As filed with the Securities and Exchange Commission on October 19, 2000
Registration Statement No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CONEXANT SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
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4311 Jamboree Road
Newport Beach, California 92660-3095
Delaware (949) 483-4600 25-1799439
(State or other (Address, including zip code, (I.R.S. Employer
jurisdiction of and telephone number, including Identification No.)
incorporation or area code, of registrant's principal
organization) executive offices)
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DENNIS E. O'REILLY, ESQ.
Senior Vice President,
General Counsel and Secretary
Conexant Systems, Inc.
4311 Jamboree Road
Newport Beach, California 92660-3095
(949) 483-4600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
PETER R. KOLYER, ESQ.
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, New York 10112
(212) 408-5100
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Approximate date of commencement of proposed sale to the public: From time
to time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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Calculation of Registration Fee
<TABLE>
<S> <C> <C> <C> <C>
======================================= ================ ================ ================== ================
Proposed maximum Proposed maximum
Title of each class of securities to be Amount to be offering price aggregate offering Amount of
registered registered (1) per unit (2) price (2) registration fee
--------------------------------------- ---------------- ---------------- ------------------ ----------------
Common Stock, par value $1 per share
(including the associated Preferred
Share Purchase Rights)............... 2,075,260 $28.84375 $59,858,281 $15,803
--------------------------------------- ---------------- ---------------- ------------------ ----------------
</TABLE>
<PAGE>
(1) This represents the number of shares of the registrant's common stock that
(a) were issued to three shareholders of Novanet Semiconductor Ltd., an
Israeli company, in connection with the acquisition of all outstanding
shares of Novanet on September 22, 2000 and (b) that may be issued on
exercise by 15 former Novanet employees and directors and Novanet
consultants of options to purchase the registrant's common stock resulting
from the conversion in the acquisition of options to purchase shares of
Novanet into options to purchase shares of the registrant's common stock.
The shares of common stock set forth in the Calculation of Registration Fee
Table, and which may be offered pursuant to this registration statement,
include, pursuant to Rule 416 under the Securities Act, such additional
number of shares of the registrant's common stock as may become issuable as
a result of any stock splits, stock dividends or similar events.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act based on the average of the high
and low prices of the common stock as reported on October 18, 2000 on The
Nasdaq Stock Market, Inc. National Market System.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING SECURITYHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
<PAGE>
SUBJECT TO COMPLETION, DATED , 2000
PROSPECTUS
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CONEXANT SYSTEMS, INC.
2,075,260 SHARES
OF
COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
-----------------------
In connection with the acquisition of all outstanding shares of Novanet
Semiconductor Ltd., on September 22, 2000 we issued 1,802,176 shares of our
common stock to the three shareholders of Novanet and 216,800 shares of our
common stock to The Chase Manhattan Bank, as escrow agent, who will hold these
shares in escrow. The number of escrowed shares to be released to the former
shareholders of Novanet from the escrow will be subject to reduction for any
indemnity claims that may be made by us against the former shareholders of
Novanet. This prospectus may be used by former shareholders of Novanet to resell
the common stock received by them in the Novanet acquisition transaction,
including any escrowed shares ultimately released to them. In addition, this
prospectus may be used by any transferee of those shares of common stock
transferred by a former shareholder of Novanet. This prospectus may also be used
by us to offer and sell shares of common stock upon the exercise by 15 former
Novanet employees and directors and Novanet consultants of options to purchase
shares of our common stock resulting from the conversion in the acquisition of
options to purchase shares of Novanet into options to purchase shares of our
common stock.
Our common stock is traded on the Nasdaq National Market under the symbol
"CNXT". On October 18, 2000, the last reported sale price for our common stock
on the Nasdaq National Market was $26.31 per share.
-----------------------
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. PLEASE
CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 2 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------------------
The date of this prospectus is , 2000
<PAGE>
Table of Contents
Page
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SUMMARY.....................................................................1
RISK FACTORS................................................................2
USE OF PROCEEDS............................................................20
PRICE RANGE OF COMMON STOCK................................................21
COMMON STOCK ISSUABLE ON EXERCISE OF OPTIONS HELD BY FORMER NOVANET
EMPLOYEES, DIRECTORS AND CONSULTANTS..................................21
NOVANET EMPLOYEE SHARES OPTION PLAN........................................22
DIVIDEND POLICY............................................................24
DESCRIPTION OF CAPITAL STOCK...............................................25
SELLING SECURITYHOLDERS....................................................33
PLAN OF DISTRIBUTION.......................................................34
LEGAL MATTERS..............................................................37
EXPERTS....................................................................37
HOW TO OBTAIN MORE INFORMATION.............................................37
FORWARD-LOOKING STATEMENTS.................................................39
<PAGE>
SUMMARY
CONEXANT SYSTEMS, INC.
Conexant Systems, Inc. (which may be referred to as Conexant, we, us or
our) is the world's largest independent company focused exclusively on providing
semiconductor products for communications electronics. With more than 30 years
of experience in developing communications products, we draw upon our expertise
in mixed-signal processing to deliver integrated systems and semiconductor
products for a broad range of communications applications. These products
facilitate communications worldwide through wireline voice and data
communications networks, cordless and cellular wireless telephony systems,
personal imaging devices and equipment, and emerging cable and wireless
broadband communications networks. We align our business into five product
platforms:
o Network Access
o Wireless Communications
o Digital Infotainment
o Personal Imaging
o Personal Computing
Before December 31, 1998, we were a wholly-owned subsidiary of Rockwell
International Corporation and, together with certain other subsidiaries and
divisions of Rockwell, operated Rockwell's semiconductor systems business
("Semiconductor Systems"). On December 31, 1998, we became an independent,
public company by means of a tax-free spin-off from Rockwell.
Unless the context otherwise indicates, as used in this prospectus, all
references to Conexant, we, us and our are to Semiconductor Systems for periods
prior to our spin-off from Rockwell and to Conexant and its subsidiaries for
periods following the spin-off.
ACQUISITION OF NOVANET SEMICONDUCTOR LTD.
On September 22, 2000, we completed the acquisition of Novanet
Semiconductor Ltd., an Israeli company dedicated to the design and development
of high-speed integrated circuits used in physical layer solutions for a broad
range of networking applications in the Internet and telecommunications
infrastructure markets. The aggregate consideration we will pay on the
transaction is up to approximately 2,369,424 shares of our common stock. The
aggregate consideration consists of 1,802,176 shares of our common stock issued
to former shareholders of Novanet at the closing, 216,800 shares of our common
stock which are being held in escrow to pay any contingent indemnification
obligations and approximately 294,166 shares of our common stock reserved for
issuance upon the exercise of options to purchase shares of our common stock
that were converted in the acquisition from options to purchase shares of
Novanet. The shares issuable upon exercise of such options held by former
employees and directors and Novanet consultants,
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amounting to approximately 56,282 shares, are being registered hereunder. The
shares issuable upon exercise of such options held by current Novanet employees
amounting to approximately 237,884 shares, are being registered on a separate
registration statement and are not covered by this prospectus. Under the
Registration Rights Agreement dated as of September 22, 2000 by and among
Conexant, Novacom Technologies Ltd., Ericsson Microelectronics AB and C. Mer
Industries Ltd., we have agreed to register the resale of shares of our common
stock issued at the closing of the Novanet acquisition transaction, including
shares of our common stock that may be released from the escrow for
indemnification claims.
RISK FACTORS
You should carefully consider and evaluate all of the information in this
prospectus, including the risk factors listed below. Any of these risks could
materially and adversely affect our business, financial condition and results of
operations, which in turn could materially and adversely affect the price of our
common stock or other securities.
OUR FUTURE SUCCESS DEPENDS LARGELY ON THE CONTINUED GROWTH OF OUR EXPANSION
PLATFORMS.
Our recent revenue growth is principally a result of our plan, begun in
1995, to diversify our business and expand into the following selected related
product platforms:
o Network Access;
o Wireless Communications;
o Digital Infotainment; and
o Personal Imaging.
These product platforms represented 64 percent of our total revenues for
the first nine months of fiscal 2000, compared to 54 percent for the first nine
months of fiscal 1999. We believe that these platforms continue to offer higher
growth prospects than our dial-up modem business. Our future financial
performance and overall success, particularly in the long term, will depend
largely on the rate of sales growth and margin contribution of our expansion
platforms and whether these platforms will continue to increase their relative
contribution to our financial performance.
There are numerous risks inherent in our diversification and expansion
strategy, many of which are beyond our control. In certain product lines within
these expansion platforms, we currently have minimal market presence relative to
other more established competitors. Moreover, continued growth of these
expansion platforms depends, in part, on the ability of our customers to develop
new and enhanced products and to successfully introduce and market those
products to end users. We cannot assure you that we will be able to sustain the
recent growth of our expansion platforms or that our diversification and
expansion program will be successful. A failure of this program would have a
material adverse effect on our business, financial condition and results of
operations.
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WE MUST INCUR SUBSTANTIAL RESEARCH AND DEVELOPMENT EXPENSES.
The semiconductor industry requires substantial investment in research and
development. In order to remain competitive, we must continue to make
substantial investments in research and development to develop new and enhanced
products. We cannot assure you that we will have sufficient resources to develop
new and enhanced technologies and competitive products. Our failure to continue
to make sufficient investments in research and development programs could have a
material adverse effect on our business, financial condition and results of
operations.
OUR SUCCESS IS DEPENDENT UPON OUR ABILITY TO TIMELY DEVELOP NEW PRODUCTS AND
REDUCE COSTS.
Our operating results will depend largely on our ability to continue to
introduce new and enhanced semiconductor products on a timely basis. Successful
product development and introduction depends on numerous factors, including,
among others:
o our ability to anticipate customer and market requirements and changes
in technology and industry standards;
o our ability to accurately define new products;
o our ability to timely complete new products and introduce our products
to the market;
o our ability to differentiate our products from offerings of our
competitors; and
o market acceptance of our products.
Furthermore, we are required to continually evaluate expenditures for
planned product development and to choose among alternative technologies based
upon our expectations of future market growth. We cannot assure you that we will
be able to develop and introduce new or enhanced 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 in order 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 MUST INCUR SIGNIFICANT CAPITAL EXPENDITURES FOR MANUFACTURING TECHNOLOGY AND
EQUIPMENT TO REMAIN COMPETITIVE.
The semiconductor industry is highly capital intensive. Semiconductor
manufacturing requires a constant upgrading of process technology to remain
competitive, as new and enhanced semiconductor processes are developed which
permit smaller, more efficient and more powerful
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semiconductor devices. We maintain our own manufacturing, assembly and test
facilities which have required and will continue to require significant
investments in manufacturing technology and equipment.
We expect fiscal 2000 capital expenditures to be in excess of $300 million,
compared to $214 million spent on capital expenditures during fiscal 1999. There
can be no assurance that we will have sufficient capital resources to make
necessary investments in manufacturing technology and equipment.
