SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or 240.14a-12
CONEXANT SYSTEMS, INC.
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(CONEXANT LOGO)
January 10, 2002
Dear Shareowner:
Conexant's 2002 Annual Meeting of Shareowners will be held at 10:00 a.m.
Pacific Standard Time on Wednesday, February 27, 2002, at the Hyatt Regency Los
Angeles Hotel, located at 711 South Hope Street, Los Angeles, California. We
look forward to your attending either in person or by proxy. Details of the
business to be conducted at the Annual Meeting are included in the attached
Notice of Annual Meeting and Proxy Statement. Shareowners may also access the
Notice of Annual Meeting and the Proxy Statement via the Internet at
http://www.conexant.com.
If you plan to attend the meeting, please check the box on your proxy card
indicating your desire to attend and save the admission ticket attached to your
proxy; or indicate your intention to attend when voting by telephone or via the
Internet, and an admittance card will be forwarded to you promptly.
Sincerely yours,
/s/ DWIGHT W. DECKER
Dwight W. Decker
Chairman of the Board and Chief
Executive Officer
RETURN OF PROXY CARD
Please complete, sign, date and return the accompanying Proxy Card promptly
in the enclosed addressed envelope, even if you plan to attend the Annual
Meeting. Postage need not be affixed to the envelope if mailed in the United
States.
The immediate return of your Proxy Card will be of great assistance in
preparing for the Annual Meeting and is, therefore, urgently requested. If you
attend the Annual Meeting and have made arrangements to vote in person, your
Proxy Card will not be used.
VOTING ELECTRONICALLY OR BY TELEPHONE
Instead of submitting your proxy vote with the accompanying paper Proxy
Card, you may vote electronically via the Internet or by telephone in accordance
with the procedures set forth on the Proxy Card.
IF YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON
If you plan to attend the Annual Meeting to be held at 10:00 a.m. Pacific
Standard Time on Wednesday, February 27, 2002, at the Hyatt Regency Los Angeles
Hotel, located at 711 South Hope Street, Los Angeles, California, please be sure
to check the box on your proxy card indicating your desire to attend and save
the admission ticket attached to your proxy; or, indicate your desire to attend
the meeting through Conexant's telephone or Internet voting procedures.
IF YOU PLAN TO ATTEND THE ANNUAL MEETING, IT WILL BE NECESSARY FOR YOU TO
BRING YOUR ADMISSION TICKET. IN ADDITION TO YOUR ADMISSION TICKET, YOU MAY BE
ASKED TO PRESENT A VALID PICTURE IDENTIFICATION SUCH AS A DRIVER'S LICENSE OR
PASSPORT.
IF YOUR SHARES ARE NOT REGISTERED IN YOUR OWN NAME AND YOU PLAN TO ATTEND
THE ANNUAL MEETING AND VOTE YOUR SHARES IN PERSON, IN ADDITION TO BRINGING YOUR
ADMISSION TICKET, YOU SHOULD CONTACT YOUR BROKER OR AGENT IN WHOSE NAME YOUR
SHARES ARE REGISTERED TO OBTAIN A BROKER'S PROXY AND BRING IT TO THE ANNUAL
MEETING IN ORDER TO VOTE.
CONEXANT SYSTEMS, INC.
4311 JAMBOREE ROAD
NEWPORT BEACH, CALIFORNIA 92660-3095
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
Dear Shareowner:
You are cordially invited to attend the 2002 Annual Meeting of Shareowners
of Conexant Systems, Inc. ("Conexant" or the "Company") which will be held on
Wednesday, February 27, 2002, at 10:00 a.m. Pacific Standard Time, at the Hyatt
Regency Los Angeles Hotel, located at 711 South Hope Street, Los Angeles,
California. The 2002 Annual Meeting is being held for the following purposes:
1. To elect two members of the Board of Directors of the Company with terms
expiring at the 2005 Annual Meeting of Shareowners;
2. To approve amendments to the Conexant Systems, Inc. Directors Stock Plan;
3. To approve the adoption by the Board of Directors of the Conexant Systems,
Inc. 2001 Employee Stock Purchase Plan;
4. To ratify the appointment by the Board of Directors of the accounting firm of
Deloitte & Touche LLP as independent auditors for the Company for the current
fiscal year; and
5. To transact such other business as may properly come before the 2002 Annual
Meeting or any adjournment thereof.
These items are fully discussed in the following pages. Only shareowners of
record at the close of business on January 2, 2002 will be entitled to notice
of, and to vote at, the 2002 Annual Meeting. A list of such shareowners will be
available for inspection by any shareowner at the offices of the Company, 4311
Jamboree Road, Newport Beach, California 92660-3095, for at least ten days prior
to the 2002 Annual Meeting and also at the meeting.
Shareowners are requested to complete, sign, date and return the Proxy Card
as promptly as possible. A return envelope is enclosed. Submitting your proxy
with the Proxy Card, or via the Internet, or by telephone will not affect your
right to vote in person should you decide to attend the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
[/s/ DENNIS E. O'REILLY]
Dennis E. O'Reilly
Secretary
January 10, 2002
CONEXANT SYSTEMS, INC.
4311 JAMBOREE ROAD
NEWPORT BEACH, CALIFORNIA 92660-3095
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Conexant
Systems, Inc. ("Conexant" or the "Company") for use in voting at the 2002 Annual
Meeting of Shareowners (the "Annual Meeting") to be held at 10:00 a.m. Pacific
Standard Time on Wednesday, February 27, 2002, at the Hyatt Regency Los Angeles
Hotel, located at 711 South Hope Street, Los Angeles, California, and at any
adjournment thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareowners. This proxy statement and the proxy are first
being mailed to shareowners and made available on the Internet
(http://www.conexant.com) on or about January 14, 2002.
On September 13, 1999, the Board of Directors of the Company declared a
2-for-1 stock split in the form of a stock dividend payable on October 29, 1999
to holders of record of the Company's Common Stock as of the close of business
on September 24, 1999 (the "Stock Split"). In connection with the Stock Split,
certain adjustments were made to the Company's stock-based compensation plans
and outstanding awards thereunder. All information in this Proxy Statement
regarding the Company's Common Stock and awards under the Company's stock-based
compensation plans gives effect to the Stock Split and the related adjustments.
For presentation purposes, references made to the September 30, 2000 period
relate to the actual fiscal year ended September 29, 2000, and references made
to the September 30, 2001 period relate to the actual fiscal year ended
September 28, 2001.
VOTING AND REVOCABILITY OF PROXIES
When proxies are properly executed, dated and returned, the shares they
represent will be voted at the Annual Meeting in accordance with the
instructions of the shareowners. If no specific instructions are given, the
shares will be voted FOR the election of the nominees for directors set forth
herein, FOR approval of the amendments to the Conexant Systems, Inc. Directors
Stock Plan, FOR the approval of the adoption by the Board of Directors of the
Conexant Systems, Inc. 2001 Employee Stock Purchase Plan and FOR ratification of
the appointment of the independent auditors. In addition, if other matters come
before the Annual Meeting, the persons named in the accompanying form of proxy
will vote in accordance with their best judgment with respect to such matters. A
shareowner giving a proxy has the power to revoke it at any time prior to its
exercise by voting in person at the Annual Meeting, by giving written notice of
revocation to the Secretary prior to the Annual Meeting or by giving a valid,
later dated proxy.
The enclosed Proxy Card also offers shareowners the option to access
materials for any future shareowner meeting electronically via the Internet. A
shareowner who consents to accessing such materials electronically may revoke
such consent at any time. The Company will continue to distribute printed
materials for future shareowner meetings to shareowners who do not consent to
access such materials electronically.
It is the Company's policy to keep confidential proxy cards, ballots and
voting tabulations that identify individual shareowners except as may be
necessary to meet any applicable legal requirements and, in the case of any
contested proxy solicitation, as may be necessary to permit proper parties to
verify the propriety of proxies presented by any person and the results of the
voting. The inspectors of election and any employees associated with processing
proxy cards or ballots and tabulating the vote are required to acknowledge their
responsibility to comply with this policy of confidentiality.
Each share of Common Stock of the Company outstanding on the record date
will be entitled to one vote on all matters. The one share of the Company's
Series B Voting Preferred Stock outstanding on the record date will be entitled
to one vote for every exchangeable share of Philsar Semiconductor Inc., a
subsidiary of the Company ("Philsar"), outstanding on the record date and not
held by the Company or one of its subsidiaries. The Company's Common Stock and
Series B Voting Preferred Stock will vote together as one class on all matters
to be voted on at the Annual Meeting. The two candidates for election as
directors at the
Annual Meeting who receive the highest number of affirmative votes, a quorum
being present, will be elected. The approval of the proposed amendments to the
Directors Stock Plan, the approval of the adoption of the 2001 Employee Stock
Purchase Plan and the ratification of the appointment of the independent
auditors each will require the affirmative vote of a majority of the votes
entitled to be cast by holders of shares of the Company's Common Stock and
Series B Voting Preferred Stock, voting together as a single class, present or
represented by proxy and entitled to vote at the Annual Meeting, a quorum being
present. Because abstentions with respect to any matter are treated as shares
present or represented by proxy and entitled to vote for the purposes of
determining whether that matter has been approved by the shareowners,
abstentions have the same effect as negative votes for each proposal, other than
the election of directors. Broker non-votes are not deemed to be present or
represented by proxy for purposes of determining whether shareowner approval of
a matter has been obtained, but they are counted as present for purposes of
determining the existence of a quorum at the Annual Meeting.
RECORD DATE, QUORUM AND SHARE OWNERSHIP
Only shareowners of record at the close of business on January 2, 2002 will
be entitled to vote at the Annual Meeting. The presence in person or by proxy of
a majority of the shares of Common Stock and Series B Voting Preferred Stock
outstanding on the record date is required for a quorum. As of January 2, 2002,
there were 254,789,888 shares of the Company's Common Stock and one share of the
Company's Series B Voting Preferred Stock issued and outstanding. The
outstanding share of Series B Voting Preferred Stock is held by CIBC Mellon
Trust Company, as trustee (the "Trustee"), on behalf of the holders of
exchangeable shares of Philsar. On January 2, 2002, there were 342,658
exchangeable shares of Philsar outstanding and not held by the Company or one of
its subsidiaries. The Trustee will exercise the voting rights of the Series B
Voting Preferred Stock only to the extent it receives voting instructions from
the holders of the Philsar exchangeable shares.
ELECTION OF DIRECTORS (PROPOSAL 1)
The Company's Restated Certificate of Incorporation provides that the Board
of Directors shall consist of three classes of directors with overlapping
three-year terms. One class of directors is to be elected each year with a term
extending to the third succeeding Annual Meeting after election. The Restated
Certificate of Incorporation provides that the Board shall maintain the three
classes so as to be as nearly equal in number as the then total number of
directors permits. On November 1, 2001, the Board of Directors increased the
number of directors of the Company from five to six and designated Ralph J.
Cicerone, who was elected by the Board of Directors to fill the vacancy created
by such increase, as a member of Class III, whose term expires at the 2002
Annual Meeting. On November 28, 2001, the Board of Directors again increased the
number of the directors of the Company from six to seven and designated Hossein
Eslambolchi, who was elected by the Board of Directors to fill the vacancy
created by such increase, as a member of Class I, whose term expires at the 2003
Annual Meeting. The two directors in Class III will be elected at the 2002
Annual Meeting to serve for a term expiring at the Company's Annual Meeting in
the year 2005. The three directors in Class I and the two directors in Class II
are serving terms expiring at the Company's Annual Meeting of Shareowners in
2003 and 2004, respectively.
Unless marked otherwise, proxies received will be voted FOR the election of
each of the two nominees specified in "Class III--Nominees for Directors with
Terms Expiring in 2005" below, who now serve as directors with terms extending
to the 2002 Annual Meeting and until their successors are elected and qualified.
If either such nominee for the office of director is unwilling or unable to
serve as a nominee for the office of director at the time of the Annual Meeting,
the proxies may be voted either (1) for a substitute nominee who shall be
designated by the proxy holders or by the present Board of Directors to fill
such vacancy or (2) for the other nominee only, leaving a vacancy.
Alternatively, the size of the Board may be reduced so that there is no vacancy.
The Board of Directors has no reason to believe that either of the nominees will
be unwilling or unable to serve if elected as a director. Such persons have been
nominated to serve until the 2005 Annual Meeting of Shareowners and until their
successors are elected and qualified.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES LISTED BELOW.
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INFORMATION AS TO NOMINEES FOR DIRECTORS AND CONTINUING DIRECTORS
There is shown below for each nominee for director and each continuing
director, as reported to the Company, the name, age and principal occupation;
the position, if any, with the Company; and other directorships held.
CLASS III--NOMINEES FOR DIRECTORS WITH TERMS EXPIRING IN 2005
RICHARD M. BRESSLER (PHOTO) Mr. Bressler has been a Director of Conexant
Age 71 since 1998. He served as Chief Executive
Retired Chairman of the Board of El Officer of Burlington Northern Inc. (rail
Paso Corporation transportation) from 1980 through 1988. Mr.
