procedures. If no Unrestricted Global Security is then
outstanding, the Company shall execute and the Trustee shall, upon
receipt of a Company Order (which the Company agrees to deliver
promptly), authenticate and deliver an Unrestricted Global Security.
(d) Transfer of a Beneficial Interest in an Unrestricted
Global Security for a Beneficial Interest in a Restricted Global Security. Any
person having a beneficial interest in an Unrestricted Global Security may upon
request, subject to the Applicable Procedures, transfer such beneficial interest
to a person who is required or permitted to take delivery thereof in the form of
a Restricted Global Security (it being understood that only QIBs may own
beneficial interests in Restricted Global Securities). Upon receipt by the
Trustee of written instructions or such other form of instructions as is
customary for the Depositary, from the Depositary or its nominee, on behalf of
any person having a beneficial interest in an Unrestricted Global Security and,
in such form as is customary for the Depositary, from the Depositary or its
nominee on behalf of the person having such beneficial interest in the
Unrestricted Global Security (all of which may be submitted by facsimile or
electronically) a certification from the transferor (in substantially the form
set forth in the Transfer Certificate) to the effect that such beneficial
interest is being transferred to a person that the transferor reasonably
believes is a QIB in accordance with Rule 144A. The Trustee, as a Registrar and
Securities Custodian, shall reduce or cause to be reduced the aggregate
principal amount of the Unrestricted Global Security by the appropriate
principal amount and shall increase or cause to be increased the aggregate
principal amount of the Restricted Global Security by a like principal amount.
Such transfer shall otherwise be effected in accordance with the Applicable
Procedures. If no Restricted Global Security is then outstanding, the Company
shall execute and the Trustee shall, upon receipt of a Company Order (which the
Company agrees to deliver promptly), authenticate and deliver a Restricted
Global Security.
23
(e) Transfers of Certificated Securities for Beneficial
Interest in Global Securities. In the event that Certificated Securities are
issued in exchange for beneficial interests in Global Securities and,
thereafter, the events or conditions specified in Section 2.08(a)(1) which
required such exchange shall cease to exist, the Company shall mail notice to
the Trustee and to the Holders stating that Holders may exchange Certificated
Securities for interests in Global Securities by complying with the procedures
set forth in this Indenture and briefly describing such procedures and the
events or circumstances requiring that such notice be given. Thereafter, if
Certificated Securities are presented by a Holder to a Registrar with a request:
(x) to register the transfer of such Certificated Securities
to a person who will take delivery thereof in the form of a beneficial
interest in a Global Security, which request shall specify whether such
Global Security will be a Restricted Global Security or an Unrestricted
Global Security; or
(y) to exchange such Certificated Securities for an equal
principal amount of beneficial interests in a Global Security, which
beneficial interests will be owned by the Holder transferring such
Certificated Securities (provided that in the case of such an exchange,
Restricted Certificated Securities may be exchanged only for Restricted
Global Securities and Unrestricted Certificated Securities may be
exchanged only for Unrestricted Global Securities), the Registrar shall
register the transfer or make the exchange as requested by canceling
such Certificated Security and causing, or directing the Securities
Custodian to cause, the aggregate principal amount of the applicable
Global Security to be increased accordingly and, if no such Global
Security is then outstanding, the Company shall issue and the Trustee
shall authenticate and deliver a new Global Security;
provided, however, that the Certificated Securities presented or surrendered for
registration of transfer or exchange:
(1) shall be duly endorsed or accompanied by a written
instrument of transfer in accordance with the provisions of Section
2.08(b)(y)(1);
24
(2) in the case of a Restricted Certificated Security to be
transferred for a beneficial interest in an Unrestricted Global Security, such
request shall be accompanied by the following additional information and
documents, as applicable:
(i) if such Restricted Certificated Security is being
transferred pursuant to an effective registration statement under the
Securities Act, a certification to that effect from such Holder (in
substantially the form set forth in the Transfer Certificate); or
(ii) if such Restricted Certificated Security is being
transferred (x) pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144, (y)
outside the United States in an offshore transaction within the meaning
of Regulation S under the Securities Act in compliance with Rule 904
under the Securities Act or (z)(A) pursuant to an exemption from the
registration requirements of the Securities Act (other than pursuant to
Rule 144A, Rule 144 or Rule 904) and (B) as a result, such Security
shall cease to be a "restricted security" within the meaning of Rule
144, a certification to that effect from such Holder (in substantially
the form set forth in the Transfer Certificate), and, if the Company or
the Registrar so requests, an Opinion of Counsel, certificates and
other information reasonably acceptable to the Company and the Trustee
to the effect that such transfer is in compliance with the registration
requirements of the Securities Act;
(3) in the case of a Restricted Certificated Security to be
transferred or exchanged for a beneficial interest in a Restricted Global
Security, such request shall be accompanied by a certification from such Holder
(in substantially the form set forth in the Transfer Certificate) to the effect
that such Restricted Certificated Security is being transferred to a person the
Holder reasonably believes is a QIB (which, in the case of an exchange, shall be
such Holder) in accordance with Rule 144A;
(4) in the case of an Unrestricted Certificated Security to be
transferred or exchanged for a beneficial
25
interest in an Unrestricted Global Security, such request need not be
accompanied by any additional information or documents; and
(5) in the case of an Unrestricted Certificated Security to be
transferred or exchanged for a beneficial interest in a Restricted Global
Security, such request shall be accompanied by a certification from such Holder
(in substantially the form set forth in the Transfer Certificate) to the effect
that such Unrestricted Certificated Security is being transferred to a person
the Holder reasonably believes is a QIB (which, in the case of an exchange,
shall be such Holder) in accordance with Rule 144A.
(f) Legends.
(1) Except as permitted by the following paragraphs (2) and
(3), each Global Security and Certificated Security (and all Securities issued
in exchange therefor or upon registration of transfer or replacement thereof)
shall bear a legend in substantially the form called for by footnote 2 to
Exhibit A hereto (each a "Transfer Restricted Security" for so long as it is
required by this Indenture to bear such legend). Each Transfer Restricted
Security shall have attached thereto a certificate (a "Transfer Certificate") in
substantially the form called for by footnote 5 to Exhibit A hereto.
(2) Upon any sale or transfer of a Transfer Restricted
Security (v) after the expiration of the holding period applicable to sales of
the Securities under Rule 144(k) of the Securities Act, (w) pursuant to Rule
144, (x) outside the United States in an offshore transaction within the meaning
of Regulation S under the Securities Act in compliance with Rule 904 under the
Securities Act (y) pursuant to an effective registration statement under the
Securities Act or (z)(A) pursuant to any other available exemption (other than
Rule 144A, Rule 144 or Rule 904) from the registration requirements of the
Securities Act and (B) as a result, such Security shall cease to be a
"restricted security" within the meaning of Rule 144:
26
(i) in the case of any Restricted Certificated Security, any
Registrar shall permit the Holder thereof to exchange such Restricted
Certificated Security for an Unrestricted Certificated Security, or
(under the circumstances described in Section 2.08(e) to transfer such
Restricted Certificated Security to a transferee who shall take such
Security in the form of a beneficial interest in an Unrestricted Global
Security, and in each case shall rescind any restriction on the
transfer of such Security; provided, however, that the Holder of such
Restricted Certificated Security shall, in connection with such
exchange or transfer, comply with the other applicable provisions of
this Section 2.08; and
(ii) in the case of any beneficial interest in a Restricted
Global Security, the Trustee shall permit the beneficial owner thereof
to transfer such beneficial interest to a transferee who shall take
such interest in the form of a beneficial interest in an Unrestricted
Global Security and shall rescind any restriction on transfer of such
beneficial interest; provided, however, that such Unrestricted Global
Security shall continue to be subject to the provisions of Section
2.08(a)(2); and provided further, that the owner of such beneficial
interest shall, in connection with such transfer, comply with the other
applicable provisions of this Section 2.07.
(3) Upon the exchange, registration of transfer or replacement
of Securities not bearing the legend described in paragraph (1) above, the
Company shall execute, and the Trustee shall authenticate and deliver Securities
that do not bear such legend and that do not have a Transfer Certificate
attached thereto.
(4) After the expiration of the holding period pursuant to
Rule 144(k) of the Securities Act, the Company may with the consent of the
Holder of a Restricted Global Security or Restricted Certificated Security,
remove any restriction of transfer on such Security, and the Company shall
execute, and the Trustee shall authenticate and deliver Securities that do not
bear such legend and that do not have a Transfer Certificate attached thereto.
(g) Transfers to the Company. Nothing in this Indenture or in
the Securities shall prohibit the sale or
27
other transfer of any Securities (including beneficial interests in Global
Securities) to the Company or any of its Subsidiaries.
(h) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or
obligation to any beneficial owner of a Global Security, a
member of, or a participant in the Depository or other Person
with respect to the accuracy of the books or records, or the
acts or omissions, of the Depository or its nominee or of any
participant or member thereof, with respect to any ownership
interest in the Securities or with respect to the delivery to
any participant, member, beneficial owner or other Person
(other than the Depository) of any notice (including any
notice of redemption) or the payment of any amount, under or
with respect to such Securities. All notices and
communications to be given to the Holders and all payments to
be made to Holders under the Securities shall be given or made
only to or upon the order of the registered Holders (which
shall be the Depository or its nominee in the case of a Global
Security). The rights of beneficial owners in any Global
Security shall be exercised only through the Depository
subject to the Applicable Procedures of the Depository. The
Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its
members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under this Indenture or under
applicable law with respect to any transfer of any interest in
any Security (including any transfers between or among
Depository participants, members or beneficial owners in any
Global Security) other than to require delivery of such
certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly
required by, the terms of this Indenture, and to examine the
same to determine substantial
28
compliance as to form with the express requirements hereof.
SECTION 2.09. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption or purchase as a
convenience to Holders; provided, however, that any such notice may state that
no representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of a redemption or
purchase and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption or purchase shall not
be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the "CUSIP" numbers.
SECTION 2.10. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
this Indenture are met and the Holder satisfies any other reasonable
requirements of the Trustee. If required by the Trustee or the Company, such
Holder shall furnish an indemnity bond sufficient in the judgment of the Company
and the Trustee to protect the Company, the Trustee, the Paying Agent, the
Registrar and any co-registrar from any loss which any of them may suffer if a
Security is replaced. The Company and the Trustee may charge the Holder for
their expenses in replacing a Security.
Upon the issuance of any new Securities under this Section
2.10, the Company or the Registrar may require the payment by a Holder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.11. Outstanding Securities. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
cancelled by it, those delivered to it for cancellation and those described in
this
29
Section as not outstanding. A Security does not cease to be outstanding because
the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.10, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser, in which
case the replacement Security shall cease to be outstanding, subject to the
provisions of this Indenture.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, and the Paying Agent is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture, then on
and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.12. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate definitive Securities
and deliver them in exchange for temporary Securities.
SECTION 2.13. Cancellation. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else shall
cancel and destroy all Securities surrendered for registration of transfer,
exchange, payment or cancellation and deliver a certificate of such destruction
to the Company unless the Company directs the Trustee to deliver cancelled
Securities to the Company. The Company may not issue new Securities to replace
Securities it has redeemed, paid or delivered to the Trustee for cancellation.
30
SECTION 2.14. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
ARTICLE 3
Redemption
SECTION 3.01. Optional Redemption. At any time on or after
November 20, 2005, the Company may redeem any portion of the Securities
("Optional Redemption") upon giving notice as set forth in Section 3.04 at the
Redemption Prices (an "Optional Redemption Price") specified in paragraph 5 of
the form of Security attached hereto as Exhibit A; provided, however, that if
the redemption date (the "Optional Redemption Date") falls after an interest
payment record date and on or before an interest payment date, then the interest
payment will be payable to the Holders in whose name the Securities are
registered at the close of business on the relevant record date for payment of
such interest. If the Company elects to redeem Securities pursuant to this
Section 3.01 and paragraph 5 of the Securities, it shall notify the Trustee, at
the earlier of the time the Company notifies the Holders of such redemption or
45 days prior to the Optional Redemption Date as fixed by the Company (unless a
shorter notice shall be satisfactory to the Trustee), of the Optional Redemption
Date and the principal amount of Securities to be redeemed. If fewer than all of
the Securities are to be redeemed, the record date relating to such redemption
shall be selected by the Company and given to the Trustee, which record date
shall not be less than ten days after the date of notice of the Trustee.
SECTION 3.02. Notices to Trustee. If the Company elects to
redeem the Securities pursuant to paragraph 5 of the Securities, it shall notify
the Trustee in writing of the redemption date, the principal amount of
Securities to
31
be redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
SECTION 3.03. Selection of Securities to Be Redeemed. If fewer
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any, and that the
Trustee in its sole discretion considers to be fair and appropriate. The Trustee
shall make the selection from outstanding Securities not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Securities that have denominations larger than $1,000. Securities and portions
of them the Trustee selects shall be in amounts of $1,000 or a whole multiple of
$1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Trustee shall notify the Company promptly of the Securities or portions of
Securities to be redeemed. If any Security selected for partial redemption is
converted in part before termination of the conversion right with respect to the
portion of the Security so selected, the converted portion of such Security
shall be deemed to be the portion selected for redemption. Securities which have
been converted during the selection of Securities to be redeemed shall be
treated by the Trustee as outstanding for the purpose of such selection.
SECTION 3.04. Notice of Redemption. At least 20 days but not
more than 60 days before a date for an Optional Redemption Date of Securities,
the Company shall mail or deliver a notice of redemption to each Holder of
Securities to be redeemed at such Holder's registered address.
The notice shall identify the Securities (including CUSIP
numbers) to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) the then-current Conversion Price;
32
(5) that Securities called for redemption must be surrendered
to the Paying Agent to collect the Optional Redemption Price;
(6) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts of the particular
Securities to be redeemed;
(7) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, interest on Securities
(or portion thereof) called for redemption ceases to accrue on and
after the redemption date;
(8) that Holders who wish to convert Securities must surrender
such Securities for conversion no later than the close of business on
the Business Day immediately preceding the Optional Redemption Date and
must satisfy the other requirements in paragraph 8 of the Securities;
(9) the paragraph of the Securities pursuant to which the
Securities called for redemption are being redeemed; and
(10) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
If any of the Securities to be redeemed is in the form of a Global Security,
then the Company shall modify such notice to the extent necessary, to accord
with the Applicable Procedures of the Depositary applicable to redemptions.
At the Company's request, upon at least five (5) days prior
notice to the Trustee, the Trustee shall give the notice of redemption in the
Company's name and at the Company's expense. In such event, the Company shall
provide the Trustee with the information required by this Section.
SECTION 3.05. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the Optional Redemption Date and at the Optional Redemption Price stated in the
notice, except for Securities that are converted in accordance with the
provisions of Article 5. Upon surrender
33
to the Paying Agent, such Securities shall be paid at the Optional Redemption
Price stated in the notice, plus accrued interest to the Optional Redemption
Date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date) and such Securities
will be delivered to the Trustee for cancellation. Failure to give notice or any
defect in the notice to any Holder shall not affect the validity of the notice
to any other Holder.
SECTION 3.06. Deposit of Redemption Price. Prior to the
Optional Redemption Date, the Company shall deposit with the Paying Agent (or,
if the Company or a Subsidiary is the Paying Agent, shall segregate and hold in
trust) money sufficient to pay the Optional Redemption Price of and accrued
interest (subject to the right of Holders of record on the relevant record date
to receive interest due on the relevant interest payment date) on all Securities
to be redeemed on that date other than Securities or portions of Securities
called for redemption which have been delivered by the Company to the Trustee
for cancellation or conversion. The Paying Agent shall return to the Company any
money not required for that purpose because of the conversion of the Securities
pursuant to Article 5.
SECTION 3.07. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security surrendered.
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities. The Company shall
promptly pay the principal of and interest on the Securities on the dates and in
the manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee or
the Paying Agent holds in accordance with this Indenture money sufficient to pay
all principal and interest then due and the Trustee or the Paying Agent, as the
case may be, is not prohibited from paying such money to the
34
Securityholders on that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful. The conversion
of any Securities pursuant to Article 5 hereof, together with the making of any
cash payments required to be made in accordance with the terms of the Securities
and this Indenture, shall satisfy the Company's obligations under this Section
4.01 with respect to such Securities.
SECTION 4.02. SEC Reports. Whether or not subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
will file with the SEC and provide the Trustee with such annual reports and such
information, documents and other reports as are specified in Sections 13 and
15(d) of the Exchange Act and applicable to a U.S. corporation subject to such
Sections, at the times specified for such filings under such Sections. The
Company also shall comply with the other provisions of TIA Section 314(a) as may
be required under the provisions of the TIA. Delivery of such reports,
information and documents to the Trustee is for informational purposes only and
the Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely on an Officer's Certificate).
SECTION 4.03. Compliance Certificates. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company certificates of the principal executive officer, the principal financial
officer or the principal accounting officer of the Company stating whether or
not the signer knows of any Default that occurred during such Period. If such
signer does, the certificate shall describe the Default, its status and what
action the Company is taking or proposes to take with respect thereto. The
Company also shall comply with TIA Section 314(a)(4).
SECTION 4.04 Further Instruments and Acts. Upon
35
request of the Trustee, the Company will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to
carry out more effectively the purpose of this Indenture.
SECTION 4.05. Maintenance of Corporate Existence. Except as
otherwise permitted in this Indenture, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence.
SECTION 4.06. Payment of Additional Interest. If Additional
Interest is payable by the Company pursuant to the Registration Rights
Agreement, the Company shall deliver to the Trustee a certificate to that effect
stating (i) the amount of such Additional Interest that is payable and (ii) the
date on which such Additional Interest is payable. Unless and until a Trust
Officer of the Trustee receives such a certificate, the Trustee may assume
without inquiry that no such Additional Interest is payable. If the Company has
paid Additional Interest directly to the Persons entitled to it, the Company
shall deliver to the Trustee a certificate setting forth the particulars of such
payment.
SECTION 4.07. Purchase of Securities at Option of the Holder
upon Change in Control. (a) If at any time that Securities remain outstanding
there shall occur a Change in Control, Securities shall be purchased by the
Company at the option of the Holders thereof as of the date that is no less than
30 and no more than 60 days from the date such notice is mailed or delivered as
required by paragraph (b) of this Section 4.07, (the "Change in Control Purchase
Date") at a purchase price equal to the principal amount of the Securities, plus
accrued and unpaid interest to, but excluding, the Change in Control Purchase
Date (the "Change in Control Purchase Price"), subject to satisfaction by or on
behalf of any Holder of the requirements set forth in subsection (c) of this
Section 4.07.
A "Change in Control" shall be deemed to have occurred if any
of the following occurs after the date hereof:
(1) any "person" or "group" is or becomes the "beneficial
owner" (as defined below), directly or indirectly, of shares of Voting
Stock of the Company representing 50% or more of the total voting power
of
36
all outstanding classes of Voting Stock of the Company or such person
or group has the power, directly or indirectly, to elect a majority of
the members of the Board of Directors of the Company; or
(2) the Company consolidates with, or merges with or into,
another Person or the Company sells, assigns, conveys, transfers,
leases or otherwise disposes of all or substantially all of its assets,
or any Person consolidates with, or merges with or into, the Company,
in any such event other than pursuant to a transaction in which the
Persons that "beneficially owned" (as defined below), directly or
indirectly, shares of Voting Stock of the Company immediately prior to
such transaction "beneficially own" (as defined below), directly or
indirectly, shares of Voting Stock representing at least a majority of
the total voting power of all outstanding classes of Voting Stock of
the surviving or transferee Person; or
(3) the adoption of a plan relating to the liquidation or
dissolution of the Company.
For the purpose of the definition of "Change in Control", (i)
"person" and "group" have the meanings given to them for purposes of Section
13(d) and 14(d) of the Exchange Act or any successor provisions, and the term
"group" includes any group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act (or any successor provision thereto), (ii) a "beneficial owner"
shall be determined in accordance with Rule 13D-3 under the Exchange Act, as in
effect on the date of this Indenture, except that the number of shares of Voting
Stock of the Company shall be deemed to include, in addition to all outstanding
shares of Voting Stock of the Company and Unissued Shares deemed to be held by
the "person" or "group" (as such terms are defined above) or other Person with
respect to which the Change in Control determination is being made, all Unissued
Shares deemed to be held by all other Persons, (iii) "beneficially owned" has a
meaning correlative to that of beneficial owner and (iv) "Unissued Shares" means
shares of Voting Stock of the Company not outstanding that are subject to
options, warrants, rights to purchase or conversion privileges exercisable
within 60 days of the date of determination of a Change in Control.
37
Notwithstanding anything to the contrary set forth in this Section 4.07, a
Change in Control will not be deemed to have occurred if either:
(1) the Closing Price of the Company's Common Stock for any
five Trading Days during the ten Trading Days immediately preceding the
Change in Control is at least equal to 105% of the Conversion Price in
effect on such Trading Day; or
(2) in the case of a merger or consolidation, at least 75% of
the consideration excluding cash payments for fractional shares in the
merger or consolidation constituting the Change in Control consists of
common stock traded on a United States national securities exchange or
quoted on The Nasdaq National Market (or which will be so traded or
quoted when issued or exchanged in connection with such Change in
Control) and as a result of such transaction or transactions the
Securities become convertible solely into such common stock.
(b) Within 10 Business Days after the occurrence of a Change
in Control, the Company shall mail a written notice of the Change in Control to
the Trustee (and the Paying Agent if the Trustee is not then acting as Paying
Agent) and to each Holder (and to beneficial owners as required by applicable
law). The notice shall include the form of a Change in Control Purchase Notice
to be completed by the Holder and shall state:
(1) the date of such Change in Control and, briefly, the
events causing such Change in Control;
(2) the date by which the Change in Control Purchase Notice
pursuant to this Section 4.07 must be given;
(3) the Change in Control Purchase Date;
(4) the Change in Control Purchase Price;
(5) the name and address of each Paying Agent and Conversion
Agent;
(6) the Conversion Price and any adjustments thereto;
38
(7) that Securities as to which a Change in Control Purchase
Notice has been given may be converted into Common Stock pursuant to
Article 5 of this Indenture only to the extent that the Change in
Control Purchase Notice has been withdrawn in accordance with the terms
of this Indenture;
(8) the procedures that the Holder must follow to exercise
rights under this Section 4.07;
(9) the procedures for withdrawing a Change in Control
Purchase Notice, including a form of notice of withdrawal; and
(10) that the Holder must satisfy the requirements set forth
in the Securities in order to convert the Securities.
If any of the Securities is in the form of a Global Security,
then the Company shall modify such notice to the extent necessary to accord with
the procedures of the Depositary applicable to the repurchase of Global
Securities.
(c) A Holder may exercise its rights specified in subsection
(a) of this Section 4.07 upon delivery of a written notice (which shall be in
substantially the form included in Exhibit A hereto and which may be delivered
by letter, overnight courier, hand delivery, facsimile transmission or in any
other written form and, in the case of Global Securities, may be delivered
electronically or by other means in accordance with the Depositary's customary
procedures) of the exercise of such rights (a "Change in Control Purchase
Notice") to any Paying Agent at any time prior to the close of business on the
Business Day next preceding the Change in Control Purchase Date.
The delivery of such Security to any Paying Agent (together
with all necessary endorsements) at the office of such Paying Agent shall be a
condition to the receipt by the Holder of the Change in Control Purchase Price
therefor.
The Company shall purchase from the Holder thereof, pursuant
to this Section 4.07, a portion of a Security if the principal amount of such
portion is $1,000 or an integral multiple of $1,000. Provisions of the Indenture
that apply to the purchase of all of a Security
39
pursuant to Sections 4.07 through 4.12 also apply to the purchase of such
portion of such Security.
Notwithstanding anything herein to the contrary, any Holder
delivering to a Paying Agent the Change in Control Purchase Notice contemplated
by this subsection (c) shall have the right to withdraw such Change in Control
Purchase Notice in whole or in a portion thereof that is a principal amount of
$1,000 or in an integral multiple thereof at any time prior to the close of
business on the Business Day next preceding the Change in Control Purchase Date
by delivery of a written notice of withdrawal to the Paying Agent in accordance
with Section 4.08.
A Paying Agent shall promptly notify the Company of the
receipt by it of any Change in Control Purchase Notice or written withdrawal
thereof.
Anything herein to the contrary notwithstanding, in the case
of Global Securities, any Change in Control Purchase Notice may be delivered or
withdrawn and such Securities may be surrendered or delivered for purchase in
accordance with the Applicable Procedures as in effect from time to time.
SECTION 4.08. Effect of Change in Control Purchase Notice.
Upon receipt by any Paying Agent of the Change in Control Purchase Notice
specified in Section 4.07(c), the Holder of the Security in respect of which
such Change in Control Purchase Notice was given shall (unless such Change in
Control Purchase Notice is withdrawn as specified below) thereafter be entitled
to receive the Change in Control Purchase Price with respect to such Security.
Such Change in Control Purchase Price shall be paid to such Holder promptly
following the later of (a) the Change in Control Purchase Date with respect to
such Security (provided the conditions in Section 4.07(c) have been satisfied)
and (b) the time of delivery of such Security to a Paying Agent by the Holder
thereof in the manner required by Section 4.07(c). Securities in respect of
which a Change in Control Purchase Notice has been given by the Holder thereof
may not be converted into shares of Common Stock on or after the date of the
delivery of such Change in Control Purchase Notice unless such Change in Control
Purchase Notice has first been validly withdrawn.
40
A Change in Control Purchase Notice may be withdrawn by means
of a written notice (which may be delivered by letter, overnight courier, hand
delivery, facsimile transmission or in any other written form and, in the case
of Global Securities, may be delivered electronically or by other means in
accordance with the Depositary's customary procedures) of withdrawal delivered
by the Holder to a Paying Agent at any time prior to the close of business on
the Business Day immediately preceding the Change in Control Purchase Date,
specifying the principal amount of the Security or portion thereof (which must
be a principal amount of $1,000 or an integral multiple of $1,000 in excess
thereof) with respect to which such notice of withdrawal is being submitted.
SECTION 4.09. Deposit of Change in Control Purchase Price. On
or before 11:00 a.m. New York City time on the Change in Control Purchase Date,
the Company shall deposit with the Trustee or with a Paying Agent (other than
the Company or an Affiliate of the Company) an amount of money (in immediately
available funds if deposited on such Business Day) sufficient to pay the
aggregate Change in Control Purchase Price of all the Securities or portions
thereof that are to be purchased as of such Change in Control Purchase Date. The
manner in which the deposit required by this Section 4.09 is made by the Company
shall be at the option of the Company, provided that such deposit shall be made
in a manner such that the Trustee or a Paying Agent shall have immediately
available funds on the Change in Control Purchase Date.
If a Paying Agent holds, in accordance with the terms hereof,
money sufficient to pay the Change in Control Purchase Price of any Security for
which a Change in Control Purchase Notice has been tendered and not withdrawn in
accordance with this Indenture then, on the Change in Control Purchase Date,
such Security will cease to be outstanding and the rights of the Holder in
respect thereof shall terminate (other than the right to receive the Change in
Control Purchase Price as aforesaid). The Company shall publicly announce the
principal amount of Securities purchased as a result of such Change in Control
on or as soon as practicable after the Change in Control Purchase Date.
SECTION 4.10. Securities Purchased in Part. Any Security that
is to be purchased only in part shall be surrendered at the office of a Paying
Agent and promptly
41
after the Change in Control Purchase Date the Company shall execute and the
Trustee shall authenticate and deliver to the Holder of such Security, without
service charge, a new Security or Securities, of such authorized denomination or
denominations as may be requested by such Holder, in aggregate principal amount
equal to, and in exchange for, the portion of the principal amount of the
Security so surrendered that is not purchased.
SECTION 4.11. Compliance with Securities Laws upon Purchase of
Securities. In connection with any offer to purchase or purchase of Securities
under Section 4.07, the Company shall (a) comply with Rule 13e-4 and Rule 14e-1
(or any successor to either such Rule), if applicable, under the Exchange Act,
(b) file the related Schedule TO (or any successor or similar schedule, form or
report) if required under the Exchange Act, and (c) otherwise comply with all
federal and state securities laws in connection with such offer to purchase or
purchase of Securities, all so as to permit the rights of the Holders and
obligations of the Company under Sections 4.07 through 4.10 to be exercised in
the time and in the manner specified therein.
SECTION 4.12 Repayment to the Company. To the extent that the
aggregate amount of cash deposited by the Company pursuant to Section 4.09
exceeds the aggregate Change in Control Purchase Price together with interest,
if any, thereon of the Securities or portions thereof that the Company is
obligated to purchase, then promptly after the Change in Control Purchase Date
the Trustee or a Paying Agent, as the case may be, shall return any such excess
cash (including any interest thereon) to the Company.
ARTICLE 5
Conversion
42
SECTION 5.01. Conversion Privilege. Subject to the further
provisions of this Article 5, a Holder of a Security may, at the Holder's
option, convert the principal amount of such Security (or any portion thereof
equal to $1,000 or any integral multiple of $1,000 in excess thereof) into
Common Stock at any time prior to the close of business on the Business Day
immediately proceeding November 15, 2007, the Conversion Price then in effect;
provided, however, that, if such Security is called for redemption or submitted
or presented for purchase pursuant to Article 4, such conversion right shall
terminate at the close of business on the Business Day immediately preceding the
Optional Redemption Date or Change in Control Purchase Date, as the case may be,
for such Security or such earlier date as the Holder presents such Security for
redemption or for purchase (unless the Company shall default in making the
redemption payment or Change in Control Purchase Price payment when due, in
which case the conversion right shall terminate at the close of business on the
date such default is cured and such Security is redeemed or purchased, as the
case may be). The number of shares of Common Stock issuable upon conversion of a
Security shall be determined by dividing the principal amount of the Security or
portion thereof surrendered for conversion by the Conversion Price in effect on
the Conversion Date. The initial Conversion Price is set forth in paragraph 8 of
the Securities and is subject to adjustment as provided in this Article 5.
Provisions of this Indenture that apply to conversion of all
of a Security also apply to conversion of a portion of a Security.
A Security in respect of which a Holder has delivered a Change
in Control Purchase Notice pursuant to Section 4.07(c) exercising the option of
such Holder to require the Company to purchase such Security may be converted
only if such Change in Control Purchase Notice is withdrawn by a written notice
of withdrawal delivered to a Paying Agent prior to the close of business on the
Business Day immediately preceding the Change in Control Purchase Date in
accordance with Section 4.08.
A Holder of Securities is not entitled to any rights of a
holder of Common Stock until such Holder has converted its Securities into
Common Stock, and only to the extent such Securities are deemed to have been
converted into Common Stock pursuant to this Article 5.
43
SECTION 5.02. Conversion Procedure. To convert a Security, a
Holder must (a) complete and manually sign the conversion notice on the back of
the Security and deliver such notice to a Conversion Agent, (b) surrender the
Security to a Conversion Agent, (c) furnish appropriate endorsements and
transfer documents if required by a Registrar or a Conversion Agent, and (d) pay
any transfer or similar tax, if required. The date on which the Holder satisfies
all of those requirements is the "Conversion Date". As soon as practicable after
the Conversion Date, the Company shall deliver to the Holder through a
Conversion Agent a certificate for the number of whole shares of Common Stock
issuable upon the conversion and cash in lieu of any fractional shares pursuant
to Section 5.03. Anything herein to the contrary notwithstanding, in the case of
Global Securities, conversion notices may be delivered and such Securities may
be surrendered for conversion in accordance with the Applicable Procedures as in
effect from time to time.
The person in whose name the Common Stock certificate is
registered shall be deemed to be a stockholder of record on the Conversion Date;
provided, however, that no surrender of a Security on any date when the stock
transfer books of Company shall be closed shall be effective to constitute the
person or persons entitled to receive the shares of Common Stock upon such
conversion as the record holder or holders of such shares of Common Stock on
such date, but such surrender shall be effective to constitute the person or
persons entitled to receive such shares of Common Stock as the record holder or
holders thereof for all purposes at the close of business on the next succeeding
day on which such stock transfer books are open; provided further, however, that
such conversion shall be at the Conversion Price in effect on the Conversion
Date as if the stock transfer books of Company had not been closed. Upon
conversion of a Security, such person shall no longer be a Holder of such
Security. No payment or adjustment will be made for dividends or distributions
on shares of Common Stock issued upon conversion of a Security.
Securities so surrendered for conversion (in whole or in part)
during the period from the close of business on any regular record date to the
opening of business on the next succeeding interest payment date (excluding
Securities or portions thereof which are either (i) called for
44
redemption or (ii) subject to purchase following a Change in Control, in either
case, on a date during the period beginning at the close of business on a
regular record date and ending at the opening of business on the first Business
Day after the next succeeding interest payment date, or if such interest payment
date is not a Business Day, the second such Business Day) shall also be
accompanied by payment in funds acceptable to the Company in an amount equal to
the interest payable on such interest payment date on the principal amount of
such Security then being converted, and such interest shall be payable to such
registered Holder notwithstanding the conversion of such Security, subject to
the provisions of this Indenture relating to the payment of defaulted interest
by the Company. Except as otherwise provided in this Section 5.02, no payment or
adjustment will be made for accrued interest on a converted Security. If the
Company defaults in the payment of interest payable on such interest payment
date, the Company shall promptly repay such funds to such Holder.
Nothing in this Section shall affect the right of a Holder in
whose name any Security is registered at the close of business on a record date
to receive the interest payable on such Security on the related interest payment
date in accordance with the terms of this Indenture and the Securities. If a
Holder converts more than one Security at the same time, the number of shares of
Common Stock issuable upon the conversion shall be based on the aggregate
principal amount of Securities converted.
Upon surrender of a Security that is converted in part, the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder, a new Security equal in principal amount to the unconverted portion of
the Security surrendered.
SECTION 5.03. Fractional Shares. The Company will not issue
fractional shares of Common Stock upon conversion of Securities. In lieu
thereof, the Company will pay an amount in cash based upon the Closing Price of
the Common Stock on the Trading Day immediately prior to the Conversion Date.
SECTION 5.04. Taxes on Conversion. If a Holder converts a
Security, the Company shall pay any documentary, stamp or similar issue or
transfer tax due on the issue of shares of Common Stock upon such conversion.
However, the
45
Holder shall pay any such tax which is due because the Holder requests the
shares to be issued in a name other than the Holder's name. The Conversion Agent
may refuse to deliver the certificate representing the Common Stock being issued
in a name other than the Holder's name until the Conversion Agent receives a sum
sufficient to pay any tax which will be due because the shares are to be issued
in a name other than the Holder's name. Nothing herein shall preclude any tax
withholding required by law or regulation.
SECTION 5.05. Company To Provide Stock. The Company shall,
prior to issuance of any Securities hereunder, and from time to time as may be
necessary, reserve, out of its authorized but unissued Common Stock, a
sufficient number of shares of Common Stock to permit the conversion of all
outstanding Securities into shares of Common Stock.
All shares of Common Stock delivered upon conversion of the
Securities shall be newly issued shares, shall be duly authorized, validly
issued, fully paid and nonassessable and shall be free from preemptive rights
and free of any lien or adverse claim.
The Company will endeavor promptly to comply with all federal
and state securities laws regulating the offer and delivery of shares of Common
Stock upon conversion of Securities, if any, and will list or cause to have
quoted such shares of Common Stock on each national securities exchange or on
The Nasdaq National Market or other over-the-counter market or such other market
on which the Common Stock is then listed or quoted; provided, however, that if
rules of such automated quotation system or exchange permit the Company to defer
the listing of such Common Stock until the first conversion of the Securities
into Common Stock in accordance with the provisions of this Indenture, the
Company covenants to list such Common Stock issuable upon conversion of the
Securities in accordance with the requirements of such automated quotation
system or exchange at such time.
46
SECTION 5.06. Adjustment of Conversion Price. The conversion
price as stated in paragraph 8 of the Securities (the "Conversion Price") shall
be adjusted from time to time by the Company as follows:
(a) In case the Company shall (i) pay a dividend on its Common
Stock in shares of Common Stock, (ii) make a distribution on its Common
Stock in shares of Common Stock, (iii) subdivide its outstanding Common
Stock into a greater number of shares, or (iv) combine its outstanding
Common Stock into a smaller number of shares, the Conversion Price in
effect immediately prior thereto shall be adjusted so that the Holder
of any Security thereafter surrendered for conversion shall be entitled
to receive that number of shares of Common Stock which it would have
owned had such Security been converted immediately prior to the
happening of such event. An adjustment made pursuant to this subsection
(a) shall become effective immediately after the record date in the
case of a dividend or distribution and shall become effective
immediately after the effective date in the case of subdivision or
combination.
(b) In case the Company shall issue rights or warrants to all
or substantially all holders of its Common Stock entitling them (for a
period commencing no earlier than the record date described below and
expiring not more than 60 days after such record date) to subscribe for
or purchase shares of Common Stock (or securities convertible into
Common Stock) at a price per share (or having a conversion price per
share) less than the Current Market Price Per Share of Common Stock on
the record date for the determination of stockholders entitled to
receive such rights or warrants, the Conversion Price in effect
immediately prior thereto shall be adjusted so that the same shall
equal the price determined by multiplying the Conversion Price in
effect immediately prior to such record date by a fraction of which (x)
the numerator shall be the number of shares of Common Stock outstanding
on such record date plus the number of shares which the aggregate
offering price of the total number of shares of Common Stock so offered
(or the aggregate conversion price of the convertible securities so
offered, which shall be determined by multiplying the number of shares
of Common Stock
47
issuable upon conversion of such convertible securities by the
conversion price per share of Common Stock pursuant to the terms of
such convertible securities) would purchase at the Current Market Price
Per Share of Common Stock on such record date, and of which (y) the
denominator shall be the number of shares of Common Stock outstanding
on such record date plus the number of additional shares of Common
Stock offered (or into which the convertible securities so offered are
convertible). Such adjustment shall be made successively whenever any
such rights or warrants are issued, and shall become effective
immediately after such record date. If at the end of the period during
which such rights or warrants are exercisable not all rights or
warrants shall have been exercised, the adjusted Conversion Price shall
be immediately readjusted to what it would have been based upon the
number of additional shares of Common Stock actually issued (or the
number of shares of Common Stock issuable upon conversion of
convertible securities actually issued).
(c) In case the Company shall distribute to all or
substantially all holders of its Common Stock any shares of capital
stock of the Company (other than Common Stock), evidences of
indebtedness or other non-cash assets (including securities of any
person other than the Company but excluding (1) dividends or
distributions paid in cash or (2) dividends or distributions referred
to in subsection (a) of this Section 5.06), or shall distribute to all
or substantially all holders of its Common Stock rights or warrants to
subscribe for or purchase any of its securities (excluding those rights
and warrants referred to in subsection (b) of this Section 5.06 and
also excluding the distribution of rights to all holders of Common
Stock pursuant to the adoption of a stockholders rights plan or the
detachment of such rights under the terms of such stockholder rights
plan), then in each such case the Conversion Price shall be adjusted so
that the same shall equal the price determined by multiplying the
current Conversion Price by a fraction of which the numerator shall be
the Current Market Price Per Share of the Common Stock on the record
date mentioned below less the fair market value on such record date (as
reasonably determined in good faith by the Board of Directors of the
Company,
48
whose determination shall be conclusive evidence of such fair market
value and which shall be evidenced by an Officers' Certificate
delivered to the Trustee) of the portion of the capital stock,
evidences of indebtedness or other non-cash assets so distributed or of
such rights or warrants applicable to one share of Common Stock
(determined on the basis of the number of shares of Common Stock
outstanding on the record date), and of which the denominator shall be
the Current Market Price Per Share of the Common Stock on such record
date. Such adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the
record date for the determination of shareholders entitled to receive
such distribution.
(d) In case the Company shall, by dividend or otherwise, at
any time distribute (a "Triggering Distribution") to all or
substantially all holders of its Common Stock cash in an aggregate
amount that, together with the aggregate amount of (i) any cash and the
fair market value (as reasonably determined in good faith by the Board
of Directors of the Company, whose determination shall be conclusive
evidence thereof and which shall be evidenced by an Officers'
Certificate delivered to the Trustee) of any other consideration
payable in respect of any tender offer by the Company or a Subsidiary
of the Company for Common Stock consummated within the 12 months
preceding the date of payment of the Triggering Distribution and in
respect of which no Conversion Price adjustment pursuant to this
Section 5.06 has been made and (ii) all other cash distributions to all
or substantially all holders of its Common Stock made within the 12
months preceding the date of payment of the Triggering Distribution and
in respect of which no Conversion Price adjustment pursuant to this
Section 5.06 has been made, exceeds an amount equal to 10.0% of the
product of the Current Market Price Per Share of Common Stock on the
Business Day (the "Determination Date") immediately preceding the day
on which such Triggering Distribution is declared by the Company
multiplied by the number of shares of Common Stock outstanding on the
Determination Date (excluding shares held in the treasury of the
Company), the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying such Conversion Price in
effect immediately
49
prior to the Determination Date by a fraction of which the numerator
shall be the Current Market Price Per Share of the Common Stock on the
Determination Date less the sum of the aggregate amount of cash and the
aggregate fair market value (as reasonably determined in good faith by
the Board of Directors of the Company, whose determination shall be
conclusive evidence of such fair market value and which shall be
evidenced by an Officers' Certificate delivered to the Trustee) of any
such other consideration so distributed, paid or payable within such 12
months (including, without limitation, the Triggering Distribution)
applicable to one share of Common Stock (determined on the basis of the
number of shares of Common Stock outstanding on the Determination Date)
and the denominator shall be such Current Market Price Per Share of the
Common Stock on the Determination Date, such reduction to become
effective immediately prior to the opening of business on the day
following the date on which the Triggering Distribution is paid.
(e) (1) In case any tender offer made by the Company for
Common Stock shall expire and such tender offer (as amended upon the
expiration thereof) shall involve the payment of aggregate
consideration in an amount (determined as the sum of the aggregate
amount of cash consideration and the aggregate fair market value (as
reasonably determined in good faith by the Board of Directors of the
Company, whose determination shall be conclusive evidence thereof and
which shall be evidenced by an Officers' Certificate delivered to the
Trustee) of any other consideration) that, together with the aggregate
amount of (i) any cash and the fair market value (as reasonably
determined in good faith by the Board of Directors of the Company,
whose determination shall be conclusive evidence thereof and which
shall be evidenced by an Officers' Certificate delivered to the
Trustee) of any other consideration payable in respect of any other
tender offers by the Company or any Subsidiary of the Company for
Common Stock consummated within the 12 months preceding the date of the
Expiration Date (as defined below) and in respect of which no
Conversion Price adjustment pursuant to this Section 5.06 has been made
and (B) all cash distributions to all or substantially all holders of
its Common Stock made within the 12 months preceding
50
the Expiration Date and in respect of which no Conversion Price
adjustment pursuant to this Section 5.06 has been made, exceeds an
amount equal to 10.0% of the product of the Current Market Price Per
Share of Common Stock as of the last date (the "Expiration Date")
tenders could have been made pursuant to such tender offer (as it may
be amended) (the last time at which such tenders could have been made
on the Expiration Date is hereinafter sometimes called the "Expiration
Time") multiplied by the number of shares of Common Stock outstanding
(including tendered shares but excluding any shares held in the
treasury of the Company) at the Expiration Time, then, immediately
prior to the opening of business on the day after the Expiration Date,
the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect
immediately prior to the close of business on the Expiration Date by a
fraction of which the numerator shall be the product of the number of
shares of Common Stock outstanding (including tendered shares but
excluding any shares held in the treasury of the Company) at the
Expiration Time multiplied by the Current Market Price Per Share of the
Common Stock on the Trading Day next succeeding the Expiration Date and
the denominator shall be the sum of (x) the aggregate consideration
(determined as aforesaid) payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the tender
offer) of all shares validly tendered and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum,
being referred to as the "Purchased Shares") and (y) the product of the
number of shares of Common Stock outstanding (less any Purchased Shares
and excluding any shares held in the treasury of the Company) at the
Expiration Time and the Current Market Price Per Share of Common Stock
on the Trading Day next succeeding the Expiration Date, such reduction
to become effective immediately prior to the opening of business on the
day following the Expiration Date. In the event that the Company is
obligated to purchase shares pursuant to any such tender offer, but the
Company is permanently prevented by applicable law from effecting any
or all such purchases or any or all such purchases are rescinded, the
Conversion Price shall again be adjusted to be the Conversion Price
which would have been in effect based upon the number of
51
shares actually purchased. If the application of this Section 5.06(e)
to any tender offer would result in an increase in the Conversion
Price, no adjustment shall be made for such tender offer under this
Section 5.06(e).
(2) For purposes of Section 5.06(d) and 5.06(e), the term
"tender offer" shall mean and include both tender offers and exchange
offers (within the meaning of U.S. Federal securities laws), all
references to "purchases" of shares in tender offers (and all similar
references) shall mean and include both the purchase of shares in
tender offers and the acquisition of shares pursuant to exchange
offers, and all references to "tendered shares" (and all similar
references) shall mean and include shares tendered in both tender
offers and exchange offers.
(f) For the purpose of any computation under subsections (b),
(c), (d) and (e) of this Section 5.06, the current market price per
share of Common Stock (the "Current Market Price Per Share") on any
date shall be deemed to be the average of the daily Closing Prices for
the 30 consecutive Trading Days commencing 45 Trading Days before (i)
the Determination Date or the Expiration Date, as the case may be, with
respect to distributions or tender offers under subsection (e) of this
Section 5.06 or (ii) the record date with respect to distributions,
issuances or other events requiring such computation under subsection
(b), (c) or (d) of this Section 5.06. The Closing Price for each day
(the "Closing Price") shall be the last reported sales price or, in
case no such reported sale takes place on such date, the average of the
reported closing bid and asked prices in either case on The New York
Stock Exchange (the "NYSE") or The Nasdaq National Market (the "NNM"),
as applicable, or, if the Common Stock is not listed or admitted to
trading on the NYSE or the NNM, the principal national securities
exchange or quotation system on which the Common Stock is quoted or
listed or admitted to trading or, if not quoted or listed or admitted
to trading on any national securities exchange or quotation system, the
closing sales price or, in case no reported sale takes place, the
average of the closing bid and asked prices, as furnished by any two
members of the National Association of Securities Dealers, Inc.
selected from time to time by the Company
52
for that purpose. If no such prices are available, the Current Market
Price Per Share shall be the fair value of a share of Common Stock (as
reasonably determined in good faith by the Board of Directors of the
Company, whose determination shall be conclusive evidence of such fair
market value and which shall be evidenced by an Officers' Certificate
delivered to the Trustee).
(g) In any case in which this Section 5.06 shall require that
an adjustment be made following a record date or a Determination Date
or Expiration Date, as the case may be, established for purposes of
this Section 5.06, the Company may elect to defer (but only until five
Business Days following the filing by the Company with the Trustee of
the certificate described in Section 5.09) issuing to the Holder of any
Security converted after such record date or Determination Date or
Expiration Date the shares of Common Stock and other capital stock of
the Company issuable upon such conversion over and above the shares of
Common Stock and other capital stock of the Company issuable upon such
conversion only on the basis of the Conversion Price prior to
adjustment; and, in lieu of the shares the issuance of which is so
deferred, the Company shall issue or cause its transfer agent to issue
due bills or other appropriate evidence prepared by the Company of the
right to receive such shares. If any distribution in respect of which
an adjustment to the Conversion Price is required to be made as of the
record date or Determination Date or Expiration Date therefor is not
thereafter made or paid by the Company for any reason, the Conversion
Price shall be readjusted to the Conversion Price which would then be
in effect if such record date had not been fixed or such effective date
or Determination Date or Expiration Date had not occurred.
SECTION 5.07. No Adjustment. No adjustment in the Conversion
Price shall be required unless the adjustment would require an increase or
decrease of at least 1% in the Conversion Price as last adjusted; provided,
however, that any adjustments which by reason of this Section 5.07 are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Article 5 shall be made to
the nearest cent or to the nearest one-hundredth of a share, as the case may be.
53
No adjustment need be made for issuances of Common Stock
pursuant to a Company plan for reinvestment of dividends or interest or for a
change in the par value or a change to no par value of the Common Stock.
To the extent that the Securities become convertible into the
right to receive cash, no adjustment need be made thereafter as to the cash.
Interest will not accrue on the cash.
SECTION 5.08. Adjustment for Tax Purposes. The Company shall
be entitled to make such reductions in the Conversion Price, in addition to
those required by Section 5.06, as it in its discretion shall determine to be
advisable in order that any stock dividends, subdivisions of shares,
distributions of rights to purchase stock or securities or distributions of
securities convertible into or exchangeable for stock hereafter made by the
Company to its stockholders shall not be taxable.
SECTION 5.09. Notice of Adjustment. Whenever the Conversion
Price or conversion privilege is adjusted, the Company shall promptly mail to
Securityholders a notice of the adjustment and file with the Trustee an
Officers' Certificate briefly stating the facts requiring the adjustment and the
manner of computing it. Unless and until the Trustee shall receive an Officers'
Certificate setting forth an adjustment of the Conversion Price, the Trustee may
assume without inquiry that the Conversion Price has not been adjusted and that
the last Conversion Price of which it has knowledge remains in effect.
SECTION 5.10. Notice of Certain Transactions. In the event
that:
(1) the Company takes any action which would require an
adjustment in the Conversion Price;
(2) the Company consolidates or merges with or into, or
transfers all or substantially all of its property and assets to,
another corporation or another corporation merges into the Company and,
in each such case, stockholders of the Company must approve the
transaction; or
(3) there is a dissolution or liquidation of the Company, the
Company shall mail to Holders and file
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with the Trustee a notice stating the proposed record or effective
date, as the case may be. The Company shall mail the notice at least
ten days before such date. Failure to mail such notice or any defect
therein shall not affect the validity of any transaction referred to in
clause (1), (2) or (3) of this Section 5.10.
SECTION 5.11. Effect of Reclassification, Consolidation,
Merger or Sale on Conversion Privilege. If any of the following shall occur,
namely: (a) any reclassification or change of shares of Common Stock issuable
upon conversion of the Securities (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination, or any other change for which an adjustment is
provided in Section 5.06); (b) any consolidation or merger or combination to
which the Company is a party other than a merger in which the Company is the
continuing corporation and which does not result in any reclassification of, or
change (other than in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination) in,
outstanding shares of Common Stock; or (c) any sale, conveyance, transfer or
lease of all or substantially all of the property and assets of the Company,
directly or indirectly, to any Person, then the Company, or such successor,
purchasing, transferee or leasing Person, as the case may be, shall, as a
condition precedent to such reclassification, change, combination,
consolidation, merger, sale, conveyance, transfer or lease, execute and deliver
to the Trustee a supplemental indenture providing that the Holder of each
Security then outstanding shall have the right to convert such Security into the
kind and amount of shares of stock and other securities and property (including
cash) receivable upon such reclassification, change, combination, consolidation,
merger, sale, conveyance, transfer or lease by a holder of the number of shares
of Common Stock deliverable upon conversion of such Security immediately prior
to such reclassification, change, combination, consolidation, merger, sale,
conveyance, transfer or lease. Such supplemental indenture shall provide for
adjustments of the Conversion Price which shall be as nearly equivalent as may
be practicable to the adjustments of the Conversion Price provided for in this
Article 5. If, in the case of any such consolidation, merger, combination, sale,
conveyance, transfer or lease the
55
stock or other securities and property (including cash) receivable thereupon by
a holder of Common Stock include shares of stock or other securities and
property of a Person other than the successor, purchasing, transferee or leasing
Person, as the case may be, in such consolidation, merger, combination, sale,
conveyance, transfer or lease, then such supplemental indenture shall also be
executed by such other Person and shall contain such additional provisions to
protect the interests of the Holders of the Securities as the Board of Directors
of the Company shall reasonably consider necessary by reason of the foregoing.
The provisions of this Section 5.11 shall similarly apply to successive
reclassifications, changes, combinations, consolidations, mergers, sales,
conveyances, transfers or leases.
In the event the Company shall execute a supplemental
indenture pursuant to this Section 5.11, the Company shall promptly file with
the Trustee (x) an Officers' Certificate briefly stating the reasons therefor,
the kind or amount of shares of stock or other securities or property (including
cash) receivable by Holders of the Securities upon the conversion of their
Securities after any such reclassification, change, combination, consolidation,
merger, sale, conveyance, transfer or lease, any adjustment to be made with
respect thereto and that all conditions precedent have been complied with and
(y) an Opinion of Counsel that all conditions precedent have been complied with,
and shall promptly mail notice thereof to all Holders.
SECTION 5.12. Trustee's Disclaimer. The Trustee shall have no
duty to determine when an adjustment under this Article 5 should be made, how it
should be made or what such adjustment should be, but may accept as conclusive
evidence of that fact or the correctness of any such adjustment, and shall be
protected in relying upon, an Officers' Certificate including the Officers'
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 5.09. The Trustee makes no representation as to the
validity or value of any securities or assets issued upon conversion of
Securities, and the Trustee shall not be responsible for the Company's failure
to comply with any provisions of this Article 5.
The Trustee shall not be under any responsibility to determine
the correctness of any provisions contained in any supplemental indenture
executed pursuant to
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Section 5.11, but may accept as conclusive evidence of the correctness thereof,
and shall be fully protected in relying upon, the Officers' Certificate with
respect thereto which the Company is obligated to file with the Trustee pursuant
to Section 5.11.
SECTION 5.13. Voluntary Reduction. The Company from time to
time may voluntarily reduce the Conversion Price by any amount for any period of
time if the period is at least 20 days and if the reduction is irrevocable
during the period if the Board of Directors of the Company determines that such
reduction would be in the best interest of the Company, and the Company provides
15 days' prior notice of any voluntary reduction in the Conversion Price;
provided, however, that in no event may the Company reduce the Conversion Price
to be less than the par value of a share of Common Stock.
ARTICLE 6
Successor Companies
SECTION 6.01. When Company May Merge or Transfer Assets. The
Company may not consolidate, combine with or merge with or into any other
Person, in a transaction in which it is not the surviving corporation, sell,
convey, transfer or lease all or substantially all of its properties and assets
to any successor Person unless:
(1) the successor, purchasing, transferring or leasing Person,
if any, is a corporation, limited liability company, partnership, trust
or other entity organized and existing under the laws of the United
States, any State thereof or the District of Columbia (the "Successor
Person") and expressly assumes the obligations of the Company under
this Indenture by a supplemental indenture as provided in Section 5.11;
(2) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing; and
(3) the Company shall have delivered to the Trustee an
Officers's Certificate and an Opinion of Counsel, each stating that
such consolidation, combination, merger, conveyance, sale, transfer or
57
lease and such supplemental indenture (if any) comply with this
Indenture;
The Successor Person shall be the successor to the Company and
shall succeed to, and be substituted for, and may exercise every right and power
of the Company under this Indenture, but the predecessor Company in the case of
a sale, conveyance, transfer or lease shall not be released from the obligation
to pay the principal of and interest on the Securities.
ARTICLE 7
Defaults and Remedies
SECTION 7.01. Events of Default. An "Event of Default"
occurs if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, whether or not such
payment shall be prohibited by Article 11, and such default continues
for a period of 30 days;
(2) the Company (i) defaults in the payment of the principal
of any Security when the same becomes due and payable at its Stated
Maturity, upon redemption, upon declaration or otherwise, whether or
not such payment shall be prohibited by Article 11 or (ii) fails to
redeem or purchase Securities when required pursuant to this Indenture
or the Securities, whether or not such redemption or purchase shall be
prohibited by Article 11;
(3) the Company fails to provide notice of a Change in Control
in accordance with Section 4.07;
(4) the Company fails to comply with its obligations under
Section 6.01;
(5) the Company fails to comply with any of its agreements in
the Securities or this Indenture (other than those referred to in
clauses (1) through (4) above) and such failure continues for 60 days
after the notice specified below;
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(6) the Company pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for a substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
(7) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company in an
involuntary case;
(B) appoints a Custodian of the Company or for any
substantial part of its property; or
(C) orders the winding up or liquidation of the
Company;
and the order or decree remains unstayed and in effect for 60 days
(together with Clause (6), the "bankruptcy provisions"); or
(8) Indebtedness of the Company is not paid within 15 days of
any applicable grace period after final maturity or is accelerated by
the holders thereof because of a default and the total amount of such
Indebtedness unpaid or accelerated exceeds $20.0 million (the "cross
acceleration provision").
However, a default under clauses (3) or (5) will not constitute an Event of
Default until the Trustee or the holders of 25% in principal amount of the
outstanding Securities notify the Company of the default and the Company does
not cure such default within the time specified after receipt of such notice.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and
59
whether it is voluntary or involuntary or is effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal, state or foreign law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
SECTION 7.02. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 7.01(6) or (7) (in either case) with
respect to the Company) occurs and is continuing, the Trustee by notice to the
Company, or the Holders of at least 25% in principal amount of the Securities by
notice to the Company and the Trustee, may declare the principal of and accrued
but unpaid interest on all the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable immediately.
If an Event of Default specified in Section 7.01(6) or (7) occurs, the principal
of and interest on all the Securities shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Securityholders. The Holders of a majority in principal amount of the
outstanding Securities by notice to the Trustee may rescind an acceleration with
respect to the Securities and its consequences if the rescission would not
conflict with any judgment or decree, if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of acceleration and all payments due to the Trustee under
Section 8.07 of this Indenture have been made. No such rescission shall affect
any subsequent Default or impair any right consequent thereto.
SECTION 7.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or
60
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 7.04. Waiver of Past Defaults. The Holders of a
majority in principal amount of the Securities by notice to the Trustee may
waive an existing Default and its consequences except (1) a Default in the
payment of the principal of or interest on a Security or (2) a Default in
respect of a provision that under Section 10.02 cannot be amended without the
consent of each Securityholder affected. When a Default is waived, it is deemed
cured, but no such waiver shall extend to any subsequent or other Default or
impair any consequent right.
SECTION 7.05. Control by Majority. The Holders of a majority
in principal amount of the outstanding Securities may direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or of exercising any trust or power conferred on the Trustee. However, the
Trustee may refuse to follow any direction that conflicts with law or this
Indenture or, subject to Section 8.01, that the Trustee determines is unduly
prejudicial to the rights of other Securityholders or would involve the Trustee
in personal liability; provided, however, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to indemnification from the Holders satisfactory to it in its sole discretion
against all losses and expenses caused by taking or not taking such action.
SECTION 7.06. Limitation on Suits. Except to enforce the right
to receive payment of principal, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
outstanding Securities make a written request to the Trustee to pursue
the remedy;
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(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in principal amount of the
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 7.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 7.08. Collection Suit by Trustee. If an Event of
Default specified in Section 7.01(1) or (2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts provided
for in Section 8.07.
SECTION 7.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property to collect and receive any monies or other property payable or
deliverable on any such claims, and to distribute the same after the deduction
of any amounts due the Trustee under Section 8.07, and to take any other action
with respect to such claims, including participating as a member of any official
committee of creditors, as it reasonably deems necessary or advisable, and,
unless prohibited by law or applicable regulations, may vote on behalf of the
Holders in any election of a trustee
62
in bankruptcy or other Person performing similar functions. The Trustee shall be
entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims, and any Custodian in any
such judicial proceeding is hereby authorized by each Holder to make payments to
the Trustee and, in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due it
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and its counsel, and any other amounts due the Trustee under
Section 8.07.
SECTION 7.10. Priorities. If the Trustee collects any money
pursuant to this Article 7, it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due to the Trustee under
Section 8.07 or any other provision of this Indenture;
SECOND: to holders of Senior Indebtedness of the Company to
the extent required by Article 11;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Trustee shall mail to each Securityholder and the Company
a notice that states the record date, the payment date and amount to be paid.
SECTION 7.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the
63
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 7.07 or a suit by Holders of
more than 10% in principal amount of the Securities.
ARTICLE 8
Trustee
SECTION 8.01. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise such of the rights
and powers vested in it by this Indenture, and use the same degree of care and
skill in their exercise, as a prudent Person would exercise or use under the
circumstances in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any such certificates or
opinions which, by any provision hereof, are required to be furnished
to the Trustee, the Trustee shall examine such certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own wilful misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
64
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 7.05.
(d) Every provision of this Indenture that in any way relates
to the Trustee, other than paragraph (g) of this Section, is subject to
paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 8.02. Rights of Trustee. (a) The Trustee, may
conclusively rely on any document believed by it to be genuine and to have been
signed or presented by the proper Person. The Trustee need not investigate any
fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any
65
action it takes or omits to take in good faith in reliance on the Officers'
Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) Subject to Section 8.01(c), the Trustee shall not be
liable for any action it takes or omits to take in good faith which it believes
to be authorized or within its rights or powers.
(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Trust Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
Default or Event of Default is received by the Trustee at the Corporate Trust
Office, and such notice references the Securities under this Indenture.
(g) The rights, privileges, protections, immunities and
benefits given to the Trustee hereunder, including without limitation, its right
to be indemnified, are extended to, and shall be enforceable by, the Trustee in
each of its capacities hereunder, and to each agent, custodian and other Person
employed by the Trustee consistent with the terms of this Indenture to act
hereunder.
(h) Any permissive right or authority granted to the Trustee
shall not be construed as a mandatory duty.
SECTION 8.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 8.10 and 8.11.
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SECTION 8.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in the Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 8.05. Notice of Defaults. If a Default occurs and is
continuing and if it is actually known to the Trustee, or upon written notice
from the Company or any Securityholder or upon a Payment Default, the Trustee
shall mail to each Securityholder notice of the Default within 90 days after it
occurs. Except in the case of a Default in payment of principal of or interest
on any Security (including payments pursuant to the mandatory redemption
provisions of such Security, if any), the Trustee may withhold the notice if and
so long as a committee of its Trust Officers in good faith determines that
withholding the notice is in the interests of Securityholders.
SECTION 8.06. Reports by Trustee to Holders. As promptly as
practicable after each November 15 beginning with November 15, 2003, and in any
event within 60 days of each November 15, the Trustee shall mail to each
Securityholder a brief report dated as of November 15 of each year that complies
with TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 8.07. Compensation and Indemnity. The Company shall
pay to the Trustee from time to time reasonable compensation for its services.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable out-of-pocket expenses, disbursements and
advances incurred or made by it, including costs of collection, in addition to
67
the compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and experts. The Company shall indemnify the Trustee
against any and all loss, liability or expense (including reasonable attorneys'
fees) incurred by it in connection with the administration of this trust and the
performance of its duties hereunder, including the costs and expenses of
enforcing this Indenture (including this Section 8.07) against the Company and
defending itself against any claim (whether asserted by any Securityholder or
any other Person) or liability in connection with the exercise or performance of
any of its powers or duties hereunder. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Company shall not relieve the Company of its obligations hereunder
unless such failure prejudices the Company. The Company shall defend the claim
and the Trustee may have separate counsel and the Company shall pay the fees and
expenses of such counsel. The Company need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee through
the Trustee's own wilful misconduct, negligence or bad faith.
The Company need not pay for any settlement made by the
Trustee without the Company's consent, such consent not to be unreasonably
withheld.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities.
The Company's payment obligations, and the lien granted to the
Trustee, pursuant to this Section shall survive the discharge of this Indenture.
When the Trustee incurs expenses or renders services after the occurrence of a
Default specified in Section 7.01(6) or (7) with respect to the Company, the
expenses and the compensation for the services (including the fees and expenses
of its agents and counsel) are intended to constitute expenses of administration
under the Bankruptcy Law.
SECTION 8.08. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Company.
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The Holders of a majority in principal amount of the Securities may remove the
Trustee by so notifying the Trustee and may appoint a successor Trustee. The
Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 8.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount of the outstanding Securities and such
Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy
exists in the office of Trustee for any reason (the Trustee in such event being
referred to herein as the retiring Trustee), the Company shall promptly appoint
a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided that the
amounts owing to the Trustee hereunder have been paid and subject to the lien
provided for in Section 8.07.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the Securities may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 8.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under
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Section 8.07 shall continue for the benefit of the retiring Trustee.
SECTION 8.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee provided that such successor shall be
eligible and qualified under Section 8.10.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 8.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of TIA Section 310(a). The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply with
TIA Section 310(b); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
the Company are outstanding if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.
SECTION 8.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
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ARTICLE 9
Discharge of Indenture
SECTION 9.01. Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect (except as to any rights of
conversion, registration of transfer or exchange of Securities herein expressly
provided for and except as further provided below), and the Trustee, on demand
of and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when (a) either;
(1) all Securities theretofore authorized and delivered (other
than (x) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.10 and (y)
Securities for whose payment money has therefore been deposited in
trust and thereafter repaid to the Company as provided in Section 9.03,
have been delivered to the Trustee for cancellation; or
(2) all such Securities not theretofore delivered to the
Trustee for cancellation (x) have become due and payable, (y) will
become due and payable at the Stated Maturity within 90 days, or (z)
have been called for redemption within 90 days under arrangements
satisfactory to the Trustee for the giving of notice of redemption by
the Trustee in the name, and at the expense, of the Company, and the
Company has irrevocably deposited or caused to be irrevocably deposited
with the Trustee or a Paying Agent (other than the Company or any of
its Affiliates) as trust funds in trust for the purpose cash in an
amount sufficient to pay and discharge the entire indebtedness on such
Securities not theretofore delivered to the Trustee for cancellation,
for principal and interest to the date of such deposit (in the case of
Securities which have become due and payable) or to the Stated Maturity
or Optional Redemption Date, as the case may be;
(b) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
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(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 8.07 shall survive and,
if money shall have been deposited with the Trustee pursuant to clause (1) of
this Section, the provisions of Sections 2.03, 2.05, 2.06, 2.07, 2.08, 2.10,
4.02, 4.04, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, Article 5, Article 6, and
this Article 9 shall survive until the Securities have been paid in full.
SECTION 9.02. Application of Trust Money. Subject to the
provisions of Section 9.03, the Trustee or a Paying Agent shall hold in trust,
for the benefit of the Holders, all money deposited with it pursuant to Section
9.01 and shall apply the deposited money in accordance with this Indenture and
the Securities to the payment of the principal of and interest on the
Securities. Money so held in trust shall not be subject to the subordination
provisions of Article 11.
SECTION 9.03. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money (i)
deposited with them pursuant to Section 9.01 and (ii) held by them at any time.
The Trustee and each Paying Agent shall pay to the Company
upon request any money held by them for the payment of principal or interest
that remains unclaimed for two years, and, thereafter, Securityholders entitled
to the money must look to the Company for payment as general creditors.
SECTION 9.04. Reinstatement. If the Trustee or any Paying
Agent is unable to apply any money in accordance with Section 9.02 by reason of
any legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 9.01
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until such time as the Trustee or such Paying Agent is permitted to apply all
such money in accordance with Section 9.02; provided, however, that if the
Company has made any payment of the principal of or interest on any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive any such payment from
the money held by the Trustee or such Paying Agent.
ARTICLE 10
Amendments
SECTION 10.01. Without Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to or consent
of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Section 5.11 or Article 6;
(3) to provide for uncertificated Securities in addition to or
in place of Certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to appoint a successor Trustee;
(5) to comply with any requirements of the SEC in connection
with qualifying, or maintaining the qualification of, this Indenture
under the TIA;
(6) to add guarantees with respect to the Securities or to
secure the Securities;
(7) to add to covenants of the Company for the benefit of the
Securityholders or to surrender any right or power conferred upon the
Company; and
(8) to make any change that does not adversely affect the
rights of any Securityholder, including
73
providing for the sale and resale of the Securities under Regulation S
of the Securities Act.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 10.02. With Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities then outstanding (including
consents obtained in connection with a tender offer or exchange for the
Securities). However, without the written consent of each Securityholder
affected thereby, an amendment may not:
(a) change the stated maturity of the principal of, or
interest on, any Security;
(b) reduce the principal amount of, or any premium or interest
on, any Security;
(c) reduce the amount of principal payable upon acceleration
of the maturity of any Security;
(d) change the time at which any Security may be redeemed in
accordance with Article 3;
(e) change the place or currency of payment of principal of,
or any premium or interest on, any Security;
(f) impair the right to institute suit for the enforcement of
any payment on, or with respect to, any Security;
(g) modify the subordination provisions of Article 11 in a
manner materially adverse to the Holders of Securities;
(h) adversely affect the right of Holders to convert
Securities other than under Article 5 of this Indenture; or
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(i) adversely affect the adjustment of the Conversion Price
except as provided in Article 5 of this Indenture;
(j) reduce the percentage of the aggregate principal amount of
the outstanding Securities whose Holders must consent to a modification
or amendment of this Indenture; and
(k) modify any of the provisions of this Section or Section
7.04, except to increase any such percentage or to provide that
specified additional provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each outstanding Security
affected thereby.
It shall not be necessary for the consent of the Holders under
this Section 10.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
10.02 becomes effective, the Company shall mail to the Holders affected thereby
a notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver. An amendment or supplement under this Section 10.02 or under Section
10.01 may not make any change that adversely affects the rights under Article 11
of any holder of an issue of Senior Indebtedness unless the holders of that
issue, pursuant to its terms, consent to the change.
SECTION 10.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect to the extent required thereby.
SECTION 10.04. Revocation and Effect of Consents and Waivers.
A consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subse-
75
quent Holder may revoke the consent or waiver as to such Holder's Security or
portion of the Security if the Trustee receives the notice of revocation before
the date the amendment or waiver becomes effective. After an amendment or waiver
becomes effective, it shall bind every Securityholder. An amendment or waiver
becomes effective upon the execution of such amendment or waiver by the Trustee.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 10.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 10.06. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article 10 if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing any
amendment the Trustee shall be entitled to receive and (subject to Section 8.01)
shall be fully protected in relying upon, an Officer's Certificate and an
Opinion of Counsel stating that such amendment is authorized or permitted by
this Indenture.
SECTION 10.07. Payment for Consent. Neither the Company nor
any Affiliate of the Company shall, directly or
76
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder for or as an inducement to any
consent, waiver or amendment of any of the terms or provisions of this Indenture
or the Securities unless such consideration is offered to be paid to all Holders
that so consent, waive or agree to amend in the time frame set forth in
solicitation documents relating to such consent, waiver or agreement.
ARTICLE 11
Subordination
SECTION 11.01. Agreement To Subordinate. The Company agrees,
and each Securityholder by accepting a Security agrees, that the Indebtedness
evidenced by the Securities is subordinated in right of payment, to the extent
and in the manner provided in this Article 11, to the prior payment in full in
cash of all Obligations with respect to Senior Indebtedness of the Company and
that the subordination is for the benefit of and enforceable by the holders of
such Senior Indebtedness. All provisions of this Article 11 shall be subject to
Section 11.12.
SECTION 11.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company to creditors upon a total
or partial liquidation or a total or partial dissolution or winding up of the
Company or upon any assignment for the benefit of creditors or marshaling of
assets of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property,
whether voluntary or involuntary:
(1) the holders of Senior Indebtedness of the Company shall be
entitled to receive payment in full in cash of all Obligations with
respect to such Senior Indebtedness (including all interest accruing
subsequent to the filing of a petition in bankruptcy at the rate
provided for in the documentation with respect thereto, whether or not
such interest is an allowed claim under applicable law) before
Securityholders shall be entitled to receive any payment or
distribution with respect to the Securities; and
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(2) until all Obligations with respect to such Senior
Indebtedness are paid in full in cash, any payment or distribution to
which Securityholders would be entitled but for this Article 11 shall
be made to holders of such Senior Indebtedness as their interests may
appear, except that Securityholders may receive in exchange for the
Securities in any proceeding of the type described above in this
Section 11.02, (x) equity securities of the Company which, in any case,
do not provide any mandatory redemption or similar retirement prior to
the maturity of the Securities or (y) unsecured debt securities of the
Company which are subordinated to at least the same extent as the
Securities to the payment of all Senior Indebtedness of the Company and
which, in any case, do not mature or become subject to a mandatory
redemption obligation prior to the maturity of the Securities.
SECTION 11.03. Default on Senior Indebtedness. The Company may
not pay (in cash, property or other assets) the principal or interest on the
Securities and may not repurchase, redeem or otherwise retire any Securities
(collectively, "pay the Securities") if either of the following occurs (each, a
"Payment Default") (i) any Obligations with respect to Senior Indebtedness are
not paid in full when due or (ii) any other default on Senior Indebtedness
occurs and the maturity of such Senior Indebtedness is accelerated in accordance
with its terms unless, in either case, (x) the default has been cured or waived
and any such acceleration has been rescinded in writing or (y) such Senior
Indebtedness has been paid in full in cash; provided, however, that the Company
may pay the Securities without regard to the foregoing if the Company and the
Trustee receive written notice approving such payment from the Representative of
such Senior Indebtedness. During the continuance of any default (other than a
default described in clause (i) or (ii) of the preceding sentence) with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof may
be accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, the Company may not pay the Securities for a period (a "Payment
Blockage Period") commencing upon the receipt by the Company and the Trustee of
written notice (a "Blockage Notice") of such default from the Representative of
such Designated Senior
78
Indebtedness specifying an election to effect a Payment Blockage Period and
ending 179 days thereafter (or earlier if such Payment Blockage Period is
terminated (1) by written notice to the Trustee and the Company from the Person
or Persons who gave such Blockage Notice, (2) because no defaults continue in
existence which would permit the acceleration of the maturities of any
Designated Senior Indebtedness at such time) or (3) because such Designated
Senior Indebtedness has been repaid in full in cash. Unless the holders of such
Designated Senior Indebtedness or the Representative of such holders shall have
accelerated the maturity of such Designated Senior Indebtedness, or any Payment
Default otherwise exists, the Company may resume payments on the Securities
after termination of such Payment Blockage Period and may make any and all
payments that were previously subject to a Payment Blockage Period. The
Securities shall not be subject to more than one Payment Blockage Period in any
consecutive 360-day period. For purposes of this Section, no default or event of
default which existed or was continuing on the date of the commencement of any
Payment Blockage Period with respect to the Designated Senior Indebtedness
initiating such Payment Blockage Period shall be, or be made, the basis of the
commencement of a subsequent Payment Blockage Period by the Representative of
such Designated Senior Indebtedness, whether or not within a period of 360
consecutive days, unless such default or event of default shall have been cured
or waived for a period of not less than 90 consecutive days (it being
acknowledged and agreed that (x) any default or event of default as a result of
a continued failure to meet a financial covenant or test for a period ended
subsequent to the commencement of a Payment Blockage Period shall constitute a
new default or event of default, as the case may be, and shall be deemed not to
be a continuing default or event of default, as the case may be, for purposes of
this sentence and (y) any subsequent action which would give rise to a default
or an event of default pursuant to any provision under which a default or event
of default previously existed or was continuing shall constitute a new default
or event of default, as the case may be, for this purpose and shall be deemed
not to be a continuing default or event of default, as the case may be, for
purposes of this sentence).
SECTION 11.04. Acceleration of Payment of Securities. If
payment of the Securities is accelerated because of an Event of Default, the
Company or the Trustee
79
shall promptly notify the holders of the Designated Senior Indebtedness (or
their Representatives) of the acceleration. If any Designated Senior
Indebtedness is outstanding at the time of such acceleration, the Company may
not pay the Securities until five Business Days after the Representatives of all
the issues of Designated Senior Indebtedness receive notice of such acceleration
and, thereafter, may pay the Securities only if the Indenture otherwise permits
payment at that time.
SECTION 11.05. When Distribution Must Be Paid Over. If a
distribution is made to Securityholders that because of this Article 11 should
not have been made to them, the Securityholders who receive the distribution
shall hold it in trust for holders of Senior Indebtedness of the Company and pay
it over to them as their interests may appear.
SECTION 11.06. Subrogation. After all Senior Indebtedness of
the Company is paid in full in cash and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of such Senior
Indebtedness to receive distributions applicable to such Senior Indebtedness. A
distribution made under this Article 11 to holders of such Senior Indebtedness
which otherwise would have been made to Securityholders is not, as between the
Company and Securityholders, a payment by the Company on such Senior
Indebtedness.
SECTION 11.07. Relative Rights. This Article 11 defines the
relative rights of Securityholders and holders of Senior Indebtedness of the
Company. Nothing in this Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Securityholder from exercising
its available remedies upon a Default, subject to the rights of holders
of Senior Indebtedness of the Company to receive distributions
otherwise payable to Securityholders.
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SECTION 11.08. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Indebtedness of the Company to enforce the
subordination of the Indebtedness evidenced by the Securities shall be impaired
by any act or failure to act by the Company or by its failure to comply with
this Indenture.
SECTION 11.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 11.03, the Trustee or Paying Agent may continue to make
payments on the Securities and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives notice satisfactory to it that payments may not
be made under this Article 11. The Company, the Registrar or co-registrar, the
Paying Agent, a Representative or a holder of Senior Indebtedness may give the
notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness of the Company with the same rights it would have if it were
not Trustee. The Registrar and co-registrar and the Paying Agent may do the same
with like rights. The Trustee shall be entitled to all the rights set forth in
this Article 11 with respect to any Senior Indebtedness of the Company which may
at any time be held by it, to the same extent as any other holder of such Senior
Indebtedness; and nothing in Article 8 shall deprive the Trustee of any of its
rights as such holder. Nothing in this Article 11 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 8.07.
SECTION 11.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness of the Company, the distribution may be made and the notice given
to their Representative (if any).
SECTION 11.11. Article 11 Not To Prevent Events of Default or
Limit Right To Accelerate. The failure to make a payment pursuant to the
Securities by reason of any provision in this Article 11 shall not be construed
as preventing the occurrence of a Default. Nothing in this Article 11 shall have
any effect on the right of the Securityholders or the Trustee to accelerate the
maturity of the Securities.
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SECTION 11.12. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 11, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 11.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness of the Company for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of such Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 11. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness of the Company to participate
in any payment or distribution pursuant to this Article 11, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of such Senior Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person under this
Article 11, and, if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment. The provisions of Sections 8.01 and 8.02 shall
be applicable to all actions or omissions of actions by the Trustee pursuant to
this Article 11.
SECTION 11.13. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on its
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness of the Company as provided in this Article 11 and appoints
the Trustee as attorney-in-fact for any and all such purposes.
SECTION 11.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Securityholders or the
82
Company or any other Person, money or assets to which any holders of Senior
Indebtedness of the Company shall be entitled by virtue of this Article 11 or
otherwise.
SECTION 11.15. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Securityholder by accepting a Security
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness of the Company, whether such Senior Indebtedness was created or
acquired before or after the issuance of the Securities, to acquire and continue
to hold, or to continue to hold, such Senior Indebtedness and such holder of
such Senior Indebtedness shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Indebtedness.
ARTICLE 12
Miscellaneous
SECTION 12.01 Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which
is required to be included in the Indenture by the TIA, the required provision
shall control.
SECTION 12.02. Notices. Any notice or communication shall be
in writing and delivered or mailed to the address set forth below:
if to the Company:
Skyworks Solutions, Inc.
20 Sylvan Road
Woburn, MA 01801
Attention: Chief Financial Officer
83
if to the Trustee:
State Street Bank and Trust Company
2 Avenue de Lafayette
Boston, MA 02111
Attention: Skyworks Solutions 4 3/4%
Subordinated Notes due 2007
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 12.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 12.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officer's Certificate in form and substance
reasonably satisfactory to the Trustee stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance
84
reasonably satisfactory to the Trustee stating that, in the opinion of
such counsel, all such conditions precedent have been complied with.
SECTION 12.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate
or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 12.06. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at the
time shall be considered in any such determination.
SECTION 12.07. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
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SECTION 12.08. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions are not required to be
open in the State of New York or the Commonwealth of Massachusetts. If a payment
date is a Legal Holiday, payment shall be made on the next succeeding day that
is not a Legal Holiday, and no interest shall accrue for the intervening period.
If a regular record date is a Legal Holiday, the record date shall not be
affected.
SECTION 12.09. Governing Law. This Indenture and the
Securities shall be governed by, and construed in accordance with, the laws of
the State of New York but without giving effect to applicable principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
SECTION 12.10. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Securities.
SECTION 12.11. Successors. All agreements of the Company in
this Indenture and the Securities shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.
SECTION 12.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 12.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
86
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
SKYWORKS SOLUTIONS, INC.
by /s/ PAUL E. VINCENT
____________________
Name: Paul E. Vincent
Title: Vice President
and Chief Financial Officer
STATE STREET BANK AND TRUST COMPANY,
as Trustee
by /s/ ALISON D.B. NADEAU
____________________
Name: Alison D.B. Nadeau
Title: Vice President
EXHIBIT A
See Form of 4.75% Convertible Subordinated Note of the Company filed herewith as
Exhibit 4.d
Exhibit 4.d
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY
IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS
SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY AND THE SHARES OF
COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE
SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION THEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS
SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. IN ANY
CASE, THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING
TRANSACTIONS WITH REGARD TO THIS SECURITY EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT.
THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF A
REGISTRATION RIGHTS AGREEMENT (AS SUCH TERM IS DEFINED IN THE INDENTURE REFERRED
TO ON THE REVERSE HEREOF) AND, BY ITS ACCEPTANCE HEREOF, AGREES TO BE BOUND BY
AND TO COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION RIGHTS AGREEMENT.
THIS SECURITY MAY NOT BE SOLD OR TRANSFERRED TO, AND EACH
PURCHASER BY ITS PURCHASE OF THIS SECURITY SHALL BE DEEMED TO HAVE REPRESENTED
AND COVENANTED THAT IT IS NOT ACQUIRING THIS SECURITY FOR OR ON BEHALF OF, AND
WILL NOT TRANSFER THIS SECURITY TO, ANY EMPLOYEE BENEFIT PLAN (A "PLAN") AS
DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED ("ERISA"), EXCEPT THAT SUCH PURCHASE FOR OR ON BEHALF OF A PLAN SHALL
BE PERMITTED:
(I) TO THE EXTENT SUCH PURCHASE IS MADE BY OR ON BEHALF OF A
BANK COLLECTIVE INVESTMENT FUND MAINTAINED BY THE PURCHASER IN WHICH NO
PLAN (TOGETHER WITH ANY OTHER PLANS MAINTAINED BY THE SAME EMPLOYER OR
EMPLOYEE ORGANIZATION) HAS AN INTEREST IN EXCESS OF 10% OF THE TOTAL
ASSETS IN SUCH COLLECTIVE INVESTMENT FUND, AND THE OTHER APPLICABLE
CONDITIONS OF PROHIBITED TRANSACTION CLASS EXEMPTION 91-38 ISSUED BY
THE DEPARTMENT OF LABOR ARE SATISFIED;
(II) TO THE EXTENT SUCH PURCHASE IS MADE BY OR ON BEHALF OF
AN INSURANCE COMPANY POOLED SEPARATE ACCOUNT MAINTAINED BY THE
PURCHASER IN WHICH, AT ANY TIME WHILE THESE SECURITIES ARE OUTSTANDING,
NO PLAN (TOGETHER WITH ANY OTHER PLANS MAINTAINED BY THE SAME EMPLOYER
OR EMPLOYEE ORGANIZATION) HAS AN INTEREST IN EXCESS OF 10% OF THE TOTAL
OF ALL ASSETS IN SUCH POOLED SEPARATE ACCOUNT, AND THE OTHER APPLICABLE
CONDITIONS OF PROHIBITED TRANSACTION CLASS EXEMPTION 90-1 ISSUED BY THE
DEPARTMENT OF LABOR ARE SATISFIED;
(III) TO THE EXTENT SUCH PURCHASE IS MADE BY AN INVESTMENT
FUND ON BEHALF OF A PLAN BY (A) AN INVESTMENT ADVISER REGISTERED UNDER
THE INVESTMENT ADVISERS ACT OF 1940, AS AMENDED (THE "1940 ACT"), THAT
HAD AS OF THE LAST DAY OF ITS MOST RECENT FISCAL YEAR TOTAL ASSETS
UNDER ITS MANAGEMENT AND CONTROL IN EXCESS OF $50.0 MILLION AND HAD
STOCKHOLDERS' OR PARTNERS'
EQUITY IN EXCESS OF $750,000, AS SHOWN IN ITS MOST RECENT BALANCE SHEET
PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES,
OR (B) A BANK AS DEFINED IN SECTION 202(A)(2) OF THE 1940 ACT WITH
EQUITY CAPITAL IN EXCESS OF $1.0 MILLION AS OF THE LAST DAY OF ITS MOST
RECENT FISCAL YEAR, OR (C) AN INSURANCE COMPANY WHICH IS QUALIFIED
UNDER THE LAWS OF MORE THAN ONE STATE TO MANAGE, ACQUIRE OR DISPOSE OF
ANY ASSETS OF A PENSION OR WELFARE PLAN, WHICH INSURANCE COMPANY HAS AS
OF THE LAST DAY OF ITS MOST RECENT FISCAL YEAR, NET WORTH IN EXCESS OF
$1.0 MILLION AND WHICH IS SUBJECT TO SUPERVISION AND EXAMINATION BY A
STATE AUTHORITY HAVING SUPERVISION OVER INSURANCE COMPANIES AND, IN ANY
CASE, SUCH INVESTMENT ADVISER, BANK OR INSURANCE COMPANY IS OTHERWISE A
QUALIFIED PROFESSIONAL ASSET MANAGER, AS SUCH TERM IS USED IN
PROHIBITED TRANSACTION CLASS EXEMPTION 84-14 ISSUED BY THE DEPARTMENT
OF LABOR, AND THE ASSETS OF SUCH PLAN WHEN COMBINED WITH THE ASSETS OF
OTHER PLANS ESTABLISHED OR MAINTAINED BY THE SAME EMPLOYER (OR
AFFILIATE THEREOF) OR EMPLOYEE ORGANIZATION AND MANAGED BY SUCH
INVESTMENT ADVISER, BANK OR INSURANCE COMPANY, DO NOT REPRESENT MORE
THAN 20% OF THE TOTAL CLIENT ASSETS MANAGED BY SUCH INVESTMENT ADVISER,
BANK OR INSURANCE COMPANY AT THE TIME OF THE TRANSACTION, AND THE OTHER
APPLICABLE CONDITIONS OF SUCH EXEMPTION ARE OTHERWISE SATISFIED;
(IV) TO THE EXTENT SUCH PLAN IS A GOVERNMENTAL PLAN, AS
DEFINED IN SECTION 3(32) OF ERISA WHICH IS NOT SUBJECT TO THE
PROVISIONS OF TITLE 1 OF ERISA, AND AS DEFINED IN SECTION 414(d) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE");
(V) TO THE EXTENT SUCH PURCHASE IS MADE BY OR ON BEHALF OF
AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT, THE
RESERVES AND LIABILITIES FOR THE GENERAL ACCOUNT CONTRACTS HELD BY OR
ON BEHALF OF ANY PLAN, TOGETHER WITH ANY OTHER PLANS MAINTAINED BY THE
SAME EMPLOYER (OR ITS AFFILIATES) OR EMPLOYEE ORGANIZATION, DO NOT
EXCEED 10% OF THE TOTAL RESERVES AND LIABILITIES OF THE INSURANCE
COMPANY GENERAL ACCOUNT (EXCLUSIVE OF SEPARATE ACCOUNT LIABILITIES),
PLUS SURPLUS AS SET FORTH IN THE NATIONAL ASSOCIATION OF INSURANCE
COMMISSIONERS ANNUAL STATEMENT FILED WITH THE STATE OF DOMICILE OF THE
INSURER, IN ACCORDANCE WITH PROHIBITED TRANSACTION CLASS EXEMPTION
95-60, AND THE OTHER APPLICABLE CONDITIONS OF SUCH EXEMPTION ARE
OTHERWISE SATISFIED;
(VI) TO THE EXTENT PURCHASE IS MADE BY AN IN-HOUSE ASSET
MANAGER WITHIN THE MEANING OF PART IV(A) OF PROHIBITED TRANSACTION
CLASS EXEMPTION 96-23, SUCH MANAGER HAS MADE OR PROPERLY AUTHORIZED THE
DECISION FOR SUCH PLAN TO PURCHASE THIS SECURITY, UNDER CIRCUMSTANCES
SUCH THAT PROHIBITED TRANSACTION CLASS
EXEMPTION 96-23 IS APPLICABLE TO THE PURCHASE AND HOLDING OF THIS
SECURITY; OR
(VII) TO THE EXTENT SUCH PURCHASE WILL NOT OTHERWISE GIVE RISE
TO A TRANSACTION DESCRIBED IN SECTION 406 OR SECTION 4975(C)(1) OF THE
CODE FOR WHICH A STATUTORY OR ADMINISTRATIVE EXEMPTION IS UNAVAILABLE.
SKYWORKS SOLUTIONS, INC.
CUSIP No. 83088M AA 0 No. 1
ISIN No. US83088MAA09
4 3/4% CONVERTIBLE SUBORDINATED NOTE DUE NOVEMBER 15, 2007
Skyworks Solutions, Inc., a Delaware corporation (the
"COMPANY", which term shall include any successor corporation under the
Indenture referred to on the reverse hereof), promises to pay to Cede & Co., or
registered assigns, the principal sum of Two hundred thirty million Dollars on
November 15, 2007 or such greater or lesser amount as is indicated on the
Schedule of Exchanges of Securities on the other side of this Security.
Interest Payment Dates: May 15 and November 15, beginning May
15, 2003
Record Dates: May 1 and November 1
This Security is convertible as specified on the other side of
this Security. Additional provisions of this Security are set forth on the other
side of this Security.
SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.
SKYWORKS SOLUTIONS, INC.
By: __________________________
Name:
Title:
Trustee's Certificate of Authentication: This is one of the Securities referred
to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee,
_____________________________________
Authorized Signatory
By:
SKYWORKS SOLUTIONS, INC.
4 3/4% CONVERTIBLE SUBORDINATED NOTE DUE NOVEMBER 15, 2007
1. Interest
Skyworks Solutions, Inc., a Delaware corporation (the "COMPANY" which
term shall include any successor corporation under the Indenture hereinafter
referred to), promises to pay interest on the principal amount of this Security
at the rate of 4.75% per annum. The Company shall pay interest semiannually on
May 15 and November 15 of each year, commencing May 15, 2003; provided, however,
that such interest may be increased by any Additional Interest accruing from
time to time on the principal amount of this Security as provided in the
Registration Rights Agreement. Any reference herein to interest accrued or
payable as of any date shall include any Additional Interest accrued or payable
on such date as provided in the Registration Rights Agreement. Interest on the
Securities shall accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from November 12, 2002; provided,
however, that if there is not an existing Default in the payment of interest and
if this Security is authenticated between a record date referred to on the face
hereof and the next succeeding interest payment date, interest shall accrue from
such interest payment date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
2. Method of Payment
The Company shall pay interest on this Security (except defaulted
interest) to the person who is the Holder of this Security at the close of
business on May 1 or November 1, as the case may be, next preceding the related
interest payment date. The Holder must surrender this Security to a Paying Agent
to collect payment of principal. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. The Company may, however, pay principal and
interest in respect of any Certificated Security by check or wire payable in
such money; provided, however, that a Holder with an aggregate principal amount
in excess of $2,000,000 will be paid by wire transfer in immediately available
funds at the election of such Holder. The Company may mail an interest check to
the Holder's registered address. Notwithstanding the foregoing, so long as this
Security is registered in the name of a Depositary or its nominee, all payments
hereon shall be made by wire transfer of immediately available funds to the
account of the Depositary or its nominee.
3. Paying Agent, Registrar and Conversion Agent
Initially, State Street Bank and Trust Company (the "TRUSTEE," which
term shall include any successor trustee under the Indenture hereinafter
referred to) will act as Paying Agent, Registrar and Conversion Agent. The
Company may change any Paying Agent, Registrar or Conversion Agent without
notice to the Holder. The Company or any of its Subsidiaries may, subject to
certain limitations set forth in the Indenture, act as Paying Agent or
Registrar.
4. Indenture, Limitations
This Security is one of a duly authorized issue of Securities of the
Company designated as its 4 3/4% Convertible Subordinated Notes Due November 15,
2007 (the "SECURITIES") issued under an Indenture dated as of November 12, 2002
(together with any supplemental indentures thereto, the "INDENTURE"), among
Skyworks Solutions, Inc. (the "COMPANY"), and the Trustee. Capitalized terms
herein are used as defined in the Indenture unless otherwise defined herein. The
terms of this Security include those stated in the Indenture and those required
by or made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended, as in effect on the date of the Indenture. This Security is
subject to all such terms, and the Holder of this Security is referred to the
Indenture and said Act for a statement of them. The Securities are subordinated
unsecured obligations of the Company limited to $230,000,000 aggregate principal
amount. The Indenture does not limit other debt of the Company, secured or
unsecured, including Senior Indebtedness.
5. Optional Redemption
The Company shall not have the option to redeem the Securities pursuant
to this Section 5 prior to November 20, 2005. Thereafter, the Company shall have
the option to redeem any portion of the Securities (an "OPTIONAL REDEMPTION")
upon giving notice as set forth in Section 6. The Optional Redemption Prices
(expressed as percentages of the principal amount) are as follows for Securities
redeemed during the periods set forth below:
Period Redemption
- ------ ----------
Price
-----
Beginning on November 20, 2005 and ending on November 14, 2006 101.1875%
Beginning on November 15, 2006 and thereafter 100.0000%
in each case together with accrued interest up to but not including the date of
redemption (the "OPTIONAL REDEMPTION DATE"), provided that if the Optional
Redemption Date falls after an interest payment record date and on or before an
interest payment date, then the interest payment will be payable to the Holders
in whose names the Securities are
registered at the close of business on the relevant record date for payment of
such interest.
6. Notice of Redemption
Notice of redemption will be mailed or delivered at least 20 days but
not more than 60 days before the Optional Redemption Date to each Holder of
Securities to be redeemed at its registered address. Securities in denominations
larger than $1,000 may be redeemed in part, but only in whole multiples of
$1,000. On and after the Optional Redemption Date, subject to the deposit with
the Paying Agent of funds sufficient to pay the Optional Redemption Price plus
accrued interest, if any, accrued to, but excluding, the Optional Redemption
Date, interest shall cease to accrue on Securities or portions of them called
for redemption.
7. Purchase of Securities at Option of Holder Upon a Change in Control
At the option of the Holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to purchase all or any part
specified by the Holder (so long as the principal amount of such part is $1,000
or an integral multiple of $1,000 in excess thereof) of the Securities held by
such Holder on the date that is no less than 30 days and not more than 60 days
after notice of the occurrence of a Change in Control is given as provided in
Section 4.07, at a purchase price equal to 100% of the principal amount thereof
together with accrued interest up to, but excluding, the Change in Control
Purchase Date. The Holder shall have the right to withdraw any Change in Control
Purchase Notice (in whole or in a portion thereof that is $1,000 or an integral
multiple of $1,000 in excess thereof) at any time prior to the close of business
on the Business Day next preceding the Change in Control Purchase Date by
delivering a written notice of withdrawal to the Paying Agent in accordance with
the terms of the Indenture.
8. Conversion
A Holder of a Security may convert the principal amount of such
Security (or any portion thereof equal to $1,000 or any integral multiple of
$1,000 in excess thereof) into shares of Common Stock at any time prior to the
close of business on the Business Day immediately preceding November 15, 2007;
provided, however, that if the Security is called for redemption or subject to
purchase upon a Change in Control, the conversion right will terminate at the
close of business on the Business Day immediately preceding the Optional
Redemption Date or the Change in Control Purchase Date, as the case may be, for
such Security or such earlier date as the Holder presents such Security for
redemption or purchase (unless the Company shall default
in making the redemption payment or Change in Control Purchase Price, as the
case may be, when due, in which case the conversion right shall terminate at the
close of business on the date such default is cured and such Security is
redeemed or purchased). The initial Conversion Price is $9.0505 per share,
subject to adjustment under certain circumstances. The number of shares of
Common Stock issuable upon conversion of a Security is determined by dividing
the principal amount of the Security or portion thereof converted by the
Conversion Price in effect on the Conversion Date. No fractional shares will be
issued upon conversion; in lieu thereof, an amount will be paid in cash based
upon the Closing Price (as defined in the Indenture) of the Common Stock on the
Trading Day immediately prior to the Conversion Date. To convert a Security, a
Holder must (a) complete and manually sign the conversion notice set forth below
and deliver such notice to a Conversion Agent, (b) surrender the Security to a
Conversion Agent, (c) furnish appropriate endorsements and transfer documents if
required by a Registrar or a Conversion Agent, and (d) pay any transfer or
similar tax, if required. Securities so surrendered for conversion (in whole or
in part) during the period from the close of business on any regular record date
to the opening of business on the next succeeding interest payment date
(excluding Securities or portions thereof which are either (i) called for
redemption or (ii) subject to purchase following a Change in Control, in either
case, on a date during the period beginning at the close of business on a
regular record date and ending at the opening of business on the first Business
Day after the next succeeding interest payment date, or if such interest payment
date is not a Business Day, the second such Business Day) shall also be
accompanied by payment in funds acceptable to the Company of an amount equal to
the interest payable on such interest payment date on the principal amount of
such Security then being converted, and such interest shall be payable to such
registered Holder notwithstanding the conversion of such Security, subject to
the provisions of this Indenture relating to the payment of defaulted interest
by the Company. If the Company defaults in the payment of interest payable on
such interest payment date, the Company shall promptly repay such funds to such
Holder. A Holder may convert a portion of a Security equal to $1,000 or any
integral multiple thereof. A Security in respect of which a Holder had delivered
a Change in Control Purchase Notice exercising the option of such Holder to
require the Company to purchase such Security may be converted only if the
Change in Control Purchase Notice is withdrawn in accordance with the terms of
the Indenture.
9. Conversion Arrangement on Call for Redemption
Any Securities called for redemption, unless surrendered for conversion
before the close of business on the Business Day immediately preceding the
Optional Redemption Date, may be deemed to be purchased from the
Holders of such Securities at an amount not less than the Optional Redemption
Price, together with accrued interest, if any, to, but not including, the
Optional Redemption Date, by one or more investment bankers or other purchasers
who may agree with the Company to purchase such Securities from the Holders, to
convert them into Common Stock of the Company and to make payment for such
Securities to the Paying Agent in trust for such Holders.
10. Subordination
The indebtedness evidenced by the Securities is, to the extent and in
the manner provided in the Indenture, subordinate and junior in right of payment
to the prior payment in full of all Senior Indebtedness of the Company. Any
Holder by accepting this Security agrees to and shall be bound by such
subordination provisions and authorizes the Trustee to give them effect. In
addition to all other rights of Senior Indebtedness described in the Indenture,
the Senior Indebtedness shall continue to be Senior Indebtedness and entitled to
the benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any terms of any instrument relating to the Senior
Indebtedness or any extension or renewal of the Senior Indebtedness.
11. Denominations, Transfer, Exchange
The Securities are in registered form without coupons in denominations
of $1,000 and integral multiples of $1,000. A Holder may register the transfer
of or exchange Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes or other governmental charges that may
be imposed in relation thereto by law or permitted by the Indenture.