WE FACE A RISK THAT CAPITAL NEEDED FOR OUR BUSINESS WILL NOT BE AVAILABLE WHEN
WE NEED IT.
We believe that cash flows from operations, existing cash reserves, and
available borrowings under our $475 million revolving credit facility will be
sufficient to satisfy our future research and development, capital expenditure,
working capital and other financing requirements. However, we cannot assure you
that this will be the case or that we will have access to alternative sources of
capital on favorable terms or at all.
In addition, we have and will continue to review on an ongoing basis
strategic investments and acquisitions which will help us grow our business.
These investments and acquisitions 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 OPERATING RESULTS MAY BE IMPACTED BY SUBSTANTIAL QUARTERLY AND ANNUAL
FLUCTUATIONS AND MARKET DOWNTURNS.
These fluctuations are due to a number of factors, many of which are beyond
our control. These factors include, among others:
o the effects of competitive pricing pressures;
o decreases in average selling prices of our products;
o production capacity levels and fluctuations in manufacturing yields;
o availability and cost of products from our suppliers;
o the gain or loss of significant customers;
o our ability to develop, introduce and market new products and
technologies on a timely basis;
o new product and technology introductions by competitors;
o changes in the mix of products produced and sold;
o market acceptance of our products and our customers' products;
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<PAGE>
o intellectual property disputes;
o seasonal customer demand;
o the timing of significant orders; and
o the timing and extent of product development costs.
General economic or other conditions causing a downturn in the market for
semiconductor products, affecting the timing of customer orders or causing order
cancellations or rescheduling of orders, could also adversely affect our
operating results. Moreover, our customers may change delivery schedules or
cancel or reduce orders without significant penalty and generally are not
subject to minimum purchase requirements.
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.
Our operating results may also be impacted by acquisition-related amortization
or other charges against earnings.
For the first nine months of fiscal 2000 we incurred a net loss of $134
million, due to amortization expense and other charges resulting from our
recently-completed acquisitions. The nine-month fiscal 2000 net loss includes
charges totaling $196.4 million for the write-off of purchased in-process
research and development, and amortization expenses of $83.6 million for
acquisition-related intangible assets. In fiscal 1998, we incurred a net loss of
$262 million due to restructuring charges of $147 million, inventory write-offs
of approximately $66 million, and a charge for intellectual property matters of
approximately $43 million. Our operating results for fiscal 1999 were adversely
affected by additional charges of $38 million related to the 1998 restructuring
actions. Significant charges against earnings for purchased in-process research
and development are not unusual in connection with acquisitions of technology
companies. We may incur further losses due to these types of write-offs as a
result of future business acquisitions or other actions.
As a result of our recent acquisitions, we expect to record amortization
expense related to goodwill and intangible assets in excess of $300 million
annually for five years. Our profitability may also be affected by increased
amortization expenses related to intangible assets, which often result from
acquisitions of technology companies, as we make additional acquisitions.
WE FACE A RISK THAT WE WILL BE UNABLE TO INTEGRATE COMPANIES WE ACQUIRE.
We have completed several acquisitions in the past year, including the
acquisitions of Applied Telecom, Inc., HotRail Inc., Istari Design, Inc., Maker
Communications, Inc., Microcosm Communications Limited, Philsar Semiconductor
Inc., Sierra Imaging, Inc., the wireless broadband business of Oak Technology,
Inc., NetPlane Systems, formerly named Harris & Jeffries, Inc. and Novanet. On
an ongoing basis, we evaluate acquisitions and may make additional acquisitions
in
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the future. Integrating acquired organizations and their products and
services may be expensive, time-consuming and a strain on our resources. Risks
we could face with respect to acquisitions include:
o the difficulty of integrating acquired technology into our product
offerings;
o the failure successfully to integrate acquired technology, resulting
in the impairment of amounts currently capitalized as intangible
assets;
o the impairment of relationships with employees and customers;
o the difficulty of coordinating and integrating
geographically-dispersed operations;
o the difficulty of coordinating and integrating overall business
strategies and sales and marketing and research and development
efforts;
o the potential disruption of our ongoing business and distraction of
management;
o the maintenance of brand recognition of acquired businesses;
o the maintenance of corporate cultures, controls, procedures and
policies; and
o the potential unknown liabilities associated with acquired businesses.
Our inability to address any of these risks successfully could harm our
business.
We may have difficulty in integrating any future acquisitions with our
current organization, technology and product and services offerings, and any
acquired features, functions, products or services may not achieve market
acceptance.
OUR CREDIT FACILITY MAY RESTRICT OUR OPERATING AND FINANCIAL FLEXIBILITY.
We have a $475 million revolving credit facility which expires in 2003.
This credit facility includes covenants that may restrict our operating and
financial flexibility in the future. The credit facility includes restrictions
on capital expenditures, indebtedness, acquisitions, mergers, asset sales and
liens on assets that apply to us and our subsidiaries. We also must meet certain
financial tests and maintain certain financial ratios. Although we believe that
we will be able to comply with these requirements, compliance with these
requirements may restrict our operating and financial flexibility. We cannot
assure you that we will in fact be able to satisfy all of the requirements in
the credit facility. If we do not satisfy the financial ratios or comply with
the other covenants included in the credit facility, the lenders under the
credit facility could declare all amounts owed to them due and payable and
proceed against their collateral. Such a foreclosure on the collateral could
have a material adverse effect on our business, financial condition and results
of operations. The credit facility is secured by a pledge of the stock of our
significant subsidiaries (as that term is defined in the credit facility),
subject to certain exceptions for stock of foreign significant subsidiaries, and
by a pledge of certain intercompany indebtedness owed to us by our domestic
significant subsidiaries. If there is a downgrading of the ratings on our
long-term, unsecured
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indebtedness by Standard & Poor's Rating Services Group to B or less and a
rating by Moody's Investor Service of B2 or less (in the event of a rating by
Moody's), we will be required to secure the credit facility by pledging
substantially all of our assets and the assets of our domestic subsidiaries and
the stock of all of our subsidiaries, subject to certain exceptions. Our
obligations under the credit facility must be guaranteed by any domestic
significant subsidiary.
WE ENGAGE IN LITIGATION TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS AND TO
DEFEND OURSELVES AGAINST CLAIMS OF INFRINGEMENT BY OTHERS.
Our business faces risks of intellectual property infringement and
litigation. The semiconductor industry is characterized by vigorous protection
and pursuit of intellectual property rights. In the past, we have found it
necessary to engage in litigation 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. We expect future
litigation on similar grounds.
We have received, and may continue to receive in the future, claims of
infringement of intellectual property rights of others. We are a party to
certain pending proceedings involving such claims. We cannot assure you that:
o we will prevail in pending actions;
o other actions alleging infringement by us of third-party patents or
invalidity of our patents will not be asserted or prosecuted against
us; or
o any assertions of infringement or actions seeking to establish the
invalidity of our patents will not materially and adversely affect our
business, financial condition and results of operations.
Even if we are successful in such matters, the attempted enforcement of
intellectual property rights by or against us could result in significant costs
and diversion of our resources. It could also have a material adverse effect on
our business, financial condition and results of operations. If claims or
actions are asserted or commenced against us, in certain situations we may seek
to obtain licenses under a third party's intellectual property rights to avert
or resolve a controversy. We cannot assure you that under such circumstances a
license would be available on commercially reasonable terms, if at all.
WE MAY NOT BE SUCCESSFUL IN PROTECTING OUR INTELLECTUAL PROPERTY RIGHTS.
We rely primarily on patent, copyright, trademark and trade secret laws, as
well as nondisclosure and confidentiality agreements and other methods, to
protect our proprietary technologies and processes. In addition, we often
incorporate the intellectual property of our customers into our designs, and
have certain obligations with respect to the non-use and non-disclosure of their
intellectual property. We cannot assure you that:
o the steps we take to prevent misappropriation or infringement of our
intellectual property or the intellectual property of our customers
will be successful;
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o any existing or future patents will not be challenged, invalidated or
circumvented; or
o any of the measures described above would provide meaningful
protection.
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. In addition, effective copyright, trademark and trade
secret protection may be unavailable or limited in certain countries.
OUR INTELLECTUAL PROPERTY INDEMNIFICATION PRACTICE MAY ADVERSELY IMPACT OUR
BUSINESS.
We have historically indemnified our customers for certain costs and
damages of patent infringement in circumstances where our product is the factor
creating the customer's infringement exposure. This practice generally excludes
coverage in circumstances where infringement arises out of the combination of
our products with products of others. This indemnification practice could have a
material adverse effect on our business, financial condition and results of
operations, particularly in situations where our products are designed for use
in devices manufactured by our customers that comply with international
standards. These international standards are often covered by patent rights held
by our competitors or our customers. The combined costs of obtaining licenses
from all holders of patent rights essential to such standards could be high and
could have a material adverse effect on our business, financial condition and
results of operations.
WE OPERATE IN THE HIGHLY CYCLICAL SEMICONDUCTOR INDUSTRY.
The 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.
The industry has experienced significant downturns, often in connection
with, or in anticipation of, maturing product cycles (of both semiconductor
companies' and their customers' products) and declines in general economic
conditions. These downturns have been characterized by diminished product
demand, production overcapacity, high inventory levels and accelerated erosion
of average selling prices.
We have experienced these conditions in our business in the past and may
experience such downturns in the future. Any future downturns of this nature
could have a material adverse effect on our business, financial condition and
results of operations. From time to time the semiconductor industry also has
experienced periods of increased demand and production capacity constraints. We
may experience substantial changes in future operating results due to general
semiconductor industry conditions, general economic conditions and other
factors.
WE ARE SUBJECT TO INTENSE COMPETITION AND COULD LOSE BUSINESS TO OUR
COMPETITORS.
The semiconductor industry in general and the markets in which we compete
in particular are intensely competitive. We compete worldwide with a number of
United States and international semiconductor manufacturers that are both larger
and smaller than us in terms of
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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, technological and public policy changes and relatively low
barriers to entry in certain markets of the industry.
We currently enjoy substantial market share in our V.90 and facsimile modem
chipset product lines. However, as we continue our diversification strategy and
develop our expansion platforms, we are and will be competing in certain new
markets in which we have lesser market shares and existing competitors have
dominant market positions. Moreover, as with many companies in the semiconductor
industry, customers for certain of our products offer other products that
compete with similar products offered by us.
We believe that the principal competitive factors for integrated circuit
providers to our addressed markets are:
o product performance;
o level of integration;
o quality;
o compliance with industry standards;
o price;
o time-to-market;
o system cost;
o design and engineering capabilities;
o new product innovation; and
o customer support.
The specific bases on which we compete vary by product platform.
Many of our current and potential competitors have certain advantages,
including:
o longer operating histories and presence in key markets;
o greater name recognition;
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o access to larger customer bases; and
o significantly greater financial, sales and marketing, manufacturing,
distribution, technical and other resources than we have.
As a result, such competitors may be able to adapt more quickly 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 Conexant.
Current and potential competitors also have established or may establish
financial or strategic relationships among themselves or with our existing or
potential 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. We also cannot assure
you that competition will not have a material adverse effect on our business,
financial condition and results of operations.