Bressler retired in October 1990 as Chairman
of both Burlington Northern Inc. and
Burlington Resources Inc. (natural resources
operations), positions he had held since
1982 and 1989, respectively. He served as
Chairman of Plum Creek Management Company
(timber operations) from April 1989 to
January 1993 and as Chairman of the El Paso
Natural Gas Company, now known as El Paso
Corporation (natural gas operations), from
October 1990 through December 1993. Mr.
Bressler is active in a number of business
and civic organizations.
RALPH J. CICERONE (PHOTO) Mr. Cicerone has been a Director of Conexant
Age 58 since November 2001. He has been Chancellor
Chancellor of the University of and the Daniel G. Aldrich Professor of Earth
California, Irvine Sciences of the University of California at
Irvine (education) since 1998 and served as
Dean of Physical Sciences from 1994 through
1998. He also served as a consultant to the
Minnesota Mining and Manufacturing Company
from 1989 to 1998. Mr. Cicerone is a past
president of the American Geophysical Union
and is a member of the National Academy of
Sciences, the American Academy of the Arts
and Sciences and the American Philosophical
Society.
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CLASS I--CONTINUING DIRECTORS WITH TERMS EXPIRING IN 2003
DWIGHT W. DECKER (PHOTO) Mr. Decker has been a Director of Conexant
Age 51 since its incorporation in 1996. Mr. Decker
Chairman of the Board and has been Chairman of the Board and Chief
Chief Executive Officer of Executive Officer of the Company since
the Company November 1998. He served as Senior Vice
President of Rockwell International
Corporation ("Rockwell") (electronic
controls and communications) and President,
Rockwell Semiconductor Systems from July
1998 to December 1998; Senior Vice President
of Rockwell and President, Rockwell
Semiconductor Systems and Electronic
Commerce from March 1997 to July 1998; and
President, Rockwell Semiconductor Systems
prior thereto.
F. CRAIG FARRILL (PHOTO) Mr. Farrill has been a Director of Conexant
Age 49 since 1998. Mr. Farrill has been Managing
Managing Director and Chief Director and Chief Technology Officer of
Technology Officer of inOvate inOvate Communications Group (wireless
Communications Group and Former Chief communications) since September 2000. Prior
Technology Officer of Vodafone thereto, he was Chief Technology Officer of
AirTouch PLC Vodafone AirTouch PLC (wireless
communications) from July 1999 to July 2000
and was Vice President, Strategic Technology
of AirTouch Communications, Inc. (wireless
communications) from June 1996 to July 1999.
From June 1991 to June 1996, Mr. Farrill
served as Vice President of Technology,
Planning and Development of AirTouch
Communications, Inc. He is also a member of
the Board of Directors and a corporate
officer of the CDMA Development Group, a
digital cellular technology consortium,
which he founded in 1993.
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HOSSEIN ESLAMBOLCHI (PHOTO) Mr. Eslambolchi has been a Director of
Age 41 Conexant since November 2001. Mr.
Chief Technology Officer of AT&T Eslambolchi has been Chief Technology
Corporation and President of AT&T Officer of AT&T Corp. (telecommunications)
Labs and President of AT&T Labs since July 2001.
He served as the interim President of
Excite@Home Broadband Networks Services from
January to June 2001, Senior Vice President
of AT&T's Packet and Optical Network
Services from July 2000 to July 2001, Vice
President, AT&T Data and Network Services
from January to July 2000, Vice President,
AT&T Network Operations and AT&T Chief
Compliance Officer from October 1997 to
January 2000, and Network Vice
President--Engineering and Operations from
March 1996 to October 1997. Mr. Eslambolchi
is a member of the Board of Advisors of The
Catalyst Group, Inc. and Pacific Broadband
Communications. He has served on the Compaq
Computer Corporation Board of Technical
Advisors and was an Advisory Council member
at the John Hopkins University Whiting
School of Engineering.
CLASS II--CONTINUING DIRECTORS WITH TERMS EXPIRING IN 2004
DONALD R. BEALL (PHOTO) Mr. Beall has been a Director of Conexant
Age 63 since 1998. He is the non-executive Chairman
Chairman of the Board of Directors of of the Board of Rockwell Collins, Inc.
Rockwell Collins, Inc. and Retired ("Rockwell Collins") (avionics and
Chairman and Chief Executive Officer communications). He served as a director of
of Rockwell International Corporation Rockwell from February 1978 to February
2001. He was Chairman of the Board and Chief
Executive Officer of Rockwell from February
1988 to February 1998 and Chief Executive
Officer of Rockwell from February 1988 to
September 1997. In addition to being a
director of Rockwell Collins, Mr. Beall is a
director of The Procter & Gamble Company and
a former director of Amoco Corporation,
ArvinMeritor, Inc., Rockwell and The Times
Mirror Company. He is a trustee of
California Institute of Technology, a member
of the Foundation Board of Trustees at the
University of California, Irvine and an
Overseer of the Hoover Institution. He is
also a member of The Business Council and
numerous professional, civic and
entrepreneurial organizations.
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JERRE L. STEAD (PHOTO) Mr. Stead has been a Director of Conexant
Age 59 since 1998. In May 2000 he retired as
Retired Chairman Chairman of the Board and Chief Executive
and Chief Executive Officer of Ingram Micro Inc. (computer
Officer of Ingram Micro Inc. technology products and services), positions
he had held since August 1996. Mr. Stead
served as Chief Executive Officer and
Chairman of the Board of LEGENT Corporation
(software development) from January 1995 to
August 1995. He is a director of Armstrong
World Industries, Inc., Brightpoint, Inc.,
Mobility, Inc. and Thomas & Betts
Corporation. Mr. Stead is Chairman of the
Board of the Center of Ethics and Values at
Garrett Seminary on the Northwestern
University campus.
BOARD COMMITTEES AND MEETINGS
The standing committees of the Board of Directors of the Company during
fiscal 2001 were an Audit Committee, a Board Composition Committee, a
Compensation and Management Development Committee, and a Technology,
Environmental and Social Responsibility Committee, each of which is comprised of
non-employee directors. The functions of each of these four committees are
described below. The members of the standing committees are identified in the
following table.
COMPENSATION & TECHNOLOGY,
BOARD MANAGEMENT ENVIRONMENTAL &
DIRECTOR AUDIT COMPOSITION DEVELOPMENT SOCIAL RESPONSIBILITY
-------- ----- ----------- -------------- ---------------------
D. R. Beall.................. x* x x
R. M. Bressler............... x* x
F. C. Farrill................ x x x*
J. L. Stead.................. x x x*
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* Chairman
The Audit Committee:
- reviews the scope and effectiveness of audits of the Company by the
Company's independent public accountants and internal auditors;
- selects and recommends to the Board of Directors the employment of
independent public accountants for the Company, subject to approval of
the shareowners;
- reviews the audit plans of the Company's independent public accountants
and internal auditors;
- reviews and approves the fees charged by the independent public
accountants;
- reviews the Company's quarterly and annual financial statements before
their release;
- reviews the adequacy of the Company's system of internal controls and
recommendations of the independent public accountants and of the internal
auditors with respect thereto;
- reviews and acts on comments and suggestions by the independent public
accountants and by the internal auditors with respect to their audit
activities; and
- monitors compliance by the employees of the Company with the Company's
standards of business conduct policies.
The Committee acts pursuant to a written charter, a copy of which was
attached as Appendix A to the Proxy Statement for the Company's 2001 Annual
Meeting. In the opinion of the Board of Directors of the Company, all current
members of the Company's Audit Committee are independent directors within the
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meaning of Rule 4200(a)(14) of the Rules of the National Association of
Securities Dealers, Inc. The Committee met six times during the 2001 fiscal
year.
The principal functions of the Board Composition Committee are to consider
and recommend to the Board of Directors qualified candidates for election as
directors of the Company and periodically to prepare and submit to the Board of
Directors for adoption the Committee's selection criteria for director nominees.
The Committee periodically assesses the performance of the Board of Directors
and reports thereon to the Board. Shareowners of the Company may recommend
candidates for consideration by the Committee by writing to the Secretary of the
Company within certain time periods specified in the Company's By-laws, giving
the candidate's name, biographical data and qualifications. Any such
recommendation should be accompanied by a written statement from the individual
of his or her consent to be named as a candidate and, if nominated and elected,
to serve as a director. The Committee did not meet during the 2001 fiscal year.
Effective November 1 and November 28, 2001, respectively, Messrs. Cicerone and
Eslambolchi became members of the Board Composition Committee.
The principal functions of the Compensation and Management Development
Committee (the "Compensation Committee") are to evaluate the performance of the
Company's senior executives and plans for management succession and development,
to consider the design and competitiveness of the Company's compensation plans,
to review and approve senior executive compensation and to administer the
Company's incentive, deferred compensation, stock option and long-term
incentives plans pursuant to the terms of the respective plans. The members of
the Compensation Committee are ineligible to participate in any of the plans or
programs which are administered by the Committee except the Company's Directors
Stock Plan. The Committee met six times during the 2001 fiscal year.
Prior to November 2001, the Technology, Environmental and Social
Responsibility Committee reviewed and monitored science and technological
activities of the Company and reviewed and assessed the Company's policies and
practices in the following areas: employee relations, with an emphasis on equal
employment opportunity and advancement; the protection and enhancement of the
environment and energy resources; product integrity and safety; employee health
and safety; and community and civic relations including programs for and
contributions to health, educational, cultural and other social institutions.
The Committee did not meet during the 2001 fiscal year.
In November 2001, the Technology, Environmental and Social Responsibility
Committee was divided into two separate committees of the Board: the Technology
Committee, comprised of Mr. Farrill (Chairman) and Mr. Beall, and the Social
Responsibility and Environmental Committee, comprised of Mr. Cicerone (Chairman)
and Mr. Beall.
The Technology Committee reviews and oversees technology-based issues of
importance to the Company including, but not limited to, evaluation of the
Company's investments in technology, research resources and product development;
evaluation of the Company as a technology leader based on benchmarking against
other recognized technology centers (corporate, government and universities);
evaluation of the strength and integrity of the Company's engineering and
manufacturing processes and disciplines; and evaluation of the application of
information and other advanced technologies in the Company's businesses to
enhance productivity and competitiveness. Effective November 28, 2001, Mr.
Eslambolchi became a member of the Technology Committee.
The Social Responsibility and Environmental Committee reviews and assesses
the Company's policies and practices in the areas of community and civic
relations including programs and contributions to health, educational, cultural
and other social institutions; product integrity and safety; employee health and
safety; employee relations, with particular emphasis on equal employment
opportunities and advancement; and the protection and enhancement of the
environment and energy resources.
The Board of Directors held 13 meetings and acted by unanimous written
consent 7 times during the 2001 fiscal year. Each director is expected to attend
each meeting of the Board and those committees on which he serves. Other than
Mr. Bressler, who attended 68% of all meetings of the Board of Directors and all
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committees on which he served during the 2001 fiscal year, no director attended
less than 75% of all the meetings of the Board and those committees on which he
served in the 2001 fiscal year.
DIRECTORS' COMPENSATION
During fiscal 2001, non-employee directors of the Company received a base
retainer at the rate of $30,000 per year for Board service. The Directors Stock
Plan provides that upon initial election to the Board, each non-employee
director will be granted an option to purchase 40,000 shares of the Company's
Common Stock at an exercise price per share equal to the fair market value of
the Company's Common Stock on the date of grant. Such stock options become
exercisable in four equal installments on each of the first, second, third and
fourth anniversaries of the date the options are granted. In addition, following
completion of one year of service on the Board, each non-employee director will
thereafter be granted an option to purchase 20,000 shares of the Company's
Common Stock immediately after each Annual Meeting of Shareowners of the
Company. Following the 2001 Annual Meeting, each non-employee director (other
than Messrs. Cicerone and Eslambolchi) was granted an option to purchase 20,000
shares of the Company's Common Stock. Upon their respective elections to the
Board on November 1 and November 28, 2001, Messrs. Cicerone and Eslambolchi were
each granted an option to purchase 40,000 shares of the Company's Common Stock.
Messrs. Cicerone and Eslambolchi will not be eligible to receive the annual
grant of options to purchase 20,000 shares with respect to the 2002 Annual
Meeting.
On August 10, 2001, the Board amended the Directors Stock Plan to permit
the annual grant of options to the non-employee directors to be deferred, at the
discretion of the Board of Directors, for up to 60 days following an Annual
Meeting to a date coinciding with the date of grant of options by the Company to
some or all of its officers. At the August 10, 2001 meeting, the Board adopted,
subject to shareowner approval, certain amendments to the Directors Stock Plan
described in this proxy statement below, under the caption "Approval of
Amendments to the Directors Stock Plan (Proposal 2)".
At the November 1, 2001 meeting, the Board adopted changes to the cash
compensation of the directors of the Company. Effective January 1, 2002, in
addition to the $30,000 base annual retainer, non-employee directors of the
Company will receive fees for attending each Board meeting: $1,000 per day for
attending Board meetings in person and $500 per day for participating in Board
meetings via telephone. Additionally, for service on the committees of the Board
of Directors, the chairman of each committee will receive $2,500 per year and
the other members will receive $1,250 per year.