12. Persons Deemed Owners
The Holder of a Security may be treated as the owner of it for all
purposes.
13. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for
two years, the Trustee or Paying Agent will pay the money back to the Company at
its written request. After that, Holders entitled to money must look to the
Company for payment.
14. Amendment, Supplement and Waiver
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Securities then outstanding, and an existing
Default or Event of Default and its consequence or compliance with any provision
of the Indenture or the Securities may be waived in a particular instance with
the consent of the Holders of a majority in principal amount of the Securities
then outstanding. Without the consent of or notice to any Holder, the Company
and the Trustee may amend or supplement the Indenture or the Securities to,
among other things, cure any ambiguity, defect or inconsistency or make any
other change that does not adversely affect the rights of any Holder.
15. Successor Corporation
When a successor corporation assumes all the obligations of its
predecessor under the Securities and the Indenture in accordance with the terms
and conditions of the Indenture, the predecessor corporation will (except in
certain circumstances specified in the Indenture) be released from those
obligations.
16. Defaults and Remedies
Under the Indenture, an Event of Default includes: (1) the Company
defaults in any payment of interest on any Security when the same becomes due
and payable, whether or not such payment shall be prohibited by Article 11, and
such default continues for a period of 30 days; (2) the Company (i) defaults in
the payment of the principal of any Security when the same becomes due and
payable at its Stated Maturity, upon redemption, upon declaration or otherwise,
whether or not such payment shall be prohibited by Article 11 or (ii) fails to
redeem or purchase Securities when required pursuant to this Indenture or the
Securities, whether or not such redemption or purchase shall be prohibited by
Article 11; (3) the Company fails to provide notice of a Change in Control in
accordance with Section 4.07; (4) the Company fails to comply with its
obligations under Section 6.01; (5) the Company fails to comply with any of its
agreements in the Securities or this Indenture (other than those referred to in
clauses (1) through (4) above) and such failure continues for 60 days after the
notice specified below; or (6) the Company pursuant to or within the meaning of
any Bankruptcy Law: (A) commences a voluntary case; (B) consents to the entry of
an order for relief against it in an involuntary case; (C) consents to the
appointment of a Custodian of it or for a substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors; (7) a court of
competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(A) is for relief against the Company in an involuntary case; (B) appoints a
Custodian of the Company or for any substantial part of its property; or (C)
orders the winding up or liquidation of the Company; and the order or decree
remains unstayed and in effect for 60 days (together with Clause (6), the
"bankruptcy
provisions"); (8) Indebtedness of the Company is not paid within 15 days of any
applicable grace period after final maturity or is accelerated by the holders
thereof because of a default and the total amount of such Indebtedness unpaid or
accelerated exceeds $20.0 million (the "cross acceleration provision").
If an Event of Default (other than an event of default as described in
clauses (6)and (7) with respect to the Company) occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the Securities
then outstanding may declare all unpaid principal to the date of acceleration on
the Securities then outstanding to be due and payable immediately, all as and to
the extent provided in the Indenture. If an Event of Default occurs as a result
of certain events of bankruptcy, insolvency or reorganization of the Company or
as described in clauses (6) and (7) herein, unpaid principal of the Securities
then outstanding shall become due and payable immediately without any
declaration or other act on the part of the Trustee or any Holder, all as and to
the extent provided in the Indenture. Holders may not enforce the Indenture or
the Securities except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Securities.
Subject to certain limitations, Holders of a majority in principal amount of the
Securities then outstanding may direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders notice of any continuing Default
(except a Default in payment of principal or interest) if it determines that
withholding notice is in their interests. The Company is required to file
periodic reports with the Trustee as to the absence of Default.
17. Trustee Dealings with the Company
State Street Bank and Trust Company, the Trustee under the Indenture,
in its individual or any other capacity, may make loans to, accept deposits from
and perform services for the Company or an Affiliate of the Company, and may
otherwise deal with the Company or an Affiliate of the Company, as if it were
not the Trustee.
18. No Recourse Against Others
A director, officer, employee or shareholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or the Indenture nor for any claim based on, in respect of or by
reason of such obligations or their creation. The Holder of this Security by
accepting this Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of this Security.
19. Authentication
This Security shall not be valid until the Trustee or an authenticating
agent manually signs the certificate of authentication on the other side of this
Security.
20. Abbreviations and Definitions
Customary abbreviations may be used in the name of the Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and UGMA (= Uniform Gifts to Minors Act).
All terms defined in the Indenture and used in this Security but not
specifically defined herein are defined in the Indenture and are used herein as
so defined.
21. Indenture to Control; Governing Law
In the case of any conflict between the provisions of this Security and
the Indenture, the provisions of the Indenture shall control. This Security
shall be governed by, and construed in accordance with, the laws of the State of
New York, without regard to principles of conflicts of law.
The Company will furnish to any Holder, upon written request and
without charge, a copy of the Indenture. Requests may be made to: Skyworks
Solutions, Inc., 20 Sylvan Road, Woburn, Massachusetts 01801, Attention: Chief
Financial Officer.
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
_____________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint
_____________________________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him or her.
Your Signature:
Date: ___________ __________________________________
(Sign exactly as your name appears
on the other side of this Security)
*Signature guaranteed by:
By: ____________________
* Signature(s) must be guaranteed by a qualified guarantor institution
with membership in an approved signature guarantee program pursuant to
Rule 17Ad-15 under the Securities Exchange Act of 1934.
CONVERSION NOTICE
To convert this Security into Common Stock of Skyworks Solutions, Inc.,
check the box: []
To convert only part of this Security, state the principal amount to be
converted (must be $1,000 or a multiple of $1,000): $______________.
If you want the stock certificate made out in another person's name,
fill in the form below:
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
________________________________________________________________________________
Your Signature:
Date: ___________ __________________________________
(Sign exactly as your name appears
on the other side of this Security)
*Signature guaranteed by:
By: ________________________
* Signature(s) must be guaranteed by a qualified guarantor institution
with membership in an approved signature guarantee program pursuant to
Rule 17Ad-15 under the Securities Exchange Act of 1934.
OPTION TO ELECT REPURCHASE
UPON A CHANGE OF CONTROL
To: Skyworks Solutions, Inc.
The undersigned registered owner of this Security hereby irrevocably
acknowledges receipt of a notice from Skyworks Solutions, Inc. (the "COMPANY")
as to the occurrence of a Change in Control with respect to the Company, and
requests and instructs the Company to redeem the entire principal amount of this
Security, or the portion thereof (which is $1,000 or an integral multiple
thereof) below designated, in accordance with the terms of the Indenture
referred to in this Security at the Change in Control Purchase Price, together
with accrued interest to, but excluding, such date, to the registered Holder
hereof.
Date: __________ ___________________________________
Signature(s)
Signature(s) must be guaranteed by a
qualified guarantor institution with
membership in an approved signature
guarantee program pursuant to Rule
17Ad-15 under the Securities
Exchange Act of 1934.
___________________________________
Signature Guaranty
Principal amount to be redeemed (in an integral multiple of $1,000, if less than
all):
____________________________________
NOTICE: The signature to the foregoing Election must correspond to the
Name as written upon the face of this Security in every particular,
without alteration or any change whatsoever.
SCHEDULE OF EXCHANGES OF SECURITIES
The following exchanges, redemptions, repurchases or conversions of a
part of this global Security have been made:
Principal
Amount of
this
Global Amount of Amount of
Security Decrease in Increase in
Following Principal Principal
Such Authorized Amount of Amount of
Decrease Signatory of this this
(or Date Securities Global Global
Increase) of Exchange Custodian Security Security
------------ ------------- --------------- ------------- -------------
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION
OF TRANSFER OF TRANSFER RESTRICTED SECURITIES
Re: 4 3/4% Convertible Subordinated Securities Due November 15, 2007 (the
"SECURITIES") of Skyworks Solutions, Inc.
This certificate relates to $______________ principal amount of
Securities owned in (check applicable box)
[] book-entry or [] definitive form by ___________ (the "TRANSFEROR").
The Transferor has requested a Registrar or the Trustee to exchange or
register the transfer of such Securities.
In connection with such request and in respect of each such Security,
the Transferor does hereby certify that the Transferor is familiar with transfer
restrictions relating to the Securities as provided in Section 2.08 of the
Indenture dated as of November 12, 2002, between Skyworks Solutions, Inc. and
State Street Bank and Trust Company (the "INDENTURE"), and the transfer of such
Security is being made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "SECURITIES ACT") (check applicable box)
or the transfer or exchange, as the case may be, of such Security does not
require registration under the Securities Act because (check applicable box):
[] Such Security is being transferred pursuant to an effective
registration statement under the Securities Act.
[] Such Security is being transferred to the Company.
[] Such Security is being transferred inside the United States to a person
the Transferor reasonably believes is a "qualified institutional buyer"
(as defined in Rule 144A or any successor provision thereto ("RULE
144A") under the Securities Act) that is purchasing for its own account
or for the account of a "qualified institutional buyer", in each case
to whom notice has been given that the transfer is being made in
reliance on such Rule 144A, and in each case in reliance on Rule 144A.
[] Such Security is being transferred outside the United States in an
offshore transaction within the meaning of Regulation S under the
Securities Act in compliance with Rule 904 under the Securities Act.
[] Such Security is being transferred pursuant to and in compliance with
an exemption from the registration requirements under the Securities
Act in accordance with Rule 144 (or any successor thereto) ("RULE 144")
under the Securities Act.
[] Such Security is being transferred pursuant to and in compliance with
an exemption from the registration requirements of the Securities Act
(other than an exemption referred to above) and as a result of which
such Security will, upon such transfer, cease to be a "restricted
security" within the meaning of Rule 144 under the Securities Act.
The Transferor acknowledges and agrees that, if the transferee will
hold any such Securities in the form of beneficial interests in a Global
Security which is a "restricted security" within the meaning of Rule 144 under
the Securities Act, then such transfer can only be made pursuant to Rule 144A
under the Securities Act and such transferee must be a "qualified institutional
buyer" (as defined in Rule 144A).
Date: _______________ ______________________________
(Insert Name of Transferor)
Exhibit 4.e
[EXECUTION COPY]
SKYWORKS SOLUTIONS, INC.,
Issuer
15% Convertible Senior Subordinated Notes
Due June 30, 2005
-------------------------------
INDENTURE
Dated as of November 20, 2002
-------------------------------
WACHOVIA BANK, NATIONAL ASSOCIATION,
Trustee
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- ------------------------------------------------------------------- -------------
310 (a)(1)......................................................... 8.10
(a)(2)......................................................... 8.10
(a)(3)......................................................... N.A.
(a)(4)......................................................... N.A.
(b)............................................................ 8.08; 8.10
(c)............................................................ N.A
311 (a)............................................................ 8.11
(b)............................................................ 8.11
(c)............................................................ N.A.
312 (a)............................................................ 2.06
(b)............................................................ 12.03
(c)............................................................ 12.03
313 (a)............................................................ 8.06
(b)(1)......................................................... N.A.
(b)(2)......................................................... 8.06
(c)............................................................ 12.02
(d)............................................................ 8.06
314 (a)............................................................ 4.02; 12.02
(b)............................................................ N.A.
(c)(1)......................................................... 12.04
(c)(2)......................................................... 12.04
(c)(3)......................................................... N.A.
(d)............................................................ N.A.
(e)............................................................ 12.05
315 (a)............................................................ 8.01
(b)............................................................ 8.05; 12.02
(c)............................................................ 8.01
(d)............................................................ 8.01
(e)............................................................ 7.11
316 (a)(last sentence)............................................. 12.06
(a)(1) (A)..................................................... 7.05
(a)(1) (B)..................................................... 7.04
(a)(2)......................................................... N.A.
(b)............................................................ 7.07
317 (a)(1)......................................................... 7.08
(a)(2)......................................................... 7.09
(b)............................................................ 2.05
318 (a)............................................................ 12.01
- -----------------------------------
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE.................................... 1
Section 1.01. Definitions................................................................... 1
Section 1.02. Other Definitions............................................................. 9
Section 1.03. Incorporation by Reference of Trust Indenture Act............................. 10
Section 1.04. Rules of Construction......................................................... 10
ARTICLE 2 THE SECURITIES................................................................ 11
Section 2.01. Form and Dating............................................................... 11
Section 2.02. Execution and Authentication.................................................. 12
Section 2.03. Registrar, Paying Agent and Conversion Agent.................................. 13
Section 2.04. Maintenance of Office or Agency............................................... 13
Section 2.05. Paying Agent to Hold Money and Shares of Common Stock in Trust................ 14
Section 2.06. Securityholder Lists.......................................................... 14
Section 2.07. Transfer and Exchange......................................................... 14
Section 2.08. Additional Transfer and Exchange Requirements................................. 15
Section 2.09. CUSIP Numbers................................................................. 22
Section 2.10. Replacement Securities........................................................ 23
Section 2.11. Outstanding Securities........................................................ 23
Section 2.12. Temporary Securities.......................................................... 24
Section 2.13. Cancellation.................................................................. 24
Section 2.14. Defaulted Interest............................................................ 24
ARTICLE 3 REDEMPTION.................................................................... 24
Section 3.01. Optional Redemption........................................................... 24
Section 3.02. Notices to Trustee............................................................ 25
Section 3.03. Selection of Securities to Be Redeemed........................................ 25
Section 3.04. Notice of Redemption.......................................................... 25
Section 3.05. Effect of Notice of Redemption................................................ 26
Section 3.06. Deposit of Redemption Price................................................... 26
Section 3.07. Securities Redeemed in Part................................................... 27
ARTICLE 4 COVENANTS..................................................................... 27
Section 4.01. Payment of Securities......................................................... 27
Section 4.02. SEC Reports................................................................... 27
Section 4.03. Compliance Certificates....................................................... 28
Section 4.04. Further Instruments and Acts.................................................. 28
i
Section 4.05. Maintenance of Corporate Existence............................................ 28
Section 4.06. Payment of Additional Interest................................................ 28
Section 4.07. Purchase of Securities at Option of the Holder upon Change in Control......... 28
Section 4.08. Effect of Change in Control Purchase Notice................................... 32
Section 4.09. Deposit of Change in Control Purchase Price................................... 32
Section 4.10. Securities Purchased in Part.................................................. 33
Section 4.11. Compliance with Securities Laws upon Purchase of Securities................... 33
Section 4.12. Repayment to the Company...................................................... 33
ARTICLE 5 CONVERSION.................................................................... 33
Section 5.01. Conversion Privilege.......................................................... 33
Section 5.02. Conversion Procedure.......................................................... 34
Section 5.03. Fractional Shares............................................................. 36
Section 5.04. Taxes on Conversion........................................................... 36
Section 5.05. Company to Provide Stock...................................................... 36
Section 5.06. Adjustment of Conversion Price................................................ 37
Section 5.07. No Adjustment................................................................. 41
Section 5.08. Adjustment for Tax Purposes................................................... 42
Section 5.09. Notice of Adjustment.......................................................... 42
Section 5.10. Notice of Certain Transactions................................................ 42
Section 5.11. Effect of Reclassification, Consolidation, Merger or Sale on Conversion
Privilege..................................................................... 43
Section 5.12. Trustee's Disclaimer.......................................................... 44
Section 5.13. Voluntary Reduction........................................................... 44
ARTICLE 6 SUCCESSOR COMPANIES........................................................... 44
Section 6.01. When the Company May Merge or Transfer Assets................................. 44
ARTICLE 7 DEFAULTS AND REMEDIES......................................................... 45
Section 7.01. Events of Default............................................................. 45
Section 7.02. Acceleration.................................................................. 47
Section 7.03. Other Remedies................................................................ 47
Section 7.04. Waiver of Past Defaults....................................................... 48
Section 7.05. Control by Majority........................................................... 48
Section 7.06. Limitation on Suits........................................................... 48
Section 7.07. Rights of Holders to Receive Payment.......................................... 49
Section 7.08. Collection Suit by Trustee.................................................... 49
Section 7.09. Trustee May File Proofs of Claim.............................................. 49
Section 7.10. Priorities.................................................................... 49
Section 7.11. Undertaking for Costs......................................................... 50
ii
ARTICLE 8 TRUSTEE....................................................................... 50
Section 8.01. Duties of Trustee............................................................. 50
Section 8.02. Rights of Trustee............................................................. 51
Section 8.03. Individual Rights of Trustee.................................................. 52
Section 8.04. Trustee's Disclaimer.......................................................... 52
Section 8.05. Notice of Defaults............................................................ 53
Section 8.06. Reports by Trustee to Holders................................................. 53
Section 8.07. Compensation and Indemnity.................................................... 53
Section 8.08. Replacement of Trustee........................................................ 54
Section 8.09. Successor Trustee by Merger................................................... 55
Section 8.10. Eligibility; Disqualification................................................. 55
Section 8.11. Preferential Collection of Claims Against Company............................. 56
ARTICLE 9 DISCHARGE OF INDENTURE........................................................ 56
Section 9.01. Satisfaction and Discharge of Indenture....................................... 56
Section 9.02. Application of Trust Money and Shares......................................... 57
Section 9.03. Repayment to Company.......................................................... 57
Section 9.04. Reinstatement................................................................. 58
ARTICLE 10 AMENDMENTS.................................................................... 58
Section 10.01. Without Consent of Holders.................................................... 58
Section 10.02. With Consent of Holders....................................................... 59
Section 10.03. Compliance with Trust Indenture Act........................................... 60
Section 10.04. Revocation and Effect of Consents and Waivers................................. 60
Section 10.05. Notation on or Exchange of Securities......................................... 61
Section 10.06. Trustee to Sign Amendments.................................................... 61
Section 10.07. Payment for Consent........................................................... 61
ARTICLE 11 SUBORDINATION................................................................. 61
Section 11.01. Agreement to Subordinate...................................................... 61
Section 11.02. Liquidation, Dissolution, Bankruptcy.......................................... 62
Section 11.03. Default on Senior Indebtedness................................................ 62
Section 11.04. Acceleration of Payment of Securities......................................... 63
Section 11.05. When Distribution Must Be Paid Over........................................... 64
Section 11.06. Subrogation................................................................... 64
Section 11.07. Relative Rights............................................................... 64
Section 11.08. Subordination May Not Be Impaired by the Company.............................. 64
Section 11.09. Rights of Trustee and Paying Agent............................................ 64
Section 11.10. Distribution or Notice to Representative...................................... 65
Section 11.11. Article 11 Not to Prevent Events of Default or Limit Right to Accelerate...... 65
Section 11.12. Trustee Entitled to Rely...................................................... 65
iii
Section 11.13. Trustee to Effectuate Subordination........................................... 66
Section 11.14. Trustee Not Fiduciary for Holders of Senior Indebtedness...................... 66
Section 11.15. Reliance by Holders of Senior Indebtedness on Subordination Provisions........ 66
ARTICLE 12 MISCELLANEOUS................................................................. 66
Section 12.01. Trust Indenture Act Controls.................................................. 66
Section 12.02. Notices....................................................................... 66
Section 12.03. Communication by Holders with Other Holders................................... 67
Section 12.04. Certificate and Opinion as to Conditions Precedent............................ 67
Section 12.05. Statements Required in Certificate or Opinion................................. 68
Section 12.06. When Securities Disregarded................................................... 68
Section 12.07. Rules by Trustee, Paying Agent and Registrar.................................. 68
Section 12.08. Legal Holidays................................................................ 68
Section 12.09. Governing Law................................................................. 69
Section 12.10. No Recourse Against Others.................................................... 69
Section 12.11. Successors.................................................................... 69
Section 12.12. Multiple Originals............................................................ 69
Section 12.13. Table of Contents; Headings................................................... 69
Exhibit A - Form of Security ...................................................................... A-1
iv
INDENTURE dated as of November 20, 2002, between Skyworks
Solutions, Inc., a Delaware corporation (the "Company"), and Wachovia Bank,
National Association, a national banking association, as trustee hereunder (the
"Trustee").
Each party agrees as follows for the benefit of the other party
and for the equal and ratable benefit of the Holders of the Company's 15%
Convertible Senior Subordinated Notes due June 30, 2005.
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"Additional Interest" has the meaning specified in Section 5 of
the Registration Rights Agreement. All references herein to interest accrued or
payable as of any date shall include any Additional Interest accrued or payable
as of such date as provided in the Registration Rights Agreement.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Applicable Conversion Price" means, as applicable, with respect
to the Maturity Date or any Conversion Date, as the case may be, (a) if the
Current Market Price is greater than or equal to the Conversion Price, the
Conversion Price, (b) if the Current Market Price is less than the Conversion
Price but greater than or equal to the Floor Price, the Current Market Price,
and (c) if the Current Market Price is less than the Floor Price, the Floor
Price. For the purpose of this definition, "Current Market Price" means the
average of the daily Closing Price per share of the Common Stock for the ten
consecutive Trading Days immediately prior to, but not including, the Maturity
Date or the Conversion Date, as the case may be.
"Applicable Procedures" means, with respect to any transfer or
exchange of beneficial ownership interests in a Global Security, the rules and
procedures of the Depositary that are applicable to such transfer or exchange.
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Securities, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Board of Directors" means the Board of Directors of the Company
or any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligation" means an obligation that is required to
be classified and accounted for as a capital lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Certificated Security" means a Security that is in substantially
the form attached hereto as Exhibit A and that does not include the information
or the schedule called for by footnotes 1, 3 and 4 thereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock of the Company, par value
$.25 per share, as it exists on the date of this Indenture and any shares of any
class or classes of capital stock of the Company resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which are
not subject to redemption by the Company; provided, however, that if at any time
there shall be more than one resulting class, the shares of each class then so
issuable on conversion of Securities shall be substantially in the proportion
which the total number of shares of such class resulting from all such
reclassifications bears to the total number of shares of all such classes
resulting from such reclassifications.
2
"Company" means Skyworks Solutions, Inc., a Delaware corporation,
and its successors.
"Corporate Trust Office" means the principal corporate trust
office of the Trustee at 200 Berkeley Street, 17th floor, Boston, MA 02116, or
such other office, designated by the Trustee by written notice to the Company
and approved by the Company, at which at any particular time its corporate trust
business shall be administered.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement designed
to protect such Person against fluctuations in currency values.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Designated Senior Indebtedness" means any Senior Indebtedness of
the Company which, at the date of determination, has an aggregate principal
amount outstanding of, or under which, at the date of determination, the holders
thereof are committed to lend up to, at least $10 million and is specifically
designated by the Company in the instrument evidencing or governing such Senior
Indebtedness as "Designated Senior Indebtedness" for purposes of this Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Floor Price" shall be equal to 80% of the Conversion Price.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of November 12, 2002, including those
set forth in (1) the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants, (2) statements
and pronouncements of the Financial Accounting Standards Board, (3) such other
statements by such other entity as approved by a significant segment of the
accounting profession and (4) the rules and regulations of the SEC governing the
inclusion of financial statements (including pro forma financial statements) in
periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC.
"Global Security" means a permanent Global Security that is in
substantially the form attached hereto as Exhibit A and that includes the
information and schedule called for by footnotes 1, 3 and 4 thereof and which is
deposited with the Depositary or its custodian and registered in the name of the
Depositary or its nominee.
3
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
or any obligation, direct or indirect, contingent or otherwise, of such Person
(1) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness of such Person (whether arising by virtue of partnership
arrangements, or by agreements to keep-well, to purchase assets, goods,
securities or services, to take-or- pay or to maintain financial statement
conditions or otherwise) or (2) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning. The term "Guarantor" shall mean any
Person Guaranteeing any obligation.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Person at the time it becomes a Subsidiary. The term "Incurrence" when used as a
noun shall have a correlative meaning. The accretion of principal of a
non-interest bearing or other discount security shall not be deemed the
Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(1) the principal of and premium (if any) in respect of (A)
indebtedness of such Person for money borrowed and (B) indebtedness
evidenced by notes, debentures, bonds or other similar instruments for
the payment of which such Person is responsible or liable;
(2) all Capital Lease Obligations of such Person and all
Attributable Debt in respect of Sale/Leaseback Transactions entered into
by such Person;
(3) all obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale obligations of
such Person and all
4
obligations of such Person under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of
business);
(4) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit
securing obligations (other than obligations described in clauses (1)
through (3) above) entered into in the ordinary course of business of
such Person to the extent such letters of credit are not drawn upon or,
if and to the extent drawn upon, such drawing is reimbursed no later than
the tenth Business Day following payment on the letter of credit);
(5) the amount of all obligations of such Person with respect to
the redemption, repayment or other repurchase of any Capital Stock of
such Person;
(6) all obligations of the type referred to in clauses (1)
through (5) of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise, including by
means of any Guarantee;
(7) all obligations of the type referred to in clauses (1)
through (6) of other Persons secured by any Lien on any property or asset
of such Person (whether or not such obligation is assumed by such
Person), the amount of such obligation being deemed to be the lesser of
the value of such property or assets or the amount of the obligation so
secured; and
(8) to the extent not otherwise included in this definition,
Hedging Obligations of such Person.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date; provided, however, that
in the case of Indebtedness sold at a discount, the amount of such Indebtedness
at any time will be the accreted value thereof at such time.
"Indenture" means this Indenture as amended or supplemented from
time to time.
"Interest Rate Agreement" means in respect of a Person any
interest rate swap agreement, interest rate cap agreement or other financial
agreement or arrangement designed to protect such Person against fluctuations in
interest rates.
5
"Issue Date" means the date on which the Securities are originally
issued.
"Junior Notes" means the 4 3/4% Convertible Subordinated Notes due
November 15, 2007 of the Company, individually and collectively.
"Junior Notes Indenture" means the Indenture dated as of November
12, 2002 between the Company and State Street Bank and Trust Company with
respect to the Junior Notes.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or similar charge.
"Maturity Date" means June 30, 2005.
"Obligations" means with respect to any Indebtedness all
obligations for principal, premium, interest, penalties, fees, indemnifications,
reimbursements, and other amounts payable pursuant to the documentation
governing such Indebtedness.
"Officer" means the Chief Executive Officer, the President, any
Vice President, the Treasurer, the Corporate Controller or the Secretary of the
Company.
"Officer's Certificate" means a certificate signed by an Officer.
"Opinion of Counsel" means a written opinion from legal counsel
who is acceptable to the Trustee. The counsel may be an employee of or counsel
to the Company or the Trustee.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of
such Person.
"principal" of a Security means the principal plus the premium, if
any, of the Security payable on the Security which is due or overdue or is to
become due at the relevant time.
6
"Refinance" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
other Indebtedness in exchange or replacement for, such indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Registration Rights Agreement" means the Registration Rights
Agreement dated November 12, 2002 between the Company and Conexant Systems, Inc.
"Representative" means any trustee, agent or representative (if
any) for an issue of Senior Indebtedness; provided, however, that if and for so
long as any Senior Indebtedness lacks such a representative, then the
Representative for such Senior Indebtedness shall at all times be the holders of
a majority in outstanding principal amount of such Senior Indebtedness.
"Restricted Certificated Security" means a Certificated Security
which is a Transfer Restricted Security.
"Restricted Global Security" means a Global Security which is a
Transfer Restricted Security.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company transfers such
property to an unaffiliated Person and the Company leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Securities" means the securities issued under this Indenture
which shall be "Designated Senior Indebtedness" (as defined in the Junior Notes
Indenture) for purposes of the Junior Notes Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to a
Global Security (as appointed by the Depository), or any successor Person
thereto and shall initially be the Trustee.
"Senior Indebtedness" means with respect to any Person all (1)
Indebtedness of such Person, whether outstanding on the Issue Date or thereafter
Incurred and (2) all other Obligations of such Person (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to such Person whether or not post-filing interest is
allowed in such proceeding) in respect of Indebtedness described in clause (1)
above unless, in the case of clauses (1) and (2), in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is
expressly
7
provided that such Indebtedness or other Obligations are not superior in right
of payment to the Securities; provided, however, that Senior Indebtedness shall
not include (i) any obligation of such Person to any Subsidiary, (ii) any
liability for Federal, state, local or other taxes owed or owing by such Person
or (iii) any accounts payable or other liability to trade creditors arising in
the ordinary course of business (including guarantees thereof or instruments
evidencing such liabilities).
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (1) such Person,
(2) such Person and one or more Subsidiaries of such Person or (3) one or more
Subsidiaries of such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date of this Indenture.
"Trading Day" means, with respect to any security, each Monday,
Tuesday, Wednesday, Thursday and Friday, other than any day on which securities
are not generally traded on the principal exchange or market in which such
security is traded.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means any officer within the Corporate Trust
Office of the Trustee with direct responsibility for the administration of this
Indenture and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his or her
knowledge and familiarity with the particular subject.
"Unrestricted Certificated Security" means a Certificated Security
that is not a Transfer Restricted Security.
"Unrestricted Global Security" means a Global Security that is not
a Transfer Restricted Security.
8
"Voting Stock" means any class or classes of Capital Stock
pursuant to which the holders thereof under ordinary circumstances have the
power to vote in the election of the board of directors, managers or trustees of
any Person, or other persons performing similar functions irrespective of
whether or not the Capital Stock of any other class or classes shall have, or
might have, voting power by reason of the happening of any contingency.
Section 1.02. Other Definitions.
Defined in
Term Section
---------- --------------
"Agent Members".................................................................. 2.01(c)
"Bankruptcy Law"................................................................. 7.01
"Blockage Notice"................................................................ 11.03
"Change in Control".............................................................. 4.07(a)
"Change in Control Purchase Date"................................................ 4.07(a)
"Change in Control Purchase Notice".............................................. 4.07(c)
"Change in Control Purchase Price"............................................... 4.07(a)
"Closing Price".................................................................. 5.06(f)
"Conversion Agent"............................................................... 2.03
"Conversion Date"................................................................ 5.02
"Conversion Price"............................................................... 5.06
"Current Market Price Per Share"................................................. 5.06(f)
"Custodian"...................................................................... 7.01
"Depositary"..................................................................... 2.01(b)
"Determination Date"............................................................. 5.06(d)
"DTC"............................................................................ 2.01(b)
"Expiration Date"................................................................ 5.06(e)
"Expiration Time"................................................................ 5.06(e)
"Event of Default"............................................................... 7.01
"Legal Holiday".................................................................. 12.08
"NNM"............................................................................ 5.06(f)
"NYSE"........................................................................... 5.06(f)
"Optional Redemption"............................................................ 3.01
"Optional Redemption Date"....................................................... 3.01
"Optional Redemption Price"...................................................... 3.01
"pay the Securities"............................................................. 11.03
"Paying Agent"................................................................... 2.03
"Payment Blockage Period"........................................................ 11.03
"Payment Default"................................................................ 11.03
"Purchased Shares"............................................................... 5.06(e)
9
Defined in
Term Section
---------- --------------
"Refinancing Agreement".......................................................... 2.01(a)
"Registrar"...................................................................... 2.03
"Successor Person"............................................................... 6.01
"Transfer Certificate"........................................................... 2.08(f)(1)
"Transfer Restricted Security"................................................... 2.08(f)(1)
"Triggering Distribution"........................................................ 5.06(d)
"Unissued Shares"................................................................ 4.07(a)
Section 1.03. Incorporation by Reference of Trust Indenture Act.
The mandatory provisions of the TIA are incorporated by reference in and made a
part of this Indenture. The following TIA terms have the following meanings:
"Commission" means the SEC;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the indenture securities means the Company and any
other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
Section 1.04. Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
10
(6) unsecured Indebtedness shall not be deemed to be subordinate
or junior to Indebtedness secured by a Lien merely by virtue of its
nature as unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the Company dated such date prepared
in accordance with GAAP; and
(8) all references to any amount of interest or any other amount
payable on or with respect to any of the Securities shall be deemed to
include payment of any Additional Interest pursuant to the Registration
Rights Agreement.
ARTICLE 2
THE SECURITIES
Section 2.01. Form and Dating.
(a) Form and Dating. The Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A,
which is hereby incorporated in and expressly made part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Company). The Securities are being issued by the Company pursuant to the
Refinancing Agreement dated as of November 6, 2002 (the "Refinancing
Agreement"), between the Company and Conexant Systems, Inc., in exchange for the
Interim Convertible Note (as defined in the Refinancing Agreement). Each
Security shall be dated the date of its authentication. The terms of the
Securities set forth in Exhibit A are part of the terms of this Indenture.
(b) Global Securities. Any Securities issued in the form of one
or more Global Securities shall be deposited on behalf of the Holders of the
Securities represented thereby with the Trustee, at its Corporate Trust Office,
as custodian for the depositary, The Depository Trust Company ("DTC") (such
depositary, or any successor thereto, being hereinafter referred to as the
"Depositary"), and registered in the name of its nominee, Cede & Co., duly
executed by the Company and authenticated by the Trustee as hereinafter
provided.
(c) Global Securities in General. Each Global Security shall
represent such of the outstanding Securities as shall be specified therein and
each shall provide that
11
it shall represent the aggregate amount of outstanding Securities from time to
time endorsed thereon and that the aggregate amount of outstanding Securities
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges, redemptions, purchases or conversions of such
Securities. Any endorsement of a Global Security to reflect the amount of any
increase or decrease in the amount of outstanding Securities represented thereby
shall be made by the Securities Custodian in accordance with the standing
instructions and procedures existing between the Depositary and the Securities
Custodian.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depositary or under any Global Security, and the
Depositary (including, for this purpose, its nominee) may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the absolute
owner and Holder of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall (1) prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or (2) impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Security.
Section 2.02. Execution and Authentication. An Officer shall sign
the Securities for the Company by manual or facsimile signature. Typographic and
other minor defects in any facsimile signature shall not affect the validity or
enforceability of any Security which has been authenticated and delivered by the
Trustee.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
On the Issue Date, the Trustee shall authenticate and deliver $45
million of 15% Convertible Senior Subordinated Notes due June 30, 2005, which
initially will be represented by a Restricted Certificated Security. The
aggregate principal amount of Securities outstanding at any time may not exceed
$45 million except as provided in Section 2.10.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes
12
authentication by such agent. An authenticating agent has the same rights as any
Registrar, Paying Agent or agent for service of notices and demands.
Section 2.03. Registrar, Paying Agent and Conversion Agent. The
Company shall maintain an office or agency where Securities may be presented for
registration of transfer or for exchange (the "Registrar"), an office or agency
where Securities may be presented for payment (the "Paying Agent") and one or
more offices or agencies where securities may be presented for conversion (each,
a "Conversion Agent"). The Registrar shall keep a register of the Securities and
of their transfer and exchange. The Company may have one or more co-registrars
and one or more additional paying agents. The term "Paying Agent" includes any
additional paying agent.
The Company shall enter into an appropriate agency agreement with
any Registrar, co-registrar, Paying Agent or Conversion Agent not a party to
this Indenture, which shall incorporate the terms of the TIA. The agreement
shall implement the provisions of this Indenture that relate to such agent. The
Company shall notify the Trustee of the name and address of any such agent. If
the Company fails to maintain a Registrar, Paying Agent or Conversion Agent, the
Trustee shall act as such and shall be entitled to appropriate compensation
therefor pursuant to Section 8.07. The Company may act as Paying Agent,
Registrar, co-registrar, transfer agent or Conversion Agent.
The Company initially appoints the Trustee as Registrar, Paying
Agent and Conversion Agent in connection with the Securities.
Section 2.04. Maintenance of Office or Agency. The Company shall
maintain in the Borough of Manhattan, the City of New York, an office or agency
(which may be an office of the Trustee or an affiliate of the Trustee, Registrar
or co-registrar) where Securities may be surrendered for registration of
transfer or for exchange and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. Such office shall
initially be Wachovia Bank, National Association, at 40 Broad Street in the City
of New York. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New
13
York, for such purposes. The Company shall give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.
Section 2.05. Paying Agent to Hold Money and Shares of Common
Stock in Trust. Prior to 11:00 a.m. New York City time on each due date of the
principal and interest on any Security, the Company shall deposit with the
Paying Agent (i) a sum sufficient to pay such principal (if to be due in cash)
and interest when so becoming due or (ii) a number of shares of Common Stock
sufficient to pay such principal (if to be due in shares of Common Stock) in
accordance with paragraph 2 or 16 of the Form of Security attached hereto as
Exhibit A. The Company shall require each Paying Agent (other than the Trustee)
to agree in writing that the Paying Agent shall hold in trust for the benefit of
Securityholders or the Trustee all money and shares of Common Stock held by the
Paying Agent for the payment of principal of or interest on the Securities and,
if the Paying Agent is different than the Trustee, shall notify the Trustee of
any default by the Company in making any such payment, and while any such
default continues, the Trustee may require the Paying Agent to pay all money and
shares of Common Stock held by it to the Trustee. If the Company or a Subsidiary
acts as Paying Agent, it shall segregate the money and shares of Common Stock
held by it as Paying Agent and hold it as a separate trust fund. The Company at
any time may require a Paying Agent to pay all money and shares of Common Stock
held by it to the Trustee and to account for any funds and shares of Common
Stock disbursed by the Paying Agent. Upon complying with this Section, the
Paying Agent shall have no further liability for the money and shares of Common
Stock delivered to the Trustee.
Section 2.06. Securityholder Lists. The Trustee shall preserve in
as current a form as is reasonably practicable the most recent list available to
it of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
Section 2.07. Transfer and Exchange. The Securities shall be
issued in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer. When a Security is presented to the
Registrar or a co-registrar with a request to register a transfer, the Registrar
shall register the transfer as requested if the requirements of this Indenture
are satisfied. When Securities are presented to the Registrar or a co-registrar
with a request to exchange them for an equal principal amount of Securities of
other denominations, the Registrar shall make the exchange as requested if the
same requirements are met. To permit registration of transfers and exchanges,
the Company shall execute and the Trustee shall authenticate Securities at the
Registrar's or
14
co-registrar's request. The Company or the Registrar may require payment by the
Holder of a sum sufficient to pay all taxes, assessments or other governmental
charges in connection with any transfer or exchange pursuant to this Section.
The Company shall not be required to make and the Registrar need not register
transfers or exchanges of Securities selected for redemption (except, in the
case of Securities to be redeemed in part, the portion thereof not to be
redeemed) or any Securities for a period of 15 days before a selection of
Securities to be redeemed or 15 days before an interest payment date.
Prior to the due presentation for registration of transfer of any
Security, the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and (subject to the provisions of the Securities with
respect to record dates) interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the Company,
the Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
All Securities issued upon any transfer or exchange pursuant to
the terms of this Indenture will evidence the same debt and will be entitled to
the same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
Section 2.08. Additional Transfer and Exchange Requirements.
(a) Transfer and Exchange of Global Securities. (1) Certificated
Securities shall be issued in exchange for interests in the Global Securities
only if (x) the Depositary notifies the Company that it is unwilling or unable
to continue as depositary for the Global Securities or if it at any time ceases
to be a "clearing agency" registered under the Exchange Act, if so required by
applicable law or regulation and a successor depositary is not appointed by the
Company within 90 days, (y) an Event of Default has occurred and is continuing
or (z) the Company, in its sole discretion, notifies the Trustee in writing that
it elects to cause the issuance of Certificated Securities. In any such case,
the Company shall execute, and the Trustee shall, upon receipt of an order from
the Company (which the Company agrees to deliver promptly), authenticate and
deliver Certificated Securities in an aggregate principal amount equal to the
principal amount of such Global Securities in exchange therefor. Only Restricted
Certificated Securities shall be issued in exchange for beneficial interests in
Restricted Global Securities, and only Unrestricted Certificated Securities
shall be issued in exchange for beneficial interests in Unrestricted Global
Securities. Certificated Securities issued in exchange for beneficial interests
in Global Securities shall be registered in such names and shall be in such
authorized denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the Trustee. The
Trustee shall deliver or
15
cause to be delivered such Certificated Securities to the persons in whose names
such Securities are so registered. Such exchange shall be effected in accordance
with the Applicable Procedures.
(2) Notwithstanding any other provisions of this Indenture other
than the provisions set forth in Section 2.08(a)(1), a Global Security may not
be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(b) Transfer and Exchange of Certificated Securities. When
Certificated Securities are presented by a Holder to a Registrar with a request:
(x) to register the transfer of the Certificated Securities to a
person who will take delivery thereof in the form of Certificated
Securities only; or
(y) to exchange such Certificated Securities for an equal
principal amount of Certificated Securities of other authorized
denominations;
such Registrar shall register the transfer or make the exchange as requested if
the requirements for such transaction under this Indenture are satisfied;
provided, however, that the Certificated Securities presented or surrendered for
register of transfer or exchange:
(1) shall be duly endorsed or accompanied by an assignment form
and, if applicable, a transfer certificate each in the form included in
Exhibit A, and in a form satisfactory to the Registrar duly executed by
the Holder thereof or its attorney duly authorized in writing; and
(2) in the case of a Restricted Certificated Security, such
request shall be accompanied by the following additional information and
documents, as applicable:
(i) if such Restricted Certificated Security is being
delivered to the Registrar by a Holder for registration in the
name of such Holder, without transfer, or such Restricted
Certificated Security is being transferred to the Company or a
Subsidiary of the Company, a certification to that effect from
such Holder (in substantially the form set forth in the Transfer
Certificate);
(ii) if such Restricted Certificated Security is being
transferred pursuant to an effective registration statement under
the Securities Act, a
16
certification to that effect from such Holder (in substantially
the form set forth in the Transfer Certificate); or
(iii) if such Restricted Certificated Security is being
transferred (x) pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144,
(y) outside the United States in an offshore transaction within
the meaning of Regulation S under the Securities Act in compliance
with Rule 904 under the Securities Act or (z) (A) pursuant to an
exemption from the registration requirements of the Securities Act
(other than pursuant to Rule 144 or Rule 904), and (B) as a
result, such Security shall cease to be a "restricted security"
within the meaning of Rule 144, a certification to that effect
from the Holder (in substantially the form set forth in the
Transfer Certificate) and, if the Company or such Registrar so
requests, an Opinion of Counsel, certificates and other
information reasonably acceptable to the Company and such
Registrar to the effect that such transfer is in compliance with
the requirements of the Securities Act.
(c) Transfer of a Beneficial Interest in a Restricted Global
Security for a Beneficial Interest in an Unrestricted Global Security. Any
person having a beneficial interest in a Restricted Global Security may upon
request, subject to the Applicable Procedures, transfer such beneficial interest
to a person who is required or permitted to take delivery thereof in the form of
an Unrestricted Global Security. Upon receipt by the Trustee of written
instructions, or such other form of instructions as is customary for the
Depositary, from the Depositary or its nominee on behalf of any person having a
beneficial interest in a Restricted Global Security and the following additional
information and documents in such form as is customary for the Depositary from
the Depositary or its nominee on behalf of the person having such beneficial
interest in the Restricted Global Security (all of which may be submitted by
facsimile or electronically):
(1) if such beneficial interest is being transferred pursuant to
an effective registration statement under the Securities Act, a
certification to that effect from the transferor (in substantially the
form set forth in the Transfer Certificate); or
(2) if such beneficial interest is being transferred (i)
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144, (ii) outside the United
States in an offshore transaction within the meaning of Regulation S
under the Securities Act in compliance with Rule 904 under the Securities
Act or (iii) (A) pursuant to an exemption from the registration
requirements of the Securities Act (other than pursuant to Rule 144 or
Rule 904) and (B) as a result, such Security shall cease to be a
"restricted security" within the meaning of Rule 144, a certification to
that effect from the transferor (in substantially the form set forth in
the Transfer Certificate) and, if the Company or
17
the Trustee so requests, an Opinion of Counsel, certificates and other
information reasonably acceptable to the Company and the Trustee to the
effect that such transfer is in compliance with the requirements of the
Securities Act;
the Trustee, as a Registrar and Securities Custodian, shall reduce or cause to
be reduced the aggregate principal amount of the Restricted Global Security by
the appropriate principal amount and shall increase or cause to be increased the
aggregate principal amount of the Unrestricted Global Security by a like
principal amount. Such transfer shall otherwise be effected in accordance with
the Applicable Procedures. If no Unrestricted Global Security is then
outstanding, the Company shall execute and the Trustee shall, upon receipt of a
Company Order (which the Company agrees to deliver promptly), authenticate and
deliver an Unrestricted Global Security.
(d) Transfer of a Beneficial Interest in an Unrestricted Global
Security for a Beneficial Interest in a Restricted Global Security. In the event
that Transfer Restricted Securities are eligible for book-entry settlement with
the Depositary, any person having a beneficial interest in an Unrestricted
Global Security may upon request, subject to the Applicable Procedures, transfer
such beneficial interest to a person who is required or permitted to take
delivery thereof in the form of a Restricted Global Security. Upon receipt by
the Trustee of written instructions or such other form of instructions as is
customary for the Depositary, from the Depositary or its nominee, on behalf of
any person having a beneficial interest in an Unrestricted Global Security and,
in such form as is customary for the Depositary, from the Depositary or its
nominee on behalf of the person having such beneficial interest in the
Unrestricted Global Security (all of which may be submitted by facsimile or
electronically) a certification from the transferor (in substantially the form
set forth in the Transfer Certificate) to the effect that such beneficial
interest is being transferred to a person that the transferor reasonably
believes is required or permitted to hold the Security as a Transfer Restricted
Security, the Trustee, as a Registrar and Securities Custodian, shall reduce or
cause to be reduced the aggregate principal amount of the Unrestricted Global
Security by the appropriate principal amount and shall increase or cause to be
increased the aggregate principal amount of the Restricted Global Security by a
like principal amount. Such transfer shall otherwise be effected in accordance
with the Applicable Procedures. If no Restricted Global Security is then
outstanding, the Company shall execute and the Trustee shall, upon receipt of a
Company Order (which the Company agrees to deliver promptly), authenticate and
deliver a Restricted Global Security.
(e) Transfers or Exchanges of Certificated Securities for
Beneficial Interest in Global Securities. In the event that (1) Certificated
Securities are issued in exchange for beneficial interests in Global Securities
and, thereafter, the events or conditions specified in Section 2.08(a)(1) which
required such exchange shall cease to exist or (2) Transfer Restricted
Securities (including the Restricted Certificated Securities
18
issued pursuant to Section 2.02) would be eligible for book-entry settlement
with the Depositary if in the form of a Global Security, the Company shall mail
notice to the Trustee and to the Holders stating that Holders may exchange
Certificated Securities for interests in Global Securities by complying with the
procedures set forth in this Indenture and briefly describing such procedures
and the events or circumstances requiring that such notice be given. Provided
that no events or conditions specified in Section 2.08(a)(1) exist, if
Certificated Securities described in the immediately preceding sentence or
Unrestricted Certificated Securities issued upon transfer or exchange of
Restricted Certificated Securities pursuant to Section 2.08(b) are presented by
a Holder to a Registrar with a request:
(x) to register the transfer of such Certificated Securities to
a person who will take delivery thereof in the form of a beneficial
interest in a Global Security, which request shall specify whether such
Global Security will be a Restricted Global Security or an Unrestricted
Global Security; or
(y) to exchange such Certificated Securities for an equal
principal amount of beneficial interests in a Global Security, which
beneficial interests will be owned by the Holder transferring such
Certificated Securities (provided that in the case of such an exchange,
Restricted Certificated Securities may be exchanged only for Restricted
Global Securities and Unrestricted Certificated Securities may be
exchanged only for Unrestricted Global Securities);
the Registrar shall register the transfer or make the exchange as requested by
canceling such Certificated Security and causing, or directing the Securities
Custodian to cause, the aggregate principal amount of the applicable Global
Security to be increased accordingly and, if no such Global Security is then
outstanding, the Company shall issue and the Trustee shall authenticate and
deliver a new Global Security; provided, however, that the Certificated
Securities presented or surrendered for registration of transfer or exchange:
(1) shall be duly endorsed or accompanied by a written
instrument of transfer in accordance with the provisions of Section
2.08(b)(y)(1);
(2) in the case of a Restricted Certificated Security to be
transferred for a beneficial interest in an Unrestricted Global Security,
such request shall be accompanied by the following additional information
and documents, as applicable:
(i) if such Restricted Certificated Security is being
transferred pursuant to an effective registration statement under
the Securities Act, a certification to that effect from such
Holder (in substantially the form set forth in the Transfer
Certificate); or
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(ii) if such Restricted Certificated Security is being
transferred (x) pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144,
(y) outside the United States in an offshore transaction within
the meaning of Regulation S under the Securities Act in compliance
with Rule 904 under the Securities Act or (z) (A) pursuant to an
exemption from the registration requirements of the Securities Act
(other than pursuant to Rule 144 or Rule 904) and (B) as a result,
such Security shall cease to be a "restricted security" within the
meaning of Rule 144; a certification to that effect from such
Holder (in substantially the form set forth in the Transfer
Certificate), and, if the Company or the Registrar so requests, an
Opinion of Counsel, certificates and other information reasonably
acceptable to the Company and the Trustee to the effect that such
transfer is in compliance with the requirements of the Securities
Act;
(3) in the case of a Restricted Certificated Security to be
transferred or exchanged for a beneficial interest in a Restricted Global
Security, such request shall be accompanied by a certification from such
Holder (in substantially the form set forth in the Transfer Certificate)
to the effect that such Restricted Certificated Security is being
transferred to a person the Holder reasonably believes is required or
permitted to hold the Security as a Transfer Restricted Global Security
(which, in the case of an exchange, shall be such Holder);
(4) in the case of an Unrestricted Certificated Security to be
transferred or exchanged for a beneficial interest in an Unrestricted
Global Security, such request need not be accompanied by any additional
information or documents; and
(5) in the case of an Unrestricted Certificated Security to be
transferred or exchanged for a beneficial interest in a Restricted Global
Security, such request shall be accompanied by a certification from such
Holder (in substantially the form set forth in the Transfer Certificate)
to the effect that such Unrestricted Certificated Security is being
transferred to a person the Holder reasonably believes is required or
permitted to hold the Security as a Transfer Restricted Global Security
(which, in the case of an exchange, shall be such Holder).
(f) Legends. (1) Except as permitted by the following paragraphs
(2) and (3), each Global Security and Certificated Security (and all Securities
issued in exchange therefor or upon registration of transfer or replacement
thereof) shall bear a legend in substantially the form called for by footnote 2
to Exhibit A hereto (each a "Transfer Restricted Security" for so long as it is
required by this Indenture to bear such legend). Each Transfer Restricted
Security shall have attached thereto a certificate (a "Transfer Certificate") in
substantially the form called for by footnote 5 to Exhibit A hereto.
20
(2) Unless the Holder is an affiliate of the Company for
purposes of Rule 144 or the Company is otherwise required by law to maintain the
legend on the Security, upon any sale or transfer of a Transfer Restricted
Security (v) after the expiration of the holding period applicable to sales of
the Securities under Rule 144(k) of the Securities Act, (w) pursuant to Rule
144, (x) outside the United States in an offshore transaction within the meaning
of Regulation S under the Securities Act in compliance with Rule 904 under the
Securities Act, (y) pursuant to an effective registration statement under the
Securities Act or (z) (A) pursuant to any other available exemption (other than
Rule 144 or Rule 904) from the registration requirements of the Securities Act
and (B) as a result, such Security shall cease to be a "restricted security"
within the meaning of Rule 144:
(i) in the case of any Restricted Certificated Security, any
Registrar shall permit the Holder thereof to exchange such Restricted
Certificated Security for an Unrestricted Certificated Security, or
(under the circumstances described in Section 2.08(e)) to transfer such
Restricted Certificated Security to a transferee who shall take such
Security in the form of a beneficial interest in an Unrestricted Global
Security, and in each case shall rescind any restriction on the transfer
of such Security; provided, however, that the Holder of such Restricted
Certificated Security shall, in connection with such exchange or
transfer, comply with the other applicable provisions of this Section
2.08; and
(ii) in the case of any beneficial interest in a Restricted
Global Security, the Trustee shall permit the beneficial owner thereof to
transfer such beneficial interest to a transferee who shall take such
interest in the form of a beneficial interest in an Unrestricted Global
Security and shall rescind any restriction on transfer of such beneficial
interest; provided, however, that such Unrestricted Global Security shall
continue to be subject to the provisions of Section 2.08(a)(2); and
provided further, that the owner of such beneficial interest shall, in
connection with such transfer, comply with the other applicable
provisions of this Section 2.08.
(3) Upon the exchange, registration of transfer or replacement
of Securities not bearing the legend described in paragraph (1) above, the
Company shall execute, and the Trustee shall authenticate and deliver,
Securities that do not bear such legend and that do not have a Transfer
Certificate attached thereto.
(4) Unless the Holder is an affiliate of the Company for
purposes of Rule 144 or the Company is otherwise required by law to maintain the
legend on the Security, after the expiration of the holding period pursuant to
Rule 144(k) of the Securities Act applicable to a Holder of a Restricted Global
Security or Restricted Certificated Security, the Company may with the consent
of such Holder of a Restricted Global Security or Restricted Certificated
Security, remove any restriction of transfer on such Security, and
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the Company shall execute, and the Trustee shall authenticate and deliver,
Securities that do not bear such legend and that do not have a Transfer
Certificate attached thereto.
(g) Transfers to the Company. Nothing in this Indenture or in
the Securities shall prohibit the sale or other transfer of any Securities
(including beneficial interests in Global Securities) to the Company or any of
its Subsidiaries.
(h) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation to
any beneficial owner of a Global Security, a member of, or a participant
in the Depository or other Person with respect to the accuracy of the
books or records, or the acts or omissions, of the Depository or its
nominee or of any participant or member thereof, with respect to any
ownership interest in the Securities or with respect to the delivery to
any participant, member, beneficial owner or other Person (other than the
Depository) of any notice (including any notice of redemption) or the
payment of any amount, under or with respect to such Securities. All
notices and communications to be given to the Holders and all payments to
be made to Holders under the Securities shall be given or made only to or
upon the order of the registered Holders (which shall be the Depository
or its nominee in the case of a Global Security). The rights of
beneficial owners in any Global Security shall be exercised only through
the Depository subject to the Applicable Procedures of the Depository.
The Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its members,
participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security (including any transfers between
or among Depository participants, members or beneficial owners in any
Global Security) other than to require delivery of such certificates and
other documentation or evidence as are expressly required by, and to do
so if and when expressly required by, the terms of this Indenture, and to
examine the same to determine substantial compliance as to form with the
express requirements hereof.
Section 2.09. CUSIP Numbers. The Company in issuing the Securities
may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption or purchase as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption or purchase and
that reliance may be placed only on the other
22
identification numbers printed on the Securities, and any such redemption or
purchase shall not be affected by any defect in or omission of such numbers. The
Company will promptly notify the Trustee of any change in the "CUSIP" numbers.
Section 2.10. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
this Indenture are met and the Holder satisfies any other reasonable
requirements of the Trustee. If required by the Trustee or the Company, such
Holder shall furnish an indemnity bond sufficient in the judgment of the Company
and the Trustee to protect the Company, the Trustee, the Paying Agent, the
Registrar and any co-registrar from any loss which any of them may suffer if a
Security is replaced. The Company and the Trustee may charge the Holder for
their expenses in replacing a Security.
Upon the issuance of any new Securities under this Section 2.10,
the Company or the Registrar may require the payment by the Holder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto.
Every replacement Security is an additional obligation of the
Company.
Section 2.11. Outstanding Securities. Securities outstanding at
any time are all Securities authenticated by the Trustee except for those
cancelled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.10, it ceases to
be outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser, in which case
the replacement Security shall cease to be outstanding, subject to the
provisions of this Indenture.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a redemption date or maturity date money or shares of
Common Stock, as applicable, for payment of the principal of the Securities as
provided in the form of Security attached hereto as Exhibit A and this Indenture
sufficient to pay all principal and money sufficient to pay all interest payable
on that date with respect to the Securities (or portions thereof) to be redeemed
or maturing, as the case may be, and the Paying Agent is not prohibited from
paying such money and/or delivering such shares of Common Stock to the
Securityholders on that date pursuant to the terms of this Indenture, then on
and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
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Section 2.12. Temporary Securities. Until definitive Securities
are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate definitive Securities
and deliver them in exchange for temporary Securities.
Section 2.13. Cancellation. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel and
destroy all Securities surrendered for registration of transfer, exchange,
payment or cancellation and deliver a certificate of such destruction to the
Company unless the Company directs the Trustee to deliver cancelled Securities
to the Company. The Company may not issue new Securities to replace Securities
it has redeemed, paid or delivered to the Trustee for cancellation.
Section 2.14. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) as provided in
paragraph 1 of the Security in any lawful manner. The Company may pay the
defaulted interest to the persons who are Securityholders on a subsequent
special record date. The Company shall fix or cause to be fixed any such special
record date and payment date to the reasonable satisfaction of the Trustee and
shall promptly mail to each Securityholder a notice that states the special
record date, the payment date and the amount of defaulted interest to be paid.
ARTICLE 3
REDEMPTION
Section 3.01. Optional Redemption. At any time on or after May 12,
2004, the Company may redeem any portion of the Securities ("Optional
Redemption"), upon giving notice as set forth in Section 3.04, at the redemption
price (the "Optional Redemption Price") specified in paragraph 5 of the form of
Security attached hereto as Exhibit A; provided, however, that if the redemption
date (the "Optional Redemption Date") falls after an interest payment record
date and on or before an interest payment date, then the interest payment will
be payable to the Holders in whose name the Securities are registered at the
close of business on the relevant record date for payment of such interest. If
the Company elects to redeem Securities pursuant to this Section 3.01 and
paragraph 5 of the Securities, it shall notify the Trustee, at the earlier of
the time the Company notifies the Holders of such redemption or 45 days prior to
the Optional Redemption Date as fixed by the Company (unless a shorter notice
shall be satisfactory to
24
the Trustee), of the Optional Redemption Date and the principal amount of
Securities to be redeemed. If fewer than all of the Securities are to be
redeemed, the record date relating to such redemption shall be selected by the
Company and notice thereof given to the Trustee, which record date shall not be
less than ten days after the date of notice to the Trustee.
Section 3.02. Notices to Trustee. If the Company elects to redeem
the Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date and the principal amount of Securities
to be redeemed.
Section 3.03. Selection of Securities to Be Redeemed. If fewer
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any, and that the
Trustee in its sole discretion considers to be fair and appropriate. The Trustee
shall make the selection from outstanding Securities not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Securities that have denominations larger than $1,000. Securities and portions
of them the Trustee selects shall be in amounts of $1,000 or a whole multiple of
$1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Trustee shall notify the Company promptly of the Securities or portions of
Securities to be redeemed. If any Security selected for partial redemption is
converted in part before termination of the conversion right with respect to the
portion of the Security so selected, the converted portion of such Security
shall be deemed to be the portion selected for redemption. Securities which have
been converted during the selection of Securities to be redeemed shall be
treated by the Trustee as outstanding for the purpose of such selection.
Section 3.04. Notice of Redemption. At least 20 days but not more
than 60 days before an Optional Redemption Date, the Company shall mail or
deliver a notice of redemption to each Holder of Securities to be redeemed at
such Holder's registered address.
The notice shall identify the Securities (including CUSIP numbers)
to be redeemed and shall state:
(1) the Optional Redemption Date;
(2) the Optional Redemption Price;
(3) the name and address of the Paying Agent;
(4) the then-current Conversion Price and Floor Price;
25
(5) that Securities called for redemption must be surrendered to
the Paying Agent to collect the Optional Redemption Price;
(6) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts of the particular
Securities to be redeemed;
(7) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment
pursuant to the terms of this Indenture, interest on Securities (or
portion thereof) called for redemption ceases to accrue on and after the
Optional Redemption Date;
(8) that Holders who wish to convert Securities must surrender
such Securities for conversion no later than the close of business on the
Business Day immediately preceding the Optional Redemption Date and must
satisfy the other requirements in Article 5 hereof and paragraph 8 of the
Securities; and
(9) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on
the Securities.
If any of the Securities to be redeemed is in the form of a Global Security,
then the Company shall modify such notice to the extent necessary, to accord
with the Applicable Procedures of the Depositary applicable to redemptions.
At the Company's request, upon at least five (5) days' prior
notice to the Trustee, the Trustee shall give the notice of redemption in the
Company's name and at the Company's expense. In such event, the Company shall
provide the Trustee with the information required by this Section.
Section 3.05. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the Optional Redemption Date and at the Optional Redemption Price stated in the
notice, except for Securities that are converted in accordance with the
provisions of Article 5. Upon surrender to the Paying Agent, such Securities
shall be paid at the Optional Redemption Price stated in the notice, plus
accrued interest to the Optional Redemption Date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date) and such Securities will be delivered to the
Trustee for cancellation. Failure to give notice or any defect in the notice to
any Holder shall not affect the validity of the notice to any other Holder.
Section 3.06. Deposit of Redemption Price. Prior to the Optional
Redemption Date, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to
26
pay the Optional Redemption Price of and accrued interest (subject to the right
of Holders of record on the relevant record date to receive interest due on the
relevant interest payment date) on all Securities to be redeemed on that date
other than Securities or portions of Securities called for redemption which have
been delivered by the Company to the Trustee for cancellation or conversion. The
Paying Agent shall return to the Company any money not required for that purpose
because of the conversion of the Securities pursuant to Article 5.
Section 3.07. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security surrendered.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Securities. The Company shall promptly
pay the principal of and interest on the Securities on the dates and in the
manner provided in the Securities and in this Indenture. Principal and interest
shall be considered paid on the date due if on such date the Trustee or the
Paying Agent holds in accordance with this Indenture money or shares of Common
Stock, as applicable, for payment of the principal of the Securities provided in
the form of Security attached hereto as Exhibit A and this Indenture sufficient
to pay all principal and money sufficient to pay all interest then due and the
Trustee or the Paying Agent, as the case may be, is not prohibited from paying
such money or shares of Common Stock to the Securityholders on that date
pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the rate provided in paragraph 1 of the Security to
the extent lawful. The conversion of any Securities pursuant to Article 5
hereof, together with the making of any cash payments or payments in Common
Stock required to be made in accordance with the terms of the Securities and
this Indenture, shall satisfy the Company's obligations under this Section 4.01
with respect to such Securities.
Section 4.02. SEC Reports. Whether or not subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company will file
with the SEC and provide the Trustee with such annual reports and such
information, documents and other reports as are specified in Sections 13 and
15(d) of the Exchange Act and applicable to a U.S. corporation subject to such
Sections, at the times specified for such
27
filings under such Sections. The Company also shall comply with the other
provisions of TIA Section 314(a) as may be required under the provisions of
the TIA. Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely on an Officer's Certificate).
Section 4.03. Compliance Certificates. The Company shall deliver
to the Trustee within 120 days after the end of each fiscal year of the Company
certificates of the principal executive officer, the principal financial officer
or the principal accounting officer of the Company stating whether or not the
signer knows of any Default that occurred during such Period. If such signer
does, the certificate shall describe the Default, its status and what action the
Company is taking or proposes to take with respect thereto. The Company also
shall comply with TIA Section 314(a)(4).
Section 4.04. Further Instruments and Acts. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.
Section 4.05. Maintenance of Corporate Existence. Except as
otherwise permitted by this Indenture, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence.
Section 4.06. Payment of Additional Interest. If Additional
Interest is payable by the Company pursuant to the Registration Rights
Agreement, the Company shall deliver to the Trustee a certificate to that effect
stating (i) the amount of such Additional Interest that is payable and (ii) the
date on which such Additional Interest is payable. Unless and until a Trust
Officer of the Trustee receives such a certificate, the Trustee may assume
without inquiry that no such Additional Interest is payable. If the Company has
paid Additional Interest directly to the Persons entitled to it, the Company
shall deliver to the Trustee a certificate setting forth the particulars of such
payment.
Section 4.07. Purchase of Securities at Option of the Holder upon
Change in Control. (a) If at any time that Securities remain outstanding there
shall occur a Change in Control, Securities shall be purchased by the Company at
the option of the Holders thereof as of the date that is no less than 30 days
and no more than 60 days from the date such notice is mailed or delivered as
required by subsection (b) of this Section 4.07 (the "Change in Control Purchase
Date") at a purchase price in cash equal to the principal amount of the
Securities, plus accrued and unpaid interest to, but excluding, the Change in
Control Purchase Date (the "Change in Control Purchase Price"), subject to
28
satisfaction by or on behalf of any Holder of the requirements set forth in
subsection (c) of this Section 4.07.
A "Change in Control" shall be deemed to have occurred if any of
the following occurs after the date hereof:
(1) any "person" or "group" is or becomes the "beneficial owner"
(each as defined below), directly or indirectly, of shares of Voting
Stock of the Company representing 50% or more of the total voting power
of all outstanding classes of Voting Stock of the Company or such person
or group has the power, directly or indirectly, to elect a majority of
the members of the Board of Directors of the Company; or
(2) the Company consolidates with, or merges with or into,
another Person or the Company sells, assigns, conveys, transfers, leases
or otherwise disposes of all or substantially all of its assets, or any
Person consolidates with, or merges with or into, the Company, in any
such event other than pursuant to a transaction in which the Persons that
"beneficially owned" (as defined below), directly or indirectly, shares
of Voting Stock of the Company immediately prior to such transaction
"beneficially own" (as defined below), directly or indirectly, shares of
Voting Stock representing at least a majority of the total voting power
of all outstanding classes of Voting Stock of the surviving or transferee
Person; or
(3) the adoption of a plan relating to the liquidation or
dissolution of the Company.
For the purpose of the definition of "Change in Control", (i)
"person" and "group" have the meanings given to them for purposes of Section
13(d) and 14(d) of the Exchange Act or any successor provisions, and the term
"group" includes any group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act (or any successor provision thereto), (ii) a "beneficial owner"
shall be determined in accordance with Rule 13d-3 under the Exchange Act, as in
effect on the date of this Indenture, except that the number of shares of Voting
Stock of the Company shall be deemed to include, in addition to all outstanding
shares of Voting Stock of the Company and Unissued Shares (as defined below)
deemed to be held by the "person" or "group" (as such terms are defined above)
or other Person with respect to which the Change in Control determination is
being made, all Unissued Shares deemed to be held by all other Persons, (iii)
"beneficially owned" has a meaning correlative to that of beneficial owner and
(iv) "Unissued Shares" means shares of Voting Stock of the Company not
outstanding that are subject to options, warrants, rights to purchase or
conversion privileges exercisable within 60 days of the date of determination of
a Change in Control.
29
Notwithstanding anything to the contrary set forth in this Section
4.07, a Change in Control will not be deemed to have occurred if either:
(1) the Closing Price of the Company's Common Stock for any five
Trading Days during the ten Trading Days immediately preceding the Change
in Control is at least equal to 105% of the Conversion Price in effect on
such Trading Day; or
(2) in the case of a merger or consolidation, at least 75% of
the consideration excluding cash payments for fractional shares in the
merger or consolidation constituting the Change in Control consists of
common stock traded on a United States national securities exchange or
quoted on The Nasdaq National Market (or which will be so traded or
quoted when issued or exchanged in connection with such Change in
Control) and as a result of such transaction or transactions the
Securities become convertible into such common stock.
(b) Within 10 Business Days after the occurrence of a Change in
Control, the Company shall mail a written notice of the Change in Control to the
Trustee (and the Paying Agent if the Trustee is not then acting as Paying Agent)
and to each Holder (and to beneficial owners as required by applicable law). The
notice shall include the form of a Change in Control Purchase Notice (as defined
below) to be completed by the Holder and shall state:
(1) the date of such Change in Control and, briefly, the events
causing such Change in Control;
(2) the date by which the Change in Control Purchase Notice
pursuant to this Section 4.07 must be given;
(3) the Change in Control Purchase Date;
(4) the Change in Control Purchase Price;
(5) the name and address of each Paying Agent and Conversion
Agent;
(6) the then-current Conversion Price and Floor Price;
(7) that Securities as to which a Change in Control Purchase
Notice has been given may be converted into Common Stock pursuant to
Article 5 of this Indenture only to the extent that the Change in Control
Purchase Notice has been withdrawn in accordance with the terms of this
Indenture;
(8) the procedures that the Holder must follow to exercise
rights under this Section 4.07;
30
(9) the procedures for withdrawing a Change in Control Purchase
Notice, including a form of notice of withdrawal; and
(10) that the Holder must satisfy the requirements set forth in
the Securities in order to convert the Securities.
If any of the Securities is in the form of a Global Security, then
the Company shall modify such notice to the extent necessary to accord with the
procedures of the Depositary applicable to the repurchase of Global Securities.
(c) A Holder may exercise its rights specified in subsection (a)
of this Section 4.07 upon delivery of a written notice (which shall be in
substantially the form included in Exhibit A hereto and which may be delivered
by letter, overnight courier, hand delivery, facsimile transmission or in any
other written form and, in the case of Global Securities, may be delivered
electronically or by other means in accordance with the Depositary's customary
procedures) of the exercise of such rights (a "Change in Control Purchase
Notice") to any Paying Agent at any time prior to the close of business on the
Business Day next preceding the Change in Control Purchase Date.
The delivery of such Security to any Paying Agent (together with
all necessary endorsements) at the office of such Paying Agent shall be a
condition to the receipt by the Holder of the Change in Control Purchase Price
therefor.
The Company shall purchase from the Holder thereof, pursuant to
this Section 4.07, the portion of a Security specified in the Change in Control
Purchase Notice if the principal amount of such portion is $1,000 or an integral
multiple of $1,000. Provisions of the Indenture that apply to the purchase of
all of a Security pursuant to Sections 4.07 through 4.12 also apply to the
purchase of such portion of such Security.
Notwithstanding anything herein to the contrary, any Holder
delivering to a Paying Agent the Change in Control Purchase Notice contemplated
by this subsection (c) shall have the right to withdraw such Change in Control
Purchase Notice in whole or in a portion thereof that is a principal amount of
$1,000 or in an integral multiple thereof at any time prior to the close of
business on the Business Day next preceding the Change in Control Purchase Date
by delivery of a written notice of withdrawal to the Paying Agent in accordance
with Section 4.08.
A Paying Agent shall promptly notify the Company of the receipt by
it of any Change in Control Purchase Notice or written withdrawal thereof.
Anything herein to the contrary notwithstanding, in the case of
Global Securities, any Change in Control Purchase Notice may be delivered or
withdrawn and
31
such Securities may be surrendered or delivered for purchase in accordance with
the Applicable Procedures as in effect from time to time.
Section 4.08. Effect of Change in Control Purchase Notice. Upon
receipt by any Paying Agent of the Change in Control Purchase Notice specified
in Section 4.07(c), the Holder of the Security in respect of which such Change
in Control Purchase Notice was given shall (unless such Change in Control
Purchase Notice is withdrawn as specified below) thereafter be entitled to
receive the Change in Control Purchase Price with respect to such Security. Such
Change in Control Purchase Price shall be paid to such Holder promptly following
the later of (a) the Change in Control Purchase Date with respect to such
Security (provided the conditions in Section 4.07(c) have been satisfied) and
(b) the time of delivery of such Security to a Paying Agent by the Holder
thereof in the manner required by Section 4.07(c). Securities in respect of
which a Change in Control Purchase Notice has been given by the Holder thereof
may not be converted into shares of Common Stock on or after the date of the
delivery of such Change in Control Purchase Notice unless such Change in Control
Purchase Notice has first been validly withdrawn.
A Change in Control Purchase Notice may be withdrawn by means of a
written notice (which may be delivered by letter, overnight courier, hand
delivery, facsimile transmission or in any other written form and, in the case
of Global Securities, may be delivered electronically or by other means in
accordance with the Depositary's customary procedures) of withdrawal delivered
by the Holder to a Paying Agent at any time prior to the close of business on
the Business Day immediately preceding the Change in Control Purchase Date,
specifying the principal amount of the Security or portion thereof (which must
be a principal amount of $1,000 or an integral multiple of $1,000 in excess
thereof) with respect to which such notice of withdrawal is being submitted.
Section 4.09. Deposit of Change in Control Purchase Price. On or
before 11:00 a.m. New York City time on the Change in Control Purchase Date, the
Company shall deposit with the Trustee or with a Paying Agent (other than the
Company or an Affiliate of the Company) an amount of money (in immediately
available funds if deposited on such Business Day) sufficient to pay the
aggregate Change in Control Purchase Price of all the Securities or portions
thereof that are to be purchased as of such Change in Control Purchase Date. The
manner in which the deposit required by this Section 4.09 is made by the Company
shall be at the option of the Company, provided that such deposit shall be made
in a manner such that the Trustee or a Paying Agent shall have immediately
available funds on the Change in Control Purchase Date.
If a Paying Agent holds, in accordance with the terms hereof,
money sufficient to pay the Change in Control Purchase Price of any Security for
which a
32
Change in Control Purchase Notice has been tendered and not withdrawn in
accordance with this Indenture then, on the Change in Control Purchase Date,
such Security will cease to be outstanding and the rights of the Holder in
respect thereof shall terminate (other than the right to receive the Change in
Control Purchase Price as aforesaid). The Company shall publicly announce the
principal amount of Securities purchased as a result of such Change in Control
on or as soon as practicable after the Change in Control Purchase Date.
Section 4.10. Securities Purchased in Part. Any Security that is
to be purchased only in part shall be surrendered at the office of a Paying
Agent and promptly after the Change in Control Purchase Date the Company shall
execute and the Trustee shall authenticate and deliver to the Holder of such
Security, without service charge, a new Security or Securities, of such
authorized denomination or denominations as may be requested by such Holder, in
aggregate principal amount equal to, and in exchange for, the portion of the
principal amount of the Security so surrendered that is not purchased.
Section 4.11. Compliance with Securities Laws upon Purchase of
Securities. In connection with any offer to purchase or purchase of Securities
under Section 4.07, the Company shall (a) comply with Rule 13e-4 and Rule 14e-1
(or any successor to either such Rule), if applicable, under the Exchange Act,
(b) file the related Schedule TO (or any successor or similar schedule, form or
report) if required under the Exchange Act, and (c) otherwise comply with all
federal and state securities laws in connection with such offer to purchase or
purchase of Securities, all so as to permit the rights of the Holders and
obligations of the Company under Sections 4.07 through 4.10 to be exercised in
the time and in the manner specified therein.
Section 4.12. Repayment to the Company. To the extent that the
aggregate amount of cash deposited by the Company pursuant to Section 4.09
exceeds the aggregate Change in Control Purchase Price together with interest,
if any, thereon of the Securities or portions thereof that the Company is
obligated to purchase, then promptly after the Change in Control Purchase Date
the Trustee or a Paying Agent, as the case may be, shall return any such excess
cash (including any interest thereon) to the Company.
ARTICLE 5
CONVERSION
Section 5.01. Conversion Privilege. Subject to the further
provisions of this Article 5, a Holder of a Security may, at the Holder's
option, convert the principal amount of such Security (or any portion thereof
equal to $1,000 or any integral multiple of $1,000 in excess thereof) into
Common Stock at any time after 60 days from November
33
12, 2002 and prior to the close of business on the Business Day immediately
proceeding the Maturity Date, at the Applicable Conversion Price as of the
related Conversion Date; provided, however, that, if such Security is called for
redemption pursuant to Article 3 or submitted or presented for purchase pursuant
to Article 4, such conversion right shall terminate at the close of business on
the Business Day immediately preceding the Optional Redemption Date or Change in
Control Purchase Date, as the case may be, for such Security or such earlier
date as the Holder presents such Security for redemption or for purchase (unless
the Company shall default in making the Optional Redemption Price payment or
Change in Control Purchase Price payment when due, in which case the conversion
right shall terminate at the close of business on the date such default is cured
and such Security is redeemed or purchased, as the case may be). The number of
shares of Common Stock issuable upon conversion of a Security shall be
determined by dividing the principal amount of the Security or portion thereof
surrendered for conversion by the Applicable Conversion Price as of the related
Conversion Date. The initial Conversion Price is set forth in paragraph 8 of the
Securities and is subject to adjustment as provided in this Article 5.
Provisions of this Indenture that apply to conversion of all of a
Security also apply to conversion of a portion of a Security.
A Security in respect of which a Holder has delivered a Change in
Control Purchase Notice pursuant to Section 4.07(c) exercising the option of
such Holder to require the Company to purchase such Security may be converted
only if such Change in Control Purchase Notice is withdrawn by a written notice
of withdrawal delivered to a Paying Agent prior to the close of business on the
Business Day immediately preceding the Change in Control Purchase Date in
accordance with Section 4.08.
A Holder of Securities is not entitled to any rights of a holder
of Common Stock until such Holder has converted its Securities into Common
Stock, and only to the extent such Securities are deemed to have been converted
into Common Stock pursuant to this Article 5.
Section 5.02. Conversion Procedure. To convert a Security, a
Holder must (a) complete and manually sign the conversion notice on the back of
the Security and deliver such notice to a Conversion Agent, (b) surrender the
Security to a Conversion Agent, (c) furnish appropriate endorsements and
transfer documents if required by a Registrar or a Conversion Agent, and (d) pay
any transfer or similar tax, if required. The date on which the Holder satisfies
all of those requirements is the "Conversion Date." As soon as practicable after
the Conversion Date, the Company shall deliver to the Holder through a
Conversion Agent a certificate for the number of whole shares of Common Stock
issuable upon the conversion and cash in lieu of any fractional shares pursuant
to Section 5.03. Anything herein to the contrary notwithstanding, in the case of
34
Global Securities, conversion notices may be delivered and such Securities may
be surrendered for conversion in accordance with the Applicable Procedures as in
effect from time to time.
The person in whose name the Common Stock certificate is
registered shall be deemed to be a stockholder of record on the Conversion Date;
provided, however, that no surrender of a Security on any date when the stock
transfer books of the Company shall be closed shall be effective to constitute
the person or persons entitled to receive the shares of Common Stock upon such
conversion as the record holder or holders of such shares of Common Stock on
such date, but such surrender shall be effective to constitute the person or
persons entitled to receive such shares of Common Stock as the record holder or
holders thereof for all purposes at the close of business on the next succeeding
day on which such stock transfer books are open; provided further, however, that
such conversion shall be at the Applicable Conversion Price as of the Conversion
Date as if the stock transfer books of the Company had not been closed. Upon
conversion of a Security, such person shall no longer be a Holder of such
Security. No payment or adjustment will be made for dividends or distributions
on shares of Common Stock issued upon conversion of a Security.
Securities so surrendered for conversion (in whole or in part)
during the period from the close of business on any regular record date to the
opening of business on the next succeeding interest payment date (excluding
Securities or portions thereof which are either (i) called for redemption or
(ii) subject to purchase following a Change in Control, in either case, on a
date during the period beginning at the close of business on a regular record
date and ending at the opening of business on the first Business Day after the
next succeeding interest payment date, or if such interest payment date is not a
Business Day, the second such Business Day) shall also be accompanied by payment
in funds acceptable to the Company in an amount equal to the interest payable on
such interest payment date on the principal amount of such Security then being
converted, and such interest shall be payable to such registered Holder
notwithstanding the conversion of such Security, subject to the provisions of
this Indenture relating to the payment of defaulted interest by the Company.
Except as otherwise provided in this Section 5.02, no payment or adjustment will
be made for accrued interest on a converted Security. If the Company defaults in
the payment of interest payable on such interest payment date, the Company shall
promptly repay such funds to such Holder.
Nothing in this Section shall affect the right of a Holder in
whose name any Security is registered at the close of business on a record date
to receive the interest payable on such Security on the related interest payment
date in accordance with the terms of this Indenture and the Securities. If a
Holder converts more than one Security at the same time, the number of shares of
Common Stock issuable upon the conversion shall be based on the aggregate
principal amount of Securities converted.
35
Upon surrender of a Security that is converted in part, the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder, a new Security equal in principal amount to the unconverted portion of
the Security surrendered.
Section 5.03. Fractional Shares. The Company will not issue
fractional shares of Common Stock upon conversion of Securities or payment of
the principal in shares of Common Stock. In lieu thereof, the Company will pay
an amount in cash based upon the Closing Price of the Common Stock on the
Trading Day immediately prior to the Conversion Date or the Maturity Date or the
date payment of principal in shares of Common Stock is otherwise due, as the
case may be.
Section 5.04. Taxes on Conversion. If a Holder converts a
Security, the Company shall pay any documentary, stamp or similar issue or
transfer tax due on the issue of shares of Common Stock upon such conversion.
However, the Holder shall pay any such tax which is due because the Holder
requests the shares to be issued in a name other than the Holder's name. The
Conversion Agent may refuse to deliver the certificate representing the Common
Stock being issued in a name other than the Holder's name until the Conversion
Agent receives a sum sufficient to pay any tax which will be due because the
shares are to be issued in a name other than the Holder's name. Nothing herein
shall preclude any tax withholding required by law or regulation.
Section 5.05. Company to Provide Stock. The Company shall, prior
to issuance of any Securities hereunder, and from time to time as may be
necessary, reserve, out of its authorized but unissued Common Stock, a
sufficient number of shares of Common Stock to permit the conversion of all
outstanding Securities into shares of Common Stock.
All shares of Common Stock delivered upon conversion of the
Securities shall be newly issued shares, shall be duly authorized, validly
issued, fully paid and nonassessable and shall be free from preemptive rights
and free of any lien or adverse claim.
The Company will endeavor promptly to comply with all federal and
state securities laws regulating the offer and delivery of shares of Common
Stock upon conversion of Securities, if any, and will list or cause to have
quoted such shares of Common Stock on each national securities exchange or on
The Nasdaq National Market or other over-the-counter market or such other market
on which the Common Stock is then listed or quoted; provided, however, that if
rules of such automated quotation system or exchange permit the Company to defer
the listing of such Common Stock until the first conversion of the Securities
into Common Stock in accordance with the provisions of this Indenture, the
Company covenants to list such Common Stock issuable upon conversion
36
of the Securities in accordance with the requirements of such automated
quotation system or exchange at such time.
Section 5.06. Adjustment of Conversion Price. The conversion price
as stated in paragraph 8 of the Securities (the "Conversion Price") shall be
adjusted from time to time by the Company as follows:
(a) In case the Company shall (i) pay a dividend on its Common
Stock in shares of Common Stock, (ii) make a distribution on its Common Stock in
shares of Common Stock, (iii) subdivide its outstanding Common Stock into a
greater number of shares, or (iv) combine its outstanding Common Stock into a
smaller number of shares, the Conversion Price in effect immediately prior
thereto shall be adjusted so that the Holder of any Security thereafter
surrendered for conversion shall be entitled to receive that number of shares of
Common Stock which it would have owned had such Security been converted
immediately prior to the happening of such event. An adjustment made pursuant to
this subsection (a) shall become effective immediately after the record date in
the case of a dividend or distribution and shall become effective immediately
after the effective date in the case of subdivision or combination.
(b) In case the Company shall issue rights or warrants to all or
substantially all holders of its Common Stock entitling them (for a period
commencing no earlier than the record date described below and expiring not more
than 60 days after such record date) to subscribe for or purchase shares of
Common Stock (or securities convertible into Common Stock) at a price per share
(or having a conversion price per share) less than the Current Market Price Per
Share (as defined below) of Common Stock on the record date for the
determination of stockholders entitled to receive such rights or warrants, the
Conversion Price in effect immediately prior thereto shall be adjusted so that
the same shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to such record date by a fraction of which (x) the
numerator shall be the number of shares of Common Stock outstanding on such
record date plus the number of shares which the aggregate offering price of the
total number of shares of Common Stock so offered (or the aggregate conversion
price of the convertible securities so offered, which shall be determined by
multiplying the number of shares of Common Stock issuable upon conversion of
such convertible securities by the conversion price per share of Common Stock
pursuant to the terms of such convertible securities) would purchase at the
Current Market Price Per Share of Common Stock on such record date, and of which
(y) the denominator shall be the number of shares of Common Stock outstanding on
such record date plus the number of additional shares of Common Stock offered
(or into which the convertible securities so offered are convertible). Such
adjustment shall be made successively whenever any such rights or warrants are
issued, and shall become effective immediately after such record date. If at the
end of the period during which such rights or warrants are exercisable not all
rights or warrants shall have
37
been exercised, the adjusted Conversion Price shall be immediately readjusted to
what it would have been based upon the number of additional shares of Common
Stock actually issued (or the number of shares of Common Stock issuable upon
conversion of convertible securities actually issued).
(c) In case the Company shall distribute to all or substantially
all holders of its Common Stock any shares of capital stock of the Company
(other than Common Stock), evidences of indebtedness or other non-cash assets
(including securities of any person other than the Company but excluding (1)
dividends or distributions paid in cash or (2) dividends or distributions
referred to in subsection (a) of this Section 5.06), or shall distribute to all
or substantially all holders of its Common Stock rights or warrants to subscribe
for or purchase any of its securities (excluding those rights and warrants
referred to in subsection (b) of this Section 5.06 and also excluding the
distribution of rights to all holders of Common Stock pursuant to the adoption
of a stockholders rights plan or the detachment of such rights under the terms
of such stockholder rights plan), then in each such case the Conversion Price
shall be adjusted so that the same shall equal the price determined by
multiplying the current Conversion Price by a fraction of which the numerator
shall be the Current Market Price Per Share of the Common Stock on the record
date mentioned below less the fair market value on such record date (as
reasonably determined in good faith by the Board of Directors of the Company,
whose determination shall be conclusive evidence of such fair market value and
which shall be evidenced by an Officer's Certificate delivered to the Trustee)
of the portion of the capital stock, evidences of indebtedness or other non-cash
assets so distributed or of such rights or warrants applicable to one share of
Common Stock (determined on the basis of the number of shares of Common Stock
outstanding on the record date), and of which the denominator shall be the
Current Market Price Per Share of the Common Stock on such record date. Such
adjustment shall be made successively whenever any such distribution is made and
shall become effective immediately after the record date for the determination
of shareholders entitled to receive such distribution.
(d) In case the Company shall, by dividend or otherwise, at any
time distribute (a "Triggering Distribution") to all or substantially all
holders of its Common Stock cash in an aggregate amount that, together with the
aggregate amount of (i) any cash and the fair market value (as reasonably
determined in good faith by the Board of Directors of the Company, whose
determination shall be conclusive evidence thereof and which shall be evidenced
by an Officer's Certificate delivered to the Trustee) of any other consideration
payable in respect of any tender offer by the Company or a Subsidiary of the
Company for Common Stock consummated within the 12 months preceding the date of
payment of the Triggering Distribution and in respect of which no Conversion
Price adjustment pursuant to this Section 5.06 has been made and (ii) all other
cash distributions to all or substantially all holders of its Common Stock made
within the 12 months preceding the date of payment of the Triggering
Distribution and in respect of
38
which no Conversion Price adjustment pursuant to this Section 5.06 has been
made, exceeds an amount equal to 10.0% of the product of the Current Market
Price Per Share of Common Stock on the Business Day (the "Determination Date")
immediately preceding the day on which such Triggering Distribution is declared
by the Company multiplied by the number of shares of Common Stock outstanding on
the Determination Date (excluding shares held in the treasury of the Company),
the Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying such Conversion Price in effect immediately prior to
the Determination Date by a fraction of which the numerator shall be the Current
Market Price Per Share of the Common Stock on the Determination Date less the
sum of the aggregate amount of cash and the aggregate fair market value (as
reasonably determined in good faith by the Board of Directors of the Company,
whose determination shall be conclusive evidence of such fair market value and
which shall be evidenced by an Officer's Certificate delivered to the Trustee)
of any such other consideration so distributed, paid or payable within such 12
months (including, without limitation, the Triggering Distribution) applicable
to one share of Common Stock (determined on the basis of the number of shares of
Common Stock outstanding on the Determination Date) and the denominator shall be
such Current Market Price Per Share of the Common Stock on the Determination
Date, such reduction to become effective immediately prior to the opening of
business on the day following the date on which the Triggering Distribution is
paid.
(e) (1) In case any tender offer made by the Company for Common
Stock shall expire and such tender offer (as amended upon the expiration
thereof) shall involve the payment of aggregate consideration in an amount
(determined as the sum of the aggregate amount of cash consideration and the
aggregate fair market value (as reasonably determined in good faith by the Board
of Directors of the Company, whose determination shall be conclusive evidence
thereof and which shall be evidenced by an Officer's Certificate delivered to
the Trustee) of any other consideration) that, together with the aggregate
amount of (i) any cash and the fair market value (as reasonably determined in
good faith by the Board of Directors of the Company, whose determination shall
be conclusive evidence thereof and which shall be evidenced by an Officer's
Certificate delivered to the Trustee) of any other consideration payable in
respect of any other tender offers by the Company or any Subsidiary of the
Company for Common Stock consummated within the 12 months preceding the date of
the Expiration Date (as defined below) and in respect of which no Conversion
Price adjustment pursuant to this Section 5.06 has been made and (B) all cash
distributions to all or substantially all holders of its Common Stock made
within the 12 months preceding the Expiration Date and in respect of which no
Conversion Price adjustment pursuant to this Section 5.06 has been made, exceeds
an amount equal to 10.0% of the product of the Current Market Price Per Share of
Common Stock as of the last date (the "Expiration Date") tenders could have been
made pursuant to such tender offer (as it may be amended) (the last time at
which
39
such tenders could have been made on the Expiration Date is hereinafter
sometimes called the "Expiration Time") multiplied by the number of shares of
Common Stock outstanding (including tendered shares but excluding any shares
held in the treasury of the Company) at the Expiration Time, then, immediately
prior to the opening of business on the day after the Expiration Date, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the close of business on the Expiration Date by a fraction of which the
numerator shall be the product of the number of shares of Common Stock
outstanding (including tendered shares but excluding any shares held in the
treasury of the Company) at the Expiration Time multiplied by the Current Market
Price Per Share of the Common Stock on the Trading Day next succeeding the
Expiration Date and the denominator shall be the sum of (x) the aggregate
consideration (determined as aforesaid) payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the tender offer) of all
shares validly tendered and not withdrawn as of the Expiration Time (the shares
deemed so accepted, up to any such maximum, being referred to as the "Purchased
Shares") and (y) the product of the number of shares of Common Stock outstanding
(less any Purchased Shares and excluding any shares held in the treasury of the
Company) at the Expiration Time and the Current Market Price Per Share of Common
Stock on the Trading Day next succeeding the Expiration Date, such reduction to
become effective immediately prior to the opening of business on the day
following the Expiration Date. In the event that the Company is obligated to
purchase shares pursuant to any such tender offer, but the Company is
permanently prevented by applicable law from effecting any or all such purchases
or any or all such purchases are rescinded, the Conversion Price shall again be
adjusted to be the Conversion Price which would have been in effect based upon
the number of shares actually purchased. If the application of this Section
5.06(e) to any tender offer would result in an increase in the Conversion Price,
no adjustment shall be made for such tender offer under this Section 5.06(e).
(2) For purposes of Sections 5.06(d) and 5.06(e), the
term "tender offer" shall mean and include both tender offers and exchange
offers (within the meaning of U.S. Federal securities laws), all references to
"purchases" of shares in tender offers (and all similar references) shall mean
and include both the purchase of shares in tender offers and the acquisition of
shares pursuant to exchange offers, and all references to "tendered shares" (and
all similar references) shall mean and include shares tendered in both tender
offers and exchange offers.
(f) For the purpose of any computation under subsections (b),
(c), (d) and (e) of this Section 5.06, the current market price per share of
Common Stock (the "Current Market Price Per Share") on any date shall be deemed
to be the average of the daily Closing Prices for the 30 consecutive Trading
Days commencing 45 Trading Days before (i) the Determination Date or the
Expiration Date, as the case may be, with respect
40
to distributions or tender offers under subsection (d) or (e) of this Section
5.06 or (ii) the record date with respect to distributions, issuances or other
events requiring such computation under subsection (b) or (c) of this Section
5.06. The Closing Price for each day (the "Closing Price") shall be the last
reported sales price or, in case no such reported sale takes place on such date,
the average of the reported closing bid and asked prices in either case on The
New York Stock Exchange (the "NYSE") or The Nasdaq National Market (the "NNM"),
as applicable, or, if the Common Stock is not listed or admitted to trading on
the NYSE or the NNM, the principal national securities exchange or quotation
system on which the Common Stock is quoted or listed or admitted to trading or,
if not quoted or listed or admitted to trading on any national securities
exchange or quotation system, the closing sales price or, in case no reported
sale takes place, the average of the closing bid and asked prices, as furnished
by any two members of the National Association of Securities Dealers, Inc.
selected from time to time by the Company for that purpose. If no such prices
are available, the Current Market Price Per Share shall be the fair value of a
share of Common Stock (as reasonably determined in good faith by the Board of
Directors of the Company, whose determination shall be conclusive evidence of
such fair market value and which shall be evidenced by an Officer's Certificate
delivered to the Trustee).
(g) In any case in which this Section 5.06 shall require that an
adjustment be made following a record date or a Determination Date or Expiration
Date, as the case may be, established for purposes of this Section 5.06, the
Company may elect to defer (but only until five Business Days following the
filing by the Company with the Trustee of the certificate described in Section
5.09) issuing to the Holder of any Security converted after such record date or
Determination Date or Expiration Date the shares of Common Stock and other
capital stock of the Company issuable upon such conversion over and above the
shares of Common Stock and other capital stock of the Company issuable upon such
conversion only on the basis of the Conversion Price prior to adjustment; and,
in lieu of the shares the issuance of which is so deferred, the Company shall
issue or cause its transfer agent to issue due bills or other appropriate
evidence prepared by the Company of the right to receive such shares. If any
distribution in respect of which an adjustment to the Conversion Price is
required to be made as of the record date or Determination Date or Expiration
Date therefor is not thereafter made or paid by the Company for any reason, the
Conversion Price shall be readjusted to the Conversion Price which would then be
in effect if such record date had not been fixed or such effective date or
Determination Date or Expiration Date had not occurred.
Section 5.07. No Adjustment. No adjustment in the Conversion Price
shall be required unless the adjustment would require an increase or decrease of
at least 1% in the Conversion Price as last adjusted; provided, however, that
any adjustments which by reason of this Section 5.07 are not required to be made
shall be carried forward and taken
41
into account in any subsequent adjustment. All calculations under this Article 5
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be.
No adjustment need be made for issuances of Common Stock pursuant
to a Company plan for reinvestment of dividends or interest or for a change in
the par value or a change to no par value of the Common Stock.
To the extent that the Securities become convertible into the
right to receive cash, no adjustment need be made thereafter as to the cash.
Interest will not accrue on the cash.
Section 5.08. Adjustment for Tax Purposes. The Company shall be
entitled to make such reductions in the Conversion Price, in addition to those
required by Section 5.06, as it in its discretion shall determine to be
advisable in order that any stock dividends, subdivisions of shares,
distributions of rights to purchase stock or securities or distributions of
securities convertible into or exchangeable for stock hereafter made by the
Company to its stockholders shall not be taxable.
Section 5.09. Notice of Adjustment. Whenever the Conversion Price
or conversion privilege is adjusted, the Company shall promptly mail to
Securityholders a notice of the adjustment and file with the Trustee an
Officer's Certificate briefly stating the facts requiring the adjustment and the
manner of computing it. Unless and until the Trustee shall receive an Officer's
Certificate setting forth an adjustment of the Conversion Price, the Trustee may
assume without inquiry that the Conversion Price has not been adjusted and that
the last Conversion Price of which it has knowledge remains in effect.
Section 5.10. Notice of Certain Transactions. In the event that:
(1) the Company takes any action which would require an
adjustment in the Conversion Price;
(2) the Company consolidates or merges with or into, or
transfers all or substantially all of its property and assets to, another
corporation or another corporation merges into the Company and, in each
such case, stockholders of the Company must approve the transaction; or
(3) there is a dissolution or liquidation of the Company;
the Company shall mail to Holders and file with the Trustee a notice stating the
proposed record or effective date, as the case may be. The Company shall mail
the notice at least ten days before such date. Failure to mail such notice or
any defect therein shall not
42
affect the validity of any transaction referred to in clause (1), (2) or (3) of
this Section 5.10.
Section 5.11. Effect of Reclassification, Consolidation, Merger or
Sale on Conversion Privilege. If any of the following shall occur, namely: (a)
any reclassification or change of shares of Common Stock issuable upon
conversion of the Securities (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination, or any other change for which an adjustment is
provided in Section 5.06); (b) any consolidation or merger or combination to
which the Company is a party other than a merger in which the Company is the
continuing corporation and which does not result in any reclassification of, or
change (other than in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination) in,
outstanding shares of Common Stock; or (c) any sale, conveyance, transfer or
lease of all or substantially all of the property and assets of the Company,
directly or indirectly, to any Person, then the Company, or such successor,
purchasing, transferee or leasing Person, as the case may be, shall, as a
condition precedent to such reclassification, change, combination,
consolidation, merger, sale, conveyance, transfer or lease, execute and deliver
to the Trustee a supplemental indenture providing that the Holder of each
Security then outstanding shall have the right to convert such Security into the
kind and amount of shares of stock and other securities and property (including
cash) receivable upon such reclassification, change, combination, consolidation,
merger, sale, conveyance, transfer or lease, by a holder of the number of shares
of Common Stock deliverable upon conversion of such Security immediately prior
to such reclassification, change, combination, consolidation, merger, sale,
conveyance, transfer or lease. Such supplemental indenture shall provide for
adjustments of the Conversion Price which shall be as nearly equivalent as may
be practicable to the adjustments of the Conversion Price provided for in this
Article 5. If, in the case of any such consolidation, merger, combination, sale,
conveyance, transfer or lease, the stock or other securities and property
(including cash) receivable thereupon by a holder of Common Stock include shares
of stock or other securities and property of a Person other than the successor,
purchasing, transferee or leasing Person, as the case may be, in such
consolidation, merger, combination, sale, conveyance, transfer or lease, then
such supplemental indenture shall also be executed by such other Person and
shall contain such additional provisions to protect the interests of the Holders
of the Securities as the Board of Directors of the Company shall reasonably
consider necessary by reason of the foregoing. The provisions of this Section
5.11 shall similarly apply to successive reclassifications, changes,
combinations, consolidations, mergers, sales, conveyances, transfers or leases.
In the event the Company shall execute a supplemental indenture
pursuant to this Section 5.11, the Company shall promptly file with the Trustee
(x) an Officer's Certificate briefly stating the reasons therefor, the kind or
amount of shares of stock or
43
other securities or property (including cash) receivable by Holders of the
Securities upon the conversion of their Securities after any such
reclassification, change, combination, consolidation, merger, sale, conveyance,
transfer or lease, any adjustment to be made with respect thereto and that all
conditions precedent have been complied with and (y) an Opinion of Counsel that
all conditions precedent have been complied with, and shall promptly mail notice
thereof to all Holders.
Section 5.12. Trustee's Disclaimer. The Trustee shall have no duty
to determine when an adjustment under this Article 5 should be made, how it
should be made or what such adjustment should be, but may accept as conclusive
evidence of that fact or the correctness of any such adjustment, and shall be
protected in relying upon, an Officer's Certificate including the Officer's
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 5.09. The Trustee makes no representation as to the
validity or value of any securities or assets issued upon conversion of
Securities, and the Trustee shall not be responsible for the Company's failure
to comply with any provisions of this Article 5.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 5.11, but may accept as conclusive evidence of the
correctness thereof, and shall be fully protected in relying upon, the Officer's
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 5.11.
