EXHIBIT 10.3
CONVERTIBLE NOTE
THIS NOTE HAS NOT BEEN, AND ANY SHARES WHICH MAY BE ISSUED ON
CONVERSION OF THIS NOTE HAVE NOT BEEN, REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE
DISPOSED OF EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH LAWS AND (2) IN ACCORDANCE
WITH SECTION 13 OF THIS NOTE.
SKYWORKS SOLUTIONS, INC.
15% CONVERTIBLE NOTE
DUE JUNE 30, 2005
$[ ],000,000.00 New York, New York
November [12], 2002
FOR VALUE RECEIVED, Skyworks Solutions, Inc., a Delaware corporation
("SKYWORKS"), is issuing this Note to Conexant Systems, Inc. ("CONEXANT").
1. DEFINED TERMS. The defined terms and rules of construction set
forth in EXHIBIT A shall apply to this Note.
2. INTEREST. (a) The initial principal amount of this Note is
[_________] Million dollars ($[__],000,000). The principal amount of this Note
shall be reduced as and to the extent this Note is converted into Common Stock,
repaid or redeemed, as provided in this Note. Skyworks shall pay interest on the
principal amount of this Note outstanding from time to time at the rate of 15%
per annum (the "INTEREST RATE"). Interest on the principal amount of this Note
outstanding from time to time shall accrue from and including the date of
issuance through and until repayment, conversion or redemption of principal as
provided in this Note and payment of all accrued interest in full. Interest
shall be computed on the basis of a 360-day year of twelve 30-day months, for
the actual number of days elapsed in each interest period. Interest shall be
paid quarterly on the last Business Day of each March, June, September and
December, beginning on December 31, 2002, as provided in Section 3.
(b) Notwithstanding the foregoing provisions of this Section 2,
but subject to applicable law, any overdue interest on this Note or any
principal of this Note due pursuant to
Section 5(a) of this Note shall bear interest, payable on demand in immediately
available funds, for each day from the date payment thereof was due to the date
of actual payment, at a rate equal to the sum of (i) the Interest Rate and (ii)
an additional 1% per annum, or, if an Event of Default has occurred and is
continuing, this Note shall bear interest, from the date of the occurrence of
such Event of Default until such Event of Default is cured or waived, payable on
demand in immediately available funds, at a rate equal to the sum of (i) the
Interest Rate and (ii) an additional 1% per annum. Subject to applicable law,
any interest that shall accrue on overdue interest on this Note as provided in
the preceding sentence, and that shall not have been paid in full on or before
the next interest payment date to occur after the date on which the overdue
interest became due and payable, shall itself be deemed to be overdue interest
on this Note to which the preceding sentence shall apply.
(c) In the event that any interest rate(s) provided for in this
Section 2 shall be determined to be unlawful, such interest rate(s) shall be
computed at the highest rate permitted by applicable law. Any payment by
Skyworks of any interest amount in excess of that permitted by law shall be
considered a mistake, with the excess being applied to the principal amount of
this Note without prepayment premium or penalty; if no such principal amount is
outstanding, such excess shall be returned to Skyworks.
3. PAYMENTS. (a) All payments of interest on this Note, and any
payment of principal pursuant to Section 5(a) of this Note, shall be made by
wire transfer of immediately available United States dollars to the account of
Conexant at Comerica Bank, Detroit, Michigan, ABA #000000000, Account Number
1850967629, or to Conexant at any other place or to any other account in the
United States of America previously designated by Conexant in a written notice
to Skyworks at least ten business days before the given payment date. If any
payment on this Note becomes due and payable on a date that is not a Business
Day, the date for such payment shall be extended to the next succeeding Business
Day, and with respect to payment of principal, interest thereon shall be payable
during such extension at the then applicable rate.
(b) On June 30, 2005 (the "MATURITY DATE"), Skyworks shall pay the
principal amount of this Note then outstanding by delivery of a number of fully
paid and non-assessable shares of Common Stock equal to the principal amount of
this Note outstanding on the Maturity Date divided by the Applicable Conversion
Price as of the Maturity Date. No fractional shares will be issued upon payment
of principal pursuant to this Section 3(b); in lieu thereof, an amount will be
paid in cash based upon the Closing Price of the Common Stock on the Trading Day
immediately prior to the Maturity Date.