In view of Mr. Beall's extraordinary contributions to the Company and its
shareowners, on February 28, 2001, the Board of Directors (with Mr. Beall
abstaining) extended the expiration date of certain options to purchase the
Company's Common Stock (the "Conexant Options") granted to Mr. Beall under the
Conexant Systems, Inc. 1998 Stock Option Plan (the "Conexant 1998 Plan") in
connection with certain adjustments to options to purchase Rockwell common stock
(the "Rockwell Options") held by Mr. Beall at the time of the spin-off of the
Company from Rockwell on December 31, 1998. Mr. Beall's Conexant Options consist
of (i) non-qualified options to purchase 194,408 shares of Common Stock of the
Company with an exercise price of approximately $4.36 per share and (ii)
non-qualified options to purchase 287,602 shares of Common Stock of the Company
with an exercise price of approximately $4.14 per share. Under the terms of the
Conexant 1998 Plan and Mr. Beall's stock option agreements, the Conexant
Options, if not sooner exercised, were to expire on June 30, 2001, the third
anniversary of Mr. Beall's retirement from Rockwell. As a result of the
extension, the Conexant Options may be exercised until ten years after the
original date of grant of the corresponding Rockwell Options from which the
Conexant Options were derived (specifically, until May 5, 2002 in the case of
the Conexant Options with a $4.36 exercise price and until March 11, 2003 in the
case of the Conexant Options with a $4.14 exercise price). The Board of
Directors acknowledged that in connection with the proposed extension of the
expiration date of the Conexant Options the Company would incur a one-time
(non-cash) earnings charge of approximately $2.3 million equal to the aggregate
intrinsic value of the Conexant Options (i.e., the difference between the
aggregate fair market value of the Company's common stock subject to the
Conexant Options on the date the extension became effective and the aggregate
exercise price of the Conexant Options).
8
Each of the non-employee directors then in office participated in the
Company's Exchange Offer described below under the caption "Stock Options and
Restricted Stock" in the Report of the Compensation and Management Development
Committee on Executive Compensation, to the full amount allowed. The replacement
options to be granted to the participating non-employee directors will be
granted under the Company's 1999 Long-Term Incentives Plan (the "1999 LTIP").
Under the terms of the Company's directors' deferred compensation plan, a
director may elect to defer all or part of the cash payment of retainer fees
until such time as shall be specified with interest on deferred amounts accruing
quarterly at 120% of the Federal long-term rate set each month by the Secretary
of the Treasury. Each director also has the alternative each year to determine
whether to defer all or any portion of the cash retainer by electing to receive
restricted shares valued at the closing price of the Company's Common Stock on
the Nasdaq National Market on the date each retainer payment would otherwise be
made in cash.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee, which consists entirely of non-employee directors (see
"Board Committees and Meetings" above), has furnished the following report on
Audit Committee matters:
The Audit Committee acts pursuant to a written charter which was adopted by
the Board of Directors of the Company on November 30, 1998, and most recently
amended and restated on December 20, 2000. A copy of the charter, which is
reviewed annually by the Audit Committee, was attached as Appendix A to the
Company's proxy statement for the 2001 Annual Meeting of Shareowners. The Audit
Committee has reviewed the audited financial statements of the Company for the
fiscal year ended September 30, 2001 with management and it has discussed with
Deloitte & Touche LLP, the Company's independent auditors, the matters required
to be discussed by Statement on Auditing Standards No. 61 (Communication with
Audit Committees) relating to the conduct of the audit. The Audit Committee has
also received written disclosures and a letter from Deloitte & Touche LLP
regarding its independence from the Company as required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees),
has discussed with Deloitte & Touche LLP the independence of that firm and has
considered whether the provision of non-audit services by Deloitte & Touche LLP
is compatible with maintaining the independence of that firm. Based upon the
above materials and discussions, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the fiscal year ended September 30, 2001.
Audit Committee
Richard M. Bressler, Chairman
F. Craig Farrill
Jerre L. Stead
REPORT OF THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE ON EXECUTIVE
COMPENSATION
The Compensation Committee, which consists entirely of non-employee
directors (see "Board Committees and Meetings" above), has furnished the
following report on executive compensation:
COMPENSATION PHILOSOPHY AND OBJECTIVES OF THE COMPANY
The Compensation Committee has adopted for the Company a general
compensation philosophy of "pay for performance" in which total cash
compensation should vary with Company performance. The Compensation Committee
believes this philosophy is appropriate for the Company as a high technology,
semiconductor company. The Compensation Committee's goal is to provide base
salary and opportunity for annual incentives sufficient to provide total cash
compensation at market competitive levels for major U.S. high technology
companies and to provide long-term incentives in the form of stock option grants
to its executives at slightly above market competitive levels for major U.S.
high technology companies.
9
Total annual compensation for the majority of the Company's employees,
including its executive officers, consists of the following:
- Base salary; and
- An annual incentive compensation program that is related to growth in
certain financial performance measures of the Company and/or its stock
price appreciation, and based on an individual bonus target for the
performance period. The annual incentive from year to year may be
delivered in cash, restricted stock or stock options.
Long-term incentive compensation is realized through the grant of stock
options and, in some cases, shares of restricted stock, to executive officers
and most employees under the 1999 LTIP and the 2000 Non-Qualified Stock Plan.
In addition to encouraging stock ownership by granting stock options and
restricted stock, the Company further encourages all of its employees to own the
Company's Common Stock through the Company's Employee Stock Purchase Plans (the
"ESPPs"). The ESPPs allow participants to buy the Company's Common Stock at a
discount to the market price with up to 10% of their salary and bonuses (subject
to certain limits), thereby allowing employees to profit when the value of the
Company's Common Stock increases over time.
SETTING EXECUTIVE COMPENSATION
In setting the base salary and individual bonus target amount for executive
officers, the Compensation Committee reviews information relating to executive
compensation of U.S.-based semiconductor and other high technology companies
that are considered generally comparable to the Company. While there is no
specific formula that is used to establish executive compensation in relation to
this market data, executive officer base salary is generally set to be around
the average salaries for comparable jobs in the marketplace. However, if the
Company's business groups meet or exceed certain predetermined financial and
non-financial goals, amounts paid under the Company's performance-based
incentive compensation programs may lead to total cash compensation levels that
are higher than the average salaries for comparable jobs. The Compensation
Committee considers the total compensation (earned or potentially available) of
the senior executives in establishing each component of compensation. In its
review, the Compensation Committee considers the following: (1) industry, peer
group and national surveys of other U.S. semiconductor and high technology
companies; (2) reports of the independent compensation consultants who advise
the Compensation Committee on the Company's compensation programs in comparison
with those of other companies which the consultants believe compete with the
Company for executive talent; and (3) performance judgments as to the past and
expected future contributions of individual senior executives.
As a result of this process, and in accordance with the Company's
compensation philosophy that total cash compensation should vary with Company
performance, the Compensation Committee establishes base salaries of the
Company's executive officers at levels which the Compensation Committee believes
are at the average of base salaries of executives of companies considered by the
Compensation Committee to be comparable to the Company. In order to deliver on
this philosophy for fiscal year 2001, the Company reduced salaries by 10% for
executive officers at the level of vice president and above. This reduction will
remain in effect until the Company achieves profitability as measured on a pro
forma basis. In addition, as set forth below, a significant part of each
executive officer's potential total cash compensation is dependent on the
performance of the Company as measured through its performance-based incentive
compensation program.
PERFORMANCE-BASED COMPENSATION
The Company's executive annual incentive compensation plan is based on the
overall financial performance of the Company. In any given year, that
performance is measured by either stock price appreciation or the performance of
the product platform for which the executive has responsibility or other
functional performance criteria and the attainment of strategic development
goals. In addition, executive incentive compensation awards may be adjusted by
an individual performance multiplier. The Chief Executive
10
Officer's annual incentive plan has the same components as the executive plan.
This award may also be adjusted by the Board of Directors based on individual
performance. For all executives, the annual incentive award value is targeted at
competitive market levels for semiconductor and other high technology companies.
For fiscal year 2001, executives including the Chief Executive Officer were
granted stock options in place of cash incentives. These options were granted on
October 27, 2000 and vest in two equal annual installments on the first and
second anniversaries of the date of grant.
PERFORMANCE SHARE PLAN
In November 2001, the Company adopted the 2001 Performance Share Plan
pursuant to which the Company may make grants of performance share awards to
eligible employees, including executive officers. Performance share awards
entitle the employee to whom a grant is made to receive cash or shares of the
Company's Common Stock at the election of the Compensation Committee, based on
the value of the Company's Common Stock on the date such performance share award
vests. This form of equity-based incentive compensation is intended to attract,
reward and retain employees.
The Compensation Committee determines which of the employees of the Company
or its subsidiaries are eligible for performance share awards under the 2001
Performance Share Plan, to whom performance share awards are granted and the
terms and conditions of performance share award grants, including the number of
shares subject to the performance share award and the vesting criteria of such
shares.
For grants of performance share awards during fiscal 2002, the Compensation
Committee has established separate vesting criteria for performance share awards
to (i) employees of the Company's Personal Networking business and (ii)
employees of the Company's Mindspeed Technologies business unit ("Mindspeed").
In each case, the performance share awards will vest upon the achievement by the
Company's Personal Networking business or Mindspeed, as the case may be, of
their separate and respective financial performance criteria by certain
specified dates.
To the extent that the applicable financial performance criteria are not
met by the specified dates, the relevant performance share awards will not vest
and will terminate.
STOCK OPTIONS AND RESTRICTED STOCK
The Company grants stock options to aid in the attraction and retention of
employees and to align the interests of employees with those of the shareowners.
Stock options have value for an employee only if the price of the Company's
stock increases above the fair market value on the grant date and the employee
remains employed by the Company for the period required for the stock option to
be exercisable, thus providing an incentive to remain in the Company's employ.
In addition, stock options directly link a portion of an employee's compensation
to the interests of shareowners by providing an incentive to maximize shareowner
value.
The Company's 1999 LTIP is generally used for making grants of incentive
stock options, nonqualified stock options and restricted stock to officers and
other employees as a part of the Company's executive performance review process.
In addition, the Company's 2000 Non-Qualified Stock Plan authorizes the grant of
nonqualified stock option and restricted stock awards to officers and other
employees. Annual stock option grants for executives are a key element of
market-competitive total compensation. In fiscal year 2001, stock options for
the executive officers were granted upon recommendation of management and
approval of the Compensation Committee. Individual grant amounts were based on
internal factors such as relative job scope and contributions made during the
past year, as well as a review of publicly available data on senior management
compensation at other companies. In general, options are exercisable in 25%
increments over a four-year period, first exercisable one year after the date of
grant (e.g., 25% of options granted in 2001 become exercisable on the
anniversary of the date of grant in 2002). However, with respect to the stock
options granted on March 30, 2001, 50% become exercisable on the first
anniversary of the date of grant, and 25% become exercisable on each of the
second and third anniversaries.
11
The continuing deterioration in the price of the Company's Common Stock
strongly undercut the Board of Directors' desire to provide all employees of the
Company with the opportunity to participate in the Company's long-term growth
through its stock option programs. In order to increase the value of the
Company's stock option programs, the Board approved an exchange offer pursuant
to which all employees, officers and directors with stock option grants having
an exercise price of $25 or above could exchange them for new stock options to
be granted in the future (the "Exchange Offer"). Under the terms of the Exchange
Offer, which commenced on September 4, 2001, eligible employees, officers and
directors who chose to participate would have their stock options cancelled on
October 2, 2001 and would receive on or after April 3, 2002 one new option for
each option cancelled with an exercise price equal to the fair market value
(based on the closing price of the Common Stock as reported by Nasdaq) on that
date (the "Replacement Options"). The vesting provisions of the Replacement
Options issued would remain the same as the provisions applicable to the
cancelled options. At the close of the Exchange Offer on October 2, 2001, the
Company accepted for exchange options to purchase an aggregate of 27,497,520
shares of Company Common Stock from 3,730 eligible participants representing 89%
of the shares subject to stock options that were eligible for the Exchange
Offer. All of the Company's non-employee directors and officers participated in
the Exchange Offer to the full amount allowed.
COMPLIANCE WITH SECTION 162(m)
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), places a limit of $1,000,000 on the amount of compensation that may be
deducted by the Company in any year with respect to each of the Company's five
most highly paid executive officers. Certain performance-based compensation that
has been approved by shareowners is not subject to the deduction limit. The 1999
LTIP is qualified so that awards under the plan constitute performance-based
compensation not subject to the deduction limit under Section 162(m). It is the
Committee's objective that, so long as it is consistent with its overall
business, compensation and retention objectives, the Company will, to the extent
reasonable, endeavor to keep executive compensation deductible by the Company
for federal income tax purposes.
COMPANY PERFORMANCE AND CEO COMPENSATION
The Company's compensation program is designed to support the achievement
of corporate and business objectives. This pay-for-performance program is most
clearly exemplified in the compensation of the Company's Chairman and Chief
Executive Officer, Dwight W. Decker.