Section 5.13. Voluntary Reduction. The Company from time to time
may voluntarily reduce the Conversion Price by any amount for any period of time
if the period is at least 20 days and if the reduction is irrevocable during the
period if the Board of Directors of the Company determines that such reduction
would be in the best interest of the Company, and the Company provides 15 days'
prior notice of any voluntary reduction in the Conversion Price; provided,
however, that in no event may the Company reduce the Conversion Price to be less
than the par value of a share of Common Stock.
ARTICLE 6
SUCCESSOR COMPANIES
Section 6.01. When the Company May Merge or Transfer Assets. The
Company shall not consolidate, combine with or merge with or into any other
Person, in a transaction in which the Company is not the surviving corporation,
or sell, convey, transfer or lease all or substantially all of its properties
and assets to any Person, unless:
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(1) the successor, purchasing, transferee or leasing Person, if
any, is a corporation, limited liability company, partnership, trust or
other entity organized and existing under the laws of the United States,
any State thereof or the District of Columbia (the "Successor Person")
and expressly assumes the obligations of the Company under this Indenture
by a supplemental indenture as provided in Section 5.11;
(2) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing; and
(3) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that such
consolidation, combination, merger, conveyance, sale, transfer or lease
and such supplemental indenture (if any) comply with this Indenture.
The Successor Person shall be the successor to the Company and
shall succeed to, and be substituted for, and may exercise every right and power
of, the Company under this Indenture, but the predecessor Person in the case of
a sale, conveyance, transfer or lease shall not be released from the obligation
to pay the principal of and interest on the Securities.
ARTICLE 7
DEFAULTS AND REMEDIES
Section 7.01. Events of Default. An "Event of Default" occurs if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, whether or not such
payment shall be prohibited by Article 11, and such default continues for
a period of 15 days;
(2) the Company (i) defaults in the payment of the principal of
any Security when the same becomes due and payable at its Stated
Maturity, whether or not such payment shall be prohibited by Article 11
or (ii) fails to redeem or purchase Securities when required pursuant to
this Indenture or the Securities, whether or not such redemption or
purchase shall be prohibited by Article 11;
(3) the Company fails to provide notice of a Change in Control
in accordance with Section 4.07;
(4) the Company fails to comply with its obligations under
Section 6.01;
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(5) the Company fails to comply with any of its agreements in
the Securities or this Indenture (other than those referred to in clauses
(1) through (4) above) and such failure continues for 60 days after the
notice specified below;
(6) the Company pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against
it in an involuntary case;
(C) consents to the appointment of a Custodian of it or
for a substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
(7) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company in an involuntary
case;
(B) appoints a Custodian of the Company or for any
substantial part of its property; or
(C) orders the winding up or liquidation of the Company;
and the order or decree remains unstayed and in effect for 60 days
(together with clause (6), the "bankruptcy provisions"); or
(8) the payment of the principal of the Junior Notes is
accelerated under the terms of the Junior Notes Indenture.
However, a default under clause (3) or (5) will not constitute an Event of
Default until the Trustee or the Holders of 25% in principal amount of the
outstanding Securities notify the Company of the default and the Company does
not cure such default within the time specified after receipt of such notice.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
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The term "Bankruptcy Law" means Title 11, United States Code, or
any similar Federal, state or foreign law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
Section 7.02. Acceleration. (a) If an Event of Default specified
in Section 7.01(6), (7) or (8) occurs, the principal of and interest on all the
Securities shall ipso facto become and be immediately due and payable in cash
without any declaration or other act on the part of the Trustee or any
Securityholders.
(b) If an Event of Default specified in Section 7.01(1) or
(2)(ii) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in principal amount of the Securities by notice to the
Company and the Trustee, may declare the principal of and accrued but unpaid
interest on all the Securities to be due and payable immediately in cash.
(c) If an Event of Default (other than an Event of Default
specified in Section 7.01(1), (2)(ii), (6), (7) or (8)) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of at least 25%
in principal amount of the Securities by notice to the Company and the Trustee,
may declare the principal of and accrued but unpaid interest on all the
Securities to be due and payable. Upon such a declaration, such principal and
interest shall be due and payable immediately with principal payable in shares
of Common Stock as provided in paragraphs 2 and 16 of the Security and this
Indenture.
(d) The Holders of a majority in principal amount of the
outstanding Securities by notice to the Trustee may rescind an acceleration with
respect to the Securities and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of acceleration and all payments due to the Trustee under
Section 8.07 of this Indenture have been made. No such rescission shall affect
any subsequent Default or impair any right consequent thereto.
Section 7.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Securityholder in exercising any right or
remedy accruing upon an Event
47
of Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative.
Section 7.04. Waiver of Past Defaults. The Holders of a majority
in principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (i) a Default specified in Section
7.01(1) or (2) or (ii) a Default in respect of a provision that under Section
10.02 cannot be amended without the consent of each Securityholder affected.
When a Default is waived, it is deemed cured, but no such waiver shall extend to
any subsequent or other Default or impair any consequent right.
Section 7.05. Control by Majority. The Holders of a majority in
principal amount of the outstanding Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 8.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
from the Holders satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.
Section 7.06. Limitation on Suits. Except to enforce the right to
receive payment of principal, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating that
an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
outstanding Securities make a written request to the Trustee to pursue
the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
48
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
Section 7.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder in the manner provided in the Security and this Indenture, on or after
the respective due dates expressed in the Securities, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
Section 7.08. Collection Suit by Trustee. If an Event of Default
resulting in acceleration described in Section 7.02(a) or (b) occurs, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts provided
for in Section 8.07.
Section 7.09. Trustee May File Proofs of Claim. The Trustee may
file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property to collect and receive any monies or other property payable or
deliverable on any such claims, and to distribute the same after the deduction
of any amounts due the Trustee under Section 8.07, and to take any other action
with respect to such claims, including participating as a member of any official
committee of creditors, as it reasonably deems necessary or advisable, and,
unless prohibited by law or applicable regulations, may vote on behalf of the
Holders in any election of a trustee in bankruptcy or other Person performing
similar functions. The Trustee shall be entitled and empowered to collect,
receive and distribute any money or other property payable or deliverable on any
such claims, and any Custodian in any such judicial proceeding is hereby
authorized by each Holder to make payments to the Trustee and, in the event that
the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and its counsel, and any other amounts due the Trustee under Section 8.07.
Section 7.10. Priorities. If the Trustee collects any money
pursuant to this Article 7, it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due to the Trustee under Section
8.07 or any other provision of this Indenture;
SECOND: to holders of Senior Indebtedness of the Company to the
extent required by Article 11;
49
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any payment
to Securityholders pursuant to this Section. At least 15 days before such record
date, the Trustee shall mail to each Securityholder and the Company a notice
that states the record date, the payment date and amount to be paid.
Section 7.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 7.07 or a suit by
Holders of more than 10% in principal amount of the Securities.
ARTICLE 8
TRUSTEE
Section 8.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and skill
in their exercise, as a prudent Person would exercise or use under the
circumstances in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the
50
requirements of this Indenture. However, in the case of any such
certificates or opinions which, by any provision hereof, are required to
be furnished to the Trustee, the Trustee shall examine such certificates
and opinions to determine whether or not they conform to the requirements
of this Indenture.
(c) No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act or its own wilful misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 7.05.
(d) Every provision of this Indenture that in any way relates to
the Trustee, other than paragraph (g) of this Section, is subject to paragraphs
(a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
Section 8.02. Rights of Trustee. (a) The Trustee may conclusively
rely on any document believed by it to be genuine and to have been signed or
presented by the proper Person. The Trustee need not investigate any fact or
matter stated in the document.
51
(b) Before the Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Officer's Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) Subject to Section 8.01(c), the Trustee shall not be liable
for any action it takes or omits to take in good faith which it believes to be
authorized or within its rights or powers.
(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Trust Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
Default or Event of Default is received by the Trustee at the Corporate Trust
Office, and such notice references the Securities under this Indenture.
(g) The rights, privileges, protections, immunities and benefits
given to the Trustee hereunder, including without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed by the Trustee consistent with the terms of this Indenture to act
hereunder.
(h) Any permissive right or authority granted to the Trustee
shall not be construed as a mandatory duty.
Section 8.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 8.10 and 8.11.
Section 8.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the
52
Securities, and it shall not be responsible for any statement of the Company in
the Indenture or in any document issued in connection with the sale of the
Securities or in the Securities other than the Trustee's certificate of
authentication.
Section 8.05. Notice of Defaults. If a Default occurs and is
continuing and if it is actually known to the Trustee, or upon written notice
from the Company or any Securityholder or upon a Payment Default, the Trustee
shall mail to each Securityholder notice of the Default within 90 days after it
occurs. Except in the case of a Default in payment of principal of or interest
on any Security (including payments pursuant to the mandatory redemption
provisions of such Security, if any), the Trustee may withhold the notice if and
so long as a committee of its Trust Officers in good faith determines that
withholding the notice is in the interests of Securityholders.
Section 8.06. Reports by Trustee to Holders. As promptly as
practicable after each November 15, beginning with November 15, 2003, and in any
event within 60 days of each November 15, the Trustee shall mail to each
Securityholder a brief report dated as of November 15 of each year that complies
with TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
Section 8.07. Compensation and Indemnity. The Company shall pay to
the Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable out-of-pocket expenses, disbursements and
advances incurred or made by it, including costs of collection, in addition to
the compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and experts. Except as set forth below, the Company shall
indemnify the Trustee against any and all loss, liability or expense (including
reasonable attorneys' fees) incurred by it in connection with the administration
of this trust and the performance of its duties hereunder, including the costs
and expenses of enforcing this Indenture (including this Section 8.07) against
the Company and defending itself against any claim (whether asserted by any
Securityholder or any other Person) or liability in connection with the exercise
or performance of any of its powers or duties hereunder. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder unless such failure prejudices the Company. The
Company shall defend the claim and the Trustee may have separate counsel and the
53
Company shall pay the fees and expenses of such counsel. The Company need not
reimburse any expense or indemnify against any loss, liability or expense
incurred by the Trustee through the Trustee's own wilful misconduct, negligence
or bad faith.
The Company need not pay for any settlement made by the Trustee
without the Company's consent, such consent not to be unreasonably withheld or
delayed.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities.
The Company's payment obligations, and the lien granted to the
Trustee, pursuant to this Section shall survive the discharge of this Indenture.
When the Trustee incurs expenses or renders services after the occurrence of a
Default specified in Section 7.01(6) or (7) with respect to the Company, the
expenses and the compensation for the services (including the fees and expenses
of its agents and counsel) are intended to constitute expenses of administration
under the Bankruptcy Law.
Section 8.08. Replacement of Trustee. The Trustee may resign at
any time by so notifying the Company. The Holders of a majority in principal
amount of the Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 8.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount of the outstanding Securities and such
Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy
exists in the office of Trustee for any reason (the Trustee in such event being
referred to herein as the retiring Trustee), the Company shall promptly appoint
a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a
54
notice of its succession to Securityholders. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
that the amounts owing to the Trustee hereunder have been paid and subject to
the lien provided for in Section 8.07.
If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee or the Holders
of 10% in principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 8.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 8.07 shall continue for the
benefit of the retiring Trustee.
Section 8.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee provided that such successor shall be
eligible and qualified under Section 8.10.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
Section 8.10. Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA Section 310(a). The Trustee shall have
a combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
Section 310(b); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities
55
of the Company are outstanding if the requirements for such exclusion set forth
in TIA Section 310(b)(1) are met.
Section 8.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 9
DISCHARGE OF INDENTURE
Section 9.01. Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect (except as to any rights of
conversion, registration of transfer or exchange of Securities herein expressly
provided for and except as further provided below), and the Trustee, on demand
of and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when
(a) either:
(1) all Securities theretofore authorized and delivered (other
than (x) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.10 and (y) Securities
for whose payment money and shares of Common Stock have theretofore been
deposited in trust and thereafter been repaid to the Company as provided
in Section 9.03) have been delivered to the Trustee for cancellation; or
(2) all such Securities not theretofore delivered to the Trustee
for cancellation (x) have become due and payable, (y) will become due and
payable at the Stated Maturity within 90 days, or (z) have been called
for redemption within 90 days under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the
name, and at the expense, of the Company, and the Company has irrevocably
deposited or caused to be irrevocably deposited with the Trustee or a
Paying Agent (other than the Company or any of its Affiliates) as trust
funds in trust for the purpose, (i) cash in an amount sufficient to pay
and discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for (A) principal (if due or
to be due in cash), the Optional Redemption Price or the Change in
Control Purchase Price and (B) interest to the date of such deposit (in
the case of Securities which have become due and payable) or to the
Stated Maturity or Optional Redemption Date, as the case may be, and (ii)
shares of Common Stock in an amount sufficient to pay the principal (if
due or
56
to be due in shares of Common Stock), assuming the Applicable Conversion
Price is the Floor Price on the date of deposit; provided that
notwithstanding the satisfaction and discharge of this Indenture, if
after the date of such deposit and prior to the Stated Maturity, the
Conversion Price shall be adjusted pursuant to the adjustment provisions
of Section 5.06, and as a result the number of shares of Common Stock
deliverable at Stated Maturity (assuming the Applicable Conversion Price
is the adjusted Floor Price following such adjustment to the Conversion
Price) shall be greater than the number of shares of Common Stock on
deposit with the Trustee or a Paying Agent, the Company shall be
obligated to deposit in trust such additional shares of Common Stock as
shall be necessary to deliver the required number of shares of Common
Stock at Stated Maturity;
(b) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 8.07 shall survive
and, if money and shares of Common Stock shall have been deposited with the
Trustee pursuant to this Section 9.01(a)(2), the provisions of Sections 2.03,
2.05, 2.06, 2.07, 2.08, 2.10, 4.02, 4.04, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11 and
4.12, Article 5, Article 6 and this Article 9 (including the obligations to
deliver additional shares of Common Stock provided in Section 9.01(a)(2) above)
shall survive until the Securities have been paid in full.
Section 9.02. Application of Trust Money and Shares. Subject to
the provisions of Section 9.03, the Trustee or a Paying Agent shall hold in
trust, for the benefit of the Holders, all money and shares of Common Stock
deposited with it pursuant to Section 9.01 and shall apply the deposited money
and shares of Common Stock in accordance with this Indenture and the Securities
to the payment of the principal of and interest on the Securities; provided,
however, that after the Securities have been paid in full pursuant to the terms
of the Security, the Holders shall not be entitled to any excess money or shares
of Common Stock that may be held by the Trustee or the Paying Agent pursuant to
Section 9.01. Money and shares of Common Stock so held in trust shall not be
subject to the subordination provisions of Article 11.
Section 9.03. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money and
shares of Common Stock (i) deposited with them pursuant to Section 9.01 and (ii)
held by them at any time.
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The Trustee and each Paying Agent shall pay to the Company upon
request any money and shares of Common Stock held by them for the payment of
principal or interest that remains unclaimed for two years, and, thereafter,
Securityholders entitled to the money or shares of Common Stock must look to the
Company for payment as general creditors.
Section 9.04. Reinstatement. If the Trustee or any Paying Agent is
unable to apply any money or shares of Common Stock in accordance with Section
9.02 by reason of any legal proceeding or by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 9.01 until such time as the Trustee or
such Paying Agent is permitted to apply all such money and shares of Common
Stock in accordance with Section 9.02; provided, however, that if the Company
has made any payment of the principal of or interest on any Securities because
of the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Securities to receive any such payment from the
money and shares of Common Stock held by the Trustee or such Paying Agent.
ARTICLE 10
AMENDMENTS
Section 10.01. Without Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to or consent
of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Section 5.11 or Article 6;
(3) to provide for uncertificated Securities in addition to or
in place of Certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to appoint a successor Trustee;
(5) to comply with any requirements of the SEC in connection
with qualifying, or maintaining the qualification of, this Indenture
under the TIA;
58
(6) to add guarantees with respect to the Securities or to
secure the Securities;
(7) to add to covenants of the Company for the benefit of the
Securityholders or to surrender any right or power conferred upon the
Company; and
(8) to make any change that does not adversely affect the rights
of any Securityholder, including providing for the sale and resale of the
Securities under Regulation S of the Securities Act.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
Section 10.02. With Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities then outstanding (including
consents obtained in connection with a tender offer or exchange for the
Securities). However, without the written consent of each Securityholder
affected thereby, an amendment may not:
(a) change the stated maturity of the principal of, or interest
on, any Security;
(b) reduce the principal amount of, or any premium or interest
on, any Security;
(c) reduce the amount of principal payable upon acceleration of
the maturity of any Security;
(d) change the time at which any Security may be redeemed in
accordance with Article 3;
(e) change the place or currency of payment of principal of, or
any premium or interest on, any Security;
(f) impair the right to institute suit for the enforcement of
any payment on, or with respect to, any Security;
(g) modify the subordination provisions of Article 11 in a
manner materially adverse to the Holders of Securities;
59
(h) adversely affect the right of Holders to convert Securities
other than under Article 5;
(i) adversely affect the adjustment of the Conversion Price
except as provided in Article 5;
(j) reduce the percentage of the aggregate principal amount of
the outstanding Securities whose Holders must consent to a modification
or amendment of this Indenture; and
(k) modify any of the provisions of this Section or Section
7.04, except to increase any such percentage or to provide that specified
additional provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each outstanding Security affected
thereby.
It shall not be necessary for the consent of the Holders under
this Section 10.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 10.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver. An amendment or supplement under this Section 10.02 or under Section
10.01 may not make any change that adversely affects the rights under Article 11
of any holder of an issue of Senior Indebtedness unless the holders of that
issue, pursuant to its terms, consent to the change.
Section 10.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect to the extent required thereby.
Section 10.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder. An
amendment or waiver becomes effective upon the execution of such amendment or
waiver by the Trustee.
60
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
Section 10.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
Section 10.06. Trustee to Sign Amendments. The Trustee shall sign
any amendment authorized pursuant to this Article 10 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing any amendment the
Trustee shall be entitled to receive, and (subject to Section 8.01) shall be
fully protected in relying upon, an Officer's Certificate and an Opinion of
Counsel stating that such amendment is authorized or permitted by this
Indenture.
Section 10.07. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 11
SUBORDINATION
Section 11.01. Agreement to Subordinate. The Company agrees, and
each Securityholder by accepting a Security agrees, that the Indebtedness
evidenced by the
61
Securities is subordinated in right of payment, to the extent and in the manner
provided in this Article 11, to the prior payment in full in cash of all
Obligations with respect to Senior Indebtedness of the Company and that the
subordination is for the benefit of and enforceable by the holders of such
Senior Indebtedness. All provisions of this Article 11 shall be subject to
Section 11.12.
Section 11.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company to creditors upon a total
or partial liquidation or a total or partial dissolution or winding up of the
Company or upon any assignment for the benefit of creditors or marshalling of
assets of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property,
whether voluntary or involuntary:
(1) the holders of Senior Indebtedness of the Company shall be
entitled to receive payment in full in cash of all Obligations with
respect to such Senior Indebtedness (including all interest accruing
subsequent to the filing of a petition in bankruptcy at the rate provided
for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) before Securityholders
shall be entitled to receive any payment or distribution with respect to
the Securities; and
(2) until all Obligations with respect to such Senior
Indebtedness are paid in full in cash, any payment or distribution to
which Securityholders would be entitled but for this Article 11 shall be
made to holders of such Senior Indebtedness as their interests may
appear, except that Securityholders may receive in exchange for the
Securities in any proceeding of the type described above in this Section
11.02, (x) equity securities of the Company which, in any case, do not
provide any mandatory redemption or similar retirement prior to the
maturity of the Securities or (y) unsecured debt securities of the
Company which are subordinated to at least the same extent as the
Securities to the payment of all Senior Indebtedness of the Company and
which, in any case, do not mature or become subject to a mandatory
redemption obligation prior to the maturity of the Securities.
Section 11.03. Default on Senior Indebtedness. The Company may not
pay (in cash, property or other assets) the principal of or interest on the
Securities and may not repurchase, redeem or otherwise retire any Securities
(collectively, "pay the Securities") if either of the following occurs (each, a
"Payment Default") (i) any Obligations with respect to Senior Indebtedness are
not paid in full when due or (ii) any other default on Senior Indebtedness
occurs and the maturity of such Senior Indebtedness is accelerated in accordance
with its terms unless, in either case, (x) the default has been cured or waived
and any such acceleration has been rescinded in writing or (y) such Senior
Indebtedness has been paid in full in cash; provided, however, that the Company
62
may pay the Securities without regard to the foregoing if the Company and the
Trustee receive written notice approving such payment from the Representative of
such Senior Indebtedness. During the continuance of any default (other than a
default described in clause (i) or (ii) of the preceding sentence) with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof may
be accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, the Company may not pay the Securities for a period (a "Payment
Blockage Period") commencing upon the receipt by the Company and the Trustee of
written notice (a "Blockage Notice") of such default from the Representative of
such Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (1) by written notice to the Trustee and the
Company from the Person or Persons who gave such Blockage Notice, (2) because no
defaults continue in existence which would permit the acceleration of the
maturities of any Designated Senior Indebtedness at such time or (3) because
such Designated Senior Indebtedness has been repaid in full in cash). Unless the
holders of such Designated Senior Indebtedness or the Representative of such
holders shall have accelerated the maturity of such Designated Senior
Indebtedness, or any Payment Default otherwise exists, the Company may resume
payments on the Securities after termination of such Payment Blockage Period and
may make any and all payments that were previously subject to a Payment Blockage
Period. The Securities shall not be subject to more than one Payment Blockage
Period in any consecutive 360-day period. For purposes of this Section, no
default or event of default which existed or was continuing on the date of the
commencement of any Payment Blockage Period with respect to the Designated
Senior Indebtedness initiating such Payment Blockage Period shall be, or be
made, the basis of the commencement of a subsequent Payment Blockage Period by
the Representative of such Designated Senior Indebtedness, whether or not within
a period of 360 consecutive days, unless such default or event of default shall
have been cured or waived for a period of not less than 90 consecutive days (it
being acknowledged and agreed that (x) any default or event of default as a
result of a continued failure to meet a financial covenant or test for a period
ended subsequent to the commencement of a Payment Blockage Period shall
constitute a new default or event of default, as the case may be, and shall be
deemed not to be a continuing default or event of default, as the case may be,
for purposes of this sentence and (y) any subsequent action which would give
rise to a default or an event of default pursuant to any provision under which a
default or event of default previously existed or was continuing shall
constitute a new default or event of default, as the case may be, for this
purpose and shall be deemed not to be a continuing default or event of default,
as the case may be, for purposes of this sentence).
Section 11.04. Acceleration of Payment of Securities. If payment
of the Securities is accelerated because of an Event of Default, the Company or
the Trustee
63
shall promptly notify the holders of the Designated Senior Indebtedness (or
their Representatives) of the acceleration. If any Designated Senior
Indebtedness is outstanding at the time of such acceleration, the Company may
not pay the Securities until five Business Days after the Representatives of all
the issues of Designated Senior Indebtedness receive notice of such acceleration
and, thereafter, may pay the Securities only if the Indenture otherwise permits
payment at that time.
Section 11.05. When Distribution Must Be Paid Over. If a
distribution is made to Securityholders that because of this Article 11 should
not have been made to them, the Securityholders who receive the distribution
shall hold it in trust for holders of Senior Indebtedness of the Company and pay
it over to them as their interests may appear.
Section 11.06. Subrogation. After all Senior Indebtedness of the
Company is paid in full in cash and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of such Senior
Indebtedness to receive distributions applicable to such Senior Indebtedness. A
distribution made under this Article 11 to holders of such Senior Indebtedness
which otherwise would have been made to Securityholders is not, as between the
Company and Securityholders, a payment by the Company on such Senior
Indebtedness.
Section 11.07. Relative Rights. This Article 11 defines the
relative rights of Securityholders and holders of Senior Indebtedness of the
Company. Nothing in this Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Securityholder from exercising
its available remedies upon a Default, subject to the rights of holders
of Senior Indebtedness of the Company to receive distributions otherwise
payable to Securityholders.
Section 11.08. Subordination May Not Be Impaired by the Company.
No right of any holder of Senior Indebtedness of the Company to enforce the
subordination of the Indebtedness evidenced by the Securities shall be impaired
by any act or failure to act by the Company or by its failure to comply with
this Indenture.
Section 11.09. Rights of Trustee and Paying Agent. Notwithstanding
Section 11.03, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior
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to the date of such payment, a Trust Officer of the Trustee receives notice
satisfactory to it that payments may not be made under this Article 11. The
Company, the Registrar or co-registrar, the Paying Agent, a Representative or a
holder of Senior Indebtedness may give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness of the Company with the same rights it would have if it were
not Trustee. The Registrar and co-registrar and the Paying Agent may do the same
with like rights. The Trustee shall be entitled to all the rights set forth in
this Article 11 with respect to any Senior Indebtedness of the Company which may
at any time be held by it, to the same extent as any other holder of such Senior
Indebtedness; and nothing in Article 8 shall deprive the Trustee of any of its
rights as such holder. Nothing in this Article 11 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 8.07.
Section 11.10. Distribution or Notice to Representative. Whenever
a distribution is to be made or a notice given to holders of Senior Indebtedness
of the Company, the distribution may be made and the notice given to their
Representative (if any).
Section 11.11. Article 11 Not to Prevent Events of Default or
Limit Right to Accelerate. The failure to make a payment pursuant to the
Securities by reason of any provision in this Article 11 shall not be construed
as preventing the occurrence of a Default. Nothing in this Article 11 shall have
any effect on the right of the Securityholders or the Trustee to accelerate the
maturity of the Securities.
Section 11.12. Trustee Entitled to Rely. Upon any payment or
distribution pursuant to this Article 11, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 11.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness of the Company for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of such Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 11. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness of the Company to participate
in any payment or distribution pursuant to this Article 11, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of such Senior Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person under this
Article 11, and, if such evidence is
65
not furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment. The
provisions of Sections 8.01 and 8.02 shall be applicable to all actions or
omissions of actions by the Trustee pursuant to this Article 11.
Section 11.13. Trustee to Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on its
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness of the Company as provided in this Article 11 and appoints
the Trustee as attorney-in-fact for any and all such purposes.
Section 11.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Securityholders or the Company or any
other Person, money or assets to which any holders of Senior Indebtedness of the
Company shall be entitled by virtue of this Article 11 or otherwise.
Section 11.15. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Securityholder by accepting a Security
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness of the Company, whether such Senior Indebtedness was created or
acquired before or after the issuance of the Securities, to acquire and continue
to hold, or to continue to hold, such Senior Indebtedness and such holder of
such Senior Indebtedness shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Indebtedness.
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls. If any provision of
this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
Section 12.02. Notices. Any notice or communication shall be in
writing and delivered or mailed to the address set forth below:
66
if to the Company:
Skyworks Solutions, Inc.
20 Sylvan Road
Woburn, MA 01801
Attention: Chief Financial Officer
if to the Trustee:
Wachovia Bank, National Association
Corporate Trust Group
200 Berkeley Street, 17th floor
Boston, MA 02116
Attention: Skyworks Solutions, Inc. 15% Convertible
Senior Subordinated Notes due 2005
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be
mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or
any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
Section 12.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
Section 12.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officer's Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
67
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
Section 12.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
Section 12.06. When Securities Disregarded. In determining whether
the Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.
Section 12.07. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
Section 12.08. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be open in the
State of New York, the Commonwealth of Massachusetts or the state where the
office of any Paying Agent is located. If a payment date is a Legal Holiday,
payment shall be made on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue for the
68
intervening period. If a regular record date is a Legal Holiday, the record date
shall not be affected.
Section 12.09. Governing Law. This Indenture and the Securities
shall be governed by, and construed in accordance with, the laws of the State
of New York but without giving effect to applicable principles of conflicts of
law to the extent that the application of the laws of another jurisdiction would
be required thereby.
Section 12.10. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.
Section 12.11. Successors. All agreements of the Company in this
Indenture and the Securities shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
Section 12.12. Multiple Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
Section 12.13. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
(remainder of this page intentionally left blank)
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IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
SKYWORKS SOLUTIONS, INC.
By /s/ DAVID J. ALDRICH
_________________________________________
Name: David J. Aldrich
Title: President and Chief Executive
Officer
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Trustee
By /s/ TIMOTHY DONMOYER
_________________________________________
Name: Timothy Donmoyer
Title: Vice President
EXHIBIT A
See Form of 15% Senior Convertible Note of the Company filed herewith as
Exhibit 4.f
Exhibit 4.f
EXECUTION COPY
[FACE OF SECURITY]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY AND THE SHARES OF
COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY
THAT (A) THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
THEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904
UNDER THE SECURITIES ACT, (II) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT INCLUDING PURSUANT TO RULE 144 THEREUNDER (IF AVAILABLE) OR
(III) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
IN EACH OF CASES (I) THROUGH (III) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT
OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. IN ANY CASE, THE HOLDER
HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTIONS WITH
REGARD TO THIS SECURITY EXCEPT AS PERMITTED UNDER THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF A
REGISTRATION RIGHTS AGREEMENT (AS SUCH TERM IS DEFINED IN THE INDENTURE REFERRED
TO ON THE REVERSE HEREOF) AND, BY ITS ACCEPTANCE HEREOF, AGREES TO BE BOUND BY
AND TO COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION RIGHTS AGREEMENT.
THIS SECURITY MAY NOT BE SOLD OR TRANSFERRED TO, AND EACH
PURCHASER BY ITS PURCHASE OF THIS SECURITY SHALL BE DEEMED TO HAVE REPRESENTED
AND COVENANTED THAT IT IS NOT ACQUIRING THIS SECURITY FOR OR ON BEHALF OF, AND
WILL NOT TRANSFER THIS SECURITY TO, ANY EMPLOYEE BENEFIT PLAN (A "PLAN") AS
DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), EXCEPT THAT SUCH
PURCHASE FOR OR ON BEHALF OF A PLAN SHALL BE PERMITTED:
(I) TO THE EXTENT SUCH PURCHASE IS MADE BY OR ON BEHALF OF A
BANK COLLECTIVE INVESTMENT FUND MAINTAINED BY THE PURCHASER IN WHICH NO
PLAN (TOGETHER WITH ANY OTHER PLANS MAINTAINED BY THE SAME EMPLOYER OR
EMPLOYEE ORGANIZATION) HAS AN INTEREST IN EXCESS OF 10% OF THE TOTAL
ASSETS IN SUCH COLLECTIVE INVESTMENT FUND, AND THE OTHER APPLICABLE
CONDITIONS OF PROHIBITED TRANSACTION CLASS EXEMPTION 91-38 ISSUED BY THE
DEPARTMENT OF LABOR ARE SATISFIED;
(II) TO THE EXTENT SUCH PURCHASE IS MADE BY OR ON BEHALF OF AN
INSURANCE COMPANY POOLED SEPARATE ACCOUNT MAINTAINED BY THE PURCHASER IN
WHICH, AT ANY TIME WHILE THESE SECURITIES ARE OUTSTANDING, NO PLAN
(TOGETHER WITH ANY OTHER PLANS MAINTAINED BY THE SAME EMPLOYER OR
EMPLOYEE ORGANIZATION) HAS AN INTEREST IN EXCESS OF 10% OF THE TOTAL OF
ALL ASSETS IN SUCH POOLED SEPARATE ACCOUNT, AND THE OTHER APPLICABLE
CONDITIONS OF PROHIBITED TRANSACTION CLASS EXEMPTION 90-1 ISSUED BY THE
DEPARTMENT OF LABOR ARE SATISFIED;
(III) TO THE EXTENT SUCH PURCHASE IS MADE BY AN INVESTMENT FUND ON
BEHALF OF A PLAN BY (A) AN INVESTMENT ADVISER REGISTERED UNDER THE
INVESTMENT ADVISERS ACT OF 1940, AS AMENDED (THE "1940 ACT"), THAT HAD AS
OF THE LAST DAY OF ITS MOST RECENT FISCAL YEAR TOTAL ASSETS UNDER ITS
MANAGEMENT AND CONTROL IN EXCESS OF $50.0 MILLION AND HAD STOCKHOLDERS'
OR PARTNERS' EQUITY IN EXCESS OF $750,000, AS SHOWN IN ITS MOST RECENT
BALANCE SHEET PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES, OR (B) A BANK AS DEFINED IN SECTION 202(A)(2) OF THE 1940 ACT
WITH EQUITY CAPITAL IN EXCESS OF $1.0 MILLION AS OF THE LAST DAY OF ITS
MOST RECENT FISCAL YEAR, OR (C) AN INSURANCE COMPANY WHICH IS QUALIFIED
UNDER THE LAWS OF MORE THAN ONE STATE TO MANAGE, ACQUIRE OR DISPOSE OF
ANY ASSETS OF A PENSION OR WELFARE PLAN, WHICH INSURANCE COMPANY HAS AS
OF THE LAST DAY OF ITS MOST RECENT FISCAL YEAR, NET WORTH IN
2
EXCESS OF $1.0 MILLION AND WHICH IS SUBJECT TO SUPERVISION AND
EXAMINATION BY A STATE AUTHORITY HAVING SUPERVISION OVER INSURANCE
COMPANIES AND, IN ANY CASE, SUCH INVESTMENT ADVISER, BANK OR INSURANCE
COMPANY IS OTHERWISE A QUALIFIED PROFESSIONAL ASSET MANAGER, AS SUCH TERM
IS USED IN PROHIBITED TRANSACTION CLASS EXEMPTION 84-14 ISSUED BY THE
DEPARTMENT OF LABOR, AND THE ASSETS OF SUCH PLAN WHEN COMBINED WITH THE
ASSETS OF OTHER PLANS ESTABLISHED OR MAINTAINED BY THE SAME EMPLOYER (OR
AFFILIATE THEREOF) OR EMPLOYEE ORGANIZATION AND MANAGED BY SUCH
INVESTMENT ADVISER, BANK OR INSURANCE COMPANY, DO NOT REPRESENT MORE THAN
20% OF THE TOTAL CLIENT ASSETS MANAGED BY SUCH INVESTMENT ADVISER, BANK
OR INSURANCE COMPANY AT THE TIME OF THE TRANSACTION, AND THE OTHER
APPLICABLE CONDITIONS OF SUCH EXEMPTION ARE OTHERWISE SATISFIED;
(IV) TO THE EXTENT SUCH PLAN IS A GOVERNMENTAL PLAN, AS DEFINED
IN SECTION 3(32) OF ERISA WHICH IS NOT SUBJECT TO THE PROVISIONS OF
TITLE 1 OF ERISA, AND AS DEFINED IN SECTION 414(d) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE");
(V) TO THE EXTENT SUCH PURCHASE IS MADE BY OR ON BEHALF OF AN
INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT, THE RESERVES
AND LIABILITIES FOR THE GENERAL ACCOUNT CONTRACTS HELD BY OR ON BEHALF OF
ANY PLAN, TOGETHER WITH ANY OTHER PLANS MAINTAINED BY THE SAME EMPLOYER
(OR ITS AFFILIATES) OR EMPLOYEE ORGANIZATION, DO NOT EXCEED 10% OF THE
TOTAL RESERVES AND LIABILITIES OF THE INSURANCE COMPANY GENERAL ACCOUNT
(EXCLUSIVE OF SEPARATE ACCOUNT LIABILITIES), PLUS SURPLUS AS SET FORTH IN
THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS ANNUAL STATEMENT
FILED WITH THE STATE OF DOMICILE OF THE INSURER, IN ACCORDANCE WITH
PROHIBITED TRANSACTION CLASS EXEMPTION 95-60, AND THE OTHER APPLICABLE
CONDITIONS OF SUCH EXEMPTION ARE OTHERWISE SATISFIED;
(VI) TO THE EXTENT PURCHASE IS MADE BY AN IN-HOUSE ASSET MANAGER
WITHIN THE MEANING OF PART IV(A) OF PROHIBITED TRANSACTION CLASS
EXEMPTION 96-23, SUCH
3
MANAGER HAS MADE OR PROPERLY AUTHORIZED THE DECISION FOR SUCH PLAN TO
PURCHASE THIS SECURITY, UNDER CIRCUMSTANCES SUCH THAT PROHIBITED
TRANSACTION CLASS EXEMPTION 96-23 IS APPLICABLE TO THE PURCHASE AND
HOLDING OF THIS SECURITY; OR
(VII) TO THE EXTENT SUCH PURCHASE WILL NOT OTHERWISE GIVE RISE TO
A TRANSACTION DESCRIBED IN SECTION 406 OR SECTION 4975(C)(1) OF THE CODE
FOR WHICH A STATUTORY OR ADMINISTRATIVE EXEMPTION IS UNAVAILABLE.
4
SKYWORKS SOLUTIONS, INC.
CUSIP No. 83088M AC 6 No. R-1
ISIN No. US83088MAC64
15% CONVERTIBLE SENIOR SUBORDINATED NOTE DUE JUNE 30, 2005
Skyworks Solutions, Inc., a Delaware corporation (the "Company",
which term shall include any successor corporation under the Indenture referred
to on the reverse hereof), promises to pay to Conexant Systems, Inc., or
registered assigns, the principal sum of Forty-Five Million Dollars
($45,000,000) by delivery of shares of Common Stock on June 30, 2005.
Interest Payment Dates: the last Business Day (as defined in
this Security) of each March, June, September and December, beginning
December 31, 2002.
Record Dates: March 15, June 15, September 15 and December 15
This Security is convertible as specified on the other side of
this Security. Additional provisions of this Security are set forth on the other
side of this Security.
SIGNATURE PAGE FOLLOWS
5
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.
SKYWORKS SOLUTIONS, INC.
By _______________________________________
Name:
Title:
Dated:
Trustee's Certificate of Authentication: This is one
of the Securities referred to in the within-mentioned
Indenture.
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Trustee
By: _______________________________
Authorized Signatory
6
[REVERSE SIDE OF SECURITY]
SKYWORKS SOLUTIONS, INC.
15% CONVERTIBLE SENIOR SUBORDINATED NOTE
DUE JUNE 30, 2005
1. Interest
Skyworks Solutions, Inc., a Delaware corporation (the "Company",
which term shall include any successor corporation under the Indenture
hereinafter referred to), promises to pay interest on the principal amount of
this Security at the rate of 15% per annum. The Company shall pay interest
quarterly on the last Business Day of each March, June, September and December,
commencing December 31, 2002; provided, however, that such interest may be
increased by any Additional Interest accruing from time to time on the principal
amount of this Security as provided in the Registration Rights Agreement. Any
reference herein to interest accrued or payable as of any date shall include any
Additional Interest accrued or payable on such date as provided in the
Registration Rights Agreement. Interest on the Securities shall accrue from the
most recent date to which interest has been paid on the Securities or the
Interim Convertible Note (as defined in the Refinancing Agreement) or, if no
interest has been paid, from November 12, 2002; provided, however, that if there
is not an existing Default in the payment of interest and if this Security is
authenticated between a record date referred to on the face hereof and the next
succeeding interest payment date, interest shall accrue from such interest
payment date. Interest will be computed on the basis of a 360-day year of twelve
30-day months.
Notwithstanding the foregoing provisions of this paragraph 1, but
subject to applicable law, any overdue interest on this Security or any
principal of this Security due pursuant to paragraph 16 of this Security shall
bear interest, payable on demand in immediately available funds, for each day
from the date payment thereof was due to the date of actual payment, at a rate
equal to the sum of (1) the interest rate then otherwise applicable and (2) an
additional 1% per annum, or, if an Event of Default described in clause (i),
(iii), (vii) or (viii) of paragraph 16 has occurred and is continuing, this
Security shall bear interest, from the date of the occurrence of such Event of
Default until such Event of Default is cured or waived, payable on demand in
immediately available funds, at a rate equal to the sum of (1) the interest rate
then otherwise applicable and (2) an additional 1% per annum. Subject to
applicable law, any interest that shall accrue on overdue interest on this
Security as provided in the preceding sentence, and that shall not have been
paid in full on or before the next interest payment date to occur after the date
7
on which the overdue interest became due and payable, shall itself be deemed to
be overdue interest on this Security to which the preceding sentence shall
apply.
In the event that any interest rate(s) provided for in this
paragraph 1 shall be determined to be unlawful, such interest rate(s) shall be
computed at the highest rate permitted by applicable law. Any payment by the
Company of any interest amount in excess of that permitted by law shall be
considered a mistake, with the excess being applied to the principal amount of
this Security without prepayment premium or penalty; if no such principal amount
is outstanding, such excess shall be returned to the Company.
2. Method of Payment
On the Maturity Date, the Company shall pay the principal amount
of this Security by issuing and delivering a number of whole shares of Common
Stock equal to the principal amount of the Security due and payable on the
Maturity Date divided by the Applicable Conversion Price in effect on the
Maturity Date, together with cash in lieu of any fractional shares pursuant to
Section 5.03 of the Indenture. The Company shall pay interest on this Security
(except defaulted interest) to the person who is the Holder of this Security at
the close of business on the March 15, June 15, September 15 or December 15, as
the case may be, next preceding the related interest payment date. The Holder
must surrender this Security to a Paying Agent to collect payment of principal.
Principal payable pursuant to paragraph 16 is payable in cash upon acceleration
for an Event of Default described in clause (i), (iii), (vii) or (viii) of the
first sentence of paragraph 16 and is payable in shares of Common Stock upon
acceleration for any other Event of Default. The Company will pay the Optional
Redemption Price, the Change in Control Purchase Price, principal payable in
cash pursuant to paragraph 16, cash in lieu of any fractional shares pursuant to
Section 5.03 of the Indenture and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts. The
Company may, however, pay such Optional Redemption Price, Change in Control
Purchase Price, principal, cash in lieu of any fractional shares and interest in
respect of any Certificated Security by check or wire payable in such money;
provided, however, that a Holder with an aggregate principal amount in excess of
$2,000,000 will be paid by wire transfer in immediately available funds at the
election of such Holder. The Company may mail an interest check to the Holder's
registered address. Notwithstanding the foregoing, so long as this Security is
registered in the name of a Depositary or its nominee, all payments hereon shall
be made by wire transfer of immediately available funds to the account of the
Depositary or its nominee.
3. Paying Agent, Registrar and Conversion Agent
Initially, Wachovia Bank, National Association (the "Trustee,"
which term shall include any successor trustee under the Indenture hereinafter
referred to) will act as
8
Paying Agent, Registrar and Conversion Agent. The Company may change any Paying
Agent, Registrar or Conversion Agent without notice to the Holder. The Company
or any of its Subsidiaries may, subject to certain limitations set forth in the
Indenture, act as Paying Agent or Registrar.
4. Indenture, Limitations
This Security is one of a duly authorized issue of Securities of
the Company designated as its 15% Convertible Senior Subordinated Notes Due June
30, 2005 (the "Securities") issued under an Indenture dated as of November 20,
2002 (together with any supplemental indentures thereto, the "Indenture")
between the Company and the Trustee. Capitalized terms herein are used as
defined in the Indenture unless otherwise defined herein. The terms of this
Security include those stated in the Indenture and those required by or made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended, as in effect on the date of the Indenture. This Security is subject to
all such terms, and the Holder of this Security is referred to the Indenture and
said Act for a statement of them. The Securities are senior subordinated
unsecured obligations of the Company limited to $45 million aggregate principal
amount, subject to Section 2.10 of the Indenture, and are "Designated Senior
Indebtedness" (as defined in the Junior Notes Indenture) for purposes of the
Junior Notes Indenture. The Indenture does not limit other debt of the Company,
secured or unsecured, including Senior Indebtedness.
5. Optional Redemption
The Company shall not have the option to redeem the Securities
pursuant to this paragraph 5 prior to May 12, 2004. Thereafter, the Company
shall have the option to redeem any portion of the Securities (an "Optional
Redemption") upon giving notice as set forth in paragraph 6. The Optional
Redemption Price (expressed as a percentage of the principal amount) shall be
103%, together with accrued interest up to but not including the date of
redemption (the "Optional Redemption Date"), payable in cash, provided that if
the Optional Redemption Date falls after an interest payment record date and on
or before an interest payment date, then the interest payment will be payable to
the Holders in whose names the Securities are registered at the close of
business on the relevant record date for payment of such interest.
6. Notice of Redemption
Notice of redemption will be mailed or delivered at least 20 days
but not more than 60 days before the Optional Redemption Date to each Holder of
Securities to be redeemed at its registered address. Securities in denominations
larger than $1,000 may be redeemed in part, but only in whole multiples of
$1,000. On and after the Optional Redemption Date, subject to the deposit with
the Paying Agent of funds sufficient to pay
9
in cash the Optional Redemption Price plus accrued interest, if any, to, but
excluding, the Optional Redemption Date, interest shall cease to accrue on
Securities or portions of them called for redemption.
7. Purchase of Securities at Option of Holder Upon a Change in Control
At the option of the Holder and subject to the terms and
conditions of the Indenture, the Company shall be obligated to purchase all or
any part specified by the Holder (so long as the principal amount of such part
is $1,000 or an integral multiple of $1,000 in excess thereof) of the Securities
held by such Holder on the date that is no less than 30 days and not more than
60 days after notice of the occurrence of a Change in Control is given as
provided in Section 4.07, at a purchase price in cash equal to 100% of the
principal amount thereof together with accrued interest up to, but excluding,
the Change in Control Purchase Date. The Holder shall have the right to withdraw
any Change in Control Purchase Notice (in whole or in a portion thereof that is
$1,000 or an integral multiple of $1,000 in excess thereof) at any time prior to
the close of business on the Business Day next preceding the Change in Control
Purchase Date by delivering a written notice of withdrawal to the Paying Agent
in accordance with the terms of the Indenture.
8. Conversion
A Holder of a Security may convert the principal amount of such
Security (or any portion thereof equal to $1,000 or any integral multiple of
$1,000 in excess thereof) into shares of Common Stock at any time after 60 days
from November 12, 2002 and prior to the close of business on the Business Day
immediately preceding June 30, 2005; provided, however, that if the Security is
called for redemption or subject to purchase upon a Change in Control, the
conversion right will terminate at the close of business on the Business Day
immediately preceding the Optional Redemption Date or the Change in Control
Purchase Date, as the case may be, for such Security or such earlier date as the
Holder presents such Security for redemption or purchase (unless the Company
shall default in making the Optional Redemption Price payment or Change in
Control Purchase Price payment, as the case may be, when due, in which case the
conversion right shall terminate at the close of business on the date such
default is cured and such Security is redeemed or purchased). The initial
Conversion Price is $7.87 per share, subject to adjustment under certain
circumstances. The number of shares of Common Stock issuable upon conversion of
a Security is determined by dividing the principal amount of the Security or
portion thereof converted by the Applicable Conversion Price as of the related
Conversion Date. No fractional shares will be issued upon conversion; in lieu
thereof, an amount will be paid in cash based upon the Closing Price (as defined
in the Indenture) of the Common Stock on the Trading Day immediately prior to
the Conversion Date. To convert a Security, a Holder must (a) complete and
10
manually sign the conversion notice set forth below and deliver such notice to a
Conversion Agent, (b) surrender the Security to a Conversion Agent, (c) furnish
appropriate endorsements and transfer documents if required by a Registrar or a
Conversion Agent, and (d) pay any transfer or similar tax, if required.
Securities so surrendered for conversion (in whole or in part) during the period
from the close of business on any regular record date to the opening of business
on the next succeeding interest payment date (excluding Securities or portions
thereof which are either (i) called for redemption or (ii) subject to purchase
following a Change in Control, in either case, on a date during the period
beginning at the close of business on a regular record date and ending at the
opening of business on the first Business Day after the next succeeding interest
payment date, or if such interest payment date is not a Business Day, the second
such Business Day) shall also be accompanied by payment in funds acceptable to
the Company of an amount equal to the interest payable on such interest payment
date on the principal amount of such Security then being converted, and such
interest shall be payable to such registered Holder notwithstanding the
conversion of such Security, subject to the provisions of this Indenture
relating to the payment of defaulted interest by the Company. If the Company
defaults in the payment of interest payable on such interest payment date, the
Company shall promptly repay such funds to such Holder. A Holder may convert a
portion of a Security equal to $1,000 or any integral multiple thereof. A
Security in respect of which a Holder had delivered a Change in Control Purchase
Notice exercising the option of such Holder to require the Company to purchase
such Security may be converted only if the Change in Control Purchase Notice is
withdrawn in accordance with the terms of the Indenture.
9. Conversion Arrangement on Call for Redemption
Any Securities called for redemption, unless surrendered for
conversion before the close of business on the Business Day immediately
preceding the Optional Redemption Date, may be deemed to be purchased from the
Holders of such Securities at an amount not less than the Optional Redemption
Price, together with accrued interest, if any, to, but not including, the
Optional Redemption Date, by one or more investment bankers or other purchasers
who may agree with the Company to purchase such Securities from the Holders, to
convert them into Common Stock of the Company and to make payment for such
Securities to the Paying Agent in trust for such Holders.
10. Subordination
The indebtedness evidenced by the Securities is, to the extent and
in the manner provided in the Indenture, subordinate and junior in right of
payment to the prior payment in full of all Senior Indebtedness of the Company.
Any Holder by accepting this Security agrees to and shall be bound by such
subordination provisions and authorizes the Trustee to give them effect. In
addition to all other rights of Senior Indebtedness
11
described in the Indenture, the Senior Indebtedness shall continue to be Senior
Indebtedness and entitled to the benefits of the subordination provisions
irrespective of any amendment, modification or waiver of any terms of any
instrument relating to the Senior Indebtedness or any extension or renewal of
the Senior Indebtedness.
11. Denominations, Transfer, Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and integral multiples of $1,000. A Holder may register
the transfer of or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes or other governmental
charges that may be imposed in relation thereto by law or permitted by the
Indenture.
12. Persons Deemed Owners
The Holder of a Security may be treated as the owner of it for all
purposes.
13. Unclaimed Money and Shares of Common Stock
If money or shares of Common Stock for the payment of principal or
interest remains unclaimed for two years, the Trustee or Paying Agent will pay
the money and deliver the shares of Common Stock back to the Company at its
written request. After that, Holders entitled to money or shares of Common Stock
must look to the Company for payment.
14. Amendment, Supplement and Waiver
Subject to certain exceptions, the Indenture or the Securities may
be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Securities then outstanding, and an existing
Default or Event of Default and its consequence or compliance with any provision
of the Indenture or the Securities may be waived in a particular instance with
the consent of the Holders of a majority in principal amount of the Securities
then outstanding. Without the consent of or notice to any Holder, the Company
and the Trustee may amend or supplement the Indenture or the Securities to,
among other things, cure any ambiguity, defect or inconsistency or make any
other change that does not adversely affect the rights of any Holder.
15. Successor Corporation
When a successor corporation assumes all the obligations of its
predecessor under the Securities and the Indenture in accordance with the terms
and conditions of the
12
Indenture, the predecessor corporation will (except in certain circumstances
specified in the Indenture) be released from those obligations.
16. Defaults and Remedies
Under the Indenture, an Event of Default includes: (i) default for
15 days in payment of any interest on any Securities; (ii) default in payment of
any principal on the Securities when due at its Stated Maturity; (iii) failure
by the Company to redeem or purchase Securities when required under the
Indenture, whether or not prohibited by the subordination provisions of the
Indenture; (iv) failure by the Company to provide notice to the Trustee and
Holders of a Change in Control in accordance with the Indenture; (v) failure by
the Company to comply with its obligations under Section 6.01 of the Indenture;
(vi) failure by the Company for 60 days after notice to it to perform any other
covenant required of it in the Indenture; (vii) certain events of bankruptcy,
insolvency or reorganization of the Company; or (viii) acceleration of payment
of the principal of the Junior Notes under the terms of the Junior Notes
Indenture.
If an Event of Default described in clause (vii) or (viii) above
occurs, unpaid principal of and interest on the Securities then outstanding
shall become due and payable in cash immediately without any declaration or
other act on the part of the Trustee or any Holder, all as and to the extent
provided in the Indenture. If an Event of Default specified in clause (i) or
(iii) above occurs and is continuing, the Trustee by notice to the Company, or
the Holders of at least 25% in principal amount of the Securities by notice to
the Company and the Trustee, may declare the principal of and accrued but unpaid
interest on all the Securities to be due and payable immediately in cash. If an
Event of Default (other than an Event of Default described in clause (i), (iii),
(vii) or (viii) above) occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the Securities then outstanding may declare
all unpaid principal and interest to the date of acceleration on the Securities
then outstanding to be due and payable immediately by delivery of shares of
Common Stock in the same manner provided in paragraph 2 of this Security and the
Indenture for payment of principal and interest at Stated Maturity, all as and
to the extent provided in this Security and the Indenture, with the date of
acceleration substituted for the Maturity Date in the definitions of "Applicable
Conversion Price" and "Current Market Price" for purposes of calculating the
number of shares of Common Stock to be delivered. Holders may not enforce the
Indenture or the Securities except as provided in the Indenture. The Trustee may
require indemnity satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, Holders of a majority in principal
amount of the Securities then outstanding may direct the Trustee in its exercise
of any trust or power. The Trustee may withhold from Holders notice of any
continuing Default (except a Default in payment of principal or interest) if it
determines that withholding notice is in their interests. The Company is
required to file periodic reports with the Trustee as to the absence of Default.
13
17. Trustee Dealings with the Company
Wachovia Bank, National Association, the Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from and perform services for the Company or an Affiliate of the
Company, and may otherwise deal with the Company or an Affiliate of the Company,
as if it were not the Trustee.
18. No Recourse Against Others
A director, officer, employee or shareholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture nor for any claim based on, in respect of or by
reason of such obligations or their creation. The Holder of this Security by
accepting this Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of this Security.
19. Authentication
This Security shall not be valid until the Trustee or an
authenticating agent manually signs the certificate of authentication on the
other side of this Security.
20. Abbreviations and Definitions
Customary abbreviations may be used in the name of the Holder or
an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and UGMA (= Uniform Gifts to Minors Act).
All terms defined in the Indenture and used in this Security but not
specifically defined herein are defined in the Indenture and are used herein as
so defined.
21. Indenture to Control; Governing Law
In the case of any conflict between the provisions of this
Security and the Indenture, the provisions of the Indenture shall control. This
Security shall be governed by, and construed in accordance with, the laws of the
State of New York, without regard to principles of conflicts of law.
The Company will furnish to any Holder, upon written request and
without charge, a copy of the Indenture. Requests may be made to: Skyworks
Solutions, Inc., 20 Sylvan Road, Woburn, MA 01801, Attention: Chief Financial
Officer.
14
22. Additional Provisions Regarding Conexant.
(a) HSR Filings. In the event that Conexant Systems Inc.
("Conexant") shall become subject to the notification requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), as a result of its acquisition of shares of Common Stock upon conversion
of all or a portion of this Security, subject to the terms and conditions of
this Security, each of the Company and Conexant will use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, and to assist and cooperate with each other in doing or causing to be
done, all things necessary, proper or advisable under applicable laws to prepare
and file as promptly as practicable a Notification and Report Form pursuant to
the HSR Act with respect to the acquisition by Conexant of shares of Common
Stock, and to supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to applicable laws or by
governmental authorities.
(b) Restriction on Conversion. Notwithstanding anything
contained herein, by accepting this Security, Conexant agrees that Conexant may
not exercise its rights to convert the principal amount of this Security (or any
portion thereof) to the extent that such conversion would result in Conexant
owning at any one time more than 10% of the then outstanding shares of Common
Stock.
(c) Restriction on Transfer. Notwithstanding anything contained
herein, by accepting this Security, Conexant agrees that Conexant may not sell,
assign or otherwise transfer, in whole or in part, this Security or any interest
therein or any shares of Common Stock acquired on conversion of this Security,
in whole or in part, for a period of 90 days from November 12, 2002.
15
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint
________________________________________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him or her.
Your Signature:
Date: __________ _____________________________________________________________
(Sign exactly as your name appears on the other side of this
Security)
*Signature guaranteed by:
By: _______________________
* Signature(s) must be guaranteed by a qualified guarantor institution with
membership in an approved signature guarantee program pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934.
16
CONVERSION NOTICE
To convert this Security into Common Stock of Skyworks Solutions,
Inc.,
check the box: [ ]
To convert only part of this Security, state the principal amount
to be converted (must be $1,000 or a multiple of $1,000): $______________.
If you want the stock certificate made out in another person's
name, fill in the form below:
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
Your Signature:
Date: __________ ____________________________________________________________
(Sign exactly as your name appears on the other side of this
Security)
*Signature guaranteed by:
By: __________________________
* Signature(s) must be guaranteed by a qualified guarantor institution with
membership in an approved signature guarantee program pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934.
17
OPTION TO ELECT REPURCHASE UPON A CHANGE OF CONTROL
To: Skyworks Solutions, Inc.
The undersigned registered owner of this Security hereby
irrevocably acknowledges receipt of a notice from Skyworks Solutions, Inc. (the
"Company") as to the occurrence of a Change in Control with respect to the
Company, and requests and instructs the Company to redeem in cash the entire
principal amount of this Security, or the portion thereof (which is $1,000 or an
integral multiple thereof) below designated, in accordance with the terms of the
Indenture referred to in this Security at the Change in Control Purchase Price,
together with accrued interest to, but excluding, the date of redemption, to the
registered Holder hereof.
Date: ___________ ____________________________________________________________
Signature(s)
Signature(s) must be guaranteed by a qualified guarantor institution with
membership in an approved signature guarantee program pursuant to Rule 17Ad-15
under the Securities Exchange Act of 1934.
____________________________________________________________
Signature Guaranty
Principal amount to be redeemed (in an integral multiple of $1,000, if less than
all):
________________________________________________________________________________
NOTICE: The signature to the foregoing Election must correspond to
the Name as written upon the face of this Security in every particular, without
alteration or any change whatsoever.
18
CERTIFICATE TO BE DELIVERED
UPON EXCHANGE OR REGISTRATION
OF TRANSFER OF TRANSFER RESTRICTED SECURITIES
Re: 15% Convertible Senior Subordinated Notes
Due June 30, 2005 (the "Securities") of Skyworks Solutions, Inc.
This certificate relates to $______________ principal amount of
Securities owned in (check applicable box)
[ ] book-entry or [ ] definitive form by ___________ (the
"Transferor").
The Transferor has requested a Registrar or the Trustee to exchange or register
the transfer of such Securities.
In connection with such request and in respect of each such
Security, the Transferor does hereby certify that the Transferor is familiar
with transfer restrictions relating to the Securities as provided in Section
2.08 of the Indenture dated as of November 20, 2002, between Skyworks Solutions,
Inc. (the "Company") and Wachovia Bank, National Association, as Trustee, and
the transfer of such Security is being made pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act") (check applicable box) or the transfer or exchange, as the
case may be, of such Security does not require registration under the Securities
Act because (check applicable box):
[ ] Such Security is being transferred pursuant to an effective
registration statement under the Securities Act.
[ ] Such Security is being transferred to the Company.
[ ] Such Security is being transferred outside the United States
in an offshore transaction within the meaning of Regulation S under the
Securities Act in compliance with Rule 904 under the Securities Act.
[ ] Such Security is being transferred pursuant to and in
compliance with an exemption from the registration requirements under the
Securities Act in accordance with Rule 144 (or any successor thereto)
("Rule 144") under the Securities Act.
19
[ ] Such Security is being transferred pursuant to and in
compliance with an exemption from the registration requirements of the
Securities Act (other than an exemption referred to above) and as a
result of which such Security will, upon such transfer, cease to be a
"restricted security" within the meaning of Rule 144 under the Securities
Act.
Date: _______ _____________________________________________________________
(Insert Name of Transferor)
20
Exhibit 10.l
SKYWORKS SOLUTIONS, INC.
1999 EMPLOYEE LONG-TERM INCENTIVE PLAN
SECTION I. PURPOSE OF THE PLAN.
The purposes of this Skyworks Solutions, Inc. 1999 Employee Long-term Incentive
Plan (the "1999 Plan") are (i) to provide long-term incentives and rewards to
those employees (the "Participants") of Skyworks Solutions, Inc. (the
"Corporation") and its subsidiaries (if any), other than officers and
non-employee Directors of the Corporation, who are in a position to contribute
to the long-term success and growth of the Corporation and its subsidiaries,
(ii) to assist the Corporation in retaining and attracting employees with
requisite experience and ability, and (iii) to associate more closely the
interests of such employees with those of the Corporation's stockholders.
SECTION II. DEFINITIONS.
"Code" is the Internal Revenue Code of 1986, as it may be amended from time to
time.
"Common Stock" is the $.25 par value common stock of the Corporation.
"Committee" is defined in Section III, paragraph (a).
"Corporation" is defined in Section I.
"Expiration date" is defined in Section IV.
"Participant" is defined in Section I.
"Fair Market Value" of any property is the value of the property as reasonably
determined by the Committee.
"1999 Plan" is defined in Section I.
"Section 16" means Section 16 of the Securities Exchange Act of 1934, as
amended, or any similar or successor statute, and any rules, regulations, or
policies adopted or applied thereunder.
"Stock Options" are rights granted pursuant to this 1999 Plan to purchase shares
of Common Stock at a fixed price.
SECTION III. ADMINISTRATION.
(a) The Committee. This 1999 Plan shall be administered by a compensation
committee designated by the Board of Directors of the Corporation, which may
include any persons (including any or all of the directors) designated by the
Board of Directors (the administering body is hereafter referred to as the
"Committee"). The Committee shall serve at the pleasure of the Board of
Directors, which may from time to time, and in its sole discretion, discharge
any member, appoint additional new members in substitution for those previously
appointed and/or fill vacancies however caused. A majority of the Committee
shall constitute a quorum and the acts of a majority of the members present at
any meeting at which a quorum is present shall be deemed the action of the
Committee. No person shall be eligible to be a member of the Committee if that
person's membership would prevent the plan from complying with Section 16, if
applicable to the Corporation. At such time as any class of equity security of
the Corporation is registered pursuant to Section 12 of the Securities Exchange
Act of 1934, as amended (the "Act"), (i) the Committee shall consist of at least
two members of the Board of Directors and (ii) to the extent required by Rule
16b-3 promulgated under the Act, no member of the Committee while a member
thereof shall be eligible to participate in this Plan, nor may any person be
appointed to the Committee unless he was not eligible to participate in this
1999 Plan or any other plan of the Corporation at any time within the one-year
period immediately prior to such appointment.
(b) Authority and Discretion of the Committee. Subject to the express provisions
of this 1999 Plan and provided that all actions taken shall be consistent with
the purposes of this 1999 Plan, and subject to ratification by the Board of
Directors only if required by applicable law, the Committee shall have full and
complete authority and the sole discretion to: (i) determine those persons who
shall constitute employees eligible to be Participants; (ii) select the
Participants to whom awards shall be granted under this 1999 Plan; (iii)
determine the size and the form of the award or, if any, to be granted to any
Participant; (iv) determine the time or times such awards shall be granted
including the grant of Stock Options in connection with other awards made, or
compensation paid, to the Participant; (v) establish
the terms and conditions upon which such awards may be exercised and/or
transferred, including the exercise of Stock Options in connection with other
awards made, or compensation paid, to the Participant; (vi) make or alter any
restrictions and conditions upon such awards; and (vii) adopt such rules and
regulations, establish, define and/or interpret these and any other terms and
conditions, and make all determinations (which may be on a case-by-case basis)
deemed necessary or desirable for the administration of this 1999 Plan.
(c) Applicable Law. This 1999 Plan and all awards shall be governed by the law
of the state in which the Corporation is incorporated.
SECTION IV. AWARDS.
Awards under this 1999 Plan shall consist of Stock Options, all as described
herein.
(a) Form of Agreement. Stock Options shall be evidenced by a writing or written
agreement in such form, and containing such terms and conditions (not
inconsistent with this 1999 Plan), as the Committee may determine. The document
shall include the following, or a similar, statement: "This stock option is not
intended to be an Incentive Stock Option, as that term is described in Section
422 of the Internal Revenue Code of 1986, as amended."
(b) Period of Exercisability. Stock Options shall be for such periods as may be
determined by the Committee, but in no event more than ten years. The date upon
which a Stock Option ceases to be exerciseable is the Stock Option's "Expiration
Date".
(c) Purchase Price and Payment. The purchase price of shares purchased pursuant
to any Stock Option shall be determined by the Committee, and shall be paid by
the Participant or other person permitted to exercise the Stock Option in full
upon exercise, (A) in cash, (B) by delivery of shares of Common Stock (valued at
their Fair Market Value on the date of such exercise), (C) any other property
(valued at its Fair Market Value on the date of such exercise), or (D) any
combination of cash, stock and other property, with any payment made pursuant to
clauses (B), (C) or (D) only as permitted by the Committee, in its sole
discretion. In no event will the purchase price of Common Stock be less than the
par value of the Common Stock.
(d) Vesting and Transferability. At the discretion of the Committee, the Common
Stock issued pursuant to the Stock Options granted hereunder may be subject to
restrictions on vesting or transferability.
(e) If a Participant's employment with the Corporation is terminated, then that
Participant's Stock Options may be exercised as to all shares that have not been
previously purchased only in accordance with the following provisions and
notwithstanding any other provision of this Plan.
i. In the event of termination by reason of a Participant's death, the
Participant's Stock Options may be exercised as to all vested and
unvested shares until the earlier of the Expiration Date or twelve
(12) months after the date of death.
ii. In the event of termination by reason of a Participant's permanent and
total disability, the Participant's Stock Options may be exercised as
to all shares vested as of the date of the termination until the
earlier of the Expiration Date or six (6) months after the date of
termination. Shares not vested as of the date of the termination may
not be exercised.
iii. In the event of termination of a Participant for Cause, the
Participant's Stock Options may not be exercised as to any shares,
whether or not they were previously vested. "Cause" shall mean: (i)
deliberate dishonesty significantly detrimental to the best interests
of the Corporation or any subsidiary or affiliate; (ii) conduct
constituting an act of moral turpitude; (iii) willful disloyalty to
the Corporation or refusal or failure to obey the directions of
supervisors; or (iv) inadequate performance or inattention to or
neglect of duties. The Corporation's appropriate management personnel
shall determine whether termination was for Cause.
iv. In the event of termination of a Participant for any other reason,
including without limitation termination without Cause and voluntary
resignation, the Participant's Stock Options may be exercised as to
all shares vested as of the date of the termination until the earlier
of the Expiration Date or three (3) months after the date of
termination. Shares not vested as of the date of the termination may
not be exercised.
2
SECTION V. AMENDMENT; ADJUSTMENTS UPON CHANGES IN STOCK.
(a) Power to Amend and Restrictions on Amendment. The Board of Directors of the
Corporation may at any time, and from time to time, amend, suspend or terminate
this 1999 Plan in whole or in part; provided, however, that, to the extent
required by Section 16(b)(3) of the Act and the Internal Revenue Code, as
amended, neither the Board of Directors nor the Committee may amend or modify
this 1999 Plan without compliance with any applicable law, rules, or
regulations. Except as provided herein, no amendment, suspension or termination
of this 1999 Plan may affect the rights of a Participant to whom an award has
been granted without such Participant's consent.
(b) Merger or Consolidation. If the Corporation is a party to any merger or
consolidation, any purchase or acquisition of property or stock, or any
separation, reorganization or liquidation, the Board of Directors (or, if the
Corporation is not the surviving corporation, the board of directors of the
surviving corporation) shall have the power to make arrangements, which shall be
binding upon the holders of unexpired Stock Options, for the substitution of new
options for, or the assumption by another corporation of, any unexpired Stock
Options then outstanding hereunder.
(c) Adjustment of Exercise Price after Corporate Event. If by reason of
recapitalization, reclassification, stock split-up, combination of shares,
separation (including a spin-off) or dividend on the stock payable in shares of
Common Stock, the outstanding shares of Common Stock are increased or decreased
or changed into or exchanged for a different number or kind of shares or other
securities of the Corporation, the Board of Directors shall conclusively
determine the appropriate adjustment in the exercise prices of outstanding Stock
Options and in the number and kind of shares as to which outstanding Stock
Options shall be exercisable.
(d) Adjustment of Number of Shares after Corporate Event. In the event of a
transaction of the type described in paragraphs (b) and (c) above, the total
number of shares of Common Stock on which Stock Options may be granted under
this 1999 Plan shall be appropriately adjusted by the Board of Directors.
SECTION VI. CHANGE OF CONTROL PROVISIONS.
(a) Notwithstanding any other provision of the Plan to the contrary, in the
event of a Change of Control, any Options outstanding as of the date such Change
of Control is determined to have occurred and not then exercisable shall become
fully exercisable to the full extent of the original grant.
(b) A "Change in Control" will be deemed to have occurred if the Continuing
Board of Skyworks shall have ceased for any reason to constitute a majority of
the Board of Directors of Skyworks. For this purpose, a "Continuing Director"
will include any member of the Board of Directors of Skyworks as of the
Effective Date and any person nominated for election to the Board of Directors
of Skyworks by a majority of the then Continuing Directors.
SECTION VII. SHARES OF STOCK SUBJECT TO THE PLAN.
The number of shares of Common Stock that may be the subject of awards under
this 1999 Plan shall not exceed an aggregate of 19,951,500 shares. Shares to be
delivered under this 1999 Plan may be either authorized but unissued shares of
Common Stock or treasury shares. Any shares subject to a Stock Option hereunder
which for any reason terminates, is canceled or otherwise expires unexercised,
shares reacquired by the Corporation because restrictions do not lapse and any
shares reacquired by the Corporation due to restrictions imposed on the shares,
shares returned because payment is made hereunder in stock of equivalent value
rather than in cash, and/or shares reacquired from a recipient for any other
reason shall, at such time, no longer count towards the aggregate number of
shares which have been the subject of Stock Options issued hereunder, and such
number of shares shall be subject to further awards under this 1999 Plan.
SECTION VIII. MISCELLANEOUS PROVISIONS.
(a) Indemnity. Neither the Board of Directors nor the Committee, nor any
members of either, nor any employees of the Corporation or any parent,
subsidiary, or other affiliate, shall be liable for any act, omission,
interpretation, construction or determination made in good faith in connection
with their responsibilities with respect to this 1999 Plan, and the Corporation
hereby agrees to indemnify the members of the Board of Directors, the members of
the Committee, and the employees of the Corporation and its parent or
subsidiaries in respect of any claim, loss, damage,
3
or expense (including reasonable counsel fees) arising from any such act,
omission, interpretation, construction or determination to the full extent
permitted by law.
(b) Participation by Foreigners. Without amending this 1999 Plan, the Committee
may modify grants made to Participants who are foreign nationals or employed
outside the United States so as to recognize differences in local law, tax
policy, or custom.
(c) Rights of Participants of Awards. The holder of any Stock Option granted
under the 1999 Plan shall have no rights as a stockholder of the Corporation
with respect thereto unless and until certificates for shares are issued.
(d) Assignment of Stock Options. No Stock Option or any rights or interests of
the recipient therein shall be assignable or transferable by such recipient
except by will or the laws of descent and distribution. During the lifetime of
the recipient, such Stock Option shall be exercisable only by, or payable only
to, the recipient thereof.
(e) Legal and Other Requirements. No shares of Common Stock shall be issued or
transferred upon grant or exercise of any award under the 1999 Plan unless and
until all legal requirements applicable to the issuance or transfer of such
shares and such other requirements as are consistent with the 1999 Plan have
been complied with to the satisfaction of the Committee. Furthermore, the
Corporation is not obligated to register or qualify the shares of Common Stock
to be issued upon exercise of a Stock Option under federal or state securities
laws (or to register them at any time thereafter), and it may refuse to issue
such shares if, in its sole discretion, registration or exemption from
registration is not practical or available. The Committee may require that prior
to the issuance or transfer of Common Stock hereunder, the recipient thereof
shall enter into a written agreement to comply with any restrictions on
subsequent disposition that the Committee or the Company deem necessary or
advisable under any applicable law, regulation or official interpretation
thereof. Certificates of stock issued hereunder may be legended to reflect such
restrictions.
(f) Withholding of Taxes. Pursuant to applicable federal, state, local or
foreign laws, the Corporation may be required to collect income or other taxes
upon the grant of awards to, or exercise of a Stock Option by, a holder. The
Corporation may require, as a condition to the exercise of a Stock Option, or
demand, at such other time as it may consider appropriate, that the Participant
pay the Corporation the amount of any taxes which the Corporation may determine
is required to be withheld or collected, and the Participant shall comply with
the requirement or demand of the Corporation. In its discretion, the Corporation
may withhold shares to be received upon exercise of a Stock Option if it deems
this an appropriate method for withholding or collecting taxes.
(g) Pledge of Shares. Notwithstanding restrictions against disposition of any
award made pursuant to the 1999 Plan, the Committee, in its discretion, may
permit any shares acquired under the 1999 Plan to be pledged or otherwise
encumbered to secure borrowing by the recipient thereof solely for the purpose
of obtaining the acquisition price to be paid for such shares, provided, that
the amount of such borrowing may not exceed the acquisition price of such
shares, and the recipient must provide the Corporation with a copy of the
documents executed in connection with such borrowing. Any borrowing made by the
recipient of an award pursuant to this paragraph (g) must permit the Corporation
to repay the outstanding indebtedness and reacquire the pledged shares in the
event of a default by the recipient under the borrowing documents. Nothing in
this paragraph (g) shall require the Corporation to repay any indebtedness of a
Participant or reacquire shares pledged hereunder.
(h) Right to Awards. No employee of the Corporation or other person shall have
any claim or right to be a Participant in this 1999 Plan or to be granted an
award hereunder. Neither this 1999 Plan nor any action taken hereunder shall be
construed as giving any Participant any right to be retained in the employ of
the Corporation. Nothing contained hereunder shall be construed as giving any
Participant or any other person any equity or interest of any kind in any assets
of the Company or creating a trust of any kind or a fiduciary relationship of
any kind between the Company and any such person. As to any claim for any unpaid
amounts under the 1999 Plan, any Participant or any other person having a claim
for payments shall be an unsecured creditor.
SECTION IX. EFFECTIVE DATE AND TERM OF THIS PLAN.
The effective date of this 1999 Plan is April 27, 1999 (the "Effective Date")
and awards under this 1999 Plan may be made for a period of ten years commencing
on the Effective Date. The period during which a Stock Option or other award may
be exercised may extend beyond that time as provided herein.
As amended through September 25, 2002
4
EXHIBIT 10.n
SKYWORKS SOLUTIONS, INC.
NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE.
The Skyworks Solutions, Inc. Non-Qualified Employee Stock Purchase Plan
(hereinafter the "Plan"), effective as of October 1, 2002, is intended to
provide a method whereby employees of participating organizations (as defined in
Article 18) of Skyworks Solutions, Inc. (the "Company") will have an opportunity
to acquire a proprietary interest in the Company through the purchase of shares
of the Company's Common Stock. It is the intention of the Company that this Plan
authorize the grant of purchase rights and issuance of Common Stock which do not
qualify as an "Employee Stock Purchase Plan" under section 423 of the United
States Internal Revenue Code of 1986, as amended (the "Internal Revenue Code").
2. ELIGIBLE EMPLOYEES.
All employees of the participating organizations of the Company who are
employed on or before the first day of the applicable Offering Period or any
Special Offering Period (each as defined below) shall be eligible to participate
in and receive rights under this Plan to purchase the Company's Common Stock.
Except as otherwise provided herein, persons who become eligible employees after
the first day of any Offering Period shall be eligible to receive purchase
rights on the first day of the next succeeding Offering Period on which purchase
rights are granted to eligible employees under the Plan. In no event may an
employee be granted a purchase right if such employee, immediately after the
purchase right is granted, owns stock possessing five (5%) percent or more of
the total combined voting power or value of all classes of stock of the Company
or of its parent corporation or subsidiary corporation as the terms "parent
corporation" and "subsidiary corporation" are defined in Section 424(e) and (f)
of the Internal Revenue Code. For purposes of determining stock ownership under
this paragraph, the rules of Section 424(d) of the Internal Revenue Code shall
apply and stock which the employee may purchase under outstanding purchase
rights shall be treated as stock owned by the employee. All employees who
participate in the Plan shall have the same rights and privileges under the Plan
except for differences which may be mandated by local law and except that
employees participating in a sub-plan adopted pursuant to Article 26 need not
have the same rights and privileges as employees participating in another
sub-plan. The Plan administrators (as defined in Article 19) may impose
restrictions on eligibility and participation of employees who are officers and
directors to facilitate compliance with federal or state securities laws or
foreign laws.
3. STOCK SUBJECT TO THE PLAN.
The stock subject to the purchase rights granted hereunder shall be
shares of the Company's authorized but unissued Common Stock or shares of Common
Stock reacquired by the Company, including shares purchased in the open market.
The aggregate number of shares
- 1 -
which may be issued pursuant to the Plan is 50,000 for all Offering Periods,
including any Special Offering Period, subject to increase or decrease by reason
of stock split-ups, reclassifications, stock dividends, changes in par value and
the like. If any purchase right granted under the Plan shall expire or terminate
for any reason without having been exercised in full or shall cease for any
reason to be exercisable in whole or in part, the unpurchased shares subject to
such purchase right shall again be available under the Plan. If the number of
shares of Common Stock available for any Offering Period, including any Special
Offering Period, is insufficient to satisfy all purchase requirements for that
Offering Period, the available shares for that Offering Period shall be
apportioned among participating employees in proportion to their purchase
rights.
4. OFFERING PERIODS AND STOCK PURCHASE RIGHTS.
There shall be Offering Periods and Special Offering Periods during
which payroll deductions and permitted cash contributions will be accumulated
under the Plan. Each Offering Period, including any Special Offering Period,
includes only regular pay days falling within it. The Offering Periods shall
commence and end as follows:
OFFERING PERIOD OFFERING PERIOD
COMMENCEMENT DATES TERMINATION DATES
- ------------------ -----------------
Each January 1 Each June 30
Each July 1 Each December 31
Notwithstanding the foregoing, in the event that the Committee adopts a
sub-plan or establishes eligibility pursuant to Article 26 hereof for a
particular organization or location, there will be a Special Offering Period
(the "Special Offering Period") that will begin ten (10) business days after the
adoption of such a sub-plan or such eligibility for all employees of the Company
at that particular organization or location who are eligible as of the date of
the Offering Commencement Date of the Special Offering Period.
The Offering Commencement Date is the first day of each Offering Period,
including any Special Offering Period. The Offering Termination Date is the
applicable date on which an Offering Period ends under this Article 4. In the
case of a Special Offering Period, the Offering Termination Date is the date
which is the Offering Termination Date for the regular Offering Period in which
the Offering Commencement Date for such Special Offering Period occurs.
On each Offering Commencement Date, the Company will grant to each
eligible employee who is then a participant in the Plan a purchase right to
purchase on the Offering Termination Date at the Purchase Right Exercise Price,
as hereinafter provided, that number of full shares of Common Stock reserved
for the purpose of the Plan, up to a maximum of 5,000 shares, subject to
increase or decrease by reason of stock split-ups, reclassifications, stock
dividends, changes in par value and the like; provided that such employee
remains eligible to participate in the Plan throughout such Offering Period or
Special Offering Period, as the case may be. If the eligible employee's
accumulated payroll deductions and permitted cash contributions on the Offering
Termination Date would enable the eligible employee to purchase more than 5,000
shares except
- 2 -
for the 5,000-share limitation, the excess of the amount of the
accumulated payroll deductions and permitted cash contributions over the
aggregate purchase price of the 5,000 shares shall be refunded to the eligible
employee by the Company as soon as administratively practicable, without
interest (except where required by local law as determined by the Plan
administrators). The Purchase Right Exercise Price for each Offering Period,
including any Special Offering Period, shall be the lesser of (i) eighty-five
percent (85%) of the fair market value of the Common Stock on the Offering
Commencement Date, or (ii) eighty-five percent (85%) of the fair market value of
the Common Stock on the Offering Termination Date, in either case rounded up to
the next whole cent. In the event of an increase or decrease in the number of
outstanding shares of Common Stock through stock split-ups, reclassifications,
stock dividends, changes in par value and the like, an appropriate adjustment
shall be made in the number of shares and Purchase Right Exercise Price per
share provided for under the Plan, either by a proportionate increase in the
number of shares and proportionate decrease in the Purchase Right Exercise Price
per share, or by a proportionate decrease in the number of shares and a
proportionate increase in the Purchase Right Exercise Price per share, as may be
required to enable an eligible employee who is then a participant in the Plan to
acquire on the Offering Termination Date that number of full shares of Common
Stock as his accumulated payroll deductions and permitted cash contributions on
such date will pay for at a price equal to the lesser of (i) eighty-five percent
(85%) of the fair market value of the Common Stock on the Offering Commencement
Date, or (ii) eighty-five percent (85%) of the fair market value of the Common
Stock on the Offering Termination Date, in either case rounded up to the next
whole cent, as so adjusted.
For purposes of this Plan, the term "fair market value" means, if the
Common Stock is listed on a national securities exchange or is on the (U.S.)
National Association of Securities Dealers Automated Quotation ("Nasdaq")
National Market system, the closing sale price of the Common Stock on such
exchange or as reported on Nasdaq or, if the Common Stock is traded in the
over-the-counter securities market, but not on the Nasdaq National Market, the
closing bid quotation for the Common Stock, each as published in The Wall Street
Journal. If no shares of Common Stock are traded on the Offering Commencement
Date or Offering Termination Date, the fair market value will be determined on
the next regular business day on which shares of Common Stock are traded.
For purposes of this Plan the term "business day" as used herein means a
day on which there is trading on the Nasdaq National Market or such national
securities exchange on which the Common Stock is listed.
No employee shall be granted a purchase right which permits the employee
to purchase Common Stock under the Plan and any similar plans of the Company or
any parent or subsidiary corporations at a rate which exceeds $25,000 of fair
market value of such stock (determined at the time such purchase right is
granted) for each calendar year in which such purchase right is outstanding at
any time. If the participant's accumulated payroll deductions and permitted cash
contributions on the last day of the Offering Period would otherwise enable the
participant to purchase Common Stock in excess of the $25,000 limitation
described in this paragraph, the excess of the amount of the accumulated payroll
deductions and permitted cash contributions over the aggregate purchase price of
the shares actually purchased shall be refunded to the
- 3 -
participant by the Company or its participating organization as soon as
administratively practicable, without interest (except where required by local
law as determined by the Plan administrators).
5. EXERCISE OF PURCHASE RIGHT.
Each eligible employee who continues to be a participant in the Plan on
the Offering Termination Date shall be deemed to have exercised his or her
purchase right on such date and shall be deemed to have purchased from the
Company such number of full shares of Common Stock reserved for the purpose of
the Plan as his or her accumulated payroll deductions and permitted cash
contributions on such date will pay for at the Purchase Right Exercise Price
subject to the 5,000-share limit of the purchase right and the $25,000
limitation described in Article 4. If a participant is not an employee on the
Offering Termination Date and throughout an Offering Period or Special Offering
Period, he or she shall not be entitled to exercise his or her purchase right
under the Plan..
If a participant's accumulated payroll deductions and permitted cash
contributions in his or her account are based on a currency other than the U.S.
dollar, then on the Offering Termination Date the accumulated payroll deductions
and permitted cash contributions in his or her account will be converted into an
equivalent value of U.S. dollars based upon the U.S. dollar-foreign currency
exchange rate in effect on that date, as reported in The Wall Street Journal,
provided that such conversion does not result in an Purchase Right Exercise
Price which is, in fact, less than the lesser of an amount equal to 85 percent
of the fair market value of the Common Stock at the time such purchase right is
granted or 85 percent of the fair market value of the Common Stock at the time
such purchase right is exercised. The Plan administrators shall have the right
to change such conversion date, as they deem appropriate to effectively purchase
shares on any Offering Termination Date.
6. AUTHORIZATION FOR ENTERING PLAN.
An eligible employee may enter the Plan by following a written,
electronic or other enrollment process, including a payroll deduction
authorization, as prescribed by the Plan administrators. Except as may otherwise
be established by the Plan administrators, all enrollment authorizations shall
be effective only if delivered to the designated Plan administrator(s) in
accordance with the prescribed procedures not later than ten (10) business days
before an applicable Offering Commencement Date. Participation may be
conditioned on an eligible employee's consent to transfer and process personal
data and on acknowledgment and agreement to Plan terms and other specified
conditions.
The Company or its participating organization will accumulate and hold for
the employee's account the amounts deducted from his or her pay, except for such
jurisdictions in which payroll deductions are prohibited. No interest will be
paid thereon (except where required by local law as determined by the Plan
administrators). Participating employees may not make any separate cash payments
into their account, except in jurisdictions in which employees may not
contribute through payroll deductions.
- 4 -
Unless an employee files a new authorization, or withdraws from the
Plan, his or her deductions and purchases under the authorization he or she has
on file under the Plan will continue as long as the Plan remains in effect. An
employee may increase or decrease the amount of his or her payroll deductions
and permitted cash contributions as of the next Offering Commencement Date by
filing a revised payroll deduction authorization or cash contribution election
in accordance with the procedures then applicable to such actions. Except as may
otherwise be established by the Plan administrators, all revised authorizations
and elections shall be effective only if delivered to the designated Plan
administrator(s) in accordance with the prescribed procedures not later than ten
(10) business days before the next Offering Commencement Date.
7. MAXIMUM AMOUNT OF PAYROLL DEDUCTIONS AND PERMITTED CASH CONTRIBUTIONS.
An employee may authorize payroll deductions, or, where permitted by
the Plan, make cash contributions, in an aggregate amount of not less than one
percent (1%) and not more than ten percent (10%) (in whole number percentages
only) of his or her eligible compensation. Such deductions shall be determined
based on the employee's election in effect on the payday on which such eligible
compensation is paid. An employee may not make any additional payments into such
account. Except as otherwise required by an applicable sub-plan, eligible
compensation means the wages as defined in Section 3401(a) of the Internal
Revenue Code, determined without regard to any rules that limit compensation
included in wages based on the nature or location or employment or services
performed, including without limitation base pay, shift premium, overtime, gain
sharing (profit sharing), incentive compensation, bonuses and commissions and
all other payments made to the employee for services as an employee during the
applicable payroll period, and excluding the value of any qualified or
non-qualified stock option or purchase right granted to the employee to the
extent such value is includible in the taxable wages, reimbursements or other
expense allowances, fringe benefits, moving expenses, deferred compensation, and
welfare benefits, but determined prior to any exclusions for any amounts
deferred under Sections 125, 401(k), 402(e)(3), 402(h)(1)(B), 403(b) or 457(b)
of the Internal Revenue Code or for certain contributions described in Section
457(h)(2) of the Internal Revenue Code that are treated as Company
contributions.
8. UNUSED PAYROLL DEDUCTIONS AND PERMITTED CASH CONTRIBUTIONS.
Only full shares of Common Stock may be purchased. Any balance remaining
in an employee's account after a purchase will be reported to the employee and
will be carried forward to the next Offering Period. However, in no event will
the amount of the unused payroll deductions and permitted cash contributions
carried forward from a payroll period exceed the Purchase Right Exercise Price
per share for that Offering Period or Special Offering Period, as the case may
be. If for any Offering Period, including any Special Offering Period, the
amount of unused payroll deductions and permitted cash contributions should
exceed the Purchase Right Exercise Price per share, the amount of the excess for
any participant shall be refunded to such participant as soon as
administratively practicable, without interest (except where required by local
law as determined by the Plan administrators).
- 5 -
9. CHANGE IN PAYROLL DEDUCTIONS AND PERMITTED CASH CONTRIBUTIONS.
Deductions, or, where permitted by the Plan, cash contributions, may
not be increased or decreased during an Offering Period or Special Offering
Period, as the case may be.
10. WITHDRAWAL FROM THE PLAN.
An employee may withdraw from the Plan and withdraw all but not less
than all of the payroll deductions and permitted cash contributions credited to
his or her account under the Plan prior to the Offering Termination Date by
completing and filing a withdrawal notification with the designated Plan
administrator(s) in accordance with the prescribed procedures, in which event
the Company will refund as soon as administratively practicable without interest
(except where required by local law as determined by the Plan administrators)
the entire balance of such employee's deductions not previously used to purchase
Common Stock under the Plan. Except as may otherwise be established by the Plan
administrators, all withdrawals shall be effective only if delivered to the
designated Plan administrator(s) in accordance with the prescribed procedures
not later than ten (10) business days before the Offering Termination Date.
An employee who withdraws from the Plan is like an employee who has
never entered the Plan; the employee's rights under the Plan will be terminated
and no further payroll deductions or cash contributions will be made. To
reenter, such an employee must re-enroll pursuant to the provisions of Article 6
before the next Offering Commencement Date which cannot, however, become
effective before the beginning of the next Offering Period or Special Offering
Period following his withdrawal. Notwithstanding the foregoing, employees who
are subject to Section 16 of the Securities Exchange Act of 1934, as amended,
who withdraw from the Plan may not reenter the Plan until the next Offering
Commencement Date which is at least six months following the date of such
withdrawal.
11. ISSUANCE OF STOCK.
As soon as administratively practicable after each Offering Period,
including any Special Offering Period, the Company shall deliver (by electronic
or other means) to the participant the Common Stock purchased under the Plan,
except as specified below. The Plan administrators may permit or require that
the Common Stock shares be deposited directly with a broker or agent designated
by the Plan administrators, and the Plan administrators may utilize electronic
or automated methods of share transfer. In addition, the Plan administrators may
establish other procedures to ensure that the Company's and its subsidiaries'
applicable tax withholding obligations are satisfied.
12. NO TRANSFER OR ASSIGNMENT OF EMPLOYEE'S RIGHTS.
An employee's rights under the Plan are his or hers alone and may not be
transferred or assigned to, or availed of by, any other person. Any purchase
right granted to an employee may
- 6 -
be exercised only by him or her, except as provided in Article 13 in the event
of an employee's death.
13. TERMINATION OF EMPLOYEE'S RIGHTS.
Except as set forth in the last paragraph of this Article 13, an
employee's rights under the Plan will terminate when he or she ceases to be an
employee because of retirement, resignation, lay-off, discharge, death, change
of status, or fails to meet the applicable requirements for eligibility in the
Plan, or for any other reason. Notwithstanding anything to the contrary
contained in Article 10, a withdrawal notice will be considered as having been
received from the employee on the day his or her employment ceases, and all
payroll deductions and permitted cash contributions not used to purchase Common
Stock will be refunded without interest as soon as administratively feasible
(except where required by local law as determined by the Plan administrators).
Notwithstanding anything to the contrary contained in Article 10, if an
employee's payroll deductions and permitted cash contributions are interrupted
by any legal process, a withdrawal notice will be considered as having been
received from him or her on the day the interruption occurs.
Upon termination of the participating employee's employment because of
death, the authorized legal representative of the employee's estate shall have
the right to elect, by written notice given to the Plan administrators prior to
earlier of the the expiration of the thirty (30) day period commencing with the
date of the death of the employee or the first Offering Termination Date
following the date of the death of the employee, either (i) to withdraw, without
interest (except where required by local law as determined by the Plan
administrators), all of the payroll deductions and permitted cash contributions
credited to the employee's account under the Plan, or (ii) to exercise the
employee's purchase right for the purchase of shares of Common Stock on the next
Offering Termination Date following the date of the employee's death for the
purchase of that number of full shares of Common Stock reserved for the purpose
of the Plan which the accumulated payroll deductions and permitted cash
contributions in the employee's account at the date of the employee's death will
purchase at the applicable Purchase Right Exercise Price (subject to the
limitations set forth in Article 4), and any excess in such account (in lieu of
fractional shares) will be paid to the employee's estate as soon as
administratively practicable, without interest (except where required by local
law as determined by the Plan administrators). In the event that no such written
notice of election shall be duly received by the Plan administrators, the
payroll deductions and permitted cash contributions credited to the employee's
account at the date of the employee's death will be paid to the employee's
estate as soon as administratively practicable, without interest (except where
required by local law as determined by the Plan administrators).
- 7 -
14. TERMINATION AND AMENDMENTS TO PLAN.
The Plan may be terminated at any time by the Company's Board of
Directors. It will terminate in any case on December 31, 2012, or if sooner,
when all of the shares of Common Stock reserved for the purposes of the Plan
have been purchased. Upon such termination or any other termination of the Plan,
all payroll deductions and permitted cash contributions not used to purchase
Common Stock will be refunded without interest (except where required by local
law as determined by the Plan administrators).
The Committee or the Board of Directors may, in its sole discretion,
insofar as permitted by law, adopt amendments to the Plan from time to time.
15. LIMITATIONS OF SALE OF STOCK PURCHASED UNDER THE PLAN.
The Plan is intended to provide shares of Common Stock for investment
and not for resale. The Company does not, however, intend to restrict or
influence any employee in the conduct of his or her own affairs. An employee
may, therefore, sell stock purchased under the Plan at any time the employee
chooses, subject to compliance with any applicable securities laws and subject
to any restrictions imposed under Articles 11 and 25. The employee assumes the
risk of any market fluctuations in the price of such Common Stock.
16. COMPANY'S OFFERING OF EXPENSES RELATED TO PLAN.
The Company will bear all costs of administering and carrying out the
Plan.
17. PARTICIPATING ORGANIZATIONS.
The term "participating organizations" shall mean any present or future
subsidiary, organization or business unit of the Company which is designated by
the Committee to participate in the Plan.
18. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by a committee of "disinterested"
directors as that term is defined in Rule 16b-3 under the U.S. Securities
Exchange Act of 1934, as amended, appointed by the Board of Directors of the
Company (the "Committee"). The Committee shall consist of not less than two
members of the Company's Board of Directors. The Board of Directors may from
time to time remove members from, or add members to, the Committee. Vacancies on
the Committee, howsoever caused, shall be filled by the Board of Directors. No
member of the Committee shall be eligible to participate in the Plan while
serving as a member of the Committee.
The Committee shall select one of its members as Chairman, and shall
hold meetings at such times and places as it may determine. Acts by a majority
of the Committee, or acts reduced
- 8 -
to or approved in writing by a majority of the members of the Committee, shall
be the valid acts of the Committee.
The interpretation and construction by the Committee of any provisions
of the Plan or of any purchase right granted under it shall be final. The
Committee may from time to time adopt such rules and regulations which it deems
necessary for the proper administration of the Plan, to interpret the
provisions and supervise the administration of the Plan, to make factual
determinations relevant to Plan entitlements, to adopt sub-plans applicable to
specified organizations or locations and to take all action in connection with
administration of the Plan as it deems necessary or advisable, consistent with
the delegation from the Board.
The Committee may, insofar as permitted by applicable laws and
regulations, limit participation in the Plan, for participating organizations,
to employees whose customary employment is greater than twenty (20) hours per
week and is more than five (5) months in any calendar year.
With respect to persons subject to Section 16 of the Securities and
Exchange Act of 1934, as amended, transactions under the Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors under said
Act. To the extent any provision of the Plan or action by the Committee fails to
so comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee.
No member of the Board of Directors or the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or any
purchase right granted under it. The Company shall indemnify each member of the
Board of Directors and the Committee to the fullest extent permitted by law with
respect to any claim, loss, damage or expense (including counsel fees) arising
in connection with their responsibilities under this Plan.
The Committee may delegate to one or more individuals the day-to-day
administration of the Plan. Without limitation, subject to the terms and
conditions of this Plan, the President, the Chief Financial Officer of the
Company, and any other officer of the Company or committee of officers or
employees designated by the Committee (collectively, the "Plan administrators"),
shall each be authorized to determine the methods through which eligible
employees may elect to participate, amend their participation, or withdraw from
participation in the Plan, and establish methods of enrollment by means of a
manual or electronic form of authorization or an integrated voice response
system. The Plan administrators are further authorized to determine the matters
described in Articles 11 and 25 concerning the means of issuance of Common Stock
and the procedures established to ensure that the Company's applicable tax
withholding obligations are satisfied.
As soon as administratively practicable after the end of each Offering
Period and the Special Offering Period, the Plan administrators shall prepare
and distribute or make otherwise readily available by electronic means or
otherwise to each participating employee in the Plan information concerning the
amount of the participating employee's accumulated payroll deductions and
permitted cash contributions as of the Offering Termination Date, the Purchase
Right Exercise
- 9 -
Price for such Offering Period, the number of shares of Common Stock purchased
by the participating employee with the participating employee's accumulated
payroll deductions and permitted cash contributions, and the amount of any
unused payroll deductions and permitted cash contributions either to be carried
forward to the next Offering Period or returned to the participating employee
without interest or otherwise distributed or retained as required by local law
as determined by the Plan administrators.
19. PARTICIPANTS NOT STOCKHOLDERS.
Neither the granting of a purchase right to an employee nor the
deductions from his or her pay shall constitute such employee a stockholder of
the Company with respect to the shares covered by such purchase right until such
shares have been purchased by and issued to him.
20. APPLICATION OF FUNDS.
The proceeds received by the Company and its subsidiaries from the sale
of Common Stock pursuant to purchase rights granted under the Plan may be used
for any corporate purposes, and the Company shall not be obligated to segregate
participating employees' payroll deductions and permitted cash contributions,
unless required by applicable laws and regulations.
21. GOVERNMENTAL REGULATION.
The Company's obligation to sell and deliver shares of the Company's
Common Stock under this Plan is subject to the approval of any governmental
authority required in connection with the authorization, issuance or sale of
such stock.
In this regard, the Board of Directors may, in its discretion, require
as a condition to the exercise of any purchase right that a Registration
Statement under the U.S. Securities Act of 1933, as amended, with respect to the
shares of Common Stock reserved for issuance upon exercise of the purchase right
shall be effective, and that all other applicable provisions of U.S. state and
federal and applicable foreign law have been satisfied.
22. TRANSFERABILITY.
Neither payroll deductions or permitted cash contributions credited to
an employee's account nor any rights with regard to the exercise of a purchase
right or to receive stock under the Plan may be assigned, transferred, pledged,
or otherwise disposed of in any way by the employee. Any such attempted
assignment, transfer, pledge, or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw funds in
accordance with Article 10.
23. EFFECT OF CHANGES OF COMMON STOCK.
If the Company should subdivide or reclassify the Common Stock which has
been or may be subject to purchase rights under the Plan, or should declare
thereon any dividend payable in
- 10 -
shares of such Common Stock, or should take any other action of a similar
nature affecting such Common Stock, then the number and class of shares of
Common Stock which may thereafter be subject to purchase rights (in the
aggregate and to any individual participating employee) shall be adjusted
accordingly.
24. MERGER OR CONSOLIDATION.
If the Company should at any time merge into or consolidate with another
corporation, the Board of Directors may, at its election, either (i) terminate
the Plan and refund without interest (except where required by local law as
determined by the Plan administrators) the entire balance of each participating
employee's payroll deductions and permitted cash contributions, or (ii) entitle
each participating employee to receive on the Offering Termination Date upon the
exercise of such purchase right for each share of Common Stock as to which such
purchase right shall be exercised the securities or property to which a holder
of one share of the Common Stock was entitled upon and at the time of such
merger or consolidation, and the Board of Directors shall take such steps in
connection with such merger or consolidation as the Board of Directors shall
deem necessary to assure that the provisions of this Article 24 shall thereafter
be applicable, as nearly as reasonably possible. A sale of all or substantially
all of the assets of the Company shall be deemed a merger or consolidation for
the foregoing purposes.