Many of our competitors have combined with each other and consolidated
their businesses, including the consolidation of competitors with our customers.
This is attributable to a number of factors, including the high-growth nature of
the communications electronic industry and the time-to-market pressures on
suppliers to decrease the time required for product conception, research and
development, sampling and production launch before a product reaches the market.
This consolidation trend is expected to continue, since investments, alliances
and acquisitions may enable semiconductor suppliers, including Conexant and our
competitors, to augment technical capabilities or to achieve faster
time-to-market for their products than would be possible solely through internal
development.
Consolidations by industry participants, including in some cases,
acquisitions of certain of our customers by our competitors, are creating
entities with increased market share, customer base, technology and marketing
expertise in markets in which we compete. These developments may significantly
and adversely affect our current markets, the markets we are seeking to serve
and our ability to compete successfully in those markets.
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 because our markets generally exhibit the following characteristics:
o rapid technological developments;
o evolving industry standards;
o changes in customer requirements;
o frequent new product introductions and enhancements; and
o short product life cycles with declining prices over the life cycle of
the product.
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Our products could become obsolete 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. If we are unable to keep abreast of these developments, these
events could have a material adverse effect on our business, financial condition
and results of operations.
OUR MANUFACTURING PROCESS IS 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. Minute
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
large volumes of 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 labor strikes, work stoppages, fire, earthquake,
flooding or other natural disasters. These disruptions could cause significant
delays in shipments until we could 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 alternate capacity, particularly wafer production capacity, would be
available on a timely basis or at all. Even if alternate wafer production
capacity is available, we may not be able to obtain it on favorable terms, which
would result in a loss of customers. Any inability to obtain sufficient
manufacturing capacities to meet demand, either at our own facilities or through
foundry or similar arrangements with others, could have a material adverse
effect on our business, financial condition and results of operations. Certain
of our manufacturing facilities are located near major earthquake fault lines,
including our California and Mexico facilities. We maintain only minimal
earthquake insurance coverage on these facilities.
Due to the highly specialized nature of the gallium arsenide semiconductor
manufacturing process, in the event of a disruption at our Newbury Park,
California wafer fabrication facility, alternate gallium arsenide production
capacity would not be readily available from third party sources. Although we
recently entered into a multi-year agreement with a foundry that guarantees us
access to additional gallium arsenide wafer production capacity beginning in the
fourth quarter of calendar year 2000, a disruption of operations at our Newbury
Park wafer fabrication facility or the interruption in the supply of epitaxial
wafers used in our gallium arsenide process could have a material adverse effect
on our business, financial condition and results of operations, particularly
with respect to our Wireless Communications products.
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Our ability to sustain our revenue growth is also dependent on our ability
to secure adequate additional manufacturing capacity, including wafer production
capacity. We have recently entered into agreements with outside foundries to
secure additional wafer manufacturing capacity, including additional gallium
arsenide wafer production capacity. In addition, we continue to explore wafer
manufacturing alternatives, which may include increased use of outside
foundries, entering into new or expanded business relationships with respect to
wafer manufacturing or other actions related to our wafer manufacturing
facilities. We cannot assure you that we will be successful in securing adequate
additional manufacturing capacity, and our inability to do so could result in
delays in customer shipments.
WE MAY NOT BE ABLE TO ACHIEVE MANUFACTURING YIELDS TO MAINTAIN OUR
PROFITABILITY.
Minor deviations 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 will typically
increase as we ramp 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 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 ever
increasing process complexity of manufacturing integrated circuit products. Our
manufacturing operations also face pressures arising from the compression of
product life cycles which requires us to bring new products on line 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 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.
Although we currently purchase wafers used in the production of our
complementary metal oxide semiconductor (CMOS) products from one major supplier,
such wafers are available from several other suppliers. We are currently
dependent on two suppliers for epitaxial wafers used in the gallium arsenide
semiconductor manufacturing processes at our Newbury Park, California facility
and we are in the process of arranging another supplier for epitaxial wafers.
The number of qualified alternative suppliers for wafers is limited and the
process of qualifying a new wafer supplier could require a substantial leadtime.
Although we historically have not experienced any significant difficulties in
obtaining an adequate supply of raw materials and components necessary for our
manufacturing operations, the loss of a significant supplier or the inability of
a supplier to meet performance and quality specifications or delivery schedules
could have a material adverse effect on our business, financial condition and
results of operations.
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UNCERTAINTIES INVOLVING THE ORDERING AND SHIPMENT OF OUR PRODUCTS COULD
ADVERSELY AFFECT OUR BUSINESS.
Our sales are typically made pursuant to individual purchase orders and we
generally do not have long-term supply arrangements with our customers. Our
customers may cancel orders until 30 days prior to the shipping date. In
addition, we sell a portion of our products through distributors who have
certain rights to return unsold products to us. Moreover, semiconductor
companies, including Conexant, routinely manufacture or purchase inventory based
on estimates of customer demand for their products, which is difficult to
predict. 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 our holding excess or obsolete inventory
which could have a material adverse effect on our business, financial condition
and results of operations.
WE ARE SUBJECT TO THE RISKS OF DOING BUSINESS INTERNATIONALLY.
For the nine months ended June 30, 2000, approximately 69 percent of our
total sales were to customers located outside the United States, primarily in
the Asia-Pacific and European countries. In addition, we have facilities and
suppliers located outside the United States, including our assembly and test
facility in Mexicali, Mexico and third-party 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:
o currency exchange rate fluctuations;
o local economic and political conditions;
o disruptions of capital and trading markets;
o restrictive governmental actions (such as restrictions on transfer of
funds and trade protection measures, including export duties and
quotas and customs duties and tariffs);
o changes in legal or regulatory requirements;
o import or export licensing requirements;
o limitations on the repatriation of funds;
o difficulty in obtaining distribution and support;
o nationalization;
o the laws and policies of the United States affecting trade, foreign
investment and loans;
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o tax laws; and
o limitations on our ability under local laws to protect our
intellectual property.
Because most of our international sales, other than sales to Japan (which
are denominated principally in Japanese yen), are currently 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
foreign sales or on our business, financial condition and results of operations.
Our past operating performance has been impacted by adverse economic
conditions in the Asia-Pacific region, which have increased the uncertainty with
respect to the long-term viability of certain of our customers and suppliers in
the region. Sales to customers in Japan and other countries in the Asia-Pacific
region, principally Taiwan, South Korea and Hong Kong, represented approximately
57 percent of total revenues in the first nine months of fiscal 2000.
We enter into foreign currency forward exchange contracts, principally for
the Japanese yen, to minimize risk of loss from currency exchange rate
fluctuations for foreign currency commitments entered into in the ordinary
course of business. We have not experienced nor do we anticipate any material
adverse effect on our results of operations or financial condition related to
these foreign currency forward exchange contracts. We have not entered into
foreign currency forward exchange contracts for other purposes and our financial
condition and results of operations could be affected (negatively or positively)
by currency fluctuations.
OUR SUCCESS DEPENDS ON OUR ABILITY TO EFFECT SUITABLE INVESTMENTS, ALLIANCES OR
ACQUISITIONS.
Although we invest significant resources in research and development
activities, the complexity and rapidity of technological changes make it
impractical for us to pursue development of all technological solutions on our
own. As part of our goal to provide advanced semiconductor product systems, we
have and will continue to review on an ongoing basis investment, alliance and
acquisition prospects that would complement our existing 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:
o the diversion of management resources;
o dilutive issuances of equity securities;
o large one-time write-offs;
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o the incurrence of debt and contingent liabilities;
o amortization expenses related to goodwill and other intangible assets;
and
o other acquisition related costs.
Any of these events could materially adversely affect our business,
financial condition and results of operations and the price of our common stock.
For example, as a result of fiscal 2000 acquisitions, we have recorded charges
of $196.4 million for the nine months ended June 30, 2000 for purchased
in-process research and development and we expect to record amortization expense
related to goodwill and intangible assets in excess of approximately $300
million annually for five years.
The ultimate success of any such investments, alliances or acquisitions in
achieving the purposes for which they are undertaken will depend on our ability
to integrate successfully any acquired business and to retain key personnel, as
well as a variety of other factors.
OUR SUCCESS COULD BE NEGATIVELY AFFECTED IF KEY PERSONNEL LEAVE.
Our future success depends largely upon the continued service of our
executive officers and other key management and technical personnel. Our success
also depends on our ability to continue to attract, retain and motivate
qualified personnel. We are dependent on key technical personnel. They represent
a significant asset, as the source of our technological and product innovations.
The competition for such personnel is intense in the semiconductor industry. We
cannot assure you that we will be able to continue to attract and retain
qualified management and other personnel necessary for the design, development,
manufacture and sale of our products.
We may have difficulty attracting and retaining key personnel during
periods of poor operating performance. 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 business, financial
condition and results of operations. In particular, the loss of the services of
Dwight W. Decker, our Chairman and Chief Executive Officer, or certain key
design and technical personnel could materially and adversely affect us.
OUR MANAGEMENT TEAM MAY BE SUBJECT TO A VARIETY OF DEMANDS FOR ITS ATTENTION.
Our management currently faces a variety of challenges. These include
implementing our ongoing diversification and expansion strategy and continuing
to expand the infrastructure and systems necessary for us to operate as an
independent public company and to integrate our recent acquisitions. While we
believe that we have sufficient management resources to execute each of these
initiatives, we cannot assure you that we will have these resources or that our
initiatives will be successfully implemented. Failure to implement these
initiatives successfully could have a material adverse effect on our business,
financial condition and results of operations.
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WE MAY BE LIABLE FOR PENALTIES UNDER ENVIRONMENTAL LAWS, RULES AND REGULATIONS,
WHICH COULD NEGATIVELY AFFECT OUR SUCCESS.
We use a variety of chemicals in our manufacturing operations and are
subject to a wide range of environmental protection regulations in the United
States, Mexico and Canada. 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.
In the United States, 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 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.
We have been designated as a potentially responsible party at one Superfund
site located at a former silicon wafer manufacturing facility and steel
fabrication plant in Parker Ford, Pennsylvania formerly occupied by
Semiconductor Systems. The site was also formerly occupied by Recticon
Corporation and Allied Steel Products Corporation, each of whom has been named
as a potentially responsible party and each of whom is insolvent. We have
accrued approximately $4 million at June 30, 2000 for the cost of groundwater
remediation, including installation of a public water supply line and
groundwater pump and treatment system, as well as routine groundwater sampling.
In addition, we are engaged in two other remediations of groundwater
contamination at our Newport Beach and Newbury Park, California facilities for
which we have accrued approximately $3 million for the costs of remediation at
June 30, 2000. Pursuant to our agreement with Rockwell, we have assumed
liabilities in respect of environmental matters related to current and former
operations of Conexant.
WE HAVE A LIMITED HISTORY AS AN INDEPENDENT COMPANY.