Mr. Decker's base salary and incentive target is determined in the same
manner as described above for all executive officers. In setting compensation
levels for the Chief Executive Officer, the Compensation Committee considers
data reflecting comparative compensation information from other companies for
the prior year. Effective January 1, 2001, Mr. Decker's salary was set at
$730,000, a 4.3% increase from his fiscal year 2000 salary and at approximately
the average base salary level of the chief executive officers of the Company's
peers. As of March 30, 2001, Mr. Decker's salary was reduced by 10% thereby
reducing his salary to $657,000. This base salary will remain in effect until
the Company achieves two consecutive profitable quarters on a pro forma basis.
Mr. Decker received a stock option grant of 100,000 shares with an exercise
price of $21.875 on October 27, 2000 as his annual incentive award for fiscal
year 2001. This award would have a value equal to 125% of his target payout if
the price of the Company's Common Stock increased by 50% from the date of grant.
As of the end of fiscal year 2001 this stock price increase target has not been
achieved.
Compensation and Management Development Committee
Jerre L. Stead, Chairman
Donald R. Beall
12
SHAREOWNER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total shareowner
return on the Company's Common Stock against the cumulative total return of the
Nasdaq Stock Market (U.S.) Index and the Nasdaq Electronic Components Index for
the 33-month period beginning January 4, 1999 and ending September 30, 2001. The
graph assumes that $100 was invested on January 4, 1999, the first day of public
trading of the Company's Common Stock, in each of the Company's Common Stock,
the Nasdaq Stock Market (U.S.) Index and the Nasdaq Electronic Components Index
and that all dividends were reinvested. No cash dividends have been paid or
declared on the Company's Common Stock.
Comparison of 33-Month Cumulative Total Return*
Among Conexant Systems, Inc.,
Standard & Poors 500 Stock Index
and the Nasdaq Electronic Components Index
(PERFORMANCE GRAPH)
* $100 Invested on 1/4/1999 in Stock or Index--
Including Reinvestment of Dividends.
Fiscal Year Ending September 30.
CUMULATIVE TOTAL RETURN
---------------------------------------------------------------------------------------------
1999 2000 2001
------------------------------------- ----------------------------- ---------------------
01/04 03/31 06/30 09/30 12/31 03/31 06/30 09/30 12/31 03/31 06/30 09/30
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Conexant Systems, Inc............. 100 147 309 386 706 755 517 445 163 95 95 88
Standard & Poors 500 Stock
Index........................... 100 105 112 105 121 124 121 120 110 97 103 88
Nasdaq Electronic Components...... 100 102 116 138 184 294 288 243 151 92 106 68
13
EXECUTIVE COMPENSATION
The Company, which was incorporated in 1996, became a publicly-held company
through the pro rata distribution by Rockwell of all the outstanding shares of
Common Stock, par value $1 per share, of the Company to Rockwell's shareowners
on December 31, 1998 (the "Distribution"). The Company did not pay any
compensation to its executive officers for services rendered in all capacities
to the Company and its subsidiaries prior to that date. The information shown
below reflects the annual and long-term compensation, from all sources, of the
Chief Executive Officer of the Company and the other four most highly
compensated executive officers of the Company at September 30, 2001 (the "Named
Executive Officers"), for services rendered in all capacities to the Company or
to Rockwell and its subsidiaries for the fiscal years ended September 30, 1999,
2000 and 2001, except as noted below. In many cases, the individuals listed
below served Rockwell and its subsidiaries in different capacities than those in
which they serve the Company.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -----------------------------------
-------------------------------------------- AWARDS PAYOUTS
OTHER ---------------------- ---------
ANNUAL RESTRICTED STOCK LONG-TERM ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL COMPENSA- STOCK OPTIONS INCENTIVE COMPENSA-
WITH THE COMPANY(1) YEAR SALARY BONUS TION AWARDS(2) (SHARES) PAYOUTS TION(3)
---------------------------- ------ -------- ------- --------- ---------- --------- --------- ---------
Dwight W. Decker............ 2001 $686,827 -- $26,118 -- 600,000 -- $29,822
Chairman of the Board and 2000 669,231 950,000 80,440 -- 1,250,000(4) -- 26,769
Chief Executive Officer 1999 444,385 336,520 46,889 -- 1,000,000 -- 20,873
Raouf Y. Halim.............. 2001 422,885 250,000(5) 37,965 -- 1,024,000 -- 27,869
Senior Vice President and 2000 334,615 234,437 72,565 -- 885,000(4) -- 13,385
Chief Executive Officer-- 1999 266,408 126,805(6) 44,440 -- 520,000 -- 12,977
Mindspeed Technologies(TM)
Moiz M. Beguwala............ 2001 326,700 -- 10,356 -- 97,629 -- 16,151
Senior Vice President and 2000 343,846(7) 120,142 19,297 -- 225,000(4) -- 12,831
General Manager-- 1999 245,309 126,805(6) 26,377 -- 470,000 -- 12,328
Wireless Communications
Balakrishnan S. Iyer........ 2001 343,817 -- 14,109 -- 197,629 -- 19,314
Senior Vice President and 2000 320,769 227,085 65,962 -- 500,000 -- 12,831
Chief Financial Officer 1999 282,693 341,805(8) 55,126(9) -- 700,000 -- 6,400
F. Matthew Rhodes........... 2001 317,787 2,500(10) 9,010 -- 170,572 -- 15,204
Senior Vice President and 2000 292,308 276,558(11) 22,969 -- 300,000(4) -- 10,850
General Manager-- 1999 217,616 211,805(12) 21,119(13) -- 300,000 -- 11,418
Personal Computing
------------------------------
(1) The table reflects the positions held with the Company at September 30,
2001. The Named Executive Officers served Rockwell and its subsidiaries in
the following capacities during the first quarter of the fiscal year 1999
and the compensation reflected in the table for that quarter was paid by
Rockwell to the Named Executive Officers in such capacities: Mr.
Decker--Senior Vice President, Rockwell and President, Rockwell
Semiconductor Systems (July 1998--December 1998); Mr. Halim--Vice President
and General Manager--Network Access Division, Rockwell Semiconductor
Systems, Inc. (February 1997--December 1998); Mr. Beguwala--Vice President
and General Manager--Wireless Communications Division, Rockwell
Semiconductor Systems, Inc. (October 1998--December 1998); Mr. Iyer--Senior
Vice President and Chief Financial Officer, Rockwell Semiconductor Systems,
Inc. (October 1998--December 1998); and Mr. Rhodes--Vice President and
General Manager--Personal Computing Division, Rockwell Semiconductor
Systems, Inc. (October 1998--December 1998).
(2) On January 4, 1999, each Named Executive Officer received shares of
restricted stock valued at $9.4063 per share, the closing price of the
Company's Common Stock on the Nasdaq National Market on that day. The total
value of each Named Executive Officer's shares is included in his bonus for
fiscal year 1999, as such shares were granted in lieu of payments from the
Company's cash incentive plans in fiscal 1999. Mr. Decker received 35,776
shares ($336,520) and each of Messrs. Halim, Beguwala, Iyer and Rhodes
received 9,760 shares ($91,805).
(3) Amounts contributed or accrued for the Named Executive Officers under the
Rockwell and Conexant savings plans and the related supplemental savings
plans.
14
(4) Pursuant to the Company's Exchange Offer, each of Messrs. Decker, Halim,
Beguwala, Iyer and Rhodes exchanged options to purchase 1,250,000; 825,000;
225,000; 500,000; and 300,000 shares, respectively, with an exercise price
of $25 or above (representing all of their eligible options) for a grant of
new options for the same number of shares on or after April 3, 2002. As a
result, these exchanged options were cancelled on October 2, 2001 and
Messrs. Decker, Halim, Beguwala, Iyer and Rhodes will have the right to
receive their new options with an exercise price equal to the fair market
value of the Company's Common Stock on the grant date.
(5) Represents a bonus paid to Mr. Halim in connection with his being named
Senior Vice President and Chief Executive Officer--Mindspeed Technologies.
(6) Includes a retention bonus of $35,000 paid to each of Messrs. Halim and
Beguwala as consideration for their remaining with the Company after the
Distribution.
(7) Includes $23,077 paid to Mr. Beguwala in lieu of vacation.
(8) Includes a hire-on bonus of $250,000 paid to Mr. Iyer upon his joining the
Company in October 1998.
(9) Includes $26,757 paid in connection with the relocation of Mr. Iyer's
residence in Southern California upon his joining the Company.
(10) Represents an invention award paid to Mr. Rhodes in recognition of his
contribution towards an invention.
(11) Includes a retention bonus of $60,000 paid to Mr. Rhodes in connection with
Rockwell's acquisition of Pacific Communication Sciences, Inc.
(12) Includes a retention bonus of $120,000 paid to Mr. Rhodes in connection
with Rockwell's acquisition of Pacific Communication Sciences, Inc.
(13) Includes $3,437 paid in connection with the relocation of Mr. Rhodes'
residence within Southern California.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the Distribution, Rockwell and the Company entered into
several agreements, including agreements relating to services to be provided by
Rockwell to the Company following the spin-off, the allocation of liabilities
and obligations with respect to taxes, employee benefit plans and compensation
arrangements, and other matters. At the time these agreements were negotiated
and executed, certain of the Company's directors and executive officers also
served as a director and executive officers of Rockwell. The Company believes
the terms of these agreements to be fair.
The Company has entered into change of control employment agreements
("Employment Agreements") with certain key executives, including Messrs. Decker,
Halim, Beguwala, Iyer and Rhodes. Each such Employment Agreement becomes
effective upon a "change of control" of the Company (as defined in the
Employment Agreement). Each Employment Agreement provides for the continuing
employment of the executive after the change of control on terms and conditions
no less favorable than those in effect before the change of control. If the
executive's employment is terminated by the Company without "cause" or if the
executive terminates his or her own employment for "good reason" (each as
defined in the Employment Agreement), the executive is entitled to severance
benefits equal to a multiple of his or her annual compensation (including bonus)
and continuation of certain benefits for a number of years equal to the
multiple. The multiple is three for Mr. Decker and two for the other executives
(or, in either case, the shorter number of years until the executive's normal
retirement date). The executives are entitled to an additional payment, if
necessary, to make them whole as a result of any excise tax imposed by the Code
on certain change of control payments (unless the safe harbor amount above which
the excise tax is imposed is not exceeded by more than 10%, in which event the
payments will be reduced to avoid the excise tax).
In October 1999, the Company made loans to certain officers and other
employees (including the Named Executive Officers), the proceeds of which were
used to pay federal and state withholding tax due in connection with the
accelerated vesting on October 1, 1999 of certain shares of restricted stock
previously granted to such officers and other employees. Because the tax
payments were due at a time shortly prior to the
15
announcement of the Company's year-end results when such officers and other
employees were not permitted to trade in Conexant Common Stock, the Company made
the loans available to these individuals to allow them to pay the taxes without
selling their shares of restricted stock. The loans bear interest at a rate of
5.54% and, pursuant to action of the Board taken on March 21, 2001 are now due
on December 1, 2002. The loan to Mr. Decker was in the amount of $232,052 and
the loan to each of Messrs. Halim, Beguwala, Iyer and Rhodes was in the amount
of $126,612. Mr. Iyer repaid his loan in December 1999.
In fiscal year 2000, the Company donated $772,500 to the University of
California, Irvine, Foundation. In fiscal year 2000, such donations totalled
$1,265,840. Of these donations, $105,000 in 2000 and $140,000 in 2001 were made
directly by the Company. The remaining amounts were made by the Conexant Systems
Charitable Fund, a donor-directed fund administered by the California Community
Foundation.
On September 28, 2001, At Home Corporation and all of its wholly-owned
subsidiaries and certain of its foreign subsidiaries filed voluntary petitions
for reorganization under Chapter 11 of the U.S. Bankruptcy Code. In the first
half of 2001, Mr. Eslambolchi served as interim president of Excite@Home
Broadband Networks Services, a division of At Home Corporation, during which
time he was an AT&T employee and executive on-loan to Excite@Home Broadband
Networks Services.
OPTION GRANTS IN LAST FISCAL YEAR
Shown below is further information on grants to the Named Executive
Officers of stock options pursuant to the 1999 LTIP during the fiscal year ended
September 30, 2001, which are reflected in the Summary Compensation Table on
page 14.
OPTION GRANTS
---------------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENTAGE OF TOTAL AT ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS GRANTED STOCK PRICE APPRECIATION FOR
UNDERLYING TO CONEXANT EXERCISE OPTION TERM
OPTIONS GRANTED EMPLOYEES PRICE EXPIRATION ----------------------------
NAME (SHARES) IN FISCAL 2000 (PER SHARE) DATE 5% 10%
---- --------------- ------------------- ----------- ---------- ------------ -------------
Dwight W. Decker..... 500,000(1) 1.69% $ 8.9375 3/30/2011 $2,810,373 $ 7,122,037
100,000(2) 0.34 21.8750 10/27/2010 1,375,707 3,486,312
Raouf Y. Halim....... 1,000,000(1) 3.37 8.9375 3/30/2011 5,620,746 14,244,073
24,000(2) 0.08 21.8750 10/27/2010 330,170 836,715
Moiz M. Beguwala..... 75,000(3) 0.25 8.9375 3/30/2011 983,631 2,492,713
22,629(2) 0.08 21.8750 10/27/2010 311,309 788,917
Balakrishnan S.