25. WITHHOLDING OF ADDITIONAL TAX.
By electing to participate in the Plan, each participant acknowledges
that the Company and its subsidiaries are required to withhold taxes with
respect to the amounts deducted from the participant's compensation and
accumulated for the benefit of the participant under the Plan, and each
participant agrees that the Company and its subsidiaries may deduct additional
amounts from the participant's compensation, when amounts are added to the
participant's account, used to purchase Common Stock or refunded, in order to
satisfy such withholding obligations. Each participant further acknowledges that
when Common Stock is purchased under the Plan the Company and its subsidiaries
may be required to withhold taxes with respect to the Common Stock purchased,
and each participant agrees that such taxes may be withheld from compensation
otherwise payable to such participant. It is intended that tax withholding will
be accomplished in such a manner that the full amount of payroll deductions and
permitted cash contributions elected by the participant under Article 7 will be
used to purchase Common Stock. However, if amounts sufficient to satisfy
applicable tax withholding obligations have not been withheld from compensation
otherwise payable to any participant then, notwithstanding any other provision
of the Plan, the Company and its subsidiaries may withhold such taxes from the
participant's accumulated payroll deductions and permitted cash contributions
and apply the net amount to the purchase of Common Stock, unless the participant
pays to the Company or its subsidiary, prior to the exercise date, an amount
sufficient to satisfy such withholding obligations. Each participant further
acknowledges that the Company and its subsidiaries may be required to withhold
taxes in connection with the disposition of stock acquired under the Plan and
agrees that the Company and its subsidiaries may take whatever actions they
consider appropriate to satisfy such withholding requirements, including
deducting from compensation otherwise payable to such participant an amount
sufficient to satisfy such withholding requirements or conditioning any
- 11 -
disposition of Common Stock by the participant upon the payment to the Company
or its subsidiaries of an amount sufficient to satisfy such withholding
requirements.
26. COMMITTEE RULES FOR FOREIGN JURISDICTIONS.
The Committee may adopt rules or procedures relating to the operation
and administration of the Plan to accommodate the specific requirements of local
laws and procedures. Without limiting the generality of the foregoing, the
Committee is specifically authorized to (and to delegate to the Plan
administrators the authority to) adopt rules and procedures regarding handling
of payroll deductions, cash contributions, payment of interest, conversion of
local currency, tax, withholding procedures and handling of stock certificates
which vary with local requirements.
The Committee may also adopt sub-plans and establish or discontinue
eligibility to participate in the Plan applicable to particular organizations or
locations. The rules of such sub-plans may take precedence over other provisions
of this Plan, but unless otherwise superseded by the terms of such sub-plan, the
provisions of this Plan shall govern the operation of such sub-plan.
Adopted by the Directors: April 25, 2002
- 12 -
Exhibit 10.q
NEWPORT BEACH WAFER SUPPLY AND SERVICES AGREEMENT
THIS NEWPORT BEACH WAFER SUPPLY AND SERVICES AGREEMENT (the
"AGREEMENT") is entered into as of June 25th, 2002 (the "EFFECTIVE DATE") by and
between CONEXANT SYSTEMS, INC., a Delaware corporation ("CONEXANT") and ALPHA
INDUSTRIES, INC. a Delaware corporation ("ALPHA").
RECITALS
A. On March 30, 2002, Conexant entered into a Wafer Supply and
Services Agreement with Specialtysemi, Inc. ("SPECIALTYSEMI") for the
manufacture and supply of certain wafers and services from Specialtysemi's
Newport Beach, California semiconductor wafer manufacturing facility (herein,
the "SPECIALTYSEMI AGREEMENT") attached hereto as Exhibit A.
B. Alpha desires, on the terms and conditions of this Agreement,
to obtain certain semiconductor wafers and related foundry, manufacturing and
probe services from Specialtysemi.
C. Conexant is willing to enable Alpha to purchase such wafers
and related services from Specialtysemi, on the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement, the Parties agree as follows:
AGREEMENT
1. ALPHA PURCHASES. Pursuant to Section 2.l(f) of the Specialtysemi
Agreement, Alpha shall have the right to purchase Wafers and related Probe
Services pursuant to the terms and conditions of the Specialtysemi Agreement, as
expressly modified in this Agreement, and specifically excluding Sections 2.l(f)
(Purchases for Certain Entities) and 6.2 (Wafer Credits). Alpha shall (i) submit
forecasts and Purchase Orders for Alpha's Wafers and Probe Services directly to
Specialtysemi; (ii) receive delivery of such Wafers and Probe Services directly
from Specialtysemi; (iii) be invoiced for such Wafers and Probe Services
directly by Specialtysemi; and (iv) pay all amounts due under such invoices
directly to Specialtysemi, all of the foregoing in accordance with the terms and
conditions of the Specialtysemi Agreement. Notwithstanding the foregoing, the
prices to be paid by Alpha for such purchases shall be at the Contract Price set
forth in Exhibit A of the Specialtysemi Agreement for the calendar year
following the Effective Date of the Specialtysemi Agreement, halfway between
Contract Price and market for the second year following the Effective Date of
the Specialtysemi Agreement, and market for the third year following the
Effective Date of the Specialtysemi Agreement.
2. PURCHASE COMMITMENTS. Alpha will submit Purchase Orders to
Specialtysemi for the manufacture of, and will purchase pursuant to such
Purchase Orders, Wafers in volumes sufficient to meet 47.5% of Conexant's
minimum MPD purchase commitments set forth in, and in accordance with the terms
and conditions in, Section 2.1 and Exhibit B, Schedule 1 of the Specialtysemi
Agreement. The purchases of Alpha, Conexant and all Conexant Spin-offs and
Conexant Affiliates shall be aggregated to meet the total Wafer Volume
Commitment under the Specialtysemi Agreement. To the extent that Conexant is
required to pay Specialtysemi under Section 2.l(h) of the Specialtysemi
Agreement for portions of the total Wafer Volume Commitment not purchased by
Alpha, Conexant and all Conexant Spin-offs and Conexant Affiliates, Conexant
will invoice Alpha for all amounts to be paid in respect of portions of Alpha's
47.5% of the Wafer Volume Commitment not purchased by Alpha. Alpha shall pay
such amounts within thirty (30) days of the date of invoice. To the extent that
Conexant is entitled to a
1.
reduction in price for Wafers purchased in a Working Segment under Section
2.l(b)(iii) of the Specialtysemi Agreement resulting from purchases by Alpha,
Conexant and all Conexant Spin-offs and Conexant Affiliates in excess of the
Wafer Volume Commitment for the Working Segment, Alpha will share in the price
reduction proportionately to the amount purchased by Alpha in excess of Alpha's
47.5% of the Wafer Volume Commitment.
3. INDEMNIFICATION. Alpha agrees to indemnify and hold Conexant harmless
from any liability or cost associated with any claim asserted or brought by
Specialtysemi against Conexant relating to any act or omission by Alpha under
this Agreement or the Specialtysemi Agreement. Likewise, Conexant agrees to
indemnify and hold Alpha harmless from any liability or cost associated with any
claim asserted or brought by Specialtysemi against it relating to any act or
omission by Conexant under this Agreement or the Specialtysemi Agreement. With
respect to the obligation of any party ("Indemnitor") to indemnify and hold
harmless any other party ("Indemnitee") hereunder, the Indemnitor's obligation
shall be conditional upon the Indemnitee's giving the Indemnitor (a) prompt
notice of the claim, (b) control of the defense and/or settlement of the claim,
and (c) reasonable cooperation (at Indemnitor's expense) with respect to the
defense of such claim.
4. CONEXANT OBLIGATIONS. Conexant agrees that it shall make commercially
reasonable efforts to perform its obligations under the Specialtysemi Agreement.
Alpha acknowledges and agrees that (i) the supply of Wafers and Probe Services
is contingent upon the performance of Specialtysemi; (ii) Conexant cannot
guarantee the performance of Specialtysemi; (iii) Conexant shall have no
liability to Alpha for any failure to perform this Agreement in the event of
termination of the Specialtysemi Agreement other than for a termination due to a
breach of the Specialtysemi Agreement by Conexant; and (iv) Conexant shall not
be liable for any failure of Specialtysemi to provide such Wafers or Probe
Services, notwithstanding Conexant's reasonable commercial efforts to enable
Alpha to obtain such Wafers or Probe Services from Specialtysemi other than for
failure due to a breach of the Specialtysemi Agreement by Conexant. Should
Specialtysemi fail to perform its supply obligations under the Specialtysemi
Agreement, Conexant shall at Alpha's request invoke its rights as a party to
that agreement on behalf of Alpha to secure such performance including, as
warranted, providing notice of breach and/or termination. If and to the extent
Conexant fails to act to secure performance as a party to the SpecialtySemi
Agreement, and Alpha is unable to purchase Wafers, then Alpha's performance and
payment obligations to Conexant under this Agreement, including those under
Section 2, shall be excused.
5. CREDIT REQUIREMENTS. In the event Alpha does not make timely payment
to Conexant or Specialtysemi, as applicable under this Agreement or the
Specialtysemi Agreement and such issue is not resolved within sixty (60) days'
of receipt of Conexant's written notice of such payment delays, Conexant
reserves the right to limit Alpha's purchases to a reasonable amount, such
amount to be based on a then-current credit report of Alpha and mutually agreed
to by Conexant and Alpha.
6. TERM; TERMINATION. This Agreement will take effect on the Effective
Date and will remain in effect for a period of three (3) years from the
Effective Date, unless earlier terminated as set forth herein. This Agreement
may be terminated (a) immediately upon Written agreement of the Parties; (b) by
Conexant, immediately upon Alpha entering into a separate agreement with
Specialtysemi for the supply of Wafers or related Probe Services; or (c)
immediately upon termination of the Specialtysemi Agreement other than for a
termination due to a breach or act or failure to act by Conexant
7. NOTICES. As between Conexant and Alpha, notices will be sent to the
following addresses:
2.
If to Conexant, to: If to Alpha, to:
Conexant Systems, Inc. Alpha Industries, Inc. (Skyworks Solutions)
4311 Jamboree Road 25 Computer Drive
Newport Beach, CA 92660-3095 Haverhill, MA 01832-1236
Attn: Chief Executive Officer Attn: President
with a copy to: with a copy to:
Conexant Systems, Inc. Alpha Industries, Inc. (Skyworks Solutions)
4311 Jamboree Road 4311 Jamboree Road
Newport Beach, CA 92660-3095 Newport Beach, CA 92660-3095
Attn: General Counsel Attn: General Counsel
8. ENTIRE AGREEMENT. As to the subject matter hereof: (i) this Agreement
and the terms and conditions of the Specialtysemi Agreement set forth the entire
agreement between Conexant and Alpha; (ii) no promise, inducement,
understanding, or agreement not expressly contained herein has been made; and
(iii) this Agreement merges and supersedes any and all previous agreements,
understandings, and negotiations between the Parties. Except as otherwise set
forth in this Agreement, the terms and conditions of the Specialtysemi Agreement
are incorporated herein by reference with the understanding that as between
Conexant and Alpha and where applicable, the term "Company" shall mean Conexant,
the term "Conexant" shall mean Alpha, and the term "Parties" shall refer to
Conexant and Alpha. Conexant shall not, without Alpha's prior written consent,
enter into any amendments or modifications of the Specialtysemi Agreement that
would have a material adverse effect on Alpha's rights or obligations under this
Agreement. The terms and conditions of this Agreement supersede any terms or
conditions in any purchase order, form acknowledgement or other instrument
issued by either Party in connection with this Agreement that add to or differ
from this Agreement and such additional or differing terms and conditions shall
have no force or effect.
3.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date by the undersigned duly authorized representatives of each Party.
CONEXANT SYSTEMS, INC. ALPHA INDUSTRIES, INC.
By: /s/ Dennis E. 'O'Reilly By:__________________________
---------------------------
Name: Dennis E. 'O'Reilly Name:________________________
Title: Senior Vice President, Title:_______________________
General Counsel and
Secretary
ALPHA INDUSTRIES, INC.
By: /s/ Paul E. Vincent
--------------------------
Name: PAUL E. VINCENT
Title: VICE PRESIDENT, CHIEF FINANCIAL
OFFICER, TREASURER AND SECRETARY
4.
EXHIBIT A - SPECIALTYSEMI AGREEMENT
See Wafer Supply and Services Agreement dated as of March 30, 2002 by and
between Specialtysemi, Inc. (now named Jazz Semiconductor, Inc.) and Conexant
Systems, Inc., filed as Exhibit 10.1 to Conexant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2002.
INFORMATION TECHNOLOGY SERVICE AGREEMENT
This INFORMATION TECHNOLOGY SERVICE AGREEMENT (this "Agreement"), dated
as of June, 25th 2002 (the "Effective Date"), is by and between CONEXANT
SYSTEMS, INC., a Delaware corporation (together with its subsidiaries and
affiliates, "Conexant") and ALPHA INDUSTRIES, INC., a Delaware corporation
(together with its subsidiaries "Alpha"). Conexant and Alpha are individually
referred to herein as a "Party" and collectively as the "Parties."
BACKGROUND
A. On December 16, 2001, Conexant, Washington Sub, Inc., a
Delaware corporation and successor to the Washington Business ("Washington"),
and Alpha entered into an Agreement and Plan of Reorganization, pursuant to
which Washington will merge with and into Alpha, with Alpha being the surviving
corporation (the "Merger"). Alpha, as the surviving corporation after the
Merger, is referred to herein as "Skyworks".
B. As a condition to the Merger, Skyworks desires to obtain from
Conexant, and Conexant desires to provide to Skyworks, certain information
technology services during the term of, and subject to the terms and conditions
of, this Agreement.
C. The information technology services provided under this
Agreement are intended to provide Skyworks with the same level of information
technology services that Conexant provides to the Washington Business as of the
Effective Date. In addition, Conexant has agreed to provide such other
information technology services beyond the Washington Business as set forth in
this Agreement, as well as such Additional Services as may be mutually agreed
upon from time to time.
NOW, THEREFORE, in consideration of the mutual covenants herein and for
good and valuable consideration, receipt of which is hereby acknowledged, the
Parties agree as follows.
AGREEMENT
1. DEFINITIONS. The following terms, when used in this Agreement with
initial capital letters, have the meanings ascribed to such terms in this
Section 1.
1.1 "ADDITIONAL SERVICES" means any services, functions, or
responsibilities, other than the Base Services, that Conexant will provide
pursuant to Additional Services Orders mutually agreed upon in accordance with
the process identified in Attachment E. Additional Services include any Projects
and any IT Services above the Base Services as well as the addition, deletion,
transfer, migration, upgrade, modification, expansion, installation, creation,
or implementation of any desktop, help desk, data center, infrastructure,
programming, application, or other services, or any Supported Hardware or
Supported Software.
1.2 "ADDITIONAL SERVICES ORDER" has the meaning given in
Attachment E.
1.3 "ALPHA LOCATIONS" mean the locations listed in Attachment B-3.
If the Parties mutually agree to add a new location pursuant to the provisions
of Attachment E, it will be included in Alpha Locations as of the date of such
agreement.
1.4 "BASE SERVICES" means the information technology services
identified on Attachment A.
1.5 "CONEXANT HARDWARE" means Hardware that is owned or leased by
Conexant, or obtained by Conexant (with or without Skyworks' assistance) from a
third party. Conexant retains ownership and lease rights, as appropriate, to all
Conexant Hardware, subject only to express rights granted in this Agreement.
1.6 "CONEXANT HOLIDAYS" for the balance of Conexant's fiscal year,
ending September 27, 2002, include July 4th, July 5th and September 2nd.
Conexant will determine, and notify Skyworks of, Conexant Holidays beyond
September 27, 2002, by September 27, 2002.
1.7 "CONEXANT SOFTWARE" means Software that is owned, leased or
licensed by Conexant, or obtained by Conexant (with or without Skyworks'
assistance) from a third party. Conexant retains ownership, lease and license
rights, as appropriate, to all Conexant Software, subject only to express rights
granted in this Agreement.
1.8 "EMERGENCY" means a business critical situation that will
cause a quantifiable, material impact to the operations, revenue or profit of
the Washington Business.
1.9 "FIRST LEVEL SUPPORT" means that the Party providing such
support will make every attempt to resolve the problem or issue prior to
contacting the other Party.
1.10 "FISCAL YEAR" means the annual period ending on the Friday
closest to September 30.
1.11 "HARDWARE" means computer and communications equipment,
including data center class servers and peripherals, personal computers and
peripherals, data, voice and video infrastructure and any related third party
documentation.
1.12 "INTELLECTUAL PROPERTY RIGHTS" means all trademarks, trade
names, and other indications of origin, trade secrets, copyrights and other
rights of authorship whether copyrightable or not, copyright registrations and
applications, and all extensions, renewals and derivatives thereof, patent and
patent application rights, including divisions, continuations in part and
renewals thereof, moral rights, and other proprietary rights throughout the
world.
1.13 "IT SERVICES" means the Base Services and any Additional
Services.
1.14 "PROJECT" means a discrete project agreed upon by the Parties
as Additional Services pursuant to Attachment E.
1.15 "REMOTE LOCATIONS, SATELLITE LOCATIONS OR REMOTE SITES" means
Washington Locations other than Newport Beach, CA.
1.16 "SECOND LEVEL SUPPORT" means that the Party providing such
support shall be available to consult with the other Party to attempt to resolve
the problem or issue.
1.17 "SERVICE HOURS" means, unless otherwise noted, the hours
of 8 a.m. to 5 p.m. local time, at the location from which the service is being
provided, Monday through Friday, excluding Conexant Holidays.
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1.18 "SERVICE LEVELS" means the performance standards specifically
designated on Attachment A as "Service Levels."
1.19 "SKYWORKS HARDWARE" means Hardware that is owned or leased by
Skyworks, or obtained by Skyworks (with or without Conexant's assistance) from a
third party. Skyworks retains ownership and lease rights, as appropriate, to all
Skyworks Hardware, subject only to express rights granted in this Agreement.
1.20 "SKYWORKS LOCATIONS" means the combined Alpha Locations and
Washington Locations.
1.21 "SKYWORKS SOFTWARE" means Software that is owned, leased or
licensed by Skyworks, or obtained by Skyworks (with or without Conexant's
assistance) from a third party. Skyworks retains ownership, lease and license
rights, as appropriate, to all Skyworks Software, subject only to express rights
granted in this Agreement.
1.22 "SOFTWARE" means software programs in object code, including
supporting documentation and online help facilities. Software includes
applications software programs and operating systems software programs.
1.23 "SUPPORTED SOFTWARE" means the items of Software listed on
Attachment C.1 and C.2 (not C.3). In addition, Supported Software includes other
Software listed in Attachment D which is resident on Supported Hardware.
1.24 "SUPPORTED HARDWARE" means the items of Hardware listed on
Attachment D.
1.25 "SUPPORTED WASHINGTON PERSONNEL" means up to 3,500 employees
of Skyworks located at the Washington Locations, including those who were
employees of Conexant immediately prior to the Merger.
1.26 "TOWERS OF SERVICE" means each of the following five (5)
general services: (i) data center operations management, as described in
Sections 10 through 12 of Attachment A, (ii) remotesite support, as described in
Section 3 of Attachment A, (iii) IT infrastructure, as described in Sections 4
through 9 of Attachment A, (iv) programming services, as described in Section 2
of Attachment A, and (v) applications support, as described in Section 1 of
Attachment A.
1.27 "WASHINGTON BUSINESS" means the business conducted by the
Wireless Communications Division and Mexicali operations of Conexant immediately
prior to the Merger.
1.28 "WASHINGTON LOCATIONS" means the locations listed in
Attachment B.2. If the Parties mutually agree to add a new location pursuant to
the provisions of Attachment E, it will be included in the Washington Locations
as of the date of such agreement.
1.29 "YEAR" means each twelve (12) month period beginning on the
Effective Date and each anniversary thereof during the Term.
2. RIGHTS AND LICENSES
2.1 SKYWORKS SOFTWARE. Skyworks hereby grants to Conexant, at no
charge, a nonexclusive license to install, execute, copy, modify, display, and
otherwise use all Skyworks
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Software that may be reasonably required by Conexant for the sole purpose of
performing IT Services under this Agreement.
2.2 SKYWORKS HARDWARE. Skyworks hereby grants to Conexant, at no
charge, the nonexclusive right to use Skyworks Hardware that may be reasonably
required by Conexant for the sole purpose of performing IT Services under this
Agreement.
2.3 REQUIRED CONSENTS
(a) Prior to giving Conexant access to any Skyworks
Software or Skyworks Hardware, Skyworks will use [commercially reasonable
efforts] to obtain all consents, approvals, and agreements that may be required
from third parties for the grant of rights under Sections 2.1 and 2.2 and for
Conexant to perform the IT Services ("Skyworks Required Consents").
(b) Prior to giving Skyworks access to any Conexant
Software or Conexant Hardware, Conexant will use [commercially reasonable
efforts] to obtain all consents, approvals, and agreements that may be required
from third parties for the grant of rights under Section 2.4 ("Conexant Required
Consents").
(c) Skyworks will pay any and all fees or costs
associated with acquiring any and all Skyworks Required Consents and Conexant
Required Consents. If, after using [commercially reasonable efforts], Skyworks
does not obtain any Skyworks Required Consent or Conexant does not obtain any
Conexant Required Consent, and Conexant is unable to perform any or all IT
Services without infringing any third party rights or breaching the terms of its
contracts as a result thereof, the Parties will meet to mutually agree upon
alternative approaches to permit Conexant to perform the IT Services.
Alternative approaches may include Skyworks purchasing the rights to use such
Software or Hardware pursuant to Section 2.4 or adjustments to the scope of the
IT Services, the Service Levels and the charges for the IT Services. If an
alternative approach is not agreed upon and adopted, then Conexant will be
relieved of its obligations under this Agreement, and the charges for such IT
Services or Services Levels adjusted accordingly, to the extent that Conexant's
ability to perform is hindered, delayed or prevented due to Conexant's inability
to access or use, or permit Skyworks to access or use, the affected Software or
Hardware.
2.4 USE OF SUPPORTED HARDWARE AND SUPPORTED SOFTWARE. To the
extent consents or approvals of third party vendors are not required, or are
obtained pursuant to Section 2.3, Conexant hereby grants to Skyworks a
nonexclusive, nontransferable license to use the Supported Hardware and
Supported Software for the Washington Business for as long as Skyworks pays for
the IT Services related to such Supported Hardware or Supported Software during
the Term. If, after using [commercially reasonable efforts] Conexant does not
obtain any required consents and approvals and adjustments are not agreed to
pursuant to Section 2.3, or if the Parties determine that additional Software or
Hardware is necessary to operate the Washington Business, Skyworks will buy such
Software or Hardware and provide Conexant with the right to use such Software or
Hardware for the sole purpose of performing IT Services under this Agreement in
accordance with Sections 2.1, 2.2 and 2.3. To avoid any ambiguity, Software or
Hardware purchased, leased or licensed by Skyworks under this Section 2.4 shall
be Skyworks Software and Skyworks Hardware, respectively.
4
2.5 RETURN OF HARDWARE AND SOFTWARE; CONTINUED USE
(a) Within 15 business days of the effective date of
termination of any Tower of Service, Skyworks shall physically return to
Conexant all Conexant Hardware set forth opposite such terminated Tower of
Service on Attachment J.1 and delete all Conexant Software set forth opposite
such terminated Tower of Service on Attachment J.2 from Skyworks personal
computers (i.e. EPO, SMS) and servers, unless otherwise negotiated with the head
of Conexant IT operations or such Conexant Hardware or Conexant Software is
transferred to Skyworks pursuant to Section 2.6. If Skyworks continues to use
Supported Hardware or Supported Software, or does not return or delete it as
required, irrespective of use, after termination, Conexant will continue to bill
Skyworks, and Skyworks will be required to pay, for use of such Supported
Hardware or Supported Software.
(b) Within 15 business days of the effective date of
termination of any Tower of Service, Conexant shall physically return to
Skyworks all Skyworks Hardware and delete all Skyworks Software from Conexant
personal computers and servers, unless otherwise negotiated with the head of
Skyworks IT operations.
2.6 TRANSFER OF CONEXANT SOFTWARE AND CONEXANT HARDWARE
(a) Promptly following the Effective Date, Conexant will
use commercially reasonable efforts to transfer the licenses for the Supported
Software that are identified on Attachment J.2 (the "Identified Licenses"). The
transfer of the Identified Licenses will occur no later than December 31, 2002,
may be subject to restrictions on transfer imposed by third-party vendors and
will only be transferred to the extent such transfer does not impair Conexant's
use of any Identified License. As consideration for, and upon the transfer of,
an Identified License, Skyworks will pay Conexant the amount set forth in the
"Consideration" column of Attachment J.2 for that Identified License. If, after
using commercially reasonable efforts, Conexant is unable to transfer an
Identified License and Skyworks purchases such license directly from the vendor,
the amount set forth in the "Consideration" column on Attachment J.2 for that
Identified License will not be paid to Conexant. If any fees are required to be
paid to transfer an Identified License, Conexant shall pay such fees; provided
that if such fees, in the aggregate, exceed $200,000, Skyworks shall pay such
excess amount. The parties agree that the transfers discussed above will not
change the Base Services Fee until the Rate Review Date.
(b) Within 5 business days following (i) the effective
date of termination of the IT infrastructure Tower of Service or, if later, (ii)
the date on which Conexant receives a payment of $500,000, Conexant will
transfer ownership to Skyworks all Conexant Hardware set forth on Attachment J.1
2.7 STATISTICAL INFORMATION. Conexant may gather, copy,
distribute, and use nonconfidential IT metrics gathered in connection with
performing the IT Services; provided, that Conexant will not copy, distribute or
use for non-internal purposes statistical information from which Skyworks can
reasonably be identified as the source and Conexant will not identify Skyworks
or its customers to any third party as the source of such statistics.
2.8 OWNERSHIP OF MODIFICATIONS. In the event Conexant, or a third
party engaged by Conexant, develops any upgrades or updates or otherwise
modifies any Conexant Software, with or without the assistance of Skyworks
("Modifications"), Conexant shall retain sole ownership to all such
Modifications. If such Modifications are made in connection with Conexant
providing any IT
5
Services for Skyworks, Conexant hereby grants to Skyworks a nonexclusive
perpetual, royalty-free license to use such Modifications.
3. SERVICES
3.1 BASE SERVICES. Subject to the terms and conditions of this
Agreement, Conexant will provide to Skyworks, and Skyworks will obtain from
Conexant, the Base Services. The parties agree that Conexant will be the
exclusive provider of the Base Services provided, however, that Skyworks shall
have the right to internally provide such services, excluding data center
operations management and IT infrastructure services described in Section 1.26.
3.2 ADDITIONAL SERVICES. Subject to the terms and conditions of
this Agreement, Conexant will provide to Skyworks any Additional Services agreed
upon by the Parties pursuant to the procedures of Attachment E.
3.3 SUBCONTRACTING. Skyworks understands that before and after the
Effective Date, Conexant may have contracted, and may in the future contract,
with third parties to provide services in connection with all or any portion of
the IT Services to be provided under this Agreement. Conexant reserves the right
to continue to contract with third parties to provide the foregoing or to enter
into new contractual relationships for any of the foregoing. Provided, however,
that should Conexant in the future enter into a contract with a third party or
otherwise enter contract discussions or negotiations with a third party under
this Section 3.3, then Conexant shall use commercially reasonable efforts to
include in such contract the right to share the contract with, or to assign the
contract to Skyworks, after the Term. In the event Conexant is not permitted to
share or assign the contract after the Term, Conexant will notify Skyworks of
such restriction and, at the end of the Term, will assist Skyworks in obtaining
a contract directly between that third party and Skyworks.
3.4 PERFORMANCE. Conexant will use commercially reasonable
efforts to perform the Base Services in conformance with the applicable Service
Levels. In the event any third-party supplier fails to perform its obligations
related to the IT Services, provided Conexant uses reasonable efforts to cause
such third party to perform, Conexant shall not be responsible for any such
failure to perform and any delay or suspension of IT Services arising from such
failure will not result in any reduction to the Base Services Fee, as defined
below.
4. OBLIGATIONS
4.1 CONEXANT POLICIES. Skyworks will comply with Conexant's
computer security policies, procedures, requirements and restrictions with
respect to Skyworks' use of IT Services, a current copy of which are set forth
in Attachment G, and the standards set forth in Attachment C and D. Conexant's
computer security policies, procedures, requirements and restrictions may change
from time to time upon notice and delivery of an electronic copy of such
policies, procedures, requirements and restrictions to Skyworks.
4.2 COOPERATION. In order to enable Conexant to perform IT
Services, Skyworks will provide Conexant with such cooperation and assistance as
Conexant reasonably and timely requests. Such cooperation and assistance shall
include providing Conexant in a timely manner answers to questions, technical
consultation and other information that is necessary for Conexant to perform the
IT Services, is in the possession of Skyworks and not reasonably available to
Conexant without out-of-pocket costs to Conexant. Skyworks' Account Manager (as
described in Section 6.1 below) will
6
be Skyworks' principal point of contact for Conexant to obtain such cooperation
and assistance. Conexant shall be excused from performing IT Services and
meeting any Service Levels, unless the charges for IT Services and/or Services
Levels are adjusted upon mutual agreement to account for the lack of cooperation
and assistance, but only to the extent Conexant's performance is actually
prevented or hindered by: (i) Skyworks' nonperformance; (ii) the failure by
Skyworks personnel or any Skyworks third-party contractor to adequately perform
its tasks related to the IT Services; (iii) unreasonable, untimely, inaccurate,
or incomplete information from Skyworks; (iv) the failure of any Hardware or
Software that is not the fault of Conexant; and (v) the occurrence of an event
described in Section 13.3.
4.3 NEW SOFTWARE, HARDWARE AND PHONE LINES. Unless otherwise
agreed to under a separate agreement, any new or additional Software, Hardware
or phone lines (voice and data lines) that Conexant may require from time to
time to perform the IT Services on behalf of Skyworks (including maintaining,
upgrading, enhancing, and implementing new versions of existing Software) will
be purchased, leased, or licensed by Skyworks in its own name and at its own
expense. Should such purchase, lease or license restrict or prohibit Conexant's
use thereof in connection with the IT Services, then to the extent that
Conexant's performance is actually prevented or hindered by this restriction,
Conexant shall be excused from performing such IT Services and meeting such
Service Levels, and the charges for IT Services and Service Levels shall be
adjusted accordingly.
4.4 FACILITIES. If IT Services are to be performed at Skyworks
Locations, Skyworks will provide to Conexant, at no charge, the facilities and
facilities related equipment, supplies and services that Conexant may reasonably
require to perform such IT Services and that Skyworks provides to its own
employees. To the extent reasonably necessary to perform the IT Services,
Skyworks will provide Conexant access to the Skyworks Locations twenty-four (24)
hours per day, seven (7) days per week. Skyworks will provide reasonable storage
space for backup media as reasonably requested in connection with the IT
Services. Skyworks will provide to Conexant reasonable advance notice of any
alteration or relocation of the Skyworks Locations to allow Conexant to prepare
for the relocation and, before any alteration or relocation is undertaken, the
Parties will agree upon adjustments to the IT Services and Service Levels as may
be reasonably required, and to a corresponding adjustment to the charges for
such IT Services and Service Levels in connection with the alteration or
relocation.
4.5 RISK OF LOSS. As between the Parties, risk of loss for
Hardware and Software will remain with the Party at whose facility the Hardware
or Software is located.
5. RESTORATION OF DATA
5.1 APPLICATIONS.
(a) CORE APPLICATIONS. If Skyworks' machine-readable
files relating to Core Applications identified in Attachment C are lost,
destroyed or impaired due to the negligence of Conexant (including it's
personnel, consultants or third party contractors under the control of
Conexant), Conexant will use reasonable best efforts to recover a prior version
of the files from backup media maintained by Conexant. If, after using
reasonable best efforts, Conexant is unable to restore such files from back-up
media, Conexant will use reasonable best efforts to perform such
7
restoration as can reasonably be performed using machine-readable source data
furnished by Skyworks.
(b) MAJOR APPLICATIONS. If Skyworks' machine-readable
files relating to Major Applications identified in Attachment C (excluding Core
Applications) are lost, destroyed or impaired due to the negligence of Conexant
(including it's personnel, consultants or third party contractors under the
control of Conexant), Conexant will use commercially reasonable efforts to
recover a prior version of the files from back-up media maintained by Conexant.
If, after using commercially reasonable efforts, Conexant is unable to restore
such files from back-up media, Conexant will use commercially reasonable efforts
to perform such restoration as can reasonably be performed using
machine-readable source data furnished by Skyworks.
5.2 DATA. Conexant will use commercially reasonable efforts, at
the sole expense of Skyworks, to recover and restore Skyworks data files on
Conexant IT servers that are lost, destroyed, or impaired by the acts or
omissions of Skyworks (including it's personnel, consultants or third party
contractors under the control of Skyworks). If the acts or omissions of Skyworks
impact files, servers or applications of Conexant or any third partie s,
Conexant may attempt restoration in any manner it reasonably deems appropriate,
at the sole expense of Skyworks. Conexant may use third parties to assist in
such restoration efforts.
6. COORDINATION AND COMMUNICATION
6.1 ACCOUNT MANAGERS. Skyworks and Conexant will each appoint a
single "Account Manager" who will serve as the primary point of contact for the
other Party for matters related to this Agreement. Either Party may replace its
Account Manager with an individual of comparable qualifications and experience
by notifying the other Party of such new appointment. Either party may assign an
alternate as needed in writing.
6.2 ESCALATION. All matters regarding the performance of IT
Services under this Agreement will be brought to the attention of the Account
Managers assigned to Skyworks and Conexant. It will be the responsibility of the
Account Managers to promptly communicate and develop a timely resolution for
such matters and only those matters handled in compliance with this procedure
will be addressed and reported on pursuant to Section 6.3. If an Emergency is
jointly declared by the Skyworks Account Manager and the Conexant Account
Manager, the Conexant Account Manager will provide the Skyworks Account Manager
with daily updates on the progress to resolve the Emergency. In the event the
Account Managers are unable to resolve any matter, the dispute shall be resolved
in accordance with the dispute resolution procedures set forth in Section 13.2.
6.3 REPORTS. Monthly during the Term, Conexant will furnish to
Skyworks a report that shows Conexant's performance during the preceding month
of the IT Services measured against the applicable Service Levels.
6.4 SERVICE PERFORMANCE REVIEWS. The Account Managers will meet
formally each month and informally as needed in order to review Service Levels,
address new requirements, review outstanding issues and new issues and other
items as needed. Each Account Manager will submit to the other a list of agenda
items no less than twenty-four (24) hours prior to the scheduled meeting.
Meetings will be scheduled based on the availability of both Account Managers.
8
6.5 SOFTWARE LICENSE REPORTING. When either party recognizing a
Software license utilization problem, such Party shall report the problem to
both Account Managers immediately.
6.6 CHANGE REQUESTS. At the end of each calendar quarter, either
Party may request changes to the lists of Supported Software and/or Supported
Hardware by notifying the Account Manager of the other Party in writing of such
change request. The receiving Party shall have ten (10) business days to accept
or reject the requested change, provided that failure to respond to such change
request within such ten (10) day period shall be deemed acceptance.
7. PRICING & PAYMENTS
7.1 FEES FOR BASE SERVICES. Skyworks will pay Conexant each month
the Base Services Fee of $700,000 per month. The monthly Tower of Services fees
are as follows: remote site support $39,000, data center operations management
$210,000, IT infrastructure $205,000, applications $204,000, and programming
services $42,000. The parties hereby agree that they will meet on or before
February 1 of each year during the Term ("Rate Review Date") to discuss the fees
and Service Levels of the Towers of Service. In the event that a particular
Tower of Service is terminated pursuant to Section 12.2, the Base Services Fee
charged for the terminated services between the Rate Review Date and the
effective date of termination shall not be increased under this Section by more
than 10% of the rate in effect on the date of receipt of notice of termination
7.2 FEES FOR ADDITIONAL SERVICES. For each month during which
Conexant provides Additional Services, Skyworks will pay Conexant at the rates
or fees set forth in the applicable Additional Services Order (the "Additional
Services Fees").
7.3 EXPENSES. In addition to the Base Services Fee and Additional
Services Fees, Skyworks will reimburse Conexant for any actual and reasonable
expenses of the type identified in Attachment F attached hereto that are
incurred by Conexant in connection with performance of IT Services.
7.4 TAXES. The Base Services Fee and any Additional Services Fees
exclude all applicable excise, sales, use, gross receipts, value added, goods
and services, property, or other tax of any federal, state, or local taxing
authority ("Taxes") that may be imposed on the Base Services Fee or any
Additional Services Fees, and Skyworks will be responsible for payment of all
such Taxes and any related penalties and interest.
7.5 INVOICING. On or about the first day of each month, Conexant
will invoice Skyworks for an amount equal to the Base Services Fee for such
month, any applicable Additional Services Fees for the preceding month, any
expenses reimbursable under Section 7.3 and other amounts due under this
Agreement. Skyworks will pay in full the amount invoiced no later than thirty
(30) days after receipt of an invoice. Skyworks will pay interest on all
payments received more than thirty (30) days after the invoice date at the rate
of the lesser of the Prime rate published on the first day of the then most
recent month by the Wall Street Journal, plus four percent (4%), or the maximum
rate permitted by law. In the event Skyworks fails to pay any invoiced amount
within sixty (60) days after the date of the invoice (a "Payment Default")
Conexant shall have the right to suspend the performance of IT Services.
7.6 INVOICE RECORDS. Conexant will maintain complete and accurate
records of the fees billed to Skyworks in accordance with generally accepted
accounting principles. Conexant will
9
maintain such records applicable to fees for a period of one (1) year after
Skyworks is invoiced for such fees.
8. CONFIDENTIALITY
8.1 GENERAL. Notwithstanding any termination, expiration or
cancellation of this Agreement, the Parties agree that they will keep in
confidence and prevent the unauthorized use of, or disclosure to, any Person or
Persons (other than an employee, agent, subcontractor or division of a Party
hereto with a need to know solely to exercise the Parties' respective rights or
obligations under this Agreement and who are bound to protect such information
against any other use or disclosure) all data marked or otherwise properly
identified as proprietary or confidential and exchanged between the Parties and
the terms of this Agreement ("Confidential Information"). The Parties agree to
protect the Confidential Information by using the same degree of care, but no
less than a reasonable degree of care, to prevent the unauthorized use,
disclosure, dissemination or publication of the Confidential Information as the
Parties use to protect their own comparable confidential and proprietary
information. Confidential Information shall only be used by the receiving party
for the purposes of providing services under this Agreement. Any oral disclosure
of Confidential Information shall be identified as proprietary or confidential
at the time of disclosure and shall be reduced to writing within thirty (30)
days of such disclosure, and identified as Confidential Information by an
appropriate stamp or other reasonable form of identification.
8.2 EXCLUSIONS FROM NONDISCLOSURE OBLIGATIONS. The obligation of
confidentiality imposed on each Party pursuant to Section 8.1 above shall not
apply to any particular item of Confidential Information that the receiving
Party can prove was:
(a) rightfully in the possession of the receiving Party
without restrictions prior to receiving it from the disclosing Party;
(b) in the public domain prior to the date of this
Agreement or subsequently came into the public domain through no act of the
receiving Party;
(c) independently developed by the receiving Party,
without use of the Confidential Information, by personnel, consultants or third
party contractors under the control of the disclosing Party;
(d) lawfully received by the receiving Party without
restrictions from a source other than the disclosing Party; or
(e) disclosed pursuant to a valid order by a court or
other governmental body or otherwise necessary to comply with laws or
regulations provided that such Party shall give the other Party reasonable
advance notice of such proposed disclosure and shall use its commercially
reasonable efforts to secure confidential treatment of any such Confidential
Information. Any compelled disclosure shall be limited to the maximum disclosure
required by such order or applicable law.
8.3 REMEDY. Each Party hereby acknowledges the other party's claim
that any violation by such Party of the obligations described in this Section 8
will cause immediate and irreparable harm to the other Party. Accordingly, each
Party shall have the right to seek preliminary and final injunctive relief
without the requirement of posting a bond to enforce this Agreement in case of
any
10
actual or threatened breach of this Section 8, in addition to any other rights
and remedies in law or equity that may be available to such Party.
8.4 OWNERSHIP OF CONFIDENTIAL INFORMATION. All Confidential
Information (including all copies thereof) of a Party hereto shall at all times
remain the property of such Party. No rights or licenses to Intellectual
Property Rights are implied or granted under this Agreement, except as expressly
set forth herein.
9. ACCESS TO COMPUTER SYSTEMS BY IT PERSONNEL
9.1 SKYWORKS ACCESS. If Skyworks is given access to any Conexant
Hardware, Conexant Software, networks or electronic files owned or controlled by
Conexant, Skyworks shall limit such access and use solely to the extent required
to receive IT Services under this Agreement and shall not access or attempt to
access any Conexant Hardware, Conexant Software, networks or electronic files,
other than those specifically required to receive the IT Services. Skyworks
shall limit such access to those with a requirement to have such access in
connection with this Agreement, shall advise Conexant in writing of the name of
each such person and the duration (from date and to date) who will be granted
such access, and shall comply with all Conexant security rules and procedures
for use of Conexant's electronic resources that have been communicated in
writing to Skyworks. All user identification numbers and passwords disclosed to
Skyworks and any Conexant Confidential Information obtained by Skyworks as a
result of their access to and use of any Conexant Hardware, Conexant Software,
networks and electronic files owned or controlled by Conexant, shall be deemed
to be, and shall be treated as, Conexant Confidential Information under
applicable provisions of this Agreement. Skyworks agrees to cooperate with
Conexant in the investigation of any apparent unauthorized access by Skyworks to
any Conexant Hardware, Conexant Software, networks or electronic files owned or
controlled by Conexant, or any apparent unauthorized release of Conexant
Confidential Information by Skyworks employees. Nothing in this Agreement shall
require Conexant to provide access to any of its Conexant Hardware, Conexant
Software, networks or electronic files and any such access shall be at the
reasonable discretion of Conexant.
9.2 CONEXANT ACCESS. If Conexant is given access to any Skyworks
Hardware, Skyworks Software, networks, electronic files or clean rooms owned or
controlled by Skyworks, Conexant shall limit such access and use solely to the
extent required to provide IT Services under this Agreement and shall not access
or attempt to access any Skyworks Hardware, Skyworks Software, networks,
electronic files or clean rooms, other than those specifically required to
provide the IT Services. Conexant shall limit such access to those with a
requirement to have such access in connection with this Agreement, shall advise
Skyworks in writing of the name of each such person and the duration (from date
and to date) who will be granted such access, and shall comply with all Skyworks
security rules and procedures for use of Skyworks' electronic resources that
have been communicated in writing to Conexant. All user identification numbers
and passwords disclosed to Conexant and any Skyworks Confidential Information
obtained by Conexant as a result of their access to and use of any Skyworks
Hardware, Skyworks Software, networks, electronic files and clean rooms owned or
controlled by Skyworks, shall be deemed to be, and shall be treated as, Skyworks
Confidential Information under applicable provision of this Agreement. Conexant
agrees to cooperate with Skyworks in the investigation of any apparent
unauthorized access by Conexant to any Skyworks Hardware, Skyworks Software,
networks, clean-rooms or electronic files owned or controlled by Skyworks, or
any apparent unauthorized release of Skyworks Confidential Information by
Conexant employees. Nothing in this Agreement shall require Skyworks to provide
access to any of its Skyworks Hardware, Skyworks Software, networks, electronic
files or clean rooms and any
11
such access shall be at the reasonable discretion of Skyworks; provided, that if
such access is required to perform IT Services and is denied by Skyworks,
Conexant shall be relieved of its obligations to provide those IT Services that
are dependent on access, without any adjustment to the Base Service Fees.
9.3 PHYSICAL ACCESS RIGHTS. Each Party shall only be provided
access to the other Party's data center or data closet in accordance with this
Section 9 during normal business hours, accompanied by an escort of the Party
providing such access, and upon reasonable advanced notice of such access, which
shall not be less than twenty-four (24) hours, or as otherwise mutually agreed
between the Parties.
10. LIMITATIONS OF LIABILITY
10.1 WAIVER. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY LOSS
OF PROFIT, INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES
ARISING OUT OF OR RELATING TO THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES OCCURRING.
10.2 LIABILITY LIMIT. IN NO EVENT WILL THE AGGREGATE LIABILITY OF
CONEXANT OR SKYWORKS UNDER THIS AGREEMENT EXCEED $1 MILLION.
10.3 BASIS OF THE BARGAIN. EACH PARTY ACKNOWLEDGES THAT THE MUTUAL
LIMITATIONS OF LIABILITY CONTAINED IN THIS SECTION 10 REFLECT THE ALLOCATION OF
RISK SET FORTH IN THIS AGREEMENT AND THAT NEITHER PARTY WOULD ENTER INTO THIS
AGREEMENT WITHOUT THESE LIMITATIONS ON LIABILITY.
10.4 DISCLAIMER. THE SERVICES PROVIDED UNDER THIS AGREEMENT ARE
PROVIDED "AS IS." CONEXANT MAKES NO REPRESENTATIONS OR WARRANTIES UNDER THIS
AGREEMENT, AND CONEXANT DISCLAIMS ANY AND ALL REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, TITLE, AND NON-INFRINGEMENT.
11. INDEMNIFICATION
11.1 Skyworks will, at its expense, defend, indemnify, and hold
Conexant harmless from and against any and all claims, actions, demands, suits,
losses, liabilities, judgments, expenses and costs (including reasonable
attorneys' fees and fees of other professionals) ("Claims") (a) arising out of
or related to any failure of Skyworks to obtain Required Consents, (b) alleging
that Conexant's use, in accordance with this Agreement, of any Skyworks
Intellectual Property Rights infringes or misappropriates a third party's
Intellectual Property Rights, or (c) arising out of or relating to any personal
injury (including death) or loss or damage to tangible property (other than data
or information) to the extent such injury or damage is the result of negligence
or wrongful misconduct of Skyworks or its employees. Conexant will use
reasonable efforts to notify Skyworks promptly in writing of any Claim for which
Conexant believes it is entitled to indemnification under this Section 11.1;
however, Skyworks will be relieved of its indemnification obligations under this
Section 11.1 only if and to the extent that the failure to receive prompt notice
materially prejudices Skyworks' ability to defend the Claim. If Conexant tenders
defense of any such Claim to Skyworks, Skyworks
12
must assume and bear the cost of the defense of the Claim. Conexant may, at its
option and expense, retain its own counsel to participate in any proceeding
related to a Claim.
11.2 Conexant will, at its expense, defend, indemnify, and hold
Skyworks harmless from and against any and all Claims arising out of or relating
to any personal injury (including death) or loss or damage to tangible property
(other than data or information) to the extent such injury or damage is the
result of negligence or wrongful misconduct of Conexant or its employees.
Skyworks will use reasonable efforts to notify Conexant promptly in writing of
any Claim for which Skyworks believes it is entitled to indemnification under
this Section 11.2; however, Conexant will be relieved of its indemnification
obligations under this Section 11.2 only if and to the extent that the failure
to receive prompt notice materially prejudices Conexant's ability to defend the
Claim. If Skyworks tenders defense of any such Claim to Conexant, Conexant must
assume and bear the cost of the defense of the Claim. Skyworks may, at its
option and expense, retain its own counsel to participate in any proceeding
related to a Claim.
11.3 Neither Party shall have the right to settle any Claims in a
manner that would reasonably be expected to materially diminish the rights or
interests of the other Party without such other Party's prior written consent,
which shall not be unreasonably withheld or delayed. If the Party to whom the
defense is tendered fails to promptly assume the defense of such Claim, the
other Party may assume the defense of such Claim at the expense of the Party to
whom the defense was tendered.
12. TERM AND TERMINATION
12.1 TERM. The term of this Agreement (the "TERM") will begin on
the Effective Date and will continue until terminated pursuant to this Section
12.
12.2 TERMINATION FOR CONVENIENCE. Examples of termination under
this Section 12.2 are set forth in Attachment H.
(a) On or before each of the following dates: February 1
and August 1 of each year (each, a "Notice Date"), either Party may notify of
the intent to terminate this Agreement with respect to any Tower of Service by
providing the other Party with at least six (6) months advance written notice of
termination, unless the Parties mutually agree to a shorter period of notice.
The effective date of termination of any Tower of Service pursuant to the
previous sentence shall be six (6) months from the applicable Notice Date,
whether such notice is delivered on or before such Notice Date. In the event
either Party delivers notice of termination to the other Party pursuant to this
Section, the recipient of such notice shall have five (5) business days to
respond to such notice, during which time, the recipient Party may elect to
terminate (1) a Tower of Service described in (i), (ii) or (iii) of Section 1.26
if the other Party delivers notice of termination of a Tower of Service
described in (i), (ii) or (iii) of Section 1.26, or (2) a Tower of Service
described in (iv) or (v) of Section 1.26 if the other Party delivers notice of
termination of a Tower of Service described in (iv) or (v) of Section 1.26.
(b) If a Party has a justifiable concern regarding the
continuation of any Tower of Service, on or before the next Notice Date, such
Party may provide the other Party written notice of its intent to evaluate
termination of a Tower of Service on or before a date that is three (3) months
following the applicable Notice Date (an "Evaluation Date"). If any such notice
of evaluation is delivered in good faith, the Party delivering such notice may
elect to terminate the applicable Tower of Service on or before the applicable
Evaluation Date, which termination shall be effective six (6)
13
months following such Evaluation Date. If notice of termination is not received
by the applicable Evaluation Date, the expressed concern shall be deemed
alleviated.
(c) If either Party delivers notice of termination as set
forth in 12.2(a) or (b), such Party shall have up to ninety days (90) days to
request an extension. The Tower of Service shall then be extended for six (6)
months beyond the otherwise effective date of termination. The Parties may
mutually agree to adjust the applicable IT Services, Service Levels and charges
relating to the affected Tower of Service to reflect reduced IT Services during
such extension period.
(d) Only after delivery of notice of termination of a
particular Tower of Service in accordance with this Section 12.2, Skyworks may
utilize a third party for any such Tower of Service to ensure a smooth
transition away from Conexant by the time such Tower of Service is terminated.
In the event of termination of a Tower of Service, Conexant will use reasonable
efforts to assist Skyworks in the transition of such services, including, but
not limited to, data migration in a mutually agreed upon format, provided such
assistance does not unreasonably interfere with ordinary business operations of
Conexant.
12.3 TERMINATION FOR CAUSE. Each Party may terminate this Agreement
immediately, upon written notice, (i) if the other Party breaches any material
term of this Agreement and fails to cure such breach within thirty (30) days
after receipt by the breaching Party of written notice from the non-breaching
Party describing such breach; (ii) upon the institution by or against the other
Party of insolvency, receivership or bankruptcy proceedings or any other
proceedings for the settlement of the other Party's debts, (iii) upon the other
Party's making an assignment for the benefit of creditors, (iv) upon the other
Party's dissolution or ceasing to conduct business in the normal course, see
13.4 assignability or (v) the other Party's failure to pay its debts as they
mature in the ordinary course of business.
12.4 TERMINATION FOR PAYMENT DEFAULT. Conexant may terminate this
Agreement immediately, upon written notice, (i) if the Skyworks fails to satisfy
its payment obligations when due under the terms of this Agreement and fails to
cure such breach within ten (10) days after receipt of written notice from
Conexant of a Payment Default, or (ii) any time after Skyworks has failed to
satisfy its payment obligations when due under the terms of this Agreement on
three separate occasions. The Parties agree that Conexant's right to terminate
this Agreement under this Section shall not apply to amounts that are in dispute
and are in the process of being resolved in accordance with Section 13.2.
12.5 SURVIVAL. Sections 1, 2.5, 2.6, 7, 8, 10, 11 and 13 shall
survive termination of this Agreement for any reason.
12.6 FIRST CONSIDERATION. At the time that Skyworks discontinues
utilizing Conexant, in part or in total, as its IT service provider, Skyworks
will give Conexant IT employees first consideration for employment with Skyworks
in lieu of reduction in force by Conexant.
12.7 EMPLOYEE TERMINATION. Within ten (10) business days of receipt
of termination notification of any Tower of Service, payment of retention and
severance packages, if any, will be mutually agreed to in writing by the Chief
Information Officers and designated human resources officers of each Party. If
agreement cannot be reached within such ten (10) day period, all Service Levels
and charges relating to the terminated Tower of Servic e may be adjusted
accordingly to the extent that Service Levels or charges are affected by the
Parties inability to agree on retention and
14
severance packages. After receipt of termination notification of any Tower of
Service, the Parties shall meet monthly to discuss resolution of retention and
severance packages.
12.8 PASSWORDS AND DATA. Provided that termination of a Tower of
Service is not the result of a breach by Skyworks, upon termination of a Tower
of Service, Conexant will (i) deliver to Skyworks such passwords or other access
codes associated with the terminated Tower of Service as deemed appropriate in
Conexant's reasonable discretion and (ii) as soon as practicable, return all
Skyworks data to Skyworks in a mutually agreed upon format. Conexant shall not
be required to return data to Skyworks that is not readily separable from
Conexant data without compromising Conexant data or otherwise impeding the
operations of Conexant.
13. GENERAL
13.1 NOTICES. All notices, requests, claims, demands and other
communications required or permitted to be given hereunder shall be in writing
and shall be delivered and will be deemed given (a) when so delivered if
delivered by hand, (b) when written confirmation is received if delivered by
telecopier, (c) when e-mail confirmation is received if delivered by e-mail, (d)
three (3) business days after mailing in the case of registered or certified
mail, or (e) one (1) business day after mailing in the case of express mail or
overnight courier service. All such notices, requests, claims, demands and other
communications shall be addressed as set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice:
If to Skyworks, to:
Skyworks Solutions, Inc.
25 Computer Drive
Haverhill, MA 01832-1236
Attention: President
With copies to (not effective for purposes of notice):
Skyworks Solutions, Inc. Skyworks Solutions, Inc.
4311 Jamboree Road 4311 Jamboree Road
Newport Beach, CA 92660-3095 Newport Beach, CA 92660-3095
Attention: General Counsel Attention: Chief Information Officer
or if to Conexant, to:
Conexant Systems, Inc.
4311 Jamboree Road
Newport Beach, CA 92660-3095
Attention: Chief Executive Officer
With copies to (not effective for purposes of notice):
Conexant Systems, Inc. Conexant Systems, Inc.
4311 Jamboree Road 4311 Jamboree Road
Newport Beach, CA 92660-3095 Newport Beach, CA 92660-3095
Attention: General Counsel Attention: Chief Information Officer
15
13.2 CHOICE OF LAW; DISPUTE RESOLUTION.
(a) This Agreement and the rights and obligations of the
Parties hereunder shall be governed by the substantive laws of the State of
California applicable to contracts made and to be performed therein, without
reference to principles of conflicts of laws. In the event that any dispute,
claim or controversy (collectively, a "Dispute") arises out of or relates to any
provision of this Agreement or the breach, performance or validity or invalidity
thereof, an appropriate authorized manager of Conexant and an appropriate
authorized manager of Skyworks shall attempt a good faith resolution of such
Dispute within thirty (30) days after either Party notifies the other of such
Dispute. If such Dispute is not resolved within thirty (30) days of such
notification, such Dispute will be referred for resolution to the Skyworks
President and the Conexant Chief Executive Officer. Should they be unable to
resolve such Dispute within thirty (30) days following such referral to them, or
within such other time as they may agree, Skyworks and Conexant shall submit
such Dispute to binding arbitration, initiated and conducted in accordance with
the then-existing American Arbitration Association Commercial Arbitration Rules,
before a single arbitrator selected jointly by Conexant and Skyworks. If
Conexant and Skyworks cannot agree upon the identity of an arbitrator within ten
(10) days after the arbitration process is initiated, then the arbitration shall
be conducted before three (3) arbitrators, one (1) selected by Conexant, one (1)
selected by Skyworks, and the third selected by the first two. The arbitration
shall be conducted in the County of Orange, California and shall be governed by
the United States Arbitration Act, 9 USC Section 116, and judgment upon the
award may be entered by any court having jurisdiction thereof. The
arbitrator(s) shall have case management authority and shall resolve the Dispute
in a final award within one hundred eighty (180) days from the commencement of
the arbitration action, subject to any extension of time thereof allowed by the
arbitrators upon good cause shown. There shall be no appeal from the arbitral
award, except for fraud committed by an arbitrator in carrying out his or her
duties under the aforesaid rules; otherwise the Parties irrevocably waive their
rights to judicial review of any Dispute arising out of or related to this
Agreement. Notwithstanding the foregoing, either Party may pursue immediate
equitable relief in the event of a breach of Section 8 or an alleged violation
or misappropriation of the Intellectual Property Rights of either Party.
(b) During any period in which the Parties are resolving
a Dispute pursuant to this Section 13.2, the Parties shall continue to provide
the services and support pursuant to the terms of this Agreement; provided,
however, that (i) if the Parties jointly determine that any such services or
support shall be suspended during the period in which the Parties are resolving
a Dispute, then the deadlines and time periods in which such services and/or
support are to be provided pursuant to this Agreement (as described herein)
shall be extended for the same amount of time as the services and/or support
were suspended, and (ii) if the Dispute pertains to the payment of fees due
under the terms of this Agreement or any Additional Services Order, the Party
claiming entitlement to such fees may suspend the provision of services until
the other Party pays such amounts in Dispute or deposits such amounts with a
neutral third party in escrow for distribution upon resolution of the Dispute.
13.3 FORCE MAJEURE. Neither Party will be liable for delays or
failure to perform the Services if due to any cause or conditions beyond its
reasonable control, including delays or failures due to acts of God, natural
disasters, acts of civil or military authority, fire, flood, earthquake,
strikes, wars, or utility disruptions (shortage of power).
13.4 ASSIGNMENT. Neither Party shall assign or subcontract its
rights and obligations under this Agreement without the prior written consent of
the other Party, which may not be unreasonably withheld or delayed.
Notwithstanding the foregoing, each Party may assign, delegate
16
or sublicense all or any portion of its rights and obligations under this
Agreement to (i) the surviving entity resulting from a merger or consolidation
involving such Party, (ii) the acquiring entity of a sale or other disposition
of all or substantially all of the assets of such Party as a whole or of any
line of business or division of such Party, or (iii) any other party that is
created as a result of a spin-off from, or similar reorganization transaction
of, such Party or any line of business or division of such Party, including,
without limitation, a subsidiary of Conexant into which the assets of Conexant's
information technology organization are transferred; provided that, in no event
shall either Party assign delegate or sublicense any of its rights or
obligations under this Agreement to any party that is engaged in a business that
is similar to or competitive with the other Party without such other Party's
prior written consent, which may not be unreasonably withheld or delayed. In the
event of an assignment pursuant to (ii) or (iii) above, Skyworks and Conexant
shall, at the assigning Party's request, use good faith, commercially reasonable
efforts to enter into separate agreements with each of the resulting entities
and take such further actions as may be reasonably required to assure that the
rights and obligations under this Agreement are preserved, in the aggregate, and
divided equitably between such entities.
13.5 ENTIRE AGREEMENT; AMENDMENT; WAIVERS. This Agreement, together
with all Attachments hereto, constitutes the entire agreement between the
Parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties. No supplement, modification or waiver of this Agreement
shall be binding unless executed in writing by the Party to be bound thereby. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
13.6 INVALIDITY. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, is, for any reason, held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement or any other such instrument and the invalid,
illegal or unenforceable provision shall be deemed modified so as to be valid,
legal and enforceable to the maximum extent allowed under applicable law.
13.7 CONSTRUCTION. The headings of the Sections herein are inserted
for convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement. All Section and
Attachment references in this Agreement are to Sections and Attachments,
respectively, of or to this Agreement unless specified otherwise. Unless
expressly stated otherwise, when used in this Agreement the word "including"
means "including but not limited to." The Parties have participated jointly in
the negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties, and no presumption or burden of proof will arise or
disfavoring any Party by virtue of the authorship of any provisions of this
Agreement.
13.8 PARTIES OBLIGATED AND BENEFITED. This Agreement will be
binding upon the Parties hereto and their respective permitted assigns and
successors in interest and will inure solely to the benefit of such Parties and
their respective permitted assigns and successors in interest, and no other
Person.
13.9 RELATIONSHIP. Nothing in this Agreement shall be deemed or
construed as creating a joint venture or partnership between the Parties.
Neither Party is by virtue of this Agreement
17
authorized as an agent, employee, or legal representative of the other Party,
and the relationship of the Parties is, and at all times will continue to be,
that of independent contractors.
13.10 NO EMPLOYEE SOLICITATION. Without the other Party's written
consent, during the Term of this Agreement and for a period of twelve (12)
months thereafter, each Party agrees not to hire, contract with, or solicit for
hire any IT personnel previously employed by such other Party in the twelve (12)
months immediately preceding such hiring, contracting, or soliciting and with
whom the hiring, contracting or soliciting Party had material contact in
connection with the performance of IT Services during the Term of this
Agreement. Notwithstanding the foregoing, this Section does not preclude either
Party from contracting with third-party vendors engaged by the other Party.
Nothing in this Section shall be deemed to reduce or otherwise amend each
Party's non-solicitation obligations under the Contribution and Distribution
Agreement between Conexant and Washington dated December 16, 2001 or any other
documents executed in connection with the Merger.
13.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original but all of which
will constitute one and the same agreement.
13.12 EXECUTION. This Agreement may be executed by facsimile
signatures and such signature will be deemed binding for all purposes of this
Agreement, without delivery of an original signature being thereafter required.
18
The Parties have executed this Information Technology Service Agreement as of
the Effective Date.
CONEXANT SYSTEMS, INC.
By: /s/ Dennis E. O' Reilly
-----------------------------------
Name: Dennis E. O' Reilly
Title: Senior Vice President, General
Counsel and Secretary
ALPHA INDUSTRIES, INC.
By: /s/ Paul E. Vincent
-----------------------------------
Name: Paul E. Vincent
Title: Vice President, Chief Financial
Officer, Treasure and Secretary
19
ATTACHMENT A
BASE SERVICES
The Base Services consist of the services described in this Attachment A. A
summary of the Service Levels described herein is set forth on Attachment I. The
Service Levels may change from time to time upon mutual agreement of the
Parties.
1. Application Support. Conexant will provide computer security, architecture
& technology services and application support to the Skyworks Locations
for the number of access accounts listed in Attachment B.1.
a. Communication with the third-party application vendor on licenses,
bug fixes, upgrades and updates, new products, and consulting
services.
b. Troubleshooting of Supported Software application issues.
c. Changes to current configuration, if required to support business
processes.
d. Training on systems, explanation of current and future
functionalities.
e. Granting access privileges, account maintenance, new account
creation, security architecture and other application infrastructure
services.
f. Attachment K represents the maximum support to be provided by each
party. If and when any one of these limits are exceeded, both Account
Managers will take action within one (1) month to reprioritize tasks
and/or projects to bring the support requirement into compliance with
Attachment K.
g. Service Level. Each party will respond by confirming the receipt of
all of the other party's questions, issues and requests within eight
(8) Service Hours after receipt. Each party may require all issues to
be communicated in a specific format that is reasonable, through a
readily accessible specific media such as an intranet application.
Each party will assign a priority to each request, and communicate an
estimate of a completion date within a reasonable time. Each party
shall assign priorities to support requests without regard to their
source.
2. Programming Services. Conexant will provide modifications (to the extent
permitted by any third party licensor) to Supported Software applications
or their extensions, including reports. Programming services shall be
provided by seven full-time equivalent personnel of Conexant dedicated to
such support services. Such services will be provided for Skywork
Locations as requested by Skyworks personnel. These services consist of
First Level and Second Level Support for the following:
a. Modifications to Supported Software applications or application
extensions to fix bugs/issues, support changes in business processes,
or to extend functionality.
b. Modifications to change reporting databases or output reports,
through addition of new data fields, changes to existing data fields,
new formats and/or views.
A-1
c. Modifications to interfaces to reflect minor database changes, and
additions or modifications to data fields.
d. Creation of new reports from existing applications or reporting
databases.
e. Conexant will be responsible for all communication with third party
programming contract resources acquired by Conexant to complete any
of Skyworks programming requests.
f. The management, direction and selection of third-party programming
resources engaged by Conexant will be the responsibility of Conexant.
g. Service Levels. Conexant will respond by confirming the receipt of
all Skyworks questions, issues and requests relating to the foregoing
programming services within eight (8) Service Hours after receipt.
If Conexant set priorities, Conexant will assign a priority to each
request, and communicate an estimate of a completion date within a
reasonable time, provided, however, that Conexant shall assign
priorities to both Skyworks and Conexant requests without regard to
their source. Conexant may require all issues to be communicated in a
specific format that is reasonable, through a readily accessible
specific media such as an intranet application. Skyworks may elect to
expedite the request through a funded (by Skyworks) acquisition of
additional programming effort as agreed as an Additional Service.
3. Remote Site Support Services. Conexant will provide reasonable support of
Supported Software and Supported Hardware located on the desktops of
Supported Washington Personnel at the Washington Locations in Europe and
Asia Pacific. First Level and Second Level Support will be provided.
a. Acquisition and installation of new printers, Supported Hardware PCs,
and desktop Supported Software purchased by Skyworks for the
Washington Business and upgrades of Supported Hardware PCs and
remote-site Supported Software purchased by Skyworks are limited to
an aggregate of six (6) installations, moves or upgrades per week in
Asia Pacific or Europe. Support outside of Service Hours or more than
an aggregate of six (6) installations, moves or upgrades per week
during Service Hours will require Skyworks to cover expenses. All
overtime and contract services must be approved in advance.
b. Reasonable virus removal as requested from supported networked
computers, in accordance with Conexant current policies. Infected
Supported Hardware PCs must be first isolated from the network and
will be put back in service only after the infection is cleaned.
Remote Locations will be a coordinated effort through a local vendor.
c. Reasonable troubleshooting of PC Supported Hardware and desktop
Supported Software, within 2 releases of current standards.
d. Creation and management of print queues for Asia Pacific and Europe.
A-2
e. Service Levels. Conexant will respond within eight (8) Service Hours
of the ticket being created. In addition, Conexant will resolve at
least 50% of the problems reported within sixteen (16) Service Hours,
according to the policies of the system used to track IT Operations
Department related problems. In the event Remote Locations are moved
or closed, the Parties shall mutually agree to adjustments in the IT
Services, Service Levels and charges as appropriate to reflect the
move or closure.
4. Infrastructure Services - Wire Line Telephony. Conexant will provide
installation of new telephones and voicemail software purchased by
Skyworks for the Washington Business, provided that no more than 600 wired
telephone lines in Newport Beach shall be required to be managed
simultaneously. Conexant will use commercially reasonable efforts to
provide such services at all Washington Locations. Conexant will provide
Second Level Support for Newbury Park and Mexicali and First and Second
Level Support for all other Washington Locations. Telecommunications
management will be provided for all Washington Locations.
a. Moves, adds and changes will be coordinated with local support
personnel for all Washington Locations for the following telephony,
voicemail, cabling and network provided services.
- Local dial-tone
- Long distance dedicated or switched access
- Toll-free service
- Seven-digit dial plan - voice private network
- Authorization codes
- Phone cards
- Voice network mgmt. - trouble tracking
- Audio - conferencing
- On-demand conferencing
- Fax messaging
- Global "voice" messaging
- Local voicemail distribution list
- System maintenance
- Call accounting
- Telco facilities
- SOHO
- Telecom lines and circuit tracking
- Telecom billing
b. Where Conexant utilizes its own personnel for moves, adds and changes
to existing services during Service Hours, services are limited to
three (3) moves, adds or changes per week on the Newport Beach
campus. Support outside of Service Hours or more than three (3)
moves, adds or changes per week during Service Hours will require
Skyworks to cover expenses. Remote locations will be limited to ten
(10) moves, adds or changes per week, supported remotely.
c. Cabling services and dedicated telephony circuits and phone lines
will be charged on a per job or per line basis as Additional
Services.
A-3
d. Service Levels. All administration related tasks (Ex: PBX and
voice-mail moves, adds, and changes) will be responded to within four
(4) Service Hours of the ticket being created. In addition, Conexant
will address at least 50% of the problems reported within sixteen
(16) Service Hours according to the policies of the system used to
track IT Operations Department related problems.
e. Conexant will inform the Skyworks Account Manager on a hourly basis
as to when any phone outage impacts more than ten (10) people or a
complete site and Conexant will use continuous efforts to resolve any
such outage.
5. Infrastructure Services - Video Telephony. Conexant will provide all video
services on a request basis. The request will be reported through the
proper channels. Supported Washington Personnel will log a ticket to
request support for the following services.
a. El Capitan Auditorium IT support will be limited to three (3)
meetings (not to exceed four (4) hours per meeting) per month. Any
excess will be billed as an Additional Service.
b. The following video telephony services are supported:
(i) on-demand streaming video;
(ii) web conferencing and on-line collaboration ;
(iii) video-conferencing bridged calls;
(iv) ISDN connectivity;
(v) media ( streaming ) player management;
(vi) global video - systems management;
(vii) WAN - video IP;
(viii) global address book; and
(ix) company video broadcast.
c. Service Levels. All requests will be responded to within four (4)
Service Hours of the ticket being created. In addition, Conexant will
address at least 50% of the problems reported within sixteen (16)
Service Hours according to the policies of the system used to track
IT Operations Department related problems.
6. Infrastructure Services - LAN Services. Conexant will provide support of
current local area networks (data networks) in place at the Washington
Locations. Conexant will provide First Level Support at all Washington
Locations, except Newbury Park, Ottawa and Mexicali. Second Level Support
will be provided at all Washington Locations, including Newbury Park,
Ottawa and Mexicali.
A-4
a. Reasonable configuration of the speed and duplex settings for
existing switches in the Skyworks network for the Washington
Business.
b. Reasonable monitoring of the network switches in the Washington
network. Identifying & correcting misbehaving devices by first
isolating them from the Skyworks production network for the
Washington Business.
c. Reasonable configuration and management of the VLANs and their
routing in the network for the Washington Business.
d. Reasonable support of internal DNS changes using the Conexant tool
during regular Service Hours. Support outside of Service Hours will
require Skyworks to cover for overtime-related expenses.
e. Reasonable support for primary & backup DHCP servers. 7x24 support
will be provided for DHCP related problems in the network for
Skyworks Locations.
f. Only Conexant will have both read and read/write (second level
access) access to the network Hardware that is being managed.
g. Service Levels. Conexant will respond within two (2) Service Hours of
the ticket being created. In addition, Conexant will address at least
50% of the problems reported within sixteen (16) Service Hours
according to the policies of the system used to track IT Operations
Department related problems
7. Infrastructure Services - Remote Access & Small Office Home Office
("SOHO") Services. Conexant will provide support of current remote access
for all Skyworks Locations. Conexant will provide First and Second Level
Support.
a. Reasonable installation, configuration, monitoring, and management of
the remote access servers for the number of access accounts set forth
opposite the services listed in Attachment B.1. These access servers
may be shared with Conexant and other companies supported by
Conexant.
b. Reasonable installation, configuration, monitoring, and management of
the Authentication, Authorization, and Accounting (AAA) servers. The
AAA servers will be shared with Conexant and other companies that are
supported by Conexant.
c. Reasonable installation, configuration, monitoring, and management of
the Ace servers for strong authentication of remote access users not
to exceed 200 additional users. The Ace server will be shared with
Conexant and other companies supported by Conexant. Skyworks will
purchase all secure ID tokens and any necessary software licenses for
new access that is needed by Skyworks personnel.
d. Reasonable installation, configuration, monitoring, and management of
the VPN servers. The VPN servers will be shared with Conexant and
other companies supported by Conexant.
e. Monitoring and management of the hardware and software VPN clients.
A-5
f. Mutually agreed to Skyworks upgrades, other than Conexant upgrades,
will be done as Additional Services.
g. Service Levels. Conexant will respond within eight (8) Service Hours
of the ticket being created. In addition, Conexant will address at
least 50% of the problems reported within sixteen (16) Service Hours
according to the policies of the system used to track IT Operations
Department related problems.
8. Infrastructure Services - Internet Services. Conexant will provide support
of Internet access for personnel at Skyworks Locations. Conexant will
provide First and Second Level Support.
a. The personnel must observe Conexant's Security and firewall policy
while participating in any Internet activity.
b. Only Skyworks client PCs with static IP addresses or an entire subnet
will be blocked from accessing the Internet.
c. Conexant will provide Internet access. This Internet access may be
shared with Conexant and other companies supported by Conexant.
d. Reasonable installation, configuration, monitoring, and management of
the firewalls. These firewalls may be shared with Conexant and other
companies supported by Conexant.
e. Requests for planned changes to the firewall policy need to be
received one week prior to the change for design validation &
verification. Urgent changes will be accommodated within eight (8)
Service Hours for an additional cost, as agreed as an Additional
Service.
f. Service Levels. Conexant will respond within 8 Service Hours of the
ticket being created. In addition, Conexant will address at least 50%
of the problems reported within sixteen (16) Service Hours according
to the policies of the system used to track IT Operations Department
related problems.
g. Conexant will inform the Skyworks Account Manager on a hourly basis
as to when any Internet outage impacts more than ten (10) people or a
complete site and Conexant will use continuous efforts to resolve the
outage.
9. Infrastructure Services - WAN Services. Conexant will provide support of
the wide area network infrastructure at all Skyworks Locations. The
network hardware may be shared with Conexant and other companies supported
by Conexant. Conexant will provide First and Second Level Support.
a. Reasonable monitoring of the WAN on a 7x24 basis.
b. Reasonable monitoring of the network routers in the network.
c. Reasonable configuration and management of the WAN circuits and their
routing in the network.
A-6
d. Reasonable configuration and management of existing network Hardware
that meet Conexant's hardware standards in place today.
e. Reasonable upgrades to the Hardware and Software in the network
Hardware.
f. WAN upgrades, WAN downgrades, WAN adds, moves and changes must be
approved by Conexant in advance.
g. WAN upgrades, WAN downgrades, WAN adds, moves and changes requested
by Skyworks may be considered as Additional Services, depending on
the scope.
h. Monthly reporting on utilization will be made available to the
Skyworks Account Manager.
i. Only Conexant will have both read and read/write (second level
access) access to the network Hardware that is being managed.
j. Dedicated leased lines & frame relay connections will be charged on a
per line basis as Additional Services.
k. Service Levels. Conexant will respond within two (2) Service Hours of
the ticket being created. In addition, Conexant will address at least
70% of the problems reported within eight (8) Service Hours according
to the policies of the system used to track IT Operations Department
related problems.
l. Conexant will inform the Skyworks Account Manager on an hourly basis
as to when any WAN outage impacts more than ten (10) people or a
complete site and Conexant will use continuous efforts to resolve the
outage.
10. Infrastructure Services - Email Services. Conexant will provide management
of the email infrastructure at the Skyworks Locations.
a. Reasonable support of email configuration until the transition from
Lotus Notes is complete.
b. Reasonable support of the data migration of email files from Lotus
Notes to Microsoft Exchange.
c. Validation of SMTP will be the responsibility of Skyworks.
A-7
11. Infrastructure Services; Groupware Services. Skyworks will provide First
Level Support, and Conexant will provide Second Level Support.
a. Conexant will reasonably support the creation of new accounts;
certification and troubleshooting of Lotus Notes Groupware for
personnel at Skyworks Locations. New account creation is not to
exceed 500 existing Skyworks employee accounts during the Term of
this Agreement. Skyworks is responsible for the purchase of the
associated account licenses.
b. Conexant will provide reasonable infrastructure support to Groupware
related applications accessed by personnel at Skyworks Locations.
c. Conexant will provide reasonable web application hosting for "web
based" Lotus Notes/Domino databases accessed by personnel at Skyworks
Locations as of the Effective Date.
d. Conexant will provide access to Lotus Notes based "Teamrooms,
discussion databases, and group mail boxes" accessed by personnel at
Skyworks Locations.
e. Service Levels. Conexant will respond within eight (8) Service Hours
of the ticket being created. In addition, Conexant will resolve at
least 50% of the problems reported within sixteen (16) Service Hours,
according to the policies of the system used to track IT Operations
Department related problems.
12. Data Center Services. Conexant will provide reasonable support of all
applications, hardware platforms and backup infrastructure hosted in a
Conexant managed data center (except Newbury Park, Ottawa and Mexicali),
including 7x24x365 service where necessary. Conexant will provide First
and Second Level Support. These services consist of:
a. Supports all Supported Hardware servers under current maintenance
agreements. The system instances covered include production, training
and development.
b. Supports all Supported Hardware and Supported Software upgrades and
patches.
c. Conexant reserves the right to refuse upgrades on shared resources.
d. Supports hardware configuration changes (e.g. disk space and
printers). Configuration changes of Supported Software applications
(e.g. new instances and database refreshes.
e. System management, troubleshooting, performance tuning and capacity
planning of system related issues
f. Granting access privileges, account maintenance, and new account
creation as reasonably requested.
g. Transport application changes to production will be based on
Conexant's current established procedures.
h. Any new server installations will be treated as Additional Services.
A-8
i. Data backup conducted in a manner consistent with past practices of
Conexant.
j. Service Level. Conexant will respond within eight (8) Services Hours
of the ticket being created. Conexant may require all issues to be
communicated in a specific format that is reasonable, through a
readily accessible specific media such as an intranet application. If
Conexant set priorities, Conexant will assign a priority to each
request, and communicate an estimate of a completion date within a
reasonable time, provided, however, that Conexant shall assign
priorities to both Skyworks and Conexant requests without regard to
their source.
k. Mission Critical Support: Conexant will respond to mission critical
problems within 1 hour and make continuous effort to resolve the
problem to the extent that it is related to the data center operation
management (SAP, Adexa, DMS and PROMIS). All mission critical
problems will have a "root cause' analysis completed and sent to the
Account Managers once the problem has been resolved.
A-9
ATTACHMENT B
B.1 - APPLICATIONS AND
NUMBER OF SYSTEM ACCESS ACCOUNTS FOR THE WASHINGTON BUSINESS
The number of users set forth below may increase or decrease by up to
ten percent (10%) without affecting the Base Services Fee. Any increase in the
number of users above ten percent (10%) shall be Additional Services.
APPLICATIONS LICENSE TYPE ACCESS ACCOUNTS
- ------------ ------------ ---------------
Lotus Notes Named 1951
SAP - Production Named 258
PROMIS Concurrent 1636
Sherpa DMS Server and Concurrent 561
Viador Server 148
iPlanet LDAP Server 1315
Adexa Server 8
SERVICES ACCESS ACCOUNTS
- -------- ---------------
Remote - Modem Dial-up 620
Remote - Cox Cable 51
Remote - Private DSL 53
B-1
ATTACHMENT B
B.2 - WASHINGTON LOCATIONS
APAC (ASIA/PACIFIC REGION)
BEIJING, CHINA
Unit 2421 South Office Tower
Beijing Kerry Centre 1
Guang Hua Road
Chao Yang District
TAEGU, KOREA
13F Sambee Bldg.,
559-0 Bumeo-1 Dong
Soosung-Gu, Taegu, Korea 706-011
SEOUL, KOREA
Rm 1508 Textile Centre Building
944-31, Daechi-3 Dong
Kangnam-Ku 135-283
Seoul Korea
HONG KONG, CHINA
Rm 2501-2513 & 2532-2540
Sun Hung Kai Centre
30 Harbour Road Wanchai
Hong Kong
SHANGHAI, CHINA
Lucky Target Square Bldg. 31st flr
Suite 3102, 500 Chengdu
North Road, Shanghai 200003
P.R.C.
TAIPEI, TAIWAN
Room 2808, International Trade Bldg.
333 Keelung Road, Section 1
Taipei, 110 Taiwan R.O.C.
TOKYO, JAPAN
Shimomoto Building
1-46-3 Hatsudai, Shibuya-ku
Tokyo, 151-0061 Japan
EUROPE
CAMBRIDGE, UK
St. Johns Innovation Centre
B-2
Cowely Road, Cambridge, Cb4
0WS UK
DENMARK
Parallelvej 10 2800
Lyngby, Copenhagen
Denmark
HELSINKI, FINLAND
Ayritie 12a
01510 Vantaa
Finland
LEMANS, FRANCE
2 Ave. Pierre Piffault, 72100
Lemans, France
MUNICH, GERMANY
Paul-Gerhardt-Allee 50 A
81245 Munchen, Germany
PARIS, FRANCE
Immeuble "Le Franklin"
34 Avenue Franklin Roosevelt - BP92
92159 Suresnes Cedex
France
NICE, FRANCE
Les Taissounieres B1
1680 Route des Dolines, BP 283
06905 Sophia Antipolis Cedex
France
READING, ENGLAND
100 Longwater Avenue Green Park
Reading Berkshire RG2 6GP
England
NORTH AMERICA
CEDAR RAPIDS, IA
4840 North River Blvd, NE
Cedar Rapids, IA 52402
HILLSBORO, OR
3000 NW Stucki Place
3000 Bldg, Suite 220
Hillsboro, OR 97124
IRVING, TX
B-3
750 W. Carpenter
Suite 300
Irving, TX 75039
NEWBURY PARK, CA (includes all buildings at the Newbury Park campus)
2427 West Hillcrest Drive
Newbury Park, CA 91320
NEWPORT BEACH, CA (includes all buildings at the Newport Beach campus)
4311 Jamboree Road
Newport Beach CA 92660
RALEIGH, NC
1121 Situs Court
Suite 330
Raleigh, NC 27606
SAN DIEGO, CA (includes all buildings at the San Diego campus)
9868 Scranton Road
San Diego, CA 92121
SAN JOSE, CA
2075 Zanker Road
San Jose, CA 95037
SANTA ROSA, CA
120 Stony Point Road, Suite 105
Santa Rosa, CA 95401
MEXICALI, MEXICO
Ave. Ignacio Lopez Rayon 1699
21050 Mexicali, BC Mexico
OTTAWA, CANADA
146 Colonnade Road
S.Nepean, Ontario, Canada
K2E 7Y1
CALEXICO, CA
AF Romero Warehouse
291 Avenida Campillo Suite E
Calexico, CA 92231
B-4
ATTACHMENT B
B.3 - ALPHA LOCATIONS
NORTH AMERICA
HAVERHILL, MA
25 Computer Drive
Haverhill, MA 01832
WOBURN, MA
20 Sylvan Road
Woburn, MA 01801
SUNNYVALE, CA
1230 Bordeaux Drive
Sunnyvale, CA 94089
MUNDELEIN, IL
112 Terrace Drive
Mundelein, IL 60060
ADAMSTOWN, MD
5520 Adamstown Road
Adamstown, Maryland 21710
FREMONT, CA
43194 Christy Street
Fremont, CA 94538
APAC (ASIA/PACIFIC REGION)
HONG KONG, CHINA
39/ F., One Pacific Place
88 Queensway, Admiralty
Hong Kong
EUROPE
MILTON KEYNES, U.K.
494 Midsummer Boulevard
Central Milton Keynes
Buckinghamshire, MK9-ZEA
B-5
MAZAN, FRANCE
430 La Venue de Mormoiron
84.380 Mazan
France
CO. CLARE IRELAND
9 Woodbrok
Cratloekeel, Co. Clare
Ireland
B-6
ATTACHMENT C
C.1 - SUPPORTED APPLICATIONS
- --------------------------------------------------------------------------------
APPLICATION NAME
- --------------------------------------------------------------------------------
MAJOR APPLICATIONS - FINANCE
- --------------------------------------------------------------------------------
SAP R/3 - FI/CO/IM*
PROMIS - Costing*
Lotus Notes/Domino - EPRS/FAA*
- --------------------------------------------------------------------------------
MAJOR APPLICATIONS - GENERAL COUNSEL
- --------------------------------------------------------------------------------
Lotus Notes/Domino - IDS/NDA*
- --------------------------------------------------------------------------------
MAJOR APPLICATIONS - PAYROLL
- --------------------------------------------------------------------------------
ProBusiness - Payroll
Kronos
- --------------------------------------------------------------------------------
MAJOR APPLICATIONS - STOCK PROCESSING
- --------------------------------------------------------------------------------
Chase Mellon
Fidelity
Exercise Excel System
Deferred Compensation System
- --------------------------------------------------------------------------------
MAJOR APPLICATIONS - HUMAN RESOURCES
- --------------------------------------------------------------------------------
SAP HR Modules*
Employ!
ESS
Employment Verification System
Travel Arrangement System
HR Datamart
- --------------------------------------------------------------------------------
MAJOR APPLICATIONS - BENEFITS PROCESSING
- --------------------------------------------------------------------------------
FSA
Sageo
- --------------------------------------------------------------------------------
MAJOR APPLICATIONS - ERP APPLICATIONS
- --------------------------------------------------------------------------------
SAP R/3*
SAP ITS (Internet Transaction System)*
- --------------------------------------------------------------------------------
MAJOR APPLICATIONS - WEB APPLICATIONS
- --------------------------------------------------------------------------------
Lotus Notes/Domino*
Web development
Custom developed Lotus Notes/Domino Workflow and Web applications*
- --------------------------------------------------------------------------------
MAJOR APPLICATIONS - WORLD WIDE SALES
- --------------------------------------------------------------------------------
SAP Sales & Distribution Module*
SAP Incentive & Commissions Planning Module*
SAP Foreign Trade Module*
Design Tracking System (DTS)
Field Sales Forecast (FSF)
POS
E-Biz (Order Status, Shipment Status, Account Status, Incentive Report and
Order Entry)
- --------------------------------------------------------------------------------
C-1
- --------------------------------------------------------------------------------
MAJOR APPLICATIONS - WORLD WIDE QUALITY
- --------------------------------------------------------------------------------
SAP - Quality Management Module*
QSI ISO Tracking System
RMA Tracking System
e-RMA System
- --------------------------------------------------------------------------------
MAJOR APPLICATIONS - SUPPLY CHAIN MANAGEMENT
- --------------------------------------------------------------------------------
Adexa Supply Chain Planning*
SAP Sales and Distribution Module*
SAP Materials Management Module*
Supply Demand Data Mart
Excess Inventory System
Merlin forecasting system (Mimi) (or replacement)
- --------------------------------------------------------------------------------
MAJOR APPLICATIONS - OPERATIONS
- --------------------------------------------------------------------------------
PROMIS WIP Tracking*
DMS - Product Data Management System*
Lotus Notes Databases
Extricity (or replacement)
RS1
Ops Web Pages
OEE Database
DDR Reporting
- --------------------------------------------------------------------------------
MAJOR APPLICATIONS - INFRASTRUCTURE
- --------------------------------------------------------------------------------
Data Warehouse
Tibco Middleware
Accounts Security Database
Oblix Single Sign-On Environment/LDAP Directories
BMQ
Multinet
Oracle
Replic Action
Viador
Informatica
- --------------------------------------------------------------------------------
*Indicates that the application is a Core Application for purposes of Section
5.1(a) of the Agreement.
C-2
ATTACHMENT C
SUPPORTED SOFTWARE
C.2 - DESKTOP
SITE LICENSED SOFTWARE
Netscape
Netswitcher
McAfee
WinZip
Adobe Acrobat Reader
Ghost
NON-SITE LICENSED SOFTWARE
Lotus Notes R5
Windows 95 and subsequent versions of Windows
MS Office Suites
MS Access
MS Project
MS SMS
Reflections Suite for X
Exceed
AutoCAD, Auto CAD Lite
Visio
Kea Term
Adobe Acrobat Write
C-3
ATTACHMENT C
SUPPORTED SOFTWARE
C.3 - APPLICATIONS NOT SUPPORTED
This list should not be considered comprehensive. The exclusion of
these applications from Supported Software does not affect Conexant's
obligations to backup data pursuant to Section 12.i. of Attachment A.
- ------------------------------------------------------
MAJOR APPLICATIONS - FINANCE
- ------------------------------------------------------
Hyperion
- ------------------------------------------------------
MAJOR APPLICATIONS - GENERAL COUNSEL
- ------------------------------------------------------
CPI Intellectual Property Management System
Case Track - Legal Matter Management System
- ------------------------------------------------------
MAJOR APPLICATIONS - HUMAN RESOURCES
- ------------------------------------------------------
Kadiri
- ------------------------------------------------------
MAJOR APPLICATIONS - BENEFITS PROCESSING
- ------------------------------------------------------
ProBusiness - Benesphere
- ------------------------------------------------------
MAJOR APPLICATIONS - OPERATIONS
- ------------------------------------------------------
RTD Dispatching
Data Power
- ------------------------------------------------------
C-4
ATTACHMENT D
SUPPORTED HARDWARE
D.1 - INFRASTRUCTURE
This list includes all infrastructure standards currently used by Conexant
irrespective of its use by Skyworks.
SERVICE STANDARD
- ------- --------
DATA NETWORKS
LAN-DHCP CISCO NETWORK REGISTRAR
LAN-DNS CISCO NETWORK REGISTRAR & OSI BIND
LAN-AUDIT CISCO NETSONAR
LAN-LAYER3 SWITCHING CISCO CAT 6500 MSFC
LAN-GB BACKBONE CISCO CAT 6500
WAN-FRAME RELAY SPRINT
WAN-PRIVATE LINE (DS3,T1, F/T1) SPRINT
WAN-ISDN BACK UP SPRINT/PAC BELL
WAN-SWITCHING CISCO 8420 IGX
WAN-DSL/CABLE LOCAL PROVIDERS
WAN-OUT-OF-BAND MGMT ANALOG LINES (PACBELL/LOCAL PROVIDERS)
WAN-NTP SERVICES CONEXAT STRATUM 2 NTP SERVER, CISCO
ROUTER RELAY
WAN-VOIP CISCO
RAS-SERVERS CISCO AS5300 CISCO 3640
RAS-AAA SERVICES CISCO SECURE SERVER (AUTHENTICATION,
AUTHORIZATION, AND ACCOUNTING
SERVICES)
RAS-STRONG AUTHENTICATION SECURED TOKENS
RAS-SERVICE PROVIDERS SPRINT TOLL FREE NUMBER &
INTERNATIONAL EQUANT
INTERNET-ISP MULTI-HOMING SPRINT (DS3-45MB)
COX(10MB) AT&T(4MB)
INTERNET-ROUTING BGP
INTERNET-ASN ASN 2646 OWN INTERNET IP
INTERNET-CACHING CISCO CACHE ENGINES
INTERNET-SECURITY PIX FIREWALLS
INTERNET-VPN NETSCREEN & NORTEL CONTIVITY
INTERNET-DNS OSI BIND/UNIX
INTERNET-IDS CISCO NETRANGERS
INTERNET-URL MANAGEMENT WEBSENSE/SUPERSCOUT
INTERNET-WEB TRAFFIC LOAD LOCAL DIRECTOR
BALANCING
SOHO-ISP COX COMMUNICATION & COVAD DSL &
LOCAL DSL PROVIDERS
SOHO-MANAGEMENT OUTSOURCE TO AXCELERANT
NETMGMT-TRENDING CONCORD
D-1
SERVICE STANDARD
- ------- --------
NETMGMT-MONITORING HP OPENVIEW, CUSTOM SCRIPTS
NETMGMT-LOGGING UNIX LOG SERVER
NETMGMT-CONFIGURATION UNIX TFTP SERVER
NETMGMT-ALERTING ATTENTION
NETMGMT-TROUBLE TRACKING REMEDY
NETMGMT-TRACING DISTRIBUTED SNIFFER (LAN, WAN, ATM, GB,
RMON)
VOICE NETWORK
LOCAL DIAL-TONE XO COMMS, SBC, QWEST, VARIOUS LOCAL
EXCHANGES
LONG DISTANCE DEDICATED OR
SWITCHED ACCESS
SPRINT
TOLL-FREE SERVICE SPRINT
SEVEN-DIGIT DIAL PLAN -VOICE SPRINT
PRIVATE NETWORK
AUTHORIZATION CODES SPRINT
PHONECARDS SPRINT
VOICE NETWORK MGMT. - TROUBLE REMEDY
TRACKING
AUDIO -CONFERENCING BRIDGED CONFERENCE AMERICA
CALLS
ON-DEMAND CONFERENCING CONFERENCE AMERICA
LAN - VOIP AVAYA 4624 PHONES
WAN - VOIP AVAYA DEFINITY IP600'S
FAX MESSAGING RIGHTFAX, AVAYA INTUITY AUDIX
GLOBAL "VOICE" MESSAGING AVAYA INTERCHANGE HUB
GLOBAL DISTRIBUTION LIST AVAYA INTERCHANGE HUB
(VOICEMAIL )
VOICEMAIL VIA WEBMESSAGING AVAYA WEBMESSAGING PROTOCOL
MOVES, ADDS, AND CHANGES AVAYA DEFINITY NETWORK
ADMINISTRATION, IMPACT -MAC-EZ
SYSTEM MAINTENANCE AVAYA, INTEGRATED TECHNOLOGIES
CALL ACCOUNTING TELEMATE
TELCO FACILITIES DS1'S, PRI'S, 1MB'S, TIE LINES BRI'S, CO/DID
TRUNKS,
SOHO 1MB LINES, ISDN BRI LINES TRACKING LOTUS NOTES DATABASE
TELECOM LINES AND CIRCUIT
CELL PHONES VERIZON WIRELESS
PAGERS SKYTEL
TELECOM BILLING PROFITLINE
D-2
SERVICE STANDARD
- ------- --------
VIDEO NETWORK
ON - DEMAND STEAMING VIDEO REAL NETWORKS WEB - CONFERENCING AND
ON-LINE COLLABORATION
WEB-EX
VIDEO - CONFERENCING BRIDGED GLOBAL CROSSING
CALLS
ISDN CONNECTIVITY LOCAL EXCHANGE, SPRINT
CONTENT DEVELOPMENT AVID, REAL NETWORKS
MEDIA PLAYER MGMT. REAL NETWORKS / PLAYER
GLOBAL VIDEO - SYSTEMS MGMT POLYCOM GMS SOLUTION
WAN - VIDEO IP POLYCOM VIEWTSATION
GLOBAL ADDRESS BOOK POLYCOM GMS
COMPANY VIDEO BROADCAST WEBEX, REAL NETWORKS
E-MAIL SERVICES
E-MAIL IBM/LOTUS
GROUPWARE APPLICATION SUPPORT IBM/LOTUS
WEB APPLICATION HOSTING IBM/LOTUS
INSTANT MESSAGING IBM/LOTUS
TEAMROOMS, DISCUSSIONS & GROUP IBM/LOTUS
MAILBOXES
D-3
ATTACHMENT D
SUPPORTED HARDWARE
D.2 - DATA CENTER
This list is supported hardware that is located in the Newport Beach data
center and may not be used exclusively for/by Skyworks and will be owned by
Conexant.