4. SECURITY. (a) This Note is one of the Interim Convertible
Notes referred to in the Financing Agreement, dated as of June 25, 2002, as
amended by the First Amendment of Financing Agreement, dated as of November 12,
2002, by and among Skyworks, Skyworks' subsidiaries party thereto and Conexant
(as the same may hereafter be amended, modified or supplemented from time to
time, the "FINANCING AGREEMENT"). Payment of interest on this Note, and any
payment of principal pursuant to Section 5(a) of this Note, are entitled to the
benefits of the collateral security and guarantees provided in the Financing
Agreement and the
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other Financing Documents referred to therein until the foregoing are terminated
as provided therein.
(b) Upon termination of the Financing Agreement pursuant to
Section 2.4 of the Refinancing Agreement, Conexant agrees that its rights to the
benefits of the collateral security and guarantees provided in the Financing
Agreement and the other Financing Documents referred to therein shall terminate.
(c) All payments of interest on this Note, and any payment of
principal pursuant to Section 5(a) of this Note, will be (i) expressly senior in
right to payment to any obligations of Skyworks under the Junior Notes and (ii)
subordinated in right to payment to all other obligations of Skyworks unless the
instrument evidencing the same expressly provides that such obligations are
subordinated to or pari passu with obligations of Skyworks under this Note in
right to payment.
5. REMEDIES. (a) If an Event of Default has occurred and is
continuing, the principal of and accrued interest on this Note may be declared
due and payable and, upon such declaration, the then outstanding principal
amount of this Note shall be paid in cash as provided in Section 3(a).
(b) Upon the occurrence of any one or more Events of Default,
Conexant may proceed to protect and enforce its rights hereunder by suit in
equity, action at law or by other appropriate proceeding.
(c) In case of any default under this Note, Skyworks will pay to
Conexant such amounts actually incurred by Conexant in connection with the
enforcement of this Note, including reasonable fees and expenses of legal
counsel for Conexant.
(d) No remedy herein conferred upon Conexant is intended to be
exclusive of any other remedy and each and every such remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute or otherwise.
(e) No course of dealing between Skyworks and Conexant or any
delay on the part of Conexant in exercising any rights hereunder shall operate
as a waiver of any right.
6. COVENANTS. The covenants of Skyworks set forth in Section 7 of
the Financing Agreement are incorporated by reference into this Note as if set
forth herein; provided, however, that upon termination of the Financing
Agreement pursuant to Section 2.4 of the Refinancing Agreement, the covenants of
Skyworks set forth in the Senior Notes Indenture shall be incorporated by
reference into this Note as if set forth herein in lieu of the covenants set
forth in Section 7 of the Financing Agreement.
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7. CONVERSION.
7.1 RIGHT TO CONVERT. Subject to and upon compliance with the
provisions of this Note, Conexant shall have the right, at its option, at any
time after 60 days from the original issuance of this Note through the close of
business on the Business Day immediately preceding the Maturity Date to convert
the outstanding principal amount of this Note (or any portion thereof) into a
number of fully paid and non-assessable shares of Common Stock equal to the
principal amount of this Note to be converted, divided by the Applicable
Conversion Price as of the related Conversion Date. No fractional shares will be
issued upon conversion; in lieu thereof, an amount will be paid in cash based
upon the Closing Price of the Common Stock on the Trading Day immediately prior
to the Conversion Date. Conexant is not entitled to any rights of a holder of
shares of Common Stock until Conexant has converted the principal amount of this
Note (or any portion thereof) into shares of Common Stock, and only then to the
extent such Note has been converted into shares of Common Stock under this
Section 7. Upon any partial conversion, Skyworks shall issue new Notes identical
in form to this Note in an aggregate principal amount equal to the principal
amount outstanding after giving effect to such partial conversion.