We have a limited operating history as an independent company. Accordingly,
the financial information included or incorporated into this prospectus for
periods prior to January 1, 1999 may not necessarily reflect the results of
operations, financial position and cash flows we would have achieved if we had
operated independently during the periods presented. We cannot assure you that
we will return to profitability in the near future or that we will be profitable
on an ongoing basis as a stand-alone company. Prior to the spin-off, we relied
on Rockwell for cash investments and various financial and administrative
services.
THE VALUE OF OUR COMMON STOCK MAY BE ADVERSELY AFFECTED BY MARKET VOLATILITY.
The trading price of our common stock fluctuates significantly. Since our
common stock began trading publicly, the reported sale price of our common stock
on the Nasdaq National Market has been as high as $132-1/2 and as low as
$6-27/32 per share. This price may be influenced by many factors, including:
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o our performance and prospects;
o the depth and liquidity of the market for our common stock;
o investor perception of Conexant and the industry in which it operates;
o changes in earnings estimates or buy/sell recommendations by analysts;
o general financial and other market conditions; and
o domestic and international economic conditions.
In addition, public stock markets have experienced, and are currently
experiencing, extreme price and trading volume volatility, particularly in high
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.
CERTAIN PROVISIONS IN OUR ORGANIZATIONAL DOCUMENTS AND RIGHTS AGREEMENT AND
DELAWARE LAW MAY MAKE IT DIFFICULT FOR SOMEONE TO ACQUIRE CONTROL OF CONEXANT.
We have established certain anti-takeover measures that may affect our
common stock and convertible notes. Our restated certificate of incorporation,
our by-laws, our rights agreement with ChaseMellon Shareholder Services, L.L.C.,
as rights agent, dated as of November 30, 1998, as amended, and the Delaware
General Corporation Law contain several provisions that would make more
difficult an acquisition of control of Conexant in a transaction not approved by
our board of directors. Our restated certificate of incorporation and by-laws
include provisions such as:
o the ability of our board of directors to issue shares of our preferred
stock in one or more series without further authorization of our
shareowners;
o a fair price provision, as described under "Description of Capital
Stock -- Certain Provisions of Our Restated Certificate of
Incorporation and By-Laws";
o a prohibition on shareowner action by written consent, as described
under "Description of Capital Stock -- Certain Provisions of Our
Restated Certificate of Incorporation and By-Laws";
o a requirement that shareowners provide advance notice of any
shareowner nominations of directors or any proposal of new business to
be considered at any meeting of shareowners;
o a requirement that a supermajority vote be obtained to remove a
director for cause or to amend or repeal certain provisions of our
restated certificate of incorporation or by-laws;
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o elimination of the right of shareowners to call a special meeting of
shareowners; and
o the division of our board of directors into three classes to be
elected on a staggered basis, one class each year.
We also have a rights agreement which gives our shareowners certain rights
that would substantially increase the cost of acquiring us in a transaction not
approved by our board of directors.
In addition to the rights agreement and the provisions in our restated
certificate of incorporation and by-laws, Section 203 of the Delaware General
Corporation Law provides that, subject to certain exceptions, a corporation
shall not engage in any business combination with any interested shareowner
during the three-year period following the time that such shareowner becomes an
interested shareowner. The restrictions of Section 203 of the Delaware General
Corporation Law, in certain circumstances, make it more difficult for a person
who would be an interested shareowner to effect various business combinations
with a corporation during this three-year period. The provisions of Section 203
of the Delaware General Corporation Law provide that the shareowner approval
requirement may be avoided if a majority of the directors then in office
approved either the business combination or the transaction that resulted in the
shareowner becoming an interested shareowner.
WE MAY BE RESPONSIBLE FOR CERTAIN FEDERAL INCOME TAX LIABILITIES THAT RELATE TO
OUR SPIN-OFF FROM ROCKWELL.
In connection with our spin-off from Rockwell, the Internal Revenue Service
issued a tax ruling to Rockwell stating that the spin-off would qualify as a
tax-free reorganization within the meaning of Section 368(a)(1)(D) of the
Internal Revenue Code of 1986, as amended. While the tax ruling generally is
binding on the Internal Revenue Service, the continuing validity of the tax
ruling is subject to certain factual representations and assumptions. We are not
aware of any facts or circumstances that would cause such representations and
assumptions to be untrue.
The Tax Allocation Agreement dated as of December 31, 1998 between Conexant
and Rockwell provides that we will be responsible for any taxes imposed on
Rockwell, Conexant or Rockwell shareowners as a result of either:
o the failure of the spin-off from Rockwell to qualify as a tax-free
reorganization within the meaning of Section 368(a)(1)(D) of the
Internal Revenue Code or
o the subsequent disqualification of the spin-off from Rockwell as a
tax-free transaction to Rockwell under Section 361(c)(2) of the
Internal Revenue Code,
if the failure or disqualification is attributable to certain post-spin-off
actions by or in respect of Conexant (including our subsidiaries) or our
shareowners, such as our acquisition by a third party at a time and in a manner
that would cause such failure or disqualification.
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The Tax Allocation Agreement also provides, among other things, that
neither Rockwell nor Conexant is to take any action inconsistent with, nor fail
to take any action required by, the request for the tax ruling or the tax ruling
unless:
o required to do so by law;
o the other party has given its prior written consent; or
o in certain circumstances, a supplemental ruling permitting such action
is obtained.
Rockwell and Conexant have indemnified each other for any tax liability
resulting from each entity's failure to comply with these provisions.
In addition, we effected certain tax-free intragroup spin-offs as a result
of Rockwell's spin-off of Meritor Automotive, Inc. (now ArvinMeritor, Inc.) on
September 30, 1997. The Tax Allocation Agreement provides that we will be
responsible for any taxes imposed on Rockwell, Conexant or Rockwell shareowners
in respect of those intragroup spin-offs if such taxes are attributable to
certain actions taken after the spin-off from Rockwell by or in respect of
Conexant (including our subsidiaries) or our shareowners, such as our
acquisition by a third party at a time and in a manner that would cause the
taxes to be incurred.
If we were required to pay any of the taxes described above, such payment
would have a material adverse effect on our financial position, results of
operations and cash flow.
USE OF PROCEEDS
The selling securityholders will receive all of the proceeds from the sale
of common stock by them pursuant to this prospectus. We will not receive any
proceeds from the sale. Any proceeds received by us from the exercise of the
stock options held by former Novanet employees, directors and consultants,
representing the exercise price for those stock options, will be used for
general corporate purposes. The aggregate proceeds if all of those options are
exercised would not exceed approximately $336,000.
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PRICE RANGE OF COMMON STOCK
Our common stock began trading on the Nasdaq National Market under the
symbol "CNXT" on January 4, 1999. The following table lists the high and low per
share sale prices for our common stock as reported by the Nasdaq National Market
for the periods indicated. These per share sale prices reflect the 2-for-1 stock
split effected in the form of a stock dividend on October 29, 1999.
High Low
---- ---
Fiscal year ending September 30, 1999:
Second quarter....................... $ 13 27/32 $ 6 27/32
Third quarter........................ $ 31 15/16 $ 13 3/16
Fourth quarter....................... $ 41 17/32 $ 27 5/8
Fiscal year ending September 30, 2000:
First quarter........................ $ 76 3/16 $ 30 7/8
Second quarter....................... $132 1/2 $ 53
Third quarter........................ $ 79 $ 31 1/4
Fourth quarter....................... $ 57 1/16 $ 26 1/2
On October 18, 2000 the last sale price of our common stock as reported on
the Nasdaq National Market was $26.31 per share. As of September 29, 2000 there
were approximately 50,736 holders of record of our common stock.
COMMON STOCK ISSUABLE ON EXERCISE OF OPTIONS HELD BY FORMER NOVANET EMPLOYEES,
DIRECTORS AND CONSULTANTS
Under the purchase agreement for the Novanet acquisition, outstanding
Novanet options held by employees, directors and consultants of Novanet were
converted into options to purchase our common stock. This included options held
by 15 individuals who are former employees, directors and consultants. These
options were all vested at the time of the acquisition and are exercisable for
approximately 56,282 shares of our common stock. The shares issuable on exercise
of these options by former employees, directors and consultants are being
registered under this registration statement.
The exercise price for each of these options was adjusted under the
purchase agreement to equal the per share exercise price of the Novanet option
converted immediately prior to the Novanet acquisition multiplied by
1.887895674, rounded up to the nearest whole cent, but in no event less than
$1.00 per share. This exercise price was established by negotiations among the
parties to the purchase agreement. If all of the options held by these former
employees, directors and consultants were exercised, the aggregate proceeds we
would receive on payment of the exercise price would be approximately $336,000.
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All of the options held by former employees and directors and Novanet
consultants are subject to the terms of the Novanet Employee Shares Option
Plan summarized below.
NOVANET EMPLOYEE SHARES OPTION PLAN
The following statements include summaries of certain provisions of the
Novanet Semiconductor Ltd. Employee Shares Option Plan, as amended and assumed
by us. These statements do not purport to be complete and are qualified by
reference to the provisions of the Plan, which are incorporated by reference
into this prospectus.
PURPOSE; ELIGIBILITY
Following our acquisition of Novanet, the purpose of the Plan is
o to provide an additional incentive to be employed by and provide
services to Novanet;
o to encourage a sense of proprietorship; and
o to stimulate an active interest in the success of Novanet and
Conexant.
Only those persons who, on the closing date of the Novanet acquisition
transaction, held Novanet options are eligible to participate in the Plan and no
additional grants may be made under the Plan. Options granted under the Plan may
not be transferred, subject to certain exceptions.
ADMINISTRATION; INTERPRETATION
The Plan is administered by our board of directors or by our Compensation
and Management Development Committee or by any other committee appointed by our
board of directors. Our board of directors has sole and full discretion and
authority to administer the Plan and to take all actions under or related to the
Plan, including the power to interpret the Plan, to determine the terms of
option agreements, to make all other determinations deemed necessary or
advisable for the administration of the Plan and to prescribe, amend, modify,
rescind and terminate the Plan or any of its terms.
OPTION AGREEMENTS
Each option grant under the Plan is evidenced by an option agreement
between the option holder and Novanet. Each option agreement states the number
of shares of common stock of Novanet subject to the option grant and includes
the terms for vesting and exercise. Each option originally granted under the
Plan was automatically converted into and became an option to purchase shares of
our common stock under the Plan at the closing of the Novanet acquisition
transaction, with an adjustment in both the number of shares issuable and the
exercise price payable upon exercise of the options.
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TRUSTEE
In accordance with the tax ruling issued by the Israeli Income Tax and Land
Taxation Commission on September 20, 2000, the options to purchase shares of our
common stock under the Plan will be registered and held by a trustee approved by
the Israeli Income Tax Authorities.
PAYMENT OF THE EXERCISE PRICE
Payment of the exercise price of an option may be made:
o in cash or a check payable to the order of Conexant;
o in shares of our common stock (valued at the closing price of
our common stock as reported in the Nasdaq National Market reporting
system on the date of exercise, or if no sale of shares of our common
stock is reported for such date, the next preceding day for which
there is a reported sale); or
o in a combination of shares of our common stock and cash.