SERVER MANUFACTURER HARDWARE MODEL OPERATING SYSTEM APPLICATION
- ------ ------------ -------------- ---------------- -----------
corona HP HP9000 735 / 125 HPUX DMS
laguna HP HP9000 K410 HPUX DMS
malibu HP HP9000 H60 HPUX DMS
mozart SUN E4500 Solaris
newport HP HP9000 K410 HPUX DMS
sunset SUN Ultra 60 Solaris
venice SUN Sparc 10 Solaris
EUROPA Compaq GS 140 VMS PROMIS
NBNSOPS1 Compaq Proliant 5000 Windows NT
NBOPS2 Compaq Proliant DL380 Windows NT
TRITON Compaq GS 140 VMS PROMIS
COZI Compaq 2100 VMS PROMIS
EXCEL Compaq GS 140 VMS PROMIS
chewbaca SUN E3000 Solaris RTD
hershel SUN E3500 Solaris RTD
pollux Compaq 8200 Tru64
pine SUN E450 Solaris RTD
NBCBSAPPS1 Compaq Proliant 1850R Windows NT Viador
NBCBSAPPS2 Compaq Proliant 1850R Windows NT Viador
NBCBSAPPS3 Compaq Proliant 1850R Windows NT Viador
ravel SUN E250 Solaris
stellar HP HP9000 E45 HPUX
azuma Compaq DS10L Tru64
NBNSDEPT1 Compaq Proliant 5000 Windows NT
NBNSDEPT2 Compaq Proliant DL380 Windows NT
NBNSDEPT3 Compaq Proliant 5000 Windows NT
NBNSDEPT4 Compaq Proliant 5000 Windows NT
NBMCAFEE Compaq Proliant 1850R Windows 2000
NBMCAFEE2 Compaq Proliant 1850R Windows 2000
NBNSDNS01 Compaq Proliant 1600R Windows NT
NBNSDNS02 Compaq Proliant 1600R Windows NT
NBNSHOME1 Compaq Proliant 2500 Windows NT
NBNSHOME2 Compaq Proliant 2500 Windows NT
NBNSPDC Compaq Proliant 1600R Windows NT
NBNSPRNT1 Compaq Proliant DL380 Windows 2000
NBNSWSDC2 Compaq Professional WS Windows NT
6000
NBVERITAS1 Compaq Proliant ML530 Windows NT
REMEDY1 Compaq Proliant 1850R Windows NT
NBNSSQL1 Compaq Proliant 1850R Windows NT
NBSQL2 Compaq Proliant DL380 Windows NT
D-4
SERVER MANUFACTURER HARDWARE MODEL OPERATING SYSTEM APPLICATION
- ------ ------------ -------------- ---------------- -----------
NBSQL3 Compaq Proliant 6400R Windows 2000
NBSQL4 Compaq Proliant 6400R Windows 2000
NBNSDATA2 Compaq Proliant 4500 Windows NT
NBTERMSRV3 Compaq Storage System Windows NT
(former Appsrv1)
NBCISCO1 Compaq Proliant 4500 Windows 2000
NBGNSDHCP2 Compaq Proliant 2500 Windows 2000
SENSOR03 Compaq Proliant 5000 Windows NT
gateway HP9000 G50 HPUX
regis18 Compaq DS20 Tru64 SAP
regis30 Compaq 8200 Tru64 SAP
regis4 Compaq DS20 Tru64 SAP
regis5 Compaq 8200 Tru64 SAP
regis6 Compaq ES40 Tru64 SAP
regis81 Compaq DS20E Tru64 SAP
regis82 Compaq DS20E Tru64 SAP
regis83 Compaq DS20E Tru64 SAP
regis88 Compaq 8200 Tru64 SAP
NBKRONOS1 Compaq Proliant DL380 Windows NT Kronos
NBKRONOS2 Compaq Proliant DL380 Windows NT Kronos
NBKRONOS3 Windows NT Kronos
juniper SUN E3500 Solaris Kronos
BREEZE Compaq Proliant 5000
DRAGONFLY Compaq WS AP200 Windows NT Lotus Notes
NBLIBRARY2 Compaq Proliant 1850R Windows NT Lotus Notes
NBLNADM1 Compaq Proliant 5000 Windows NT Lotus Notes
NBLNAPPS1 Compaq Proliant 1850R Windows NT Lotus Notes
NBLNAPPS2 Compaq Proliant 6500 Windows NT Lotus Notes
NBLNAPPS3 Compaq Proliant 5000 Windows NT Lotus Notes
NBLNAPPS4 Compaq Proliant 2500 Windows NT Lotus Notes
NBLNAPPS5 Compaq Proliant 3000 Windows NT Lotus Notes
NBLNBKUP1 Compaq Proliant 5000 Windows NT Lotus Notes
NBLNDEVL1 Compaq Proliant 5000 Windows NT Lotus Notes
NBLNEXT1 Compaq Proliant 5000 Windows NT Lotus Notes
NBLNFAX1 Compaq Proliant 3000 Windows NT Lotus Notes
NBLNHUB1 Compaq Proliant 5000 Windows NT Lotus Notes
NBLNHUB2 Compaq Proliant 5000 Windows NT Lotus Notes
NBLNHUB3 Compaq Proliant 5000 Windows NT Lotus Notes
NBLNISO1 Compaq Proliant 1850R Windows NT Lotus Notes
NBLNISO1B Compaq Proliant DL380 Windows NT Lotus Notes
NBLNMAIL1A Compaq Proliant 6400R Windows NT Lotus Notes
NBLNMAIL1B Compaq Proliant 6500 Windows NT Lotus Notes
NBLNMAIL1C Compaq Proliant DL580 Windows NT Lotus Notes
NBLNMAIL2 Compaq Proliant 5000 Windows 2000 Lotus Notes
NBLNMAIL3 Compaq Proliant 5000 Windows NT Lotus Notes
NBLNMAIL4 Compaq Proliant 6400R Windows NT Lotus Notes
NBLNMAIL5 Compaq Proliant 5000 Windows NT Lotus Notes
NBLNMAIL6 Compaq Proliant 1850R Windows NT Lotus Notes
NBLNMON1 Compaq Proliant 2500 Windows NT Lotus Notes
D-5
SERVER MANUFACTURER HARDWARE MODEL OPERATING SYSTEM APPLICATION
- ------ ------------ -------------- ---------------- -----------
NBLNSMTP1 Compaq Proliant DL380 Windows NT Lotus Notes
NBLNSMTP2 Compaq Proliant DL380 Windows NT Lotus Notes
NBLNTRNG Compaq PC Clone Windows NT Lotus Notes
NPBDOM1 Compaq Proliant 5000 Windows NT Lotus Notes
NPBSMTP1 Compaq Proliant 5000 Windows NT Lotus Notes
SAMETIME Compaq Proliant DL380 Windows 2000 Lotus Notes
SAMETIME2 Compaq Proliant 5000 Windows NT Lotus Notes
NBNSD815 Compaq Proliant 5500 Windows NT
ATHENA Compaq Proliant 6400R
NBNSTRAIN1 Compaq Proliant 6500 Windows NT
NBCOMP Compaq Proliant DL380 Windows NT
NBNSRESUMIX Compaq Proliant 3000 Windows NT
NBTAX1 Compaq Proliant 1600R Windows NT
CNXTDDS Compaq Deskpro PC Windows NT
HORBIA Compaq Deskpro PC Windows NT
NBEXODUS Compaq Proliant 1850R Windows NT
NBMETROLOGY Compaq Proliant DL380 Windows NT
D-6
ATTACHMENT E
BUSINESS PROCEDURES/PROCESSES
1. ADDITIONAL SERVICES GENERALLY.
a. Additional Services may be requested by either Party to cover
changes to the Base Services, requested Projects, or other
Additional Services as well as changes to the current planning
parameters and assumptions, or the operating business
environment. The Parties agree to use commercially reasonable
efforts to agree upon and provide the requested Additional
Services.
b. If the Parties agree that Conexant will provide Additional
Services, then they will document their agreement in an
Additional Services order ("Additional Services Order") signed
by both Parties. Each Additional Services Order will include
(a) the effective date and term, (b) obligations of Conexant
and a description of the Additional Services, (c) obligations
of Skyworks, including facilities and additional hardware and
software to be provided, (d) fees and/or rates for the
Additional Service, and (e) any other agreed upon terms. When
the Account Managers of each Party have executed an Additional
Services Order, it will become effective and will become
subject to the terms and conditions of this Agreement. In the
event of any conflict, ambiguity, or inconsistency between the
terms of the Additional Services Order and the terms of this
Agreement, the terms of the Additional Services Order will
control, but only with respect to such Additional Services
Order.
2. PROJECT SERVICES. If the Account Managers mutually agree that an
Additional Service will be performed as a discrete Project, the
following terms apply:
a. The Project objectives and scope must be documented and
accepted by Skyworks and Conexant in an Additional Services
Order before commencement of the Project. The Additional
Services Order shall also include a detailed list of
deliverables for the Project, a detailed Project schedule and
a Project budget.
b. The Project will have a Project Manager or Co-Project Manager
from Conexant and a customer contact from Skyworks. These
positions must be established, and accepted, prior to the
commencement of the Project.
c. Conexant will follow its current project methodology (trinITy)
for conducting its Projects. This methodology will be clearly
stated and documented, and will be accepted by Skyworks and
Conexant, prior to the commencement of the Project.
d. In order to enable Conexant to successfully complete the
Project, Skyworks may be required to complete certain tasks
and/or provide Conexant with cooperation and assistance, as
may be reasonable under the scope of the Project. Skyworks
acknowledges that its failure to perform its obligations under
the scope of the Project could result in delays on the part of
Conexant in completing the Project on schedule and under
budget. Accordingly, Conexant shall be excused from performing
its obligations to the extent Conexant's performance is
prevented or hindered by Skyworks' nonperformance, and
Skyworks agrees that Conexant shall be entitled to
E-1
extension of time to complete the affected services and, if
applicable, an adjustment of the applicable fee.
e. Conexant and Skyworks will hold periodic management reviews to
track the progress of the Project. The duration and frequency
of these reviews will be established prior to the commencement
of each Project.
f. Conexant will invoice Skyworks according to the payment terms
established in Section 7 of the Agreement
g. The Parties shall set forth and allocate responsibility for
all other expenses that are reasonably likely to be incurred
in connection with any Additional Services, including Taxes,
in the Additional Service Order.
3. ADJUSTMENTS TO BASE SERVICES. If any Additional Services affect the
scope of the Base Services, the Account Managers shall mutually agree
to revise the Base Services as they deem appropriate to reflect such
change. If the Base Services are revised, the Account Managers may also
mutually agree to corresponding adjustments of the Service Levels and
charges to reflect such revisions, subject to the approval of each
Party's Chief Information Officer.
E-2
ATTACHMENT F
REIMBURSABLE EXPENSES
The following expenses, including any related Taxes, duties or customs,
if incurred by Conexant for Supported Washington Personnel in connection with
providing the IT Services, will be reimbursed by Skyworks. Conexant will not
incur any new costs with respect to the following items except upon Skyworks'
approval, except that the Parties agree that if any service charges detailed in
(#3 - #7) below are incurred from devices or Skyworks personnel previously
approved by WCD management will not require additional approvals. Any access
service charges and other expenses incurred prior to the Merger and which have
been incurred in the ordinary course of business with respect to the IT Services
shall be deemed to have been approved.
1. Cost of desktop, laptop computers (PCs), printers and
peripherals.
2. Cost of Software.
3. Cost of cell phones and monthly service cost from third
parties.
4. Cost of pagers and monthly service cost from third parties.
5. Access charges for remote access/SOHO and monthly service cost
from third parties.
6. Access and airtime for audio and video conferences.
7. Cost of long distance phone services.
8. Travel and travel related expenses when travel is incurred at
Skywork's request, as long as the travel is within Conexant's
then current travel policies.
9. Shipping and handling related expenses in the event such
expenses exceed $100 with respect to any shipment.
10. Minor purchases of tools, equipment or services by Conexant as
long as such tools, equipment or services are reasonably
required to perform the IT Services.
F-1
ATTACHMENT G
CONEXANT POLICIES
CONEXANT INFORMATION TECHNOLOGY SECURITY POLICY
RESPONSIBILITY
Conexant Information Technology organization (IT) has the ultimate
responsibility for the development and implementation of the Conexant
Information Technology Architecture. IT is responsible for providing leadership
and coordination for IT Architecture development and related initiatives.
ACCOUNTABILITY
IT is responsible for ensuring that adequate controls are established and
observed for all information resources of their respective businesses. Conexant
shall appoint an Information Security Officer who shall act under the direction
of the functional IT executive and the corporate Chief Information Security
Officer to coordinate and oversee security issues at the business. Each business
shall review its system and information security on at least an annual basis to
determine the adequacy of the location's internal controls and compliance with
this policy.
Additional baseline controls may be established as needed at individual
businesses through local attachments to the Conexant Information Security
Baseline. Local attachments to this baseline may not detract from original
baseline content, but may expand upon specific areas of concern. All
information: security baselines, including local business attachments, must be
approved by the Computer Security Committee. An effective segregation of
responsibility shall be implemented to ensure that no individual has conflicting
duties that would jeopardize their ability to protect computing resources.
CONEXANT SHALL TAKE ADEQUATE MEASURES TO ENSURE AWARENESS AND COMPLIANCE TO THIS
POLICY AND ITS SUPPORTING BASELINES BY EMPLOYEES AT EVERY LEVEL OF THE
ORGANIZATION. VIOLATIONS OF THIS POLICY CAN RESULT IN DISCIPLINARY ACTION BY THE
COMPANY UP TO AND INCLUDING EMPLOYEE TERMINATION.
G-1
DEFINITIONS
PURPOSE
The purpose of this section is to define specific terms and concepts as they
relate to this Conexant Corporate Computer Security Policy.
LOCATIONS AFFECTED
All locations of the Corporation, including subsidiaries.
ACQUISITION OF PROTECTED COMPUTER SOFTWARE - The obtaining of a copy and a
limited right to use protected computer software from a supplier or another
party under a purchase, lease, license, gift, bailment, or proprietary
agreement. The right to use may be for internal use by the Corporation,
incorporation in products sold to a customer, or delivery to a customer.
AUTHENTICATION TOKEN DEVICE - Portable device that employs one-time password
technology to authenticate a user. Authentication tokens operate by time-based
code sequences (synchronous), challenge-response (asynchronous) or other
techniques. Authentication token devices are assigned to authorized users and
are used as one of two factors in strong authentication. When used in
conjunction with a Personal Identification Number or password, authentication
token devices provide strong authentication.
AUTHORIZING AGREEMENT - A written agreement which contains conditions governing
the copying, disclosure, and use of protected computer software. The authorizing
agreement may either be expressly negotiated with an owner or authorized
licensor of protected computer software or a form agreement that accompanies
packaged software.
BUSINESS CRITICAL COMPUTING RESOURCES - Those Conexant computing resources that
are vital to the ongoing operation of Conexant business, and maintaining its
competitive position within the industry. Those computing resources required to
run business critical systems.
BUSINESS CRITICAL SYSTEMS - Those systems that are vital to the ongoing
operation of Conexant business, and maintaining its competitive position within
the industry.
CHANGE CONTROL - A process whereby all organizations directly affected by a
proposed change to systems or software, collectively collaborate and assess the
readiness of the change and the timing of its implementation.
COMPANY PROPRIETARY INFORMATION - Information applicable to the business,
personnel, financial and legal affairs, including intellectual property of the
Corporation which is generated by, or on behalf of, the Corporation and which
is, by reason of its sensitivity, to have limited dissemination. As well as
information applicable to research, development, and production technology which
is generated by, or on behalf of, the Corporation and which is useful to the
Corporation and would adversely affect the Corporation's interest if not
properly protected. It may or may not be in documentary form and includes
computer software programs, program descriptions and supporting materials and
databases.
COMPUTER PROGRAM - A set of instructions capable, when incorporated in a
machine-readable form, of causing a machine having information-processing
capabilities to indicate, perform or achieve a particular function, task or
result.
COMPUTER SECURITY COMMITTEE
CONEXANT COMPUTING RESOURCES - Computer hardware, software, networks, and other
assets related to any of the following: computer-based information technology,
computer installations, and related communications systems.
CONFIGURATION CONTROL - The process which documents how related hardware,
system, or software components are changed.
G-2
DATA SECURITY The protection of data against loss, modification, or unauthorized
disclosure during its input, storage, transmission, or processing by an
information technology- based system,
DERIVATIVE SOFTWARE - A change, modification, or enhancement to protected
computer software.
DYNAMIC PASSWORD - A one-time password mechanism where the password is
automatically changed by the system. It is generally used in conjunction with
authentication token devices that generate random passwords than can be matched
by the host verification system.
EXECUTIVE COUNCIL (EC): Team consisting of the CEO and the company's senior vice
presidents (and or other members) as approved by the Board of Directors.
EXTERNAL ROUTER - A router that filters network traffic to the perimeter
networks from the Internet or other untrusted network. Also referred to as a
screening router.
EXTRANET - Dedicated network connections between Conexant and non Conexant
locations or Conexant partners. The Conexant network may, with due diligence, be
extended into non- Conexant facilities, but may not be connected to that
facilities network unless firewalls are utilized.
FIREWALL - An integrated configuration of filtering, encrypting and logging
devices, and/or secure application gateways, and proxies that are positioned
between networks.
GATEWAY - A dedicated server that interconnects two different services or
applications (e.g., a gateway for internal and external e-mail service
connections).
GUEST USER ACCOUNT - A LogonID and password which is not issued to a person, but
rather established for casual or convenient access to a systems. Establishing
such accounts shall be prohibited.
INFORMATION SECURITY ADMINISTRATION OF SENSITIVE TASKS - The administration of
those tasks which oversee access of external, un-trusted systems or networks to
internal, trusted Conexant systems or networks. This would include but not be
limited to the principal information security officer of a business, firewall
administrators, hosts systems security administrators, router administrators,
authentication server administrators, and so forth.
INFORMATION TECHNOLOGY ARCHITECTURE - A "blueprint" for the deployment of IT
Resources that establishes standards and guidelines and defines the minimum
criteria and infrastructure required for interoperability between locations on
the Conexant network.
INFORMATION TECHNOLOGY RESOURCE - Refers to any resource that contributes to the
provision of digital electronic and telecommunication services to Company
locations. This includes all Company-owned or leased computer hardware,
including workstations and personal computers, software, networks, and other
assets related to any of the following: computer-based information technology,
computer installations, and related communications systems. For the purpose of
this policy, Information Technology Resource also refers to the staff and
intellectual property associated with the support and operation of these
systems.
LOGON-ID: Unique user identification for log on.
NON-CONEXANT USERS - People (i.e., contractors, business partners, and
suppliers) who are not employees of Conexant, yet are authorized to use Conexant
computing resources.
ONE-TIME PASSWORD - A password that can be used only one time with an associated
LogonID. One-time passwords are changed immediately after they have been used to
gain access to the system.
PERIMETER NETWORKS -Subnets that are established on Conexant networks that use
internal screening routers and firewalls are configured to permit traffic
between networks.
PHYSICAL SECURITY - The protection of hardware, facilities, and utilities used
in data processing operations against damage, destruction, or misuse. It also
encompasses the protection of information in hard copy form against loss or
unauthorized disclosure during its production, distribution, and use.
PRODUCTIONS DATA FILES - All data files used by Production Programs.
G-3
PRODUCTION PROGRAMS - All software programs, including operating systems,
utilities and application programs which are either (I) executed on a routine
basis, or (ii) provide information to comply with contract requirements, manage
corporate assets, or support business or operational decision making.
PROGRAM DESCRIPTION - A complete procedural representation in verbal, schematic,
or other form, in sufficient detail to define a set of instructions making up a
computer program.
PROTECTED COMPUTER SOFTWARE - The materials, whether in human or
machine-readable forms, referred to in the definitions of Computer Program,
Program Description, and Supporting Material, which are identified to be the
proprietary or copyrighted information of a party other than the Corporation.
SECURED FAX MACHINES - Those fax machines, which encrypt the faxes that are sent
through them.
SENSITIVE INFORMATION - Information existing in any electronic form (i.e.,
stored file, email message, data transmission, fax, etc.) that Conexant would
not want to be made generally available to the public due to propriety,
confidentially or competitive reasons.
SOHO - Small Office/Home Office (high-speed connection, i.e. DSL; cable modem).
STATIC PASSWORD - A password that can be used repeatedly with an associated
LogonID. Static passwords generally expire after pre-established timeframes
(e.g., 30, 60, 90 days).
STRONG AUTHENTICATION - Generally referred to as a two-factor verification
process used to positively authenticate the identity of a user attempting to
gain access to a system. The first factor is something you possess (i.e.,
authentication token, finger print, retinal vascular pattern, encryption keys)
and the second factor is something only you would know (i.e., Personal
Identification Number (PIN) or password). These two factors used together
constitute strong authentication.
TRUSTED NETWORK - is a network that is owned or controlled by Conexant that is
protected from non-authorized entry or use by non-Conexant personnel. Sometimes
referred to as an internal network'.
UNAUTHORIZED ACCESS - Use of a company computing resource by people who have not
been given legal access by Conexant management or administrators in accordance
with established security procedures, baselines, and policies.
UNSECURED FAX MACHINES - Those fax machines, which do not encrypt the faxes that
are sent through them.
UN-TRUSTED NETWORK - is any network that is not administered or overseen by
Conexant personnel. This would include the Internet, Conexant's supplier
networks, customers' networks, and Conexant's partners' networks. Even a
Conexant private network is deemed "un-trusted" if unauthorized access is
allowed through dialup, IPX, DECNET, AppleTalk, etc. on any nonisolated segment
of the divisional network. Obviously, not all un-trusted networks are equally
dangerous. The Internet is the least trusted of all networks, and requires the
most stringent security precautions.
VIRTUAL PRIVATE NETWORK (VPN) - required when a Conexant office or employee is
utilizing the Internet to communicate with the Conexant Intranet. A VPN will
encrypt the data as it traverses the Internet to provide security.
Authentication is required when using client VPN's for SOHO and Remote Access.
IP Security Protocol (IPSEC) is the preferred solution for deploying client
VPN's and the required solution when deploying LAN to LAN VPN's.
G-4
ACQUISITION, DISSEMINATION, AND USE OF COMPUTER SOFTWARE OWNED BY ANOTHER
PURPOSE
The Corporation respects the copyright and proprietary information rights of
others in protected computer software. To protect the Corporation from claims of
infringement based upon those rights, the acquisition by the Corporation of
rights in protected computer software and the copying, disclosure, or use of
protected computer software by the Corporation will be in accordance with this
Policy.
GENERAL
1. The EC shall be responsible for authorizing the acquisition of protected
computer software and shall be responsible for ensuring that it is
acquired, safeguarded, and used in accordance with the applicable
software agreement.
2. Protected computer software acquired pursuant to, or accompanied by, an
authorizing agreement may only be copied, disclosed, or used as
permitted by the authorizing agreement.
3. Protected computer software marked only with a copyright notice and not
acquired pursuant to, or accompanied by, an authorizing agreement may
only be copied for backup purposes, but the acquired copy may be used
for any Corporation business purpose which does not involve making other
than the backup copy.
4. Protected computer software marked with both proprietary and copyright
markings or only proprietary markings may only be copied, disclosed, or
used as permitted by the authorizing agreement and must have the written
approval of the material owner before being allowed on Company computing
resources.
5. Copying of protected computer software in, or its use as an integral
part of, the products sold by the Corporation, or delivery of copies to
a customer or another party must be expressly licensed by the
authorizing agreement. Procedures required in this regard by the
authorizing agreement must be followed.
6. A legend identifying protected computer software as proprietary to, or
copyrighted by, another shall not be changed, removed or obliterated
except with the prior written advice of the cognizant Patent Counsel.
7. An authorized copy, or portion thereof, of protected computer software
shall be reproduced with the proprietary or copyright notice displayed
in the same manner as the original or as otherwise required by the
authorizing agreement.
8. Removal in any manner from Corporation premises of protected computer
software may only be with the approval of the EC.
9. The generation of derivative software is not permitted unless authorized
pursuant to the authorizing agreement. Where so authorized and unless
otherwise provided by the authorizing agreement, that portion of the
derivative software, which is unmodified, shall continue to be treated
as protected computer software. The derivative software shall be treated
as Corporation sensitive information under section Safeguarding Company
Sensitive Information, or as otherwise required by the authorizing
agreement.
G-5
10. The supervisor of a terminating or transferring employee having access
to protected computer software shall require the employee to promptly
turn over to the supervisor any protected computer software and copies
thereof that he or she has in his or her possession or control and
certify in writing that it has been done.
11. Computer software which is generated within, or on behalf of, the
Corporation, or to which all rights have been acquired by the
Corporation, may be subject to the requirements of section Safeguarding
Company Sensitive Information.
G-6
- - GENERAL
Protection adequate to ensure confidentiality, integrity and
availability of information contained in information technology-based systems
will be provided through management focus and action. Access will be restricted
to those individuals having appropriate authorization.
The following fundamental controls will be established:
- There will be no unrestricted access to production programs and
production data files.
- There will be access controls to ensure against unauthorized use of
production programs.
- There will be physical procedural controls to ensure against
unauthorized access to computing facilities.
Physical and data security is the responsibility of the senior line executive of
each operating location, who will designate one or more individuals as
Information Systems Security Officers (ISSOs) to assume the responsibility for
implementing and monitoring compliance with Corporate and location information
security procedures and guidelines.
The Vice President & General Manager - Conexant Information Systems will:
- Provide Corporate - wide management direction and integration of
information of information security as the focal point for planning,
organizing, coordinating, directing and controlling this function for
the benefit of all using organizations.
- Review the development of major information technology-based systems
undertaken by the Corporation to assure adherence to appropriate
systems security considerations.
- Operate a company wide program for maintaining information security.
- Coordinate with company user organizations in the development of
detailed procedures and guidelines for the achievement and maintenance
of information security.
G-7
TO BE REVIEWED BY HR/LEGAL DEPTS
SAFEGUARDING COMPANY SENSITIVE INFORMATION
PURPOSE
Company Sensitive Information is a valuable asset of the Corporation and will be
protected and used only to promote Corporation interests. The courts have
generally provided protection for Company Sensitive Information, such as
formulas, patterns, devices, or compilations of scientific, technical or
commercial information (including computer programs and databases), provided the
owner has taken reasonable precautions to maintain it as confidential and such
information gives the owner a competitive advantage over others who do not know
it.
GENERAL
The identification, availability and dissemination of Company Sensitive
Information shall be governed by the following principles:
a. Proprietary Information shall be prominently marked with the legend
"Conexant Proprietary Information." Company Official Information shall
be prominently marked with the legend "Company Official (Not to be
disclosed to unauthorized persons)." Exceptions to these requirements
are specified in paragraph c., below.
b. The employee who originates Company Sensitive Information and the
employee's supervisor are responsible for ensuring that such
information is properly marked upon its origination and is safeguarded
in accordance with this Policy.
c. Company Sensitive Information otherwise requiring markings in
accordance with this Policy need not be so marked when the EC (or a
direct report to whom such authority has been expressly delegated)
determines that it is not practicable or necessary to mark it, that it
is for internal use only, and that all the following precautions are in
effect and are reasonable to protect unmarked Company Sensitive
Information:
1. Access thereto is restricted to a limited number of employees
having a "need to know" in order to carry out their duties;
2. Those employees allowed access thereto are made aware of its
sensitive nature; and
3. Procedures have been established to prevent the release
thereof outside the Corporation unless it is appropriately
marked before release.
d. The release, either written or oral, of Company Sensitive Information
to persons, firms or organizations outside the Corporation is
authorized only:
1. If it is appropriately marked and a confidentiality agreement
has been entered into between the recipient and the
Corporation;
2. If required by a final order, no longer subject of stay or
appeal, of a court of law of competent jurisdiction.
3. If furnished to the United States Government as material
exempt from disclosure under the Freedom of Information Act.
4. Upon approval of the EC (or a direct report to whom such
authority has been expressly delegated).
G-8
e. Company Sensitive Information shall always be kept from "open view" by
unauthorized persons and shall be handled, transmitted and stored in a
manner consistent with its importance.
f. Employees having access to Company Sensitive Information who are
terminating or transferring shall be interviewed as to their
responsibilities with respect to Company Sensitive Information.
Interview guidelines or procedures shall be established in business
units, with the advice and assistance of the Office of the General
Counsel. The terminating or transferring employee shall be alerted to
the legal consequences of (i) using or disclosing Company Sensitive
Information for any purpose not expressly authorized by the Company,
with the advice and assistance of the Office of the General Counsel,
and (ii) retaining or using any correspondence, notes, depictions,
models, data, experimental results or any other manifestation of
Company Sensitive Information.
g. The supervisor of a terminating or transferring employee having access
to Company Sensitive Information shall require the employee to deliver
promptly to the supervisor all materials, including documents and
software which may contain Company Sensitive Information, and to
acknowledge in writing that all such materials so required to be
delivered have been delivered.
UNAUTHORIZED RELEASE
Any employee having knowledge of any unauthorized disclosure or removal of
Company Sensitive Information will promptly inform his or her immediate
supervisor and the Office of the General Counsel.
G-9
USE AND MONITORING OF COMPUTING RESOURCES
PURPOSE
This policy provides guidance to employees on the proper use of the Company's
Computing Resources, including use of the Internet and electronic mail. It is
not intended to cover every imaginable situation that could arise concerning the
use of such resources. When in doubt as to the proper use of Computing
Resources, employees should ask their managers or, if appropriate, Human
Resources.
CONTENTS:
- - POLICY
A. PERSONAL USE
B. SECURITY
C. INTERNET
D. ELECTRONIC MAIL
E. MONITORING
F. OWNERSHIP OF DATA
G. RESPONSIBILITIES
POLICY
Computing Resources will continue to play an important part in the Company's
ongoing success. While this policy directs Company managers to use their
discretion in making responsible decisions concerning appropriate use of the
resources they manage, it is grounded in the fundamental trust that all
employees behave responsibly and use good judgment when using these resources.
Although the Company intends that these resources be used for business purposes,
occasional personal use may occur without adversely affecting the Company's
interests.
Employees are expected to exercise good judgment in using Computing Resources.
Managers are responsible for the Computing Resources assigned to their
respective organizations and are empowered to resolve issues concerning their
proper use under the guidance of local information technology personnel. Use of
Computing Resources for non-Company purposes is appropriate only when consistent
with this Policy. Any personal use of Computing Resources must not result in
significant added costs, disruption of business processes, or any other
disadvantage to the Company.
Employees can unknowingly compromise the security and integrity of Company
information and Computing Resources through the improper use of such resources.
Employees are accountable for their use of Computing Resources and must ensure
that they are familiar with and abide by relevant security restrictions and
information technology policies of the Company.
A. PERSONAL USE
Computing Resources are provided for the conduct of Company business. However,
personal use by employees, including use of the Internet and electronic mail,
may occur within the following guidelines:
- It is of reasonable duration and frequency;
- It does not interfere with Company business, an employee's or
co-worker's performance or assigned duties, or the performance of the
employee's organization;
- It does not cause the Company to incur additional costs;
- It is not related to any illegal activity or the conduct of an outside
business;
- It would not cause embarrassment to the Company.
G-10
Issues concerning appropriate personal use of Computing Resources within a
particular business or work group are to be resolved by the management of that
organization in conjunction with Human Resources
B. SECURITY
All employees are responsible for ensuring that:
- Computing Resources remain on Company property, unless use in another
location has been authorized by local management;
- Measures are taken to protect Company sensitive and/or proprietary
information resident on Computing Resources from unauthorized access,
use or removal.
- Personal use of Computing Resources, including the downloading of
software or other use of the Internet, does not compromise the security
or integrity of Company information or software.
C. INTERNET
1. Transmitting Data
The Internet is a public network; users cannot expect that data
transmitted over the Internet will be kept private. Company sensitive
and/or proprietary information must not be transmitted over the
Internet unless it is first encrypted. Employees should keep in mind
that all messages transmitted over the Internet from Computing
Resources bear a Company address and may be attributed to the Company.
2. Downloading Software
Use of software obtained from the Internet or other on-line sources may
expose the Company to significant legal liability, unless the user
takes measures to ensure that the vendor has good title, and pertinent
licensing provisions permit the user's intended use. Downloading of
such software may also compromise the security and integrity of
Computing Resources. For these reasons, employees may download or use
software derived from the Internet or other on-line sources only in
accordance with guidelines established by management and approved by
Information Technology. If there is any question as to the propriety of
such downloading or use, employees should seek prior approval of
management. In no event, may such software be incorporated, either
directly or in derivative form, in a product of or provision of service
by the Company, unless the Company has first entered into a written
license agreement with the software vendor pursuant to Corporate
Policy.
D. ELECTRONIC MAIL
E-mail messages are stored on the sender's and recipient's local hard drives
and/or mail servers and may be recorded on back-up tapes by the Company. In
order to reduce the unnecessary proliferation of e-mail, employees should limit
their dissemination of e-mail to those persons who have a need to know and
should delete e-mail messages as soon as practicable after receipt.
Local information systems personnel shall ensure that back-up tapes made by the
Company of e-mail system repositories on Company networks are retained for no
more than seven days.
E. MONITORING
The Company reserves the right to monitor any use of Computing Resources,
whether business or personal, and to inspect, copy or delete any message or file
transmitted, received or stored
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on Computing Resources, at any time with or without notice to users. Computer
Security shall coordinate and approve all such monitoring requests.
F. OWNERSHIP OF DATA
All data, which is generated by means of Computing Resources for business
purposes, is the property of the Company and may be used by the Company without
limitation. Data may not be copyrighted, patented, leased or sold by individuals
or otherwise used for personal gain.
G-12
INFORMATION AND COMMUNICATIONS SECURITY
PURPOSE
The purpose of this policy is to ensure that the Corporation's computing
resources and associated information are adequately protected by establishing
mandatory internal controls.
CONTENTS
A. SCOPE
B. PHYSICAL SECURITY
C. INFORMATION SECURITY
D. NETWORK SECURITY
E. DISASTER RECOVERY AND BUSINESS RESUMPTION AND PROBLEM ESCALATION
POLICY
It is the policy of the Corporation that adequate protection be provided to
ensure confidentiality, integrity, and availability of the company's computing
resources and related information.
A. SCOPE
Controls specified in this policy are applicable to all computing resources
owned or operated in behalf of all locations and subsidiaries of Conexant to
process, store, and/or transmit information, wherein:
- There is a risk that Company assets could be misappropriated;
- There is a risk that privacy legislation could be violated;
- The loss of such a system or related data could impair the ongoing
operations of the company.
All persons employed by the company are required to adhere to the principles set
forth in this section. Company computing resources shall be implemented so as to
safeguard Company Sensitive and/or proprietary Information.
B. PHYSICAL SECURITY
In order to limit accidental or intentional damage to company computing
resources and information, physical access to computing resources shall be
controlled and environmental precautions provided. In the least, password
protected screen savers will be utilized in the period of no more than ten (10)
minutes. System components; such as file servers, gateways, bridges, system
consoles, concentrators, wiring cabinets, etc. shall be located in secured
areas. Uninterruptible power sources and surge suppressers shall be provided for
critical systems to provide for their protection and for the protection of the
information they contain. Use of diagnostic probe equipment (software and
hardware) such as protocol analyzers and sniffers is restricted to authorized
personnel only.
C. INFORMATION SECURITY
User identification and authentication access controls are required by each
person using company resources to ensure that only authorized persons can use
appropriate company computer resources. Access shall be controlled by unique
log-on ID's to identify users to the system, and user authentication mechanisms
(minimum of a password), which verify that users are who they say they are.
Management of authentication and password strength shall be adequate to protect
information resources of the systems being accessed. All system installations
and subsequent changes to multi-user or critical (non-personal) computing
systems or files may be performed only by authorized personnel. Changes to such
equipment, data, and software shall be processed through established change
control procedures.
G-13
Computing resources accessible from non-company locations shall provide for logs
and audit trails to detect and report unauthorized access attempts. Such logs
and reports shall be preserved for an appropriate time period (minimum of
fourteen (14) days) during which they shall be protected from unauthorized
access. Logs of systems that are particularly critical or sensitive (such as
firewall systems) shall be reviewed on a regular basis.
Portable computers used outside of company facilities shall be equipped with
access protection mechanism in the form of bios password to prevent access to
the system's data or software by unauthorized persons in the event that it is
lost or stolen.
Conexant shall take adequate measures to protect against the introduction and
use of harmful or malicious software on there computing resources.
All implementations of encryption within the company shall utilize encryption
key recovery schemes to ensure company access to data resident on the system in
the event that the holders of the encryption keys become unavailable.
D. NETWORK SECURITY
All company locations shall take adequate measures to prevent unauthorized
network and dial-in access to company computing resources. Internal, trusted
company network resources shall be segregated and protected from intrusion from
external, untrusted networks. Access of internal, trusted computing resources
from non-company, untrusted computing resources must be strongly authenticated.
No system information shall be provided before users authenticate (e.g., supply
a password). While logging into a company network, users shall receive a warning
notice that the system is available only to authorized users and that the
company reserves the right to monitor activities of all users who log on.
E.DISASTER RECOVERY, BUSINESS RESUMPTION AND PROBLEM ESCALATION
All company locations shall establish a disaster recovery and business
resumption plan for their computing resources and they shall test those plans on
a regular basis. The plans shall provide for the timely recovery of
business-critical data generated on company computing resources. The plan shall
provide for equipping the business with alternate or backup critical computing
resources in the event that existing equipment becomes unavailable or unusable.
Each business shall establish problem escalation plans to be executed in the
event of security incidents. Serious incidents which compromise company
sensitive information or the security of internal trusted networks should be
reported to the business unit Corporate Chief Security Information Director.
G-14
CONEXANT INFORMATION SECURITY BASELINE
TABLE OF CONTENTS
- PURPOSE
- SCOPE
- AUTHORIZATIONS, AGREEMENTS AND CONTRACTS
- AUDITS, REVIEWS AND RISK ASSESSMENTS
- SECURITY ADMINISTRATION
- PHYSICAL SECURITY
- NETWORK/COMMUNICATIONS SECURITY
- USER IDENTIFICATION AND AUTHORIZATION
- COMPUTER AND NETWORK SYSTEM SECURITY
- ENGINEERING LABS
- SECURITY AUDIT LOGS AND MONITORING
- PROTECTION FROM MALICIOUS SOFTWARE
- BUSINESS SYSTEMS DEVELOPMENT AND ACQUISITION
- OPERATIONS
- DISASTER RECOVERY AND BUSINESS CONTINUITY
For comments and information contact Milena Hlavaty (VPN 483-6209).
PURPOSE
The purpose of this security baseline is to establish specific guidance to
protect Conexant's networks, computers, workstations, file servers, and the
information stored on them from unauthorized access, malicious action or
inadvertent disclosures. This baseline establishes the fundamental mandatory
controls and procedural considerations that are necessary to achieve compliance
with Computer Security IT policy.
SCOPE
This Information Security Baseline addresses all configurations of one or more
networked microcomputers and/or workstations. It includes the utilization of
remote and local desktop, laptop, or notebook computers, host computers,
communication servers, remote network switches, file application servers,
routers, network communication lines, remote access devices, interconnected
local area networks (LANs) or wide area networks (WANs) which are used to
transmit, store or process information that is sensitive or critical to
Conexant. At the same time, this baseline is not intended to be an exhaustive
list of Information security imperatives and recommendations, but rather a
minimum requirement.
In those instances when exceptions to this baseline arise, they shall be
documented and approved in a deviation process to be reviewed annually by the
Corporate Chief Security
G-15
Information Director. Records of the exceptions/deviations from this baseline
shall be stored appropriately during the period of the deviation for one year.
The security measures documented in this baseline shall be applied in a manner
that is consistent with the level of sensitivity of the information to Conexant.
The degree to which internal controls are established will vary according to
management's assessment of Conexant's potential exposure to theft, destruction,
alteration, or misuse of Conexant computing resources. In that regard, the
directives specified in this baseline are in the form of:
1. "shall" statements - which are "control" requirements that must be
adhered to by every Conexant location.
AUTHORIZATIONS, AGREEMENTS AND CONTRACTS
To best assure that the key hardware, software and service elements that make up
Conexant's information security infrastructure are compatible with the
guidelines identified in this baseline, contractual provisions need to be
included in the selection and acquisition of these elements. Likewise, all
services provided by contract laborers shall be governed by contract language
that specifies the appropriate use of Conexant's computing resources and the
consequences of misuse.
1. Contractual provisions and compliance procedures with vendors shall be
established regarding the security aspects of their products and
services as applicable.
2. Service agreements shall include ownership, confidentiality, and
nondisclosure statements.
3. Formal contractual provisions with contractors shall be established to
ensure compliance with enterprise security policies and standards.
4. All information technology users shall be required to read and
acknowledge the information security policies and responsibilities.
5. The appropriate hiring organization shall be responsible for enforcing
the above statements.
G-16
AUDITS, REVIEWS AND RISK ASSESSMENTS
In order for security measures to be effective, periodic reviews need to be
performed to: a) identify deficiencies of any implemented security measures, b)
identify discrepancies between documented directives and implemented security
measures, c) assess potential risks of exposure to the business and the
corporation, and d) develop corrective actions.
1. Conexant shall perform annual (minimum period) self-assessments of
information security practices and mechanisms employing qualitative and
quantitative measurements.
2. Conexant shall develop a plan of corrective actions to address
discrepancies and deficiencies discovered by security reviews and
audits.
3. Reports of security discrepancies, deficiencies and corrective actions
shall be submitted to Conexant's CIO and the Corporate Chief Security
Information Director.
4. Conexant shall retain records of all IT audit reports and associated
documentation for a period of five years.
SECURITY ADMINISTRATION
In order for information security measures to be applied effectively across
Conexant, each organization with system administration responsibilities shall
establish accountability for the administration of appropriate security
mechanisms. They shall also establish communication channels the Corporate Chief
Security Information Director
1. Information Security efforts for each Conexant location shall be
overseen and coordinated by the business unit's primary information
security officer, who will act under the direction of the business's IT
Executive and the corporate Chief Information Security Officer.
2. A problem escalation procedure shall be established and maintained that
addresses attacks on Conexant's business critical computing resources
(e.g. network attacks or intrusions, virus infestations, malicious
behavior and natural disaster).
3. In the event encryption keys get lost or become otherwise unavailable,
businesses shall establish "Key" recovery procedures to aid in the
recovery of encrypted sensitive or critical Conexant data.
PHYSICAL SECURITY
In order to limit accidental or intentional damage resulting from unauthorized
use or access, or prevent damage resulting from a natural disaster - physical
access to critical computing resources will be controlled, and effective
environmental precautions established.
1. Critical computing resources, such as file servers, remote access
hardware, gateways, bridges, routers, switches, and their consoles,
etc. shall be secured using physical security devices, and/or placement
in controlled access areas.
2. Critical networked systems shall be documented to include the inventory
and logical location of network components, the LAN operating system
including version, release, and maintenance levels.
3. All wiring cabinets shall be physically secured to prevent access by
unauthorized individuals.
G-17
4. Guidelines for the use and control of backup media shall be developed
for those occasions when that media is outside company facilities or
the company's direct control.
5. Removable media containing sensitive or critical information shall be
secured when not in use (e.g., using locked containers or cabinets).
6. Surge suppressers or voltage regulators and uninterruptible power
sources shall be used to protect business critical computing resources
(hardware components) against power fluctuations and against the loss
of data due to power interruptions.
7. Shutdown and recovery procedures shall be established for business
critical computing resources.
8. Business critical computing resources shall be located in facilities
equipped with heat/smoke/water detection and fire
protection/suppression mechanisms.
9. Business critical computing resources shall be adequately protected
from moisture, falling debris and toppling over, in those areas
susceptible to natural disturbances such as earthquakes, tornadoes,
hurricanes, floods and blizzards.
NETWORK/COMMUNICATIONS SECURITY
1. The use of system attack, probing, or sniffing tools such as (but not
limited to) port scanning software, network sniffers, password
sniffers, etc. is prohibited except where authorized individuals are
allowed by the Corporate Chief Security Information Director to use
them in the performance of their job responsibilities.
2. Access to critical network components shall be limited to specifically
designated personnel in accordance with their job responsibilities.
3. Logon to Conexant systems and networks from non-Conexant computing
locations shall be required to use strong authentication.
4. Administration of network devices via remote access shall require
strong authentication where feasible or modem enforcing log on ID and
password.
5. Warning banners with proprietary and monitoring notices shall be
displayed at login time for a reasonable amount of time of no less than
eight seconds or until acknowledged by the user.
6. Firewalls, segmentation, and routing controls shall be used to protect
against connections to untrusted networks.
7. A system of formal approval and record keeping shall be used for the
assignment of communication lines for modems and fax machines.
8. Authorized communication servers and/or modem pools shall be used to
enable remote user dial-in connections. In bound dial in on modem
connections are not allowed on individual user PC or workstations.
9. Sensitive information shall be encrypted prior to transmission over
external or untrusted networks.
G-18
10. Network operating systems that support business critical systems shall
be kept current (vendor supported) to the extent that it is
operationally feasible.
11. E-mail delivered to systems within Conexant's trusted networks may not
be automatically forwarded across untrusted networks or to systems
residing on untrusted networks.
12. Unauthorized connection of an operating system to the network that
allows admin/root privileges to the network shall be denied access.
USER IDENTIFICATION AND AUTHENTICATION
System access controls are required in order to ensure that only authorized
individuals use the system resources necessary to perform their job duties.
Access is controlled by a secure LogonID.
1. Unique user identifications (LogonIDs) shall be established for each
individual user and for automated processes (such as a time-scheduled
job or daemon acting on behalf of users) that utilize Conexant
computing resources.
2. The shared use of LogonIDs to systems and applications is prohibited
except in cases which are specifically approved by the principal
business information security officer.
3. Users of Conexant computing resources shall be registered and assigned
a unique LogonID and an obscure, temporary password that is a minimum
of six characters. Network and/or Operating System security mechanisms
shall be implemented which require users of new LogonIDs to change
their password when logging on to Conexant computing resources for the
first time where technically feasible.
4. Each user's identity shall be authenticated by the system in a manner
consistent with the protection requirements set forth in this baseline.
For remote access, this means that users shall use strong
authentication. For Local access, users may use static passwords.
5. Static passwords, when used, are for local authentication and shall be
a minimum of 6 characters in length
6. Guest user accounts shall not be permitted.
7. Password files shall be protected with appropriate access controls and
stored only in encrypted format.
8. A network session shall be terminated and a new network session will be
initiated after a specified number of unsuccessful logon attempts (not
to exceed 10). After a maximum of 10 unsuccessful logon attempts within
a 60 minute period, the system shall force an automatic session
termination, whereby the LogonID will be suspended. A log file of
unsuccessful logon attempts will be maintained and reviewed daily.
9. Information regarding limits and actions taken on unsuccessful log-on
attempts shall not be provided to users attempting to log on to
Conexant computing resources.
10. An authentication token device shall only be assigned to and used by a
single user. Authentication token devices shall not be shared.
G-19
11. The assignment of authentication token devices shall be recorded and
maintained in a secure inventory system.
12. All users of authentication token devices shall return the devices upon
a) termination of employment, or b) reassignment to functions not
requiring token usage.
13. All LogonIDs of personnel who leave the employ of the company shall be
disabled within 48 hours of termination.
14. Default system passwords, supplied by the vendors, shall be changed
immediately after system installation. Default system user accounts,
supplied by the vendors, shall be eliminated or disabled.
15. The use of LogonIDs by non-Conexant users shall be re-affirmed upon
contract expiration.
16. LogonIDs shall be removed from all systems after 180 days of non-use.
17. Passwords shall not be echoed during the login process.
18. Passwords shall not be written down.
19. Access privileges for system and security administrators shall be
reviewed at least annually to ensure the access is required and
necessary.
COMPUTER AND NETWORK SYSTEM SECURITY
1. The Information Security organization shall have oversight authority
for how security and passwords are managed in privileged (admin/root)
accounts on multi-user computing resources.
2. All installations and subsequent changes to critical or multi-user
systems or network devices shall be performed only by authorized
individuals.
3. Access and procedural controls shall be implemented to limit the use of
network/computer utility software and diagnostic tools to trained
support personnel, in accordance with their job responsibilities.
4. Change control procedures shall be established and implemented which
govern all changes to Network and system configurations.
5. A warning banner shall be displayed prior to network login. The wording
of the banner shall comply with the wording recommended by Corporate
Legal Counsel, as follows: "This computer system is the property of
Conexant. Unauthorized access and improper use is prohibited. Any
activity on the system is subject to monitoring by the Company at any
time. Anyone who uses the system consents to such monitoring and agrees
that the Company may use the results of such monitoring without
limitation."
6. Personal computers or desktops with modems shall not be connected to
phone lines for inbound calls.
7. Sensitive information shall not be sent over unsecured fax machines.
Communication servers or modem pools shall be used in lieu of
individual workstation dial-up access ports.
G-20
8. Dial-up access telephone numbers, authorization codes, LogonIDs,
passwords, shall be protected from unauthorized disclosure.
9. Systems that are not physically secured and that are left logged in
unattended in excess of ten minutes require workstation lockdown
utilities or screen savers that incorporate passwords. Lock down
utilities and secure screen savers shall be approved by local
information security officers.
10. The Information Security organization shall directly oversee all
systems that reside on the perimeter networks.
ENGINEERING LABS
1. Labs with connections to untrusted networks or dial inbound remote
access capability shall be protected by a firewall.
SECURITY AUDIT LOGS AND MONITORING
1. Multi-user systems shall be equipped with security audit log features.
2. All significant security-relevant events, such as unsuccessful access
attempts, shall be recorded on security audit logs.
3. Audit trails, obtained from a security audit log records, shall
identify source/location of unauthorized attempts, LogonID, date/time
of event, and target system or requested service where feasible.
4. Security audit log file information (especially violation reports)
shall be reviewed on a daily basis.
5. Security audit log records shall be retained for at least 7 days.
6. Monitoring of systems, networks or applications may be performed only
by personnel that have been duly authorized by the company.
PROTECTION FROM MALICIOUS SOFTWARE
1. Virus-checking software shall be installed on all desktop and notebook
PCs, as well as all file servers, network drives, and email servers
where technically feasible. The anti-virus files used by virus-checking
software shall be updated frequently.
2. Conexant shall establish well defined and publicized mechanisms for
distributing, installing and maintaining virus-checking software across
all the locations.
3. System administrators, vendors, service technicians, and users shall
use virus-checking software to scan all software media and files prior
to loading them onto Conexant computing resources where technically
feasible.
4. Original application and operating system software media shall be
write-protected (whenever possible) and stored in a secure manner.
5. Emergency response procedures, including setting up an emergency
response team, shall be established for dealing with malicious software
incidents.
G-21
SYSTEMS DEVELOPMENT AND ACQUISITION
1. Software libraries shall be established for storing and securing all
files associated with a business unit's application, systems and
utility software.
2. Separate software libraries shall be established in support of the
business unit's development, test and production environments.
3. Access controls, including activity logging, shall be established for
the business unit's development, test and production software
libraries, to ensure that only authorized personnel have access to the
libraries and that they only have access to those components necessary
to perform their job assignments.
4. Procedures shall be established to ensure that software changes are
made in accordance with business requirements, and are satisfactorily
tested prior to promoting them into production from development/test.
5. Procedures shall be established to ensure that all business system
software configurations (how the technical components fit together) are
adequately documented, and that software versions as well as
source-code to executable-code continuity can be verified.
6. Change control procedures shall be established and implemented which
govern all hardware, software and services changes to ensure they are
properly authorized and documented, and that appropriate security
controls are not compromised.
7. Security controls and mechanisms which are utilized by all applications
and systems software shall be documented and maintained.
OPERATIONS
1. Procedures shall be established to control the disposition of printed
output that contains sensitive information.
2. Printed output containing sensitive information shall be marked with
appropriate classification and proprietary notices.
3. Conexant data shall be backed up on a regular basis, depending upon the
criticality of the data, the frequency of change, the utilization of
raid and disk mirroring techniques and the probability of data loss or
damage.
4. Critical system configuration and data files (those required to recover
the operating system) shall be backed up - at least weekly. The
frequency of backups will be affected by the frequency of systems
changes and the availability of systems installation software on
high-speed storage media (i.e., CDs or hard disks).
5. At least two generations of backup files for all critical business
systems data shall be maintained at a secure storage location that is
significantly removed from the data's primary location.
6. Email backup files, stored both on and off site, shall be retained for
no more than 7 days.
G-22
7. Sensitive data stored on workstation or file server hard drive(s) shall
be erased or purged using complete erasure techniques prior to the
transfer of ownership of the workstation or server, scrapping, or
off-site maintenance.
DISASTER RECOVERY AND BUSINESS CONTINUITY
1. Conexant shall develop disaster recovery and business continuation
plans in accordance with corporate guidelines.
2. Disaster recovery and business continuation plans shall be documented
and submitted to the EC.
3. Conexant shall test disaster recovery and business continuation plans
on an annual basis.
MERGERS AND ACQUISITIONS:
- - Compliance with Conexant's IT Security Policy and IT Security Baseline
shall be completed within a reasonable amount of time, not to exceed 90
days from the finalization of the acquisition. Acquired domain names shall
remain active for the purposes of receiving email and web site access for a
period not to exceed one year from the finalization of the acquisition.
G-23
CONNECTIONS FROM/TO UNTRUSTED NETWORKS BASELINE
TABLE OF CONTENTS
1.0 INTRODUCTION
2.0 PURPOSE
3.0 SCOPE
4.0 RELEVANT POLICIES, BASELINES AND REFERENCES
5.0 ACCOUNTABILITIES
6.0 FIREWALL ARCHITECTURE
6.1 FILTERING ROUTERS
6.2 PERIMETER NETWORKS
7.0 PROTOCOL CONTROLS
7.1 BGP
7.2 DNS
7.3 FINGER
7.4 FTP COMMAND
7.5 FTP DATA
7.6 HTTP
7.7 ICMP
7.8 LP
7.9 MICROSOFT SQL
7.10 MICROSOFT NETMEETING
7.11 NFS
7.12 NNTP
7.13 NTP
7.14 OPENWINDOWS
7.15 REALAUDIO
7.16 REXEC
7.17 RLOGIN
7.18 RSH
7.19 SMTP
7.20 SQL*NET
7.21 SSL FOR ENCRYPTED HTTP
7.22 TALK
7.23 TELNET
7.24 UNSPECIFIED IP PACKETS
7.25 UNSPECIFIED UDP PACKETS
7.26 X11
8.0 AUTHENTICATION
9.0 VIRTUAL PRIVATE NETWORK
10.0 INTERNET INFORMATION SERVERS
10.1 INFORMATION SERVER GUIDELINES
11.0 SCREENING OF MALICIOUS SOFTWARE
12.0 EXTERNAL SERVICE PROVIDERS
13.0 REQUESTS FOR WAIVERS AND BASELINE CHANGES
For comments and information contact Milena Hlavaty (VPN 483-6209).
G-24
1.0 INTRODUCTION
The Internet is a global untrusted network that uses a common protocol, which
connects devices and users around the world. The Internet is a public place and
unprotected communications are not private, nor can their integrity and
confidentiality be guaranteed. Conexant shall take all requisite steps to
safeguard their trusted networks and adhere to the rules and guidelines set
forth in this baseline.
2.0 PURPOSE
The purpose of this baseline is to reduce to acceptable levels the risk entailed
in connecting a trusted Conexant network to the Internet or other untrusted
networks. This baseline sets the standards for securing connections between
Conexant's internal trusted TCP/IP networks and external, untrusted networks,
such as the Internet. This baseline prescribes specific security measures and
requirements for network and system administration, and the configuration,
operation and service use restrictions between untrusted networks and Conexant's
trusted networks. All persons are responsible and accountable for complying with
the network security safeguards established herein.
3.0 SCOPE
The standards and guidelines set forth in this document apply to all connections
that are made to the Internet or any other untrusted network from any Conexant
location.
4.0 RELEVANT POLICIES, BASELINES, AND REFERENCES
Information and Communications Security
Conexant Information Security Baseline
Safeguarding Company Sensitive Information
Acquisition, Dissemination, and Use of Computer Software Owned by Another
Use and Monitoring of Computing Resources
5.0 ACCOUNTABILITIES
The safety and security of Conexant connection to untrusted networks is the
responsibility of Conexant's CIO. Corporate Chief Security Information Director
has oversight responsibilities for all information security activities at the
business, including connections to untrusted networks. Network security
violations of the safeguards described within this baseline must be brought to
the immediate attention of the Corporate Chief Security Information Director.
Requests for firewall changes must be reviewed and approved by corporate
firewall administration to ensure compliance to this baseline. Probing,
scanning, and other activities that may be considered hostile or event
generating shall be performed only with the concurrence of corporate network
security administration
Breaches of Conexant network defenses from untrusted networks must be brought
to the immediate attention of the Corporate Chief Security Information Director
and the CIO. Unauthorized intrusions into Conexant's trusted networks shall be
reviewed by the security incident review board who will inform the CIO.
6.0 FIREWALL ARCHITECTURE
All Conexant connections to untrusted networks shall be secured with a firewall.
Conexant firewalls shall be secured by utilizing industry best practices. Strict
change control, implementation of strong authentication for remote
administration, regular internal audits, adequate physical security,
implementation testing, regular backups, and security incident response
procedures are illustrative of industry best practices for firewall
administration. To the extent feasible, firewall administrators shall maintain
the most current version of firewall devices/software in order to take advantage
of product and security enhancements. Internal, trusted subnets may only contain
devices that utilize IP addresses assigned by the Global Support Group in IT.
Conexant corporate shall act as the coordination point for documenting the RFC
private addresses in use across the company.
G-25
6.1 FILTERING ROUTERS
An important component of the firewall is the filtering router placed between
untrusted networks and the perimeter network. This router shields the perimeter
network against dangerous or unwanted untrusted network traffic (see Figure 1
below). Such routers will be referred to hereafter in this document as
'external routers'. External routers shall be configured to only permit
administrative telnet access from a specific, limited number of administrative
hosts. Remote access by administrators to external routers shall require strong
authentication. In those cases where external routers employ fixed or static
password technology, that password file must be encrypted.
6.2 PERIMETER NETWORKS
Perimeter networks logically reside between the company's external routers and
firewalls. They are to be used to host computing resources that must directly
interface with public (untrusted, non-Conexant) systems. Computing resources
resident on perimeter networks must be "security hardened" by removal of all
non-essential programs and services and by conscientious application of
security patches and fixes on a regular basis. Access to trusted Conexant
networks from a perimeter network may only be permitted via a firewall. There
shall be a perimeter network at virtually every interface between Conexant's
trusted networks and an untrusted network.
7.0 PROTOCOL CONTROLS
Conexant businesses shall implement the controls presented in this section into
their firewalls. Applicable gateway and external router controls for each
protocol are presented. All services in the direction of from less secured
networks to more secured networks which are not specifically permitted in the
controls set forth below shall be denied at company firewalls. Documentation of
a specific protocol in section 7 below (whether specifically denied or allowed)
signifies that it has undergone scrutiny and has been dispositioned as stated.
All traffic from the internal interface of the firewall shall be allowed to
pass through the external router.
7.1 BGP
Guidelines:
From Internet to perimeter network: Allow through external router
From perimeter network to Internet: Allow through external router
From perimeter network to Internal: Secure at firewall
From internal to perimeter network: Secure at firewall
7.2 DNS
Protocol: UDP - TCP
Server Port: 53
Client Port: >=1023
Guidelines:
From Internet to perimeter network: Allow through external router
Secure at firewall
From perimeter network to Internet: Allow from external DNS servers
From perimeter network to internal: Secure at firewall
From internal to perimeter network: Allow through firewall
G-26
Implementation guidelines:
Zone transfers request will be permitted from known hosts. It is secured at the
DNS servers. Conexant networks shall employ an external and internal DNS
implementation. All Conexant entities with an Internet connection shall
establish an external DNS on their perimeter network, and only those hosts and
devices on Conexant's perimeter networks shall be visible outside the Conexant
domain. The public shall not be directly given address information for
Conexant's internal, trusted network resources. Internal DNS's shall be
maintained that contain all of the hosts and devices on Conexant's internal
trusted networks and information on how to access the external DNS.
7.3 FINGER
Protocol: TCP
Server Port: 79
Client Port: >=1023
Guidelines:
From Internet to perimeter network: Block at external router
From perimeter network to Internet: Block at external router
From perimeter network to internal: Secure at firewall
From internal to perimeter network: Allow through firewall
7.4 FTP COMMAND
Protocol: TCP
Server Port: 21
Client Port: >= 1023
Guidelines:
From Internet to perimeter network: Allow at external router
Secure at firewall
From perimeter network to Internet: Allow at external router
and firewall
From perimeter network to internal: Secure at firewall
From internal to perimeter network: Allow through firewall
7.5 FTP DATA
Protocol: TCP
Server Port: 20
Client Port: >=1023
Guidelines:
From Internet to perimeter network: Secure at firewall
From perimeter network to Internet: Allow through firewall
From perimeter network to internal: Secure at firewall
From internal to perimeter network: Allow through firewall
G-27
7.6 HTTP
Protocol: TCP
Server Port: 80
Client Port: >=1023
Guidelines:
From Internet to perimeter network: Allow at external router
Secure at firewall
From perimeter network to Internet: Allow at external router and
firewall
From perimeter network to internal: Secure at firewall
From internal to perimeter network: Allow through firewall
7.7 ICMP
Protocol: ICMP
Guidelines:
Allow the following types through external router: 0 - Echo-reply
8 - Echo-request
11 - Time-xceeded
12 - Parameter-problem
Secure at firewall
From perimeter network to internal: Secure at firewall
From internal to perimeter network: Secure at firewall
7.8 LP
Protocol: TCP
Server Port: 515
Guidelines:
From Internet to perimeter network: Allow at external router
Secure at firewall
From perimeter network to Internet: Allow at external router
and firewall
From perimeter network to internal: Secure at firewall
From internal to perimeter network: Allow through firewall
7.9 MICROSOFT SQL
Protocol: Tcp
Server Port: 1612
Client Port: >=1023
Guidelines:
From Internet to perimeter network: Block at external router
From perimeter network to Internet: Allow at external router and
firewall
From perimeter network to internal: Secure at firewall
From internal to perimeter network: Allow through firewall
G-28
7.10 MICROSOFT NETMEETING
Protocol: TCP and UDP
Ports: 389, 522, 1503, 1720,
1731, and various dynamic
Guidelines:
From Internet to perimeter network: Block at external router
From perimeter network to Internet: Block at external router
From perimeter network to internal: Secure at firewall
From internal to perimeter network: Allow through firewall
7.11 NFS
Protocol: TCP
Server Port: 2049
Guidelines:
From Internet to perimeter network: Block at external router
From perimeter network to Internet: Block at external router
From perimeter network to internal: Secure at firewall
From internal to perimeter network: Allow through firewall
7.12 NNTP
Protocol: TCP
Server Port: 119
Guidelines:
From Internet to perimeter network: Allow through external router
Secure at firewall
From perimeter network to Internet: Allow through external router
and firewall
From perimeter network to internal: Secure at firewall
From internal to perimeter network: Allow through firewall
Implementation guideline: The nntp server must be
placed on the perimeter
network and adequately
security 'hardened'. Internal
newsgroups should utilize
Lotus Notes servers.
7.13 NTP
Protocol: UDP
Client Port: 123
Guidelines:
From Internet to perimeter network: Block at external router
From perimeter network to Internet: Block at external router
From perimeter network to internal: Secure at firewall
From internal to perimeter network: Secure at firewall
Implementation guideline: Network time shall be
obtained from internal, trusted
G-29
ntp servers.
7.14 OPEN WINDOWS
Protocol: TCP
Server Port: 2000 - 2FFF
Guidelines:
Same as X11
7.15 REAL AUDIO
Guidelines:
From Internet to perimeter network: Allow through external router
Secure at firewall
From perimeter network to Internet: Allow through external router
and firewall
From perimeter network to internal: Secure at firewall
From internal to perimeter network: Allow through firewall
Implementation guidelines: Allow port 7070 only
7.16 REXEC
Protocol: TCP
Server Port: 512
Guidelines:
From Internet to perimeter network: Block at external router
From perimeter network to Internet: Allow at external router
Secure at firewall
From perimeter network to internal: Secure at firewall
From internal to perimeter network: Allow through firewall
7.17 RLOGIN
Protocol: TCP
Server Port: 513
Guidelines:
From Internet to perimeter network: Block at external router
From perimeter network to Internet: Allow at external router
Secure at firewall
From perimeter network to internal: Secure at firewall
From internal to perimeter network: Allow through firewall
7.18 RSH
Protocol: TCP
Server Port: 514
Guidelines:
From Internet to perimeter network: Block at external router
From perimeter network to Internet: Allow at external router
Secure at firewall
From perimeter network to internal: Secure at firewall
From internal to perimeter network: Allow through firewall
G-30
7.19 SMTP
Protocol: TCP
Server Port: 25
Client Port: >=1023
Guidelines:
From Internet to perimeter network: Allow at external router. E-
mail only forwarded to firewall
From perimeter network to Internet: Allow at external router
Secure at firewall
From perimeter network to internal: Secure at firewall
From internal to perimeter network: Allowed through firewall.
7.20 SQL*NET
Protocol: TCP
Server Port: 1525
Client Port: >=1023
Guidelines:
From Internet to perimeter network: Block at external router
From perimeter network to Internet: Allow through external router
Secure at firewall
From perimeter network to internal: Secure at firewall
From internal to perimeter network: Allow through firewall
Implementation guidelinek: The SQL*Net application
proxy can be used to allow
internal Oracle clients to
access external database
servers. The proxy can
also be used to allow a
perimeter web server
running Oracle's Web
Request Broker to send
SQL*Net transactions to
a backend Oracle
database server on the
internal network.
7.21 SSL FOR ENCRYPTED HTTP
Protocol: TCP
Server Port: 443
Guidelines:
From Internet to perimeter network: Allow through external router
Secure at firewall
From perimeter network to Internet: Allow through external router
Secure at firewall
From perimeter network to internal: Secure at firewall
From internal to perimeter network: Allow through firewall
Implementation guideline: Although SSL is not limited to
G-31
the HTTP protocol, only HTTP
is allowed to pass in SSL.
7.22 TALK
Protocol: UDP
Server Port: 517,518
Client Port: >=1023
Guidelines:
From Internet to perimeter network: Block at external router
From perimeter network to Internet: Block at external router
From perimeter network to Internal: Secure at firewall
From internal to perimeter network: Secure at firewall
7.23 TELNET
Protocol: TCP
Server Port: 23
Client Port: >=1023
Guidelines:
From Internet to perimeter network: Allow to application gateway
at external router
Secure at firewall
From perimeter network to Internet:
Allow through firewall
From perimeter network to internal: Secure at firewall
From internal to perimeter network: Allow through firewall
7.24 UNSPECIFIED IP PACKETS
Protocol: IP
Ports: All TCP and UDP
Guidelines:
From Internet to perimeter network: Allow established TCP at
external router
Secure at firewall
From perimeter network to Internet: Allow at external router
and firewall
From perimeter network to internal: Secure at firewall
Additional guidelines: Incoming and outgoing
spoofing rules for the
Conexant and RFC 1918
private addresses shall be
applied. Packets having the
source or destination of
broadcast shall be blocked.
7.25 UNSPECIFIED UDP PACKETS
Protocol: UDP
Guidelines:
G-32
From Internet to perimeter network: Block at external router
From perimeter network to Internet: Will fail due to blocked inbound
From perimeter network to internal: Secure at firewall
7.26 X11
Protocol: TCP
Server Port: 6000 - 6063
Guidelines:
From Internet to perimeter network: Secure at firewall
From perimeter network to Internet: Allow through firewall
From perimeter network to internal: Secure at firewall
From internal to perimeter network: Allow through firewall
Implementation Guidelines: Internal X servers: Allow only
with xforward or other proxy.
The window manager must be
an internal client.
External X servers: Allow
running internal X clients;
access to machine that has X
client via telnet only.
8.0 AUTHENTICATION
Router administrators shall ensure that default privileged command passwords and
console and virtual terminal line access passwords are changed or assigned
immediately upon installation, and changed thereafter at 90 day intervals. These
passwords shall also be changed within 24 hours whenever router administrators
are terminated or transferred.
Dial-in access by administrators to routers and other sensitive network devices
shall require strong authentication.
Systems that are connected to Conexant's internal trusted networks and which
can be accessed from external networks (including dial-in) must implement
strong authentication mechanisms and comply with applicable Conexant host
security baselines.
9.0 VIRTUAL PRIVATE NETWORK
A VPN shall be required for connectivity between Conexant trusted networks or
Conexant SOHO users when traversing an untrusted network.
10.0 INTERNET INFORMATION SERVERS
Servers such as ftp and World Wide Web have been established throughout Conexant
for rapid dissemination and central updating of public and private information.
These information servers provide fast and convenient information to employees,
customers, suppliers and the general public.
Those who establish such servers must safeguard their security in order to
protect against unauthorized disclosure of sensitive and competitive
information, as well as ensure the integrity of information which they contain
10.1 INFORMATION SERVER GUIDELINES
1. Information available to an untrusted network shall be hosted on the
perimeter networks. Access to company sensitive information from an
UNTRUSTED network to a perimeter network shall require authentication
technologies. Connectivity from the perimeter network to information
within the TRUSTED network shall require strong authentication.
G-33
2. Servers on the perimeter networks shall run with as little privilege as
necessary. If at all possible, server software must not run as "root,"
or "administrator" thus limiting possible damage if an intruder
discovers vulnerability.
3. System administrators shall closely monitor the integrity of the system
and the information to be distributed. Whenever feasible, system
administrators shall run the most secured version of the information
server software which is free of known bugs or vulnerabilities.
11.0 SCREENING OF MALICIOUS SOFTWARE (PENDING ACTION ITEMS)
Executable programs embedded within HTML entering Conexant trusted networks via
HTTP or other protocols will vary across time based upon the state of the
technology. Until security shortcomings are resolved, to the extent possible
Microsoft ActiveX (and follow-on products of like content but different
marketing names) are not allowed into trusted Conexant networks from untrusted,
foreign networks. Java applets may be allowed into Conexant trusted networks
from foreign, untrusted network domains.
12.0 EXTERNAL SERVICE PROVIDERS
Dedicated network connection between to Conexant network security administration
shall be responsible for ensuring the security of all computing services and
connections. When business needs dictate, Conexant networks may, with due
diligence, be extended into non-Conexant facilities, but may not be connected to
that facility's untrusted networks unless firewalls are put into place. Under
conditions where there is no direct Conexant control or supervision of the
non-Conexant users who log on to trusted Conexant networks, logins require
strong authentication. The management of authentication devices remains at all
times the responsibility of the Conexant business unit issuing them. Clearly
defined agreements must be established with third party service providers who
issue Conexant authentication devices to their employees. Those agreements must
spell out the third party's responsibilities in the management and protection of
Conexant's security devices, computing resources, and private data.
13.0 REQUESTS FOR WAIVERS AND BASELINE CHANGES
Requests for waivers and deviations to this IT security baseline shall be sent
to the Corporate Chief Security Information Director.
Each request for waiver and deviation will be considered on an individual basis
and for a specific duration. Any change to the requirement, technical approach,
or other pertinent circumstances on which the request is granted, must be
reported to the Corporate Chief Security Information Director for
reconsideration of the waiver or deviation.
In order to consider the request, as a minimum the following information must
be specified in each written request:
1. Reference to the baseline requirement and technical description of the
requested waiver or deviation.
2. Business justification or contractual requirement.
3. Specific duration of requested waiver or deviation, not to exceed 26
weeks. If the duration is expected to exceed 26 weeks, the request must
be resubmitted for reconsideration prior to expiration of the granted
waiver/deviation duration.
4. Alternative technical approaches and solutions considered/rejected.
5. Requested technical approach and technical point of contact.
G-34
6. Concurrence from the business unit's IT executive that the deviation is
warranted.
Requests to change the Internet Security baseline should be forwarded to the
Corporate Chief Security Information Director, who is the custodian of the
document.
G-35
ATTACHMENT H
TERMINATION FOR CONVENIENCE
ATTACHMENT H
EXAMPLE OF SECTION 12.2
TERMINATION FOR CONVENIENCE
[GRAPHIC]
H-1
ATTACHMENT I
SERVICE LEVEL MATRIX
ATTACHMENT I
SERVICE LEVEL MATRIX
CATEGORY OF SERVICE SERVICE HOURS RESPONSE CLOSURE TIME MISSION CRITICAL MISSION CRITICAL SUPPORT LEVEL
TIME SYSTEMS RESPONSE TIME
- -----------------------------------------------------------------------------------------------------------------------------------
Application Support 8-5 Local Time of 8 Service Mutually Agreed See Attachment K
Service Request Hours
- -----------------------------------------------------------------------------------------------------------------------------------
Programming Services 8-5 Local Time of 8 Service Mutually Agreed 1st and 2nd Level
Service Request Hours Support
- -----------------------------------------------------------------------------------------------------------------------------------
Remote Site Support 8-5 Local Time of 8 Service 50% within 16 1st and 2nd Level
(Asia Pacific and Service Request, 6 Hours Service Hours Support
Europe) installations and/or
upgrades/week between
the regions.
- -----------------------------------------------------------------------------------------------------------------------------------
Infrastructure Services - 8-5 Local Time of 4 Service 50% within 16 Phone Outages Account Manager 2nd Level Support
Wire Line Telephony Service Request Hours Service Hours will be given informed on a for Newbury Park
highest priority hourly basis to and Mexicali, 1st
problem is Level support for
solved all other
Washington
Locations
- -----------------------------------------------------------------------------------------------------------------------------------
Infrastructure Services - 8-5 Local Time of 4 Service 50% within 16 1st and
Video Telephony Service Request Hours Service Hours 2nd Level Support
- -----------------------------------------------------------------------------------------------------------------------------------
Infrastructure Services - 7x24 Monitoring 2 Service 50% within 16 1st Level support
LAN Services Hours Service Hours at all Washington
locations except
Newbury Park,
Mexicali, and
Ottawa. 2nd Level
support at all
Washington
Locations
- -----------------------------------------------------------------------------------------------------------------------------------
I-1
CATEGORY OF SERVICE SERVICE HOURS RESPONSE CLOSURE TIME MISSION CRITICAL MISSION CRITICAL SUPPORT LEVEL
TIME SYSTEMS RESPONSE TIME
- ------------------------------------------------------------------------------------------------------------------------------------
Infrastructure Services - 8-5 Local Time of 8 Service 50% within 16 1st and 2nd
Remote Access and Service Request Hours Service Hours Level
SOHO Support
- ------------------------------------------------------------------------------------------------------------------------------------
Infrastructure Services - 8-5 Local Time of 8 Service 50% within 16 All Internet Account Manager 1st and 2nd
Internet Services Service Request Hours Service Hours Outages will informed on a Level
be given highest hourly basis Support
priority until problem is
solved when an
entire site is
affected
- ------------------------------------------------------------------------------------------------------------------------------------
Infrastructure Services - 7x24 Monitoring 2 Service 70% within 8 All WAN Outages Account Manager 1st and 2nd
Wan Services Hours Service Hours will be given informed on a Level
highest priority hourly basis Support
until problem is
solved when an
entire site is
affected
- ------------------------------------------------------------------------------------------------------------------------------------
Infrastructure Services - 8-5 Local Time of 8 Service 50% within 16 2nd Level
Groupware Services Service Request Hours Service Hours Support
- ------------------------------------------------------------------------------------------------------------------------------------
Data Center Services 7x24x365 8 Service 50% within 16 SAP, Adexa, 1 hour response 1st and 2nd
Hours Service Hours Promis, DMS and continuous Level
effort Support
until resolved
- ------------------------------------------------------------------------------------------------------------------------------------
I-2
ATTACHMENT J
J.1 - HARDWARE
THE FOLLOWING ASSETS WILL HAVE THE OWNERSHIP TRANSFERRED TO SKYWORKS WHEN THE
INFRASTRUCTURE TOWER OF SERVICE IS TERMINATED AND PAYMENT IS RECEIVED FOR
CONSIDERATION OF SUCH HARDWARE.
ASSET TAG # LOCATION DESCRIPTION
- --------------------------------------------------------------------------------
1079146 NP MODULE ETHERNET SMARTSWITCH
- --------------------------------------------------------------------------------
1079147 NP MODULE ETHERNET SMARTSWITCH
- --------------------------------------------------------------------------------
1079148 NP MODULE ETHERNET SMARTSWITCH
- --------------------------------------------------------------------------------
1082033 NP SERVER
- --------------------------------------------------------------------------------
1082034 NP SERVER
- --------------------------------------------------------------------------------
1082035 NP SERVER
- --------------------------------------------------------------------------------
1083012 NP TAPE LIBRARY, AUTOMATED
- --------------------------------------------------------------------------------
1079605 NP SERVER, COMPAQ PROLIANT
- --------------------------------------------------------------------------------
1079606 NP SERVER, COMPAQ PROLIANT
- --------------------------------------------------------------------------------
1079607 NP SERVER, COMPAQ PROLIANT
- --------------------------------------------------------------------------------
1079608 NP SERVER, COMPAQ PROLIANT
- --------------------------------------------------------------------------------
1079609 NP SERVER, COMPAQ PROLIANT
- --------------------------------------------------------------------------------
1082325 NP LAPTOP COMPUTER
- --------------------------------------------------------------------------------
1082326 NP LAPTOP COMPUTER
- --------------------------------------------------------------------------------
1079777 NP CHASSIS, WIRING CLOSET BUNDLE
- --------------------------------------------------------------------------------
1079778 NP CHASSIS, WIRING CLOSET BUNDLE
- --------------------------------------------------------------------------------
1083653 NP DATA/TELEPHONE EQUIPMENT
- --------------------------------------------------------------------------------
1078530 NP NETWORK SERVER
- --------------------------------------------------------------------------------
1079072 MEXICALI CHASSIS, CATALYST 5500 BUNDLE
- --------------------------------------------------------------------------------
1079072 MEXICALI CHASSIS, CATALYST 5500 BUNDLE
- --------------------------------------------------------------------------------
1079074 MEXICALI CHASSIS, CATALYST 5500 BUNDLE
- --------------------------------------------------------------------------------
1079285 MEXICALI CHASSIS, CATALYST 5500 BUNDLE
- --------------------------------------------------------------------------------
1079151 MEXICALI CHASSIS, RACK-MOUNT
- --------------------------------------------------------------------------------
1083651 MEXICALI DNS/SMS SERVER
- --------------------------------------------------------------------------------
1085700 MEXICALI ROUTER, CISCO 3660
- --------------------------------------------------------------------------------
1083564 MEXICALI SAP PRINTERS (2) FOR MEXICALI
- --------------------------------------------------------------------------------
40007 MEXICALI VIDEO CONFERENCING SYSTEM
- --------------------------------------------------------------------------------
1084337 NEPEAN, CANADA BRIDIAL BUNDLE
- --------------------------------------------------------------------------------
1084338 NEPEAN, CANADA CATALYST CHASSIS 5500
- --------------------------------------------------------------------------------
1084345 NEPEAN, CANADA NETWORK PROBE DAS PRO 2 PORT 10/100
- --------------------------------------------------------------------------------
1084340 NEPEAN, CANADA SERVER, PRINTER/FILER/LOTUS NOTES
- --------------------------------------------------------------------------------
1084341 NEPEAN, CANADA SERVER, PRINTER/FILER/LOTUS NOTES
- --------------------------------------------------------------------------------
1084331 NEPEAN, CANADA VIDEO CONFERENCING EQUIPMENT
- --------------------------------------------------------------------------------
1082375 CEDAR RAPIDS MICROWAVE UNIT
- --------------------------------------------------------------------------------
1082376 CEDAR RAPIDS MICROWAVE UNIT
- --------------------------------------------------------------------------------
1085582 IRVING, TX AUTOMATED TAPE LIBRARY
- --------------------------------------------------------------------------------
CIP NP COMPUTER SYSTEM BACKUP
- --------------------------------------------------------------------------------
CIP NP DLT EXPANSION
- --------------------------------------------------------------------------------
CIP NP UPGRADE OF PBX
- --------------------------------------------------------------------------------
CIP NP POKLYCOM FOR NP SALES
- --------------------------------------------------------------------------------
J-1
ATTACHMENT J
J.2 - SOFTWARE
APPLICATIONS LICENSE TYPE LICENSES SUBJECT TO CONSIDERATION
- ------------ ------------ ------------------- -------------
TRANSFER (IDENTIFIED
--------------------
LICENSES)
---------
Lotus Notes Named 1951 $ 59,000
SAP - Production Named 250 $ 795,000
PROMIS Concurrent 256 $ 845,000
Sherpa DMS Server and 1 and 25 $ 53,000
Concurrent
iPlanet LDAP Server 1 0
Adexa Server 1 $ 748,000
Total $2,500,000
J-2
ATTACHMENT K
APPLICATION SUPPORT MATRIX
CONEXANT TO SKYWORKS
APPLICATION GROUP MONTHLY FTE SUPPORT LEVEL
- -----------------------------------------------------------------------
Architecture & technology 1 2nd
- -----------------------------------------------------------------------
Computer security 1 1/2 1st and 2nd
- -----------------------------------------------------------------------
SAP 2 2nd
- -----------------------------------------------------------------------
PROMIS 1 2nd
- -----------------------------------------------------------------------
Quality Systems Inc. 1/4 1st
- -----------------------------------------------------------------------
Extricity (or its replacement) 1/4 1st and 2nd
- -----------------------------------------------------------------------
Sherpa DMS 1/4 1st and 2nd
- -----------------------------------------------------------------------
SKYWORKS TO CONEXANT
APPLICATION GROUP MONTHLY FTE SUPPORT LEVEL
- -----------------------------------------------------------------------
Adexa 1 1st and 2nd
- -----------------------------------------------------------------------
Lotus Notes 1/4 2nd
- -----------------------------------------------------------------------
J-2
Exhibit 10.v
WHENEVER CONFIDENTIAL INFORMATION IS OMITTED HEREIN (SUCH OMISSIONS ARE DENOTED
BY AN ASTERISK), SUCH CONFIDENTIAL INFORMATION HAS BEEN SUBMITTED SEPARATELY TO
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.
MEXICALI
DEVICE SUPPLY AND SERVICES AGREEMENT
AMONG:
ALPHA INDUSTRIES, INC.
A DELAWARE CORPORATION;
AND
CONEXANT SYSTEMS, INC.
A DELAWARE CORPORATION;
_________________________
DATED AS OF June 25, 2002
_________________________
TABLE OF CONTENTS
PAGE
1. DEFINITIONS ....................................................... 1
1.1 "ABC Costing Model" ........................................ 1
1.2 "Absorption" ............................................... 1
1.3 "Blanket Purchase Order" ................................... 1
1.4 "Buyer Spin-off" ........................................... 1
1.5 "Buyer Subsidiary".......................................... 1
1.6 "Common Material" .......................................... 1
1.7 "Common Material Savings" .................................. 2
1.8 "Competitor" ............................................... 2
1.9 "Confidential Information" ................................. 2
1.10 "Cycle Time" ............................................... 2
1.11 "Delivery Note" ............................................ 2
1.12 "Device" ................................................... 2
1.13 "Engineering Lots" or "e-Lots" ............................. 2
1.14 "Lead Time" ................................................ 2
1.15 "Lot" ...................................................... 2
1.16 "Manufacturing Services" ................................... 2
1.17 "Overall Factory Absorption" ............................... 2
1.18 "Party" .................................................... 2
1.19 "PBGA" ..................................................... 2
1.20 "Price" .................................................... 2
1.21 "Process Technology" ....................................... 3
1.22 "Production Devices" ....................................... 3
1.23 "Purchase Commitment" ...................................... 3
1.24 "Purchase Order" ........................................... 3
1.25 "Purchase Order Release" ................................... 3
1.26 "Quality Specifications" ................................... 3
1.27 "Risk Production" .......................................... 3
1.28 "Services" ................................................. 3
1.29 "Specifications" ........................................... 3
-i-
TABLE OF CONTENTS
(CONTINUED)
PAGE
1.30 "Supplier Manufacturing Facility" .......................... 3
1.31 "Unique Material" .......................................... 3
1.32 "Unique Material Savings" .................................. 3
2. PURCHASE AND SUPPLY OBLIGATIONS ................................... 3
2.1 Buyer Purchase Obligations ................................. 3
2.2 Supplier Supply Obligations ................................ 7
3. DEVICE PURCHASES .................................................. 9
3.1 Scope and Process Technologies ............................. 9
3.2 Forecasts and Commitments .................................. 10
3.3 Purchase Orders and Releases ............................... 10
3.4 Acceptance and Acknowledgement ............................. 10
3.5 Device Lots; Expedited Services ............................ 11
3.6 Cancellation and Modifications to Orders ................... 11
3.7 Materials .................................................. 12
3.8 Surge Capacity ............................................. 12
3.9 Risk Production ............................................ 12
3.10 Rework ..................................................... 13
3.11 NRE Services ............................................... 13
4. DELIVERY AND ACCEPTANCE OF DEVICES ................................ 13
4.1 Delivery Procedure ......................................... 13
4.2 Devices .................................................... 13
4.3 Device Logistics ........................................... 13
4.4 Shipping Arrangements ...................................... 13
5. PRICING AND PAYMENTS .............................................. 14
5.1 Pricing and Invoices ....................................... 14
5.2 Credit Requirements ........................................ 14
5.3 Costs ...................................................... 15
5.4 Taxes ...................................................... 15
6. TRACKING AND REPORTING ............................................ 15
6.1 Tracking ................................................... 15
-ii-
TABLE OF CONTENTS
(CONTINUED)
PAGE
6.2 Reporting Requirements ..................................... 15
6.3 Records and Audits ......................................... 15
7. WARRANTY AND DISCLAIMER ........................................... 16
7.1 Device Warranty ............................................ 16
7.2 Services Warranty .......................................... 16
7.3 Disclaimers ................................................ 16
8. INDEMNIFICATION ................................................... 17
8.1 Indemnification Obligations ................................ 17
8.2 Conditions ................................................. 17
8.3 Sole and Exclusive Remedy .................................. 18
9. CONFIDENTIALITY ................................................... 18
9.1 Confidentiality Obligations ................................ 18
9.2 Exceptions ................................................. 18
9.3 Confidentiality of this Mexicali Agreement ................. 19
9.4 Injunctive Relief .......................................... 19
10. LIMITATIONS OF LIABILITY .......................................... 19
10.1 Disclaimer ................................................. 19
10.2 Liability Limitation ....................................... 19
10.3 Basis of Bargain ........................................... 19
11. TERM AND TERMINATION .............................................. 19
11.1 Term ....................................................... 19
11.2 Termination ................................................ 19
11.3 Effect of Termination ...................................... 20
11.4 Termination of Buyer Spin-off Agreements ................... 20
12. GENERAL ........................................................... 21
12.1 No Agency .................................................. 21
12.2 Governing Law; Venue and Jurisdiction ...................... 21
12.3 Dispute Resolution and Escalation .......................... 21
12.4 Third-Party Beneficiaries .................................. 22
12.5 Compliance with Law ........................................ 22
-iii-
TABLE OF CONTENTS
(CONTINUED)
PAGE
12.6 Force Majeure .............................................. 22
12.7 Amendment; Later Agreement ................................. 22
12.8 Notices .................................................... 22
12.9 Assignment ................................................. 23
12.10 Waiver ..................................................... 23
12.11 Severability ............................................... 23
12.12 Counterparts and Facsimile ................................. 23
12.13 Rules of Construction ...................................... 23
12.14 Entire Agreement ........................................... 24
EXHIBIT A - CYCLE TIMES ................................................ 26
EXHIBIT B - PRICING .................................................... 27
EXHIBIT C - MANUFACTURING SERVICES ..................................... 43
EXHIBIT D - QUALITY SPECIFICATIONS ..................................... 44
EXHIBIT E - PURCHASE COMMITMENTS ....................................... 45
EXHIBIT F - ASSEMBLY, TEST AND SHIPPING QUARTERLY RATES ................ 46
EXHIBIT G - TAKE OR PAY ACTIVITY ....................................... 47
EXHIBIT H - [BLANK] .................................................... 48
EXHIBIT I - DELIVERY AND LOGISTICS ..................................... 49
EXHIBIT J - REPORTS .................................................... 50
EXHIBIT K - RECONCILIATION TABLE ....................................... 51
-iv-
MEXICALI
DEVICE SUPPLY AND SERVICES AGREEMENT
This MEXICALI DEVICE SUPPLY AND SERVICES AGREEMENT (the "MEXICALI AGREEMENT") is
entered into as of June 25, 2002 (the "EFFECTIVE DATE") by and between CONEXANT
SYSTEMS, INC., a Delaware corporation ("BUYER") and ALPHA INDUSTRIES, INC., a
Delaware corporation ("SUPPLIER").
RECITALS
A. Buyer desires, on the terms and conditions of this Mexicali
Agreement, to purchase from Supplier certain semiconductor devices, processing,
packaging and testing services, including assembly services, final testing,
post-test processing and die bank and finished goods warehousing and shipping
services, and related manufacturing services.
B. Supplier is willing to supply such devices and services to Buyer
on the terms and conditions of this Mexicali Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Mexicali Agreement, the Parties agree as follows:
AGREEMENT
1. DEFINITIONS. Capitalized terms not expressly defined elsewhere in this
Mexicali Agreement have the following meanings:
1.1 "ABC COSTING MODEL" means an Excel based model to determine
manufacturing overhead costs using Activity Based Costing methodology. The model
takes manufacturing overhead costs and assigns them to each of the manufacturing
operations through predefined allocation tables. Once the overhead cost to run
each process is determined, a rate per hour for every process is calculated
using activity and capacity standards.
1.2 "ABSORPTION" means the total amount earned by taking the unit
standards multiplied by the per unit cost.
1.3 "BLANKET PURCHASE ORDER" means a written blanket order for the
purchase of a specified quantity of Devices or Manufacturing Services submitted
by Buyer to Supplier.
1.4 "BUYER SPIN-OFF" means any entity (including, without limitation,
Mindspeed) that is a successor of any portion of the business of Buyer resulting
from a spin-off or divestiture of such business, regardless of whether or not
Buyer retains an equity or ownership interest in such entity.
1.5 "BUYER SUBSIDIARY" means any entity that at any time during the
term of this Mexicali Agreement controls, is controlled by, or is under common
control with Buyer; where control means direct or indirect ownership of fifty
percent (50%) or more of the outstanding voting stock or other equity interests
ordinarily having voting rights.
1.6 "COMMON MATERIAL" means materials used in the processing,
packaging and testing of Devices for Buyer and for devices of Supplier or its
other customers.
1.
1.7 "COMMON MATERIAL SAVINGS" means savings relating to the purchase
of Common Material computed as described in Section 5.l(e).
1.8 "COMPETITOR" means a business entity which derives a material
portion of its revenue (over the most recent three (3) year period) from sales
of similar products in similar markets, as compared with the products and
markets of a Party.
1.9 "CONFIDENTIAL INFORMATION" means (i) for information disclosed
after the Effective Date, all non-public information disclosed by one Party to
the other Party pursuant to this Mexicali Agreement that is identified as
"confidential" or marked with a similar legend at the time of such disclosure
or, if disclosed other than in writing, identified as confidential at the time
of disclosure and confirmed in writing within thirty (30) days, (ii) for
information currently in the possession of the other Party as of the Effective
Date, all non-public information that a reasonable person would have understood
to be confidential, regardless of the form or manner of disclosure, (iii) any
information obtained by one Party's employees or agents while on the premises of
the other Party, which, under the circumstances, a reasonable person would have
understood to be confidential, and (iv) any specifications or technical
information related to Buyer's products (e.g., structure, design, layout) and
Supplier's Process Technology that are known to, or otherwise in the possession
of, the other Party as of the Effective Date.
1.10 "CYCLE TIME" means, with respect to a Device, Supplier's standard
production cycle measured from start of Device manufactured through finished
goods inventory and set forth in Exhibit A.
1.11 "DELIVERY NOTE" means the delivery instructions provided by Buyer
to Supplier for Services and Devices ordered by Buyer.
1.12 "DEVICE" means a packaged and tested integrated circuit.
1.13 "ENGINEERING LOTS" or "E-LOTS" means a non-production Lot for
process of Device qualification or testing.
1.14 "LEAD TIME" means, with respect to a Device, the time period from
order acceptance to completion.
1.15 "LOT" means a group of Devices processed together through the
manufacturing line.
1.16 "MANUFACTURING SERVICES" means the performance of all tasks and
responsibilities necessary to complete assembly, test processes, final packing,
and other services described in this Mexicali Agreement, as further set forth in
Exhibit C.
1.17 "OVERALL FACTORY ABSORPTION" means the total activity at the
Supplier Manufacturing Facility multiplied by the quarterly rates set forth in
Exhibit F.
1.18 "PARTY" means either Buyer or Supplier, as the context requires,
and "PARTIES" means Buyer and Supplier collectively.
1.19 "PBGA" means plastic ball grid array devices.
1.20 "PRICE" is defined in Exhibit B.
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1.21 "PROCESS TECHNOLOGY" means the systematic techniques, methods, or
approaches used by Supplier to complete assembly, test processes and final
packing of semiconductor chips or assemblies.
1.22 "PRODUCTION DEVICES" means Devices manufactured by Supplier after
successful qualification and approval for mass production.
1.23 "PURCHASE COMMITMENT" is defined in Section 2.1(a).
1.24 "PURCHASE ORDER" means a written Purchase Order Release under a
Blanket Purchase Order, or a Purchase Order for the purchase of a specified
quantity of Devices or Manufacturing Services submitted by Buyer to Supplier.
1.25 "PURCHASE ORDER RELEASE" means a written release issued by Buyer
authorizing Supplier to commence processing of the Devices under a Blanket
Purchase Order.
1.26 "QUALITY SPECIFICATIONS" means the Device quality standards and
criteria set forth in Exhibit D, as they may be modified by written agreement of
the Parties from time to time.
1.27 "RISK PRODUCTION" means Devices specifically identified by Buyer
in a Purchase Order as "Risk Production" that are to be manufactured by Supplier
pursuant to Buyer's Specifications, but for which compliance with the Quality
Specifications is specifically waived. "Risk Production" may include the
following: unverified process changes, no supporting qualification date, and
known design rule violations.
1.28 "SERVICES" means Manufacturing Services, test engineering
services, or such other services described in this Mexicali Agreement, as
applicable.
1.29 "SPECIFICATIONS" means the technical specifications for the
Devices mutually agreed to in writing by the Parties for such Devices, as they
may be modified from time to time upon written agreement of the Parties.
1.30 "SUPPLIER MANUFACTURING FACILITY" means the Device assembly, test
processes, and final packing facility or facilities owned or operated by
Supplier.
1.31 "UNIQUE MATERIAL" means material used only in the processing,
packaging, and testing of Devices for Buyer and not used for devices of Supplier
or its other customers.
1.32 "UNIQUE MATERIAL SAVINGS" means savings relating to the purchase
of Unique Material.
2. PURCHASE AND SUPPLY OBLIGATIONS.
2.1 BUYER PURCHASE OBLIGATIONS.
(a) PURCHASE COMMITMENTS. After the Effective Date and subject
to the terms and conditions of this Mexicali Agreement, Buyer will submit
Purchase Orders to Supplier for manufacture of Devices and providing of Services
in volumes sufficient to meet the commitments set forth in Exhibit E (the
"PURCHASE COMMITMENTS"). The Purchase Commitments shall be equal to the total
dollars spent per quarter based on the quarterly rates set forth in Exhibit F
and the activity set forth in Exhibit G. If Buyer does not submit Purchase
Orders sufficient to meet the Purchase Commitments, Buyer shall pay to Supplier,
as Supplier's sole remedy, the amount described in Section 2.1(b).
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(b) RECONCILIATION PROCESS. After the close of each fiscal
quarter, the Parties shall participate in the reconciliation process described
in this Section 2.l(b). Actual activity will be represented by the number of
Devices and Services for which Purchase Orders were submitted by Buyer
(including Purchase Order Releases from prior quarters whose delivery dates have
been rescheduled into the fiscal quarter, and deducting any Purchase Order
Releases which have been cancelled or whose delivery has been rescheduled, by
Buyer, outside of the fiscal quarter). The "BUYER'S ABSORPTION" will be
calculated at the end of each fiscal quarter, which for the purpose of this
Section shall be defined as actual activity multiplied by the planned quarterly
rates set forth in Exhibit F. The Buyer's Absorption will be compared with the
planned absorption for the quarter as set forth in Exhibit E. At the close of
each fiscal quarter, the actual spending and activity levels will be entered
into the ABC Costing Model in effect as of the Effective Date. The depreciation
(computed without regard to any asset write-downs after the Effective Date) and
headcount allocations within the model will be updated on a quarterly basis, as
mutually agreed to by the Parties. The ABC Costing Model will be used to
calculate the actual rates for the quarter that just closed.
(i) SCENARIOS. Please see reconciliation table in Exhibit
K for further clarification of the reconciliation process.
(1) If the Buyer's Absorption remains flat to the
specific quarterly plan set forth in Exhibit E and the Overall Factory
Absorption has increased from the specific quarterly plan, then the resulting
quarterly actual rates will be used. The determined total cost charged to Buyer
will be the actual activity multiplied by the actual rates.
Example: As shown in Exhibit E, Buyer's planned absorption for Q4-02 is
$11.9M. The planned total factory absorption for Q4-02 is $23.3M. If the
Buyer's Absorption based on the actual activity and Q4-02 planned rates
is $11.9M and the Overall Factory Absorption based on Q4-02 rates is
$24.0M, the actual activity and actual ABC rates will be used to
determine Buyer's charge for the quarter.
(2) If the Buyer's Absorption remains flat to the
quarterly plan, and the Overall Factory Absorption has remained flat or
decreased to the specific quarterly plan, then the determined total charge to
Buyer will be the take or pay amount planned for that specific quarter as
further described in Exhibit E.
Example: As shown in Exhibit E, Buyer's planned absorption for Q4-02 is
$11.9M. The planned total factory absorption for Q4-02 is $23.3M. If the
Buyer's Absorption based on the actual activity and Q4-02 planned rates
is $11.9M and the Overall Factory Absorption based on Q4-02 rates is
$22.0M, Buyer will be charged based on the actual activity times the
planned rates for Q4-02. The charge will be the take or pay amount.
(3) If Buyer's Absorption has decreased from the
quarterly plan, and the Overall Factory Absorption has remained flat or
decreased to the specific quarterly plan, then the determined total charge to
the Buyer will be the take or pay amount.
Example: As shown in Exhibit E, Buyer's planned absorption for Q4-02 is
$11.9M. The planned total factory absorption for Q4-02 is $23.3M. If the
Buyer's Absorption based on the actual activity and Q4-02 planned rates
is $10.0M and the Overall Factory Absorption based on Q4-02 rates is
$22.0M, Buyer will be charged based on the actual activity times the
planned rates for Q4-02. The charge will be the take or pay amount.
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(4) If Buyer's Absorption has decreased from the
quarterly plan and the Overall Factory Absorption has increased from the
specific quarterly plan, the determined total charge to the Buyer will be the
total actual cost when using actual activity and actual rates.
Example: As shown in Exhibit E, Buyer's planned absorption for Q4-02 is
$11.9M. The planned total factory absorption for Q4-02 is $23.3M. If the
Buyer's Absorption based on the actual activity and Q4-02 planned rates
is $10.0M and the Overall Factory Absorption based on Q4-02 rates is
$24.0M, the actual activity and actual ABC rates will be used to
determine Buyer charge for the quarter.
(5) If Buyer's Absorption has increased from the
quarterly plan, and the Overall Factory Absorption has increased from the
specific quarterly plan. The determined total cost charged to the buyer will be
the actual activity multiplied by the actual rates.
Example: As shown in Exhibit E, Buyer's planned absorption for Q4-02 is
$11.9M. The planned total factory absorption for Q4-02 is $23.3M. If the
Buyer's Absorption based on the actual activity and Q4-02 planned rates
is $12.0M and the Overall Factory Absorption based on Q4-02 rates is
$26.0M, the actual activity and actual ABC rates will be used to
determine Buyer charge for the quarter.
(6) If Buyer's Absorption has increased from the
quarterly plan, and the Overall Factory Absorption has remained flat or
decreased from the specific quarterly plan. The determined total cost charged to
the buyer will the actual activity multiplied by the quarterly planned rates.
Example: As shown in Exhibit E, Buyer's planned absorption for Q4-02 is
$11.9M. The planned total factory absorption for Q4-02 is $23.3M. If the
Buyer's Absorption based on the actual activity and Q4-02 planned rates
is $12.0M and the Overall Factory Absorption based on Q4-02 rates is
$23.0M, Buyer will be charged based on the actual activity times the
planned rates for Q4-02.
(ii) CREDIT OR DEBIT TO BUYER'S ACCOUNT. The credit or
debit to Buyer's account is calculated by taking the determined total charge to
the Buyer and subtracting what the Buyer has already been invoiced for during
the quarter, pursuant to Section 5.l(a), based on the actual activity and
Purchase Order prices. If the determined total charge is less than the invoiced
amount, the difference is credited to Buyer's account. If the determined total
charge is greater than the invoiced amount, the difference is charged to Buyer's
account for payment in accordance with Section 5.
(iii) QUALITY REQUIREMENTS.
(1) Products manufactured at the Supplier
Manufacturing Facility shall meet or exceed normal, accepted standards of
quality in the industry. For the purpose of this Agreement, these standards
shall include visual, mechanical, thermal and electrical specifications that
comply with released drawings and specifications, any changes to which must be
mutually agreed upon by the Parties. The products manufactured shall pass normal
"qualification" testing consistent with current practices as of the Effective
Date (as may be modified by the Parties from time to time), such as HAST, Temp
Cycling, Moisture Sensitivity, and HTOL. Packaging, die attach and wire bonding
attributes such as pull strength, die shear, ball shear test, and 3rd optical
yield, must be in statistical control and the limits will be jointly agreed upon
by the Parties. A higher yield loss than Normal Yield loss (assembly yield) will
also be considered a quality issue.