Notwithstanding the foregoing, Conexant may not exercise its rights to
convert the principal amount of this Note (or any portion thereof) to the extent
that such conversion would result in Conexant owning at any one time more than
10% of the then outstanding shares of Common Stock.
7.2 CONVERSION PRICE. The conversion price (herein called the
"CONVERSION PRICE") initially shall be $7.87 per share, subject to adjustment as
provided in Section 7.3.
7.3 ADJUSTMENT OF CONVERSION PRICE. The Conversion Price shall be
adjusted from time to time by Skyworks in the same manner as provided in the
adjustment provisions of the Senior Notes Indenture.
8. REDEMPTION. This Note is subject to redemption, at any time or
from time to time on or after May 12, 2004, in whole or in part, at the election
of Skyworks at a redemption price of 103% of the then outstanding principal
amount of this Note (or any portion thereof), together with accrued interest up
to but not including the Redemption Date; provided that at any time up to the
close of Business on the Business Day immediately preceding the Redemption Date,
Conexant may exercise its right to convert the principal amount of this Note (or
a portion thereof) into shares of Common Stock as provided in Section 7. Notice
of redemption will be mailed by Skyworks to Conexant by first-class mail at
least 20 days but not more than 60 days before the Redemption Date. On the
Redemption Date to the extent that Conexant has not converted the portion of
this Note called for redemption, interest on the portion of this Note called for
redemption shall cease accruing on and after the Redemption Date and any right
of Conexant to convert the portion of this Note called for redemption shall
cease and the only remaining right of Conexant with respect to the portion of
this Note called for redemption shall be to receive payment of the redemption
price plus accrued interest to the Redemption Date.
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Skyworks may not give notice of any redemption of this Note if a default in the
payment of interest on this Note has occurred and is continuing.
9. NOTE EXCHANGE. Subject to the terms and conditions set forth
in this Section 9, at any time and from time to time Conexant shall have the
right to exchange this Note (or a portion thereof) for an equal aggregate
principal amount of senior convertible notes (the "SENIOR CONVERTIBLE NOTES")
issued under the Senior Notes Indenture by surrender of this Note to the trustee
under the Senior Notes Indenture in exchange for an aggregate principal amount
of Senior Convertible Notes equal to the aggregate principal amount of this Note
(or portion thereof) so surrendered and a new Note for the remaining principal
amount on the same Business Day, if this Note is surrendered by 11:00 a.m., or
on the next Business Day, if this Note is surrendered after 11:00 a.m.
10. REGISTRATION RIGHTS. This Note and any Senior Convertible
Notes issued in exchange for this Note pursuant to Section 9 will be entitled to
the benefits of a Registration Rights Agreement to be entered into between
Skyworks and Conexant on the Closing Date (the "REGISTRATION RIGHTS AGREEMENT")
providing for the registration under the Securities Act of the resale by
Conexant or a transferee of the Senior Convertible Notes and the shares of
Common Stock underlying this Note or the Senior Convertible Notes, on terms
substantially similar to the registration rights agreement to be entered into
between Skyworks and the initial purchaser(s) of the Junior Notes, and such
other terms as may be mutually agreed to by Skyworks and Conexant, except that
Skyworks shall maintain the registration statement contemplated by the
Registration Rights Agreement effective and available for use by Conexant until
December 31, 2005, subject to limitations set forth therein.
11. CHANGE OF CONTROL. Upon the occurrence of a Change of Control,
Conexant shall have the right to require that Skyworks repurchase this Note at a
purchase price payable at Skyworks' election in cash, shares of Common Stock or
any combination thereof equal to 100% of the principal amount of this Note on
the date of purchase, plus accrued and unpaid interest, if any, to, but not
including, the date of purchase in the same manner as provided in the Senior
Notes Indenture.