Payment of the exercise price by delivery of shares of our common stock
owned by an option holder may be made only if the payment does not result in a
charge to earnings for financial accounting purposes as determined by our board
of directors. Furthermore, if the exercise price of an option is denominated in
Israeli Shekels and is not converted (with the consent of the option holder)
into U.S. dollars, only payment by cash or check may be made.
No fractional shares of common stock will be issued or accepted.
EXERCISE PERIOD; EXERCISE PROCEDURE
Subject to the termination provisions of the Plan, each vested option is
exercisable for eight (8) years following the date the vested option was granted
but in no event may a vested option be exercised before the expiration of thirty
(30) days following the date on which a registration statement filed with the
U.S. Securities and Exchange Commission and registering the shares of our common
stock issuable upon exercise of the vested option has been declared effective.
All the options held by the trustee may be exercised only by the trustee.
The trustee will exercise those vested options by providing us a written notice
of its intent to exercise those vested options, accompanied by the written
notice from the option holder.
Upon the exercise of and full payment for the option, shares of our common
stock will be issued to the trustee, or the option holder in case of any options
are not held by the trustee, by book-entry statement representing the number of
shares of our common stock purchased. Any options not held by the trustee may be
exercised by the option holder in accordance with the Plan and the relevant
option agreement with that option holder.
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In order to transfer or sell the exercised shares of our common stock, or
any part thereof, the actual payment of all taxes required to be paid upon the
sale or transfer must be withheld and paid to the tax assessor.
TERMINATION
Any option granted to an option holder but not exercised by the option
holder within the eight-year exercise period and in accordance with the terms of
the Plan and the applicable option agreement will expire and terminate upon the
lapse of the exercise period. The Plan also makes additional provisions in the
event of termination of employment for cause, termination without cause and
authorized leave of absence. Additionally, any unvested options held by an
option holder will terminate upon the issuance of a court order declaring the
bankruptcy of the option holder, the appointment of a receiver for the option
holder or a general assignment for the benefit of the option holder's creditors.
ADJUSTMENT PROVISIONS
In the event of any change in the outstanding shares of our common stock by
reason of a stock dividend, stock split, recapitalization, reclassification,
merger, consolidation (whether or not we are a surviving corporation),
reorganization, combination or exchange of shares or other similar corporate
changes or an extraordinary dividend in cash, securities or other property, our
board of directors may amend the Plan and outstanding options and option
agreements and may adopt adjustments and take certain actions thereunder as it
deems appropriate, in its sole discretion, under the circumstances, and its
determination in that respect will be final and binding. These amendments,
adjustments and actions may include changes in the number of shares of our
common stock then remaining subject to the Plan, and the maximum number of
shares of our common stock that may be delivered to any option holder.
AMENDMENT AND TERMINATION; TERM
No amendment or modification may adversely affect the right of an option
holder under any option previously granted under the Plan without the consent of
the option holder.
The Plan will remain in effect until all options granted under the Plan
have been exercised or terminated under the terms of the Plan and applicable
option agreements.
DIVIDEND POLICY
We have never paid or declared cash dividends on our common stock and do
not anticipate paying any cash dividends in the foreseeable future. In addition,
our existing bank credit facility limits our ability to declare and pay
dividends if there is or would be after giving effect to the dividend payment
any default or event of default under the bank credit facility.
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DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock includes a summary of
certain provisions of our restated certificate of incorporation and our by-laws.
This description is subject to the detailed provisions of, and is qualified by
reference to, our restated certificate of incorporation, as amended, and our
by-laws, copies of which have been filed as exhibits to the registration
statement of which this prospectus is a part.
We are authorized to issue (1) 1,000,000,000 shares of common stock, of
which approximately 229,105,077 shares of common stock were outstanding as of
September 29, 2000, and (2) 25,000,000 shares of preferred stock, without par
value, of which our board of directors has designated (a) 1,500,000 shares as
Series A Junior Participating Preferred Stock for issuance in connection with
the exercise of our preferred share purchase rights and (2) one share as Series
B Voting Preferred Stock issued in connection with the acquisition of Philsar
Semiconductor Inc. (the "Philsar Acquisition"). For a more detailed discussion
of our preferred share purchase rights and how they relate to our common stock,
see "Conexant Rights Plan". The authorized shares of common stock and preferred
stock will be available for issuance without further action by our shareowners,
unless such action is required by applicable law or the rules of any stock
exchange or automated quotation system on which our securities may be listed or
traded. If the approval of our shareowners is not so required, our board of
directors may determine not to seek shareowner approval.
Certain of the provisions described under this section entitled
"Description of Capital Stock" could have the effect of discouraging
transactions that might lead to a change of control of Conexant.
Our restated certificate of incorporation and by-laws:
o establish a classified board of directors, whereby our directors are
elected for staggered terms in office so that only one-third of our
directors stand for election in any one year;
o require shareowners to provide advance notice of any shareowner
nominations of directors or any proposal of new business to be
considered at any meeting of shareowners;
o require a supermajority vote to remove a director or to amend or
repeal certain provisions of our restated certificate of incorporation
or by-laws; and
o preclude shareowners from calling a special meeting of shareowners.
COMMON STOCK
Holders of common stock are entitled to such dividends as may be declared
by our board of directors out of funds legally available therefor. Dividends may
not be paid on common stock unless all accrued dividends on preferred stock, if
any, have been paid or set aside. In the event of our liquidation, dissolution
or winding up, the holders of common stock will be entitled to share pro
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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. See "Dividend Policy".
Each holder of common stock will be entitled to one vote for each such
share outstanding in such holder's name. No holder of common stock will be
entitled to cumulate votes in voting for directors. Our certificate provides
that, unless otherwise determined by our board of directors, no holder of common
stock will have any right to purchase or subscribe for any stock of any class
which we may issue or sell.
ChaseMellon Shareholder Services, L.L.C. is the transfer agent and
registrar for our common stock.
PREFERRED STOCK
Our restated certificate of incorporation permits us to issue up to
25,000,000 shares of our preferred stock in one or more series and with rights
and preferences that may be fixed or designated by our board of directors
without any further action by our shareowners. Our board of directors has
designated (1) 1,500,000 shares of our preferred stock as Series A Junior
Participating Preferred Stock for issuance in connection with the exercise of
our preferred share purchase rights and (2) one share of our preferred stock as
Series B Voting Preferred Stock issued in connection with the Philsar
acquisition. The powers, preferences, rights and qualifications, limitations and
restrictions of the preferred stock of any other series will be fixed by the
certificate of designation relating to such series, which will specify the terms
of the preferred stock, including:
o the maximum number of shares in the series and the distinctive
designation;
o the terms on which dividends, if any, will be paid;
o the terms on which the shares may be redeemed, if at all;
o the terms of any retirement or sinking fund for the purchase or
redemption of the shares of the series;
o the liquidation preference, if any;
o the terms and conditions, if any, on which the shares of the series
shall be convertible into, or exchangeable for, shares of any other
class or classes of capital stock;
o the restrictions on the issuance of shares of the same series or any
other class or series; and
o the voting rights, if any, of the shares of the series.
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Although our board of directors has no intention at the present time of
doing so, it could issue a series of preferred stock that could, depending on
the terms of such series, impede the completion of a merger, tender offer or
other takeover attempt.
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
For a description of the Series A Junior Participating Preferred Stock, see
"--Conexant Rights Plan".
SERIES B VOTING PREFERRED STOCK
Under the Voting and Exchange Trust Agreement dated as of May 30, 2000 by
and between Conexant, Philsar and CIBC Mellon Trust Company entered into in
connection with the Philsar acquisition, Conexant issued one share of Series B
Voting Preferred Stock to CIBC Mellon Trust Company, as trustee of the voting
trust established thereunder, which is holding the share in trust for the
benefit of the holders of the exchangeable shares of Philsar issued to Philsar's
stockholders in connection with the Philsar Acquisition. The Series B preferred
stock entitles the trustee to vote at meetings of the holders of our common
stock. For each exchangeable share that is not held by us or one of our
subsidiaries on the record date for any meeting of holders of our common stock,
the trustee will have one vote for each such exchangeable share at such meeting,
which will be exercised only to the extent that the trustee receives voting
instructions from the registered holders of exchangeable shares. The trustee is
entitled to notice of any stockholder's meeting in accordance with our by-laws.
The trustee, as the holder of the Series B preferred stock, is entitled to
receive such dividends and distributions in equal amounts per exchangeable
share, payable in cash or otherwise, as may be declared per share of Conexant's
common stock by Conexant's board of directors from time to time out of assets or
funds of Conexant legally available therefor to the holder of record as it
appears on the stock books on such record dates as are fixed by the board of
directors out of funds at the time legally available for the payment of
dividends. Such dividends will not be cumulative.
In the event of a liquidation, dissolution or winding up of Conexant,
whether voluntary or involuntary, the holder of Series B preferred stock is
entitled to receive out of the assets of Conexant, whether such assets are
capital or surplus of any nature, an amount equal to the sum of (1) the
dividends declared but not paid thereon to the date of the final distribution to
such holder, and (2) $100 per share, and no more, before any payment shall be
made or any assets distributed to the holders of shares of our common stock or
any other class or series of Conexant's capital stock ranking junior as to
liquidation rights to the Series B preferred stock.
The Series B preferred stock is not convertible into or exchangeable for
any other class or series of capital stock, or any other securities, of Conexant
or any other corporation.
The Series B preferred stock is not subject to redemption by Conexant until
such time as there are no exchangeable shares outstanding which are not owned by
Conexant or any of its direct or indirect subsidiaries. Thereafter, the share of
Series B preferred stock may be redeemed at any time by Conexant, out of funds
legally available for a stock redemption, for cash, at a price equal to the sum
of $1.00 plus any declared and unpaid dividends, upon giving 30 days' written
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notice to the holder of record of the Series B preferred stock at the address of
such holder set forth in the stock books of Conexant. No sinking fund has been
provided for the purchase or redemption of Series B preferred stock.
At such time as (1) the Series B preferred stock is no longer entitled to
vote at a meeting of holders of our common stock because there are no
exchangeable shares outstanding which are not owned by Conexant or any of its
direct or indirect subsidiaries, and (2) there is no share of stock, warrant,
option or other agreement, obligation or commitment of Philsar which by its
terms could require Philsar to issue any exchangeable shares to any person other
than Conexant or any of its direct or indirect subsidiaries, then the share of
Series B preferred stock will be retired and canceled promptly thereafter. Such
share will upon its cancellation, and upon the taking of any action required by
applicable law, become an authorized but unissued preferred share and may be
reissued as part of a new series of preferred shares to be created by resolution
or resolutions of our board of directors, subject to the conditions and
restrictions on issuance set forth in our certificate of incorporation.
The Series B preferred stock ranks pari passu with our common stock as to
payment of dividends and prior to our common stock and our Series A junior
preferred stock as to distribution of assets upon liquidation to the extent
provided above.