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(2) The Parties agree that the "NORMAL YIELD"
shall be defined as the "standard yield" for each Device or Package type in use
by the Supplier on the Effective Date. For any yield less than 90% of the Normal
Yield Buyer shall be relieved of its Purchase Commitments for that portion of
the loss that is below the Normal Yield and, if Buyer determines in its
reasonable discretion that the entire WIP of the affected devices should be put
on hold and obtained from an alternative source, pending resolution of the
quality problem, Buyer shall confer with Supplier regarding the yield issue and
shall be relieved of its Purchase Commitment for the entire WIP of the affected
Devices. In the event of any yield loss exceeding the Normal Yield loss, the
Parties agree to cooperate in good faith in order to reduce the yield loss and
to resume the Purchase Commitments contemplated by this Agreement as soon as
yield returns to Normal Yield. Notwithstanding the foregoing, Buyer shall not be
relieved of its Purchase Commitments for any unrecoverable assembly yields where
such assemblies are not designed in accordance with Supplier's released design
rules associated with the manufacturability and mutually agreed to by the
Parties or fail as a result of materials incorporated in the Device (except for
PBGAs, which are specifically excluded from this Section). The Parties
acknowledge and agree that all Devices and packaging types provided as of the
Effective Date shall be deemed to comply with all required design rules.
(iv) DIE CONSTRAINTS. Supplier's inability to provide
Devices arising from the unavailability of die or other materials which are to
be provided by Buyer shall not be considered a Supplier failure hereunder. Buyer
will not be relieved of its Purchase Commitment liability on account of such die
or other materials capacity constraints.
(c) CREDITS; BUYER RAW MATERIAL BUY BACK. As of the Effective
Date, all of Buyer's Unique Material, fifty percent (50%) of the Common
Material, and all Buyer work-in-process ("WIP") will transfer to Supplier at
"NET VALUE" defined as the gross inventory value plus any Financial Reserves on
Unique Material. For purposes of this Section 2.1(c)(i), "FINANCIAL RESERVES"
means a financial adjustment to properly state inventory value that brings the
gross value to the net book value. Excess inventory is reserved if there is
inventory above the six (6) month demand. Buyer will receive full credit for the
Net Value of the Unique Materials, Common Materials and WIP, in the form of six
(6) monthly credits from Supplier, such that Buyer has recovered the full Net
Value of such materials during the first six (6) months from the Effective Date.
All Unique Material that is reserved material will be identified by part and
quantity; Common Materials and WIP do not have reserves. Six (6) months from the
Effective Date, Supplier will determine the remaining Unique Material reserved
inventory on a part by part basis and all remaining reserved material inventory
will be deemed "INACTIVE MATERIAL." Inactive Material will be dispensed with the
manner prescribed in Section 5.1(b)(ii). Relative to such application of Section
5.1 under this Section 2.l(c)(i), the Parties agree that the "cost" for such
purposes will be the transfer cost of such Inactive Material reserved inventory
as described in this Section (e.g., if the material is transferred to Supplier
at zero (0) "Net Value", then Supplier's "cost" would be $0.00). Reserved
inventory used by Supplier by the sixth (6th) month determination will be
credited to Buyer after the seventh (7th) month from the Effective Date.
(d) PURCHASES FOR CERTAIN ENTITIES. Supplier agrees that Buyer,
as agent, may, at any time at the prices and in accordance with the terms and
conditions established under this Mexicali Agreement, place orders for Devices
and Services on behalf of (i) third parties that are mutually agreed to by the
Parties; (ii) Buyer Subsidiaries; (iii) Buyer Spins-Offs (excluding
SpecialtySemi); and (iv) third parties for which Buyer has an obligation,
existing as of the Effective Date, to provide Devices and Services.
Notwithstanding the foregoing and for the avoidance of doubt, Supplier hereby
acknowledges and agrees that Buyer may, at any time at the prices and in
accordance with the terms and conditions of this Mexicali Agreement, place
orders for Devices or Services on behalf of Rockwell, SiRF, Mindspeed and
Lumero. If Buyer places an order on behalf of a third party, Supplier will, at
Buyer's direction, ship
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products ordered on behalf of such third party directly to such third party's
facilities, as applicable. Supplier may invoice Buyer or such third party for
such orders, it being understood that the applicable third party may pay the
invoiced amount directly to Supplier, however, Buyer, as agent for such third
party, shall remain jointly and severally liable for any such payments due to
Supplier. Notwithstanding the foregoing, however, if any such third party is
reasonably determined to be a Competitor of Supplier or its affiliates, Supplier
may, upon six (6) months written notice to Buyer, refuse to fulfill orders for
such third party; provided that Supplier will continue to manufacture, supply
and provide to Buyer, in accordance with the Device and Service purchase
procedures in Section 3, any Devices or Services ordered for such third party
for delivery prior to the expiration of such six (6) month period.
(e) BUYER SPIN-OFFS. The Parties acknowledge and agree that each
Buyer Spin-off will have the right to enter into a supply agreement with
Supplier on terms and conditions substantially similar to the terms and
conditions set forth in this Mexicali Agreement and Supplier agrees to enter
into such agreement upon Buyer Spin-offs request. Such Buyer Spin-offs purchases
are subject to the Buyer Spin-off credit requirements set forth in Section 5.2.
Buyer may partition the Purchase Commitments between Buyer and such Buyer
Spin-offs. If Buyer and Buyer Spin-off partition the Purchase Commitments, the
determination of whether the Purchase Commitments are met will be determined on
a collective basis, and no additional payments to meet the Purchase Commitments
will be due to Supplier if the total purchases by Buyer and the Buyer Spin-offs
meets or exceeds the applicable Purchase Commitment.
(f) ADDITIONAL PURCHASE NEEDS. Subject to Buyer's obligations to
third parties existing as of the Effective Date, Buyer shall submit all of
Buyer's requirements for leadframe Devices and test Services in excess of the
Purchase Commitment to Supplier, provided that: (i) the current leadframe
Devices and package type are both qualified to be manufactured at the Supplier
Manufacturing Facility, or for new leadframe Devices, the package type is
qualified to be manufactured at the Supplier Manufacturing Facility; (ii)
Supplier has sufficient uncommitted available capacity; (iii) Supplier's
committed delivery dates are competitive with other suppliers; (iv) Supplier has
the necessary testers available; and (v) Supplier offers competitive pricing for
such leadframe Devices and test Services. If such additional requirements are
outside of the normal forecasting process as identified in Section 3.2, Supplier
shall have the first right of refusal to accept Buyer's orders to provide such
leadframe Devices and test Services and shall have one (I) business day to
accept and acknowledge Buyer's Purchase Orders for such leadframe Devices and
test Services. If the additional requirement is identified in the normal
forecasting process outlined in Section 3.2, Supplier shall have three (3)
business days to accept and acknowledge Buyer's Purchase Order. If a customer
requires that Buyer have a second source of supply for such leadframe Devices
and/or test Services, Buyer may establish and purchase from such second source,
and the Parties shall discuss the allocation of purchase requirements between
Supplier and such alternate source based on pricing, available capacity at the
Supplier Manufacturing Facility, and second source requirements; provided, that
in no event, shall Supplier's allocation be zero. If Supplier does not respond
to Buyer's Purchase Order within the required time of receipt, or cannot meet
the other requirements set forth in this Section 2.l(f), Buyer may purchase such
leadframe Devices and test Services from any other party in quantities necessary
to obtain the required leadframe Devices or Services.
2.2 SUPPLIER SUPPLY OBLIGATIONS.
(a) SUPPLY OBLIGATIONS. During the term of the Mexicali
Agreement, Supplier will provide Buyer with certain Manufacturing Services and
other semiconductor processing and packaging Services. Supplier shall accept all
Purchase Orders and fulfill and provide capacity for each Service and Device in
the volumes indicated in the Purchase Commitment up to the capacity identified
in Exhibit G.
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Performance of such obligations by Supplier shall be in accordance with the
Specifications, Quality Specifications, and performance metrics including
quality, yield, and Cycle Time, that are consistent with established industry
standards. Supplier will make commercially reasonable efforts to supply capacity
requirements beyond the Purchase Commitment for each Service and Device
(b) MANUFACTURING PROCEDURES. The Devices will be manufactured
and produced using the Quality Agreement Document, Specification Number
GNO3-1306 as a nonbinding guideline. Both parties are committed to actively
achieving the requirements outlined in this document. Modifications to such
document shall require the consent of Supplier, which consent shall not be
unreasonably withheld or delayed. Appropriate adjustments to pricing shall be
made for any changes which modify Device costs.
(c) NOTICE REQUIREMENTS. If at any time Supplier believes or
becomes aware that it is likely to fail to comply in a material manner with its
supply obligations under this Mexicali Agreement, or if Supplier believes or
becomes aware that Buyer's forecasts or Purchase Orders for Devices or Services
covered by this Mexicali Agreement, when taken in the aggregate, will exceed the
maximum capacity or capability of the installed available capacity of the
Supplier, then Supplier will promptly notify Buyer in writing. (However, without
reduction of this commitment, Supplier shall have no monetary liability for its
failure to do so.) In addition, Supplier shall, on a quarterly basis, provide
Buyer with an assessment of known and existing capacity issues of the Supplier,
and any capacity issues anticipated over the next fifteen (15) month period, and
the plan to remedy such issues.
(d) DISCONTINUANCE OF MANUFACTURING PROCESS. Subject to the
restrictions in this Section 2.2(d), Supplier may terminate the use of any
Manufacturing Services at the Supplier Manufacturing Facility designated as an
"END-OF-LIFE PROCESS" or a "last-time-build" package type. At least eighteen
(18) months prior to the date the discontinuance of such process or package
manufacturing will commence, Supplier shall provide Buyer with written notice of
its intent to terminate such Manufacturing Service. Buyer may identify a
suitably qualified alternative supplier (the "FOLLOW-ON SUPPLIER"), which
selection shall be subject to Supplier's approval (which shall not be
unreasonably withheld or delayed). Upon selection of a qualified alternative
supplier, Supplier shall prepare a transition plan specifically designed to
ensure that there is minimal interruption in Buyer's supply of Manufacturing
Services arising in the transfer of production to the Follow-On Supplier and
obtain Buyer's written approval of such transition plan (which shall not be
unreasonably withheld or delayed); however, failure to obtain Buyer's written
approval shall not serve as grounds to extend the eighteen (18) month notice
described in this Section 2.2(d). Supplier will at Buyer's expense, pre-approved
by Buyer (which shall not be unreasonably withheld or delayed), work with Buyer
to perform the transition in accordance with the Buyer-approved plan and will
take commercially reasonable steps to ensure a smooth transition. In addition,
Buyer will have the right, until the expiration of eighteen (18) months from the
date of Supplier's notice of discontinuance, to submit Purchase Orders for
packages to be manufactured, or tested with such Manufacturing Services within
such eighteen (18) month period. Buyer acknowledges that all such Purchase
Orders placed during months seven (7) to eighteen (18) of the eighteen (18)
month notice period for Manufacturing Services processed with an
End-of-Life-Process (i) are non-cancelable and except for non conforming Devices
are non-returnable, and (ii) unless mutually agreed otherwise, such Purchase
Orders will not exceed the total quantity of such Manufacturing Services or
Devices manufactured, packaged, or tested with such End-of-Life Process ordered
during the eighteen (18) month period immediately prior to the end-of-life
notice provided under this section. The foregoing obligations are in addition to
Supplier's other obligations under this Mexicali Agreement.
(e) CLOSING OF SUPPLIER MANUFACTURING FACILITY. Supplier shall
notify Buyer at least eighteen (18) months prior to the date that Supplier
intends to commence any closure, in whole or in
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part, of the Supplier Manufacturing Facility. If Buyer elects to do so, Buyer
may identify a suitably qualified alternative supplier of Manufacturing Services
(the "FOLLOW-ON SUPPLIER"), and subject to Supplier's approval (which shall not
be unreasonably withheld or delayed). Supplier shall prepare a transition plan
specifically designed to ensure that there is minimal interruption in Buyer's
supply of Manufacturing Services arising in the transfer to the Follow-On
Supplier and obtain Buyer's written approval of such transition plan (which
shall not be unreasonably withheld or delayed); however failure to obtain
Buyer's written approval shall not serve as grounds to extend the eighteen (18)
month notice described in this Section 2.2(e). Supplier will seek to perform the
transfer of Manufacturing Services in accordance with the Buyer-approved plan
and will at Buyer's expense take all commercially reasonable steps to ensure a
smooth transition of the Manufacturing Services. Buyer shall reimburse Supplier
for Supplier's reasonable direct and indirect expenses incurred by Supplier, and
pre-approved by Buyer, in transitioning such technology to the designated
facility. Buyer will have the right, until the expiration of such eighteen (18)
month period, to continue to submit Purchase Orders for Devices and Services to
Supplier for delivery within such eighteen (18) month period. Supplier will
continue to manufacture, supply, and provide to Buyer, in accordance with the
purchase procedures in Section 3, any such Devices and Services that are
ordered. Buyer acknowledges that all such Purchase Orders placed during months
seven (7) to eighteen (18) of the eighteen (18) month notice period for Devices
or Services (i) are non-cancelable and except for non-conforming products are
non-returnable and (ii) unless mutually agreed otherwise, will not exceed the
total quantity of such Manufacturing Services or Devices manufactured, packaged,
or tested with such End-of-Life Process ordered during the eighteen (18) month
period immediately prior to the end-of-life notice provided under this section.
The foregoing obligations are in addition to Supplier's other obligations under
this Mexicali Agreement.
(f) SUPPLY INTERRUPTIONS. If at any time Supplier fails for any
reason (including, without limitation, force majeure events, discontinuance of
manufacturing process or closing of the Supplier Manufacturing Facility) to
fulfill its supply obligations under this Mexicali Agreement, Buyer's obligation
under Section 2.l(a) shall be reduced, for the period of supply interruption, by
the volumes Supplier failed to supply, or the minimum quantity of Devices or
Services Supplier is required to obtain from alternate source(s), whichever is
greater. This Section 2.2(f) shall not limit any other rights or remedies Buyer
may have for a breach of this Mexicali Agreement or otherwise.
(g) PBGA SUPPLY OBLIGATIONS. Supplier agrees to use reasonable
commercial efforts to support Buyer's requirements for PBGA Device assembly and
subsequent testing, that are currently qualified and sole sourced as of the
Effective Date, as per a rolling four (4) month forecast. Supplier agrees to
provide these PBGA services at the pricing as established per the ABC Costing
Model, and without warranties. Supplier shall manufacture such PBGAs for a
minimum of twenty four (24) months from the Effective Date, subject to the
provisions of Sections 2.2(d) and (e). PBGAs purchased under this Agreement
shall not be counted toward Buyer's Purchase Commitment. All other terms and
conditions shall be as mutually agreed.
3. DEVICE PURCHASES.
3.1 SCOPE AND PROCESS TECHNOLOGIES.
(a) DEVELOPED AND QUALIFIED. Upon receipt of an applicable
Purchase Order, Supplier shall provide management, planning, and procurement of
Devices and Services for Buyer. Buyer will have the right to purchase Devices
and Services in production, or released to production, at the Supplier
Manufacturing Facility as of the Effective Date pursuant to the terms and
conditions of this Mexicali Agreement including Exhibit G.
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(b) NEW OR NON-STANDARD PROCESS TECHNOLOGIES. Unless otherwise
mutually agreed to by the Parties, Supplier shall have no obligation to provide
Devices and Services manufactured or provided through the use of any new or
non-standard Process Technologies.
3.2 FORECASTS AND COMMITMENTS.
(a) On or about the last day of each calendar month during the
term of this Mexicali Agreement, Buyer will provide to Supplier a rolling
non-binding forecast, covering a minimum period of fifteen (15) months. Buyer's
forecasts are for planning purposes only and will not bind Buyer in any respect.
Before the end of each week, Buyer will provide an updated thirteen (13) week
forecast. The first three (3) weeks (nearest the current date) are considered
and will reflect firm orders. Week 1 (nearest the current date) will reflect a
current week of work in process and Weeks two (2) and three (3) will reflect two
(2) frozen weeks of committed assembly outs and test outs. Each such forecast
will include, as applicable: (i) assembly outs by package type and (ii) test
outs by tester platform. Except as otherwise specifically set forth in Section
2.1(a), only a written Purchase Order delivered in accordance with Section 3.3
will bind Buyer to purchase specified volumes of Devices or Services. Buyer
agrees to place Purchase Orders sufficient to commit and bind the committed
portions of the forecast described in this Section 3.2(a). Purchase Orders will
accurately reflect the first three (3) weeks of the thirteen (13) week forecast
and will be approved by an authorized representative of Buyer.
(b) Except as to Weeks 1, 2, and 3 (as described above), Buyer
may change or update the forecasts delivered hereunder at any time upon notice
to Supplier.
(c) Buyer acknowledges that Supplier may rely on Buyer's
thirteen (13) week forecasts for purposes of materials and production planning.
Without limitation, Buyer shall not hold Supplier accountable for any inability
to deliver Devices or Services which are required either in excess of Supplier's
predicted quantities or without suitable lead time to allow for the acquisition
of necessary materials, production capacity or other resources.
3.3 PURCHASE ORDERS AND RELEASES. Buyer will submit Purchase Orders to
Supplier to cover Buyer's expected purchases of Devices and Services. Buyer will
then submit Purchase Order Releases on a regular basis, as agreed upon by the
Parties, to any Blanket Purchase Orders. Each Purchase Order for Devices and
Services will specify, as appropriate, the applicable Purchase Order, Device
part number and revision level, quantity required by Buyer, Price, requested
delivery date, ship-to address, and other applicable information as determined
by Buyer. Notwithstanding the receipt of a Blanket Purchase Order, Supplier will
not commence manufacturing of the Devices or providing the Services under a
Blanket Purchase Order until Buyer has issued a Purchase Order Release. As a
minimum, Purchase Orders must cover the committed portion of the forecast.
3.4 ACCEPTANCE AND ACKNOWLEDGEMENT. All of Buyer's Purchase Orders for
Devices and Services, insofar as not exceeding the Purchase Commitment shall be
accepted and fulfilled by Supplier in accordance with the delivery dates
specified therein, provided that the dates requested are consistent with the
required Cycle Time for such Device or Service set forth in Exhibit A. For
Services and Devices in excess of the Purchase Commitment, Supplier shall use
commercially reasonable efforts to accept and fulfill such Purchase Orders.
Within three (3) business days after receipt of each Purchase Order, Supplier
will acknowledge such Purchase Order in writing by fax, e-mail notice, or
electronic data interchange ("EDI") to Buyer's purchasing agent identified on
the face of the Purchase Order. Such acknowledgement will include Supplier's
committed delivery date for the order; provided that, in establishing such
delivery date, Supplier shall use commercially reasonable efforts to comply with
the delivery dates specified in Buyer's Purchase Order and to meet or reduce the
Device and Service Cycle
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Times set forth in Exhibit A. The Device and Service Cycle Times set forth in
Exhibit A shall be updated quarterly, upon mutual agreement of the Parties. If
at any time during the production of such Devices or providing of such Services
Supplier believes or becomes aware that the delivery may be delayed by more than
one (1) business day, Supplier shall promptly provide Buyer with written notice
of such delivery date change or any applicable quantity change. Such report
shall be referred to as an "EXCEPTION REPORT" and any Devices or Services not
specifically identified in an Exception Report shall be delivered by Supplier no
later than the committed delivery date.
3.5 DEVICE LOTS; EXPEDITED SERVICES. Unless otherwise agreed to in
writing by the Parties, Production Device Lots shall be ordered by Buyer and
delivered by Supplier in Lots of one thousand five hundred (1500) Devices to
five thousand (5000) Devices, and Engineering Device Lots shall be ordered by
Buyer and delivered by Supplier in Lots of a maximum of one thousand (1000)
Devices.
(a) EXPEDITED LOTS. At Buyer's request, Supplier will use
commercially reasonable efforts to provide priority processing of Production
Device Lots and Engineering Device Lots at no additional cost to Buyer.
Notwithstanding the foregoing, if the quantity of expedited lots requested by
Buyer exceeds six (6) Lots in process at any given time during the first year of
the Agreement, four (4) Lots during the second year of the Agreement and two (2)
Lots during the third year of the Agreement, the fee for such additional Lots
shall be five-hundred dollars ($500) per Lot. Buyer acknowledges that excessive
Lot expediting activity could increase Cycle Time for other products.
(b) ENGINEERING LOTS. Engineering Lot pricing shall include a
set-up charge per lot of three-hundred and fifty dollars ($350) and a standard
cost charged monthly as identified in Exhibit B.
3.6 CANCELLATION AND MODIFICATIONS TO ORDERS. Except as otherwise
provided in this Mexicali Agreement, Buyer may cancel, modify or reschedule a
Purchase Order (in whole or in part) as set forth in this Section 3.6; provided
that Buyer meets its Purchase Commitments.
(a) CANCELLATION BEFORE PROCESS START. For each Purchase Order
before processing the Devices or performance of the Services is started, Buyer
may cancel or modify a Purchase Order (in whole or in part) without penalty by
delivering to Supplier a written notice of cancellation or modification. Such
cancellation shall be without charge or penalty, except that Buyer shall be
obligated to purchase and pay for any materials acquired in respect of
Supplier's anticipated production or Services for Buyer as identified in Section
5.l(d).
(b) CANCELLATIONS AFTER PROCESS START. If Buyer cancels a
Purchase Order after the date the processing of such Devices and/or Services has
been started, then Supplier shall discontinue all work on the Devices and/or
Services, return the Devices to Buyer, and as Buyer's sole liability, and
Supplier's sole remedy, for such cancellation, Buyer will pay the full price for
all such Devices and/or Services as specified in Exhibit B pursuant to
Supplier's invoice.
(c) RIGHT TO CANCEL. Supplier will indicate a delivery date for
Devices and/or Services ordered by Buyer in Supplier's acknowledgement of
receipt of Buyer's Purchase Orders. After such notice has been given, any
Devices and/or Services delivered to Buyer will be deemed timely delivered if
delivery is made within fifteen (15) days of such acknowledged delivery date.
During this fifteen (15) day period, Supplier and Buyer agree to have management
of each company discuss the reasons for the delay and the possible provision of
expedited services. If delivery is not made within fifteen (15) days from the
acknowledged delivery date, then Buyer may cancel its Purchase Order for the
delayed Devices and will not be liable for payment of the delayed Devices or
Services. Buyer will be
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relieved from his Purchase Commitment in the amount equal to all orders canceled
by Buyer due to this Section 3.6(c).
(d) LOT HOLDS AFTER PROCESS START. Buyer may place up to one
hundred (100) Lots on hold at any one time by delivering to Supplier a written
hold notice. After being held for a period of thirty (30) days, the Lots will be
considered inactive and Buyer shall pay for all such Devices and/or Services in
such Lots, as specified in Exhibit B. After Lots have been held for a period of
ninety (90) days, Supplier has the right to dispose of the Lots.
3.7 MATERIALS. Supplier shall be responsible for procuring all
materials required to manufacture the quantity of Devices and Services, as
forecasted and ordered by Buyer. When purchasing such materials, Supplier shall,
at a minimum, procure quantities of materials in such volume to cover shrinkage
and scrap associated with the assembly, test processes and final packing.
Notwithstanding the foregoing, Buyer shall be responsible pursuant to Section
5.l(b) for actual costs of material incurred by Supplier in procuring up to
thirteen (13) weeks of Unique Material (including, without limitation,
leadframes, substrates, trays).
3.8 SURGE CAPACITY. At any time after Buyer's submission of a Purchase
Order, Buyer may request an increase in the number of Devices to be purchased or
Services to be provided (an "INCREASE NOTICE"). If Buyer submits an Increase
Notice for additional Devices or Services, in order to meet a Purchase
Commitment, such additional orders on the Increase Notice will be accepted by
Supplier. If Buyer submits an Increase Notice for additional Devices or Services
that are not necessary to meet the Purchase Commitment, Supplier shall use
reasonable commercial efforts to provide surge capacity and accept the Increase
Notice so long as Buyer's aggregate daily production volume does not exceed 110%
of the aggregate daily average production volume described in Buyer's
then-current 13-week forecast. If Supplier cannot meet the delivery dates
specified by Buyer in an accepted Increase Notice, Supplier shall promptly
notify Buyer in writing and Buyer may, at its discretion, reduce or cancel such
Increase Notice. Supplier shall use reasonable commercial efforts to deliver all
such Devices and provide all such Services within the delivery dates specified.
Notwithstanding the foregoing, Supplier shall not be obligated to provide surge
capacity for any package style exceeding the total available capacity of the
Supplier Manufacturing Facility as identified in this Section 3.8.
Notwithstanding the above, surge capacity within package types will be limited
to material availability (including without limitation, die availability) and
Supplier will not be liable for its failure to provide surge capacity if
material is not available due to reliance on Buyer's forecast.
3.9 RISK PRODUCTION. At Buyer's request, as mutually agreeable to both
Parties, and subject to an applicable Purchase Order or Purchase Order Release,
Supplier shall consider Buyer's request to provide Risk Production to Buyer.
With all Purchase Orders for Risk Production, Buyer shall provide a written
statement setting forth the risk factors or any special circumstances related to
the Risk Production and specifying the Lot size and quantity of Risk Production
which Buyer requests be provided. Supplier's acknowledgement, including
modifications to such written statement included as part of Buyer's Purchase
Order for Risk Production, shall be deemed Supplier's acknowledgement of such
risks or circumstances. If the Parties cannot agree on the risk factors or any
special circumstances related to the Risk Production, Buyer may cancel the
applicable Purchase Order. Supplier shall use reasonable commercial efforts to
provide processing of Risk Production consistent with its ongoing operations and
other business. Risk Production is offered as a Service hereunder. WITHOUT
LIMITATION, SUPPLIER EXTENDS NO WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, WITH
RESPECT TO RISK PRODUCTION BEYOND SUPPLIER'S UNDERTAKING TO USE REASONABLE
COMMERCIAL EFFORTS IN THE COURSE OF THE MANUFACTURING OF RISK PRODUCTION.
Without limitation, compliance with the Quality Specifications and Section 7.1
and Section 7.2 shall not apply to Risk Production.
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3.10 REWORK. Upon Buyer's request and as accepted in Supplier's
acknowledgement, Supplier shall provide Device rework Services for Buyer. Buyer
shall pay Supplier, in accordance with the pricing set forth in Exhibit B, for
rework Services performed by Supplier for any reason other than as required by
Section 7. No warranty is provided by Supplier for such reworked devices. If
pricing is not stated in Exhibit B, then the Parties shall mutually agree on
costs and pricing for such rework processing.
3.11 NRE SERVICES. At Buyer's request, Supplier shall provide
non-recurring engineering services for new packages, Devices or Services. The
Parties shall negotiate in good faith the terms and conditions and any
applicable costs associated with such engineering services.
4. DELIVERY AND ACCEPTANCE OF DEVICES.
4.1 DELIVERY PROCEDURE. All Devices shipped by Supplier to Buyer under
this Mexicali Agreement will be accompanied by appropriate documentation
regarding shipping location, Lot identification numbers, Buyer product number,
quantity shipped, customer name, shipping date, and purchase order number and
such other information reasonably requested by Supplier. At Buyer's option,
shipped Devices may also include relevant testing data in either hard or soft
copy, and may be accompanied by an exception report, to the extent that one
exists.
(a) TITLE AND RISK OF LOSS. Buyer shall retain title and risk of
loss for any and all die and other material provided by Buyer to Supplier for
Manufacturing Services.
(b) SHIP ALERT. Supplier will use commercially reasonable
efforts to provide Buyer with a ship alert within one (1) business day after a
shipment is made. Such ship-alert will include the freight carrier, bill number,
and number of boxes shipped, as well as the information provided on the packing
list.
4.2 DEVICES. Supplier shall process all deliveries of Devices in
inventory, and Devices provided by Buyer for Manufacturing Services, in
accordance with the shipping instructions included in the Delivery Note or
otherwise communicated to Supplier in writing. Supplier processing shall include
those processes set forth in Exhibit I. Supplier shall use reasonable commercial
efforts to complete all such processing within one (1) business day from the
receipt of the Delivery Note.
4.3 DEVICE LOGISTICS. Supplier will provide handling and receiving
services and finished goods storage for Buyer as further described in Exhibit I.
Supplier shall use reasonable commercial efforts to complete all such processing
within one (1) business day from the receipt of the goods. Upon Buyer's request
and at no additional cost to Buyer, Supplier shall hold Devices in finished
goods storage for a period not to exceed fifteen (15) months.
4.4 SHIPPING ARRANGEMENTS. Supplier will use commercially reasonable
efforts to comply with any special shipping instructions specified on Buyer's
Purchase Order or Buyers Delivery Note. In the absence of any such instructions,
Supplier will determine the method of shipment and select the carrier. Buyer
will pay, or reimburse Supplier for all shipping and handling charges. If
Supplier is required to pay such charges to the carrier, Supplier will include
such charges, as a line item in an invoice to Buyer and Buyer will pay such
amount in accordance with Section 5.l(a).
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5. PRICING AND PAYMENTS.
5.1 PRICING AND INVOICES.
(a) PAYMENTS FOR ORDERED DEVICES. Supplier will invoice Buyer
for Devices and/or Services at the applicable Device or Service price calculated
pursuant to Exhibit B in effect on the date of the invoice. Each such invoice
shall be dated on or after the delivery into assembly finished goods or finished
goods and shall be itemized as agreed to by both Parties. The Parties agree that
the standards set forth in Exhibit B may be revised from time to time upon the
mutual agreement of the Parties. Buyer will pay any amounts due on such invoices
within thirty (30) days of receipt of the invoice.
(b) INACTIVE MATERIAL. Material purchased to support Buyer
forecasts, as set forth in Section 3.8, which is not consumed within one hundred
eighty (180) days of receipt will be considered "INACTIVE MATERIAL."
(i) Supplier may invoice Buyer for Supplier's cost of all
Inactive Material and handling expenses and Buyer shall pay such invoice within
thirty (30) days of its receipt. Upon receipt of such payment, the Inactive
Material will then be segregated as Buyer furnished material and, if consumed
between day one-hundred eighty one (181) and one (1) year of receipt by the
Buyer, will be credited toward future assembly Purchase Orders at Supplier's
cost as paid by Buyer.
(ii) Subject to receipt of payment, Inactive Material not
consumed within one (1) year of receipt will, at Buyer's option, be scrapped
processed for reclaim, or returned to Buyer.
(c) FINAL TEST YIELD RECONCILIATION. Supplier and Buyer shall
perform a final test yield reconciliation to adjust test services pricing on a
monthly basis. The actual yield will be compared with the financial standard
yield. The yield variance will be calculated as the delta between the financial
standard cost yield used for setting standards and the actual yield. Adjustments
made to correct yield transactions should also be taken into consideration. A
credit or debit memo will be issued from the Supplier to Buyer.
(d) MATERIAL PRICE REDUCTIONS. The Standard Price for materials
in year two (2) will be the lower of five percent (5%) less than the Standard
Price of the materials as of the Effective Date in year one (1) or the actual
cost as determined at the end of year one (1). The Standard Price of materials
in year three (3) will be the lower of five percent (5%) less than year two (2)
Standard Price or the actual cost as determined at the end of year two (2).
(e) MATERIAL SAVINGS. Supplier shall credit to Buyer's account
all Unique Material Savings. The mechanism by which Common Material Savings will
be calculated is by the process of comparing the planned Purchase Order prices,
shown in Exhibit B, with the invoice price. Common Material Savings shared will
be based on activity volume. The percentage shared with Buyer will be equal to
the Buyer assembly starts divided by the total assembly starts. Although
material savings will be calculated as set forth above, price increases shall
not be passed on to Buyer. The Parties will use reasonable commercial efforts to
calculate the material savings on a monthly basis. However, by mutual agreement,
the Parties may elect to calculate the material savings on a quarterly basis
only.
5.2 CREDIT REQUIREMENTS. If based on a then-current credit report of a
Buyer Spin-off, Supplier has an issue with the credit of such Buyer Spin-off,
Supplier shall notify such Buyer Spin-off in writing of such issue and Buyer
Spin-off shall have a period of sixty (60) days to resolve the credit issue. If
such issue is not resolved within such sixty (60) day period, Supplier reserves
the right to limit Buyer
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Spin-off's purchases to a reasonable amount, such amount to be based on a
then-current credit report of the Buyer Spin-off and mutually agreed to by
Supplier and Buyer Spin-off. The foregoing shall apply to Buyer Spin-off,
notwithstanding Buyer Spin-off entering into a separate agreement with Supplier
and assuming the rights and obligations of "Buyer" hereunder. In addition, in
the event Buyer (i.e., Conexant Systems, Inc.) does not make timely payment on
Supplier's invoices and such issue is not resolved within sixty (60) days' of
receipt of Supplier's written notice of such payment delays, Supplier reserves
the right to limit Buyer's purchases to a reasonable amount, such amount to be
based on a then-current credit report of Buyer and mutually agreed to by
Supplier and Buyer.
5.3 COSTS. Except as otherwise provided herein or agreed to in
writing by the Parties, each Party will be solely responsible for the costs and
expenses it incurs in performing its obligations under this Mexicali Agreement.
5.4 TAXES. Buyer will be responsible for payment of any and all taxes
or related governmental charges, including without limitation all sales, use,
excise, and other taxes and duties ("TAXES") imposed on or arising from Buyer's
purchase of Devices or Services under this Mexicali Agreement, excluding any
Mexican IVA (value added) tax, duties, and taxes on the net income or net worth
of Supplier. Based on the Parties' understanding that all Devices will be
exported outside of Mexico, the Parties understand that no IVA or duties will be
payable. In the event either Party's requirements cause IVA or duties to be
assessed, such IVA and duties will be borne by the Party that causes the
imposition of IVA or duties. Supplier shall use reasonable commercial efforts to
minimize Taxes within Supplier's control. Taxes shall be specifically identified
by Supplier as a separate line item on Supplier's invoices provided pursuant to
Section 5.1. Upon Buyer's request, Supplier will provide Buyer with copies of
official receipts for the payment of any such Taxes, and any other information
and documents Buyer may reasonably request in order to verify the payment of
such amounts to the appropriate governmental entity.
6. TRACKING AND REPORTING.
6.1 TRACKING. All Devices manufactured and delivered by Supplier to
Buyer shall have backward and forward traceability, for a minimum period of two
(2) years, sufficient to enable Supplier to identify (i) the processes and
materials used in the manufacture of such Devices; (ii) the batches or Lots of
such materials; and (iii) other Devices in the same or sequential Lots. Such
information shall be provided to Buyer, upon Buyer's request.
6.2 REPORTING REQUIREMENTS. Supplier shall provide Buyer with the
reports specified in Exhibit J in accordance with frequency or schedule set
forth therein. All such reports shall be in writing and provided to Buyer in the
form (e.g., electronic form) specified in Exhibit J or otherwise mutually agreed
to in writing by the Parties.
6.3 RECORDS AND AUDITS. For the term of this Mexicali Agreement and
for five (5) years thereafter, Supplier shall maintain complete, current and
accurate records documenting all amounts charged to Buyer. To ensure compliance
with the terms of this Mexicali Agreement, Buyer or its designated
representative that is bound by a confidentiality agreement, shall have the
right to conduct an inspection and audit of all the relevant manufacturing and
accounting books and records of Supplier, and to obtain true and correct
photocopies thereof, during regular business hours at Supplier's offices. Any
and all information reviewed by Buyer, its representative or the third party
auditor under this Section 6.3 is Confidential Information as described in
Section 9 of this Mexicali Agreement. Buyer shall provide Supplier with at least
thirty (30) days' advance notice of any such audit and the audit shall be
conducted in a manner that does not unreasonably interfere with Supplier's
normal business activities. In no event
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shall such audits be conducted more frequently than once every year. If any such
audit should disclose any overcharges, Supplier shall promptly reimburse Buyer
for any overpaid amounts, together with interest thereon at four percent (4%)
over the prime rate quoted from time to time in the Wall Street Journal, or the
highest rate allowable by law, whichever is less, from the date such amount was
paid until reimbursed by Supplier. If the audit reveals that Supplier has
overcharged Buyer by five percent (5%) or more of the amounts paid during such
audited period, then Supplier shall promptly reimburse Buyer for all actual
expenses incurred by Buyer in connection with the audit.
7. WARRANTY AND DISCLAIMER.
7.1 DEVICE WARRANTY. For a period of ninety (90) days from the date of
delivery (the "DEVICE WARRANTY PERIOD"), Supplier warrants that the Devices
delivered hereunder will conform to the applicable Specifications, will be
manufactured in accordance with the Quality Specifications specified in Exhibit
D, and will be free from defects in material, manufacturing and workmanship.
Supplier shall, at Buyer's option, promptly provide replacement Manufacturing
Services relating to such defective Devices or credit Buyer's account for the
amount paid by Buyer for such defective Devices. This warranty shall not apply
to Devices which, after delivery to Buyer, have been (i) repaired or altered
(except by, or under the direction of, Supplier) or (ii) damaged or subjected to
abuse or misuse. Warranty claims hereunder shall be made by Buyer by making a
written warranty claim within the Device Warranty Period. Except as otherwise
instructed by Supplier, Buyer shall return all defective Devices to Supplier for
inspection. Before returning Devices, Buyer shall request in writing and obtain
a Return Materials Authorization ("RMA") number from Supplier, and Supplier
shall be obligated to review such request and provide the RMA within two (2)
business days of receipt of such request, and Buyer agrees to display such RMA
number on the packaging of such returned Devices. Replacement Devices will be
warranted in accordance with this Section 7.1. THE FOREGOING REPRESENTS BUYER'S
SOLE REMEDY AND SUPPLIER'S SOLE LIABILITY IN THE EVENT OF A BREACH OF THE DEVICE
WARRANTY IN THIS SECTION 7.1.
7.2 SERVICES WARRANTY. For a period of ninety (90) days from
completion of performance of the applicable Service (the "SERVICES WARRANTY
PERIOD"), Supplier warrants that such Services will be provided in accordance
with the performance metrics mutually agreed by the Parties including quality,
yield, and Cycle Time and, in any event, in a professional and workmanlike
manner. If, during the Services Warranty Period, Supplier is notified in writing
of any breach of this warranty, then Supplier shall, at Buyer's option, and as
Supplier's sole liability with respect to such breach of warranty, promptly
re-perform such Services or credit Buyer for such Services. Re-performed
Services will be warranted in accordance with this Section 7.2. THE FOREGOING
REPRESENTS BUYER'S SOLE REMEDY AND SUPPLIER'S SOLE LIABILITY IN THE EVENT OF A
BREACH OF THE SERVICES WARRANTY IN THIS SECTION 7.2.
7.3 DISCLAIMERS. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS
MEXICALI AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED OR OTHERWISE, IN CONNECTION WITH THIS MEXICALI AGREEMENT OR
ANY DEVICES OR SERVICES PROVIDED UNDER THIS MEXICALI AGREEMENT, AND EACH PARTY
SPECIFICALLY DISCLAIMS THE IMPLIED WARRANTIES AND CONDITIONS OF MERCHANTABILITY,
FITNESS FOR PARTICULAR PURPOSE AND NONINFRINGEMENT.
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8. INDEMNIFICATION.
8.1 INDEMNIFICATION OBLIGATIONS.
(a) BUYER INDEMNITY. Buyer will defend at its own expense any
claim, suit, or action (collectively, "CLAIMS") asserted or brought against
Supplier by a third party to the extent that such Claim is based on a claim that
Supplier's compliance with Buyer's specifications or designs in the production
or sale of Devices or Services required the infringement of any United States or
Mexican patent or misappropriation of any trade secret (a "BUYER
INFRINGEMENT CLAIM"). Buyer will pay such damages awarded against Supplier by a
court of competent jurisdiction, or agreed to in a monetary settlement of any
such Claim by Buyer, to the extent that such damages are directly attributable
to a Buyer Infringement Claim. Buyer's indemnification obligation will not apply
to Buyer Infringement Claims that result from or are attributable to (a) any
modifications, combinations, or improvements made to the design or specification
as furnished to Supplier by Buyer (except for modifications, combinations and
improvements requested by Buyer); or (b) use of the design or specification by
Supplier for any purpose other than providing Devices or Manufacturing Services
to Buyer, if such claim under (a) or (b) would not have arisen but for such
modification, combination, improvement or use.
(b) SUPPLIER INDEMNITY. Supplier will defend at its own expense
any Claims asserted or brought against Buyer by a third party to the extent that
such Claim is based on a claim that Supplier's technology, equipment, or methods
used to manufacture the Devices or to provide the Services infringes any United
States or Mexican patent or misappropriates any trade secret (a "SUPPLIER
INFRINGEMENT CLAIM"). Supplier will pay such damages awarded against Buyer by a
court of competent jurisdiction, or agreed to in a monetary settlement of any
such Claim by Supplier, to the extent that such damages are directly
attributable to a Supplier Infringement Claim. Supplier's indemnification
obligation will not apply to Supplier Infringement Claims that result from, or
are attributable to: (a) compliance with Buyer's designs or specifications; (b)
any modifications, combinations, or improvements made to the Devices after
delivery to Buyer; or (c) use of the Devices or Services for any unintended
purpose, if such claim under (a), (b) or (c) would not have arisen but for such
compliance, modifications, combination, improvement or use. In the event the
Devices or Services are deemed to infringe and their manufacture, use or sale is
enjoined, Supplier shall, at its option, either (i) arrange for Buyer to have
the right to continue using the Devices or receiving the Services, or (ii)
provide replacements for the Devices or Services with non-infringing comparable
devices or services meeting Buyer's requirements. If neither of the foregoing in
(i) or (ii) are commercially practicable, then Supplier shall accept return of
the Devices, discontinue the Services, and refund Buyer's purchase price in
respect of the Devices and/or Services, as the case may be.
8.2 CONDITIONS. The obligations of the indemnifying Party (the
"INDEMNIFYING PARTY") under this Section 8 with respect to a Buyer Infringement
Claim or Supplier Infringement Claim (as applicable) (an "INFRINGEMENT CLAIM")
are subject to the following conditions: (a) the indemnified Party (the
"INDEMNIFIED PARTY") must promptly notify the Indemnifying Party in writing of
such Infringement Claim; (b) the Indemnifying Party must have sole control of
the defense and settlement of the Infringement Claim; and (c) the Indemnified
Party must fully cooperate with and provide reasonable assistance to the
Indemnifying Party in the defense and settlement of such Infringement Claim
(which includes furnishing to the Indemnifying Party all evidence in the
possession of the Indemnified Party that is relevant to such Infringement
Claim). Solely to the extent a proposed settlement or stipulated judgment
adversely affects the Indemnified Party, the Indemnifying Party will not accept
a settlement or stipulated judgment of any Buyer Infringement Claim or Supplier
Infringement Claim (as applicable) without the prior written consent of the
Indemnified Party, which consent will not be unreasonably withheld or delayed.
The Indemnifying Party will have no liability under this Section 8 for any
costs, losses,
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liabilities, or damages resulting from the willful acts of the Indemnified Party
or any settlement or compromise incurred or made by the Indemnified Party
without the Indemnifying Party's prior written consent. The Indemnified Party
will have the right to participate, at its own expense, in the defense or
settlement of the Infringement Claim.
8.3 SOLE AND EXCLUSIVE REMEDY. THIS SECTION 8 STATES THE INDEMNIFYING
PARTY'S ENTIRE LIABILITY AND THE INDEMNIFIED PARTY'S SOLE REMEDY WITH RESPECT TO
THE INFRINGEMENT, VIOLATION, OR MISAPPROPRIATION OF ANY INTELLECTUAL PROPERTY
RIGHTS OF ANY THIRD PARTY ARISING FROM OR RELATING TO THIS MEXICALI AGREEMENT.
EACH PARTY'S OBLIGATIONS UNDER THIS SECTION 8 ARE SUBJECT TO THE LIMITATIONS OF
LIABILITY SET FORTH IN SECTION 10.
9. CONFIDENTIALITY.
9.1 CONFIDENTIALITY OBLIGATIONS. The receiving Party ("RECIPIENT")
will hold the Confidential Information of the disclosing Party ("PROVIDER") in
strict confidence and, except as set forth herein or allowed under Section 9.2,
will not disclose, provide, or otherwise make available such Confidential
Information to any person other than Recipient's employees and independent
contractors who need to have access to such Confidential Information in order
for the Recipient to exercise its rights or perform its obligations under this
Mexicali Agreement. The Recipient will inform each such employee and independent
contractor of the Recipient's confidentiality obligations under this Mexicali
Agreement, and will ensure that each such employee and independent contractor
has signed a non-disclosure agreement containing terms no less restrictive than
the terms of this Section 9. Each Party will be liable for any breach of this
Section 9.1 by any of its employees or independent contractors. The Recipient
will use the Provider's Confidential Information solely to exercise its rights
or perform its obligations under this Mexicali Agreement and for no other
purpose. The Recipient will protect the confidentiality of the Provider's
Confidential Information using at least the same efforts Recipient uses to
protect its own confidential and proprietary information of similar nature, but
in no event less than reasonable efforts. The Recipient will return the
Provider's Confidential Information to the Provider promptly upon the Provider's
request or termination of this Mexicali Agreement; provided that, if the
Recipient has continuing rights or obligations or liabilities under this
Mexicali Agreement, the Recipient may retain a copy of any Provider Confidential
Information reasonably required to exercise its rights or perform such
obligations solely for the period of time required to meet such obligations.
Supplier acknowledges and agrees that Buyer may disclose the Confidential
Information of Supplier to Buyer Subsidiaries and employees of such Buyer
Subsidiaries, in accordance with the restrictions set forth above and Buyer will
be liable for any breach of this Section 9.1 by such Buyer Subsidiaries or its
employees.
9.2 EXCEPTIONS. Disclosure of Confidential Information will be
permitted to the extent required to comply with a valid order of a court or
governmental authority with jurisdiction over the Recipient, provided that the
Provider has been given timely notice of such requirement and that the Recipient
must cooperate with the Provider to limit the scope and effect of such order.
The Recipient's obligations under Section 9.1 with respect to any Confidential
Information of the Provider will terminate if and when the Recipient can prove
by clear and convincing evidence that such Confidential Information (i) was
rightfully in possession of the Recipient, without restriction, prior to
disclosure; (ii) was rightfully received by the Recipient without restriction
from a third party not owing a duty of confidentiality to the Provider; (iii) is
generally available to the public without fault of the Recipient; or (iv) is
independently created by the Recipient.
9.3 CONFIDENTIALITY OF THIS MEXICALI AGREEMENT. Neither Party will
disclose any terms of this Mexicali Agreement to anyone other than (i) its
attorneys, accountants, and other professional
-18-
advisors under a duty of confidentiality; (ii) its subsidiaries, spin-offs, and,
in the event of a merger or acquisition, prospective successor, all of the
foregoing under a duty of confidentiality; and (iii) as required by law or
pursuant to a mutually agreeable press release.
9.4 INJUNCTIVE RELIEF. Each Party acknowledges and agrees the other
Party would suffer irreparable harm for which monetary damages would be an
inadequate remedy if there were a breach of obligations under Section 9.1. Each
Party further acknowledges and agrees that equitable relief, including
injunctive relief, would be appropriate to protect the other Party's rights and
interests if such a breach were to arise, were threatened, or were asserted.
10. LIMITATIONS OF LIABILITY.
10.1 DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
MEXICALI AGREEMENT, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY
FOR LOST PROFITS OR FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, OR
EXEMPLARY DAMAGES ARISING FROM THE SUBJECT MATTER OF THIS MEXICALI AGREEMENT,
REGARDLESS OF THE TYPE OF CLAIM AND EVEN IF THAT PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
10.2 LIABILITY LIMITATION. EXCEPT AS SPECIFICALLY AND EXPRESSLY
PROVIDED BELOW, IN NO EVENT WILL EITHER PARTY'S AGGREGATE, CUMULATIVE LIABILITY
TO THE OTHER ARISING OUT OF OR RELATING TO THIS MEXICALI AGREEMENT, INCLUDING
ANY APPLICABLE PENALTIES, EXCEED THE GREATEST OF: (a) $250,000 OR (b) THE
AGGREGATE OF ALL AMOUNTS PAID AND OWED TO SUPPLIER PURSUANT TO THIS MEXICALI
AGREEMENT DURING THE PRECEDING 12-MONTH PERIOD. BUYER'S LIABILITY FOR PURCHASE
COMMITMENTS AS DEFINED IN SECTION 2.1(a) WILL NOT BE LIMITED BY THIS SECTION
10.2. THIS LIMITATION ON LIABILITY IS CUMULATIVE WITH ALL PAYMENTS BEING
AGGREGATED TO DETERMINE SATISFACTION OF THE LIMIT. THE EXISTENCE OF ONE OR MORE
CLAIMS OR SUITS WILL NOT ENLARGE THE LIMIT.
10.3 BASIS OF BARGAIN. EACH PARTY ACKNOWLEDGES THAT THE MUTUAL
LIMITATIONS OF LIABILITY CONTAINED IN THIS SECTION 10 REFLECT THE ALLOCATION OF
RISK SET FORTH IN THIS MEXICALI AGREEMENT AND THAT EACH PARTY WOULD NOT ENTER
INTO THIS MEXICALI AGREEMENT WITHOUT THESE LIMITATIONS ON LIABILITY.
11. TERM AND TERMINATION.
11.1 TERM. This Mexicali Agreement will take effect on the Effective
Date and will remain in effect for a period of three (3) years from the
Effective Date (the "INITIAL TERM"), unless earlier terminated in accordance
with this Section 11. Following the Initial Term, this Mexicali Agreement may be
renewed for additional one-year renewal terms (each a "RENEWAL TERM"), upon
mutual agreement of the Parties.
11.2 TERMINATION. This Mexicali Agreement, or any Purchase Order issued
hereunder, may be terminated as follows:
(a) immediately upon written agreement of the Parties;
-19-
(b) immediately upon the expiration of the ninety (90) day cure
period, if a Party materially breaches any section of this Supply Agreement and
such breach is not cured within ninety (90) days after written notice of such
breach is furnished by the non-breaching Party;
(c) by either Party, at its discretion immediately upon
providing written notice to the other Party, if within any period of twelve (12)
months there are five (5) or more material breaches or failures by the other
Party that would constitute grounds for termination pursuant to this Section
11.2 (without giving effect to cure periods), regardless of whether such
breaches or failures were cured within the applicable cure periods and provided
that: (i) such repeated material breaches collectively have a material impact on
the non-breaching Party's business, and (ii) the Parties have failed to
satisfactorily resolve the material breach issue in accordance with the
escalation procedure set forth in Section 12.3;
(d) subject to Section 2.2(e), immediately in the event of any
closure of the Supplier Manufacturing Facility;
(e) by Buyer upon six (6) months written notice in the event of
a sale, transfer, assignment or other change-of-control of the Supplier
Manufacturing Facility to a third party that is reasonably determined to be a
Competitor of Buyer or its affiliates;
(f) by Buyer upon eighteen (18) months written notice in the
event of a sale, transfer, assignment or other change-of-control of the Supplier
Manufacturing Facility to any third party; and
(g) immediately upon written notice by either Party, at its
discretion, if (i) the other Party becomes insolvent, admits in writing its
inability to pay its debts as they become due, or files or has filed against it
any proceeding in bankruptcy or for reorganization under any federal bankruptcy
law or similar state law, or has any receiver appointed for all or a substantial
part of such Party's assets or business, or makes any assignment for the benefit
of its creditors, or enters into any other proceeding for debt relief, and such
proceeding is not dismissed within sixty (60) days of filing; (ii) the other
Party dissolves, liquidates, or institutes any proceedings for the liquidation
or winding up of its business or for the termination of its corporate charter;
or (iii) the other Party ceases to conduct its business in the ordinary course.
11.3 EFFECT OF TERMINATION. The rights and obligations under Sections 1
(Definitions), 5 (Pricing and Payments), 7 (Warranty and Disclaimer), 8
(Indemnification), 9 (Confidentiality), 10 (Limitations of Liability), 11.3
(Effect of Termination), and 12 (General) will survive termination or expiration
of this Mexicali Agreement for any reason. Buyer's obligations under Section
2.1(a) (Purchase Commitments) with respect to any final partial quarter of the
term shall also survive, and be equitably determined pursuant to Section 2 by
prorating the annual and/or quarterly Purchase Commitments, as the case may be.
11.4 TERMINATION OF BUYER SPIN-OFF AGREEMENTS. In addition to the
termination rights set forth in Section 11.2, Supplier shall have the right to
terminate without cause a Buyer Spin-off Agreement entered into pursuant to
Section 2.1(e) upon six (6) months prior written notice to such Buyer Spin-off
in the event such Buyer Spin-off is merged with or acquired by an entity that is
reasonably deemed to be a Competitor of Supplier; provided that Supplier will
continue to manufacture, supply, and provide to Buyer Spin-off, in accordance
with the Device and Service purchase procedures of such Buyer Spin-off
Agreement, any Devices or Services ordered by such Buyer Spin-off for delivery
prior to the expiration of such six (6) month period. This Section 11.4 shall be
incorporated in the Buyer Spin-off Agreements and
-20-
shall apply to Buyer Spin-offs, notwithstanding such Buyer Spin-offs assuming
the rights and obligations of "Buyer" under this Agreement.
12. GENERAL.
12.1 NO AGENCY. Under this Mexicali Agreement (i) each Party will be
deemed to be an independent contractor and not an agent, joint venturer, or
representative of the other Party; (ii) neither Party may create any obligations
or responsibilities on behalf of or in the name of the other Party; and (iii)
neither Party will hold itself out to be a partner, employee, franchisee,
representative, servant, or agent of the other Party.
12.2 GOVERNING LAW; VENUE AND JURISDICTION. This Mexicali Agreement
will be governed by, subject to, and construed in accordance with the internal
laws of the State of California, as such laws apply to contracts between
California residents performed entirely within California. Venue for any dispute
however arising under this Mexicali Agreement shall be in Orange County,
California and both Parties hereby consent to the jurisdiction of the State and
Federal Courts in Orange County, California. The Parties agree that the United
Nations Convention on Contracts for the International Sale of Goods will not
apply to this Mexicali Agreement.
12.3 DISPUTE RESOLUTION AND ESCALATION.
(a) In the event that any dispute, claim or controversy
(collectively, a "DISPUTE") arises out of or relates to any provision of this
Mexicali Agreement or the breach, performance or validity of invalidity thereof,
an appropriate authorized manager of Buyer and an appropriate authorized manager
of Supplier shall attempt a good faith resolution of such Dispute within thirty
(30) days after either Party notifies the other Party of such Dispute. If such
Dispute is not resolved within thirty (30) days of such notification, such
Dispute will be referred for resolution to Supplier's President and Buyer's
Chief Executive Office. Should they be unable to resolve such Dispute within
thirty (30) days following such referral to them, or within such other time as
they may agree, Supplier and Buyer shall submit such Dispute to binding
arbitration, initiated and conducted in accordance with the then-existing
American Arbitration Association Commercial Arbitration Rules, before a single
arbitrator selected jointly by Supplier and Buyer. If Supplier and Buyer cannot
agree upon the identity of an arbitrator within ten (10) days after the
arbitration process is initiated, then the arbitration shall be conducted before
three (3) arbitrators, one (1) selected by Buyer and, one (1) selected by
Supplier, and the third selected by the first two. The arbitration shall be
conducted in the County of Orange, California and shall be governed by the
United States Arbitration Act, 9 USC Sections 116, and judgment upon the award
may be entered by any court having jurisdiction thereof. The arbitrator(s) shall
have case management authority and shall resolve the Dispute in a final award
within one hundred eighty (180) days from the commencement of the arbitration
action, subject to any extension of time thereof allowed by the arbitrators upon
good cause shown. There shall be no appeal from the arbitral award, except for
fraud committed by an arbitrator in carrying out his or her duties under the
aforesaid rules; otherwise the Parties irrevocably waive their rights to
judicial review of any Dispute arising out of or related to this Mexicali
Agreement. Notwithstanding the foregoing, either Party may pursue immediate
equitable relief in the event of a breach of Section 9 or an alleged violation
or misappropriation of the intellectual property rights of either Party.
(b) During any period in which the Parties are resolving a
Dispute pursuant to this Section 12.3, the Parties shall continue to provide the
Devices and Services pursuant to the terms of this Mexicali Agreement; provided,
however, that if the Parties jointly determine that any such Devices or Services
shall be suspended during the period in which the Parties are resolving a
Dispute, then the deadlines and time periods in which such Devices or Services
are to be provided pursuant to this Mexicali
-21-
Agreement (as described herein) shall be extended for the same amount of time as
the Devices or Services were suspended.
12.4 THIRD-PARTY BENEFICIARIES. Except for Buyer Spin-offs, there are
no third party beneficiaries of this Mexicali Agreement. Except for the rights
of Buyer Spin-offs to purchase Devices and Services from Supplier at the pricing
established under this Mexicali Agreement, no section of this Mexicali
Agreement, express or implied, is intended or will be construed to confer upon
or give to any customer or other person other than the Parties any rights,
remedies, or other benefits under or by reason of this Mexicali Agreement.
12.5 COMPLIANCE WITH LAW. The Parties will at all times comply with all
applicable foreign, U.S., state, and local laws, rules and regulations relating
to the execution, delivery and performance of this Mexicali Agreement. Each
Party agrees that it will not export or reexport, resell, ship, provide, or
divert or cause to be exported or reexported, resold, shipped, provided, or
diverted directly or indirectly any software, documentation, or technical data,
nor any Device or Service to any country or to any person or entity for which
the government (or any agency thereof) of the United States, or any foreign
sovereign government with competent jurisdiction requires an export license or
other governmental approval without first obtaining such license or approval.
12.6 FORCE MAJEURE. Neither Party shall be liable for failure or delay
in performance of its obligations under this Mexicali Agreement to the extent
such failure or delay is caused by an act of God, act of a public enemy, war or
national emergency, rebellion, insurrection, riot, epidemic, quarantine
restriction, fire, flood, explosion, storm, earthquake, or other catastrophe. If
a Party's performance under this Mexicali Agreement is affected by a force
majeure event, such Party shall give prompt written notice of such event to the
other Party and shall at all times use its reasonable commercial efforts to
mitigate the impact of the force majeure event on its performance under this
Mexicali Agreement. In the event of a force majeure event as described in this
Section that affects either or both Parties' ability to perform under this
Supply Agreement, the Parties agree to cooperate in good faith in order to
resume the transactions contemplated by this Supply Agreement as soon as
commercially possible to the extent commercially reasonable.
12.7 AMENDMENT; LATER AGREEMENT. This Mexicali Agreement may not be
amended, modified, or supplemented by the Parties in any manner, except by an
instrument in writing signed by Buyer and Supplier and specifically reciting
that it amends this Mexicali Agreement. No purchase order or acknowledgement
will amend this Mexicali Agreement. All matters designated herein as subject to
agreement of the Parties must be agreed upon in a writing signed by authorized
representatives of both Parties for such agreement to be effective.
12.8 NOTICES. Any notice, consent, approval, or other communication
intended to have legal effect to be given under this Mexicali Agreement (other
than a purchase order or invoice) must be in writing and will be delivered (as
elected by the Party giving such notice): (i) personally; (ii) by postage
prepaid registered or certified airmail, return receipt requested; (iii) by
express courier service providing proof of delivery; or (iv) by facsimile with a
confirmation copy deposited prepaid with an express courier service. Unless
otherwise provided herein, all notices will be deemed to have been duly given
on: (y) the date of receipt (or if delivery is refused, the date of such
refusal) if delivered personally, by mail, or by express courier; or (z) one (1)
business day after receipt by telecopy if the telecopy was accompanied by the
mailing of the notice via courier service. Each Party may change its address for
purposes hereof on not less than three (3) days' prior notice to the other
Party. Notice hereunder will be sent to the following addresses:
-22-
If to Buyer, to: If to Supplier, to:
Conexant Systems, Inc. Alpha Industries, Inc.
4311 Jamboree Road 25 Computer Drive
Newport Beach, CA 92660-3095 Haverhill, MA 01832-1236
Attn: Chief Executive Officer Attn: President
With a copy:
If to Buyer, to: If to Supplier, to:
Conexant Systems, Inc. Alpha Industries, Inc.
4311 Jamboree Road 25 Computer Drive
Newport Beach, CA 92660-3095 Haverhill, MA 01832-1236
Attn: General Counsel Attn: General Counsel
12.9 ASSIGNMENT. Except as otherwise expressly provided in this
Mexicali Agreement, neither Party shall assign or transfer this Mexicali
Agreement or all or any part of its rights or obligations hereunder, by
operation of law or otherwise, without the prior written consent of the other
Party which shall not be unreasonably refused or delayed. Notwithstanding the
foregoing and provided such entity is not a Competitor of the other Party,
either Party may assign this Mexicali Agreement in whole or in part (i) to any
Subsidiary; (ii) to a successor of such Party in the event of a merger or
acquisition of such Party; or (iii) to a successor of any portion of the
business of such Party resulting from a divestiture of such business, and
constituting the Supplier Manufacturing Facility in the case of Supplier, or
constituting all of Buyer's business(es) purchasing the Devices and Services in
the case of Buyer, and the other Party's consent to any of the foregoing
assignments will not be required. Any subsequent assignment by an assignee, by
operation of law or otherwise, requires the prior written consent of the
non-assigning Party. Any unauthorized assignment or transfer shall be null and
void. This Mexicali Agreement shall be binding upon and inure solely to the
benefit of each Party and its successors and permitted assigns.
12.10 WAIVER. If a Party fails to insist on performance of any of the
terms and conditions, or fails to exercise any of its rights or privileges of
this Mexicali Agreement, such failure will not constitute a waiver of such
terms, conditions, rights, or privileges.
12.11 SEVERABILITY. If the application of any section or sections of
this Mexicali Agreement to any particular facts or circumstances is held to be
invalid or unenforceable by any court of competent jurisdiction, then: (i) the
validity and enforceability of such section or sections as applied to any
other particular facts or circumstances and the validity of other sections of
this Mexicali Agreement will not in any way be affected or impaired thereby; and
(ii) such section or sections will be reformed without further action by the
Parties and only to the extent necessary to make such section or sections
valid and enforceable when applied to such particular facts and circumstances.
12.12 COUNTERPARTS AND FACSIMILE. This Mexicali Agreement may be
executed in any number of counterparts, each of which when so executed and
delivered will be deemed an original, and such counterparts together will
constitute one and the same instrument. The Parties intend that each Party will
receive a duplicate original of the counterpart copy or copies executed by it.
For purposes hereof, a facsimile copy of this Mexicali Agreement, including the
signature pages hereto, will be deemed to be an original.
12.13 RULES OF CONSTRUCTION. As used in this Mexicali Agreement, all
terms used in the singular will be deemed to include the plural, and vice versa,
as the context may require. The words "hereof," "herein," and "hereunder" refer
to this Mexicali Agreement as a whole, including the attached
-23-
exhibits, as the same may from time to time be amended or supplemented, and not
to any subdivision in this Mexicali Agreement. When used in this Mexicali
Agreement, unless otherwise expressly stated, "including" means "including,
without limitation" and "discretion" means sole discretion. Unless otherwise
expressly stated, when a Party's approval or consent is required under this
Mexicali Agreement, such Party may grant or withhold its approval or consent in
its discretion. References to "Section" or "Exhibit" will be to the applicable
section or exhibit of this Mexicali Agreement. Descriptive headings are inserted
for convenience only and will not be utilized in interpreting the Mexicali
Agreement. This Mexicali Agreement has been negotiated by the Parties and
reviewed by their respective counsel and will be fairly interpreted in
accordance with its terms and without any strict construction in favor of or
against either Party.
12.14 ENTIRE AGREEMENT. As to the subject matter hereof: (i) this
Mexicali Agreement, including its exhibits, sets forth the entire agreement
between Buyer and Supplier; (ii) no promise, inducement, understanding, or
agreement not expressly contained herein has been made; and (iii) this Mexicali
Agreement merges and supersedes any and all previous agreements, understandings,
and negotiations between the Parties.
[THIS SPACE INTENTIONALLY LEFT BLANK]
-24-
IN WITNESS WHEREOF, the Parties have executed this Mexicali Agreement as
of the Effective Date by the undersigned duly authorized representatives of each
Party.
CONEXANT SYSTEMS, INC. ALPHA INDUSTRIES, INC.
By: /s/ Dennis E. O'Reilly By: /s/ Paul E. Vincent
------------------------------- -------------------------------
Name: Dennis E. O'Reilly Name: Paul E. Vincent
---------------------------- ----------------------------
Title: Senior Vice President, Title: Vice President and
---------------------------- ----------------------------
General Counsel & Secretary Chief Financial Officer
25.
EXHIBIT A - CYCLE TIMES
AVERAGE DEVICES PROCESS CYCLE TIME FOR BROADBAND PRODUCTS:
- --------------------------------------------------------------------------------
Device Assembly Cycle time [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------
Device Test [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------
Post Test (Includes Bake *) [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------
* Bake parts at 125(degree)C +/- 5(degree)C for time specified per QS03-0805
These Cycle Times are for planning purposes only and not an obligation for
delivery, but the company will work to meet these Cycle Times. The assembly
cycle time will start from Die attach to operation 485 and for test will be from
test issue room (output) to the receiving operation (885) in finish good.
Note:
Lots that require engineering analysis will not be considered for cycle time
calculation
AVERAGE DEVICES PROCESS CYCLE TIME FOR MINDSPEED PRODUCTS:
- ---------------------------------
Queue Time 1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ---------------------------------
Assembly Cycle time [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ---------------------------------
Queue Time 2 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ---------------------------------
Test Cycle time [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ---------------------------------
Packing time [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ---------------------------------
Queue Time 3 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ---------------------------------
TOTAL [CONFIDENTIAL TREATMENT REQUESTED]/*/
Note:
Lots that require engineering analysis will not be considered for cycle time
calculation
- --------------------------------------------------------------------------------
Lead Time: From Lot created in PROMIS to the day placed in to MSPD FG
inventory.
Queue Time 1: From 1st day in Mexicali to the day of Assy Start in Dieattach.
Assy C/T: From day of Assy start Dieattach to out day of QA 485 last stage
@ Assy
Queue Time 2: Time between last stage of Assy and first time of Mextest Area.
Test C/T: From 1st day @ test area to last stage of Post Test
Op.(Bake/scanner)
Packing Time: From Last stage of Post Test Op. to the day of acceptance in to
CNXT SAP
Queue Time 3: From the day of acceptance in CNXT SAP to Shipment to MSPD.
- --------------------------------------------------------------------------------
AVERAGE TAPE AND REEL CYCLE TIME
- ------------------------------------------
Average Tape/Reel Cycle Time [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ------------------------------------------
26.
EXHIBIT B - PRICING
The Parties may change these costs by mutual written agreement in the event of
any errors in calculating or if there is a greater than 15% change in test
times.
YIELD ASSEMBLY COST
- -------------------------------------------------------------------
PARTNAME PARTID YIELDED ASSEMBLY COST
- -------------------------------------------------------------------
06815-25-A-002-A 06815-25-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
06815-36-A-003-A 06815-36-A-003-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
06827-14-A-024-A 06827-14-A-024-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
06829-11-A-001-A 06829-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
06830-16-A-010-A 06830-16-A-010-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
06830-16-A-012-A 06830-16-A-012-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
06831-12-A-002-A 06831-12-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
06832-11-A-001-A 06832-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
06832-12-A-002-A 06832-12-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
06834-11-A-001-A 06834-11-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
06834-12-A-002-A 06834-12-A-002-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
06835-14-A-002-A 06835-14-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
06835-25-A-001-A 06835-25-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
06836-11-A-011-A 06836-11-A-011-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
07202-11-A-001-A 07202-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
11235-14-A-003-A 11235-14-A-003-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
11246-12-A-001-A 11246-12-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
11247-11-A-011-A 11247-11-A-011-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
11247-12-A-012-A 11247-12-A-012-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
11252-11-A-011-A 11252-11-A-011-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
11252-15-A-015-A 11252-15-A-015-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
11473-12-A-001-A 11473-12-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
11558-11-A-001-A 11558-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
11562-11-A-001-A 11562-11-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
11577-11-A-001-A 11577-11-A-001-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
11596-21-A-002-A 11596-21-A-002-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
11609-11-A-001-A 11609-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
11614-71-A-013-A 11614-71-A-013-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
11614-72-A-014-A 11614-72-A-014-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
11614-81-A-015-A 11614-81-A-015-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
11614-82-A-016-A 11614-82-A-016-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
11623-20-A-005-A 11623-20-A-005-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
11627-31-A-031-A 11627-31-A-031-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
11634-11-A-001-A 11634-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
11661-11-A-001-A 11661-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
20415-11-A-001-A 20415-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
20431-21-A-001-A 20431-21-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
20437-11-A-001-A 20437-11-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
20438-11-A-011-A 20438-11-A-011-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
27.
20441-11-A-001-A 20441-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
20463-11-A-001-A 20463-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
20468-21-A-001-A 20468-21-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
24105-13-A-001-B 24105-13-A-001-B.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
24106-15-A-002-C 24106-15-A-002-C.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
24110-11-A-001-A 24110-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
24408-16-A-002-A 24408-16-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
24942-13-A-001-B 24942-13-A-001-B.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
25473-12-A-001-A 25473-12-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
25473-13-A-001-A 25473-13-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
25827-14-A-004-B 25827-14-A-004-B.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
25829-18-A-007-B 25829-18-A-007-B.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
25835-14-A-004-A 25835-14-A-004-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
25852-11-A-001-C 25852-11-A-001-C.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
25860-14-A-002-A 25860-14-A-002-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
25861-14-A-002-A 25861-14-A-002-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
25864-19-A-005-A 25864-19-A-005-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
25865-17-A-004-A 25865-17-A-004-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
25865-17-A-004-B 25865-17-A-004-B.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
25868-16-A-004-B 25868-16-A-004-B.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
25869-15-A-003-C 25869-15-A-003-C.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
25869-16-A-004-B 25869-16-A-004-B.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
30988-11-A-001-A 30988-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
30991-13-A-002-A 30991-13-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
30999-11-A-001-A 30999-11-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
31004-11-A-001-A 31004-11-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
31005-11-A-001-A 31005-11-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
31008-11-A-001-A 31008-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
31010-11-A-001-A 31010-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
31015-11-A-001-A 31015-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
88168-12-A-002-A 88168-12-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
C7504-12-A-012-A C7504-12-A-012-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
C7505-12-A-012-A C7505-12-A-012-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
C8103-13-A-002-A C8103-13-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
D9450-13-A-002-A D9450-13-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
D9450-14-A-006-A D9450-14-A-006-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
D9450-15-A-001-A D9450-15-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
L1902-11-A-011-A L1902-11-A-011-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
L2701-12-A-002-A L2701-12-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
L2701-15-A-005-A L2701-15-A-005-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
L2702-12-A-002-A L2702-12-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
L2702-15-A-005-A L2702-15-A-005-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
L2800-38-A-001-A L2800-38-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
L2800-40-A-001-A L2800-40-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
L3903-54-A-162-A L3903-54-A-162-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
L5502-11-A-001-A L5502-11-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
P2106-21-A-001-A P2106-21-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
-28-
P2106-22-A-002-A P2106-22-A-002-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
P2107-11-A-001-A P2107-11-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
P4601-11-A-001-A P4601-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
P5200-12-A-012-A P5200-12-A-012-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
P5200-12-A-022-A P5200-12-A-022-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
P8773-91-A-001-A P8773-91-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
P9373-11-A-001-A P9373-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
P9373-12-A-002-A P9373-12-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
P9573-11-A-001-A P9573-11-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R1060-16-A-001-A R1060-16-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6522-33-A-001-A R6522-33-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6641-15-A-012B R6641-15-A-012B.05 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6642-25-A-009-A R6642-25-A-009-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6645-18-A-001-A R6645-18-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6653-12-A-001-B R6653-12-A-001-B.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6653-13-A-002-A R6653-13-A-002-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6653-15-A-004-A R6653-15-A-004-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6653-16-A-005-A R6653-16-A-005-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6653-20-A-009-A R6653-20-A-009-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6657-14-A-004-A R6657-14-A-004-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6657-16-A-007-A R6657-16-A-007-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6664-12-A-002-A R6664-12-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6675-58-A-030-A R6675-58-A-030-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6682-28-A-004-A R6682-28-A-004-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6686-11-A-001-A R6686-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6713-20-A-003-A R6713-20-A-003-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6713-22-A-004-A R6713-22-A-004-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6713-24-A-134-A R6713-24-A-134-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6713-26-A-135-A R6713-26-A-135-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6713-27-A-136-A R6713-27-A-136-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6713-29-A-138-A R6713-29-A-138-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6715-14-A-004-A R6715-14-A-004-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6719-11-A-019-A R6719-11-A-019-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6719-12-A-014-A R6719-12-A-014-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6719-12-A-020-A R6719-12-A-020-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6732-13-A-002-AA R6732-13-A-002-AA.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6732-13-A-003-A R6732-13-A-003-A.04 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6753-14-A-014A R6753-14-A-014-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6753-15-A-006-A R6753-15-A-006-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6753-50-A-050-A R6753-50-A-050-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6753-72-A-072-A R6753-72-A-072-A.04 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6753-85-A-085-A R6753-85-A-085-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6753-86-A-086-A R6753-86-A-086-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6758-13-A-003-A R6758-13-A-003-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6758-14-A-001-A R6758-14-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6758-15-A-002-A R6758-15-A-002-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6758-16-A-004-A R6758-16-A-004-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
29.
R6764-21-A-121-A R6764-21-A-121-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6764-24-A-024-A R6764-24-A-024-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6764-26-A-126-A R6764-26-A-126-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6764-28-A-127-A R6764-28-A-127-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6764-29-A-029-A R6764-29-A-029-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6764-38-A-038-A R6764-38-A-038-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6764-61-A-261-B R6764-61-A-261-B-01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6764-62-A-362-B R6764-62-A-362-B.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6764-63-A-263-A R6764-63-A-263-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6764-65-A-165-B R6764-65-A-165-B.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6764-67-A-167-A R6764-67-A-167-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6764-68-A-168-A R6764-68-A-168-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6764-69-A-069-A R6764-69-A-069-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6764-69-A-069-B R6764-69-A-069-B.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6766-21-A-002-A R6766-21-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6768-11-A-001-A R6768-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6768-12-A-002-A R6768-12-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6771-22-A-003-A R6771-22-A-003-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6775-12-A-203-C R6775-12-A-203-C.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6781-11-A-001-A R6781-11-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6781-12-A-003-A R6781-12-A-003-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6781-13-A-006-A R6781-13-A-006-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6781-14-A-007-A R6781-14-A-007-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6781-21-A-002-A R6781-21-A-002-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6781-22-A-004A R6781-22-A-004A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6781-32-A-008-A R6781-32-A-008-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6781-33-A-001-A R6781-33-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6781-34-A-003-A R6781-34-A-003-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6785-18-A-091-B R6785-18-A-091-B.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6785-19-A-093-A R6785-19-A-093-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6785-21-A-028-A R6785-21-A-028-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6785-24-A-089-A R6785-24-A-089-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6785-25-A-090-A R6785-25-A-090-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6785-26-A-030-A R6785-26-A-030-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6789-22-A-022-A R6789-22-A-022-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6789-41-A-041-A R6789-41-A-041-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6789-44-A-044-A R6789-44-A-044-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6789-52-A-052-A R6789-52-A-052-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6790-22-A-022-A R6790-22-A-022-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6793-11-A-131-A R6793-11-A-131-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6793-12-A-222-A R6793-12-A-222-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6793-15-A-015-A R6793-15-A-015-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6793-17-A-017-A R6793-17-A-017-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6793-42-A-042-A R6793-42-A-042-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6795-11-A-111-A R6795-11-A-111-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6795-12-A-112-A R6795-12-A-112-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
R6797-40-A-040-A R6797-40-A-040-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------
-30-
R6797-55-A-055-A R6797-55-A-055-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -----------------------------------------------------------------------------------------
RF105-12-A-002-B RF105-12-A-002-B.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -----------------------------------------------------------------------------------------
RF109-12-A-001-A RF109-12-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -----------------------------------------------------------------------------------------
RF109-12-A-001-B RF109-12-A-001-B.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -----------------------------------------------------------------------------------------
RM501-14-A-003-A RM501-14-A-003-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -----------------------------------------------------------------------------------------
USR90-11-A-011-A USR90-11-A-011-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -----------------------------------------------------------------------------------------
USR90-12-A-012-A USR90-12-A-012-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -----------------------------------------------------------------------------------------
TEST COSTS
THIS COST INCLUDES LEADSCAN/BAKE/AND SHIPPING COST
* ALSO, THERE WILL BE AN ADDITIONAL CHARGE FOR TAPE AND REEL IF THERE IS A
REQUEST FOR A REPACK.
TEST COST >
PARTNAME PARTID (ROUNDED)
06815-25-A-002-A 06815-25-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
06815-36-A-003-A 06815-36-A-003-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
06827-14-A-024-A 06827-14-A-024-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
06829-11-A-001-A 06829-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
06830-16-A-010-A 06830-16-A-010-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
06830-16-A-012-A 06830-16-A-012-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
06831-12-A-002-A 06831-12-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
06832-11-A-001-A 06832-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
06832-12-A-002-A 06832-12-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
06834-11-A-001-A 06834-11-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
06834-12-A-002-A 06834-12-A-002-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
06835-14-A-002-A 06835-14-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
06835-25-A-001-A 06835-25-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
06836-11-A-011-A 06836-11-A-011-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
06836-11-A-011-A 06836-11-A-011-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
07202-11-A-001-A 07202-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11235-14-A-003-A 11235-14-A-003-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11246-12-A-001-A 11246-12-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11247-11-A-011-A 11247-11-A-011-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11247-12-A-012-A 11247-12-A-012-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11252-11-A-011-A 11252-11-A-011-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11252-15-A-015-A 11252-15-A-015-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11473-12-A-001-A 11473-12-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11558-11-A-001-A 11558-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11562-11-A-001-A 11562-11-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11577-11-A-001-A 11577-11-A-001-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11596-21-A-002-A 11596-21-A-002-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11609-11-A-001-A 11609-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11614-71-A-013-A 11614-71-A-013-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11614-72-A-014-A 11614-72-A-014-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
-31-
11614-81-A-015-A 11614-81-A-015-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11614-82-A-016-A 11614-82-A-016-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11623-20-A-005-A 11623-20-A-005-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11627-31-A-031-A 11627-31-A-031-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11634-11-A-001-A 11634-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11661-11-A-001-A 11661-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
20415-11-A-001-A 20415-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
20431-21-A-001-A 20431-21-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
20437-11-A-001-A 20437-11-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
20438-11-A-011-A 20438-11-A-011-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
20441-11-A-001-A 20441-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
20463-11-A-001-A 20463-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
20468-21-A-001-A 20468-21-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
24105-13-A-001-B 24105-13-A-001-B.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
24106-15-A-002-C 24106-15-A-002-C.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
24110-11-A-001-A 24110-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
24408-16-A-002-A 24408-16-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
24942-13-A-001-B 24942-13-A-001-B.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25459-13-A-002-BO 25459-13-A-002-BO.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25473-12-A-001-A 25473-12-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25473-13-A-001-A 25473-13-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25827-14-A-004-B 25827-14-A-004-B.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25829-18-A-007-B 25829-18-A-007-B.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25835-14-A-004-A 25835-14-A-004-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25852-11-A-001-C 25852-11-A-001-C.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25860-14-A-002-A 25860-14-A-002-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25861-14-A-002-A 25861-14-A-002-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25864-19-A-005-A 25864-19-A-005-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25865-17-A-004-A 25865-17-A-004-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25865-17-A-004-B 25865-17-A-004-B.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25868-16-A-004-B 25868-16-A-004-B.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25868-16-A-004-B 25868-16-A-004-B.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25868-16-A-004-BO 25868-16-A-004-BO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25868-16-A-004-BO 25868-16-A-004-BO.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25871-15-A-004-BO 25871-15-A-004-BO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
30988-11-A-001-A 30988-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
30991-13-A-002-A 30991-13-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
30999-11-A-001-A 30999-11-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
31004-11-A-001-A 31004-11-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
31005-11-A-001-A 31005-11-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
31008-11-A-001-A 31008-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
31010-11-A-001-A 31010-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
31015-11-A-001-A 31015-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
88168-12-A-002-A 88168-12-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
C7504-12-A-012-A C7504-12-A-012-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
C7505-12-A-012-A C7505-12-A-012-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
C8103-13-A-002-A C8103-13-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
-32-
D9450-13-A-002-A D9450-13-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
D9450-14-A-006-A D9450-14-A-006-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
D9450-15-A-001-A D9450-15-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
L1902-11-A-011-A L1902-11-A-011-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
L2701-12-A-002-A L2701-12-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
L2701-15-A-005-A L2701-15-A-005-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
L2702-12-A-002-A L2702-12-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
L2702-15-A-005-A L2702-15-A-005-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
L2800-38-A-001-A L2800-38-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
L2800-40-A-001-A L2800-40-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
L3903-54-A-162-A L3903-54-A-162-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
L5502-11-A-001-A L5502-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
P2106-21-A-001-A P2106-21-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
P2106-22-A-002-A P2106-22-A-002-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
P2107-11-A-001-A P2107-11-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
P4601-11-A-001-A P4601-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
P5200-12-A-012-A P5200-12-A-012-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
P5200-12-A-022-A P5200-12-A-022-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
P8773-91-A-001-A P8773-91-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
P9373-11-A-001-A P9373-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
P9373-12-A-002-A P9373-12-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
P9573-11-A-001-A P9573-11-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R1060-16-A-001-A R1060-16-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6522-33-A-001-A R6522-33-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6641-15-A-012B R6641-15-A-012B.05 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6642-25-A-009-A R6642-25-A-009-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6645-18-A-001-A R6645-18-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6653-12-A-001-B R6653-12-A-001-B.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6653-13-A-002-A R6653-13-A-002-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6653-15-A-004-A R6653-15-A-004-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6653-16-A-005-A R6653-16-A-005-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6653-20-A-009-A R6653-20-A-009-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6657-14-A-004-A R6657-14-A-004-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6657-16-A-007-A R6657-16-A-007-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6664-12-A-002-A R6664-12-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6675-58-A-030-A R6675-58-A-030-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6682-28-A-004-A R6682-28-A-004-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6686-11-A-001-A R6686-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6713-20-A-003-A R6713-20-A-003-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6713-22-A-004-A R6713-22-A-004-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6713-24-A-134-A R6713-24-A-134-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6713-26-A-135-A R6713-26-A-135-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6713-27-A-136-A R6713-27-A-136-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6713-29-A-138-A R6713-29-A-138-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6715-14-A-004-A R6715-14-A-004-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6719-11-A-019-A R6719-11-A-019-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6719-12-A-014-A R6719-12-A-014-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
-33-
R6719-12-A-020-A R6719-12-A-020-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6732-13-A-002-AA R6732-13-A-002-AA.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6732-13-A-003-A R6732-13-A-003-A.04 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6753-14-A-014-A R6753-14-A-014-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6753-15-A-006-A R6753-15-A-006-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6753-50-A-050-A R6753-50-A-050-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6753-72-A-072-A R6753-72-A-072-A.04 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6753-85-A-085-A R6753-85-A-085-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6753-86-A-086-A R6753-86-A-086-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6758-13-A-003-A R6758-13-A-003-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6758-14-A-001-A R6758-14-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6758-15-A-002-A R6758-15-A-002-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6758-16-A-004-A R6758-16-A-004-A.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6764-21-A-121-A R6764-21-A-121-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6764-24-A-024-A R6764-24-A-024-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6764-26-A-126-A R6764-26-A-126-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6764-28-A-127-A R6764-28-A-127-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6764-29-A-029-A R6764-29-A-029-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6764-38-A-038-A R6764-38-A-038-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6764-61-A-261-B R6764-61-A-261-B.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6764-62-A-362-B R6764-62-A-362-B.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6764-63-A-263-A R6764-63-A-263-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6764-65-A-165-B R6764-65-A-165-B.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6764-67-A-167-A R6764-67-A-167-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6764-68-A-168-A R6764-68-A-168-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6764-69-A-069-A R6764-69-A-069-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6764-69-A-069-B R6764-69-A-069-B.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6766-21-A-002-A R6766-21-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6768-11-A-001-A R6768-11-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6768-12-A-002-A R6768-12-A-002-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6771-22-A-003-A R6771-22-A-003-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6775-12-A-203-C R6775-12-A-203-C.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6781-11-A-001-A R6781-11-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6781-12-A-003-A R6781-12-A-003-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6781-13-A-006-A R6781-13-A-006-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6781-14-A-007-A R6781-14-A-007-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6781-21-A-002-A R6781-21-A-002-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6781-32-A-008-A R6781-32-A-008-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6781-33-A-001-A R6781-33-A-001-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6781-34-A-003-A R6781-34-A-003-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6785-18-A-091-B R6785-18-A-091-B.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6785-19-A-093-A R6785-19-A-093-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6785-21-A-028-A R6785-21-A-028-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6785-24-A-089-A R6785-24-A-089-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6785-25-A-090-A R6785-25-A-090-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6785-26-A-030-A R6785-26-A-030-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6789-22-A-022-A R6789-22-A-022-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
-34-
R6789-41-A-041-A R6789-41-A-041-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6789-44-A-044-A R6789-44-A-044-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6789-52-A-052-A R6789-52-A-052-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6790-22-A-022-A R6790-22-A-022-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6793-11-A-131-A R6793-11-A-131-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6793-12-A-222-A R6793-12-A-222-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6793-15-A-015-A R6793-15-A-015-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6793-17-A-017-A R6793-17-A-017-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6793-42-A-042-A R6793-42-A-042-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6795-11-A-111-A R6795-11-A-111-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6795-12-A-112-A R6795-12-A-112-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6797-40-A-040-A R6797-40-A-040-A.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6797-55-A-055-A R6797-55-A-055-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
RF105-12-A-002-B RF105-12-A-002-B.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
RF109-12-A-001-A RF109-12-A-001-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
RF109-12-A-001-B RF109-12-A-001-B.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
RM501-14-A-003-A RM501-14-A-003-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
USR90-11-A-011-A USR90-11-A-011-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
USR90-12-A-012-A USR90-12-A-012-A.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
10485-11-A-001-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11239-11-A-001-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11242-11-A-011-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11552-13-A-001-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11572-11-A-101-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11573-12-A-003-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
11577-12-A-002-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
24106-16-A-003-AO.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
24108-20ES-A-013-AO.04 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25121-11-A-001-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25218-12-A-002-AO.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25252-11-A-001-AO.03 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25254-11-A-001-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25261-11-A-001-AO.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25458-13-A-002-AO.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25458-14-A-002-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25481-11-A-001-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25485-13-A-002-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25485-14-A-002-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25497-13-A-002-BO.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25498-12-A-001-CO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25498-14-A-002-BO.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25858-11-A-001-BO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25866-11-A-001-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
25869-16-A-004-CO.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
31001-11-A-001-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
31003-11-A-001-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
31006-11-A-001-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
-35-
31006-12-A-002-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
31009-11-A-001-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
31023-11-A-001-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
P2106-23-A-003-AO.02 [CONFIDENTIAL TREATMENT REQUESTED]/*/
P5100-11-A-001-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
P5200-14-A-014-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
R6744-11-A-001-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
RF110-12-A-002-AO.01 [CONFIDENTIAL TREATMENT REQUESTED]/*/
MINDSPEED ASSEMBLY AND TEST COST
MINDSPEED PART SKYWORKS SAP TEST PART ASSY COST TEST COST-MEX
J20462-14P-001AT [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J20464-12P-001AT J20464-12P-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J20464-13P-001AT [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J20464-15P-004AT J20464-15P-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J20472-12P-001AT J20472-12P-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J20501-12P-002AT J20501-12P-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28110-12-001AT J28110-12-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28235-15-003AT J28235-15-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28250-23ES-004AT J28250-23ES-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28300-12-001AT J28300-12-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28330-13-002AT J28330-13-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28331-18-005AT J28331-18-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28332-15-001BT J28332-15-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28332-18-005AT J28332-18-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28333-18-006AT [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28333-34-005AT J28333-34-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28346-12-003AT J28346-12-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28348-12-003AT J28348-12-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28360-12-001AT J28360-12-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28365-13-001AT J28365-13-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28398-25-007AT J28398-25-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28398-27-009AT J28398-27-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28471-16-001AT J28471-16-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28472-16-005BT J28472-16-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28475-17-003AT J28475-17-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28475-18-004AT J28475-18-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28476-17-003AT J28476-17-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28476-18-004AT J28476-18-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28477-17-003AT J28477-17-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28477-17R-003AT J28477-17R-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28477-18-004AT J28477-18-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28478-17-003AT J28478-17-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28478-17R-003AT J28478-17R-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28478-18-004AT J28478-18-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28510-14-001AT J28510-14-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
-36-
J28920-13-002AAT J28920-13-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28945-13-001AT J28945-13-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28945-13-002AT [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28945-33-001AT J28945-33-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28945-33-002AT [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28953-17-001BT [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28953-19-003BT J28953-19-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28970-14-003AT J28970-14-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J60083-15-002AT J60083-15-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J60083-15P-002AT J60083-15P-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J60083-15P-AT [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J80310-11R-001AT J80310-11R-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J80310-11R-001AT2 [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
JM28331-34-004AT JM28331-34-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
JM28332-34-004AT JM28332-34-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
JM28333-34-005AT JM28333-34-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
JR1905-2P-001AT JR1905-2P-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
JR7181-38-008AT JR7181-38-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J60077-11-AT J60077-11-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J11952-22-001A J11952-22-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J20462-13P-001AO J20462-13P-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J20462-14P-001AO J20462-14P-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J20464-13P-001AO J20464-13P-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28234-13-005B J28234-13-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28342-11-002A J28342-11-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28343-11-002A J28343-11-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28344-11-002A J28344-11-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28344-11ES-002A J28344-11ES-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28370-22-008A J28370-22-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28370-23-008A J28370-23-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28375-16-004E J28375-16-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28376-16-004D J28376-16-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28392-25-002A J28392-25-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28394-17-001A J28394-17-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28394-25-003A J28394-25-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28395-25-002A J28395-25-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28395-26-002A J28395-26-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28398-26-008A J28398-26-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28952-11-001A J28952-11-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28952-12-001A J28952-12-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28953-17-001B J28953-17-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28953-17-001BP [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28953-18-002B J28953-18-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28954-13-002A J28954-13-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
J28956-21-004B J28956-21-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
JL8565-16-006A JL8565-16-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
JR6707-11-001A JR6707-11-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
-37-
JR6786-24-004A JR6786-24-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
JR7132-16-002A JR7132-16-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
JR7133-28-006A JR7133-28-MTEST [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
-38-
CONEXANT UNIQUE MATERIALS
- --------------------------------------------------------------------------------------------------------------------------------
SAP
PART NUMBER CATEGORY ITEM TYPE DESCRIPTION STD / PRICE
- --------------------------------------------------------------------------------------------------------------------------------
19032M02-005 Unique Epoxy Broadband SYRINGE/500GR [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
19032M02-009 Unique Epoxy Broadband EPOXY D/A TQFP CRM1079B [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
19032M02-01 Unique Epoxy Broadband D/A 84-1LMIS 36GR/SRY [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
19032M02-013 Unique Epoxy Broadband EPOXY D/A HYP TE-111-6R5 15G/S [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
19032V02-027 Unique Epoxy Broadband D/A EPOXY 8361J 36GR/SRY [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D139-003 Unique Leadframes Broadband 40PD1-N2- 200X200 R65,11473,5 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D140-005 Unique Leadframes Broadband X-40PD1-N4- 210X230 11471 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D140-007 Unique Leadframes Broadband x 40PD1-N6- 260X266 11476,R151 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D150-031 Unique Leadframes Broadband 64QU1-W4- 320X310 11951,41,R1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D163-005 Unique Leadframes Broadband 68PL1-Y2,Y4-300X300 (-011) C [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D163-007 Unique Leadframes Broadband 68PL1-Y5- 260X260(-021)28952, [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D163-009 Unique Leadframes Broadband X-68PL1-YE- 430X430 L8565 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D204-031 Unique Leadframes Broadband X-64QU2-WI- DUAL R6636-11 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D206-021 Unique Leadframes Broadband X-84PL1-43- 360X360 25458, 115 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D206-031 Unique Leadframes Broadband x84PL1-44- 400X400 11490-17,11 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D206-041 Unique Leadframes Broadband 84PL1-45- 275X275 C2900,L3903 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D209-001 Unique Leadframes Broadband 68PL2-Y6- DUAL R6622,41,R6781 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D217-001 Unique Leadframes Broadband x84HYP3-40- HYPAC R6741,42,61, [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D219-001 Unique Leadframes Broadband X-68PL2-Y0- DUAL R6638-12 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D219-003 Unique Leadframes Broadband X-68PL2-YF- DUAL R6715-13 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D224-001 Unique Leadframes Broadband 68PL2-YA- DUAL R6653,42 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D229-001 Unique Leadframes Broadband X-80PQ1-51- 320X320 L7905,11 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D229-005 Unique Leadframes Broadband 80PQ1-55- 260X260 L26,L39,258 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D229-007 Unique Leadframes Broadband X-80PQ1-57- 370X370 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D229-011 Unique Leadframes Broadband 80PQ1-CX11646-11 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D232-001 Unique Leadframes Broadband 100PQ2-1A- DUAL R6657/64/86 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D238-001 Unique Leadframes Broadband 68HYP2-2A- R6682, R6713,49,67 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D238-003 Unique Leadframes Broadband 68HYP2-2A R6713,49,67 HYPAC [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D241-003 Unique Leadframes Broadband 100PQ1-1D- 275X275 25827,24108 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D243-001 Unique Leadframes Broadband 100PQ2-1B- DUAL R6673,83 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D246-001 Unique Leadframes Broadband X-100PQ2-1F- DUAL R6646 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D251-001 Unique Leadframes Broadband 144TQ1-4A- 310X310 C75,C73,116 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D251-007 Unique Leadframes Broadband 144TQ1-4D- 350X350 11661,561, [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D283-001 Unique Leadframes Broadband 32TQ1-8A- 10497,25832,52,RF10 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D269-001 Unique Leadframes Broadband 128TQ1-BA- 360X360 L19XX,L27XX [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D269-005 Unique Leadframes Broadband 128TQ1-BC- 401X504 P2106-XX [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D269-009 Unique Leadframes Broadband x128TQ1-BJ- 6X6mm [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D272-001 Unique Leadframes Broadband 100PQ2-1J- DUAL R6675,31 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D274-003 Unique Leadframes Broadband 80PQ2-52- DUAL R6732-13 GaAs [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D286-001 Unique Leadframes Broadband 48TQ1-PA- 180x180 RF100 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D286-013 Unique Leadframes Broadband 48TQ1-PH- 3.5x3.5 24105-12.1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D286-015 Unique Leadframes Broadband 48TQ1-3.302x3.302 11634-11 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D290-003 Unique Leadframes Broadband X-100PQ2-1L- DUAL R6714 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D291-001 Unique Leadframes Broadband X-144TQ2-4J- DUAL [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D355-003 Unique Leadframes Broadband 52PQ1-K4- 25865 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D357-001 Unique Leadframes Broadband 144TQ2-4K- DUAL R6775,76,85 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D357-003 Unique Leadframes Broadband 144TQ2-4P- DUAL R6785 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D363-003 Unique Leadframes Broadband 176TQ1-4Y- 8X8mm 11229 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D363-009 Unique Leadframes Broadband 176T81-4X- 6x6 (11235/11236) [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D363-013 Unique Leadframes Broadband 176TQ1-4S- 10x10 (P4900-11) [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D445-001 Unique Leadframes Broadband X-144TQ2-4L- DUAL R6766 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D451-003 Unique Leadframes Broadband 64TQ1-W10- TQFP -20424-riptid [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D455-001 Unique Leadframes Broadband 100PQ2-1W- DUAL R6753 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D455-003 Unique Leadframes Broadband x 100PQ2-1N- DUAL R6815-11 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D457-001 Unique Leadframes Broadband 100PQ2-1Y- DUAL R6764,89 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D457-003 Unique Leadframes Broadband 100PQ2-1Z- DUAL R6719 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D457-005 Unique Leadframes Broadband 100PQ2-9D- (CX06832-12) [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D459-001 Unique Leadframes Broadband 128TQ2-BG- DUAL R6758 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D463-003 Unique Leadframes Broadband 144T82-4N- DUAL R6793,94 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D463-005 Unique Leadframes Broadband 144T82-4R- DUAL r6795-11,12 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D463-007 Unique Leadframes Broadband x144T82-xx- DUAL new from -00 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D463-009 Unique Leadframes Broadband 144LQFP-4G-Mono (CX06834-11 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D463-011 Unique Leadframes Broadband 144LQFP-4AA- Mono (CX06834-1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D477-003 Unique Leadframes Broadband 128TQ2-BK- DUAL 80m R6819-11-S [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D531-001 Unique Leadframes Broadband 100TQ1-9L- vTQFP 7.7x7.7mm [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D531-003 Unique Leadframes Broadband 100TQ1-9N- VTQFP (14 X 14X1mm) [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D531-003-S Unique Leadframes Broadband 100VTQFP Stamped (14 X 14X1mm) [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D531-005 Unique Leadframes Broadband 100TQ1-CX82500- VTQFP (14 X 14 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D591-001 Unique Leadframes Broadband 144LQ1-4AC- 3.440X3.4mm CX068 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D591-003 Unique Leadframes Broadband 144LQ1-CX06833-XX [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
GP00-D635-001 Unique Leadframes Broadband 128LQ1 CX80900-11 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------------------------------
-39-
CONEXANT UNIQUE MATERIALS - CONTINUED
- ---------------------------------------------------------------------------------------------------------------------------------
SAP
PART NUMBER CATEGORY ITEM TYPE DESCRIPTION STD / PRICE
- ---------------------------------------------------------------------------------------------------------------------------------
GP00-D689-001 Unique Leadframes Broadband 176LQFP-4ZA- (CX06835-25) [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
GP00-D691-001 Unique Leadframes Broadband 100TQ2-9J- (CX06836-11) [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
19098V89-002A Unique Molding Compound Broadband 6300HG 55mmX98g 40L/64L/68L/ [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
19098V89-002B Unique Molding Compound Broadband 6300HG 14mmX3.5g B0L/100L [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
19098V89-002C Unique Molding Compound Broadband 6300HG 55mmX75g 40L/64L/68L/8 [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
19098V89-003A Unique Molding Compound Broadband 6300HJ 18mmX9.5g 68L TOWA [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
19098V89-003B Unique Molding Compound Broadband 6300HJ 14mmX6.1g 100L TOWA [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
19098V89-013B Unique Molding Compound Broadband 6650E 55mmX 104g 40L DIP/64L [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
19098V89-013C Unique Molding Compound Broadband 6650E 14mmX3.7g 80L/100L (Man [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
19098V89-020C Unique Molding Compound Broadband x7720HB 14X6.7g LGA 6x6(.16g) [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
19098V89-013A Unique Molding Compound Broadband 6650E 18MMX10GR. (68L TOWA) [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
TR00-D609-003 Unique PCB's Broadband X- BOARD 84 LEADS R6639 [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
TR00-D613-003 Unique PCB's Broadband BOARD 68L, R6640/44/45 [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
TR00-D623-001 Unique PCB's Broadband BOARD 68L, R6682/R6684 [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
TR01-D700-001 Unique PCB's Broadband BOARD 68L, R6695,97/R8725 [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
TR01-D712-001 Unique PCB's Broadband BOARD 68L, R6735,36 [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
TR02-D500-003 Unique PCB's Broadband BOARD 68L, R675,46,49,50,59,60 [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
TR02-D506-001 Unique PCB's Broadband BOARD 68L, R6713, R6717 [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
TR02-D513-001 Unique PCB's Broadband BOARD 68L, R6767 [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
TR02-D514-001 Unique PCB's Broadband X-BOARD 68L, R6769,70,79,80 [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
TR02-D515-001 Unique PCB's Broadband X-BOARD 84 LEADS R6761,R6762 [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
TR02-D516-001 Unique PCB's Broadband BOARD 84 LEADS R6751,52 [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
TR02-D545-001 Unique PCB's Broadband HYPAC BOARD 84L [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON MATERIAL
- ---------------------------------------------------------------------------------------------------------------------------------
SAP
PART NUMBER CATEGORY ITEM TYPE DESCRIPTION STD / PRICE
- ---------------------------------------------------------------------------------------------------------------------------------
19014M11-19 Common Gold Wire Shared GOLD WIRE 1.25MILS NORMAL [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
19014M11-21 Common Gold Wire Shared GOLD WIRE 1.2MILS LOW LOOP [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
19014M11-21-DC Common Gold Wire Shared GOLD WIRE 1.2MILS LOW LOOP - 3 [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
19098V89-011A Common Molding Compound Shared 7351LS 14mmX5.5g 176(2.75g) [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
19098V89-011B Common Molding Compound Shared 7351LS 14mmX3.9g 144L/48L/32L [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
19098V89-013D Common Molding Compound Shared 6650E 14mmX6.5g 100L (Auto Mo [CONFIDENTIAL TREATMENT
REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------------------------------------
-40-
MINDSPEED RAW MATERIAL COSTS
SAP
PART NUMBER CATEGORY ITEM TYPE DESCRIPTION STD/PRICE
GP00-D456-001 Unique Leadframes Mindspeed 100PQ2-1X-DUAL R6786 [CONFIDENTIAL TREATMENT REQUESTED]/*/
GP00-D547-003 Unique Leadframes Mindspeed 144 ETQ2-4H-(Topaz) 28342-43/4 [CONFIDENTIAL TREATMENT REQUESTED]/*/
Molding
19098V89-007B Unique Compound Mindspeed 6710 48mmX80g 20L/24L (GaAs MA [CONFIDENTIAL TREATMENT REQUESTED]/*/
Molding 7720HL 14mmX4.1g BGA 27mm
19098V89-012A Unique Compound Mindspeed TOWA [CONFIDENTIAL TREATMENT REQUESTED]/*/
Molding 7720HL 14mmX5.7g BGA 35mm
19098V89-012B Unique Compound Mindspeed TOWA [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D111-001 Unique PCB's Mindspeed X-BGA BOARD 144L R7 130 [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D116-001 Unique PCB's Mindspeed X-BGA BOARD [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D118-001 Unique PCB's Mindspeed X-BGA BOARD [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D138-001 Unique PCB's Mindspeed BGA BOARD 268L R7133-28 [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D146-001 Unique PCB's Mindspeed BGA BOARD 268L [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D149-001 Unique PCB's Mindspeed X-340 BGA Board CSMV/6(M23/P88 [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D151-001 Unique PCB's Mindspeed X-BGA BOARD 340L R7138 [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D158-001 Unique PCB's Mindspeed X-BGA BOARD 268L [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D161-001 Unique PCB's Mindspeed xBGA BOARD (TRIPAC) R7177, R71 [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D168-001 Unique PCB's Mindspeed BGA BOARD 400 (DDP/8 CSM K56) [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D174-001 Unique PCB's Mindspeed X-BGA BOARD 318L 27mm (use D1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D176-003 Unique PCB's Mindspeed BGA BOARD 318L 27mm (Replace" [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D179-001 Unique PCB's Mindspeed 340 BGA Board CSMV (M24/P94) R [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D182-001 Unique PCB's Mindspeed X-R7155 BGA BOARD [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D183-001 Unique PCB's Mindspeed BGA BOARD 256L 27mm (Peak-7) R [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D191-001 Unique PCB's Mindspeed X-BGA BOARD (TRIPAC) R7178, [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D306-001 Unique PCB's Mindspeed BGA BOARD 388L [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D485-001 Unique PCB's Mindspeed X-BGA BOARD 272L [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D485-003 Unique PCB's Mindspeed BGA BOARD 272L 28228-11, 16 [CONFIDENTIAL TREATMENT REQUESTED]/*/
BGA BOARD 388L 35mm
TR03-D525-003 Unique PCB's Mindspeed (28234/282 [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D605-001 Unique PCB's Mindspeed BGA BOARD 264L 27MM (4 Layer) [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D655-001 Unique PCB's Mindspeed X-340 BGA CSM6V M24/P96 R7181 [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D885-001 Unique PCB's Mindspeed BGA BOARD 264L 27MM (4 Layer) [CONFIDENTIAL TREATMENT REQUESTED]/*/
TR03-D905-001 Unique PCB's Mindspeed BGA BOARD, 27MM - (MFC2000; P [CONFIDENTIAL TREATMENT REQUESTED]/*/
-41-
PROTOTYPE ASSEMBLY CHARGES (NOT INCLUDING LABOR)
PROTOTYPE PRICING:
The prototype charge consist of three parts; a flat per lot charge of $350, a
per unit charge, and a material cost charge. The prototype pricing per unit
charge starts with the same standard cost or purchase order price subtracting
any labor costs. These prices are shown in this Exhibit B. At the end of the
month the labor cost per unit is calculated by taking the total labor costs and
dividing by the number of prototype units. The per unit labor charge is then
added to the per unit charge shown in this Exhibit B. The material is charged
based on the amount and cost removed from the stockroom. For the test charge,
the standard cost per platform is used as shown in Exhibit F.