Iyer............... 175,000(1) 0.59 8.9375 3/30/2011 421,556 1,068,305
22,629(2) 0.08 21.8750 10/27/2010 311,309 788,917
F. Matthew Rhodes.... 150,000(1) 0.51 8.9375 3/30/2011 843,112 2,136,611
20,572(2) 0.07 21.8750 10/27/2010 283,010 717,204
------------------------------
(1) Options were granted on March 30, 2001, with 50% becoming exercisable on the
first anniversary of the date of grant and 25% becoming exercisable on each
of the second and third anniversaries.
(2) Options were granted on October 27, 2000 and become exercisable in two equal
annual installments on each of the first and second anniversaries of the
date of grant.
(3) Options were granted on March 30, 2001 and become fully exercisable on the
first anniversary of the date of grant.
16
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
Shown below is information with respect to (i) exercises by the Named
Executive Officers during fiscal year 2001 of options to purchase the Company's
Common Stock granted under the Company's 1998 Stock Option Plan or the 1999 LTIP
and (ii) the unexercised options to purchase the Company's Common Stock granted
to the Named Executive Officers in fiscal year 2001 and prior years and held by
them at September 30, 2001.
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
SHARES SEPTEMBER 30, 2001(1) SEPTEMBER 30, 2001(2)
ACQUIRED VALUE ---------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Dwight W. Decker.......... -- -- 1,898,586(3) 2,100,000(3) $1,355,390 --
Raouf Y. Halim............ -- -- 522,954(3) 1,996,500(3) 3,081 --
Moiz M. Beguwala.......... -- -- 456,182(3) 482,629(3) 3,081 --
Balakrishnan S. Iyer...... -- -- 262,500 960,129 -- --
F. Matthew Rhodes......... -- -- 175,000 545,572 -- --
------------------------------
(1) Pursuant to the Company's Exchange Offer, each of Messrs. Decker, Halim,
Beguwala, Iyer and Rhodes exchanged options to purchase 1,250,000; 825,000;
225,000; 500,000; and 300,000 shares, respectively, with an exercise price
of $25 or above (representing all of their eligible options) for a grant of
new options for the same number of shares on or after April 3, 2002. As a
result, these exchanged options were cancelled on October 2, 2001 and
Messrs. Decker, Halim, Beguwala, Iyer and Rhodes will have the right to
receive their new options with an exercise price equal to the fair market
value of the Company's Common Stock on the grant date.
(2) Based on the closing price of the Company's Common Stock on the Nasdaq
National Market on September 28, 2001 ($8.30).
(3) Includes options that were granted by Rockwell prior to the Distribution and
were converted into options to purchase the Company's Common Stock, on the
same terms and vesting schedule as the Rockwell options but with adjustments
to the exercise price and the number of shares for which such options are
exercisable to preserve the aggregate intrinsic value of the options.
RETIREMENT BENEFITS
The Company does not sponsor a defined benefit pension plan for salaried
employees.
17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
To the Company's knowledge, the following table sets forth information
regarding ownership of the Company's outstanding Common Stock on November 30,
2001 by each director and Named Executive Officer and all directors and
executive officers as a group. Except as otherwise indicated below and subject
to applicable community property laws, each owner has sole voting and sole
investment power with respect to the stock listed.
BENEFICIAL OWNERSHIP AS OF NOVEMBER 30, 2001
COMMON STOCK
------------------------------------
NAME SHARES(1) PERCENT OF CLASS(2)
---- --------- -------------------
Donald R. Beall............................................. 1,311,340(3,4,5) --*
Richard M. Bressler......................................... 133,062(5,6) --*
Ralph J. Cicerone........................................... 675(7) --*
Dwight W. Decker............................................ 2,077,430(3,5) --*
Hossein Eslambolchi......................................... -- --*
F. Craig Farrill............................................ 67,152(5,8) --*
Jerre L. Stead.............................................. 47,152(5,9) --*
Raouf Y. Halim.............................................. 579,055(3,5) --*
Moiz M. Beguwala............................................ 542,193(3,5) --*
Balakrishnan S. Iyer........................................ 373,835(3,5) --*
F. Matthew Rhodes........................................... 197,685(3,5) --*
All of the above and other executive officers as a group (23
persons).................................................. 7,189,972 2.83%
------------------------------
* Less than 1%
(1) Each person's address is the address of the Company.
(2) For purposes of computing the percentage of outstanding shares beneficially
owned by each person, shares of which such person has a right to acquire
beneficial ownership within 60 days have been included in both the number of
shares owned by that person and the number of shares outstanding, in
accordance with Rule 13d-3(d)(1) under the Securities Exchange Act.
(3) Includes shares held under the savings plans of the Company and Rockwell as
of November 30, 2001. Does not include the following: 4,097; 593; 751; 162;
201; and 8,295 share equivalents for Messrs. Decker, Halim, Beguwala, Iyer,
Rhodes and the group, respectively, held under the Company's and Rockwell's
supplemental savings plans as of November 30, 2001.
(4) Includes shares, as to which beneficial ownership is disclaimed, as follows:
20,152 shares held for the benefit of family members and 10,000 shares owned
by the Beall Foundation, of which Mr. Beall is President and a director.
Does not include 288,208 shares of Common Stock that may be acquired upon
exercise of stock options transferred to family members who are the
beneficial owners thereof.
(5) Includes shares that may be acquired upon the exercise of outstanding stock
options within 60 days as follows: 1,138,566; 66,238; 1,948,586; 60,000;
40,000; 552,454; 509,996; 361,314; 185,286; and 6,468,449 for Messrs. Beall,
Bressler, Decker, Farrill, Stead, Halim, Beguwala, Iyer, Rhodes and the
group, respectively.
(6) Includes 1,784 shares of Conexant Common Stock issued in the Distribution in
respect of restricted shares of Rockwell common stock granted to Mr.
Bressler under the Rockwell Directors Plan.
(7) Represents shares owned by the Ralph J. Cicerone and Carol M. Cicerone
Trust, of which Mr. Cicerone is a co-trustee.
(8) Includes 3,760 shares of Conexant Common Stock granted to Mr. Farrill as
restricted stock under the Directors Plan.
(9) Includes 7,152 shares of Conexant Common Stock granted to Mr. Stead as
restricted stock under the Directors Plan.
18
With the exception of Wells Fargo Bank, N.A., as trustee under the Rockwell
Savings Plans, which held approximately 6.3% of the outstanding shares of the
Company's Common Stock as of January 2, 2002, there are no persons known to
Conexant to be "beneficial owners" (as that term is defined in the rules of the
Securities and Exchange Commission) of more than 5% of any class of the
Company's voting securities outstanding as of November 30, 2001. Shares held by
the trustee of the Rockwell Savings Plans on account of the participants in such
plan will be voted by the trustee in accordance with instructions from the
participants (either in writing or by means of the Company's telephone or
Internet voting procedures), and where no instructions are received, as the
trustee deems proper.
APPROVAL OF AMENDMENTS TO THE DIRECTORS STOCK PLAN (PROPOSAL 2)
The Company's shareowners are being asked to act upon a proposal to approve
amendments to the Company's Directors Stock Plan (the "Directors Plan"). On
August 10, 2001, the Board of Directors approved for submission to the
shareowners amendments to the Directors Plan as set forth in Appendix A to this
proxy statement. Shareowners are urged to review the Directors Plan as proposed
to be amended (deletions are shown with overstrike and additions are underlined)
together with the following information, which is qualified in its entirety by
reference to Appendix A.
The Compensation Committee has studied board compensation for companies of
similar size and in industries similar to the Company's. The Compensation
Committee has consulted with the counsel and also engaged the consulting
company, William A. Mercer, Inc., to review and study board compensation levels
and practices to determine how the Company's current compensation of directors
compares with other members of such peer group. As a result of the information
gathered by and for the Board, the Board has determined that, in order to retain
and recruit members of the Board of a caliber best suited to the needs of the
Company, it is in the best interests of the Company and its shareowners that the
board compensation design originally put in place in 1998 for the Company be
revised. The primary purpose of the amendments is to provide additional
flexibility under the Directors Plan to enable the Company to recognize and
reward non-employee directors who provide a unique and extraordinary level of
service to the Company. Each of the Company's six non-employee directors is
eligible to participate under the Directors Plan. Upon approval by shareowners,
the amended Directors Plan will become immediately effective.
If the amended Directors Plan is approved by shareowners, the Board of
Directors or the Compensation Committee will have the discretion to provide,
from time to time, any one or more non-employee directors with additional
stock-based compensation under the Directors Plan, in addition to the annual
grant of options following the Annual Meeting of Shareowners. The additional
compensation may be in the form of a grant of restricted shares of Company
Common Stock, options to purchase shares of Company Common Stock or a
combination of restricted shares and options, subject to the terms, conditions
and restrictions established by the Board or the Compensation Committee. In
addition, if the amended Directors Plan is approved, the maximum number of
shares available for issuance pursuant to the Directors Plan would be increased,
effective October 1, 2001, by 350,000 shares to 980,000 shares. Thereafter, on
the first day of each fiscal year, the maximum number of shares would be
automatically increased by an additional amount equal to the greater of 150,000
shares or 0.067% of the shares of Company Common Stock outstanding on that date,
subject to the Board of Directors being authorized and empowered to select the
smaller amount. The Board believes these changes to be in the best interests of
the Company in that they provide the Company with additional flexibility to
design a board compensation package that recognizes and rewards non-employee
directors who provide a unique and extraordinary level of service to the
Company, with an emphasis on increased long-term stock ownership by the
directors.
The Directors Stock Plan was originally adopted by the Board of Directors
and approved by Rockwell, as the Company's sole shareowner, in October 1998,
prior to the Company's spin-off from Rockwell.
The following is a summary of the principal terms of the Directors Stock
Plan as currently in effect. Although the Company believes that the following
description provides a fair summary of the material terms of the Directors Stock
Plan, the description is qualified in its entirety by the specific terms of the
Directors Stock Plan, a copy of which attached as Appendix A to this proxy
statement.
PURPOSE. The purpose of the Directors Stock Plan is to link the
compensation of non-employee directors of the Company directly with the
interests of the Company's shareowners.
19
PARTICIPATION. Participation in the Directors Stock Plan is limited to
directors who are not employees of the Company or any of its subsidiaries.
RESTRICTED SHARES. Directors may elect to receive their cash retainer for
Board service in the form of restricted shares of Company Common Stock.
Restricted shares, if elected, are held by the Company until ten days after the
recipient retires from the Company's Board of Directors after reaching age 72
and having served at least three years as a director or ceases to be a director
by reason of the antitrust laws, compliance with the Company's conflict of
interest policies, death, disability or other circumstances the Company's Board
of Directors determines not to be adverse to the best interests of the Company.
Restricted shares have all the attributes of outstanding shares including the
right to vote and to receive dividends thereon.
STOCK OPTIONS. Under the Directors Stock Plan grants of options to purchase
40,000 shares of Company Common Stock are made to each non-employee director
effective upon election as a director. The Directors Stock Plan currently
provides that following completion of one year of service on the Board by a
non-employee director, grants of options to purchase 20,000 shares of Company
Common Stock are made annually to such non-employee director immediately
following each Annual Meeting of Shareowners; provided that the Board may, by
action taken on or before the day following the date of any such Annual Meeting,
defer the option grants in respect of such Annual Meeting for up to 60 days
following such Annual Meeting to a date coinciding with the date of grant of
options by the Company to some or all of the officers of the Company. The
purchase price of the shares subject to an option is 100% of the fair market
value of Company Common Stock on the date the option is granted. Upon exercise
of an option, the option price must be paid in full in cash, shares of Company
Common Stock valued at their fair market value on the date of exercise, or a
combination of both.
Options granted under the Directors Stock Plan generally may not be
exercised prior to one year nor after ten years from the date of grant and
become exercisable in four equal installments on the first, second, third and
fourth anniversaries of the date of grant. If an optionee who holds an
outstanding stock option dies, the Directors Stock Plan permits the exercise of
such option within three years of the date of death (or until the expiration
date specified in the option, if earlier), even if it were not exercisable at
such date. If an optionee who holds an outstanding stock option retires from the
Company's Board of Directors after reaching age 72 or having served at least ten
years as a director, all options then held will be exercisable even if they were
not exercisable at such retirement date, provided that such options shall expire
at the earlier of five years from the date of retirement or the expiration date
specified in the options. The Directors Stock Plan permits the Compensation
Committee to make determinations as to exercisability upon other termination of
an optionee's membership on the Company's Board of Directors.
ADMINISTRATION AND AMENDMENT. The Directors Stock Plan is administered by
the Compensation Committee. The Company's Board of Directors may amend the
Directors Stock Plan in any respect, provided that, without shareowner approval,
no amendment may be made that would materially (i) increase the maximum number
of shares of Company Common Stock available for delivery under the Directors
Stock Plan (other than adjustments to reflect changes in or affecting shares of
Company Common Stock), (ii) increase the benefits accruing to participants under
the Directors Stock Plan, or (iii) modify the requirements as to eligibility for
participation in the Directors Stock Plan. The Company's Board of Directors also
has authority to terminate the Directors Stock Plan at any time.