CERTAIN PROVISIONS IN OUR RESTATED CERTIFICATE OF INCORPORATION AND BY-LAWS
Our restated certificate of incorporation and by-laws contain various
provisions intended to (1) promote the stability of our shareowner base and (2)
render more difficult certain unsolicited or hostile attempts to take us over
which could disrupt us, divert the attention of our directors, officers and
employees and adversely affect the independence and integrity of our business.
Pursuant to our restated certificate of incorporation, the number of
directors is fixed by our board of directors. Other than directors elected by
the holders of any series of preferred stock or any other series or class of
stock except common stock, our directors are divided into three classes, each
class to consist as nearly as possible of one-third of the directors. Directors
elected by shareowners at an annual meeting of shareowners will be elected by a
plurality of all votes cast. Currently, the terms of office of the three classes
of directors expire, respectively, at our annual meetings in 2001, 2002 and
2003. The term of the successors of each such class of directors expires three
years from the year of election.
Our restated certificate of incorporation contains a fair price provision
pursuant to which a Business Combination (as defined in our restated certificate
of incorporation) between us or one of our subsidiaries and an Interested
Shareowner (as defined in our restated certificate of incorporation) requires
approval by the affirmative vote of the holders of not less than 80 percent of
the voting power of all of our outstanding capital stock entitled to vote
generally in the election of directors, voting together as a single class,
unless the Business Combination is approved by at least two-thirds of the
Continuing Directors (as defined in our restated certificate of incorporation)
or certain fair price criteria and procedural requirements specified in the fair
price provision are met. If either the requisite approval of our board of
directors or the fair price criteria and procedural requirements were met, the
Business Combination would be subject to the voting requirements
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otherwise applicable under the Delaware General Corporation Law, which for most
types of Business Combinations currently would be the affirmative vote of the
holders of a majority of all of our outstanding shares of stock entitled to vote
thereon. Any amendment or repeal of the fair price provision, or the adoption of
provisions inconsistent therewith, must be approved by the affirmative vote of
the holders of not less than 80 percent of the voting power of all of our
outstanding capital stock entitled to vote generally in the election of
directors, voting together as a single class, unless such amendment, repeal or
adoption were approved by at least two-thirds of the Continuing Directors, in
which case the provisions of the Delaware General Corporation Law would require
the affirmative vote of the holders of a majority of the outstanding shares of
our capital stock entitled to vote thereon.
Our restated certificate of incorporation and by-laws provide that a
special meeting of shareowners may be called only by a resolution adopted by a
majority of the entire board of directors. Shareowners are not permitted to
call, or to require that the board of directors call, a special meeting of
shareowners. Moreover, the business permitted to be conducted at any special
meeting of shareowners is limited to the business brought before the meeting
pursuant to the notice of the meeting given by us. In addition, our certificate
provides that any action taken by our shareowners must be effected at an annual
or special meeting of shareowners and may not be taken by written consent
instead of a meeting. Our by-laws establish an advance notice procedure for
shareowners to nominate candidates for election as directors or to bring other
business before meetings of our shareowners.
Our restated certificate of incorporation provides that the affirmative
vote of at least 80 percent of the voting power of all of our outstanding
capital stock entitled to vote generally in the election of directors, voting
together as a single class, would be required to:
o amend or repeal the provisions of our certificate with respect
to (a) the election of directors, (b) the right to call a special
shareowners' meeting or (c) the right to act by written consent;
o adopt any provision inconsistent with such provisions; or
o amend or repeal the provisions of our restated certificate of
incorporation with respect to amendments to our restated certificate
of incorporation or by-laws.
In addition, our restated certificate of incorporation provides that our board
of directors may make, alter, amend and repeal our by-laws and that the
amendment or repeal by shareowners of any of our by-laws would require the
affirmative vote of at least 80 percent of the voting power described above,
voting together as a single class.
CONEXANT RIGHTS PLAN
Each outstanding share of our common stock also evidences one preferred
share purchase right. Each preferred share purchase right entitles the
registered holder to purchase from us one two-hundredth of a share of Series A
Junior Participating Preferred Stock, at $300, subject to
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adjustment. The description and terms of the preferred share purchase rights are
set forth in the rights agreement dated as of November 30, 1998, as amended as
of December 9, 1999.
Until the earlier to occur of (1) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") has acquired beneficial ownership of 20 percent or more of the
outstanding common stock or (2) 10 business days, or such later date as may be
determined by our board of directors prior to such time as any person or group
becomes an Acquiring Person, following the commencement of, or announcement of
an intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of 20 percent or
more of the outstanding common stock, preferred share purchase rights will be
attached to common stock and will be owned by the registered owners of common
stock.
The rights agreement provides that, until the preferred share purchase
rights are no longer attached to the common stock, or until the earlier
redemption or expiration of the preferred share purchase rights:
o the preferred share purchase rights will be transferred with and only
with common stock;
o certificates representing common stock and statements in respect of
shares of common stock registered in book-entry or uncertificated form
will contain a notation incorporating the terms of the preferred share
purchase rights by reference; and
o the transfer of any shares of common stock will also constitute the
transfer of the associated preferred share purchase rights.
As soon as practicable following the date the preferred share purchase rights
are no longer attached to the common stock (the "Distribution Date"), separate
certificates evidencing preferred share purchase rights will be mailed to
holders of record of common stock as of the close of business on the date the
preferred share purchase rights are no longer attached to the common stock and
the separate certificates alone will evidence preferred share purchase rights.
In addition, the rights agreement provides that in connection with the
issuance or sale of our common stock following the Distribution Date and prior
to the earlier of (1) the date the preferred share purchase rights are redeemed
and (2) the date the preferred share purchase rights expire, (a) we will, with
respect to common stock issued or sold pursuant to the exercise of stock options
or under any employee plan or arrangement in existence prior to the Distribution
Date, or upon the exercise, conversion or exchange of securities, notes or
debentures (pursuant to the terms thereof) issued by us and in existence prior
to the Distribution Date, and (b) we may, in any other case, if deemed necessary
or appropriate by the board of directors, issue certificates representing the
appropriate number of preferred share purchase rights in connection with such
issuance or sale. We will not be obligated to issue any of these certificates
if, and to the extent that, we are advised by counsel that the issuance of those
certificates would create a significant risk of material adverse tax
consequences to us or the person to whom such certificate would be issued or
would create a
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significant risk that the stock options or employee plans or
arrangements would fail to qualify for otherwise available special tax
treatment. In addition, no certificate will be issued if, and to the extent
that, appropriate adjustments otherwise have been made instead of the issuance
thereof.
Preferred share purchase rights will not be exercisable until the
Distribution Date. Preferred share purchase rights will expire on December 31,
2008, unless this expiration date is extended or unless preferred share purchase
rights are earlier redeemed by us, in each case, as described below.
The purchase price payable, and the number of shares of Series A junior
preferred stock or other securities or property issuable, upon exercise of the
preferred share purchase rights will be subject to adjustment from time to time
to prevent dilution upon the occurrence of the following events:
o in the event of a stock dividend on, or a subdivision, combination or
reclassification of, Series A junior preferred stock;
o upon the grant to holders of shares of Series A junior preferred stock
of certain rights or warrants to subscribe for or purchase shares of
Series A junior preferred stock at a price, or securities convertible
into shares of Series A junior preferred stock with a conversion
price, less than the then current market price of the shares of Series
A junior preferred stock; or
o upon the distribution to holders of shares of Series A junior
preferred stock of evidences of indebtedness or assets (excluding
regular periodic cash dividends or dividends payable in shares of
Series A junior preferred stock) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding preferred share purchase rights and the number of
one two-hundredths of a share of Series A junior preferred stock issuable upon
exercise of each preferred share purchase right will also be subject to
adjustment in the event of a stock split of common stock or a stock dividend on
common stock payable in common stock or subdivisions, consolidations or
combinations of common stock occurring, in any such case, prior to the date the
preferred share purchase rights are no longer attached to the common stock.
We cannot redeem shares of Series A junior preferred stock purchasable upon
exercise of preferred share purchase rights. Each share of Series A junior
preferred stock will be entitled to a minimum preferential quarterly dividend
payment of $1 per share but will be entitled to an aggregate dividend of 100
times the dividend declared per share of common stock whenever such dividend is
declared. In the event of liquidation, the holders of Series A junior preferred
stock will be entitled to a minimum preferential liquidation payment of $100 per
share but will be entitled to an aggregate payment of 100 times the payment made
per share of common stock. Each share of Series A junior preferred stock will
have 100 votes, voting together with common stock. In the event of any merger,
consolidation or other transaction in which shares of common stock are
exchanged, each share of Series A junior preferred stock will be entitled to
receive 100 times the amount received per share of common stock. These rights
will be protected by customary antidilution provisions.
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Because of the nature of the Series A junior preferred stock's dividend,
liquidation and voting rights, the value of each one-hundredth interest in a
share of Series A junior preferred stock purchasable upon exercise of each
preferred share purchase right should approximate the value of one share of
common stock.
In the event that, at any time after a person has become an Acquiring
Person, we are acquired in a merger or other business combination transaction or
50 percent or more of our consolidated assets or earning power is sold, proper
provision will be made so that each holder of a preferred share purchase right
will thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of a preferred share purchase right, that number of
shares of common stock of the acquiring company which at the time of such
transaction will have a market value of two times the exercise price of a
preferred share purchase right. In the event that any person becomes an
Acquiring Person, proper provision shall be made so that each holder of a
preferred share purchase right, other than preferred share purchase rights
beneficially owned by the Acquiring Person (which will thereafter be void), will
thereafter have the right to receive upon exercise, instead of shares of Series
A junior preferred stock, that number of shares of common stock having a market
value of two times the exercise price of a preferred share purchase right.
At any time after any person or group of affiliated or associated persons
becomes an Acquiring Person, and prior to the acquisition by such person or
group of 50 percent or more of the outstanding shares of common stock, our board
of directors may exchange preferred share purchase rights (other than preferred
share purchase rights owned by such person or group, which will have become void
after such person became an Acquiring Person) for common stock or Series A
junior preferred stock, in whole or in part, at an exchange ratio of one share
of common stock, or two hundredths of a share of Series A junior preferred stock
(or of a share of another series of preferred stock having equivalent rights,
preferences and privileges), per preferred share purchase right (subject to
adjustment).
With certain exceptions, no adjustment in the purchase price will be
required until cumulative adjustments require an adjustment of at least one
percent. No fractional shares of Series A junior preferred stock will be issued,
other than fractions which are integral multiples of one two-hundredth of a
share of Series A junior preferred stock, which may, at our election, be
evidenced by depository receipts. Instead, an adjustment in cash will be made
based on the market price of Series A junior preferred stock on the last trading
day prior to the date of exercise.
At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 20 percent or more of the
outstanding shares of common stock, our board of directors may redeem preferred
share purchase rights in whole, but not in part, at a price of $.01 per
preferred share purchase right. The redemption of preferred share purchase
rights may be made effective at such time, on such basis and with such
conditions as our board of directors may determine, in its sole discretion.