- ---------------------------------------------------------------------------------
PROTOTYPE
PACKAGE COST
YIELDED WITH OUT
PACKAGE CODE PACKAGE TYPE LABOR (OH)
- ---------------------------------------------------------------------------------
020TQ1 20L TQFP [CONFIDENTIAL TREATMENT REQUESTED]/*/
024TQ1 24L PQFP [CONFIDENTIAL TREATMENT REQUESTED]/*/
032TQ1 32L LQFP [CONFIDENTIAL TREATMENT REQUESTED]/*/
048TQ1 48L LQFP [CONFIDENTIAL TREATMENT REQUESTED]/*/
040PD1 40L DIP [CONFIDENTIAL TREATMENT REQUESTED]/*/
064TQ1 64L LQFP [CONFIDENTIAL TREATMENT REQUESTED]/*/
064QU1 64L QUIP [CONFIDENTIAL TREATMENT REQUESTED]/*/
064QU2 64L Monopac [CONFIDENTIAL TREATMENT REQUESTED]/*/
068PL1 68L PLCC [CONFIDENTIAL TREATMENT REQUESTED]/*/
068PL2 68L Monopac [CONFIDENTIAL TREATMENT REQUESTED]/*/
084PL1 84L PLCC [CONFIDENTIAL TREATMENT REQUESTED]/*/
068HY3 68L Hypac 3 die [CONFIDENTIAL TREATMENT REQUESTED]/*/
068HY4 68L Hypac 4 die [CONFIDENTIAL TREATMENT REQUESTED]/*/
084HY3 84L Hypac 3 die [CONFIDENTIAL TREATMENT REQUESTED]/*/
052PQ1 52L PQFP [CONFIDENTIAL TREATMENT REQUESTED]/*/
080PQ1 80L PQFP [CONFIDENTIAL TREATMENT REQUESTED]/*/
080PQ2 80L Monopac [CONFIDENTIAL TREATMENT REQUESTED]/*/
100TQ1 100L TQFP [CONFIDENTIAL TREATMENT REQUESTED]/*/
100PQ1 100L PQFP [CONFIDENTIAL TREATMENT REQUESTED]/*/
100PQ2 100L Monopac [CONFIDENTIAL TREATMENT REQUESTED]/*/
128TQ1 128L LQFP [CONFIDENTIAL TREATMENT REQUESTED]/*/
128TQ2 128L LQFP Mono [CONFIDENTIAL TREATMENT REQUESTED]/*/
128T81 128L LQ 80 Micron [CONFIDENTIAL TREATMENT REQUESTED]/*/
144TQ1 144L LQFP [CONFIDENTIAL TREATMENT REQUESTED]/*/
144TQ2 144L LQ Monopac [CONFIDENTIAL TREATMENT REQUESTED]/*/
144T82 144L LQ 80 Micron [CONFIDENTIAL TREATMENT REQUESTED]/*/
176TQ1 176L LQFP [CONFIDENTIAL TREATMENT REQUESTED]/*/
176T81 176L LQ 80 Micron [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ---------------------------------------------------------------------------------
42
EXHIBIT C - MANUFACTURING SERVICES
1. All Services will be provided to Buyer by Supplier in accordance with
specifications provided by Buyer and in accordance with Supplier Manufacturing
Operating Procedures.
2. Manufacturing Services will include assembly, final testing, and
post-test processing of Devices produced by Supplier manufacturing facility
of the type provided by Buyer prior to the Effective Date.
3. Engineering Activities and Test Boards.
a. Buyer will be responsible for its own packaging engineering
activities, including design form, fit, and function.
b. First article final test interface boards and handler kits are
to be provided by Buyer within thirty (30) days of release of a new Device.
Complete drawings and specifications are to be provided by Buyer to Supplier
prior to the release of hardware to Supplier for testing.
4. Finished Goods Inventory Storage. The Services will include storage of
Buyer's product, which was manufactured at a Supplier facility, until such time
as Buyer directs Supplier to ship the Products. Finished goods inventory shall
be limited to invoiced and built deliverables, and shall be transferred to Buyer
upon the occurrence of either expiration or termination of this Agreement,
whichever is earlier. This finished goods inventory storage will be provided at
no charge to Buyer.
43
EXHIBIT D - QUALITY SPECIFICATIONS
19551G15 Mexicali Quality Manual
19592U09 Incoming inspection procedure
19592U12 Control and disposition of material and non-conforming material
19592U01 General process procedure
FGN5603 Receiving, packaging, and product storage into Finish Good
44
EXHIBIT E - PURCHASE COMMITMENTS
The take or pay commitments in spending in listed below for year 1. There is no
take or pay for Unique Material and Common Material. The take or pay is based on
the quarterly rates, shown in Exhibit F and activity shown in Exhibit G. The
take or pay is same as the planned absorption for the quarter for Buyer
(referred to in the table below as "CNXT").
- ---------------------------------------------------------------------------------------------------
Q4-02 Q1-03 Q2-03 Q3-03
- ---------------------------------------------------------------------------------------------------
CNXT Absorption [CONFIDENTIAL TREATMENT REQUESTED]/*/
Total Absorption [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ---------------------------------------------------------------------------------------------------
45
EXHIBIT F - ASSEMBLY, TEST AND SHIPPING QUARTERLY RATES
QUARTERLY ASSEMBLY RATES
- -------------------------------------------------------------------------------------------------------------------
Q4'02 PKG TYPE Q1'03 PKG TYPE Q2'03 PKG TYPE Q3'03 PKG TYPE STD. COST RATE
PACKAGE JULY-SEPT OCT-DEC JAN-MARCH APRIL-JUNE AVG. FOR YEAR
TYPES 2/4 SDF 2/4 SDF 2/4 SDF 2/4 SDF 2-4 SDF
- -------------------------------------------------------------------------------------------------------------------
020TQ1
- -------------------------------------------------------------------------------------------------------------------
024TQ1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
032TQ1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
048TQ1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
040PD1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
064TQ1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
064QU1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
064QU2 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
068PL1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
068PL2 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
084PL1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
068HY3 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
068HY4 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
084HY3 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
052PQ1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
080PQ1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
080PQ2 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
100TQ1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
100PQ1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
100PQ2 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
128TQ1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
128TQ2 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
128T81 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
144TQ1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
144TQ2 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
144T82 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
176TQ1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
176T81 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
QUARTERLY TEST RATES
- -------------------------------------------------------------------------------------------------------------------
Q4-2 Q1-03 Q2-03 Q3-03 STD. COST RATE
JULY-SEPT OCT-DEC JAN-MARCH APRIL-JUNE AVG. FOR YEAR
PLATFORM ($/HR) ($/HR) ($/HR) ($/HR) ($/HR)
- -------------------------------------------------------------------------------------------------------------------
LTX
- -------------------------------------------------------------------------------------------------------------------
Trillium [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
Synchro [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
HP84K [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
Fast PA [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
Teradyne [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
Catalyst [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
System Test [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
Lead Scan
Cost/Unit [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
Bake and Shipping
Cost/Unit [CONFIDENTIAL TREATMENT REQUESTED]/*/
- -------------------------------------------------------------------------------------------------------------------
46
EXHIBIT G - TAKE OR PAY ACTIVITY
- --------------------------------------------------------------------------------
CONEXANT TAKE OR PAY ACTIVITY-ASSEMBLY
START PER DAY
PACKAGE TYPES Q4-02 Ql-03 Q2-03 Q3-03
- --------------------------------------------------------------------------------
032TQl [CONFIDENTIAL TREATMENT REQUESTED]/*/
048TQl [CONFIDENTIAL TREATMENT REQUESTED]/*/
040PDl [CONFIDENTIAL TREATMENT REQUESTED]/*/
064TQl [CONFIDENTIAL TREATMENT REQUESTED]/*/
064QUl [CONFIDENTIAL TREATMENT REQUESTED]/*/
064QU2 [CONFIDENTIAL TREATMENT REQUESTED]/*/
068PLl [CONFIDENTIAL TREATMENT REQUESTED]/*/
068PL2 [CONFIDENTIAL TREATMENT REQUESTED]/*/
084PLl [CONFIDENTIAL TREATMENT REQUESTED]/*/
068HY3 [CONFIDENTIAL TREATMENT REQUESTED]/*/
068HY4 [CONFIDENTIAL TREATMENT REQUESTED]/*/
084HY3 [CONFIDENTIAL TREATMENT REQUESTED]/*/
052PQl [CONFIDENTIAL TREATMENT REQUESTED]/*/
080PQl [CONFIDENTIAL TREATMENT REQUESTED]/*/
080PQ2 [CONFIDENTIAL TREATMENT REQUESTED]/*/
1OOTQ1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
1OOPQ1 [CONFIDENTIAL TREATMENT REQUESTED]/*/
1OOPQ2 [CONFIDENTIAL TREATMENT REQUESTED]/*/
128TQl [CONFIDENTIAL TREATMENT REQUESTED]/*/
128TQ2 [CONFIDENTIAL TREATMENT REQUESTED]/*/
128T81 [CONFIDENTIAL TREATMENT REQUESTED]/*/
144TQl [CONFIDENTIAL TREATMENT REQUESTED]/*/
144TQ2 [CONFIDENTIAL TREATMENT REQUESTED]/*/
144T82 [CONFIDENTIAL TREATMENT REQUESTED]/*/
176TQl [CONFIDENTIAL TREATMENT REQUESTED]/*/
176T81 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------
QUARTERLY CONEXANT TEST TAKE OR PAY HOURS
- --------------------------------------------------------------------------------
CONEXANT Q4-02 Q1-03 Q2-03 Q3-03
HOURS JULY-SEPT OCT-DEC JAN-MARCH APRIL-JUNE
PLATFORM ($/HR) ($/HR) ($/HR) ($/HR)
- --------------------------------------------------------------------------------
LTX [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------
Trillium [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------
Synchro [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------
HP84000 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------
Fast PA [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------
Teradyne [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------
Catalyst [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------
System [CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------
47.
EXHIBIT H - [INTENTIONALLY LEFT BLANK]
-48-
EXHIBIT I - DELIVERY AND LOGISTICS
The Supplier will comply with any special shipping instructions specified on
Buyer's Purchase Orders.
1. The Supplier will receive Delivery Note or Reservation from Buyer's
Customer Logistics Group; the supplier will Pick and pack Delivery Note
according to document FGN5604, instructions and Guides for Packers.
2. The Supplier will Post Delivery Note and prepare US and Mexican Customs
paperwork on Buyer's SAP system. The supplier will transport goods to Mexican
Custom Brokers office for Mexican Export Pedimento preparation.
3. The Supplier will then transport goods to the US Custom Brokers local
office for US Customs Import Declaration preparation.
Additional shipping details are as follows:
(a) Shipping services shall include, (as specified by Buyer), tape and
reel handling and packaging for delivery in accordance with appropriate
packaging specifications provided by Buyer, box and hold, if specified)
preparing required shipping paperwork.
(b) Supplier shall be responsible for preparing and including in each
shipment the following shipping paperwork prepared on buyer's SAP system: airway
bill from freight forwarder export documentation customs clearance documentation
and packing list, barcode labeling, and any other paperwork agreed to by the
Parties. Supplier will also update all systems for Supplier and Buyer databases
as necessary to support the shipping function. This would include, but not be
limited to; Delivery Notes, reservations, scrap requests and all internal
systems such as SAP, Promis, Die Manager, and Pack-a-way and external systems as
FedEx, DHL, UPS, Emery, etc., provided that Buyer will be responsible for
continued support for the following systems: Die Manager and Pack-a-way.
Supplier shall also, upon request, provide Buyer with information related to
shipment metrics, including, but not limited to: quantity of shipments, type of
shipments, etc.
(c) To the extent not otherwise specifically provided for in this
Exhibit I, the policies and procedures governing the shipping services provided
by Supplier to Buyer hereunder shall be consistent with those policies and
procedures set forth in Buyer's standard operating procedures (NPB SOP-0156) as
in effect immediately prior to the Effective Date. The Parties may negotiate in
good faith from time to time to revise such procedures as deemed necessary by
either of the Parties. In the event of any conflict between the terms of this
Agreement and such standard operating procedures, the terms of this Agreement
shall control. Buyer shall be responsible for obtaining all governmental
approvals, , and notifying Supplier of all procedures required for compliance
with any laws or regulations pertaining to the shipment or export of any
products or materials; provided, however, that Supplier shall be responsible for
confirming, prior to effecting any shipment, that such approvals, etc. have been
obtained.
-49-
EXHIBIT J - REPORTS
- ----------------------------------------------------------------------------------------------------------------
AREA REPORT DESCRIPTION CAPABILITY IN PLACE FREQUENCY FORMAT
- ----------------------------------------------------------------------------------------------------------------
Assembly End to end Assembly yield and
Pareto failures Yes Monthly Excel
-----------------------------------------------------------------------------------------------
Assembly yield by package type Yes Monthly Excel
-----------------------------------------------------------------------------------------------
Assembly Cycle time Yes Monthly Excel
-----------------------------------------------------------------------------------------------
Assembly Cycle time by package type Yes Monthly Excel
-----------------------------------------------------------------------------------------------
SMT Yield Yes Monthly Excel
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Test/PE Overall Test yield and pareto failures Yes on Web Monthly Excel
-----------------------------------------------------------------------------------------------
Test yield by product type and pareto
failures Yes on Web Monthly Excel
-----------------------------------------------------------------------------------------------
Low yield lot disposition Yes on Web Monthly Excel
-----------------------------------------------------------------------------------------------
Electrical PPM by product Yes on Web Monthly Excel
-----------------------------------------------------------------------------------------------
Overall Test Cycle time Yes will be on Web Monthly Excel
-----------------------------------------------------------------------------------------------
Test Cycle time by package type Yes will be on Web Monthly Excel
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
QA Cpk on critical operations Yes Monthly Excel
-----------------------------------------------------------------------------------------------
Cpk on critical operations by package
type on going Monthly Excel
-----------------------------------------------------------------------------------------------
CAL test results yes Monthly Excel
-----------------------------------------------------------------------------------------------
3rd opticle inspection by package
type on going Monthly Excel
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Product 13 Weeks commit report yes Monthly Excel
Control -----------------------------------------------------------------------------------------------
Web-
WIP status on going Real time base
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Mindspeed Material Die Consumption Report Yes Monthly Excel
Material Die
Consumption
- ----------------------------------------------------------------------------------------------------------------
-50-
EXHIBIT K - RECONCILIATION TABLE
- ------------------------------------------------------------------------------------------
ACTIVITY/ABSORPTION IMPACT
TO QUARTERLY PLAN TO
CNXT SKYWORKS RATES CONEXANT ACTION AND IMPACT
- ------------------------------------------------------------------------------------------
Flat Flat No Change Use Qtr. Planned Rates Qtr. Planned Take or Pay
- ------------------------------------------------------------------------------------------
Flat Up Decrease Use Actual Rates Better than Take or Pay
- ------------------------------------------------------------------------------------------
Flat Down Increase Use Qtr. Planned Rates Qtr. Planned Take or Pay
- ------------------------------------------------------------------------------------------
Down Flat Increase Use Qtr. Planned Rates Qtr. Planned Take or Pay
- ------------------------------------------------------------------------------------------
Down Up Increase Use Qtr. Planned Rates Qtr. Planned Take or Pay
---------------------------------------------------------------------
Decrease Use Actual Rates Better than Take or Pay
- ------------------------------------------------------------------------------------------
Down Down Increase Use Qtr. Planned Rates Qtr. Planned Take or Pay
- ------------------------------------------------------------------------------------------
UP Flat Decrease Use Actual Rates Better than Take or Pay
- ------------------------------------------------------------------------------------------
up Up Decrease Use Actual Rates Better than Take or Pay
- ------------------------------------------------------------------------------------------
UP Down Increase Use Qtr. Planned Rates Qtr. Planned Take or Pay
---------------------------------------------------------------------
Decrease Use Actual Rates Better than Take or Pay
- ------------------------------------------------------------------------------------------
51.
Exhibit 10.w
WHENEVER CONFIDENTIAL INFORMATION IS OMITTED HEREIN (SUCH OMISSIONS ARE DENOTED
BY AN ASTERISK), SUCH CONFIDENTIAL INFORMATION HAS BEEN SUBMITTED SEPARATELY TO
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.
================================================================================
NEWBURY PARK
WAFER SUPPLY AND SERVICES AGREEMENT
among:
ALPHA INDUSTRIES, INC.
a Delaware corporation;
and
CONEXANT SYSTEMS, INC.
a Delaware corporation;
---------------------------------
Dated as of June 25th, 2002
---------------------------------
================================================================================
TABLE OF CONTENTS
PAGE
1. DEFINITIONS........................................................................................ 1
1.1 "Buyer Spin-off"............................................................................ 1
1.2 "Buyer Subsidiary".......................................................................... 1
1.3 "Competitor"................................................................................ 1
1.4 "Confidential Information................................................................... 1
1.5 "Cycle Time"................................................................................ 1
1.6 "Delivery Note"............................................................................. 2
1.7 "Engineering Wafers"........................................................................ 2
1.8 "Final Test Services........................................................................ 2
1.9 "Party"..................................................................................... 2
1.10 "Pizza Mask Wafers" ........................................................................ 2
1.11 "Photomasks................................................................................. 2
1.12 "Post Probe Processing Services"............................................................ 2
1.13 "Price"..................................................................................... 2
1.14 "Probe Services"............................................................................ 2
1.15 "Process Technology"........................................................................ 2
1.16 "Production Wafers"......................................................................... 2
1.17 "Purchase Order"............................................................................ 2
1.18 "Quality Specifications".................................................................... 2
1.19 "Risk Production"........................................................................... 2
1.20 "Services".................................................................................. 2
1.21 "Specifications"............................................................................ 2
1.22 "Supplier Fab".............................................................................. 3
1.23 "Wafers".................................................................................... 3
2. PURCHASE AND SUPPLY OBLIGATIONS.................................................................... 3
2.1 Buyer Purchases............................................................................. 3
2.2 Supplier Supply Obligations................................................................. 3
3. WAFER AND SERVICES PURCHASES ...................................................................... 5
3.1 Scope....................................................................................... 5
3.2 Process Technologies........................................................................ 5
3.3 Wafer Forecasts............................................................................. 5
3.4 Purchase Orders............................................................................. 5
3.5 Acceptance and Acknowledgement.............................................................. 6
3.6 Wafer Lots; Expedited Services.............................................................. 6
3.7 Pizza Mask Wafers........................................................................... 6
-i-
TABLE OF CONTENTS
(CONTINUED)
PAGE
3.8 Cancellation and Modifications to Orders ................................................... 6
3.9 Materials................................................................................... 7
3.10 Inactive Material........................................................................... 7
3.11 Risk Production............................................................................. 7
3.12 Rework...................................................................................... 8
3.13 NRE Services................................................................................ 8
3.14 Final Test and Probe Services............................................................... 8
4. DELIVERY AND LOGISTICS ............................................................................. 9
4.1 Delivery.................................................................................... 9
4.2 Wafers...................................................................................... 9
4.3 Product Logistics........................................................................... 9
5. PRICING AND PAYMENTS ............................................................................... 9
5.1 Pricing and Invoices........................................................................ 9
5.2 Costs....................................................................................... 10
5.3 Taxes....................................................................................... 10
6 . TRACKING; REPORTING; AND AUDITS .................................................................... 10
6.1 Wafer Tracking.............................................................................. 10
6.2 Reporting Requirements ..................................................................... 10
7 . WARRANTY AND DISCLAIMER ............................................................................ 10
7.1 Wafer Warranty ............................................................................. 10
7.2 Services Warranty........................................................................... 11
7.3 Disclaimers................................................................................. 11
8 . INDEMNIFICATION..................................................................................... 11
8.1 Indemnification Obligations ................................................................ 11
8.2 Conditions.................................................................................. 12
8.3 Sole and Exclusive Remedy................................................................... 12
9. CONFIDENTIALITY..................................................................................... 12
9.1 Confidentiality Obligations................................................................. 12
9.2 Exceptions.................................................................................. 13
9.3 Confidentiality of this Supply Agreement ................................................... 13
9.4 Injunctive Relief........................................................................... 13
10. LIMITATIONS OF LIABILITY............................................................................ 13
10.1 Disclaimer.................................................................................. 13
-ii-
TABLE OF CONTENTS
(CONTINUED)
PAGE
10.2 Liability Limitation........................................................................ 13
10.3 Basis of Bargain............................................................................ 14
11. TERM; TERMINATION................................................................................... 14
11.1 Term........................................................................................ 14
11.2 Termination................................................................................. 14
11.3 Termination for Non-Payment................................................................. 14
11.4 Termination of Buyer Spin-off Agreements.................................................... 14
11.5 Effect of Termination....................................................................... 15
12. GENERAL............................................................................................. 15
12.1 Agency...................................................................................... 15
12.2 Governing Law; Venue and Jurisdiction....................................................... 15
12.3 Dispute Resolution and Escalation........................................................... 15
12.4 Third-Party Beneficiaries................................................................... 16
12.5 Compliance with Law......................................................................... 16
12.6 Force Majeure............................................................................... 16
12.7 Amendment; Later Agreement.................................................................. 16
12.8 Assignment.................................................................................. 16
12.9 Notices..................................................................................... 17
12.10 Waiver...................................................................................... 17
12.11 Severability................................................................................ 17
12.12 Counterparts and Facsimile.................................................................. 17
12.13 Rules of Construction....................................................................... 18
12.14 Entire Agreement............................................................................ 18
EXHIBIT A - PRICING........................................................................................... 20
EXHIBIT B - QUALITY SPECIFICATIONS ........................................................................... 21
EXHIBIT C - NEW PROCESS TECHNOLOGY PROCEDURES ................................................................ 22
EXHIBIT D - WAFER CYCLE TIMES ................................................................................ 23
EXHIBIT E - FINAL TEST AND PROBE SERVICES SUPPORT ............................................................ 24
EXHIBIT F - DELIVERY AND LOGISTICS ........................................................................... 25
EXHIBIT G - REPORTS........................................................................................... 26
-iii-
NEWBURY PARK WAFER SUPPLY AND SERVICES AGREEMENT
THIS WAFER SUPPLY AND SERVICES AGREEMENT (the "SUPPLY AGREEMENT") is
entered into as of June 25th 2002 (the "EFFECTIVE DATE") by and between CONEXANT
SYSTEMS, INC., a Delaware corporation ("BUYER") and ALPHA INDUSTRIES, INC., a
Delaware corporation ("SUPPLIER").
RECITALS
A. Buyer desires, on the terms and conditions of this Supply
Agreement, to purchase from Supplier semiconductor wafers and related foundry,
manufacturing, probe, and other services.
B. Supplier is willing to supply such wafers and services to Buyer on
the terms and conditions of this Supply Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Supply Agreement, the Parties agree as follows:
AGREEMENT
1. DEFINITIONS. Capitalized terms not expressly defined elsewhere in this
Supply Agreement have the following meanings:
1.1 "BUYER SPIN-OFF" means any entity (including, without limitation,
Mindspeed) that is a successor of any portion of the business of Buyer resulting
from a spin-off or divestiture of such business, regardless of whether or not
Buyer retains an equity or ownership interest in such entity.
1.2 "BUYER SUBSIDIARY" means any entity that at any time during the
term of this Supply Agreement controls, is controlled by, or is under common
control with Buyer, where control means direct or indirect ownership of fifty
percent (50%) or more of the outstanding voting stock or other equity interests
ordinarily having voting rights.
1.3 "COMPETITOR" means a business entity which derives a material
portion of its revenue (over the most recent three (3) year period) from sales
of similar products in similar markets, as compared with the products and
markets of a Party.
1.4 "CONFIDENTIAL INFORMATION" shall mean (i) for information
disclosed after the Effective Date, all non-public information disclosed by one
Party to the other Party pursuant to this Supply Agreement that is identified as
"confidential" or marked with a similar legend at the time of such disclosure
or, if disclosed other than in writing, identified as confidential at the time
of disclosure and confirmed in writing within thirty (30) days, (ii) for
information currently in the possession of the other Party as of the Effective
Date, all non-public information that a reasonable person would have understood
to be confidential, regardless of the form or manner of disclosure, (iii) any
information obtained by one Party's employees or agents while on the premises of
the other Party, which, under the circumstances, a reasonable person would have
understood to be confidential, and (iv) any specifications or technical
information related to Buyer's products (e.g., structure, design, layout) and
Supplier's process technologies that are known to, or otherwise in the
possession of, the other Party as of the Effective Date.
1.5 "CYCLE TIME" means, with respect to a Wafer, Supplier's standard
production cycle measured from the start of Wafer manufacture through shipment.
1.
1.6 "DELIVERY NOTE" means the delivery instructions provided by Buyer
to Supplier for Wafers ordered by Buyer.
1.7 "ENGINEERING WAFERS" means non-production Wafers manufactured by
Supplier for qualification or testing and may include Pizza Mask Wafers.
1.8 "FINAL TEST SERVICES" means the testing of circuits at the
packaged level to meet the Specifications.
1.9 "PARTY" means either Buyer or Supplier, as the context requires,
and "Parties" means Buyer and Supplier collectively.
1.10 "PIZZA MASK WAFERS" means multiple device designs on a single
wafer.
1.11 "PHOTOMASKS" means precision photographic quartz or glass plates
containing microscopic images of integrated circuits for use as master images to
transfer circuit patterns onto semiconductor wafers during the fabrication of
integrated circuits and other semiconductor products.
1.12 "POST PROBE PROCESSING SERVICES" means (i) grinding of Wafers to
appropriate thickness; (ii) scribing of Wafers to commence die formation; (iii)
die singulation; (iv) breaking dies along scribed markings; and (v) final
singulation of each die.
1.13 "PRICE" is defined in Exhibit A.
1.14 "PROBE SERVICES" means electrical testing of individual
semiconductor wafers on a substrate.
1.15 "PROCESS TECHNOLOGY" means the systematic techniques, methods, or
approaches used to manufacture, or test semiconductor chips or assemblies.
1.16 "PRODUCTION WAFERS" means Wafers manufactured by Supplier after
successful qualification and approval for mass production.
1.17 "PURCHASE ORDER" means a written order for the purchase of a
specified quantity of Wafers or Services submitted by Buyer to Supplier.
1.18 "QUALITY SPECIFICATIONS" means the Wafer quality standards and
criteria set forth in Exhibit B, as may they be modified by written agreement of
the Parties from time to time.
1.19 "RISK PRODUCTION" means Wafers specifically identified by Buyer
in a Purchase Order as "Risk Production" that are to be manufactured by Supplier
pursuant to Buyer's Specifications, but for which compliance with the Quality
Specifications is specifically waived. "Risk Production" may include the
following: unverified mask sets, unverified process changes, no supporting
qualification data, and known design rule violations.
1.20 "SERVICES" means Final Test Services, Post Probe Processing
Services, Probe Services, or such other services described in this Supply
Agreement, as applicable.
1.21 "SPECIFICATIONS" means the technical specifications for the
Wafers mutually agreed to in writing by the Parties, as they may be modified
from time to time upon written agreement of the Parties.
2.
1.22 "SUPPLIER FAB" means the Newbury Park Wafer fabrication facility
or other fabrication facilities owned or operated by Supplier.
1.23 "WAFERS" means semiconductor wafers to be processed by Supplier
including Engineering Wafers, Production Wafers, Pizza Mask Wafers, and Risk
Production.
2. PURCHASE AND SUPPLY OBLIGATIONS.
2.1 BUYER PURCHASES.
(a) BUYER PURCHASE ORDERS. During the term of this Supply
Agreement, Buyer may submit Purchase Orders to Supplier for the purchase of
Wafers and Services, as further described herein.
(b) PURCHASES FOR CERTAIN ENTITIES. Supplier agrees that Buyer,
as agent, may, at any time at the prices and in accordance with the terms and
conditions established under this Supply Agreement, place orders for Wafers or
Services on behalf of (i) third parties that are mutually agreed to by the
Parties; (ii) Buyer Subsidiaries; (iii) Buyer Spin-Offs (excluding
SpecialtySemi); and (iv) third parties for which Buyer has an obligation,
existing as of the Effective Date, to provide Wafers. Notwithstanding the
foregoing and for the avoidance of doubt, Supplier hereby acknowledges and
agrees that Buyer may, at any time at the prices and in accordance with the
terms and conditions of this Supply Agreement, place orders for Wafers or
Services on behalf of Rockwell, SiRF, Mindspeed and Lumero. If Buyer places an
order on behalf of a third party, Supplier will, at Buyer's direction, ship
products ordered on behalf of such third party directly to such third party's
facilities, as applicable. Supplier may invoice Buyer or such third party for
such orders, it being understood that the applicable third party may pay the
invoiced amount directly to Supplier, however, Buyer, as agent for such third
party, shall remain jointly and severally liable for any such payments due to
Supplier. Notwithstanding the foregoing, however, if any such third party is
reasonably determined to be a Competitor of Supplier or its affiliates, Supplier
may, upon six (6) months written notice to Buyer, refuse to fulfill orders for
such third party; provided that Supplier will continue to manufacture, supply
and provide to Buyer, in accordance with the Wafer purchase procedures in
Section 3, any Wafers ordered for such third party for delivery prior to the
expiration of such six (6) month period.
(c) BUYER SPIN-OFFS. The Parties acknowledge and agree that each
Buyer Spin-off will have the right to enter into a supply agreement with
Supplier on terms and conditions substantially similar to the terms and
conditions set forth in this Supply Agreement and Supplier agrees to enter into
such agreement upon Buyer Spin-off's request. Such Buyer Spin-off's purchases
are subject to the Buyer Spin-off credit requirements set forth in Section
5.1 (c).
2.2 SUPPLIER SUPPLY OBLIGATIONS.
(a) SUPPLY OBLIGATIONS. Supplier shall use its reasonable
commercial efforts to accept and fulfill all Purchase Orders submitted by Buyer
for Wafers and Services that are within the forecasts submitted by Buyer.
Subject to the availability of required materials, Supplier shall also use
reasonable commercial efforts to accept and fulfill Purchase Orders for Wafers
and Services insofar as not exceeding 120% of Buyer's forecasts; provided that
in no event shall Supplier be required to reallocate capacity committed to other
customers to accept and fulfill such Purchase Orders.
(b) MANUFACTURING PROCEDURES. The Wafers will be manufactured and
produced in accordance with and pursuant to the most current version of
Supplier's Process Change Notice, Specification Number NPF-0570.
3.
(c) NOTICE REQUIREMENTS. If at any time Supplier believes or
becomes aware that it may fail to comply in a material manner with its supply
obligations under this Supply Agreement, or if Supplier believes or becomes
aware that Buyer's forecasts or Purchase Orders for Wafers and Services, when
taken in the aggregate, will exceed the maximum capacity or capability of the
Supplier Fab, then Supplier will promptly notify Buyer in writing. However,
without reduction of this commitment, Supplier shall have no monetary liability
for its failure to do so. In addition, Supplier shall, on a quarterly basis,
provide Buyer with an assessment of known and existing capacity issues at the
Supplier Fab, any capacity issues anticipated over the next fifteen (15) month
period, and the plan to remedy such issues.
(d) DISCONTINUANCE OF WAFER PROCESS. Subject to the restrictions
in this Section 2.2(d), Supplier may terminate the use of any Wafer process at
the Supplier Fab designated as an "End-of-Life-Process." At least eighteen (18)
months prior to the date the discontinuance of such process will commence,
Supplier shall provide Buyer with written notice of its intent to terminate such
Wafer process. Buyer may identify a suitably qualified alternative supplier of
Wafers (the "FOLLOW-ON SUPPLIER"), which selection shall be subject to
Supplier's approval (which shall not be unreasonably withheld or delayed). Upon
selection of a qualified alternative supplier, Supplier shall prepare a
transition plan specifically designed to ensure that there is minimal
interruption in Buyer's supply of Wafers arising in the transfer of production
to the Follow-On Supplier and obtain Buyer's written approval of such transition
plan (which shall not be unreasonably withheld or delayed); however, failure to
obtain Buyer's written approval shall not serve as grounds to extend the
eighteen (18) month notice described in this Section 2.2(d). Supplier will at
Buyer's expense, pre-approved by Buyer (which shall not be unreasonably withheld
or delayed), work with Buyer to perform the transition in accordance with the
Buyer-approved plan and will take all commercially reasonable steps to ensure a
smooth transition. In addition, Buyer will have the right, until the expiration
of eighteen (18) months from the date of Supplier's notice of discontinuance, to
submit Purchase Orders for Wafers to be manufactured or tested with such Wafer
process within such eighteen (18) month period. Supplier will manufacture,
supply, and provide to Buyer, in accordance with the Wafer purchase procedures
in Section 3, any such Wafers that are ordered for delivery prior to the
expiration of such eighteen (18) month period. Buyer acknowledges that all such
Purchase Orders placed during months seven (7) to eighteen (18) of the eighteen
(18) month notice period for Wafers manufactured or tested with an
End-of-Life-Process (i) are non-cancelable and except for non conforming
products are non-returnable and (ii) unless mutually agreed otherwise, will not
exceed the total quantity of such Wafers manufactured or tested with such
End-of-Life-Process ordered during the eighteen (18) month period immediately
prior to the end-of-life notice provided under this section. The foregoing
obligations are in addition to Supplier's other obligations under this Supply
Agreement.
(e) CLOSING OF SUPPLIER FAB. Supplier shall notify Buyer at least
eighteen (18) months prior to the date that Supplier intends to commence any
closure, in whole or in part, of the Supplier Fab. If Buyer elects to do so,
Buyer may identify a suitably qualified alternative supplier of Wafers (the
"FOLLOW-ON SUPPLIER"), and subject to Supplier's approval (which shall not be
unreasonably withheld or delayed), Supplier shall prepare a transition plan
specifically designed to ensure that there is minimal interruption in Buyer's
supply of Wafers arising in the transfer of production to the Follow-On Supplier
and obtain Buyer's written approval of such transition plan (which shall not be
unreasonably withheld or delayed); however, failure to obtain Buyer's written
approval shall not serve as grounds to extend the eighteen (18) month notice
described in this Section 2.2(e). Supplier will seek to perform the transfer of
Wafer processing technology in accordance with the Buyer-approved plan and will
at Buyer's expense take all commercially reasonable steps to ensure a smooth
transition of the Wafer processing. Buyer shall reimburse Supplier for
Supplier's reasonable direct and indirect expenses incurred by Supplier, and
pre-approved by Buyer, in transitioning such technology to the designated
foundry. Buyer will have the right, until the expiration of such eighteen (18)
month period, to continue to submit
4.
Purchase Orders for Wafers to Supplier to be manufactured or tested within such
eighteen (18) month period. Supplier will continue to manufacture, supply, and
provide to Buyer, in accordance with the Wafer purchase procedures in Section 3,
any such Wafers that are ordered. Buyer acknowledges that all such Purchase
Orders placed during months seven (7) to eighteen (18) of the eighteen (18)
month notice period for Wafers manufactured or tested at the Supplier Fab which
is the subject of the closure notice (i) are non-cancelable and except for
non-conforming products are non-returnable and (ii) unless mutually agreed
otherwise, will not exceed the total quantity of such Wafers manufactured or
tested ordered during the eighteen (18) month period immediately prior to the
closure notice provided under this section. The foregoing obligations are in
addition to Supplier's other obligations under this Supply Agreement.
3. WAFER AND SERVICES PURCHASES.
3.1 SCOPE. Upon receipt of an applicable Purchase Order, Supplier
shall provide management, planning and procurement of Wafers and Services for
Buyer. If Probe Services or Final Test Services are ordered, all equipment and
test programs for such Services shall be provided and maintained by Buyer,
provided that Supplier shall be responsible for providing test floor and labor
for such Services. Post Probe Processing Services shall be ordered on a separate
Purchase Order.
3.2 PROCESS TECHNOLOGIES.
(a) DEVELOPED AND QUALIFIED. Buyer will have the right to
purchase Wafers manufactured and Services provided through the use of any
Process Technologies developed and qualified for full-scale production at the
Supplier Fab as of the Effective Date under the terms and conditions of this
Supply Agreement.
(b) NEW TECHNOLOGIES NOT IN DEVELOPMENT. Buyer will not be
entitled under this Supply Agreement to purchase Wafers manufactured and
Services provided through the use of Process Technologies that are not not
developed or qualified for full-scale production at the Supplier Fab as of the
Effective Date. Supplier and Buyer may mutually agree on the terms and
conditions of the development of such Process Technologies and the supply of
Wafers and Services by Supplier to Buyer utilized such Process Technologies in a
separate agreement.
3.3 WAFER FORECASTS. On or about the last day of each calendar month
during the term of this Supply Agreement, Buyer will provide to Supplier a
rolling forecast, covering a minimum period of twelve (12) months, of Buyer's
expected order volumes for Wafers and Services. Buyer's forecasts are for
planning purposes only and will not bind Buyer in any respect. Each such
forecast will include, as applicable: (i) the number of Wafers by Process
Technology and probe platform; (ii) the number of hours by probe platform; and
(iii) the number of hours by tester platform. Only a written Purchase Order
delivered in accordance with Section 3.4 will bind Buyer to purchase specified
volumes of Wafers or Services. Buyer may change or update the forecasts
delivered hereunder at any time upon notice to Supplier.
3.4 PURCHASE ORDERS. All Purchase Orders will conform to the Cycle
Times, lead times and other pertinent details itemized in the Exhibits. Wafers
delivered more than thirty (30) days before scheduled date(s) may be returned to
Supplier. Partial shipments are permitted. Buyer will submit Purchase Orders to
Supplier to cover Buyer's expected purchases of Wafers and Services. Each
Purchase Order for Wafers and Services will specify, as appropriate, the
applicable Purchase Order number, Wafer part number and revision level,
quantity, additional component parts required by Buyer, testers to be used,
price, delivery date, ship-to address, and other applicable information as
determined by Buyer. Supplier
5.
will not commence manufacturing of the Wafers or providing of Services until
Buyer has issued a Purchase Order.
3.5 ACCEPTANCE AND ACKNOWLEDGEMENT. Subject to the limitations set
forth in Section 2.2(a), within three (3) business days after receipt, Supplier
shall use reasonable commercial efforts to accept all Buyer orders for Wafers
and Services in accordance with the delivery dates specified therein. Within
three (3) business days after receipt of each Purchase Order, Supplier will
acknowledge such Purchase Order in writing by fax, e-mail notice, or electronic
data interchange ("EDI") to Buyer's purchasing agent identified on the face of
the Purchase Order. Such acknowledgement shall include Supplier's committed
delivery date for the order; provided that, in establishing such delivery date,
Supplier shall use commercially reasonable efforts to comply with the delivery
dates specified in Buyer's Purchase Order and to meet or reduce the Wafer Cycle
Times set forth in Exhibit D. The Wafer process Cycle Times set forth in Exhibit
D shall be updated quarterly, upon mutual agreement of the Parties. If at any
time during the production of such Wafers or the providing of Services, Supplier
becomes aware that the delivery may be delayed by more than one (1) business
day, Supplier shall promptly provide Buyer with written notice of such delivery
date change or any applicable quantity change.
3.6 WAFER LOTS; EXPEDITED SERVICES. Unless otherwise agreed to in
writing by the Parties, Production Wafers shall be ordered by Buyer and
delivered by Supplier in lots of twenty (20) Wafers and Engineering Wafers shall
be ordered by Buyer and delivered by Supplier in lots of five ( 5 ) to twenty
(20) Wafers. At Buyer's request and to the greatest extent possible consistent
with Supplier's normal production and operational requirements and without undue
impact to Supplier's other production, Supplier will use reasonable commercial
efforts to provide priority processing of Production Wafer lots, Engineering
Wafer lots, and Risk Production. Notwithstanding the foregoing, Supplier shall
have no liability for failure to actually provide priority processing. Supplier
shall provide up to one (1) priority lot to be processed at any one time at no
additional cost to Buyer (herein, the "Allowable Expedited Lot"). If the number
of Allowable Expedited Lots requested by Buyer at any given time is exceeded,
Buyer will be required to pay any additional costs, as mutually agreed by the
Parties, for any such additional lots for which priority processing is actually
provided by Supplier.
3.7 PIZZA MASK WAFERS. Buyer may submit Purchase Orders for Pizza
Mask Wafers, and Supplier shall fulfill such orders, provided that (i) the only
testing of Pizza Mask Wafers required to be performed by Supplier will be
parametric testing; and (ii) Supplier will deliver Pizza Mask Wafers in wafer
form.
3.8 CANCELLATION AND MODIFICATIONS TO ORDERS. Buyer may cancel,
modify or reschedule a Purchase Order as set forth in this Section 3.8.
(a) CANCELLATION BEFORE PROCESS START. For each Purchase Order
for which processing of the Wafers or performance of the Services has not yet
been started, Buyer may cancel or modify a Purchase Order without penalty by
delivering to Supplier a written notice of cancellation or modification not less
than four (4) business days before the start of processing or performance. Such
cancellation shall be without charge or penalty, except that Buyer shall be
obligated to purchase and pay for any materials acquired in respect of
Supplier's anticipated production or Services for Buyer under the cancelled
order(s), as set forth in Section 3.9.
(b) RESCHEDULING. For each Purchase Order, Buyer may reschedule
the delivery one or more times without penalty by delivering to Supplier a
written notice rescheduling such delivery at least thirty (30) days prior to the
originally scheduled delivery date. The maximum time a delivery may be delayed
is ninety (90) days beyond its originally scheduled delivery date.
6.
(c) CANCELLATIONS AFTER PROCESS START. If Buyer cancels a
Purchase Order for Wafers after the date the processing of such Wafers has been
started, then as Buyer's sole liability, and Supplier's sole remedy, for such
cancellation, Buyer will pay to Supplier, an amount equal to the purchase price
for such cancelled Wafers prorated for the amount of processing completed at the
time of notice of cancellation, as set forth in Exhibit A.
(d) CANCELLATION FOR LATE DELIVERY. Notwithstanding any of the
foregoing, Buyer may cancel any Purchase Order, in whole or in part and without
penalty, if Supplier does not deliver the Wafers within six (6) weeks after
Supplier's committed delivery date; provided that there are no extenuating
circumstances causing the delay (e.g., a Lot is dropped and scrapped in line,
the Supplier Fab goes down, or a materials issues). If extenuating circumstances
may or are causing such a delay, Supplier shall notify Buyer in writing of such
extenuating circumstances, along with the projected delivery date for the
delayed Wafers, and the parties shall cooperate in good faith to identify and
implement a mutually agreeable resolution including, without limitation,
Supplier providing priority processing of such Wafers at no additional charge to
Buyer. In the event that extenuating circumstances scraps a Lot in line,
Supplier shall notify Buyer in writing of such event and Buyer may, at Buyer's
discretion, either approve the restart of the Lot or cancel the Lot without
penalty.
3.9 MATERIALS. Except as otherwise specified in Section 3.1,
Supplier shall be responsible for procuring all materials required to
manufacture the quantity of Wafers and to provide the Services ordered by Buyer.
When purchasing such materials, Supplier shall, at a minimum, procure quantities
of materials in such volume to cover shrinkage and scrap associated with the
fabrication process. Supplier will use commercial efforts to plan its
procurement of epitaxial wafers and other production materials consistent with
the first four (4) months of the Buyer's forecast. Supplier agrees to use
reasonable commercial efforts to exercise prudent materials resource planning to
not procure such materials in advance of the time reasonably required to meet
projected production requirements and to mitigate Buyer's materials liability
hereunder.
3.10 INACTIVE MATERIAL. Material purchased to support Buyer forecasts,
as set forth in Section 3.9, which is not consumed within four (4) months of the
material's anticipated time of utilization will be considered "INACTIVE
MATERIAL". Thereafter, Supplier may invoice Buyer for Supplier's cost of all
Inactive Material, and Buyer shall pay such invoice within thirty (30) days of
its receipt. Upon such payment, the Inactive Material will then be segregated as
Buyer furnished material and if later consumed by Buyer will be credited towards
the purchase price. Subject to payment, Inactive Material not consumed within
three hundred and sixty (360) days of receipt will, at Buyer's option, be
scrapped, processed for reclamation, or delivered to Buyer.
3.11 RISK PRODUCTION. At Buyer's request and subject to an applicable
Purchase Order and the orderly operation of Supplier's production, Supplier
shall consider Buyer's request to provide Risk Production to Buyer. With all
Purchase Orders for Risk Production, Buyer shall provide a written statement
setting forth the risk factors or any special circumstances related to the Risk
Production and specifying the lot size and quantity of Risk Production to be
provided. Supplier's acknowledgement, including Supplier modification to such
written statement, if any, will be included as part of a Purchase Order for Risk
Production and shall be deemed an acknowledgement of such risks or
circumstances. Supplier shall use reasonable commercial efforts to provide
processing of Risk Production consistent with its ongoing operations and other
business. Risk Production is offered as a Service hereunder. Without limitation,
Supplier extends no warranties of any kind, express or implied, beyond
Supplier's undertaking to use reasonable commercial efforts in the course of the
fabrication of Risk Production. Without limitation, compliance with the Quality
Specifications and Section 7.1 and Section 7.2 shall not apply to Risk
Production.
7.
3.12 REWORK. Upon Buyer's request and as accepted in Supplier's
acknowledgement, Supplier shall provide Wafer rework services for Buyer. Buyer
shall pay Supplier for rework in accordance with the pricing set forth in
Exhibit A; provided that Supplier remains solely responsible for any and all
rework required for Wafers that do not conform to the Specifications or do not
meet the Quality Specifications.
3.13 NRE SERVICES. At Buyer's request and as accepted in Supplier's
acknowledgement, Supplier shall provide non-recurring engineering services for
new Wafers. The Parties shall negotiate in good faith the terms and conditions
and any applicable costs associated with such engineering services.
3.14 FINAL TEST AND PROBE SERVICES. Supplier agrees to provide Final
Test Services and Probe Services support on Buyer owned testers located at the
Newbury Park Wafer fabrication facility on May 1, 2002. Consistent with
Supplier's practices as of May 1, 2002, or as otherwise agreed by the Parties,
Supplier will provide the required floor space, required operators, production
control services (e.g., WIP reports and lot travelers) and quality services
(e.g., incoming and outgoing inspections). Supplier will also coordinate
calibration activities at Buyer's expense. The Final Test Services and Probe
Services are described in more detail in Exhibit E.
(a) COSTS. These Final Test Services and Probe Services will be
provided at the following agreed charges, intended to approximate Supplier's
costs in providing such Services. The minimum charge per quarter is $162,500.
The minimum charge includes one set of operators (i.e., 4 people, 1 per shift)
of $40,000 per quarter, the fixed facility charge of $60,000 per quarter, and a
fixed rate of $62,500 per quarter for general support. As of the Effective Date,
Buyer and Supplier agree that the Services will include two (2) sets of
operators, resulting in an initial operators' charge of $80,000 per quarter for
labor, or a total initial charge of $202,500 per quarter for Final Test Services
and Probe Services.
(b) CHANGE IN SUPPORT LEVELS. The parties anticipate that a set
of operators can maintain an average of three (3) testers across all four (4)
shifts. With ninety (90) days written notice, Buyer can request Supplier to
increase or decrease the number of sets of operators, and Supplier shall make
reasonable commercial efforts to respond to such requests. In the event that
Buyer reduces its requirement for operators with less than one hundred and
eighty (180) days' notice, provided Supplier cannot successfully reassign any
surplus operator to another appropriate position without prejudice to Supplier's
staffing practices and requirements, Buyer will be responsible for, and shall
promptly reimburse Supplier for, Supplier's severance costs (including without
limitation any salary and benefit continuation for a period of four (4) weeks
plus one (1) week for every year of service and operator level outplacement
services) pertaining to any such terminated operator. Supplier agrees that it
will not give preferential treatment to any such terminated employee, as
compared to the manner in which Supplier would handle termination of other
comparably situated employees. The general overhead charge stated above (i.e.,
$162,500) will support up to three (3) sets of operators. If Buyer would like to
increase the number of operators over three (3) sets of operators, the Parties
shall mutually agree on an equitably increased general overhead charge.
(c) TERMINATION. The minimum length of the Final Test Service and
Probe Service support will be twelve (12) months from the Effective Date. With
ninety (90) days written notice, Buyer may terminate or continue the Services
for another six (6) months (to eighteen (18) months total). If Buyer requests
the extension, Supplier must continue to provide the Services through such
eighteen (18)-month term. Conditional upon Buyer exercising its first extension
rights, ninety (90) days prior to the end of the eighteen (18) months, Buyer
must notify Supplier whether the Services will be renewed for another six
(6)-month period (to twenty-four (24) months total). If Buyer requests the
extension, Supplier must
8.
continue to provide the service through such twenty-four (24)-month term. Ninety
(90) days prior to the end of the twenty-four (24) months, Buyer and Supplier
may mutually agree to extend the Services. Any agreement in extending Services
beyond twenty-four (24) months, must be mutually agreed to between Supplier and
Buyer. Once the service has been terminated, Buyer shall remove all its
equipment from the Supplier Fab in a prompt manner and at Buyer's expense; all
such activities shall be conducted in accordance with Supplier's reasonable
requirements, and coordinated in a manner not to disrupt Supplier's activities.
Buyer shall repair all damage to Supplier's premises caused by such removal.
(d) TAXES. Buyer shall be responsible for the prompt and timely
payment of all taxes arising with respect to its test equipment located at
Supplier's premises under this Agreement.
4. DELIVERY AND LOGISTICS.
4.1 DELIVERY. All Wafers delivered to Buyer shall be delivered F.O.B.
the Supplier Fab. Title to and risk of loss of the Wafers will pass to Buyer
upon delivery of the Wafers to the carrier.
4.2 WAFERS. Supplier shall process all deliveries of those Wafers
that have completed the manufacturing processes, and wafers provided by Buyer
for Services, in accordance with the shipping instructions included in the
Delivery Note or otherwise communicated to Supplier in writing. In the absence
of any such instructions, Supplier will determine the method of shipment and
select the carrier. Buyer will pay, or reimburse Supplier for, all shipping and
handling charges. If Supplier is required to pay such charges to the carrier,
Supplier will include such charges as a line item in an invoice to Buyer and
Buyer will pay such amount in accordance with Section 5.1. Supplier shall use
commercially reasonable efforts to complete all such processing within one (1)
business day from the receipt of the Delivery Note. All Wafers shipped by
Supplier to Buyer under this Supply Agreement will be accompanied by appropriate
documentation regarding shipping location, lot identification numbers, Buyer
product number, quantity shipped, customer name, shipping date, and purchase
order number. At Buyer's request and insofar as consistent with Supplier's
capabilities and established business practices, shipped Wafers may also include
relevant testing data in either hard or soft copy, and may be accompanied by an
exception report to the extent that one exists.
4.3 PRODUCT LOGISTICS. Supplier will provide work-in-process
management Services for Buyer as further described in Exhibit F. Supplier shall
use reasonable commercial efforts to complete these transactions in a timely
manner.
5. PRICING AND PAYMENTS.
5.1 PRICING AND INVOICES.
(a) WAFERS. Supplier will invoice Buyer for Wafers at the
applicable Wafer price calculated pursuant to Exhibit A in effect on the date of
Supplier's acceptance of the Purchase Order. Each such invoice shall be dated on
or after the date such Wafers are shipped and shall itemize the Wafers delivered
and any applicable shipping charges pursuant to Section 4.2. Buyer will pay any
amounts due on such invoices within thirty (30) days of receipt of the invoice.
(b) SERVICES. Supplier will invoice Buyer for Services upon
completion the applicable Service. Pricing for such Services shall be in
accordance with Exhibit A. All invoices for Services shall itemize the Services
actually performed, materials, material burden, and costs associated with any
changes approved in writing by Buyer. Buyer will pay any amounts due on such
invoices within thirty (30) days of receipt of the invoice.
9.
(c) CREDIT REQUIREMENTS. If based on a then-current credit report
of a Buyer Spin-off, Supplier has an issue with the credit of such Buyer
Spin-off, Supplier shall notify such Buyer Spin-off in writing of such issue
and Buyer Spin-off shall have a period of sixty (60) days to resolve the credit
issue. If such issue is not resolved within such sixty (60) day period, Supplier
reserves the right to limit Buyer Spin-off's purchases to a reasonable amount,
such amount to be based on a then-current credit report of the Buyer Spin-off
and mutually agreed to by Supplier and Buyer Spin-off. The foregoing shall apply
to Buyer Spin-off, notwithstanding Buyer Spin-off entering into a separate
agreement with Supplier and assuming the rights and obligations of "Buyer"
hereunder. In addition, in the event Buyer (i.e., Conexant Systems, Inc.) does
not make timely payment on Supplier's invoices and such issue is not resolved
within sixty (60) days' of receipt of Supplier's written notice of such payment
delays, Supplier reserves the right to limit Buyer's purchases to a reasonable
amount, such amount to be based on a then-current credit report of Buyer and
mutually agreed to by Supplier and Buyer.
5.2 COSTS. Except as otherwise provided herein or agreed to in
writing by the Parties, each Party will be solely responsible for the costs and
expenses it incurs in performing its obligations under this Supply Agreement.
5.3 TAXES. Buyer will be responsible for payment of any and all taxes
or related governmental charges ("TAXES") imposed on or arising from Buyer's
purchase of Wafers or Services under this Supply Agreement, excluding any Taxes
on the net income or net worth of Supplier. Taxes shall be specifically
identified by Supplier as a separate line item on Supplier's invoices provided
pursuant to Section 5.1. Upon Buyer's request, Supplier will provide Buyer with
copies of official receipts for the payment of any such Taxes, and any other
information and documents Buyer may reasonably request in order to verify the
payment of such amounts to the appropriate governmental entity.
6. TRACKING; REPORTING; AND AUDITS.
6.1 WAFER TRACKING. All Wafers manufactured and delivered by Supplier
to Buyer shall have backward and forward traceability sufficient to enable
Supplier to identify (i) the processes and materials used in the manufacture of
such Wafers; (ii) the batches or lots of such materials; and (iii) other Wafers
in the same or sequential lots. Such information shall be provided to Buyer,
upon Buyer's request.
6.2 REPORTING REQUIREMENTS. Supplier shall provide Buyer with the
reports specified in Exhibit G, in accordance with frequency or schedule set
forth therein. All such reports shall be in writing and provided to Buyer in the
form (e.g., electronic form) specified in Exhibit G, or otherwise mutually
agreed to in writing by the Parties.
7. WARRANTY AND DISCLAIMER.
7.1 WAFER WARRANTY. For a period of ninety (90) days from the date of
delivery (the "Wafer Warranty Period"), Supplier warrants that the Wafers
delivered hereunder will conform to the applicable Specifications, will be
manufactured in accordance with the Quality Specifications, and will be free
from defects in material, manufacturing and workmanship. Supplier shall, at
Buyer's option, promptly provide replacement Wafers for such defective Wafers or
credit Buyer's account for the amount paid by Buyer for such defective Wafers.
This warranty shall not apply to any Wafers which, after delivery to Buyer, have
been (i) repaired or altered (except by, or under the direction, of Supplier) or
(ii) damaged or subjected to abuse or misuse. Warranty claims hereunder shall be
made by Buyer by making a written warranty claim within the Wafer Warranty
Period. Except as otherwise instructed by Supplier, Buyer shall return all
defective Wafers to Supplier for inspection. Before returning Wafers, Buyer
shall request and obtain a
10.
Return Material Authorization ("RMA") number from Supplier, and will display
such RMA number on the packaging of such returned Wafers. Replacement Wafers
will be warranted in accordance with this Section 7.1. THE FOREGOING REPRESENTS
BUYER'S SOLE REMEDY AND SUPPLIER'S SOLE LIABILITY IN THE EVENT OF A BREACH OF
THE WAFER WARRANTY IN THIS SECTION 7.1.
7.2 SERVICES WARRANTY. For a period of ninety (90) days from
completion of performance of the applicable Service (the "Services Warranty
Period"), Supplier warrants that such Services will be provided in accordance
with performance metrics mutually agreed by the Parties including, without
limitation, quality, yield, and Cycle. Time and, in any event, in a professional
and workmanlike manner. If, during the Services Warranty Period, Supplier is
notified in writing of any breach of this warranty, then Supplier shall, at
Buyer's option and as Supplier's sole liability with respect to such breach of
warranty, promptly re-perform such Services or credit Buyer for such Services.
Re-performed Services will be warranted in accordance with this Section 7.2. THE
FOREGOING REPRESENTS BUYER'S SOLE REMEDY AND SUPPLIER'S SOLE LIABILITY IN THE
EVENT OF A BREACH OF THE SERVICES WARRANTY IN THIS SECTION 7.2.
7.3 DISCLAIMERS. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS
SUPPLY AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS
OR IMPLIED OR OTHERWISE, IN CONNECTION WITH THIS SUPPLY AGREEMENT OR ANY WAFERS
OR SERVICES PROVIDED UNDER THIS SUPPLY AGREEMENT, AND EACH PARTY SPECIFICALLY
DISCLAIMS THE IMPLIED WARRANTIES AND CONDITIONS OF MERCHANTABILITY, FITNESS FOR
PARTICULAR PURPOSE AND NONINFRINGEMENT.
8. INDEMNIFICATION.
8.1 INDEMNIFICATION OBLIGATIONS.
(a) BUYER INDEMNITY. Buyer will defend at its own expense any
claim, suit, or action (collectively, "CLAIMS") asserted or brought against
Supplier by a third party to the extent that such Claim is based on a claim that
Supplier's compliance with Buyer's specifications or designs in the production
or sale of Wafers required the infringement of any United States patent or mask
work or misappropriation of any trade secret (a "BUYER INFRINGEMENT CLAIM").
Buyer will pay such damages awarded against Supplier by a court of competent
jurisdiction, or agreed to in a monetary settlement of any such Claim by Buyer,
to the extent that such damages are directly attributable to a Buyer
Infringement Claim. Buyer's indemnification obligation will not apply to Buyer
Infringement Claims that result from or are attributable to (a) any
modifications, combinations, or improvements made to the design or specification
as furnished to Supplier by Buyer (except for modifications, combinations and
improvements requested by Buyer); or (b) use of the design or specification by
Supplier for any purpose other than providing Wafers or Services to Buyer, if
such claim under (a) or (b) would not have arisen but for such modification,
combination, improvement or use.
(b) SUPPLIER INDEMNITY. Supplier will defend at its own expense
any Claims asserted or brought against Buyer by a third party to the extent that
such Claim is based on a claim that Supplier's technology, equipment, or methods
used to manufacture the Wafers or to provide the Services infringes any United
States patent or mask work or misappropriates any trade secret (a "SUPPLIER
INFRINGEMENT CLAIM"). Supplier will pay such damages awarded against Buyer by a
court of competent jurisdiction, or agreed to in a monetary settlement of any
such Claim by Supplier, to the extent that such damages are directly
attributable to a Supplier Infringement Claim. Supplier's indemnification
obligation will not apply to Supplier Infringement Claims that result from or
are attributable to (a) compliance with
11.
Buyer's designs or specifications; (b) any modifications, combinations, or
improvements made to the Wafers after delivery to Buyer; or (c) use of the
Wafers or Services for any unintended purpose, if such claim under (a), (b), or
(c) would not have arisen but for such compliance, modification, combination,
improvement or use. In the event the Wafers or Services are deemed to infringe
and their manufacture, use or sale is enjoined, Supplier shall, at its option,
either (i) arrange for Buyer to have the right to continue using the Wafers or
receiving the Services, or (ii) provide replacement Wafers or Services with
non-infringing comparable wafers or services meeting Buyer's requirements. If
neither of the foregoing in (i) or (ii) are commercially practicable, then
Supplier shall accept return of the Wafers, discontinue the Services, and refund
Buyer's purchase price in respect of the Wafers and/or Services, as the case may
be.
8.2 CONDITIONS. The obligations of the indemnifying Party (the
"INDEMNIFYING PARTY") under Section 8.1 with respect to a Buyer Infringement
Claim or Supplier Infringement Claim (as applicable) (an "INFRINGEMENT CLAIM")
are subject to the following conditions: (a) the indemnified Party (the
"INDEMNIFIED PARTY") must promptly notify the Indemnifying Party in writing of
such Infringement Claim; (b) the Indemnifying Party must have sole control of
the defense and settlement of the Infringement Claim; and (c) the Indemnified
Party must fully cooperate with and provide reasonable assistance to the
Indemnifying Party in the defense and settlement of such Infringement Claim
(which includes furnishing to the Indemnifying Party all evidence in the
possession of the Indemnified Party that is relevant to such Infringement
Claim). Solely to the extent a proposed settlement or stipulated judgment
adversely affects the Indemnified Party, the Indemnifying Party will not accept
such settlement or stipulated judgment of any Buyer Infringement Claim or
Supplier Infringement Claim (as applicable) without the prior written consent of
the Indemnified Party, which consent will not be unreasonably withheld. The
Indemnifying Party will have no liability under this Section 8 for any costs,
losses, liabilities, or damages resulting from the willful acts of the
Indemnified Party or any settlement or compromise incurred or made by the
Indemnified Party without the Indemnifying Party's prior written consent. The
Indemnified Party will have the right to participate, at its own expense, in the
defense or settlement of the Infringement Claim.
8.3 SOLE AND EXCLUSIVE REMEDY. THIS SECTION 8 STATES THE INDEMNIFYING
PARTY'S ENTIRE LIABILITY AND THE INDEMNIFIED PARTY'S SOLE REMEDY WITH RESPECT TO
THE INFRINGEMENT, VIOLATION OR MISAPPROPRIATION OF ANY INTELLECTUAL PROPERTY
RIGHTS OF ANY THIRD PARTY ARISING FROM OR RELATING TO THIS SUPPLY AGREEMENT.
Each Party's obligations under this Section 8 are subject to the limitations of
liability set forth in Section 10.
9. CONFIDENTIALITY.
9.1 CONFIDENTIALITY OBLIGATIONS. The receiving Party ("RECIPIENT")
will hold the Confidential Information of the disclosing Party ("PROVIDER") in
confidence and, except as set forth herein or allowed under Section 9.2, will
not disclose, provide, or otherwise make available such Confidential Information
to any person other than Recipient's employees and independent contractors who
need to have access to such Confidential Information in order for the Recipient
to exercise its rights or perform its obligations under this Supply Agreement.
The Recipient will inform each such employee and independent contractor of the
Recipient's confidentiality obligations under this Supply Agreement, and will
ensure that each such employee and independent contractor has signed a
non-disclosure agreement containing terms no less restrictive than the terms of
this Section 9. Each Party will be liable for any breach of this Section 9.1 by
any of its employees or independent contractors. The Recipient will use the
Provider's Confidential Information solely to exercise its rights or perform its
obligations under this Supply Agreement and for no other purpose. The Recipient
will protect the confidentiality of the Provider's confidential Information
using at least the same efforts Recipient uses to protect its own
12.
confidential and proprietary information of similar nature, but in no event less
than reasonable efforts. The Recipient will return the Provider's Confidential
Information to the Provider promptly upon the Provider's request or termination
of this Supply Agreement; provided that, if the Recipient has continuing rights
or obligations or liabilities under this Supply Agreement, the Recipient may
retain a copy of any Provider Confidential Information reasonably required to
exercise its rights or perform such obligations solely for the period of time
required to meet such obligations. Supplier acknowledges and agrees that Buyer
may disclose the Confidential Information of Supplier to Buyer Subsidiaries and
employees of such Buyer Subsidiaries, in accordance with the restrictions set
forth above and Buyer will be liable for any breach of this Section 9.1 by such
Buyer Subsidiaries or its employees.
9.2 EXCEPTIONS. Disclosure of Confidential Information will be
permitted to the extent required to comply with a valid order of a court or
governmental authority with jurisdiction over the Recipient, provided that the
Provider has been given timely notice of such requirement and that the Recipient
must cooperate with the Provider to limit the scope and effect of such order.
The Recipient's obligations under Section 9.1 with respect to any Confidential
Information of the Provider will terminate if and when the Recipient can prove
by clear and convincing evidence that such Confidential Information (i) was
rightfully in possession of the Recipient, without restriction, prior to
disclosure; (ii) was rightfully received by the Recipient without restriction
from a third party not owing a duty of confidentiality to the Provider; (iii) is
generally available to the public without fault of the Recipient; or (iv) is
independently created by the Recipient.
9.3 CONFIDENTIALITY OF THIS SUPPLY AGREEMENT. Neither Party will
disclose any terms of this Supply Agreement to anyone other than (i) its
attorneys, accountants, and other professional advisors under a duty of
confidentiality; (ii) its subsidiaries, spin-offs, and, in the event of a merger
or acquisition, prospective successor, all of the foregoing under a duty of
confidentiality; and (iii) as required by law or pursuant to a mutually
agreeable press release.
9.4 INJUNCTIVE RELIEF. Each Party acknowledges and agrees that the
other Party would suffer irreparable harm for which monetary damages would be an
inadequate remedy if there were a breach of obligations under Section 9.1. Each
Party further acknowledges and agrees that equitable relief, including
injunctive relief, may be appropriate to protect the other Party's rights and
interests if such a breach were to arise, were threatened, or were asserted.
10. LIMITATIONS OF LIABILITY.
10.1 DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS SUPPLY
AGREEMENT, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR LOST
PROFITS OR FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, OR EXEMPLARY
DAMAGES ARISING FROM THE SUBJECT MATTER OF THIS SUPPLY AGREEMENT, REGARDLESS OF
THE TYPE OF CLAIM AND EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES.
10.2 LIABILITY LIMITATION. IN NO EVENT WILL EITHER PARTY'S AGGREGATE,
CUMULATIVE LIABILITY TO THE OTHER ARISING OUT OF OR RELATING TO THIS SUPPLY
AGREEMENT, INCLUDING ANY APPLICABLE PENALTIES, EXCEED THE GREATEST OF: (a)
$250,000 OR (b) THE AGGREGATE OF ALL AMOUNTS PAID AND/OR OWED TO SUPPLIER
PURSUANT TO THIS SUPPLY AGREEMENT DURING THE PRECEEDING 12-MONTH PERIOD. THIS
LIMITATION ON LIABILITY IS CUMULATIVE WITH ALL PAYMENTS BEING AGGREGATED TO
DETERMINE SATISFACTION OF THE LIMIT. THE EXISTENCE OF ONE OR MORE CLAIMS OR
SUITS WILL NOT ENLARGE THE LIMIT.
13.
10.3 BASIS OF BARGAIN. EACH PARTY ACKNOWLEDGES THAT THE MUTUAL
LIMITATIONS OF LIABILITY CONTAINED IN THIS SECTION 10 REFLECT THE ALLOCATION OF
RISK SET FORTH IN THIS SUPPLY AGREEMENT AND THAT EACH PARTY WOULD NOT ENTER INTO
THIS SUPPLY AGREEMENT WITHOUT THESE LIMITATIONS ON LIABILITY.
11. TERM; TERMINATION.
11.1 TERM. This Supply Agreement will take effect on the Effective
Date and will remain in effect for a period of three (3) years from the
Effective Date (the "INITIAL TERM"), unless earlier terminated in accordance
with this Section 11. Following the Initial Term, this Supply Agreement may be
renewed for additional one-year renewal terms (each a "RENEWAL TERM"), upon
mutual agreement of the Parties.
11.2 TERMINATION. This Supply Agreement, or any Purchase Order issued
hereunder, may be terminated as follows:
(a) immediately upon written agreement of the Parties;
(b) immediately upon the expiration of the ninety (90) day cure
period, if a Party materially breaches any provision of this Supply Agreement
and such breach is not cured within ninety (90) days after written notice of
such breach is furnished by the non-breaching Party;
(c) during the continuance of any material breach, by either
Party, at its discretion immediately upon providing written notice to the other
Party, if within any period of twelve (12) months there are three (3) or more
material breaches or failures by the other Party that would constitute grounds
for termination pursuant to this Section 11.2 (without giving effect to cure
periods), regardless of whether such breaches or failures were cured within the
applicable cure periods; or
(d) immediately upon written notice by either Party, at its
discretion, if (i) the other Party becomes insolvent, admits in writing its
inability to pay its debts as they become due, or files or has filed against it
any proceeding in bankruptcy or for reorganization under any federal bankruptcy
law or similar state law, or has any receiver appointed for all or a substantial
part of such Party's assets or business, or makes any assignment for the benefit
of its creditors, or enters into any other proceeding for debt relief, and such
proceeding is not dismissed within sixty (60) days of filing; (ii) the other
Party dissolves, liquidates, or institutes any proceedings for the liquidation
or winding up of its business or for the termination of its corporate charter;
or (iii) the other Party ceases to conduct its business in the ordinary course.
11.3 TERMINATION FOR NON-PAYMENT. In addition to its other rights
under this Section 11, Supplier may suspend performance of its obligations under
this Agreement if Buyer is more than thirty (30) days late in payment of any
undisputed invoices. Upon Buyer's payment of such invoices, Supplier shall
promptly resume performance of its obligations hereunder.
11.4 TERMINATION OF BUYER SPIN-OFF AGREEMENTS. In addition to the
termination rights set forth in Section 11.2, Supplier shall have the right to
terminate without cause a Buyer Spin-off Agreement entered into pursuant to
Section 2.1(c) upon six (6) months prior written notice to such Buyer Spin-off
in the event such Buyer Spin-off is merged with or acquired by an entity that is
reasonably deemed to be a Competitor of Supplier; provided that Supplier will
continue to manufacture, supply, and provide to Buyer Spin-off, in accordance
with the Wafer purchase procedures of such Buyer Spin-off Agreement, any Wafers
ordered by such Buyer Spin-off for delivery prior to the expiration of such six
(6) month
14.
period. This provision shall be incorporated in the Buyer Spin-off Agreements
and shall apply to Buyer Spin-offs, notwithstanding such Buyer Spin-offs
assuming the rights and obligations of "Buyer" under this Agreement.
11.5 EFFECT OF TERMINATION. The rights and obligations under Sections
1 (Definitions), 3.14 (Final Test and Probe Services), 5 (Pricing and
Payments), 7 (Warranty and Disclaimer), 8 (Indemnification), 9
(Confidentiality), 10 (Limitations of Liability), 11.5 (Effect of Termination),
and 12 (General) will survive termination or expiration of this Supply
Agreement for any reason.
12. GENERAL.
12.1 AGENCY. Under this Supply Agreement (i) each Party will be deemed
to be an independent contractor and not an agent, joint venturer, or
representative of the other Party; (ii) neither Party may create any obligations
or responsibilities on behalf of or in the name of the other Party; and (iii)
neither Party will hold itself out to be a partner, employee, franchisee,
representative, servant, or agent of the other Party.
12.2 GOVERNING LAW; VENUE AND JURISDICTION. This Supply Agreement will
be governed by, subject to, and construed in accordance with the internal laws
of the State of California, as such laws apply to contracts between California
residents performed entirely within California. Venue for any dispute however
arising under this Supply Agreement shall be in Orange County, California and
both Parties hereby consent to jurisdiction of the State and Federal Courts in
Orange County, California. The Parties agree that the United Nations Convention
on Contracts for the International Sale of Goods will not apply to this Supply
Agreement.
12.3 DISPUTE RESOLUTION AND ESCALATION.
(a) In the event that any dispute, claim or controversy
(collectively, a "DISPUTE") arises out of or relates to any provision of this
Supply Agreement or the breach, performance or validity of invalidity thereof,
an appropriate authorized manager of Buyer and an appropriate authorized manager
of Supplier shall attempt a good faith resolution of such Dispute within thirty
(30) days after either Party notifies the other Party of such Dispute. If such
Dispute is not resolved within thirty (30) days of such notification, such
Dispute will be referred for resolution to Supplier's President and Buyer's
Chief Executive Office. Should they be unable to resolve such Dispute within
thirty (30) days following such referral to them, or within such other time as
they may agree, Supplier and Buyer shall submit such Dispute to binding
arbitration, initiated and conducted in accordance with the then-existing
American Arbitration Association Commercial Arbitration Rules, before a single
arbitrator selected jointly by Supplier and Buyer. If Supplier and Buyer cannot
agree upon the identity of an arbitrator within ten (10) days after the
arbitration process is initiated, then the arbitration shall be conducted before
three (3) arbitrators, one (1) selected by Buyer and, one (1) selected by
Supplier, and the third selected by the first two. The arbitration shall be
conducted in the County of Orange, California and shall be governed by the
United States Arbitration Act, 9 USC Sections 116, and judgment upon the award
may be entered by any court having jurisdiction thereof. The arbitrator(s) shall
have case management authority and shall resolve the Dispute in a final award
within one hundred eighty (180) days from the commencement of the arbitration
action, subject to any extension of time thereof allowed by the arbitrators upon
good cause shown. There shall be no appeal from the arbitral award, except for
fraud committed by an arbitrator in carrying out his or her duties under the
aforesaid rules; otherwise the Parties irrevocably waive their rights to
judicial review of any Dispute arising out of or related to this Supply
Agreement. Notwithstanding the foregoing, either Party may pursue immediate
equitable relief in the event of a breach of Section 9 or an alleged violation
or misappropriation of the intellectual property rights of either Party.
15.
(b) During any period in which the Parties are resolving a
Dispute pursuant to this Section 12.3, the Parties shall continue to provide the
Wafers and Services pursuant to the terms of this Supply Agreement; provided,
however, that if the Parties jointly determine that any such Wafers or Services
shall be suspended during the period in which the Parties are resolving a
Dispute, then the deadlines and time periods in which such Wafers or Services
are to be provided pursuant to this Supply Agreement (as described herein) shall
be extended for the same amount of time as the Wafers or Services were
suspended.
12.4 THIRD-PARTY BENEFICIARIES. Except for Buyer Spin-offs, there are
no third party beneficiaries of this Supply Agreement. Except for the rights of
Buyer Spin-offs to purchase Wafers from Supplier at the pricing established
under this Supply Agreement, no provision of this Supply Agreement, express or
implied, is intended or will be construed to confer upon or give to any customer
or other person other than the Parties any rights, remedies, or other benefits
under or by reason of this Supply Agreement.
12.5 COMPLIANCE WITH LAW. The Parties will at all times comply with
all applicable foreign, U.S., state, and local laws, rules and regulations
relating to the execution, delivery and performance of this Supply Agreement.
Each Party agrees that it will not export or reexport, resell, ship, provide, or
divert or cause to be exported or reexported, resold, shipped, provided, or
diverted directly or indirectly any software, documentation, or technical data,
nor any Wafer or Service, to any country or to any person or entity for which
the government (or any agency thereof) of the United States, or any foreign
sovereign government with competent jurisdiction requires an export license or
other governmental approval without first obtaining such license or approval.
12.6 FORCE MAJEURE. Neither Party shall be liable for failure or delay
in performance of its obligations under this Supply Agreement to the extent such
failure or delay is due to causes beyond its reasonable control including,
without limitation, an act of God, act of a public enemy, war or national
emergency, rebellion, insurrection, riot, epidemic, quarantine restriction,
fire, flood, explosion, storm, earthquake, or other catastrophe. If a Party's
performance under this Supply Agreement is affected by a force majeure event,
such Party shall give prompt written notice of such event to the other Party and
shall at all times use its reasonable commercial efforts to mitigate the impact
of the force majeure event on its performance under this Supply Agreement.
12.7 AMENDMENT; LATER AGREEMENT. This Supply Agreement may not be
amended, modified, or supplemented by the Parties in any manner, except by an
instrument in writing signed by Buyer and Supplier and specifically reciting
that it amends this Supply Agreement. No purchase order or acknowledgement will
amend this Supply Agreement. All matters designated herein as subject to
agreement of the Parties must be agreed upon in a writing signed by authorized
representatives of both Parties for such agreement to be effective.
12.8 ASSIGNMENT. Except as otherwise expressly provided in this Supply
Agreement, neither Party shall assign or transfer this Supply Agreement or all
or any part of its rights or obligations hereunder, by operation of law or
otherwise, without the prior written consent of the other Party which shall not
be unreasonably refused or delayed. Notwithstanding the foregoing and provided
such entity is not a Competitor of the other Party, either Party may assign this
Supply Agreement in whole or in part (i) to any subsidiary of such Party; (ii)
to a successor of such Party in the event of a merger or acquisition of such
Party; or (iii) to a successor of any portion of the business of such Party
resulting from a divestiture of such business, and constituting the Supplier Fab
in the case of Supplier, or constituting substantially all of Buyer's
business(es) purchasing the Wafers and Services in the case of Buyer, and the
other Party's consent to any of the foregoing assignments will not be required.
Any unauthorized assignment or transfer
16.
shall be null and void. This Supply Agreement shall be binding upon and inure
solely to the benefit of each Party and its successors and permitted assigns.
12.9 NOTICES. Any notice, consent, approval, or other communication
intended to have legal effect to be given under this Supply Agreement (other
than a purchase order or invoice) must be in writing and will be delivered (as
elected by the Party giving such notice): (i) personally; (ii) by postage
prepaid registered or certified airmail, return receipt requested; (iii) by
express courier service providing proof of delivery; or (iv) by facsimile with a
confirmation copy deposited prepaid with an express courier service providing
proof of delivery. Unless otherwise provided herein, all notices will be deemed
to have been duly given on: (y) the date of receipt (or if delivery is refused,
the date of such refusal) if delivered personally, by mail, or by express
courier; or (z) one (1) business day after receipt by telecopy if the telecopy
was accompanied by the mailing of the notice courier service. Each Party may
change its address for purposes hereof on not less than three (3) days' prior
notice to the other Party. Notice hereunder will be sent to the following
addresses:
If to Buyer, to: If to Supplier, to:
Conexant Systems, Inc. Alpha Industries, Inc.
4311 Jamboree Road 25 Computer Drive
Newport Beach, CA 92660-3095 Haverhill, MA 01832-1236
Attn: Chief Executive Officer Attn: President
With a copy:
If to Buyer, to: If to Supplier, to:
Conexant Systems, Inc. Alpha Industries, Inc.
4311 Jamboree Road 25 Computer Drive
Newport Beach, CA 92660-3095 Haverhill, MA 01832-1236
Attn: General Counsel Attn: General Counsel
12.10 WAIVER. If a Party fails to insist on performance of any of the
terms and conditions, or fails to exercise any of its rights or privileges of
this Supply Agreement, such failure will not constitute a waiver of such terms,
conditions, rights, or privileges.
12.11 SEVERABILITY. If the application of any provision or provisions
of this Supply Agreement to any particular facts or circumstances is held to be
invalid or unenforceable by any court of competent jurisdiction, then: (i) the
validity and enforceability of such provision or provisions as applied to any
other particular facts or circumstances and the validity of other provisions of
this Supply Agreement will not in any way be affected or impaired thereby; and
(ii) such provision or provisions will be reformed without further action by the
Parties and only to the extent necessary to make such provision or provisions
valid and enforceable when applied to such particular facts and circumstances.
12.12 COUNTERPARTS AND FACSIMILE. This Supply Agreement may be executed
in any number of counterparts, each of which when so executed and delivered will
be deemed an original, and such counterparts together will constitute one and
the same instrument. The Parties intend that each Party will receive a duplicate
original of the counterpart copy or copies executed by it. For purposes hereof,
a facsimile copy of this Supply Agreement, including the signature pages hereto,
will be deemed to be an original.
17.
12.13 RULES OF CONSTRUCTION. As used in this Supply Agreement, all
terms used in the singular will be deemed to include the plural, and vice versa,
as the context may require. The words "hereof," "herein," and "hereunder" refer
to this Supply Agreement as a whole, including the attached exhibits, as the
same may from time to time be amended or supplemented, and not to any
subdivision in this Supply Agreement. When used in this Supply Agreement, unless
otherwise expressly stated, "including" means "including, without limitation"
and "discretion" means sole discretion. Unless otherwise expressly stated, when
a Party's approval or consent is required under this Supply Agreement, such
Party may grant or withhold its approval or consent in its discretion.
References to "Section" or "Exhibit" will be to the applicable section or
exhibit of this Supply Agreement. Descriptive headings are inserted for
convenience only and will not be utilized in interpreting the Supply Agreement.
This Supply Agreement has been negotiated by the Parties and reviewed by their
respective counsel and will be fairly interpreted in accordance with its terms
and without any strict construction in favor of or against either Party.
12.14 ENTIRE AGREEMENT. As to the subject matter hereof: (i) this
Supply Agreement, including its exhibits, sets forth the entire agreement
between Buyer and Supplier; (ii) no promise, inducement, understanding, or
agreement not expressly contained herein has been made; and (iii) this Supply
Agreement merges and supersedes any and all previous agreements, understandings,
and negotiations between the Parties. The terms and conditions of this Agreement
supersede any terms or conditions in any purchase order, form acknowledgement or
other instrument issued by either Party in connection with this Agreement which
add to or differ from this Agreement and such additional or differing terms and
conditions shall have no force or effect.
18.
IN WITNESS WHEREOF, the Parties have executed this Supply Agreement
as of the Effective Date by the undersigned duly authorized representatives of
each Party.
BUYER: SUPPLIER:
CONEXANT SYSTEMS, INC. ALPHA INDUSTRIES, INC.
By: /s/ Dennis E, O'Reilly By: /s/ Paul E . Vincent
----------------------------- ------------------------------
Name: Dennis E, O'Reilly Name: Paul E . Vincent
Title: Senior Vice President, Title: Vice President,
General Counsel and Chief Financial Officer,
Secretary Treasurer and Secretary
19.
EXHIBIT A - PRICING
GAAS WAFER PRICE THROUGH PCM PASS
- ---------------------------------------------------
PROCESS PRICE
- ---------------------------------------------------
CMD [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ---------------------------------------------------
HDG2 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ---------------------------------------------------
HBT-DG [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ---------------------------------------------------
POST PROBE PROCESSING CHARGE (BY PART NUMBER)
* Includes parametric test, Grind, ink, and scribe and break
- ----------------------------------------------------------------------
PART NUMBER MASK NUMBER COST PER WAFER
- ----------------------------------------------------------------------
CX60057 N/A [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
CX60077 60077 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
CX60077-IB 60077 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
CX60083 60103 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
CX60087 60087 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
R1901 40065 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
R1902A24 60044 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
R1902A6 60044 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
R1903A24 60017,60072 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
R1904 40068 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
R1905 60061 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
R1906 60062 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
R1910 60066 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
R1911 60017,60072 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
R1912 60017,60072 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
RS706 60078 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
RS711 60079 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
PRORATED WAFER CANCELLATION COST
- ---------------------------------------------------------------------------------------------
Raw Material Cost Per Step Completed
- ---------------------------------------------------------------------------------------------
CMD [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ---------------------------------------------------------------------------------------------
HDG2 [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ---------------------------------------------------------------------------------------------
HBT-DG [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ---------------------------------------------------------------------------------------------
EXHIBIT B - QUALITY SPECIFICATIONS
Level I
NP-M-0001 Newbury Park Quality Manual
Level II
NP-01084 Epi Wafer Specification
Level II
NP-01065 Wafer Visual Inspection Standard
Level II
NP-CP-4009 HBT Quality Plan
Level II
NP-01064 Specification for Handling, Packaging and Storage of GaAs Products
EXHIBIT C - NEW PROCESS TECHNOLOGY PROCEDURES
NP-01422 HBT3-DG Design Guide
NP-01247 HBT3-DG Design Rule Specification
EXHIBIT D - WAFER CYCLE TIMES
The following sets forth the average wafer cycle times:
Digital Wafer Fabrication = 12 weeks
Post Probe Processing = 2 weeks
EXHIBIT E - FINAL TEST AND PROBE SERVICES SUPPORT
QUALITY ASSURANCE (EFFECTIVELY 1 PERSON OF SUPPORT):
Incoming Package inspection / First Article Inspection on New Products
Outgoing package inspection post test and Shipping Inspection
Wafer Lot acceptance post Fab (GaAs)
Wafer outgoing inspection post scribe, break
Die Visual inspection
Logistical coordination of Test equipment calibration for Buyer owner equipment
Documentation review & Approval TECO, DMS & STR
PRODUCTION CONTROL ACTIVITIES:(EFFECTIVELY 1 PERSON FOR SUPPORT) RECEIVING:
Receive parts, prepare receiving log sheet, verify for package count and damage,
deliver to recipient.
PRODUCTION CONTROL:
Receive parts from Receiving, Match paperwork to Purchase Order.
Prepare Promis lot follower and submit parts and lot follower to Test.
Place Lot Holds and perform Lot splits to support shipment requirements as
directed.
Maintain and report Engineering Held inventory.
PRODUCTION PLANNING:
Participate in scheduling and delivery requirements meetings with Buyer.
Provide delivery commitments based on capacity and indicated priorities.
WIP monitoring to assure on time delivery commitments.
Development of Promis Prods for new products.
Focal point for problem resolution related to Purchase orders, work orders,
actual parts received mismatches.
Co-ordinate procedure changes to meet Buyer requirements.
INDUSTRIAL ENGINEERING : (VARIABLE SUPPORT AS REQUIRED)
Layout support
WIP movement plans
Staffing analysis
Capacity modeling only to support OEE improvement
EXHIBIT F - DELIVERY AND LOGISTICS
SERVICES SUPPLIED TO BUYER
Supplier receives Purchase Order from Buyer
Supplier receives Product with detailed Work Order instructions for
requested Services
Supplier creates Lot Follower in PROMIS for WIP tracking
Supplier performs Services requested
Supplier performs Quality Assurance checks
Supplier prepares Notice to Ship to Buyer
Supplier ships product to Buyer
GOODS SUPPLIED TO BUYER
Supplier receives Purchase Order from Buyer
Supplier creates Lot Follower in PROMIS for WIP tracking
Supplier Fabricates Wafers
Supplier performs Quality Assurance checks
Supplier prepares Notice to Ship to Buyer
Supplier ships Wafers to Buyer
25.
EXHIBIT G - REPORTS
Supplier shall prepare and provide the following reports to Buyer.
Monthly Yield Reports (demonstrated) - fab line yield, probe, assembly,
test - as applicable
Monthly Cycle-Time Report (demonstrated) -
Monthly Queue-Time Report (demonstrated) - can be combined with Cycle-Time
report if easier
Monthly On-Time Delivery Report (demonstrated) -
Weekly WIP Report(snapshot)-
Monthly Diebank Inventory report (snapshot) -
Monthly Raw Material Inventory Report (snapshot) - (substrates, tape/reel
material, trays, etc)
26.
Exhibit 10.aa
$200,000,000
SKYWORKS SOLUTIONS INC.
4 3/4% CONVERTIBLE SUBORDINATED
NOTES DUE NOVEMBER 15, 2007
REGISTRATION RIGHTS AGREEMENT
November 12, 2002
Credit Suisse First Boston Corporation
As Representatives of the Several Purchasers
Eleven Madison Avenue
New York, New York 10010-3629
Dear Sirs:
Skyworks Solutions Inc., a Delaware corporation (the "COMPANY"),
proposes to issue and sell to Credit Suisse First Boston Corporation (the
"INITIAL PURCHASER"), upon the terms set forth in a purchase agreement dated
November 6, 2002 (the "PURCHASE AGREEMENT"), $200,000,000 aggregate principal
amount (plus up to an additional $30,000,000 principal amount) of its 4 3/4%
Convertible Subordinated Notes due November 15, 2007 (the "INITIAL SECURITIES").
The Initial Securities will be convertible into shares of common stock, par
value $0.25 per share, of the Company (the "COMMON STOCK") at the conversion
price set forth in the Offering Circular dated November 6, 2002. The Initial
Securities will be issued pursuant to an Indenture, dated as of November 12,
2002, (the "INDENTURE"), among the Company and State Street Bank and Trust
Company, as trustee (the "TRUSTEE"). As an inducement to the Initial Purchaser
to enter into the Purchase Agreement, the Company agrees with the Initial
Purchaser, for the benefit of (i) the Initial Purchaser and (ii) the holders of
the Initial Securities and the Common Stock issuable upon conversion of the
Initial Securities (collectively, the "SECURITIES") from time to time until such
time as such Securities have been sold pursuant to a Shelf Registration
Statement (as defined below) (each of the forgoing a "HOLDER" and collectively
the "HOLDERS"), as follows:
1. Shelf Registration. (a) The Company shall, at its cost, prepare and,
as promptly as practicable (but in no event more than 90 days after the First
Closing Date (as defined in the Purchase Agreement) file with the Securities and
Exchange Commission (the "COMMISSION") and thereafter use its commercially
reasonable efforts to cause to be declared effective as soon as practicable a
registration statement on Form S-3 within 180 days of the First Closing Date,
(the "SHELF REGISTRATION STATEMENT") relating to the offer and sale of the
Transfer Restricted Securities (as defined in Section 5 hereof) by the Holders
thereof from time to time in accordance with the methods of distribution set
forth in the Shelf Registration Statement and Rule 415 under the Securities Act
of 1933, as amended (the "SECURITIES ACT") (hereinafter, the "SHELF
REGISTRATION"); provided, however, that no Holder (other than the Initial
Purchaser) shall be entitled to have the Securities held by it covered by such
Shelf Registration Statement unless such Holder agrees in writing to be bound by
all the provisions of this Agreement applicable to such Holder.
(b) The Company shall use its reasonable best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the prospectus
included therein (the "PROSPECTUS") to be lawfully delivered by the Holders of
the relevant Securities, for a period of two years (or for such longer period if
1
extended pursuant to Section 2(h) below) from the date of its effectiveness or
such shorter period that will terminate when all the Securities covered by the
Shelf Registration Statement (i) have been sold pursuant thereto or (ii) are no
longer restricted securities (as defined in Rule 144(k) under the Securities
Act, or any successor rule thereof), assuming for this purpose that the Holders
thereof are not affiliates of the Company (in any such case, such period being
called the "SHELF REGISTRATION PERIOD"). The Company shall be deemed not to have
used its reasonable best efforts to keep the Shelf Registration Statement
effective during the requisite period if it voluntarily takes any action that
would result in Holders of Securities covered thereby not being able to offer
and sell such Securities during that period, unless such action is (i) required
by applicable law or (ii) taken by the Company in good faith upon the occurrence
of any event contemplated by Section 2(b)(v) below, and the Company thereafter
complies with the requirements of Section 2(h).
(c) Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause the Shelf Registration Statement and the
Prospectus and any amendment or supplement thereto, as of the effective date of
the Shelf Registration Statement, amendment or supplement, (i) to comply in all
material respects with the applicable requirements of the Securities Act and the
rules and regulations of the Commission and (ii) not to contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
2. Registration Procedures. In connection with the Shelf Registration
contemplated by Section 1 hereof, the following provisions shall apply:
(a) The Company shall (i) furnish to each Initial Purchaser, prior to
the filing thereof with the Commission, a copy of the Shelf Registration
Statement and each amendment thereof and each supplement, if any, to the
prospectus included therein and, in the event that each Initial Purchaser (with
respect to any portion of an unsold allotment from the original offering) is
participating in the Shelf Registration Statement, shall use reasonable best
efforts to reflect in each such document, when so filed with the Commission,
such comments as such Initial Purchaser reasonably may propose; and (ii) include
the names of the Holders who propose to sell Securities pursuant to the Shelf
Registration Statement as selling securityholders.
(b) The Company shall give written notice to the Initial Purchasers and
the Holders of the Securities (which notice pursuant to clauses (ii)-(v) hereof
shall be accompanied by an instruction to suspend the use of the Prospectus
until the requisite changes have been made):
(i) when the Shelf Registration Statement or any amendment
thereto has been filed with the Commission and when the Shelf
Registration Statement or any post-effective amendment thereto has
become effective;
(ii) of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the prospectus
included therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Shelf Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(v) of the happening of any event that requires the Company to
make changes in the Shelf Registration Statement or the Prospectus in
order that the Shelf Registration Statement or the Prospectus does not
contain an untrue statement of a material fact nor omit to state a
material fact required to be stated therein or necessary to make the
statements therein (in the case of the
2
Prospectus, in light of the circumstances under which they were made)
not misleading, which written notice need not provide any detail as to
the nature of such event.
(c) The Company shall make every reasonable effort to obtain the
withdrawal at the earliest possible time, of any order suspending the
effectiveness of the Shelf Registration Statement.
(d) The Company shall furnish to each Holder of Securities included
within the coverage of the Shelf Registration, without charge, at least one copy
of the Shelf Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the Holder so requests in
writing, all exhibits thereto (including those, if any, incorporated by
reference).
(e) The Company shall, during the Shelf Registration Period, deliver to
each Holder of Securities included within the coverage of the Shelf
Registration, without charge, as many copies of the Prospectus (including each
preliminary prospectus) included in the Shelf Registration Statement and any
amendment or supplement thereto as such person may reasonably request. The
Company consents, subject to the provisions of this Agreement, to the use of the
Prospectus or any amendment or supplement thereto by each of the selling Holders
of the Securities in connection with the offering and sale of the Securities
covered by the Prospectus, or any amendment or supplement thereto, included in
the Shelf Registration Statement.
(f) Prior to any public offering of the Securities pursuant to the
Shelf Registration Statement, the Company shall register or qualify or cooperate
with the Holders of the Securities included therein and their respective counsel
in connection with the registration or qualification of the Securities for offer
and sale under the securities or "blue sky" laws of such states of the United
States as any Holder of the Securities reasonably requests in writing and do any
and all other acts or things necessary or advisable to enable the offer and sale
in such jurisdictions of the Securities covered by such Registration Statement;
provided, however, that the Company shall not be required to (i) qualify
generally to do business in any jurisdiction where it is not then so qualified
or (ii) take any action which would subject it to general service of process or
to taxation in any jurisdiction where it is not then so subject.