CHANGE OF CONTROL BENEFITS. In order to maintain the rights of participants
in the Directors Stock Plan in the event of a change of control of the Company
(as defined by the Company's By-Laws), the Directors Stock Plan provides that
upon the occurrence of such a change, all outstanding stock options shall become
fully exercisable whether or not then exercisable and the restrictions on all
restricted shares shall lapse.
TAX MATTERS. The principal federal income tax consequences of the grant of
options under the Directors Plan under present law and regulations are that the
optionee will realize ordinary income, and the Company will be entitled to a
deduction, equal to the difference between the option exercise price and the
fair market value of the shares acquired at the time of exercise. The principal
federal income tax consequences of the issuance or transfer of restricted shares
is that the value thereof is not taxable to the recipient until the restriction
lapses (at the value of the shares on the date the restriction lapses).
20
As of the date of this proxy statement, there has been no determination by
the Compensation Committee with respect to future awards of additional
compensation authorized by the proposed amendments, which are discretionary in
nature. Accordingly, the benefits or amounts that will be received by or
allocated to the non-employee directors, and that would have been received by or
allocated to the non-employee directors if the amended Directors Plan had been
in effect during fiscal 2001, are not determinable.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENTS TO THE
DIRECTORS STOCK PLAN. UNLESS A CONTRARY CHOICE IS SPECIFIED, PROXIES SOLICITED
BY THE BOARD OF DIRECTORS WILL BE VOTED FOR APPROVAL OF THE AMENDMENTS TO THE
DIRECTORS STOCK PLAN.
APPROVAL OF THE 2001 EMPLOYEE STOCK PURCHASE PLAN (PROPOSAL 3)
The Company's shareowners are being asked to act upon a proposal to approve
the adoption by the Board of Directors of the Company's 2001 Employee Stock
Purchase Plan (the "2001 ESPP"). The 2001 ESPP became effective upon its
adoption by the Board of Directors on August 10, 2001. The 2001 ESPP permits
eligible employees to elect to have a portion of their base salary withheld for
purchases of the Company's Common Stock at a price discounted from the fair
market value of the Common Stock. If the proposal is approved by the shareowners
of the Company, the 2001 ESPP will be qualified as an Employee Stock Purchase
Plan under Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code"); however, if the shareowners do not approve the 2001 ESPP within 12
months of its adoption by the Board, the 2001 ESPP will nevertheless continue in
effect as an Employee Stock Purchase Plan not qualified under Section 423 of the
Code. Regardless of whether the 2001 ESPP qualifies as an Employee Stock
Purchase Plan under Section 423 of the Code, it is the Company's present
intention that the provisions of the 2001 ESPP will be administered, interpreted
and construed in a manner consistent with the requirements of Section 423 of the
Code. The complete text of the 2001 ESPP is set forth in Appendix B to this
proxy statement and shareowners are urged to review it together with the
following information, which is qualified in its entirety by reference to
Appendix B.
PURPOSE. The purpose of the 2001 ESPP is to maintain a competitive equity
compensation program to attract, motivate, retain, and compensate present and
future employees of the Company and its domestic subsidiaries for such employees
to purchase the Company's Common Stock through payroll deductions, and therefore
more closely align the interests of the employees and shareowners of the
Company.
NUMBER OF SHARES. The maximum number of shares of the Company's Common
Stock that are available for sale under the 2001 ESPP is 5,000,000 shares,
subject to adjustment upon changes in capitalization of the Company, as provided
in the 2001 ESPP. These shares may be newly issued shares or shares reacquired
in private transactions or open market purchases. To the extent that any right
to purchase shares under the 2001 ESPP is not exercised by any participant for
any reason, or if any right to purchase terminates, any shares not purchased
under such right will again become available for issuance under the 2001 ESPP,
unless the 2001 ESPP has been terminated. If for any reason, the total number of
shares that would otherwise be subject to options granted under the 2001 ESPP
exceeds the number of shares then remaining available under the 2001 ESPP, the
Company will allocate the shares remaining in as uniform a manner as is fair and
practicable. In this event, the Company will notify participants of the
reduction and will reduce the rate of each participant's contributions to the
2001 ESPP, if necessary.
ADMINISTRATION. The Board, or a committee appointed by the Board,
administers the 2001 ESPP and has full power to adopt, amend and rescind any
rules deemed desirable and appropriate for the administration of the 2001 ESPP
and not inconsistent with the 2001 ESPP, to construe and interpret the 2001
ESPP, and to make all other determinations necessary or advisable for the
administration of the 2001 ESPP. The composition of the committee will be in
accordance with the requirements to obtain or retain any available exemption
from the operation of Section 16(b) of the Exchange Act, pursuant to Rule 16b-3
thereunder.
ELIGIBILITY. Except as otherwise described below, any employee who is
customarily employed at least 20 hours per week and five months in any calendar
year by the Company or a domestic subsidiary as of the first day of the
enrollment period for the next offering period will be eligible to participate
in the 2001 ESPP during that offering period. Officers of the Company are
eligible to participate in offerings under the
21
2001 ESPP, but the Board may provide in an offering that certain employees who
are "highly compensated" within the meaning of the Code are not eligible to
participate.
No employee will be eligible to participate in the 2001 ESPP if,
immediately after the grant of an option under the 2001 ESPP, he or she would
own, directly or indirectly, stock possessing 5% or more of the total combined
voting power or value of all classes of stock of the Company or of any parent or
subsidiary of the Company (including any stock which such employee may purchase
under all outstanding options under the 2001 ESPP and other stock-based plans of
the Company). In addition, pursuant to applicable provisions of the Code, no
employee may be granted an option under the 2001 ESPP that permits such employee
to accrue the right to purchase more than $25,000 worth of the Company's Common
Stock (determined at the fair market value of the stock at the time such options
are granted) under all employee stock purchase plans of the Company and its
affiliates for each calendar year in which such purchase right is outstanding at
any time.
PARTICIPATION. An eligible employee may become a participant in the 2001
ESPP by enrolling through the 2001 ESPP's integrated voice response ("IVR")
system, the Mellon Employee Services Direct System or other electronic form of
subscription agreement during any enrollment period of any offering period. By
enrolling in the 2001 ESPP, each participant authorizes payroll deductions from
his or her "earnings" during the offering period in whole percentages from 1% to
10%. "Earnings" include all salary, wages (including amounts defined by the
participant under any cash or deferred arrangement of the Company or its
domestic subsidiaries), overtime pay, bonuses and commissions. These
contributions will be used to pay the purchase price of the shares of the
Company's Common Stock when an option under the 2001 ESPP is exercised. (See
"Exercise of Option" below.) Each election to enroll will continue in effect
until the participant makes a new enrollment election or amends or terminates
his or her participation in the 2001 ESPP. At any time during an offering
period, up to ten calendar days preceding an Exercise Date, a participant may
terminate or suspend his or her payroll deductions under and/or withdraw from an
offering period. (See "Voluntary Withdrawal; Termination of Employment" below.)
At any time during an offering period, a participant may reduce or increase his
or her payroll deductions and such change will be effective as soon as
administratively practicable. All payroll deductions made for a participant are
credited to his or her account under the 2001 ESPP and deposited with the
general funds of the Company. A participant may not make additional payments
into such account. All of the approximately 6,900 employees of the Company or
its domestic subsidiaries are eligible to participate under the terms of the
2001 ESPP. At November 30, 2001 2,396 eligible employees have elected to
participate in the 2001 ESPP, although the Company cannot determine how many
eligible employees will elect to participate in the future.
OFFERING PERIODS. The 2001 ESPP provides for a series of concurrent
twenty-four month offering periods, generally beginning on (1) the first trading
day in February and ending on the last trading day of the January immediately
preceding the second anniversary of the commencement of such period and (2) the
first trading day in August and ending on the last trading day of the July
immediately preceding the second anniversary of the commencement of such period.
The first offering period under the 2001 ESPP will consist of the twenty-three
month period beginning on September 4, 2001 and ending on July 31, 2003, and the
second offering period under the 2001 ESPP will consist of the twenty-three
month period beginning on March 1, 2002 and ending on January 31, 2004. The
Board will have the power to change the duration and/or the frequency of
offering periods and the dates when the options can be exercised with respect to
future offerings without shareowner approval.
OPTION GRANTS. On the first trading day of each offering period (the "Grant
Date"), each participant in that offering period will be granted an option to
purchase, on each Exercise Date (as defined below) within such offering period,
a number of shares of Common Stock determined by dividing such participant's
contributions accumulated prior to such Exercise Date and retained in the
participant's account as of the Exercise Date by the lesser of (i) 85% of the
fair market value of a share of Common Stock on the Grant Date, or (ii) 85% of
the fair market value of a share of Common Stock on the Exercise Date.
EXERCISE DATES. There will be four Exercise Dates, generally six months
apart, within each offering period. The Exercise Dates for each offering period
will be the last trading day in January and July within each offering period,
except that for the first offering period, the Exercise Dates will be February
28, 2001, July 31,
22
2002, January 31, 2002 and July 31, 2002. In March 2001, the Company's Board of
Directors approved in principle a revised plan for the separation of its
Personal Networking and Mindspeed Technologies businesses by means of the
spin-off of the Personal Networking business to the Company's shareowners as a
new company. In the event the Company makes a pro rata distribution of the
shares of common stock in the new company to its shareowners, then outstanding
options under the 2001 ESPP will be exercised on the seventh trading day prior
to the record date for such distribution.
The fair market value of a share of Common Stock on a given date will be
determined by the Board in its discretion, based on the closing price of the
Common Stock for such date as reported by the Nasdaq National Market or, if such
price is not reported, the mean of the bid and asked prices per share of the
Common Stock as reported by Nasdaq or, in the event the Common Stock is listed
on a stock exchange, the fair market value per share will be the closing price
on such exchange on such date (or, in the event that the Common Stock is not
traded on such date, on the immediately preceding trading day), as reported in
The Wall Street Journal.
EXERCISE OF OPTION. Unless a participant withdraws from the 2001 ESPP, his
or her option to purchase shares of Common Stock will be exercised automatically
on each Exercise Date within an offering period, and the maximum number of full
shares subject to the option will be purchased at the applicable option price
with the accumulated contributions in his or her account; provided, however,
that such participant may not (a) accrue the right to purchase more than $25,000
of Common Stock during any calendar year, (b) purchase more than 20,000 shares
of Common Stock (subject to adjustment) in the aggregate under such option; and
(c) purchase more than 5,000 shares of Common Stock (subject to adjustment)
under such option on any Exercise Date within the offering period. If the
aggregate number of shares to be purchased upon exercise of options granted
under an offering period would exceed the maximum aggregate number of shares of
the Company's Common Stock available under the 2001 ESPP, the Board would make a
pro rata allocation of available shares in a uniform and equitable manner. The
shares purchased upon exercise of an option under the 2001 ESPP will be deemed
to be transferred to the participant on the Exercise Date. During his or her
lifetime, a participant's option to purchase shares under the 2001 ESPP is
exercisable only by him or her.
RESET OFFERING PERIODS. If the fair market value of a share of Common Stock
on the Grant Date of an offering period is less than or equal to the fair market
value of a share of Common Stock on the Grant Date of any prior offering period
then in effect, such prior offering period will terminate immediately following
the most recent Exercise Date immediately preceding the Grant Date of the new
offering period (the "Reset Offering Period"). All participants participating in
such prior offering period will terminate participation in such prior offering
period, and all options with respect to such prior offering period will
terminate, effective immediately following the purchases of shares of Common
Stock on such Exercise Date. Each such participant will be automatically
enrolled in the Reset Offering Period and will be granted an option for such
Reset Offering Period with the new lower Grant Date fair market value and will
be treated as electing to make contributions in the amount of the percentage of
such participant's compensation elected with respect to the prior offering
period. Any contributions credited to such participant's account after such
participant's purchase of shares of Common Stock will be paid to him or her
promptly after such termination of participation.
DEPOSIT OF SHARES. As promptly as practicable after each Exercise Date, the
Company will arrange for the deposit, into each participant's account with the
agent designated by the Company to administer the 2001 ESPP, of the number of
shares purchased upon exercise of his or her option.
VOLUNTARY WITHDRAWAL; TERMINATION OF EMPLOYMENT. A participant may withdraw
from a given offering period by terminating and withdrawing all, but not less
than all, of the contributions credited to his or her account under the 2001
ESPP at any time before the tenth calendar day prior to an Exercise Date, by
notifying the Company through the IVR system or the Web. All of the
participant's contributions credited to his or her account will be paid to him
or her as soon as administratively practicable after receipt of his or her
notice of withdrawal, the participant's option for the offering period will be
automatically terminated and no further contributions for the purchase of shares
will be made during the offering period. The employee is not entitled to again
participate in that offering period. However, an employee's withdrawal from an
offering period will not have any effect upon such employee's eligibility to
participate in subsequent offering periods under the 2001 ESPP.
23
Upon termination of a participant's employment by the Company or its
domestic subsidiaries prior to an Exercise Date for any reason, including
retirement or death, the contributions credited to his or her account will be
returned to the participant and the participant's option will be automatically
terminated.