Immediately upon any redemption of preferred share purchase rights, the right to
exercise preferred share purchase rights will terminate and the only right of
the holders of preferred share purchase rights will be to receive the redemption
price.
The terms of preferred share purchase rights may be amended by our board of
directors without the consent of the holders of preferred share purchase rights,
including an amendment to
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decrease the threshold at which a person becomes an Acquiring Person from 20
percent to not less than 10 percent, except that from and after such time as any
person becomes an Acquiring Person no such amendment may adversely affect the
interests of the holders of preferred share purchase rights.
Until a preferred share purchase right is exercised, the holder thereof, as
such, will have no rights as a shareowner of Conexant, including, without
limitation, the right to vote or to receive dividends.
The foregoing summary of the material terms of preferred share purchase
rights is qualified by reference to the rights agreement, a copy of which is on
file with the SEC.
SELLING SECURITYHOLDERS
The shares which may be resold hereunder by the selling securityholders are
shares issued by us in connection with the acquisition of all of the outstanding
shares of Novanet.
The shares originally issued to former shareholders of Novanet and to the
escrow agent, for the benefit of the former shareholders of Novanet, at the
closing of the Novanet acquisition transaction were issued in transactions
exempt from the registration requirements of the Securities Act. Selling
securityholders, including their transferees, pledgees or donees or their
successors, may from time to time offer and sell pursuant to this prospectus any
or all of their shares of our common stock.
The following table sets forth information, as of October 18, 2000, with
respect to the selling securityholders and the shares of common stock
beneficially owned by each selling securityholder that may be offered pursuant
to this prospectus. The information is based on information provided by or on
behalf of the selling securityholders. The selling securityholders may offer
all, some or none of the shares of common stock. Because the selling
securityholders may offer all or some portion of the common stock, we cannot
estimate the amount of the common stock that will be held by the selling
securityholders upon termination of any of these sales. In addition, the selling
securityholders identified below may have sold, transferred or otherwise
disposed of all or a portion of their shares of common stock since the date on
which they provided the information regarding their shares in transactions
exempt from the registration requirements of the Securities Act. No selling
securityholder named in the table below beneficially owns one percent or more of
our common stock based on approximately 229,105,077 shares of common stock
outstanding on September 29, 2000. Information concerning other selling
securityholders will be set forth in prospectus supplements from time to time,
if required.
Shares of
Common Stock Shares of
Owned Prior Common Stock
Name to the Offering Offered Hereby
---- --------------- --------------
Novacom Technologies Ltd....... 1,163,122 1,163,122
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C. Mer Industries Ltd.......... 50,344 50,344
Ericsson Microelectronics AB... 805,510 805,510
Total:......................... 2,018,976 2,018,976
Each of the selling securityholders set forth in the table is a party to
the Share and Option Sale and Purchase Agreement dated as of July 19, 2000 with
Conexant and Novanet and a Registration Rights Agreement dated as of September
22, 2000 by and among Conexant, Novacom Technologies Ltd., Ericsson
Microelectronics AB and C. Mer Industries Ltd.
All of the shares received by the selling securityholders at the closing of
the Novanet acquisition transaction were "restricted securities" under the
Securities Act prior to this registration.
Information concerning the selling securityholders may change from time to
time and any changed information will be set forth in supplements to this
prospectus if and when necessary.
PLAN OF DISTRIBUTION
The selling securityholders and their successors, which term includes their
transferees, pledgees or donees or their successors, may sell the common stock
directly to purchasers or through underwriters, broker-dealers or agents, who
may receive compensation in the form of discounts, concessions or commissions
from the selling securityholders or the purchasers. These discounts, concessions
or commissions as to any particular underwriter, broker-dealer or agent may be
in excess of those customary in the types of transactions involved.
The common stock may be sold in one or more transactions at:
o fixed prices,
o prevailing market prices at the time of sale,
o prices related to the prevailing market prices,
o varying prices determined at the time of sale, or
o negotiated prices.
These sales may be effected in transactions:
o on any national securities exchange or quotation service on which our
common stock may be listed or quoted at the time of sale, including
the Nasdaq National Market,
o in the over-the-counter market,
o otherwise than on such exchanges or services or in the
over-the-counter market,
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o through the writing of options, whether the options are listed on an
options exchange or otherwise, or
o through the settlement of short sales.
These transactions may include block transactions or crosses. Crosses are
transactions in which the same broker acts as agent on both sides of the trade.
The selling securityholders may also make a dividend distribution of the common
stock to their shareholders.
In connection with the sale of the common stock or otherwise, the selling
securityholders may enter into hedging transactions with broker-dealers or other
financial institutions. These broker-dealers or financial institutions may in
turn engage in short sales of the common stock in the course of hedging the
positions they assume with selling securityholders. The selling securityholders
may also sell the common stock short and deliver these securities to close out
such short positions, or loan or pledge the common stock to broker-dealers that
in turn may sell these securities.
The aggregate proceeds to the selling securityholders from the sale of the
common stock offered by them hereby will be the purchase price of the common
stock less discounts and commissions, if any. Each of the selling
securityholders reserves the right to accept and, together with their agents
from time to time, to reject, in whole or in part, any proposed purchase of
common stock to be made directly or through agents. We will not receive any of
the proceeds from the offering of shares by the selling securityholders.
Our outstanding common stock is listed for trading on the Nasdaq National
Market.
In order to comply with the securities laws of some states, if applicable,
the common stock may be sold in these jurisdictions only through registered or
licensed brokers or dealers.
The selling securityholders and any broker-dealers or agents that
participate in the sale of the common stock may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act. Profits on the sale
of the common stock by selling securityholders and any discounts, commissions or
concessions received by any broker-dealers or agents might be deemed to be
underwriting discounts and commissions under the Securities Act. Selling
securityholders who are deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act will be subject to the prospectus delivery
requirements of the Securities Act.
The selling securityholders and any other person participating in a
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder. Regulation M of the Exchange Act may limit
the timing of purchases and sales of any of the securities by the selling
securityholders and any other person. In addition, Regulation M may restrict the
ability of any person engaged in the distribution of the securities to engage in
market-making activities with respect to the particular securities being
distributed for a period of up to five business days before the distribution.
The selling securityholders have acknowledged that they understand their
obligations to comply with the provisions of the Exchange Act and the rules
thereunder relating to stock manipulation, particularly Regulation M, and have
agreed that they will not engage in any transaction in violation of such
provisions.
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To our knowledge, there are currently no plans, arrangements or
understandings between any selling securityholder and any underwriter,
broker-dealer or agent regarding the sale of the common stock by the selling
securityholders.
A selling securityholder may decide not to sell any common stock described
in this prospectus. We cannot assure you that any selling securityholder will
use this prospectus to sell any or all of the common stock. Any securities
covered by this prospectus which qualify for sale pursuant to Rule 144 of the
Securities Act may be sold under Rule 144 rather than pursuant to this
prospectus. In addition, a selling securityholder may transfer, devise or gift
the common stock by other means not described in this prospectus.
With respect to a particular offering of the common stock, to the extent
required, an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement of which this prospectus
is a part will be prepared and will set forth the following information:
o the specific shares of common stock to be offered and sold,
o the names of the selling securityholders,
o the respective purchase prices and public offering prices and other
material terms of the offering,
o the names of any participating agents, broker-dealers or underwriters,
and
o any applicable commissions, discounts, concessions and other items
constituting compensation from the selling securityholders.
The Novanet registration rights provide that the Novanet selling
securityholders and Conexant will indemnify each other and their respective
officers, directors, stockholders, partners, employees, agents and controlling
persons against specific liabilities in connection with the offer and sale of
the common stock, including liabilities under the Securities Act, or will be
entitled to contribution in connection with those liabilities. We will pay all
of our expenses and specified expenses incurred by the selling securityholders
incidental to the registration of the common stock and the public offering in
connection therewith, but the selling securityholders will be responsible for
payment of their own underwriting discounts or commissions, selling or placement
agent or broker fees and commissions, and transfer taxes, if any.
LEGAL MATTERS
The validity of the issuance of the shares of our common stock offered by
this prospectus has been passed upon for us by Jasmina Theodore Boulanger,
Associate General Counsel and Assistant Secretary of Conexant.
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EXPERTS
The consolidated financial statements and the related financial statement
schedule incorporated in this prospectus by reference from the Conexant Systems,
Inc. Annual Report on Form 10-K for the fiscal year ended September 30, 1999
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
The consolidated financial statements of Maker Communications, Inc.
incorporated by reference in this prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated herein in reliance upon the authority of
said firm as experts in giving said reports.
HOW TO OBTAIN MORE INFORMATION
In accordance with the Exchange Act, we file reports, proxy and information
statements and other information with the Securities and Exchange Commission.
You may read and copy these reports, proxy and information statements and other
information that we file at the SEC's public reference room at 450 Fifth Street,
N.W., Washington, D.C. 20549. You may obtain information on the operation of the
public reference room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains an internet site that contains reports, proxy and information
statements and other information regarding registrants (including Conexant) that
file electronically with the SEC (http://www.sec.gov). Our internet site is
http://www.conexant.com.
You also may inspect reports, proxy statements and other information about
Conexant at the offices of the Nasdaq Stock Market, Inc. National Market System,
1735 K Street, N.W., Washington, D.C. 20006-1500.
We have filed with the SEC a registration statement on Form S-3 under the
Securities Act. This prospectus does not contain all of the information in the
registration statement. We have omitted certain parts of the registration
statement, as permitted by the rules and regulations of the SEC. You may inspect
and copy the registration statement, including exhibits, at the SEC's public
reference room or internet site. Our statements in this prospectus about the
contents of any contract or other document are not necessarily complete. You
should refer to the copy of each contract or other document we have filed as an
exhibit to the registration statement for complete information.
The SEC's rules allow us to "incorporate by reference" into this prospectus
the information we file with the SEC. This means that we can disclose important
information to you by referring you to those filings. This information we
incorporate by reference is considered a part of this prospectus, and subsequent
information that we file with the SEC will automatically update and supersede
this information. Any such information so modified or superseded will not
constitute a part of this prospectus, except as so modified or superseded. We
incorporate by reference the following documents and any future filings we make
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until
the offering of securities by this prospectus is completed:
36
<PAGE>
o Our Annual Report on Form 10-K for the fiscal year ended September 30,
1999 (including the portions of our Proxy Statement for our 2000
Annual Meeting of Shareowners that are incorporated therein by
reference);
o Our Quarterly Report on Form 10-Q for the quarter ended December 31,
1999;
o Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2000;
o Our Quarterly Report on Form 10-Q for the quarter ended June 30, 2000;
o Our Current Report on Form 8-K dated January 4, 2000, as amended by
our Current Report on Form 8-K/A dated January 11, 2000;
o Our Current Report on Form 8-K dated February 16, 2000;
o Our Current Report on Form 8-K dated March 10, 2000;
o Our Current Report on Form 8-K dated April 3, 2000;
o Our Current Report on Form 8-K dated April 12, 2000;
o Our Current Report on Form 8-K dated May 17, 2000;
o Our Current Report on Form 8-K dated May 23, 2000;
o Our Current Report on Form 8-K dated May 30, 2000;
o Our Current Report on Form 8-K dated June 13, 2000;
o Our Current Report on Form 8-K dated June 27, 2000;
o Our Current Report on Form 8-K dated June 29, 2000;
o Our Current Report on Form 8-K dated July 19, 2000;
o Our Current Report on Form 8-K dated August 8, 2000;
o Our Current Report on Form 8-K dated September 14, 2000;
o Our Current Report on Form 8-K dated September 22, 2000;
o Our Current Report on Form 8-K dated September 28, 2000; and
o The description of the Company's Common Stock contained in Item 11 of
the Company's Registration Statement on Form 10, as amended (File
Number 000-24923), dated December 1, 1998, as amended by Part II, Item
2 of our Quarterly Report on Form 10-Q for the quarter ended December
31, 1999.