(g) The Company shall cooperate with the Holders of the Securities to
facilitate the timely preparation and delivery of certificates representing the
Securities to be sold pursuant to any Registration Statement free of any
restrictive legends and in such denominations and registered in such names as
the Holders may request a reasonable period of time prior to sales of the
Securities pursuant to the Shelf Registration Statement.
(h) Upon the occurrence of any event contemplated by paragraphs (ii)
through (v) of Section 2(b) above during the period for which the Company is
required to maintain an effective Shelf Registration Statement, the Company
shall as required hereby prepare and file a post-effective amendment to the
Shelf Registration Statement or an amendment or supplement to the Prospectus and
any other required document so that, as thereafter delivered to Holders or
purchasers of the Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the Company may delay filing and distributing any such supplement or
amendment (and continue the suspension of the use of the Prospectus) if the
Company determines in good faith that such supplement or amendment would, in the
reasonable judgment of the Company, (i) interfere with or affect the negotiation
or completion of a transaction that is being contemplated by the Company or (ii)
involve initial or continuing disclosure obligations that are not in the best
interests of the Company's stockholders at such time; provided, further, that
neither such delay nor such suspension shall extend for a period of more than 45
consecutive days or an aggregate of 90 days in any twelve-month period. If the
Company notifies the Initial Purchasers and the Holders in accordance with
paragraphs (ii) through (v) of Section 2(b) above to suspend the use of the
Prospectus until the requisite changes to the Prospectus have been made, then
the Initial Purchasers and the Holders shall suspend use of such prospectus, and
the period of effectiveness of the Shelf Registration Statement provided for in
Section 1(b) above shall be extended by the number of days from and including
the date of the giving of such notice to and including the date when
3
THE Initial Purchaser and the Holders shall have received such amended or
supplemented prospectus pursuant to this Section 2(h).
(i) Not later than the effective date of the Shelf Registration
Statement, the Company will provide CUSIP numbers for the Initial Securities and
the Common Stock registered under the Shelf Registration Statement, and provide
the Trustee with printed certificates for the Initial Securities, in a form
eligible for deposit with The Depository Trust Company.
(j) The Company will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the Shelf
Registration and will make generally available to its security holders (or
otherwise provide in accordance with Section 11(a) of the Securities Act) an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act, no later than 45 days after the end of a 12-month period (or 90 days, if
such period is a fiscal year) beginning with the first month of the Company's
first fiscal quarter commencing after the effective date of the Shelf
Registration Statement, which statement shall cover such 12-month period.
(k) The Company shall cause the Indenture to be qualified under the
Trust Indenture Act of 1939, as amended, (the "TRUST INDENTURE ACT") in a timely
manner and containing such changes, if any, as shall be necessary for such
qualification. In the event that such qualification would require the
appointment of a new trustee under the Indenture, the Company shall appoint a
new trustee thereunder pursuant to the applicable provisions of the Indenture.
(l) Each Holder agrees, by acquisition of the Securities, that no
Holder shall be entitled to sell any such Securities pursuant to the Shelf
Registration Statement or to receive a prospectus relating thereto, unless such
Holder has furnished the Company with a Notice and Questionnaire as required
pursuant to Section 2(m) hereof and the information set forth in the next
sentence. Each Holder agrees promptly to furnish the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such Holder not misleading and any other information regarding
such Holder and the distribution of such Securities as the Company may from time
to time reasonably request.
(m) Each Holder agrees that if such Holder wishes to sell such Holder's
Securities pursuant to the Shelf Registration Statement and related prospectus,
it will do so in accordance with this Section 2(m). Each Holder wishing to sell
Securities pursuant to a Shelf Registration Statement and related prospectus
agrees to deliver a properly, completely and signed Notice and Questionnaire
(included in the Offering Circular (as defined in the Purchase Agreement) as
Annex A and the form of attached hereto) to the Company at least fifteen (15)
business days prior to any intended distribution of Securities under the Shelf
Registration Statement. From and after the date the Shelf Registration Statement
is declared effective, the Company shall, as promptly as is practicable after
the date a Notice and Questionnaire is delivered, and in any event within
fifteen (15) business days after such date, (i) if required by law, file with
the Commission a post-effective amendment to the Registration Statement or
prepare and, if required by applicable law, file a supplement to the related
prospectus or a supplement or amendment to any document incorporated therein by
reference or file any other required document so that the Holder delivering such
Notice and Questionnaire is named a selling securityholder in the Registration
Statement and the related prospectus in such a manner as to permit such Holder
to deliver such prospectus to purchasers of the Securities in accordance with
applicable law and, if the Company shall file a post-effective amendment to the
Registration Statement, use all reasonable efforts to cause such post-effective
amendment to be declared effective under the Securities Act as promptly as
practical, but in any event by the date that is thirty (30) business days after
the date such post-effective amendment is required by this clause to be filed;
(ii) provide such Holder copies of any documents filed pursuant to this Section;
and (iii) notify such Holder as promptly as practicable after the effectiveness
under the Securities Act of any post-effective amendment filed pursuant to this
Section; provided, that if such Notice and Questionnaire is delivered during a
period in which the use of such prospectus is suspended pursuant to Section 2(c)
hereof, the Company shall so inform the Holder delivering such Notice and
Questionnaire and shall take the actions set forth in clauses (i), (ii) and
(iii) above upon expiration of such suspension period. Notwithstanding anything
contained herein to the contrary, the Company shall be under no obligation to
name any Holder that has not supplied the
4
requisite information required by this Section as a selling securityholder in
the Registration Statement and related prospectus and any amendment or
supplement thereto; provided, however, that any Holder that has subsequently
supplied the requisite information required by this Section pursuant to the
provisions of this Section (whether or not such Holder has supplied the
requisite information required by this Section at the time the Registration
Statement was declared effective) shall be named as a selling securityholder in
the Registration Statement or related prospectus in accordance with the
requirements of this Section. Notwithstanding anything contained herein to the
contrary, the Company shall not be required to file more than one post-effective
amendment or supplement for the purpose of naming selling security holders in
any seven-day period.
(n) The Company shall enter into such customary agreements (including,
if requested, an underwriting agreement in customary form) and take all such
other actions, if any, as any Holder shall reasonably request in order to
facilitate the disposition of the Securities pursuant to the Shelf Registration;
provided, however, that the Company shall not be required to facilitate an
underwritten offering pursuant to a Shelf Registration Statement by any Holders
unless the offering relates to at least $25,000,000 principal amount of the
Initial Securities or an equivalent amount of Common Stock.
(o) The Company shall (i) make reasonably available for inspection by
the Holders, any underwriter participating in any disposition pursuant to the
Shelf Registration Statement and any attorney, accountant or other agent
retained by the Holders or any such underwriter, all relevant financial and
other records, pertinent corporate documents and properties of the Company and
(ii) cause the Company's officers, directors, employees, accountants and
auditors to supply all relevant information reasonably requested by the Holders
or any such underwriter, attorney, accountant or agent in connection with the
Shelf Registration Statement, in each case, as shall be reasonably necessary to
enable such persons, to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act; provided, however, that the foregoing
inspection and information gathering shall be coordinated on behalf of the
Initial Purchasers by you and on behalf of the other parties, by one counsel
designated by and on behalf of such other parties as described in Section 3
hereof.
(p) In the event of an underwritten offering, the Company shall use
reasonable best efforts to cause (i) its counsel to deliver an opinion and
updates thereof relating to the Securities in customary form addressed to such
Holders and the managing underwriters, if any, thereof, and dated, in the case
of the initial opinion, the effective date of such Shelf Registration Statement
(it being agreed that the matters to be covered by such opinion shall include,
subject to customary assumptions and other qualifications, the due incorporation
and good standing of the Company and its subsidiaries; the qualification of the
Company and its subsidiaries to transact business as foreign corporations; the
due authorization, execution and delivery of the relevant agreement of the type
referred to in Section 2(m) hereof; the due authorization, execution,
authentication and issuance, and the validity and enforceability, of the
Securities; the absence of material legal or governmental proceedings involving
the Company and its subsidiaries; the absence of governmental approvals required
to be obtained in connection with the Shelf Registration Statement, the offering
and sale of the Securities, or any agreement of the type referred to in Section
2(m) hereof; the compliance as to form of the Shelf Registration Statement and
any documents incorporated by reference therein and of the Indenture with the
requirements of the Securities Act and the Trust Indenture Act, respectively;
and, as of the date of the opinion and as of the effective date of the Shelf
Registration Statement or most recent post-effective amendment thereto, as the
case may be, the absence from the Shelf Registration Statement and the
prospectus included therein, as then amended or supplemented, and from any
documents incorporated by reference therein of an untrue statement of a material
fact or the omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading (in the case
of any such documents, in the light of the circumstances existing at the time
that such documents were filed with the Commission under the Exchange Act of
1934, as amended (the "EXCHANGE ACT")); (ii) its officers to execute and deliver
all customary documents and certificates and updates thereof requested by any
underwriters of the Securities and (iii) its independent public accountants and
the independent public accountants with respect to any other entity for which
financial information is provided in the Shelf Registration Statement to provide
to the selling Holders of the applicable Securities and any underwriter therefor
a comfort letter in customary form and covering matters of the type customarily
covered in comfort
5
letters in connection with primary underwritten offerings, subject to receipt of
appropriate documentation as contemplated, and only if permitted, by Statement
of Auditing Standards No. 72.
(q) The Company shall use its reasonable best efforts to take all other
steps necessary to effect the registration of the Securities covered by a
Registration Statement contemplated hereby.
3. Registration Expenses. (a) The Company shall bear all fees and
expenses incurred in connection with the performance of its obligations
hereunder, whether or not a Shelf Registration Statement is filed or becomes
effective and shall bear or reimburse the Holders of the Securities covered
thereby for reasonable fees and disbursements of not more than one counsel,
designated by the Holders of a majority in principal amount of the Securities
covered by the Shelf Registration Statement (provided that Holders of Common
Stock issued upon the conversion of the Initial Securities shall be deemed to be
Holders of the aggregate principal amount of Initial Securities from which such
Common Stock was converted) to act as counsel for the Holders in connection
therewith.
(b) In connection with any underwritten Shelf Registration Statement,
the participating Holders shall be responsible for the payment of any and all
underwriters and brokers and dealers discounts and selling commissions and such
discounts and commissions shall be borne by the participating Holders in
proportion to the number of Securities sold by such Holders.
4. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Holder and each person, if any, who controls such Holder within
the meaning of the Securities Act or the Exchange Act (each Holder, and such
controlling persons are referred to collectively as the "INDEMNIFIED PARTIES")
from and against any losses, claims, damages or liabilities, joint or several,
or any actions in respect thereof (including, but not limited to, any losses,
claims, damages, liabilities or actions relating to purchases and sales of the
Securities) to which each Indemnified Party may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the Shelf
Registration Statement or prospectus including any document incorporated by
reference therein, or in any amendment or supplement thereto or in any
preliminary prospectus relating to the Shelf Registration, or arise out of, or
are based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and shall reimburse, as incurred, the Indemnified Parties for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action in
respect thereof; provided, however, that (i) the Company shall not be liable in
any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in the Shelf Registration Statement or
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus relating to the Shelf Registration in reliance upon and in conformity
with written information pertaining to such Holder and furnished to the Company
by or on behalf of such Holder specifically for inclusion therein and (ii) with
respect to any untrue statement or omission or alleged untrue statement or
omission made in any preliminary prospectus relating to the Shelf Registration
Statement, the indemnity agreement contained in this subsection (a) shall not
inure to the benefit of any Holder from whom the person asserting any such
losses, claims, damages or liabilities purchased the Securities concerned, to
the extent that a prospectus relating to such Securities was required to be
delivered by such Holder under the Securities Act in connection with such
purchase and any such loss, claim, damage or liability of such Holder results
from the fact that there was not sent or given to such person, at or prior to
the written confirmation of the sale of such Securities to such person, a copy
of the final prospectus if the Company had previously furnished copies thereof
to such Holder; provided further, however, that this indemnity agreement will be
in addition to any liability which the Company may otherwise have to such
Indemnified Party. The Company shall also indemnify underwriters, their officers
and directors and each person who controls such underwriters within the meaning
of the Securities Act or the Exchange Act to the same extent as provided above
with respect to the indemnification of the Holders of the Securities if
requested by such Holders.
6
(b) Each Holder, severally and not jointly, will indemnify and hold
harmless the Company, its officers and directors and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act from and against any losses, claims, damages or liabilities or any actions
in respect thereof, to which the Company or any such controlling person may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages, liabilities or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Shelf Registration Statement or prospectus or in any amendment
or supplement thereto or in any preliminary prospectus relating to the Shelf
Registration, or arise out of or are based upon the omission or alleged omission
to state therein a material fact necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement or
omission or alleged untrue statement or omission was made in reliance upon and
in conformity with written information pertaining to such Holder and furnished
to the Company by or on behalf of such Holder specifically for inclusion
therein; and, subject to the limitation set forth immediately preceding this
clause, shall reimburse, as incurred, the Company for any legal or other
expenses reasonably incurred by the Company or any such controlling person in
connection with investigating or defending any loss, claim, damage, liability or
action in respect thereof. This indemnity agreement will be in addition to any
liability which such Holder may otherwise have to the Company or any of its
controlling persons.
(c) Promptly after receipt by an indemnified party under this Section 4
of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 4,
notify the indemnifying party of the commencement thereof; but the failure to
notify the indemnifying party shall not relieve it from any liability that it
may have under subsection (a) or (b) above except to the extent that it has been
materially prejudiced (through the forfeiture of substantive rights or defenses)
by such failure; and provided further that the failure to notify the
indemnifying party shall not relieve it from any liability that it may have to
an indemnified party otherwise than under subsection (a) or (b) above. In case
any such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party will not be liable to such indemnified party under this
Section 4 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement (i) includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action, and (ii) does not include a statement as to or an admission of
fault, culpability or a failure to act by or on behalf of any indemnified party.
No indemnified party shall effect any settlement of any pending or threatened
action without the prior written consent of the indemnifying party, which such
consent shall not be unreasonably withheld or delayed.
(d) If the indemnification provided for in this Section 4 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subsection (a) or (b) above in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party or parties on the one hand
and the indemnified party on the other from the sale of the Securities, pursuant
to the Shelf Registration, or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the indemnifying party or parties on the
one hand and the indemnified party on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of the parties shall be determined
by reference to, among other things, whether the untrue or alleged
7
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or such Holder or such other indemnified party, as the case may be, on the
other, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid by
an indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which is
the subject of this subsection (d). Notwithstanding any other provision of this
Section 4(d), the Holders shall not be required to contribute any amount in
excess of the amount by which the net proceeds received by such Holders from the
sale of the Securities pursuant to the Shelf Registration Statement exceeds the
amount of damages which such Holders have otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this paragraph (d), each person, if any, who controls such indemnified party
within the meaning of the Securities Act or the Exchange Act shall have the same
rights to contribution as such indemnified party and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act shall have the same rights to contribution as the Company.
(e) The agreements contained in this Section 4 shall survive the sale
of the Securities pursuant to the Shelf Registration Statement and shall remain
in full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.
5. Additional Interest Under Certain Circumstances. (a) Additional
interest (the "ADDITIONAL INTEREST") with respect to the Initial Securities
shall be assessed as follows if any of the following events occur (each such
event in clauses (i) through (iv) below being herein called a "REGISTRATION
DEFAULT"):
(i) the Shelf Registration Statement has not been filed with the
Commission by the 90th day after the first date of original issuance of
the Initial Securities;
(ii) the Shelf Registration Statement has not been declared
effective by the Commission by the 180th day after the first date of
original issue of the Initial Securities; or
(iii) the Company fails with respect to a Holder that supplies the
Notice and Questionnaire described in Paragraph 2(m) to amend or
supplement the Registration Statement in the manner set forth in 2(m);
provided that such assessment shall be paid only to such Holder and
directly to such Holder; or
(iv) the Shelf Registration Statement is declared effective, and
such Shelf Registration Statement ceases to be effective or fails to be
usable in connection with resales of Initial Securities and the
Transfer Restricted Securities issuable upon the conversion of the
Initial Securities in accordance with and during the periods specified
in this Agreement and (A) the Company does not cure the Shelf
Registration Statement within fifteen business days by a post-effective
amendment or a report filed pursuant to the Exchange Act or (B) if
applicable, the Company does not terminate the suspension period
described above by the 45th or 90th day, as the case may be.
Each of the foregoing will constitute a Registration Default whatever the reason
for any such event and whether it is voluntary or involuntary or is beyond the
control of the Company or pursuant to operation of law or as a result of any
action or inaction by the Commission.
Additional Interest shall accrue on the Initial Securities over and
above the interest set forth in the title of the Initial Securities from and
including the date on which any such Registration Default shall occur to but
excluding the date on which all such Registration Defaults have been cured, at a
rate of 0.50% per annum (the "ADDITIONAL INTEREST RATE") (or an equivalent
amount of any Common Stock issued upon conversion of the Initial Securities). In
the case of a registration default described in clause (iii) the
8
Company's obligation to pay additional interest extends only to the affected
Initial Securities. The Company shall have no other liabilities for monetary
damages with respect to its registration obligations. With respect to each
Holder, the Company's obligations to pay additional interest remain in effect
only so long as the Initial Securities and the Common Stock issuable upon the
conversion of the Initial Securities held by the Holder are Transfer Restricted
Securities within the meaning of this Agreement.
(b) A Registration Default referred to in Section 5(a)(iii) hereof
shall be deemed not to have occurred and be continuing in relation to the Shelf
Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of (x) the filing of a post-effective
amendment to the Shelf Registration Statement to incorporate annual audited
financial information with respect to the Company where such post-effective
amendment is not yet effective and needs to be declared effective to permit
Holders to use the related prospectus or (y) other material events, with respect
to the Company that would need to be described in such Shelf Registration
Statement or the related prospectus and (ii) in the case of clause (y), the
Company is proceeding promptly and in good faith to amend or supplement the
Shelf Registration Statement and related prospectus to describe such events as
required by paragraph 2(h) hereof; provided, however, that in any case if such
Registration Default occurs for a continuous period in excess of 30 days,
Additional Interest shall be payable in accordance with the above paragraph from
the day such Registration Default occurs until such Registration Default is
cured.
(c) Any amounts of Additional Interest due pursuant to Section 5(a)
will be payable in cash on the regular interest payment dates with respect to
the Initial Securities. The amount of Additional Interest will be determined by
multiplying the applicable Additional Interest Rate by the principal amount of
the Initial Securities, further multiplied by a fraction, the numerator of which
is the number of days such Additional Interest Rate was applicable during such
period (determined on the basis of a 360-day year comprised of twelve 30-day
months), and the denominator of which is 360.
(d) "TRANSFER RESTRICTED SECURITIES" means each Security until (i) the
date on which such Security has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement or (ii)
the date on which such Security is distributed to the public pursuant to Rule
144 under the Securities Act or is saleable pursuant to Rule 144(k) under the
Securities Act.
6. Rules 144 and 144A. The Company shall use its reasonable best
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act in a timely manner and, if at any time the Company is not
required to file such reports, it will, upon the request of any Holder, make
publicly available other information so long as necessary to permit sales of
their securities pursuant to Rules 144 and 144A. The Company covenants that it
will take such further action as any Holder may reasonably request, all to the
extent required from time to time to enable such Holder to sell Transfer
Restricted Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rules 144 and 144A (including the
requirements of Rule 144A(d)(4)). The Company will provide a copy of this
Agreement to prospective purchasers of Securities identified to the Company by
the Initial Purchaser upon request. Upon the request of any Holder, the Company
shall deliver to such Holder a written statement as to whether it has complied
with such requirements. Notwithstanding the foregoing, nothing in this Section 6
shall be deemed to require the Company to register any of its securities
pursuant to the Exchange Act.
7. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by the Shelf Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will administer the offering ("MANAGING UNDERWRITERS") will be selected by
the holders of a majority in aggregate principal amount of such Transfer
Restricted Securities to be included in such offering (provided that holders of
Common Stock issued upon conversion of the Initial Securities shall not be
deemed holders of Common Stock, but shall be deemed to be holders of the
aggregate principal amount of Initial Securities from which such Common Stock
was converted) and such selection shall be subject to the Company's consent,
which shall not be unreasonably withheld or delayed.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting
9
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
8. Miscellaneous.
(a) Remedies. The Company acknowledges and agrees that any failure by
the Company to comply with its obligations hereunder may result in material
irreparable injury to the Initial Purchasers or the Holders for which there is
no adequate remedy at law, that it will not be possible to measure damages for
such injuries precisely and that, in the event of any such failure, the Initial
Purchasers or any Holder may obtain such relief as may be required to
specifically enforce the Company's obligations hereunder.
(b) No Inconsistent Agreements. The Company will not on or after the
date of this Agreement enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, except by the Company and the written
consent of the holders of a majority in principal amount of the Securities
affected by such amendment, modification, supplement, waiver or consents
(provided that holders of Common Stock issued upon conversion of Initial
Securities shall not be deemed holders of Common Stock, but shall be deemed to
be holders of the aggregate principal amount of Initial Securities from which
such Common Stock was converted). Without the consent of the Holder of each
Initial Security, however, no modification may change the provisions relating to
the payment of Additional Interest.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class mail,
facsimile transmission, or air courier which guarantees overnight delivery:
(1) if to a Holder of the Securities, at the most current address
given by such Holder to the Company.
(2) if to the Initial Purchasers;
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Fax No.: (212) 325-8278
Attention: Transactions Advisory Group
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Attn: Kris F. Heinzelman, Esq.
(3) if to the Company, at its address as follows:
Skyworks Solutions Inc.
20 Sylvan Road
10
Woburn, MA 01801
Attn: Chief Financial Officer
with a copy to:
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Attn: Gordon H. Hayes, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.
(e) Third Party Beneficiaries. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect their rights or the rights of Holders
hereunder.
(f) Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
By the execution and delivery of this Agreement, the Company submits to
the nonexclusive jurisdiction of any federal or state court in the State of New
York.
(j) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
(k) Securities Held by the Company. Whenever the consent or approval of
Holders of a specified percentage of principal amount of Securities is required
hereunder, Securities held by the Company or its affiliates (other than
subsequent Holders of Securities if such subsequent Holders are deemed to be
affiliates solely by reason of their holdings of such Securities) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
11
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the several Initial Purchasers and the Company in accordance with its
terms.
Very truly yours,
Skyworks Solutions, Inc.
by /s/ PAUL E. VINCENT
________________________________
Name: Paul E. Vincent
Title: Vice President
and Chief Financial
Officer
12
The foregoing Registration
Rights Agreement is hereby confirmed
and accepted as of the date first
above written.
By: CREDIT SUISSE FIRST BOSTON CORPORATION
by /s/ AMR ELSHAER
____________________________________
Name: Amr Elshaer
Title: Director
Acting on behalf of itself and as the
Representative of the several Purchasers
13
ANNEX A
FORM OF SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE
The undersigned beneficial holder of 4 3/4% Convertible Subordinated
Notes due 2007 (the "Notes") of Skyworks Solutions, Inc. (the "Company") or
Common Stock, par value $0.25 per share (the "Common Stock" and together with
the Notes, the "Registrable Securities"), of the Company understands that the
Company has filed or intends to file with the Securities and Exchange Commission
a registration statement (the "Shelf Registration Statement") for the
registration and resale under Rule 415 of the Securities Act of 1933, as
amended, of the Registrable Securities in accordance with the terms of the
Registration Rights Agreement, dated as of November 12, 2002 (the "Registration
Rights Agreement"), among the Company and the Initial Purchasers named therein.
A copy of the Registration Rights Agreement is available from the Company upon
request at the address set forth below. All capitalized terms not otherwise
defined herein shall have the meaning ascribed thereto in the Registration
Rights Agreement.
Each beneficial owner of Registrable Securities is entitled to the
benefits of the Registration Rights Agreement. In order to sell or otherwise
dispose of any Registrable Securities pursuant to the Shelf Registration
Statement, a beneficial owner of Registrable Securities generally will be
required to be named as a selling securityholder in the related prospectus,
deliver a prospectus to each purchaser of Registrable Securities and be bound by
those provisions of the Registration Rights Agreement applicable to such
beneficial owner (including certain indemnification provisions, as described
below). Beneficial owners are encouraged to complete and deliver this Notice and
Questionnaire prior to the effectiveness of the Shelf Registration Statement so
that such beneficial owners may be named as selling securityholders in the
related prospectus at the time of effectiveness. Any beneficial owner of Notes
wishing to include its Registrable Securities must deliver to the Company a
properly completed and signed Selling Securityholder Notice and Questionnaire.
Certain legal consequences arise from being named as a selling
securityholder in the Shelf Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Shelf Registration
Statement and the related prospectus.
NOTICE
The undersigned beneficial owner (the "Selling Securityholder") of
Registrable Securities hereby gives notice to the Company of its intention to
sell or otherwise dispose of Registrable Securities beneficially owned by it and
listed below in Item 3 (unless otherwise specified under Item 3) pursuant to the
Shelf Registration Statement. The undersigned, by signing and returning this
Notice and Questionnaire, understands that it will be bound by the terms and
conditions of this Notice and Questionnaire and the Registration Rights
Agreement.
The undersigned hereby provides the following information to the
Company and represents and warrants that such information is accurate and
complete:
1
QUESTIONNAIRE
1. (a) Full Legal Name of Selling Securityholder:
__________________________________________________________________
(b) Full Legal Name of Registered Holder (if not the same as (a)
above) through which Registrable Securities listed in (3)
below are held:
__________________________________________________________________
(c) Full Legal Name of DTC Participant (if applicable and if not
the same as (b) above) through which Registrable Securities
listed in (3) below are held:
__________________________________________________________________
2. Address for Notices to Selling Securityholder:
__________________________________________________________________
__________________________________________________________________
Telephone: _______________________________________________________
Fax: _____________________________________________________________
Contact Person: __________________________________________________
3. Beneficial Ownership of Registrable Securities:
(a) Type and Principal Amount of Registrable Securities
beneficially owned:
__________________________________________________________________
__________________________________________________________________
(b) CUSIP No(s). of Registrable Securities beneficially owned:
__________________________________________________________________
__________________________________________________________________
4. Beneficial Ownership of the Company's securities owned by the
Selling Securityholder:
__________________________________________________________________
__________________________________________________________________
Except as set forth below in this Item (4), the undersigned is not
the beneficial or registered owner of any "Other Securities,"
defined as securities of the Company other than the Registrable
Securities listed above in Item (3).
__________________________________________________________________
__________________________________________________________________
(a) Type and Amount of Other Securities beneficially owned by
the Selling Securityholder:
__________________________________________________________________
__________________________________________________________________
(b) CUSIP No(s). of such Other Securities beneficially owned:
__________________________________________________________________
__________________________________________________________________
A-2
5. Relationship with the Company:
Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equityholders (5% or
more) has held any position or office or has had any other
material relationship with the Company (or its predecessors or
affiliates) during the past three years.
State any exceptions here:
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
6. Plan of Distribution:
Except as set forth below, the undersigned (including its donees
or pledgees) intends to distribute the Registrable Securities
listed above in Item (3) pursuant to the Shelf Registration
Statement only as follows (if at all): Such Registrable Securities
may be sold from time to time directly by the undersigned or
alternatively, through underwriters, broker-dealers or agents. If
the Registrable Securities are sold through underwriters or
broker-dealers, the Selling Securityholder will be responsible for
underwriting discounts or commissions or agent's commissions. Such
Registrable Securities may be sold in one or more transactions at
fixed prices, at prevailing market prices at the time of sale, at
varying prices determined at the time of sale, or at negotiated
prices. Such sales may be effected in transactions (which may
involve block transactions) (i) on any national securities
exchange or quotation service on which the Registrable Securities
may be listed or quoted at the time of sale, (ii) in the
over-the-counter market, (iii) in transactions otherwise than on
such exchanges or services or in the over-the-counter market, or
(iv) through the writing of options. In connection with sales of
the Registrable Securities or otherwise, the undersigned may enter
into hedging transactions with broker-dealers, which may in turn
engage in short sales of the Registrable Securities and deliver
Registrable Securities to close out such short positions, or loan
or pledge Registrable Securities to broker-dealers that in turn
may sell such securities.
State any exceptions here:
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
The undersigned acknowledges that it understands its obligation to
comply with the provisions of the Securities Exchange Act of 1934, as amended,
and the rules thereunder relating to stock manipulation, particularly Regulation
M thereunder (or any successor rules or regulations), in connection with any
offering of Registrable Securities pursuant to the Shelf Registration Statement.
The undersigned agrees that neither it nor any person acting on its behalf will
engage in any transaction in violation of such provisions.
The Selling Securityholder hereby acknowledges its obligations under
the Registration Rights Agreement to indemnify and hold harmless certain persons
as set forth therein.
A-3
Pursuant to the Registration Rights Agreement, the Company has agreed
under certain circumstances to indemnify the Selling Securityholder against
certain liabilities.
In accordance with the undersigned's obligation under the Registration
Rights Agreement to provide such information as may be required by law for
inclusion in the Shelf Registration Statement, the undersigned agrees to
promptly notify the Company of any inaccuracies or changes in the information
provided herein that may occur subsequent to the date hereof at any time while
the Shelf Registration Statement remains effective. All notices hereunder and
pursuant to the Registration Rights Agreement shall be made in writing at the
address set forth below.
By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to items (1) through (6) above and
the inclusion of such information in the Shelf Registration Statement and the
related prospectus. The undersigned understands that such information will be
relied upon by the Company in connection with the preparation or amendment of
the Shelf Registration Statement and the related prospectus.
IN WITNESS WHEREOF, the undersigned, by authority duly given, has
caused this Notice and Questionnaire to be executed and delivered either in
person or by its duly authorized agent.
Dated: Beneficial Owner
By: ____________________________________
Name:
Title:
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO:
Skyworks Solutions, Inc
20 Sylvan Road
Woburn, Massachusetts 01801
Attention: Paul E. Vincent, Chief Financial Officer
with a copy to:
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Attention: Gordon H. Hayes
A-4
Exhibit 10.bb
$45,000,000
SKYWORKS SOLUTIONS, INC.
15% CONVERTIBLE NOTES DUE JUNE 30,2005
15% SENIOR CONVERTIBLE NOTES DUE JUNE 30,2005
REGISTRATION RIGHTS AGREEMENT
November 12,2002
Conexant Systems, Inc.
4311 Jamboree Road
Newport Beach, California 92660-3095
Dear Sirs:
Skyworks Solutions, Inc., a Delaware corporation (the "COMPANY"),
proposes to issue and deliver to Conexant Systems, Inc., a Delaware corporation
("Conexant"), upon the terms and conditions set forth in the Refinancing
Agreement dated as of November 6,2002 by and between Conexant and the Company
(the "REFINANCING AGREEMENT") $45,000,000 aggregate principal amount of its 15%
Convertible Notes Due June 30,2005 (the "INTERIM CONVERTIBLE NOTES") which are
exchangeable for an equal aggregate principal amount of 15% Senior Convertible
Notes Due June 30,2005 (the "SENIOR CONVERTIBLE NOTES"). The Interim Convertible
Notes and Senior Convertible Notes will be convertible into shares of common
stock, par value $.25 per share, of the Company (the "COMMON STOCK") at the
conversion price set forth therein (the "CONVERSION PRICE"). The Senior
Convertible Notes will be issued pursuant to an Indenture (the "INDENTURE"), by
and between the Company and a trustee to be reasonably agreed between the
Company and Conexant (the "TRUSTEE"). As an inducement to Conexant to enter into
the Refinancing Agreement, the Company agrees with Conexant, for the benefit of
(i) Conexant and (ii) the holders of the Senior Convertible Notes and the Common
Stock issuable upon conversion of the Interim Convertible Notes and the Senior
Convertible Notes (collectively, the "SECURITIES") from time to time until such
time as the Securities have been sold pursuant to a Shelf Registration Statement
(as defined below) (each of the forgoing, including Conexant, a "HOLDER" and
collectively, the "HOLDERS"), as follows:
1. Shelf Registration. (a) The Company shall, at its cost, prepare
and, as promptly as practicable (but in no event more than 45 days after the
date hereof) file with the Securities and Exchange Commission (the "COMMISSION")
and thereafter use its commercially reasonable efforts to cause to be declared
effective as soon as practicable a registration statement on Form S-3 within 90
days after the date hereof (the
"SHELF REGISTRATION STATEMENT") relating to the offer and sale of the Transfer
Restricted Securities (as defined in Section 5 hereof) by the Holders thereof
from time to time in accordance with the methods of distribution set forth in
the Shelf Registration Statement and Rule 415 under the Securities Act of 1933,
as amended (the "SECURITIES ACT") (hereinafter, the "SHELF REGISTRATION");
provided, however, that no Holder (other than Conexant) shall be entitled to
have the Securities held by it covered by the Shelf Registration Statement
unless the Holder agrees in writing to be bound by all the provisions of this
Agreement applicable to the Holder.
(b) The Company shall use its reasonable best efforts to keep the
Shelf Registration Statement continuously effective in order to permit the
prospectus included therein (the "PROSPECTUS") to be lawfully delivered by the
Holders of the relevant Securities for a period beginning from the date of its
effectiveness and ending on December 31,2005 (or for such longer period if
extended pursuant to Section 2(h) below) or such shorter period that will
terminate when all the Securities covered by the Shelf Registration Statement
(i) have been sold pursuant thereto or (ii) are no longer restricted securities
(as defined in Rule 144(k) under the Securities Act, or any successor rule
thereof) and if Conexant is a Holder, it is not then an affiliate of the Company
(in any such case, such period being called the "SHELF REGISTRATION PERIOD").
The Company shall be deemed not to have used its reasonable best efforts to keep
the Shelf Registration Statement effective during the requisite period if it
voluntarily takes any action that would result in Holders of Securities covered
thereby not being able to offer and sell the Securities during that period,
unless such action is (i) required by applicable law or (ii) taken by the
Company in good faith upon the occurrence of any event contemplated by Section
2(b)(v) below, and the Company thereafter complies with the requirements of
Section 2(h).
(c) Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause the Shelf Registration Statement and the
Prospectus and any amendment or supplement thereto, as of the effective date of
the Shelf Registration Statement, amendment or supplement, (i) to comply in all
material respects with the applicable requirements of the Securities Act and the
rules and regulations of the Commission and (ii) not to contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
2. Registration Procedures. In connection with the Shelf
Registration contemplated by Section 1 hereof, the following provisions shall
apply:
(a) The Company shall (i) furnish to Conexant, prior to the filing
thereof with the Commission, a copy of the Shelf Registration Statement and each
amendment thereof and each supplement, if any, to the Prospectus included
therein and, in the event that Conexant is participating in the Shelf
Registration Statement, shall use its reasonable best efforts to reflect in each
such document, when so filed with the
2
Commission, such comments as Conexant reasonably may propose; and (ii) include
the names of the Holders who propose to sell Securities pursuant to the Shelf
Registration Statement as selling securityholders.
(b) The Company shall give written notice to the Holders of the
Securities (which notice pursuant to clauses (ii)-(v) hereof shall be
accompanied by an instruction to suspend the use of the Prospectus until the
requisite changes have been made):
(i) when the Shelf Registration Statement or any amendment thereto
has been filed with the Commission and when the Shelf Registration Statement
or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements
to the Shelf Registration Statement or the Prospectus included therein or
for additional information;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Shelf Registration Statement or the initiation of
any proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose; and
(v) of the happening of any event that requires the Company to make
changes in the Shelf Registration Statement or the Prospectus in order that
the Shelf Registration Statement or the Prospectus does not contain an
untrue statement of a material fact nor omit to state a material fact
required to be stated therein or necessary to make the statements therein
(in the case of the Prospectus, in light of the circumstances under which
they were made) not misleading, which written notice need not provide any
detail as to the nature of such event.
(c) The Company shall make every reasonable effort to obtain the
withdrawal at the earliest possible time, of any order suspending the
effectiveness of the Shelf Registration Statement.
(d) The Company shall furnish to each Holder of the Securities
included within the coverage of the Shelf Registration, without charge, at least
one copy of the Shelf Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and, if the Holder so
requests in writing, all exhibits thereto (including those, if any, incorporated
by reference).
3
(e) The Company shall, during the Shelf Registration Period,
deliver to each Holder of Securities included within the coverage of the Shelf
Registration, without charge, as many copies of the Prospectus (including each
preliminary Prospectus) included in the Shelf Registration Statement and any
amendment or supplement thereto as such person may reasonably request. The
Company consents, subject to the provisions of this Agreement, to the use of the
Prospectus or any amendment or supplement thereto by each of the selling Holders
of the Securities in connection with the offering and sale of the Securities
covered by the Prospectus, or any amendment or supplement thereto, included in
the Shelf Registration Statement.
(f) Prior to any public offering of the Securities pursuant to the
Shelf Registration Statement, the Company shall register or qualify or cooperate
with the Holders of the Securities included therein and their respective counsel
in connection with the registration or qualification of the Securities for offer
and sale under the securities or "blue sky" laws of such states of the United
States as any Holder of the Securities reasonably requests in writing and do any
and all other acts or things necessary or advisable to enable the offer and sale
in such jurisdictions of the Securities covered by the Shelf Registration
Statement; provided, however, that the Company shall not be required to (i)
qualify generally to do business in any jurisdiction where it is not then so
qualified or (ii) take any action which would subject it to general service of
process or to taxation in any jurisdiction where it is not then so subject.
(g) The Company shall cooperate with the Holders of the Securities
to facilitate the timely preparation and delivery of certificates representing
the Securities to be sold pursuant to any Shelf Registration Statement free of
any restrictive legends and in such denominations and registered in such names
as the Holders may request a reasonable period of time prior to sales of the
Securities pursuant to the Shelf Registration Statement.
(h) Upon the occurrence of any event contemplated by paragraphs
(ii) through (v) of Section 2(b) above during the period for which the Company
is required to maintain an effective Shelf Registration Statement, the Company
shall as required hereby prepare and file a post-effective amendment to the
Shelf Registration Statement or an amendment or supplement to the Prospectus and
any other required document so that, as thereafter delivered to the Holders or
purchasers of the Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the Company may delay filing and distributing any such supplement or
amendment (and continue the suspension of the use of the Prospectus) if the
Company determines in good faith that such supplement or amendment would, in the
reasonable judgment of the Company, (i) interfere with or affect the negotiation
or completion of a transaction that is being contemplated by the Company or (ii)
involve initial or continuing disclosure obligations that are not in the best
interests of the
4
Company's stockholders at such time; provided, further, that neither such delay
nor such suspension shall extend for a period of more than 45 consecutive days
or an aggregate of 90 days in any twelve-month period. If the Company notifies
the Holders in accordance with paragraphs (ii) through (v) of Section 2(b) above
to suspend the use of the Prospectus until the requisite changes to the
Prospectus have been made, then the Holders shall suspend use of the Prospectus,
and the period of effectiveness of the Shelf Registration Statement provided for
in Section 1(b) above shall be extended by the number of days from and
including the date of the giving of such notice to and including the date when
the Holders shall have received such amended or supplemented Prospectus pursuant
to this Section 2(h).
(i) Not later than the effective date of the Shelf Registration
Statement, the Company will provide CUSIP numbers for the Senior Convertible
Notes and the Common Stock registered under the Shelf Registration Statement,
and provide the Trustee with printed certificates for the Senior Convertible
Notes, in a form eligible for deposit with The Depository Trust Company.
(j) The Company will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the Shelf
Registration and will make generally available to its security holders (or
otherwise provide in accordance with Section 11 (a) of the Securities Act) an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act, no later than 45 days after the end of a 12-month period (or 90 days, if
such period is a fiscal year) beginning with the first month of the Company's
first fiscal quarter commencing after the effective date of the Shelf
Registration Statement, which statement shall cover such 12-month period.
(k) The Company shall cause the Indenture to be qualified under the
Trust Indenture Act of 1939, as amended (the "TRUST INDENTURE ACT"), in a timely
manner and containing such changes, if any, as shall be necessary for such
qualification. In the event that such qualification would require the
appointment of a new trustee under the Indenture, the Company shall appoint a
new trustee thereunder pursuant to the applicable provisions of the Indenture.
(l) Each Holder agrees, by acquisition of the Securities, that no
Holder shall be entitled to sell any such Securities pursuant to the Shelf
Registration Statement or to receive a prospectus relating thereto, unless such
Holder has furnished the Company with a Notice and Questionnaire as required
pursuant to Section 2(m) hereof and the information set forth in the next
sentence. Each Holder agrees promptly to furnish the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such Holder not misleading and any other information regarding
such Holder and the distribution of such Securities as the Company may from time
to time reasonably request.
(m) Each Holder agrees that if such Holder wishes to sell such
Holder's Securities pursuant to the Shelf Registration Statement and related
Prospectus, it will do
5
so in accordance with this Section 2(m). Each Holder wishing to sell Securities
pursuant to a Shelf Registration Statement and related Prospectus agrees to
deliver a properly completed and signed Notice and Questionnaire (the form of
which is attached as Annex A to this Agreement) to the Company at least fifteen
(15) business days prior to any intended distribution of Securities under the
Shelf Registration Statement. From and after the date the Shelf Registration
Statement is declared effective, the Company shall, as promptly as is
practicable after the date a Notice and Questionnaire is delivered, and in any
event within fifteen (15) business days after such date, (i) if required by
law, file with the Commission a post-effective amendment to the Shelf
Registration Statement or prepare and, if required by applicable law, file a
supplement to the related Prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other required document
so that the Holder delivering such Notice and Questionnaire is named a selling
securityholder in the Shelf Registration Statement and the related Prospectus in
such a manner as to permit such Holder to deliver the Prospectus to purchasers
of the Securities in accordance with applicable law and, if the Company shall
file a post-effective amendment to the Shelf Registration Statement, use all
reasonable efforts to cause such post-effective amendment to be declared
effective under the Securities Act as promptly as practical, but in any event by
the date that is thirty (30) business days after the date such post-effective
amendment is required by this clause to be filed; (ii) provide the Holder copies
of any documents filed pursuant to this Section; and (iii) notify the Holder as
promptly as practicable after the effectiveness under the Securities Act of any
post-effective amendment filed pursuant to this Section; provided, that if such
Notice and Questionnaire is delivered during a period in which the use of the
Prospectus is suspended pursuant to Section 2(c) hereof, the Company shall so
inform the Holder delivering such Notice and Questionnaire and shall take the
actions set forth in clauses (i), (ii) and (iii) above upon expiration of such
suspension period. Notwithstanding anything contained herein to the contrary,
the Company shall be under no obligation to name any Holder that has not
supplied the requisite information required by this Section as a selling
securityholder in the Shelf Registration Statement and related Prospectus and
any amendment or supplement thereto; provided, however, that any Holder that has
subsequently supplied the requisite information required by this Section
pursuant to the provisions of this Section (whether or not the Holder has
supplied the requisite information required by this Section at the time the
Shelf Registration Statement was declared effective) shall be named as a selling
securityholder in the Shelf Registration Statement or related Prospectus in
accordance with the requirements of this Section. Notwithstanding anything
contained herein to the contrary, the Company shall not be required to file more
than one post-effective amendment or supplement for the purpose of naming
selling securityholders in any seven-day period.
(n) The Company shall enter into such customary agreements
(including, if requested, an underwriting agreement in customary form) and take
all such other actions, if any, as any Holder shall reasonably request in order
to facilitate the disposition of the Securities pursuant to the Shelf
Registration; provided, however, that the Company shall not be required to
facilitate an underwritten offering pursuant to a
6
Shelf Registration Statement by any Holders unless the offering relates to at
least $10,000,000 principal amount of the Securities or an equivalent amount of
Common Stock.
(o) The Company shall (i) make reasonably available for inspection
by the Holders, any underwriter participating in any disposition pursuant to the
Shelf Registration Statement and any attorney, accountant or other agent
retained by the Holders or any such underwriter, all relevant financial and
other records, pertinent corporate documents and properties of the Company and
(ii) cause the Company's officers, directors, employees, accountants and
auditors to supply all relevant information reasonably requested by the Holders
or any such underwriter, attorney, accountant or agent in connection with the
Shelf Registration Statement, in each case, as shall be reasonably necessary to
enable such persons to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act; provided, however, that the foregoing
inspection and information gathering shall be coordinated on behalf of the
Holders by Conexant (or by another representative designated by and on behalf of
the Holders if Conexant is not participating in the disposition) and on behalf
of the other parties, by one counsel designated by and on behalf of such other
parties as described in Section 3 hereof.
(p) In the event of an underwritten offering, the Company shall use
its reasonable best efforts to cause (i) its counsel to deliver an opinion and
updates thereof relating to the Securities in customary form addressed to the
Holders and the managing underwriters, if any, thereof, and dated, in the case
of the initial opinion, the effective date of the Shelf Registration Statement
(it being agreed that the matters to be covered by such opinion shall include,
subject to customary assumptions and other qualifications, the due incorporation
and good standing of the Company and its subsidiaries; the qualification of the
Company and its subsidiaries to transact business as foreign corporations; the
due authorization, execution and delivery of the relevant agreement of the type
referred to in Section 2(n) hereof; the due authorization, execution,
authentication and issuance, and the validity and enforceability, of the
Securities; the absence of material legal or governmental proceedings involving
the Company and its subsidiaries; the absence of governmental approvals required
to be obtained in connection with the Shelf Registration Statement, the offering
and sale of the Securities, or any agreement of the type referred to in Section
2(n) hereof; the compliance as to form of the Shelf Registration Statement and
any documents incorporated by reference therein and of the Indenture with the
requirements of the Securities Act and the Trust Indenture Act, respectively;
and, as of the date of the opinion and as of the effective date of the Shelf
Registration Statement or most recent post-effective amendment thereto, as the
case may be, the absence from the Shelf Registration Statement and the
Prospectus included therein, as then amended or supplemented, and from any
documents incorporated by reference therein of an untrue statement of a material
fact or the omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading (in the case
of any such documents, in the light of the circumstances
7
existing at the time that such documents were filed with the Commission under
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")); (ii) its
officers to execute and deliver all customary documents and certificates and
updates thereof requested by any underwriters of the Securities; and (iii) its
independent public accountants and the independent public accountants with
respect to any other entity for which financial information is provided in the
Shelf Registration Statement to provide to the selling Holders of the applicable
Securities and any underwriter therefor a comfort letter in customary form and
covering matters of the type customarily covered in comfort letters in
connection with primary underwritten offerings, subject to receipt of
appropriate documentation as contemplated, and only if permitted, by Statement
of Auditing Standards No. 72.
(q) The Company shall use its reasonable best efforts to take all
other steps necessary to effect the registration of the Securities covered by a
Shelf Registration Statement contemplated hereby.
3. Registration Expenses. (a) The Company shall bear all fees and
expenses in connection with the performance of its obligations hereunder,
whether a Shelf Registration Statement is filed or becomes effective and shall
bear or reimburse the Holders of Securities covered by the Shelf Registration
Statement for reasonable fees and disbursements of not more than one counsel,
designated by Conexant (for so long as Conexant is a Holder) or, if Conexant is
no longer a Holder, by the Holders of a majority in principal amount of the
Securities covered by the Shelf Registration Statement (provided that Holders of
Common Stock issued upon the conversion of the Interim Convertible Notes and the
Senior Convertible Notes shall be deemed to be Holders of the aggregate
principal amount of the Interim Convertible Notes and the Senior Convertible
Notes from which such Common Stock was converted), in each case, to act as
counsel for the Holders in connection therewith.
(b) In connection with any underwritten Shelf Registration
Statement, the participating Holders shall be responsible for the payment of any
and all underwriters and brokers and dealers discounts and selling commissions
and such discounts and commissions shall be borne by the participating Holders
in proportion to the number of Securities sold by such Holders.
4. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Holder and each person, if any, who controls the Holder within the
meaning of the Securities Act or the Exchange Act (each Holder, and such
controlling persons are referred to collectively as the "INDEMNIFIED PARTIES")
from and against any losses, claims, damages or liabilities, joint or several,
or any actions in respect thereof (including, but not limited to, any losses,
claims, damages, liabilities or actions relating to purchases and sales of the
Securities) to which each Indemnified Party may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement
8
or alleged untrue statement of a material fact contained in the Shelf
Registration Statement or Prospectus including any document incorporated by
reference therein, or in any amendment or supplement thereto or in any
preliminary Prospectus relating to the Shelf Registration, or arise out of, or
are based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and shall reimburse, as incurred, the Indemnified Parties for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action in
respect thereof; provided, however, that (i) the Company shall not be liable in
any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in the Shelf Registration Statement or
Prospectus or in any amendment or supplement thereto or in any preliminary
Prospectus relating to the Shelf Registration in reliance upon and in conformity
with written information pertaining to the Holder and furnished to the Company
by or on behalf of the Holder specifically for inclusion therein and (ii) with
respect to any untrue statement or omission or alleged untrue statement or
omission made in any preliminary Prospectus relating to the Shelf Registration
Statement, the indemnity agreement contained in this subsection (a) shall not
inure to the benefit of any Holder from whom the person asserting any such
losses, claims, damages or liabilities purchased the Securities concerned, to
the extent that a Prospectus relating to the Securities was required to be
delivered by the Holder under the Securities Act in connection with such
purchase and any such loss, claim, damage or liability of the Holder results
from the fact that there was not sent or given to such person, at or prior to
the written confirmation of the sale of the Securities to such person, a copy of
the final Prospectus if the Company had previously furnished copies thereof to
the Holder; provided further, however, that this indemnity agreement will be in
addition to any liability which the Company may otherwise have to the
Indemnified Party. The Company shall also indemnify underwriters, their officers
and directors and each person who controls such underwriters within the meaning
of the Securities Act or the Exchange Act to the same extent as provided above
with respect to the indemnification of the Holders of the Securities if
requested by the Holders.
(b) Each Holder, severally and not jointly, will indemnify and hold
harmless the Company, its officers and directors and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act from and against any losses, claims, damages or liabilities or any actions
in respect thereof, to which the Company or any such controlling person may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages, liabilities or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Shelf Registration Statement or Prospectus or in any amendment
or supplement thereto or in any preliminary Prospectus relating to the Shelf
Registration, or arise out of or are based upon the omission or alleged omission
to state therein a material fact necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement or
omission or alleged untrue
9
statement or omission was made in reliance upon and in conformity with written
information pertaining to the Holder and furnished to the Company by or on
behalf of the Holder specifically for inclusion therein; and, subject to the
limitation set forth immediately preceding this clause, shall reimburse, as
incurred, the Company for any legal or other expenses reasonably incurred by the
Company or any such controlling person in connection with investigating or
defending any loss, claim, damage, liability or action in respect thereof. This
indemnity agreement will be in addition to any liability which the Holder may
otherwise have to the Company or any of its controlling persons.
(c) Promptly after receipt by an indemnified party under this
Section 4 of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 4,
notify the indemnifying party of the commencement thereof; but the failure to
notify the indemnifying party shall not relieve it from any liability that it
may have under subsection (a) or (b) above except to the extent that it has been
materially prejudiced (through the forfeiture of substantive rights or defenses)
by such failure; and provided further that the failure to notify the
indemnifying party shall not relieve it from any liability that it may have to
an indemnified party otherwise than under subsection (a) or (b) above. In case
any such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party will not be liable to such indemnified party under this
Section 4 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement (i) includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action, and (ii) does not include a statement as to or an admission of
fault, culpability or a failure to act by or on behalf of any indemnified party.
No indemnified party shall effect any settlement of any pending or threatened
action without the prior written consent of the indemnifying party, which such
consent shall not be unreasonably withheld or delayed.
(d) If the indemnification provided for in this Section 4 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subsection (a) or (b) above in such proportion as is
10
appropriate to reflect the relative benefits received by the indemnifying party
or parties on the one hand and the indemnified party on the other from the sale
of the Securities, pursuant to the Shelf Registration, or (ii) if the allocation
provided by the foregoing clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of the parties shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
the Holder or such other indemnified party, as the case may be, on the other,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid by
an indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which is
the subject of this subsection (d). Notwithstanding any other provision of this
Section 4(d), the Holders shall not be required to contribute any amount in
excess of the amount by which the net proceeds received by the Holders from the
sale of the Securities pursuant to the Shelf Registration Statement exceeds the
amount of damages which the Holders have otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 1l(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this paragraph (d), each person, if any, who controls such indemnified party
within the meaning of the Securities Act or the Exchange Act shall have the same
rights to contribution as such indemnified party and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act shall have the same rights to contribution as the Company.
(e) The agreements contained in this Section 4 shall survive the
sale of the Securities pursuant to the Shelf Registration Statement and shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement or any investigation made by or on behalf of any indemnified
party.
5. Additional Interest Under Certain Circumstances. (a) Additional
interest (the "ADDITIONAL INTEREST") with respect to the Interim Convertible
Notes and Senior Convertible Notes shall be assessed as follows if any of the
following events occur (each such event in clauses (i) through (iv) below being
herein called a "REGISTRATION DEFAULT"):
11
(i) the Shelf Registration Statement has not been filed with the
Commission by the 45th day after the first date of original issuance of the
Interim Convertible Notes;
(ii) the Shelf Registration Statement has not been declared
effective by the Commission by the 90th day after the first date of original
issuance of the Interim Convertible Notes;
(iii) the Company fails with respect to a Holder that supplies the
Notice and Questionnaire described in Section 2(m) to amend or supplement
the Shelf Registration Statement in the manner set forth in Section 2(m);
provided that such assessment shall be paid only to such Holder and directly
to such Holder; or
(iv) the Shelf Registration Statement is declared effective, and
such Shelf Registration Statement ceases to be effective or fails to be
usable in connection with resales of Senior Convertible Notes and the Common
Stock issuable upon the conversion of the Interim Convertible Notes and the
Senior Convertible Notes in accordance with and during the periods specified
in this Agreement and (A) the Company does not cure the Shelf Registration
Statement within fifteen business days by a post-effective amendment or a
report filed pursuant to the Exchange Act or (B) if applicable, the Company
does not terminate the suspension period described above by the 45th or 90th
day, as the case may be.
Each of the foregoing will constitute a Registration Default whatever the reason
for any such event and whether it is voluntary or involuntary or is beyond the
control of the Company or pursuant to operation of law or as a result of any
action or inaction by the Commission.
Additional Interest shall accrue on the Interim Convertible Notes and
Senior Convertible Notes over and above the interest set forth in the title of
the Interim Convertible Notes and Senior Convertible Notes from and including
the date on which any such Registration Default shall occur to but excluding the
date on which all the Registration Defaults have been cured, at a rate of 0.50%
per annum (the "ADDITIONAL INTEREST RATE") (or an equivalent amount for any
Common Stock issued upon conversion of the Interim Convertible Notes and the
Senior Convertible Notes). In the case of a registration default described in
clause (iii) the Company's obligation to pay additional interest extends only to
the affected Securities. The Company shall have no other liabilities for
monetary damages with respect to its registration obligations. With respect to
each Holder, the Company's obligations to pay additional interest remain in
effect only so long as the Senior Convertible Notes and the Common Stock
issuable upon the conversion of the Interim Convertible Notes and the Senior
Convertible Notes held by the Holder are Securities within the meaning of this
Agreement.
12
(b) A Registration Default referred to in Section 5(a)(iv) hereof
shall be deemed not to have occurred and be continuing in relation to the Shelf
Registration Statement or the related Prospectus if (i) the Registration Default
has occurred solely as a result of (x) the filing of a post-effective amendment
to the Shelf Registration Statement to incorporate annual audited financial
information with respect to the Company where such post-effective amendment is
not yet effective and needs to be declared effective to permit Holders to use
the related Prospectus or (y) other material events with respect to the Company
that would need to be described in the Shelf Registration Statement or the
related Prospectus and (ii) in the case of clause (y), the Company is proceeding
promptly and in good faith to amend or supplement the Shelf Registration
Statement and related Prospectus to describe such events as required by
paragraph 2(h) hereof; provided, however, that in any case if the Registration
Default occurs for a continuous period in excess of 30 days, Additional Interest
shall be payable in accordance with the above paragraph from the day the
Registration Default occurs until the Registration Default is cured.
(c) Any amounts of Additional Interest due pursuant to Section 5(a)
will be payable in cash on the regular interest payment dates with respect to
the Interim Convertible Notes and the Senior Convertible Notes. The amount of
Additional Interest will be determined by multiplying the applicable Additional
Interest Rate by the principal amount of the Interim Convertible Notes and
Senior Convertible Notes further multiplied by a fraction, the numerator of
which is the number of days the Additional Interest Rate was applicable during
such period (determined on the basis of a 360-day year comprised of twelve
30-day months), and the denominator of which is 360. For purposes of this
Section 5, the holders of Common Stock issued upon conversion of the Interim
Convertible Notes and Senior Convertible Notes shall be deemed to be holders of
the aggregate principal amount of the Interim Convertible Notes and Senior
Convertible Notes from which the Common Stock was converted and, if applicable,
any amounts of Additional Interest due pursuant to Section 5(a) shall be paid to
such holders in accordance with the terms hereof as if such holders continued to
hold Interim Convertible Notes and Senior Convertible Notes.
(d) "TRANSFER RESTRICTED SECURITIES" means each Security until (i)
the date on which the Security has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement or (ii) the date on which the Security is distributed to the public
pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule
144(k) under the Securities Act.
6. Rule 144. The Company shall use its reasonable best efforts to
file the reports required to be filed by it under the Securities Act and the
Exchange Act in a timely manner and, if at any time the Company is not required
to file such reports, it will, upon the request of any Holder, make publicly
available other information so long as necessary to permit sales of their
securities pursuant to Rule 144. The Company covenants that it will take such
further action as any Holder may reasonably request, all to
13
the extent required from time to time to enable the Holder to sell Transfer
Restricted Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144. The Company will provide a
copy of this Agreement to prospective purchasers of Securities identified to the
Company by Conexant upon request. Upon the request of any Holder, the Company
shall deliver to the Holder a written statement as to whether it has complied
with such requirements. Notwithstanding the foregoing, nothing in this Section 6
shall be deemed to require the Company to register any of its securities
pursuant to the Exchange Act.
7. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by the Shelf Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will administer the offering ("MANAGING UNDERWRITERS") will be selected by
the Holders of a majority in aggregate principal amount of the Transfer
Restricted Securities to be included in such offering (provided that holders of
Common Stock issued upon conversion of the Interim Convertible Notes and Senior
Convertible Notes shall not be deemed holders of Common Stock, but shall be
deemed to be holders of the aggregate principal amount of Interim Convertible
Notes and Senior Convertible Notes from which the Common Stock was converted)
and such selection shall be subject to the Company's consent, which shall not be
unreasonably withheld or delayed.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
8. Miscellaneous.
(a) Remedies. The Company acknowledges and agrees that any failure
by the Company to comply with its obligations hereunder may result in material
irreparable injury to the Holders for which there is no adequate remedy at law,
that it will not be possible to measure damages for such injuries precisely and
that, in the event of any such failure, any Holder may obtain such relief as may
be required to specifically enforce the Company's obligations hereunder.
(b) No Inconsistent Agreements. The Company will not on or after
the date of this Agreement enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The rights granted
to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any agreement in effect on the date hereof.
14
(c) Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, except in writing by the Company
and by the holders of a majority in principal amount of the Securities affected
by such amendment, modification, supplement, waiver or consents (provided that
holders of Common Stock issued upon conversion of Interim Convertible Notes and
Senior Convertible Notes shall not be deemed holders of Common Stock, but shall
be deemed to be holders of the aggregate principal amount of Interim Convertible
Notes and Senior Convertible Notes from which the Common Stock was converted).
Without the written consent of each Holder of the Securities, however, no
modification may change the provisions relating to the payment of Additional
Interest.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class mail,
facsimile transmission, or air courier which guarantees overnight delivery:
(1) if to Conexant:
Conexant Systems, Inc.
4311 Jamboree Road
Newport Beach, CA 92660-3095
Fax No.: (949) 483-6388
Attention: Dennis E. O'Reilly
Senior Vice President, General
Counsel and Secretary
with a copy to:
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, NY 10112
Fax No.: (212) 541-5369
Attention: Peter R. Kolyer, Esq.
(2) if to any other Holder of the Securities, at the most current
address given by the Holder to the Company;
(3) if to the Company:
Skyworks Solutions, Inc.
20 Sylvan Road
Woburn, MA 01801
Fax No.: [ ]
Attention: Chief Financial Officer
15
with a copy to:
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Attention: Gordon H. Hayes, Esq.
All such notices and communications shall be deemed to have been duly
given at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.
(e) Third Party Beneficiaries. The other Holders shall be third
party beneficiaries to the agreements made hereunder between the Company, on the
one hand, and Conexant, on the other hand, and shall have the right to enforce
such agreements directly to the extent they may deem such enforcement necessary
or advisable to protect their rights or the rights of Holders hereunder.
(f) Successors and Assigns. This Agreement shall be binding upon
the Company and its successors and assigns.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS.
By the execution and delivery of this Agreement, the Company submits to
the nonexclusive jurisdiction of any federal or state court in the City of New
York, State of New York.
(j) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
16
(k) Securities Held by the Company. Whenever the consent or
approval of Holders of a specified percentage of principal amount of Securities
is required hereunder, Securities held by the Company or its affiliates (other
than (i) Conexant or (ii) subsequent Holders of Securities if such subsequent
Holders are deemed to be affiliates solely by reason of their holdings of the
Securities) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.
17
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between Conexant and the Company in accordance with its terms.
Very truly yours,
SKYWORKS SOLUTIONS, INC.
By:/s/ David J. Aldrich
--------------------
Name: David J. Aldrich
Title: President and Chief Executive Officer
The foregoing Registration Rights Agreement
is hereby confirmed and accepted as of the
date first above written.
CONEXANT SYSTEMS, INC.
By: /s/ Balakrishnan S. Iyer
--------------------------------
Name: Balakrishnan S. Iyer
Title: Senior Vice President and
Chief Financial Officer
18
SKYWORKS SOLUTIONS, INC.
FORM OF SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE
The undersigned is the beneficial holder of 15% Convertible Senior
Subordinated Notes due June 30,2005 (the "Notes") of Skyworks Solutions, Inc., a
Delaware corporation (the "Company") or Common Stock, par value $0.25 (the
"Common Stock"), of the Company issued upon conversion of the Notes or the 15%
Convertible Note due June 30,2005 (the "Interim Convertible Note"). The Common
Stock and the Notes are referred to, collectively, as the "Registrable
Securities". The undersigned understands that the Company has filed or intends
to file with the Securities and Exchange Commission (the "Commission") a
registration statement on Form S-3 (the "Shelf Registration Statement") for the
registration and resale under Rule 415 of the Securities Act of 1933, as amended
(the "Securities Act"), of the Registrable Securities in accordance with the
terms of the Registration Rights Agreement dated as of November 12,2002 (the
"Registration Rights Agreement") between the Company and Conexant Systems, Inc.,
a Delaware corporation. A copy of the Registration Rights Agreement is available
from the Company upon request at the address set forth below. All capitalized
terms not otherwise defined herein have the meaning ascribed thereto in the
Registration Rights Agreement.
Each beneficial owner of Registrable Securities is entitled to the
benefits of the Registration Rights Agreement. In order to sell or otherwise
dispose of any Registrable Securities pursuant to the Shelf Registration
Statement, a beneficial owner of Registrable Securities generally will be
required to be named as a selling securityholder in the related prospectus,
deliver a prospectus to purchasers of Registrable Securities and be bound by
those provisions of the Registration Rights Agreement applicable to such
beneficial owner (including certain indemnification provisions, as described
below). Beneficial owners are encouraged to complete and deliver this Notice and
Questionnaire prior to the effectiveness of the Shelf Registration Statement so
that such beneficial owners may be named as selling securityholders in the
related prospectus at the time of effectiveness. Any beneficial owner of Notes
wishing to include its Registrable Securities must deliver to the Company a
properly completed and signed Selling Securityholder Notice and Questionnaire.
Certain legal consequences arise from being named as a selling
securityholder in the Shelf Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Shelf Registration
Statement and the related prospectus.
NOTICE
The undersigned beneficial owner (the "Selling Securityholder") of
Registrable Securities hereby gives notice to the Company of its intention to
sell or otherwise dispose of Registrable Securities beneficially owned by it and
listed below in Item 3 (unless otherwise specified under Item 3) pursuant to the
Shelf Registration Statement. The undersigned, by signing and returning this
Notice and Questionnaire, understands that it will be bound by the terms and
conditions of this Notice and Questionnaire and the Registration Rights
Agreement.
A-1
The undersigned hereby provides the following information to the
Company and represents and warrants that such information is accurate and
complete:
QUESTIONNAIRE
1. (a) Full Legal Name of Selling Securityholder:
_______________________________________________________________________
(b) Full Legal Name of Registered Holder (if not the same as (a) above)
through which Registrable Securities listed in (3) below are held:
_______________________________________________________________________
(c) Full Legal Name of DTC Participant (if applicable and if not the same
as (b) above) through which Registrable Securities listed in (3) below
are held:
_______________________________________________________________________
2. Address for Notices to Selling Securityholder:
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
Telephone: _________________________________________________________________
Fax: _______________________________________________________________________
Contact Person: ____________________________________________________________
3. Beneficial Ownership of Registrable Securities:
(a) Type and Principal Amount of Registrable Securities beneficially owned:
_______________________________________________________________________
_______________________________________________________________________
(b) CUSIP No(s). of Registrable Securities beneficially owned:
_______________________________________________________________________
_______________________________________________________________________
A-2
4. Beneficial Ownership of the Company's securities owned by the Selling
Securityholder:
Except as set forth below in this Item (4), the undersigned is not the
beneficial or registered owner of any "Other Securities," defined as
securities of the Company other than the Registrable Securities listed
above in Item (3).
(a) Type and Amount of Other Securities beneficially owned by the Selling
Securityholder:
_______________________________________________________________________
_______________________________________________________________________
(b) CUSIP No(s). of such Other Securities beneficially owned:
_______________________________________________________________________
_______________________________________________________________________
5. Relationship with the Company:
Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equityholders (5% or more) has
held any position or office or has had any other material relationship with
the Company (or its predecessors or affiliates) during the past three years.
State any exceptions here:
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
6. Plan of Distribution:
Except as set forth below, the undersigned (including its donees or
pledgees) intends to distribute the Registrable Securities listed above in
Item (3) pursuant to the Shelf Registration Statement only as follows (if at
all): Such Registrable Securities may be sold from time to time directly by
the undersigned or alternatively, through underwriters, broker-dealers or
agents. If the Registrable Securities are sold through underwriters or
broker-dealers, the Selling Securityholder will be responsible for
underwriting discounts or commissions or agent's commissions. Such
Registrable Securities may be sold in one or more transactions at fixed
prices, at prevailing market prices at the time of sale, at varying prices
determined at the time of sale, or at negotiated prices. Such sales may be
effected in transactions (which may involve block transactions) (i) on any
national securities exchange or quotation service on which the Registrable
Securities may be listed or quoted at the time of sale, (ii) in the
over-the-counter market, (iii) in transactions otherwise than on such
exchanges or services or in the over-the-counter market, or (iv) through
the writing of options. In connection with sales of the
A-3
Registrable Securities or otherwise, the undersigned may enter into hedging
transactions with broker-dealers, which may in turn engage in short sales of
the Registrable Securities and deliver Registrable Securities to close out
such short positions, or loan or pledge Registrable Securities to
broker-dealers that in turn may sell such securities.
State any exceptions here:
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
The undersigned acknowledges that it understands its obligation to
comply with the provisions of the Securities Exchange Act of 1934, as amended,
and the rules thereunder relating to stock manipulation, particularly Regulation
M thereunder (or any successor rules or regulations), in connection with any
offering of Registrable Securities pursuant to the Shelf Registration Statement.
The undersigned agrees that neither it nor any person acting on its behalf will
engage in any transaction in violation of such provisions.
The Selling Securityholder hereby acknowledges its obligations under
the Registration Rights Agreement to indemnify and hold harmless certain persons
as set forth therein.
Pursuant to the Registration Rights Agreement, the Company has agreed
under certain circumstances to indemnify the Selling Securityholder against
certain liabilities.
In accordance with the undersigned's obligation under the Registration
Rights Agreement to provide such information as may be required by law for
inclusion in the Shelf Registration Statement, the undersigned agrees to
promptly notify the Company of any inaccuracies or changes in the information
provided herein that may occur subsequent to the date hereof at any time while
the Shelf Registration Statement remains effective. All notices hereunder and
pursuant to the Registration Rights Agreement shall be made in writing at the
address set forth below.
By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to items (1) through (6) above and
the inclusion of such information in the Shelf Registration Statement and the
related prospectus. The undersigned understands that such information will be
relied upon by the Company in connection with the preparation or amendment of
the Shelf Registration Statement and the related prospectus.
A-4
IN WITNESS WHEREOF, the undersigned, by authority duly given, has
caused this Notice and Questionnaire to be executed and delivered either in
person or by its duly authorized agent.
Dated:
Beneficial Owner
By:_____________________________
Name:
Title:
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO:
Skyworks Solutions, Inc.
20 Sylvan Road
Woburn, Massachusetts 01801
Attention: Paul E. Vincent, Chief Financial Officer
with a copy to:
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, Massachusetts 02110
Attention: Gordon H. Hayes, Esq.
A-5
Exhibit 10.cc
SKYWORKS SOLUTIONS, INC.
2002 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE.
The Skyworks Solutions, Inc. 2002 Employee Stock Purchase Plan
(hereinafter the "Plan") is intended to provide a method whereby employees of
Skyworks Solutions, Inc. (the "Company") and its participating subsidiaries (as
defined in Article 18) will have an opportunity to acquire a proprietary
interest in the Company through the purchase of shares of the Company's Common
Stock. It is the intention of the Company to have the Plan qualify as an
"employee stock purchase plan" under Section 423 of the Internal Revenue Code of
1986, as amended (the "Internal Revenue Code"). The provisions of the Plan
shall, accordingly, be construed so as to extend and limit participation in a
manner consistent with the requirements of that Section of the Internal Revenue
Code.
2. ELIGIBLE EMPLOYEES.
All employees of the Company or any of its participating subsidiaries
who are employed by the Company at least ten (10) business days prior to the
first day of the applicable Offering Period shall be eligible to receive options
under this Plan to purchase the Company's Common Stock. Except as otherwise
provided herein, persons who become eligible employees after the first day of
any Offering Period shall be eligible to receive options on the first day of the
next succeeding Offering Period on which options are granted to eligible
employees under the Plan. For the purpose of this Plan, the term employee shall
not include an employee whose customary employment is less than twenty (20)
hours per week or is for not more than five (5) months in any calendar year.
In no event may an employee be granted an option if such employee,
immediately after the option is granted, owns stock possessing five (5%) percent
or more of the total combined voting power or value of all classes of stock of
the Company or of its parent corporation or subsidiary corporation as the terms
"parent corporation" and "subsidiary corporation" are defined in Section 424(e)
and (f) of the Internal Revenue Code. For purposes of determining stock
ownership under this paragraph, the rules of Section 424(d) of the Internal
Revenue Code shall apply and stock which the employee may purchase under
outstanding options shall be treated as stock owned by the employee.
3. STOCK SUBJECT TO THE PLAN.
The stock subject to the options granted hereunder shall be shares of
the Company's authorized but unissued Common Stock or shares of Common Stock
reacquired by the Company, including shares purchased in the open market.
Subject to approval of the stockholders, the aggregate number of shares which
may be issued pursuant to the Plan is 1,880,000 for all Offering Periods,
subject to increase or decrease by reason of stock split-ups, reclassifications,
stock dividends, changes in par value and the like. If any option granted under
the Plan shall expire or terminate for any reason
- 1 -
without having been exercised in full or shall cease for any reason to be
exercisable in whole or in part, the unpurchased shares subject to such option
shall again be available under the Plan. If the number of shares of Common Stock
available for any Offering Period is insufficient to satisfy all purchase
requirements for that Offering Period, the available shares for that Offering
Period shall be apportioned among participating employees in proportion to their
options.
4. OFFERING PERIODS AND STOCK OPTIONS.
There shall be Offering Periods during which payroll deductions will be
accumulated under the Plan. Each Offering Period includes only regular pay days
falling within it. The Committee shall be expressly permitted to establish the
Offering Periods, including the Offering Commencement Date and Offering
Termination Date of any Offering Period, under this Plan. The Offering
Commencement Date is the first day of each Offering Period. The Offering
Termination Date is the applicable date on which an Offering Period ends under
this Plan.
Subject to the foregoing, the Offering Periods shall generally commence
and end as follows:
OFFERING OFFERING
COMMENCEMENT DATES TERMINATION DATES
- ------------------ -----------------
Each August 1 Each January 31
Each February 1 Each July 31
Provided, however, that (i) the Offering Commencement Date and Offering
Termination Date of the initial Offering Period under this Plan shall be October
21, 2002 and March 31, 2003, respectively, and (ii) the Offering Commencement
Date and Offering Termination Date of the Offering Period immediately following
the initial Offering Period under this Plan shall be April 1, 2003 and July 31,
2003, respectively.
On each Offering Commencement Date, the Company will grant to each
eligible employee who is then a participant in the Plan an option to purchase on
the Offering Termination Date at the Option Exercise Price, as hereinafter
provided, that number of full shares of Common Stock reserved for the purpose of
the Plan, up to a maximum of 1,000 shares, subject to increase or decrease (i)
at the discretion of the Committee before each Offering Period or (ii) by reason
of stock split-ups, reclassifications, stock dividends, changes in par value and
the like (the "Share Cap"); provided that such employee remains eligible to
participate in the Plan throughout such Offering Period. If the eligible
employee's accumulated payroll deductions on the Offering Termination Date would
enable the eligible employee to purchase more than the Share Cap except for the
Share Cap, the excess of the amount of the accumulated payroll deductions over
the aggregate purchase price of the Share Cap shall be refunded to the eligible
employee as soon as administratively practicable by the Company, without
interest. The Option Exercise Price for each Offering Period shall be the lesser
of (i) eighty-five percent (85%) of the fair market value of the Common Stock on
the Offering Commencement Date, or
- 2 -
(ii) eighty-five percent (85%) of the fair market value of the Common Stock on
the Offering Termination Date, in either case rounded up to the next whole cent.
In the event of an increase or decrease in the number of outstanding shares of
Common Stock through stock split-ups, reclassifications, stock dividends,
changes in par value and the like, an appropriate adjustment shall be made in
the number of shares and Option Exercise Price per share provided for under the
Plan, either by a proportionate increase in the number of shares and
proportionate decrease in the Option Exercise Price per share, or by a
proportionate decrease in the number of shares and a proportionate increase in
the Option Exercise Price per share, as may be required to enable an eligible
employee who is then a participant in the Plan to acquire on the Offering
Termination Date that number of full shares of Common Stock as his accumulated
payroll deductions on such date will pay for at a price equal to the lesser of
(i) eighty-five percent (85%) of the fair market value of the Common Stock on
the Offering Commencement Date, or (ii) eighty-five percent (85%) of the fair
market value of the Common Stock on the Offering Termination Date, in either
case rounded up to the next whole cent, as so adjusted.
For purposes of this Plan, the term "fair market value" means, if the
Common Stock is listed on a national securities exchange or is on the National
Association of Securities Dealers Automated Quotation ("Nasdaq") National Market
system, the closing sale price of the Common Stock on such exchange or as
reported on Nasdaq or, if the Common Stock is traded in the over-the-counter
securities market, but not on the Nasdaq National Market, the closing bid
quotation for the Common Stock, each as published in The Wall Street Journal. If
no shares of Common Stock are traded on the Offering Commencement Date or
Offering Termination Date, the fair market value will be determined on the next
regular business day on which shares of Common Stock are traded.
For purposes of this Plan the term "business day" as used herein means a
day on which there is trading on the Nasdaq National Market or such national
securities exchange on which the Common Stock is listed.
No employee shall be granted an option which permits his rights to
purchase Common Stock under the Plan and any similar plans of the Company or any
parent or subsidiary corporations to accrue at a rate which exceeds $25,000 of
fair market value of such stock (determined at the time such option is granted)
for each calendar year in which such option is outstanding at any time. The
purpose of the limitation in the preceding sentence is to comply with and shall
be construed in accordance with Section 423(b)(8) of the Internal Revenue Code.
If the participant's accumulated payroll deductions on the last day of the
Offering Period would otherwise enable the participant to purchase Common Stock
in excess of the Section 423(b)(8) limitation described in this paragraph, the
excess of the amount of the accumulated payroll deductions over the aggregate
purchase price of the shares actually purchased shall be refunded as soon as
administratively practicable to the participant by the Company, without
interest.
5. EXERCISE OF OPTION.
- 3 -
Each eligible employee who continues to be a participant in the Plan on
the Offering Termination Date shall be deemed to have exercised his or her
option on such date and shall be deemed to have purchased from the Company such
number of full shares of Common Stock reserved for the purpose of the Plan as
his or her accumulated payroll deductions on such date will pay for at the
Option Exercise Price subject to the Share Cap and the Section 423(b)(8)
limitation described in Article 4. If a participant is not an employee on the
Offering Termination Date and throughout an Offering Period, he or she shall not
be entitled to exercise his or her option.
If a participant's accumulated payroll deductions in his or her account are
based on a currency other than the U.S. dollar, then on the Offering Termination
Date the accumulated payroll deductions in his or her account will be converted
into an equivalent value of U.S. dollars based upon the U.S. dollar-foreign
currency exchange rate in effect on that date, as reported in The Wall Street
Journal, provided that such conversion does not result in an Option Exercise
Price which is, in fact, less than the lesser of an amount equal to 85 percent
of the fair market value of the Common Stock at the time such option is granted
or 85 percent of the fair market value of the Common Stock at the time such
option is exercised. The Plan administrators (as defined in Article 19) shall
have the right to change such conversion date, as they deem appropriate to
effectively purchase shares on any Offering Termination Date, provided that such
action does not cause the Plan, or any grants under the Plan, to fail to qualify
under Section 423 of the Internal Revenue Code.
6. AUTHORIZATION FOR ENTERING PLAN.
An eligible employee may enter the Plan by following a written,
electronic or other enrollment process, including a payroll deduction
authorization, as prescribed by the Plan administrators under generally
applicable rules. Except as may otherwise be established by the Plan
administrators under generally applicable rules, all enrollment authorizations
shall be effective only if delivered to the designated Plan administrator(s) in
accordance with the prescribed procedures not later than ten (10) business days
before an applicable Offering Commencement Date Participation may be conditioned
on an eligible employee's consent to transfer and process personal data and on
acknowledgment and agreement to Plan terms and other specified conditions.
The Company will accumulate and hold for the employee's account the
amounts deducted from his or her pay. No interest will be paid thereon.
Participating employees may not make any separate cash payments into their
account.
Unless an employee files a new authorization, or withdraws from the
Plan, his or her deductions and purchases under the authorization he or she has
on file under the Plan will continue as long as the Plan remains in effect. An
employee may increase or decrease the amount of his or her payroll deductions as
of the next Offering Commencement Date by filing a revised payroll deduction
authorization in accordance with the procedures then applicable to such actions.
Except as may otherwise be established by the Plan administrators under
generally applicable rules, all revised authorizations shall be
- 4 -
effective only if delivered to the designated Plan administrator(s) in
accordance with the prescribed procedures not later than ten (10) business days
before the next Offering Commencement Date.
7. MAXIMUM AMOUNT OF PAYROLL DEDUCTIONS.
An employee may authorize payroll deductions in an amount of not less
than one percent (1%) and not more than ten percent (10%) (in whole number
percentages only) of his or her eligible compensation. Such deductions shall be
determined based on the employee's election in effect on the payday on which
such eligible compensation is paid. An employee may not make any additional
payments into such account. Eligible compensation means the wages as defined in
Section 3401(a) of the Internal Revenue Code, determined without regard to any
rules that limit compensation included in wages based on the nature or location
or employment or services performed, including without limitation base pay,
shift premium, overtime, gain sharing (profit sharing), incentive compensation,
bonuses and commissions and all other payments made to the employee for services
as an employee during the applicable payroll period, and excluding the value of
any qualified or non-qualified stock option granted to the employee to the
extent such value is includible in the taxable wages, reimbursements or other
expense allowances, fringe benefits, moving expenses, deferred compensation, and
welfare benefits, but determined prior to any exclusions for any amounts
deferred under Sections 125, 401(k), 402(e)(3), 402(h)(1)(B), 403(b) or 457(b)
of the Internal Revenue Code or for certain contributions described in Section
457(h)(2) of the Internal Revenue Code that are treated as Company
contributions.
8. UNUSED PAYROLL DEDUCTIONS.
Only full shares of Common Stock may be purchased. Any balance remaining
in an employee's account after a purchase will be reported to the employee and
will be carried forward to the next Offering Period. However, in no event will
the amount of the unused payroll deductions carried forward from a payroll
period exceed the Option Exercise Price per share for that Offering Period. If
for any Offering Period the amount of unused payroll deductions should exceed
the Option Exercise Price per share, the amount of the excess for any
participant shall be refunded to such participant, without interest.
9. CHANGE IN PAYROLL DEDUCTIONS.
Unless otherwise permitted by the Committee prior to the commencement of
an Offering Period, payroll deductions may not be increased, decreased or
suspended by a participant during an Offering Period. However, a participant may
withdraw in full from the Plan.
10. WITHDRAWAL FROM THE PLAN.
An employee may withdraw from the Plan and withdraw all but not less
than all of the payroll deductions credited to his or her account under the Plan
prior to the Offering Termination Date by completing and filing a withdrawal
notification with the designated
- 5 -
Plan administrator(s) in accordance with the prescribed procedures, in which
event the Company will refund as soon as administratively practicable without
interest the entire balance of such employee's deductions not previously used to
purchase Common Stock under the Plan. Except as may otherwise be prescribed by
the Plan administrators under generally applicable rules, all withdrawals shall
be effective only if delivered to the designated Plan administrator(s) in
accordance with the prescribed procedures not later than ten (10) business days
before the Offering Termination Date.
An employee who withdraws from the Plan is like an employee who has
never entered the Plan; the employee's rights under the Plan will be terminated
and no further payroll deductions will be made. To reenter, such an employee
must re-enroll pursuant to the provisions of Article 6 before the next Offering
Commencement Date which cannot, however, become effective before the beginning
of the next Offering Period following his withdrawal. Notwithstanding the
foregoing, employees who are subject to Section 16 of the Securities Exchange
Act of 1934, as amended, who withdraw from the Plan may not reenter the Plan
until the next Offering Commencement Date which is at least six months following
the date of such withdrawal.
11. ISSUANCE OF STOCK.
As soon as administratively practicable after each Offering Period the
Company shall deliver (by electronic or other means) to the participant the
Common Stock purchased under the Plan, except as specified below. The Plan
administrators may permit or require that the Common Stock shares be deposited
directly with a broker or agent designated by the Plan administrators, and the
Plan administrators may utilize electronic or automated methods of share
transfer. In addition, the Plan administrators may require that shares be
retained with such broker or agent for a designated period of time (and may
restrict dispositions during that period) and/or may establish other procedures
to permit tracking of disqualifying dispositions of such shares or to restrict
transfer of such shares as required to ensure that the Company's applicable tax
withholding obligations are satisfied.
12. NO TRANSFER OR ASSIGNMENT OF EMPLOYEE'S RIGHTS.
An employee's rights under the Plan are his or hers alone and may not be
transferred or assigned to, or availed of by, any other person. Any option
granted to an employee may be exercised only by him or her, except as provided
in Article 13 in the event of an employee's death.
13. TERMINATION OF EMPLOYEE'S RIGHTS.
Except as set forth in Article 14, an employee's rights under the Plan
will terminate when he or she ceases to be an employee because of retirement,
resignation, lay-off, discharge, death, change of status, failure to remain in
the customary employ of the Company for twenty (20) hours or more per week, or
for any other reason. Notwithstanding anything to the contrary contained in
Article 10, a withdrawal notice
- 6 -
will be considered as having been received from the employee on the day his or
her employment ceases, and all payroll deductions not used to purchase Common
Stock will be refunded without interest.
Notwithstanding anything to the contrary contained in Article 10, if an
employee's payroll deductions are interrupted by any legal process, a withdrawal
notice will be considered as having been received from him or her on the day the
interruption occurs.
14. DEATH OF AN EMPLOYEE.
Upon termination of the participating employee's employment because of
death, the person(s) entitled to receipt of the Common Stock and/or cash as
provided in this Article 14 shall have the right to elect, by written notice
given to the Plan administrators prior to the expiration of the thirty (30) day
period commencing with the date of the death of the employee, either (i) to
withdraw, without interest, all of the payroll deductions credited to the
employee's account under the Plan, or (ii) to exercise the employee's option for
the purchase of shares of Common Stock on the next Offering Termination Date
following the date of the employee's death for the purchase of that number of
full shares of Common Stock reserved for the purpose of the Plan which the
accumulated payroll deductions in the employee's account at the date of the
employee's death will purchase at the applicable Option Exercise Price (subject
to the limitations set forth in Article 4), and any excess in such account (in
lieu of fractional shares) will be paid to the employee's estate as soon as
administratively practicable, without interest. In the event that no such
written notice of election shall be duly received by the Plan administrators,
the payroll deductions credited to the employee's account at the date of the
employee's death will be paid to the employee's estate as soon as
administratively practicable, without interest.
Except as provided in the preceding paragraph, in the event of the
death of a participating employee, the Company shall deliver such Common Stock
and/or cash to the executor or administrator of the estate of the employee.
15. TERMINATION AND AMENDMENTS TO PLAN.
The Plan may be terminated at any time by the Company's Board of
Directors. It will terminate in any case on December 31, 2012, or if sooner,
when all of the shares of Common Stock reserved for the purposes of the Plan
have been purchased. In the event that the Board of Directors terminates the
Plan pursuant to this Article 15, the date of such termination shall be deemed
as the Offering Termination Date of the applicable Offering Period in which such
termination date occurs. Upon such termination or any other termination of the
Plan, all payroll deductions not used to purchase Common Stock will be refunded
without interest.
The Committee or the Board of Directors may from time to time adopt
amendments to the Plan provided that, without the approval of the stockholders
of the Company, no amendment may (i) except as provided in Articles 3, 4, 24 and
25, increase the number of
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shares that may be issued under the Plan; (ii) change the class of employees
eligible to receive options under the Plan, if such action would be treated as
the adoption of a new plan for purposes of Section 423(b) of the Internal
Revenue Code; or (iii) cause Rule 16b-3 under the Securities Exchange Act of
1934 to become inapplicable to the Plan.
16. LIMITATIONS OF SALE OF STOCK PURCHASED UNDER THE PLAN.
The Plan is intended to provide shares of Common Stock for investment
and not for resale. The Company does not, however, intend to restrict or
influence any employee in the conduct of his or her own affairs. An employee
may, therefore, sell stock purchased under the Plan at any time the employee
chooses, subject to compliance with any applicable federal or state securities
laws and subject to any restrictions imposed under Articles 11 and 26. Each
employee agrees by entering the Plan to promptly give the Company notice of any
such Common Stock disposed of within two years after the Offering Commencement
Date on which the Common Stock was purchased showing the number of such shares
disposed of. The employee assumes the risk of any market fluctuations in the
price of such Common Stock.
17. COMPANY'S OFFERING OF EXPENSES RELATED TO PLAN.
The Company will bear all costs of administering and carrying out the
Plan.
18. PARTICIPATING SUBSIDIARIES.
The term "participating subsidiaries" shall mean any present or future
subsidiary of the Company which is designated by the Committee to participate in
the Plan. The Committee shall have the power to make such designation(s) before
or after the Plan is approved by the stockholders.
19. ADMINISTRATION OF THE PLAN.
The Plan may be administered by the Compensation Committee, or such
other committee as may be appointed by the Board of Directors of the Company
(the "Committee"). No member of the Committee shall be eligible to participate
in the Plan while serving as a member of the Committee. In the event that the
Board of Directors fails to appoint or refrains from appointing a Committee, the
Board of Directors shall have all power and authority to administer the Plan (in
such event the word "Committee" shall refer to the Board of Directors).
The Committee shall have the authority to construe and interpret the
Plan and options, and to establish, amend and revoke rules and regulations for
the administration of the Plan. The Committee, in the exercise of this power,
may correct any defect, omission or inconsistency in the Plan, in a manner and
to the extent it shall deem necessary or expedient to make the Plan fully
effective. The interpretation and construction by the Committee of any
provisions of the Plan or of any option granted
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under it shall be final. The Committee may from time to time adopt such rules
and regulations for carrying out the Plan as it may deem best. Without limiting
the foregoing, the Committee shall have the power, subject to, and within the
limitations of, the express provisions of the Plan: (i) to determine when and
how options to purchase shares of Common Stock shall be granted and the
provisions of each Offering Period (which need not be identical); (ii) to
designate from time to time which participating subsidiaries of the Company
shall be eligible to participate in the Plan; (iii) to determine the Offering
Commencement Date and Offering Termination Date of any Offering Period; (iv) to
increase or decrease the maximum number of shares which may be purchased by an
eligible employee in any Offering Period; (v) to amend the Plan as provided in
Article 15, and (vi) generally, to exercise such powers and to perform such acts
as it deems necessary or expedient to promote the best interests of the Company
and the participating subsidiaries.
The Committee may delegate to one or more individuals the day-to-day
administration of the Plan. Without limitation, subject to the terms and
conditions of this Plan, the President, the Chief Financial Officer of the
Company, and any other officer of the Company or committee of officers or
employees designated by the Committee (collectively, the "Plan administrators"),
shall each be authorized to determine the methods through which eligible
employees may elect to participate, amend their participation, or withdraw from
participation in the Plan, and establish methods of enrollment by means of a
manual or electronic form of authorization or an integrated voice response
system. The Plan administrators are further authorized to determine the matters
described in Article 11 concerning the means of issuance of Common Stock and the
procedures established to permit tracking of disqualifying dispositions of
shares or to restrict transfer of such shares.
With respect to persons subject to Section 16 of the Securities and
Exchange Act of 1934, as amended, transactions under the Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors under said
Act. To the extent any provision of the Plan or action by the Committee fails to
so comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by that Committee.
No member of the Board of Directors or the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or any
option granted under it. The Company shall indemnify each member of the Board of
Directors and the Committee to the fullest extent permitted by law with respect
to any claim, loss, damage or expense (including counsel fees) arising in
connection with their responsibilities under this Plan.
As soon as administratively practicable after the end of each Offering
Period, the Plan administrators shall prepare and distribute or make otherwise
readily available by electronic means or otherwise to each participating
employee in the Plan information concerning the amount of the participating
employee's accumulated payroll deductions as of the Offering Termination Date,
the Option Exercise Price for such Offering Period, the number of shares of
Common Stock purchased by the participating employee with the participating
employee's accumulated payroll deductions, and the amount of any unused
- 9 -
payroll deductions either to be carried forward to the next Offering Period, or
returned to the participating employee without interest.
20. OPTIONEES NOT STOCKHOLDERS.
Neither the granting of an option to an employee nor the deductions from
his or her pay shall constitute such employee a stockholder of the Company with
respect to the shares covered by such option until such shares have been
purchased by and issued to him.
21. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of Common Stock
pursuant to options granted under the Plan may be used for any corporate
purposes, and the Company shall not be obligated to segregate participating
employees' payroll deductions.
22. GOVERNMENTAL REGULATION.
The Company's obligation to sell and deliver shares of the Company's
Common Stock under this Plan is subject to the approval of any governmental
authority required in connection with the authorization, issuance or sale of
such stock.
In this regard, the Board of Directors may, in its discretion, require
as a condition to the exercise of any option that a Registration Statement under
the Securities Act of 1933, as amended, with respect to the shares of Common
Stock reserved for issuance upon exercise of the option shall be effective.
23. TRANSFERABILITY.
Neither payroll deductions credited to an employee's account nor any
rights with regard to the exercise of an option or to receive stock under the
Plan may be assigned, transferred, pledged, or otherwise disposed of in any way
by the employee. Any such attempted assignment, transfer, pledge, or other
disposition shall be without effect, except that the Company may treat such act
as an election to withdraw funds in accordance with Article 10.
24. EFFECT OF CHANGES OF COMMON STOCK.
If the Company should subdivide or reclassify the Common Stock which has
been or may be optioned under the Plan, or should declare thereon any dividend
payable in shares of such Common Stock, or should take any other action of a
similar nature affecting such Common Stock, then the number and class of shares
of Common Stock which may thereafter be optioned (in the aggregate and to any
individual participating employee) shall be adjusted accordingly.
- 10 -
25. MERGER OR CONSOLIDATION.
If the Company should at any time merge into or consolidate with another
corporation, the Board of Directors may, at its election, either (i) terminate
the Plan and refund without interest the entire balance of each participating
employee's payroll deductions, or (ii) entitle each participating employee to
receive on the Offering Termination Date upon the exercise of such option for
each share of Common Stock as to which such option shall be exercised the
securities or property to which a holder of one share of the Common Stock was
entitled upon and at the time of such merger or consolidation, and the Board of
Directors shall take such steps in connection with such merger or consolidation
as the Board of Directors shall deem necessary to assure that the provisions of
this Article 25 shall thereafter be applicable, as nearly as reasonably
possible. A sale of all or substantially all of the assets of the Company shall
be deemed a merger or consolidation for the foregoing purposes.
26. Withholding of Additional Tax.
By electing to participate in the Plan, each participant acknowledges
that the Company and its participating subsidiaries are required to withhold
taxes with respect to the amounts deducted from the participant's compensation
and accumulated for the benefit of the participant under the Plan, and each
participant agrees that the Company and its participating subsidiaries may
deduct additional amounts from the participant's compensation, when amounts are
added to the participant's account, used to purchase Common Stock or refunded,
in order to satisfy such withholding obligations. Each participant further
acknowledges that when Common Stock is purchased under the Plan the Company and
its participating subsidiaries may be required to withhold taxes with respect to
all or a portion of the difference between the fair market value of the Common
Stock purchased and its purchase price, and each participant agrees that such
taxes may be withheld from compensation otherwise payable to such participant.
It is intended that tax withholding will be accomplished in such a manner that
the full amount of payroll deductions elected by the participant under Article 7
will be used to purchase Common Stock. However, if amounts sufficient to satisfy
applicable tax withholding obligations have not been withheld from compensation
otherwise payable to any participant then, notwithstanding any other provision
of the Plan, the Company may withhold such taxes from the participant's
accumulated payroll deductions and apply the net amount to the purchase of
Common Stock, unless the participant pays to the Company, prior to the exercise
date, an amount sufficient to satisfy such withholding obligations. Each
participant further acknowledges that the Company and its participating
subsidiaries may be required to withhold taxes in connection with the
disposition of stock acquired under the Plan and agrees that the Company or any
participating subsidiary may take whatever action it considers appropriate to
satisfy such withholding requirements, including deducting from compensation
otherwise payable to such participant an amount sufficient to satisfy such
withholding requirements or conditioning any disposition of Common Stock by the
participant upon the payment to the Company or such subsidiary of an amount
sufficient to satisfy such withholding requirements.
- 11 -
27. APPROVAL OF STOCKHOLDERS.
This Plan was adopted by the Board of Directors on September 25, 2002
and approved by the stockholders of the Company on ________, 2003.
- 12 -
Skyworks Solutions, Inc. and Subsidiaries
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Name Jurisdiction Of Incorporation
- ---- -----------------------------
Aimta, Inc. California
Alpha FSC, Inc. Barbados
Alpha Industries GmbH Germany
Alpha Industries Limited England
Alpha Securities Corporation Massachusetts
CFP Holding Company, Inc. Washington
4067959 Canada, Inc. Canada
Conexant Systems SA de CV Mexico
Skyworks Semiconductor France
Skyworks Solutions Worldwide, Inc. Delaware
Skyworks Solutions Co., Ltd. Japan
Skyworks Solutions OY Sales Finland
Skyworks Solutions Korea Ltd. Korea
Skyworks Solutions Ltd. United Kingdom
Trans-Tech, Inc. Maryland
Skyworks Solutions, Inc. and Subsidiaries
EXHIBIT 23.A
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Skyworks Solutions, Inc.:
We hereby consent to incorporation by reference in the registration
statements of Alpha Industries, Inc. (No. 033-63541, No. 033-63543, No.
333-71013, No. 333-71015, No. 333-48394, No. 333-38832, No. 333-63818, No.
333-85024 and No. 333-91524) on Form S-8 and in the registration statement
of Skyworks Solutions, Inc. (No. 333-91758, No. 333-100312 and No.
333-100313) on Form S-8 and the registration statements (No. 333-99015 and
No. 333-92394) on Form S-3 of Skyworks Solutions, Inc. of our report dated
November 15, 2002, with respect to the consolidated balance sheet of
Skyworks Solutions, Inc. as of September 30, 2002, and the related
consolidated statement of operations, stockholders' equity, and cash flows
for the year ended September 30, 2002, and the related financial statement
schedule, which report appears in the 2002 annual report on Form 10-K of
Skyworks Solutions, Inc.
/s/KPMG LLP
KPMG LLP
Boston, Massachusetts
December 20, 2002
Skyworks Solutions, Inc. and Subsidiaries
EXHIBIT 23.b
INDEPENDENT AUDITORS' CONSENT
We consent to incorporation by reference in the Registration Statements of Alpha
Industries, Inc. on Form S-8 (No. 033-63541, No. 033-63543, No. 333-71013, No.
333-71015, No. 333-48394, No. 333-38832, No. 333-63818, No. 333-85024 and No.
333-91524) and in the Registration Statements of Skyworks Solutions, Inc. on
Form S-8 (No. 333-91758, No. 333-100312 and No. 333-100313) and Form S-3 (No.
333-99015 and 333-92394) of our report dated February 14, 2002, relating to the
consolidated financial statements of Skyworks Solutions, Inc. (formerly the
combined financial statements of the Washington Business and Mexicali Operations
of Conexant Systems, Inc.) as of September 30, 2001, and for the years ended
September 30, 2000 and 2001, appearing in this Annual Report on Form 10-K of
Skyworks Solutions, Inc.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Costa Mesa, California
December 20, 2002
Skyworks Solutions, Inc. and Subsidiaries
EXHIBIT 99
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Skyworks Solutions, Inc. (the "Company")
on Form 10-K for the year ended September 27, 2002 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, David J. Aldrich,
Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350,
as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
the Company.
/s/ David J. Aldrich
- -------------------------
David J. Aldrich
Chief Executive Officer
December 20, 2002
In connection with the Annual Report of Skyworks Solutions, Inc. (the "Company")
on Form 10-K for the year ended September 27, 2002 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Paul E. Vincent,
Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350,
as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
the Company.
/s/ Paul E. Vincent
- --------------------------
Paul E. Vincent
Chief Financial Officer
December 20, 2002