CORPORATE TRANSACTIONS. In the event of the proposed dissolution or
liquidation of the Company, any offering period then in effect will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board. In the event of a proposed sale of all or substantially
all of the assets of the Company, or the merger of the Company with or into
another corporation, each option under the 2001 ESPP will be assumed or an
equivalent option will be substituted by such successor corporation or a parent
or subsidiary of such successor corporation, unless the Board determines, in its
sole discretion, that in lieu of such assumption or substitution, to shorten the
offering period(s) then in progress by setting a new Exercise Date. If the Board
shortens an offering period then in effect in lieu of assumption or substitution
in the event of a merger or sale of assets, the Board will notify each
participant in writing, at least ten days prior to the new Exercise Date, that
the Exercise Date for his or her option has been changed to the new Exercise
Date and that his or her option will be exercised automatically on the new
Exercise Date, unless prior to such date he or she has withdrawn from the
offering period as provided in the 2001 ESPP.
The Board may, if it so determines in the exercise of its sole discretion,
also make provision for adjusting the price per share of Common Stock covered by
each outstanding option, in the event that the Company effects one or more
reorganizations, recapitalizations, rights offerings or other increases or
reductions of shares of its outstanding Common Stock, and in the event of the
Company being consolidated with or merged into any other corporation.
AMENDMENT OR TERMINATION. The Board may suspend or terminate the 2001 ESPP
at any time. Unless terminated earlier, the 2001 ESPP will terminate upon the
earlier of 20 years or when all of the shares of the Company's Common Stock
authorized under the 2001 ESPP are issued.
The Board may amend the 2001 ESPP at any time. If the Company desires that
the 2001 ESPP be qualified under Section 423 of the Code, then the shareowners
of the Company must approve the 2001 ESPP within twelve months of its adoption
on August 10, 2001, and any amendment of the 2001 ESPP must be approved by the
shareowners within twelve months of the adoption of such amendment by the Board
if the amendment would (i) increase the number of shares of the Company's Common
Stock authorized for issuance under the 2001 ESPP (ii) modify the requirements
relating to eligibility for participation in the 2001 ESPP, or (iii) modify the
2001 ESPP or an offering period in any other way if such modification requires
shareowner approval in order for the 2001 ESPP to obtain employee stock purchase
plan treatment under Section 423 of the Code or to comply with the requirements
of Rule 16b-3 under the Exchange Act.
Without shareowner consent and without regard to whether any participant
rights may be considered to have been adversely affected, the Board (or its
committee) will be entitled to change the offering periods and Exercise Dates,
limit the frequency and/or number of changes in the amount withheld during an
offering period, establish the exchange ratio applicable to amounts withheld in
a currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable that
are consistent with the 2001 ESPP.
Options granted before amendment or termination of the 2001 ESPP will not
be impaired by any amendment or termination of the 2001 ESPP without the consent
of each employee to whom such options were granted.
As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.
24
TAX MATTERS. The tax consequences of participating in the 2001 ESPP will
depend upon whether the 2001 ESPP is qualified as an Employee Stock Purchase
Plan under Section 423 of the Code (a "Qualified ESPP"). This qualification is
contingent on the 2001 ESPP being approved by the shareowners of the Company
within twelve months of its adoption by the Board of Directors of the Company on
August 10, 2001. If the proposal is approved by shareowners of the Company, the
2001 ESPP will be a Qualified ESPP. If the Company does not obtain the necessary
shareowner approval, then the 2001 ESPP will not be a Qualified ESPP (i.e., the
2001 ESPP will be a "Nonqualified ESPP"). The different tax treatment for a
Qualified ESPP and the Nonqualified ESPP is set forth below.
QUALIFIED ESPP
If the 2001 ESPP is a Qualified ESPP, options granted under the 2001 ESPP
will qualify for favorable federal income tax treatment. A participant will
realize taxable ordinary income on amounts withheld for the purchase of shares
of the Company's Common Stock as if he or she actually received such amounts. No
further taxable income will be realized by a participant either at the time
participation begins (i.e. the Grant Date) or at the time shares are purchased
under the 2001 ESPP (i.e. the Exercise Date), nor will the Company be entitled
to a deduction at either such time in respect of the 2001 ESPP. The federal
income tax treatment upon disposition of shares purchased under the 2001 ESPP
depends on when such disposition occurs.
If the shares of Common Stock are disposed of at least two years after the
beginning of an offering period and at least one year after the shares of Common
Stock are transferred to the participant, then the participant will recognize as
ordinary taxable income an amount equal to the lesser of (i) the excess of the
fair market value of the Common Stock at the time of such disposition over the
purchase price or (ii) 15% of the fair market value of the Common Stock as of
the beginning of the offering period. The difference between the disposition
price and the participant's basis in the shares (that is, the purchase price
plus the amount, if any, taxed as ordinary income) will be treated as long-term
capital gain or loss. No deduction will be allowed to the Company for federal
income tax purposes under such circumstances.
If the shares of Common Stock are sold or otherwise disposed of before the
expiration of the holding period described above, then the participant will
recognize as ordinary taxable income an amount equal to the excess of the fair
market value of the Common Stock on the Exercise Date over the purchase price.
In addition, the participant will recognize capital gain or loss in an amount
equal to the difference between the amount realized upon the disposition of the
shares and the participant's basis in the shares (that is, the purchase price
plus the amount taxed as ordinary income). Even if the Common Stock is disposed
of for less than its fair market value on the Exercise Date, the same amount of
ordinary taxable income is attributed to the participant, and a capital loss is
recognized equal to the difference between the sales price and the fair market
value of the Common Stock on such Exercise Date. Any capital gain or loss will
be short-term or long-term, depending on whether the participant held the shares
for more than one year. The Company will be entitled to a deduction in an amount
equal to the amount recognized by a participant as ordinary taxable income upon
such a disposition.
Under present provision of the Code, long-term capital gains are taxable at
a maximum rate of 20% and capital losses of individual taxpayers are deductible
only against capital gains and a limited amount of ordinary income.
NONQUALIFIED ESPP
If the 2001 ESPP is a Nonqualified ESPP, then the 2001 ESPP will not be
treated as a tax-advantaged plan and generally participants in the 2001 ESPP
will realize taxable ordinary income at the time the Common Stock is purchased
under the 2001 ESPP in an amount equal to the excess of the fair market value of
the shares on the Exercise Date over the purchase price. In that case, the
Company will be entitled to a corresponding deduction equal to the amount
recognized by the participant as ordinary taxable income.
When the participant later sells the shares of Common Stock or otherwise
disposes of such shares in a taxable disposition, the participant generally will
recognize an additional gain or loss equal to the difference
25
between the value of the shares at the time of purchase and the price at which
the shares are sold. The sale of shares will be treated as a capital gain or
loss, which will be either long-term or short-term depending on whether the
participant held the shares for more than one year. The Company will not be
entitled to a deduction at such time.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE ADOPTION BY
THE BOARD OF DIRECTORS OF THE 2001 ESPP. UNLESS A CONTRARY CHOICE IS SPECIFIED,
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR APPROVAL OF THE
ADOPTION BY THE BOARD OF DIRECTORS OF THE 2001 ESPP.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS (PROPOSAL 4)
Deloitte & Touche LLP have been the Company's independent auditors since
1998 and, at the recommendation of the Audit Committee of the Board, have been
selected by the Board of Directors as the Company's independent auditors for the
fiscal year ending September 30, 2002.
Before the Audit Committee recommended to the full Board the appointment of
Deloitte & Touche LLP, it carefully considered the qualifications of that firm,
including its performance for Conexant and Rockwell in prior years and its
reputation for integrity and for competence in the fields of accounting and
auditing.
A representative of Deloitte & Touche LLP is expected to be present at the
Annual Meeting and will have an opportunity to make a statement if he or she so
desires. The representative will also be available to respond to appropriate
questions from shareowners.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS FOR THE COMPANY FOR
THE CURRENT FISCAL YEAR. UNLESS A CONTRARY CHOICE IS SPECIFIED, PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR RATIFICATION OF THE
APPOINTMENT.
OTHER MATTERS
AUDITORS' FEES
The aggregate fees billed by Deloitte & Touche LLP for professional
services rendered for the audit of the Company's annual financial statements for
fiscal 2001 and for the review of the Company's quarterly financial statements
for fiscal 2001 were $765,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The aggregate fees billed by Deloitte & Touche LLP for financial
information systems design and implementation services during fiscal 2001 were
$266,000.
ALL OTHER FEES
The aggregate fees billed by Deloitte & Touche LLP to the Corporation for
fiscal 2001 for all other services rendered to the Company were $2,617,000.
These non-audit fees relate principally to (i) tax-related services, (ii)
employee benefit plan audits and (iii) statutory financial statement audits
relating to the preparation for the proposed separation of the Company's
Mindspeed and Personal Networking business units.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires the Company's
directors and officers, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership of, and
transactions in, the Company's securities with the Securities and Exchange
Commission. Such directors, officers and 10% shareowners are also required to
furnish the Company with copies of all Section 16(a) forms they file.
26
Based solely on a review of the copies of such forms received by it, and on
written representations from certain reporting persons, the Company believes
that during fiscal year 2001 its directors, officers and 10% shareowners timely
filed all forms required to be filed under Section 16(a).
2003 SHAREOWNER PROPOSALS OR NOMINATIONS
Shareowners of the Company may submit proposals that they believe should be
voted upon at the Company's Annual Meetings of Shareowners or nominate persons
for election to the Board of Directors. Pursuant to Rule 14a-8 under the
Securities Exchange Act, some shareowner proposals may be eligible for inclusion
in the Company's Proxy Statement for the Company's 2003 Annual Meeting of
Shareowners. To be eligible for inclusion in the Company's 2003 Proxy Statement,
any such shareowner proposals must be submitted in writing to the Secretary of
the Company no later than September 11, 2002. The submission of a shareowner
proposal does not guarantee that it will be included in the Company's Proxy
Statement.
With respect to the Company's 2003 Annual Meeting, under the Company's
By-laws, a shareowner proposal or nomination must be submitted in writing to the
Secretary of the Company not less than 90 days nor more than 120 days prior to
the anniversary of the 2002 Annual Meeting, unless the date of the 2003 Annual
Meeting of Shareowners is advanced by more than 30 days or delayed (other than
as a result of adjournment) by more than 60 days from the anniversary of the
2002 Annual Meeting. For the Company's 2003 Annual Meeting, this means that any
such proposal or nomination must be submitted no earlier than October 30, 2002
and no later than November 29, 2002. If the date of the 2003 Annual Meeting is
advanced by more than 30 days or delayed (other than as a result of adjournment)
by more than 60 days from the anniversary of the 2002 Annual Meeting, the
shareowner must submit any such proposal or nomination no earlier than the close
of business on the 120th day prior to the 2003 Annual Meeting and no later than
the close of business on the later of the 90th day prior to the 2003 Annual
Meeting or the 10th day following the day on which public announcement of the
date of such meeting is first made. The shareowner's submission must include
certain specified information concerning the proposal or nominee, as the case
may be, and information as to the shareowner's ownership of Common Stock of the
Company. Proposals or nominations not meeting these requirements will not be
entertained at the 2003 Annual Meeting. If the shareowner does not also comply
with the requirements of Rule 14a-4 under the Securities Exchange Act, the
Company may exercise discretionary voting authority under proxies it solicits to
vote in accordance with its best judgment on any such proposal or nomination
submitted by a shareowner. Shareowners should contact the Secretary of the
Company in writing at 4311 Jamboree Road, Newport Beach, California 92660-3095
to make any submission or to obtain additional information as to the proper form
and content of submissions.
ANNUAL REPORT TO SHAREOWNERS AND FINANCIAL STATEMENTS
The Company's 2001 Annual Report to Shareowners is being mailed to the
Company's shareowners together with this proxy statement. Copies of the
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
2001 will be furnished to interested shareowners, without charge, upon written
request. Exhibits to the Form 10-K will be furnished upon written request and
payment of a fee of ten cents per page covering the Company's costs. Written
requests should be directed to the Company at 4311 Jamboree Road, Newport Beach,
California 92660-3095, Attention: Investor Relations. The Company's 2001 Annual
Report to Shareowners, the Form 10-K and this proxy statement are also available
on Conexant's Investor Relations Website (http://www.conexant.com).
OTHER MATTERS
At the date hereof, there are no other matters that the Board of Directors
intends to present, or has reason to believe others will present, at the Annual
Meeting. If other matters come before the Annual Meeting, the persons named in
the accompanying form of proxy will vote in accordance with their best judgment
with respect to such matters.
27
EXPENSES OF SOLICITATION
The cost of the solicitation of proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited personally, or by
telephone or by telegraph, by a few regular employees of the Company without
additional compensation. The Company will also reimburse brokers and other
persons holding stock in their names, or in the names of nominees, for their
expenses for sending proxy materials to principals and obtaining their proxies.
January 10, 2002
28
APPENDIX A
CONEXANT SYSTEMS, INC.
DIRECTORS STOCK PLAN
AS AMENDED AUGUST 10, 2001
1. PURPOSE OF THE PLAN.
The purpose of the Directors Stock Plan (the Plan) is to link the
compensation of non-employee directors of Conexant Systems, Inc. (Conexant)
directly with the interests of the shareowners.