37
<PAGE>
Upon written or oral request, we will provide you with a copy of any of the
incorporated documents without charge (not including exhibits to the documents
unless the exhibits are specifically incorporated by reference into the
documents). You may submit such a request for this material to Office of the
Secretary, Conexant Systems, Inc., 4311 Jamboree Road, Newport Beach, California
92660-3095 (telephone number (949) 483-4600).
FORWARD-LOOKING STATEMENTS
In addition to historical information, this prospectus and the documents
incorporated by reference in this document contain statements relating to our
future results. These statements include certain projections and business trends
which are "forward looking" within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are made only as
of the date of this prospectus. We do not undertake to update or revise the
forward-looking statements, whether as a result of new information, future
events or otherwise.
Our actual results may differ materially from projected results as a result
of certain risks and uncertainties. These risks and uncertainties include,
without limitation, those described under "Risk Factors" as well as those set
forth below and those detailed from time to time in our filings with the SEC:
o global and market conditions, including, without limitation, the
cyclical nature of the semiconductor industry and the markets related
to our products and those of our customers;
o demand for and market acceptance of new and existing products;
o successful development of new products;
o timing of new product introductions;
o successful integration of Novanet, as well the successful integration
of our other recent acquisitions;
o availability and extent of use of manufacturing capacity;
o pricing pressures and other competitive factors;
o changes in product mix;
o fluctuations in manufacturing yields;
o product obsolescence;
o our ability to develop and implement new technologies and to obtain
protection of the related intellectual property;
o the successful implementation of our diversification strategy;
o our labor relations and those of our customers and suppliers;
o our estimates of the fair value of the assets and liabilities
acquired;
38
<PAGE>
o changes in state or federal legislation or regulation;
o uncertainties of litigation; and
o other risks and uncertainties.
---------------
The Conexant logo is a trademark of Conexant Systems, Inc. Other brands, names
and trademarks contained in this prospectus are the property of their respective
owners.
<PAGE>
===============================================================================
CONEXANT SYSTEMS, INC.
COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
---------------
PROSPECTUS
---------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROSPECTUS. YOU
SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE OF THIS
PROSPECTUS. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE
THE OFFER IS NOT PERMITTED.
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
-------------------------------------
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated costs and expenses, payable by
the registrant in connection with the offering of the securities being
registered.
Amount
Commission registration fee...................... $ 15,803
*Printing ....................................... $ 5,000
*Accounting fees and expenses.................... $ 10,000
*Legal fees and expenses......................... $ 40,000
*Miscellaneous expenses.......................... $ 5,000
*Total.................. $ 75,803
------------
* Estimated
Item 15. Liability and Indemnification of Directors and Officers.
The Delaware General Corporation Law permits Delaware corporations to
eliminate or limit the monetary liability of directors for breach of their
fiduciary duty of care, subject to certain limitations. Our restated certificate
of incorporation provides that our directors are not liable to Conexant or its
shareowners for monetary damages for breach of fiduciary duty as a director,
except for liability (1) for any breach of the director's duty of loyalty to
Conexant or its shareowners, (2) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (3) for
willful or negligent violation of the laws governing the payment of dividends or
the purchase or redemption of stock or (4) for any transaction from which a
director derived an improper personal benefit.
The Delaware General Corporation Law provides for indemnification of
directors, officers, employees and agents subject to certain limitations. Our
by-laws and the appendix thereto provide for the indemnification of our
directors, officers, employees and agents to the extent permitted by Delaware
law. Our directors and officers are insured against certain liabilities for
actions taken in such capacities, including liabilities under the Securities
Act.
II-1
<PAGE>
Item 16. Index to Exhibits.
4.a Restated Certificate of Incorporation, as amended, of Conexant, filed
as Exhibit 3.1 to Conexant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2000, is incorporated herein by reference.
4.b Amended By-Laws of Conexant, filed as Exhibit 4.2 to Conexant's
Registration Statement on Form S-8 (Registration No. 333-68755), are
incorporated herein by reference.
4.c Specimen certificate for Common Stock, par value $1 per share, filed
as Exhibit 4.3 to Conexant's Registration Statement on Form 10 (File
No. 000-24923), is incorporated herein by reference.
4.d.1 Rights Agreement, dated as of November 30, 1998, by and between
Conexant and ChaseMellon Shareholder Services, L.L.C., as rights
agent, filed as Exhibit 4.4 to Conexant's Registration Statement on
Form S-8 (Registration No. 333-68755), is incorporated herein by
reference.
4.d.2 First Amendment to Rights Agreement, dated as of December 9, 1999,
filed as Exhibit 4.1 to Conexant's Quarterly Report on Form 10-Q for
the quarter ended December 31, 1999, is incorporated herein by
reference.
4.e Registration Rights Agreement dated as of September 22, 2000 by and
among Conexant, Novacom Technologies Ltd., Ericsson Microelectronics
AB and C. Mer Industries Ltd.
4.f.1 Novanet Semiconductor Ltd. Employee Shares Option Plan, adopted by the
Novanet Board of Directors on December 22, 1998.
4.f.2 Amendment to Novanet Semiconductor Ltd. Employee Shares Option Plan,
adopted by the Novanet Board of Directors on July 19, 2000.
5 Opinion of Jasmina Theodore Boulanger, Esq., Associate General Counsel
and Assistant Secretary of Conexant.
23.a Consent of Deloitte & Touche LLP, independent auditors.
23.b Consent of Arthur Andersen LLP, independent public accountants.
23.c Consent of Jasmina Theodore Boulanger, Esq., contained in her opinion
filed as Exhibit 5 to this Registration Statement.
II-2
<PAGE>
24 Power of Attorney authorizing certain persons to sign this
Registration Statement on behalf of certain directors and officers of
Conexant (included on signature page).
Item 17. Undertakings.
A. The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information
set forth in the Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that clauses (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
clauses is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the
Exchange Act that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-3
<PAGE>
B. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described above, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. If a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Newport Beach, State of California, on the 19th day
of October, 2000.
CONEXANT SYSTEMS, INC.
By /s/ Dwight W. Decker
-----------------------------
(Dwight W. Decker, Chairman and
Chief Executive Officer)
II-5
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below on this Registration Statement hereby constitutes and appoints
DENNIS E. O'REILLY, JASMINA THEODORE BOULANGER and PETER R. KOLYER, and each of
them singly, his true and lawful attorneys-in-fact and agents, with full power
to them and each of them (including full power of substitution and
resubstitution) (1) to sign for him and in his name and in the capacity or
capacities indicated below any and all amendments (including post-effective
amendments) and supplements to this Registration Statement to be filed by
Conexant Systems, Inc. (the "Company") with the Securities and Exchange
Commission (the "Commission") and (2) any subsequent registration statement to
be filed by the Company pursuant to Section 462(b) under the Securities Act of
1933, and to file the same, with all exhibits thereto and all other documents in
connection therewith, with the Commission, granting unto said attorneys-in-fact
and agents and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as they might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his or her substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED ON THE 19TH DAY OF OCTOBER, 2000 BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
SIGNATURE TITLE
Chairman of the Board and Chief Executive Officer
/s/ Dwight W. Decker (principal executive officer) and Director
----------------------------
Dwight W. Decker
/s/ Donald R. Beall Director
----------------------------
Donald R. Beall
/s/ Richard M. Bressler Director
----------------------------
Richard M. Bressler
/s/ F. Craig Farrill Director
-----------------------------
F. Craig Farrill
/s/ Jerre L. Stead Director
-----------------------------
Jerre L. Stead
/s/ Balakrishnan S. Iyer Senior Vice President and Chief Financial Officer
----------------------------- (principal financial officer)
Balakrishnan S. Iyer
/s/ Steven M. Thomson Vice President and Controller
----------------------------- (principal accounting officer)
Steven M. Thomson
II-6
<PAGE>
EXHIBIT INDEX
Page
Number
------
4.a Restated Certificate of Incorporation, as amended, of Conexant,
filed as Exhibit 3.1 to Conexant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2000, is incorporated herein by reference.
4.b Amended By-Laws of Conexant, filed as Exhibit 4.2 to Conexant's
Registration Statement on Form S-8 (Registration No. 333-68755),
is incorporated herein by reference.
4.c Specimen certificate for Common Stock, par value $1 per share,
filed as Exhibit 4.3 to Conexant's Registration Statement on Form
10 (File No. 000-24923), are incorporated herein by reference.
4.d.1 Rights Agreement, dated as of November 30, 1998, by and between
Conexant and ChaseMellon Shareholder Services, L.L.C., as rights agent,
filed as Exhibit 4.4 to Conexant's Registration Statement on Form S-8
(Registration No. 333-68755), is incorporated herein by reference.
4.d.2 First Amendment to Rights Agreement, dated as of December 9, 1999,
filed as Exhibit 4.1 to Conexant's Quarterly Report on Form 10-Q for
the quarter ended December 31, 1999, is incorporated herein by
reference.
4.e Registration Rights Agreement dated as of September 22, 2000 by
and among Conexant, Novacom Technologies Ltd., Ericsson Microelectronics
AB and C. Mer Industries Ltd.
4.f.1 Novanet Semiconductor Ltd. Employee Shares Option Plan, adopted by
the Novanet Board of Directors on December 22, 1998.
4.f.2 Amendment to Novanet Semiconductor Ltd. Employee Shares Option Plan,
adopted by the Novanet Board of Directors on July 19, 2000.
<PAGE>
5 Opinion of Jasmina Theodore Boulanger, Esq., Associate General Counsel and
Assistant Secretary of Conexant.
23.a Consent of Deloitte & Touche LLP, independent auditors.
23.b Consent of Arthur Andersen LLP, independent public accountants.
23.c Consent of Jasmina Theodore Boulanger, Esq., contained in her opinion
filed as Exhibit 5 to this Registration Statement.
24 Power of Attorney authorizing certain persons to sign this Registration
Statement on behalf of certain directors and officers of Conexant
(included on signature page).