12. HSR FILINGS. In the event that Conexant shall become subject
to the notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR ACT"), as a result of its acquisition of
shares of Common Stock upon conversion of all or a portion of this Note, subject
to the terms and conditions of this Note, each of Skyworks and Conexant will use
its reasonable best efforts to take, or cause to be taken, all actions and to
do, or cause to be done, and to assist and cooperate with each other in doing or
causing to be done, all things necessary, proper or advisable under applicable
laws to prepare and file as promptly as practicable a Notification and Report
Form pursuant to the HSR Act with respect to the acquisition by Conexant of
shares of Common Stock, and to supply as promptly as practicable any additional
information and documentary material that may be requested pursuant to
applicable laws or by governmental authorities.
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13. TRANSFER. This Note may not be transferred or assigned, in
whole or in part, by Conexant at any time and any purported transfer shall be
null and void and not recognized by Skyworks, subject to the following:
If Conexant desires to sell, assign or otherwise transfer a portion of
the obligation represented by this Note, Conexant shall first exercise its right
to exchange this Note for Senior Convertible Notes pursuant to Section 9 and,
following such exchange, may transfer a portion of the Senior Convertible Notes
issued in such exchange; provided that Conexant shall not sell, assign or
otherwise transfer, in whole or in part, any such security or any interest
therein or any shares of Common Stock acquired on conversion of any such
security in whole or in part except pursuant to an effective registration under
the Securities Act and any applicable securities laws of other jurisdictions or
pursuant to an applicable exemption from the registration requirements of the
Securities Act and any applicable securities laws of other jurisdictions. In any
case, Conexant may not sell, assign or otherwise transfer, in whole or in part,
any such security or any interest therein or any shares of Common Stock acquired
on conversion of any such security in whole or in part for a period of 90 days
from the Closing Date.
14. REPLACEMENT OF NOTE. On receipt by Skyworks of an affidavit of
an authorized representative of Conexant stating the circumstances of the loss,
theft, destruction or mutilation of this Note (and in the case of any such
mutilation, on surrender and cancellation of such Note), Skyworks, at its
expense, will promptly execute and deliver, in lieu thereof, a new Note of like
tenor.
15. COVENANTS BIND SUCCESSORS AND ASSIGNS. All of the covenants,
stipulations, promises and agreements in this Note contained by or on behalf of
Skyworks shall bind its successors and assigns, whether so expressed or not.
16. NOTICES. All notices, demands and other communications
provided for or permitted hereunder shall be made as provided in the Financing
Agreement.
17. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY, CONSTRUED IN
ACCORDANCE WITH, AND ENFORCED UNDER, THE LAW OF THE STATE OF NEW YORK.
18. SEVERABILITY. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
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19. JURISDICTION; CONSENT TO SERVICE OF PROCESS.
19.1 NEW YORK COURTS. Each party to this Note hereby irrevocably
and unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Note, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Note shall affect any right
that Conexant may otherwise have to bring any action or proceeding relating to
this Note against any party or its properties in the courts of any other
jurisdiction.
19.2 VENUE. Each party hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Note in any New York
State or Federal court located in New York City. Each party hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
19.3 SERVICE OF PROCESS. Each party irrevocably consents to service
of process in the manner provided for notices in Section 16. Nothing in this
Note will affect the right of any party to this Note to serve process in any
other manner permitted by law.
20. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH, THIS NOTE. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS NOTE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 20.
21. COUNTERPARTS. This Note may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
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22. HEADINGS. The headings in this Note are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
SKYWORKS SOLUTIONS, INC.
By:
------------------------------------
Name:
Title:
CONEXANT SYSTEMS, INC.
By:
------------------------------------
Name:
Title:
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EXHIBIT A
DEFINED TERMS
RULES OF CONSTRUCTION
1.01 DEFINED TERMS. As used in this Note, terms defined in the preamble
or other sections shall have the meanings set forth therein, and the following
terms shall have the meanings set forth below:
"APPLICABLE CONVERSION PRICE" means, as applicable, with respect to the
Maturity Date or any Conversion Date, as the case may be, (a) if the Current
Market Price is greater than or equal to the Conversion Price, the Conversion
Price, (b) if the Current Market Price is less than the Conversion Price but
greater than or equal to the Floor Price, the Current Market Price, and (c) if
the Current Market Price is less than the Floor Price, the Floor Price.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in New York are authorized or required by law to close.
