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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): March 2, 2006
Conexant Systems, Inc.
(Exact name of registrant as specified in its charter)
Delaware 000-24923 25-1799439
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
4000 MacArthur Boulevard
Newport Beach, CA 92660-3095
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (949) 483-4600
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 1.01. Entry into a Material Definitive Agreement.
On March 7, 2006, Conexant System, Inc. (the "Company") completed the
sale of $200 million aggregate principal amount of its 4% convertible
subordinated notes due 2026 (the "Notes") in a private placement exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"). The Notes were sold pursuant to a Purchase Agreement, dated
March 2, 2006, between the Company and Lehman Brothers Inc. (the "Initial
Purchaser") and were issued pursuant to an Indenture, dated as of March 7, 2006,
between the Company and J.P. Morgan Trust Company, National Association, as
trustee (the "Indenture").
The net proceeds from the offering, after deducting the Initial
Purchaser's discount of $4.5 million and estimated offering expenses payable by
the Company, were approximately $195 million. The Company has granted the
Initial Purchaser an option, exercisable on or before April 1, 2006, to purchase
up to an additional $50 million aggregate principal amount of Notes.
The Company will pay 4% cash interest on the Notes semi-annually in
arrears on March 1 and September 1 of each year, beginning on September 1, 2006.
The Notes will mature on March 1, 2026.
The Notes are convertible into shares of the Company's common stock,
par value $.01 per share (the "Common Stock"), based on an initial conversion
rate, subject to adjustment, of 203.2520 shares per $1,000 principal amount of
Notes (which represents an initial conversion price of approximately $4.92 per
share), only under the following circumstances:
(1) During any calendar quarter beginning after March 31, 2006, and
only during such calendar quarter, if the closing sale price of the Common Stock
for at least 20 trading days in a period of 30 consecutive trading days ending
on the last trading day of such preceding calendar quarter is more than 120% of
the applicable conversion price in effect on the last trading day of such
preceding calendar quarter;
(2) During the five business day period after any five consecutive
trading day period in which the trading price per $1,000 principal amount of
Notes for each day of that period was less than 98% of the product of the
closing price of the Common Stock and the conversion rate per $1,000 principal
amount of Notes;
(3) If the Company has called the Notes for redemption;
(4) If specified corporate transactions or distributions to holders of
the Common Stock occur;
(5) If a fundamental change, consisting of a change of control of the
Company or the Common Stock ceasing to be listed for trading on a U.S. national
securities exchange or approved for trading on an established automated over-the
counter U.S. trading market, occurs; or
(6) During the ten trading days prior to, but excluding, March 1, 2026.
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Upon conversion of the Notes, the Company will have the right to
deliver, in lieu of shares of the Common Stock, cash or a combination of cash
and shares of the Common Stock. The amount of any cash delivered upon conversion
of the Notes will be determined based upon the conversion rate then in effect
and the average of the daily volume-weighted average price of the Common Stock
during a specified 20-trading-day period. A holder will receive cash in lieu of
any fractional shares of the Common Stock.
If Notes are surrendered for conversion in connection with certain
fundamental changes that occur on or prior to March 1, 2011, holders may be
entitled to a make whole premium in the form of an increase in the conversion
rate.
Beginning on March 1, 2011, the Company may redeem the Notes at its
option, in whole or in part, at a redemption price in cash equal to 100% of the
principal amount of the Notes to be redeemed, plus accrued and unpaid interest
and additional interest, if any, to, but excluding, the redemption date. In
addition, holders may require the Company to purchase all or a portion of their
Notes on each of March 1, 2011, March 1, 2016 and March 1, 2021, or upon a
fundamental change, at a purchase price in cash equal to 100% of the principal
amount of the Notes to be purchased, plus accrued and unpaid interest and
additional interest, if any, to, but excluding, the redemption date.
The Notes are unsecured subordinated obligations and will be
subordinated in right of payment to all of the Company's existing and future
senior unsecured indebtedness, structurally subordinated to the indebtedness of
the Company's subsidiaries, effectively subordinated to the Company's secured
debt to the extent of the value of the security, and equal in right of payment
with certain of the Company's subordinated debt.
In connection with the sale of the Notes, the Company entered into a
Registration Rights Agreement, dated as of March 7, 2006, with the Initial
Purchaser (the "Registration Rights Agreement"). Under the Registration Rights
Agreement, the Company has agreed to file, within 90 days of the date on which
the Notes are first issued, a shelf registration statement for resale of the
Notes and the shares of Common Stock issuable upon conversion of the Notes. The
Company is further obligated to use reasonable efforts to cause the shelf
registration statement to become effective under the Securities Act within 180
days after the date on which the Notes are first issued. If the Company fails to
comply with certain of its obligations under the Registration Rights Agreement,
it will be required to pay additional interest to holders of the Notes under
specified circumstances.
The above descriptions of certain terms and conditions of the
Indenture, the form of the Notes and the Registration Rights Agreement are
qualified in their entirety by reference to the full text of the Indenture, the
form of the Notes and the Registration Rights Agreement, which are attached
hereto as Exhibits 4.1, 4.2 and 4.3, respectively, and incorporated herein by
reference.
The Notes and the shares of the Common Stock, if any, issuable upon
conversion of the Notes have not been registered under the Securities Act, or
applicable state securities laws, and unless so registered, may not be offered
or sold in the United States except pursuant to an exemption from the
registration requirements of the Securities Act and applicable state securities
laws. This filing shall not constitute an offer to sell or the solicitation of
an offer to buy these
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securities, nor shall there be any offer or sale of these securities in any
state in which such offer, solicitation or sale would be unlawful.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under "Item 1.01. Entry into a Material
Definitive Agreement" of this Current Report on Form 8-K is incorporated herein
by reference.
Item 3.02. Unregistered Sales of Equity Securities.
The information set forth under "Item 1.01. Entry into a Material
Definitive Agreement" of this Current Report on Form 8-K is incorporated herein
by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
4.1 Indenture, dated as of March 7, 2006, between the Company and
J.P. Morgan Trust Company, National Association.
4.2 Form of 4% Convertible Subordinated Notes due 2026 (included in
Exhibit 4.1).
4.3 Registration Rights Agreement, dated as of March 7, 2006, by and
between the Company and the Initial Purchaser.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
March 8, 2006 Conexant Systems, Inc.
By /s/ Dennis E. O'Reilly
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Dennis E. O'Reilly
Senior Vice President, Chief Legal Officer
and Secretary
EXHIBIT INDEX
Exhibit
Number Description
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4.1 Indenture, dated as of March 7, 2006, between the Company and
J.P. Morgan Trust Company, National Association.
4.2 Form of 4% Convertible Subordinated Notes due 2026 (included in
Exhibit 4.1).
4.3 Registration Rights Agreement, dated as of March 7, 2006, by
and between the Company and the Initial Purchaser.