"CHANGE OF CONTROL" shall have the meaning set forth in the Senior
Notes Indenture.
"CLOSING DATE" means the closing date of the issuance and sale by
Skyworks of the Junior Notes.
"CLOSING PRICE" with respect to any security on any day shall mean the
closing sale price, regular way, on such day or, in case no such sale takes
place on such day, the average of the reported closing bid and asked prices,
regular way, in each case as quoted on the Nasdaq National Market or, if such
security is not quoted or listed or admitted to trading on the Nasdaq National
Market, on the principal national securities exchange or quotation system on
which such security is quoted or listed or admitted to trading or, if not quoted
or listed or admitted to trading on any national securities exchange or
quotation system, the average of the closing bid and asked prices of such
security on the over-the-counter market on the day in question as reported by
the National Quotation Bureau Incorporated, or a similar generally accepted
reporting service, or if not so available, in such manner as furnished by any
New York Stock Exchange member firm selected from time to time by the Board of
Directors of Skyworks for that purpose, or a price determined in good faith by
the Board of Directors of Skyworks or, to the extent permitted by applicable
law, a duly authorized committee thereof, whose determination shall be
conclusive.
"COMMON STOCK" means the common stock, par value $.25 per share, of
Skyworks.
"CONVERSION DATE" means any date on which Conexant converts the
principal amount of this Note (or a portion thereof) pursuant to Section 7.
"CURRENT MARKET PRICE" means the average Closing Price per share of the
Common Stock on the ten Trading Days immediately prior to, but not including,
the Maturity Date or Conversion Date, as the case may be.
"EVENT OF DEFAULT" means default in the payment of interest under this
Note when due and payable that is not cured within 15 days, or the declaration
of an Event of Default under (and as defined in) the Junior Notes Indenture that
has resulted in the acceleration of the entire principal amount of the Junior
Notes.
"FINANCING DOCUMENTS" shall have the meaning set forth in the Financing
Agreement.
"FLOOR PRICE" shall be equal to 80% of the Conversion Price and shall
initially be $6.2960.
"INTERIM CONVERTIBLE NOTE" shall have the meaning set forth in the
Refinancing Agreement.
"JUNIOR NOTES" means the 4.75% Convertible Subordinated Notes Due
November 2007 of Skyworks, individually and collectively.
"JUNIOR NOTES INDENTURE" means the indenture for the Junior Notes to be
entered into between Skyworks and the trustee under the indenture.
"MATURITY DATE" means June 30, 2005.
"NOTE" means this promissory note, as the same may be amended, modified
or supplemented from time to time in accordance with the terms hereof.
"REDEMPTION DATE" means the date fixed for the redemption of this Note
pursuant to Section 8 and set forth in the notice of redemption sent by Skyworks
to Conexant provided by such Section 8.
"REFINANCING AGREEMENT" means the Refinancing Agreement dated as of
November 6, 2002 between Conexant and Skyworks.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR NOTES INDENTURE" means an indenture for the Senior Convertible
Notes that is intended to be qualified under the Trust Indenture Act of 1939, as
amended, and the rules and regulations thereunder, to be agreed by Skyworks and
Conexant prior to the Closing Date and annexed as Exhibit C to the Refinancing
Agreement.
"TRADING DAY" shall mean (x) if the applicable security is quoted on
the Nasdaq National Market, a day on which trades may be made thereon or (y) if
the applicable security is
A-2
listed or admitted for trading on the New York Stock Exchange or another
national securities exchange, a day on which the New York Stock Exchange or
another national securities exchange is open for business or (z) if the
applicable security is not so listed, admitted for trading or quoted, any
Business Day.
1.02 TERMS GENERALLY. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any person shall be construed to include such person's successors and
assigns (subject to any restrictions on such assignments set forth herein), (c)
the words "herein", "hereof" and "hereunder", and words of similar import, shall
be construed to refer to this Note in its entirety and not to any particular
provision hereof, and (d) all references herein to Sections shall be construed
to refer to Sections of this Note.
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