2. PARTICIPANTS.
Participants in the Plan shall consist of directors of Conexant who are not
employees of Conexant or any of its subsidiaries (Non-Employee Director). The
term "subsidiary" as used in the Plan means a corporation more than 50% of the
voting stock of which, or an unincorporated business entity more than 50% of the
equity interest in which, shall at the time be owned directly or indirectly by
Conexant.
3. SHARES RESERVED UNDER THE PLAN.
Subject to the provisions of Section 9 of the Plan, there shall be reserved
for delivery under the Plan an aggregate number of shares of Common Stock
of Conexant (Shares) equal to the sum of (a) 980,000 plus (b) an annual increase
effective on the first day of each fiscal year of Conexant commencing with the
fiscal year beginning on or about October 1, 2002 of an amount equal to the
greater of (i) 150,000 Shares or (ii) 0.067% of the Shares outstanding on such
date, provided that the Board may, in its sole discretion, determine that the
amount of any one or more annual increases shall be the lesser of such numbers
of Shares. Shares to be delivered under the Plan may be authorized and unissued
Shares, Shares held in treasury or any combination thereof.
4. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Compensation and Management
Development Committee (the Committee) of the Board of Directors of Conexant (the
Board), subject to the right of the Board, in its sole discretion, to exercise
or authorize another committee or person to exercise some of or all the
responsibilities, powers and authority vested in the Committee under the Plan.
The Committee (or the Board or any other committee or person authorized by the
Board) shall have authority to interpret the Plan, and to prescribe, amend and
rescind rules and regulations relating to the administration of the Plan, and
all such interpretations, rules and regulations shall be conclusive and binding
on all persons.
5. EFFECTIVE DATE OF THE PLAN.
The Plan, as amended on November 1, 2001, shall be submitted to the
shareowners of Conexant for approval at the Annual Meeting of Shareowners to be
held on February 27, 2002, and, if approved by the shareowners, shall become
effective on the date of such shareowner approval. The Plan theretofore approved
by the Board shall remain in full force and effect if the Plan, as amended, is
not so approved.
6. STOCK OPTIONS.
Each Non-Employee Director in office on January 2, 1999 shall be granted,
on or prior to March 31, 1999, an option to purchase 80,000 Shares. Each other
Non-Employee Director shall be granted an option to purchase 40,000 Shares at
the meeting of the Board at which, or immediately following the Annual Meeting
of Shareowners at which, the Non-Employee Director is first elected a director
of Conexant. Immediately following the Annual Meeting of Shareowners held in the
year 2000 and each Annual Meeting of Shareowners thereafter, each Non-Employee
Director who has served as a Non-Employee Director for at least one year and is
elected a director at, or who was previously elected and continues as a director
after, that Annual Meeting
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shall be granted an option to purchase 20,000 Shares, provided that the Board
may, by action taken on or before the day following the date of any such Annual
Meeting, defer the option grants in respect of such Annual Meeting for up to 60
days following such Annual Meeting to a date coinciding with the date of grant
of options by Conexant to some or all of the officers of Conexant.
The exercise price per share for each option granted under the Plan shall
be the closing price per share (the Fair Market Value) of Shares on the date of
grant as reported in the NASDAQ reporting system (or on the next preceding day
such stock was traded if it was not traded on the date of grant). The purchase
price of the Shares with respect to which an option or portion thereof is
exercised shall be payable in full in cash, Shares valued at their Fair Market
Value on the date of exercise, or a combination thereof. Each option may be
exercised in whole or in part at any time after it becomes exercisable; and each
option shall become exercisable in four approximately equal installments on each
of the first, second, third and fourth anniversaries of the date the option is
granted. No option shall be exercisable prior to one year nor after ten years
from the date of the grant thereof; provided, however, that if the holder of an
option dies, the option may be exercised from and after the date of the
optionee's death for a period of three years (or until the expiration date
specified in the option if earlier) even if it was not exercisable at the date
of death. Moreover, if an optionee retires after attaining age 72 or completing
at least ten years service as a director, all options then held by such optionee
shall be exercisable even if they were not exercisable at such retirement date;
provided, however, that each such option shall expire at the earlier of five
years from the date of the optionee's retirement or the expiration date
specified in the option.
Options granted under the Plan are not transferable other than (i) by will
or by the laws of descent and distribution; or (ii) by gift to the grantee's
spouse or natural, adopted or stepchildren or grandchildren (Immediate Family
Members) or to a trust for the benefit of one or more of the grantee's Immediate
Family Members or to a family charitable trust established by the grantee or a
member of the grantee's family. If an optionee ceases to be a director while
holding unexercised options, such options are then void, except in the case of
(i) death, (ii) disability, (iii) retirement after attaining age 72 or
completing ten years service as a director, or (iv) resignation from the Board
for reasons of the antitrust laws, compliance with Conexant's conflict of
interest policies or other circumstances that the Committee may determine as
serving the best interests of Conexant.
7. SHARES IN LIEU OF CASH COMPENSATION.
Each Non-Employee Director may elect each year, not later than December 31
of the year preceding the year as to which an election is to be applicable, to
receive all or any portion of the cash retainer to be paid for board, committee
or other service in the following calendar year through the issuance or transfer
of Shares, valued at the closing price as reported in the NASDAQ reporting
system on the date when each payment of such retainer amount would otherwise be
made in cash (or on the next preceding day such stock was traded if it was not
traded on that date). Each Non-Employee Director making such an election may
also elect at the same time to receive those Shares in the form of restricted
stock (Restricted Shares). Upon receipt of Shares, the recipient shall have all
the rights of a shareowner. Upon receipt of Restricted Shares, the recipient
shall have the right to vote the Shares and to receive dividends thereon, and
the Shares shall have all the attributes of outstanding Shares except that the
registered owner shall have no right to direct the transfer thereof. Restricted
Shares shall be held in book-entry accounts subject to the direction of Conexant
(or if Conexant elects, certificates therefor may be issued in the recipient's
name but delivered to and held by Conexant) until ten days after (i) the
recipient retires from the Board after attaining age 72 or completing at least
ten years service as a director or (ii) the recipient resigns from the Board or
ceases to be a director by reason of the antitrust laws, compliance with
Conexant's conflict of interest policies, death, disability or other
circumstances the Board determines not to be adverse to the best interests of
Conexant, when the restrictions on such book-entry accounts shall be released
(or any certificates issued shall be delivered to the director), and such Shares
shall cease to be Restricted Shares.
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8. ADDITIONAL COMPENSATION.
The Board or the Committee may, from time to time, as and when either
thereof deems it appropriate, provide one or more Non-Employee Directors with
additional compensation under the Plan. Such additional compensation may be in
the form of a grant of Shares, Restricted Shares, options to purchase Shares or
a combination thereof, subject to the terms, conditions and restrictions
established by the Board or the Committee at the time of grant.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
If there shall be any change in or affecting Shares on account of any
merger, consolidation, reorganization, recapitalization, reclassification, stock
dividend, stock split or combination, or other distribution to holders of Shares
(other than a cash dividend), there shall be made or taken such amendments to
the Plan and such adjustments and actions thereunder as the Board may deem
appropriate under the circumstances.
10. GOVERNMENT AND OTHER REGULATIONS.
The obligations of Conexant to deliver Shares upon exercise of options
granted under Section 6 of the Plan, pursuant to an election made under Section
7 of the Plan or pursuant to a grant made under Section 8 of the Plan shall be
subject to (i) all applicable laws, rules and regulations and such approvals by
any governmental agencies as may be required, including, without limitation,
compliance with the Securities Act of 1933, as amended, and (ii) the condition
that such Shares shall have been duly listed and approved for quotation and
trading in the NASDAQ reporting system.
11. AMENDMENT AND TERMINATION OF THE PLAN.
The Plan may be amended by the Board in any respect, provided that, without
shareowner approval, no amendment shall (i) materially increase the maximum
number of Shares available for delivery under the Plan (other than as provided
for in Section 3 hereof and adjustments pursuant to Section 9 hereof), (ii)
materially increase the benefits accruing to participants under the Plan, or
(iii) materially modify the requirements as to eligibility for participation in
the Plan. The Plan may also be terminated at any time by the Board.
12. MISCELLANEOUS.
(a) If a Change of Control as defined in Article III, Section 13(I)(1) of
Conexant's By-Laws shall occur, all options then outstanding pursuant to the
Plan shall forthwith become fully exercisable whether or not then exercisable
and the restrictions on all Shares granted as Restricted Stock under the Plan
shall forthwith lapse.
(b) Nothing contained in the Plan shall be deemed to confer upon any person
any right to continue as a director of or to be associated in any other way with
Conexant.
(c) To the extent that Federal laws do not otherwise control, the Plan and
all determinations made and actions taken pursuant hereto shall be governed by
the law of the State of Delaware.
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APPENDIX B
CONEXANT SYSTEMS, INC.
2001 EMPLOYEE STOCK PURCHASE PLAN
(EFFECTIVE AS OF SEPTEMBER 4, 2001)
The Conexant Systems, Inc. 2001 Employee Stock Purchase Plan has been
established and operated in accordance with the following provisions.
1. PURPOSE. The purpose of this Plan is to maintain a competitive equity
compensation program to attract, motivate, retain, and compensate present and
future employees of the Company and its Participating Subsidiaries; and to
provide incentive for such employees to acquire a proprietary interest (or
increase an existing proprietary interest) in the Company through the purchase
of Common Stock, and therefore more closely align the interests of the employees
and shareowners of the Company. It is the present intention of the Company that
this Plan qualify as an "Employee Stock Purchase Plan" under Section 423 of the
Code. If the stockholders of the Company do not approve this Plan within twelve
(12) months of the adoption of the Plan, then the Plan shall nevertheless
continue as an Employee Stock Purchase Plan not qualified under Section 423 of
the Code. Regardless of whether the Plan qualifies as an Employee Stock Purchase
Plan under Section 423 of the Code, the provisions of this Plan will be
administered, interpreted and construed in a manner consistent with the
requirements of Section 423 of the Code.
2. DEFINITIONS. Capitalized terms not otherwise defined in this Plan have
the following meanings:
"Agent" means Mellon Investor Services LLC or such successor agent as the
Company may employ.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the Common Stock, par value $1.00 per share, of the
Company.
"Company" means Conexant Systems, Inc., a Delaware corporation, and any
successor by merger, consolidation or otherwise.
"Compensation" means all compensation paid to an Employee by the Company or
a Participating Subsidiary, including all salary, wages (including amounts
elected to be deferred by the Employee, but would otherwise have been paid,
under any cash or deferred arrangement established by the Company or a
Participating Subsidiary), overtime pay, commissions, bonuses, and other
remuneration paid directly to the Employee; but excluding the cost of employee
benefits paid by the Company or a Participating Subsidiary, education or tuition
reimbursements, imputed income arising under any Company or Participating
Subsidiary group insurance or benefit program, travel expenses, business and
moving expense reimbursements, income received in connection with stock options,
contributions made by the Company or any Participating Subsidiary under any
employee benefit plan, and similar items of compensation.
"Continuous Status as an Employee" means the absence of any interruption or
termination of service as an Employee. Continuous Status as an Employee will not
be considered interrupted in the case of a leave of absence agreed to in writing
by the Company, provided that such leave is for a period of not more than ninety
(90) days or reemployment upon the expiration of such leave is guaranteed by
contract or statute.
"Contributions" means all amounts credited to the account of a Participant
pursuant to this Plan.
"Employee" means any person, including an Officer, who is customarily
employed by the Company or any Participating Subsidiary for at least twenty (20)
hours per week and for more than five (5) months in any calendar year.
"Eligible Employee" means an Employee who is eligible to participate in
this Plan, in accordance with the provisions of Section 3.
"Enrollment Date" means the first day of each Enrollment Period of this
Plan.
B-1
"Enrollment Periods" means the periods during which an Eligible Employee
may elect to become a Participant in this Plan for the immediately following
Offering Period as follows:
(a) For Offering Periods beginning on or after September 4, 2001 and
before August 1, 2002, the periods commencing on the February 1 or August 1
immediately preceding such Offering Period and terminating on the fifth
(5th) Trading Day prior to such Offering Period; and
(b) For Offering Periods beginning on or after August 1, 2002, the
periods commencing on the January 1 or July 1 immediately preceding such
Offering Period and terminating on the fifth (5th) Trading Day prior to
such Offering Period.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercise Date" means:
(a) For Offering Periods commencing on or after September 4, 2001,
February 28, 2003, July 31, 2002, January 31, 2003, and July 31, 2003;
provided, however, that there shall be a "Purchase Date" on the seventh
(7th) Trading Day prior to the Distribution Record Date; and
(b) For Offering Periods commencing on or after March 1, 2002, the
last Trading Days in January and July occurring during such Offering
Period; provided, however, notwithstanding the foregoing, there shall be a
"Purchase Date" on the seventh (7th) Trading Day prior to the Distribution
Record Date
"Fair Market Value" means the fair market value of a share of Common Stock,
as determined in accordance with Section 7(b).
"Grant Date" means the first Trading Day of an Offering Period.
"IVR System" means the integrated voice response system maintained for this
Plan and provided by the Agent, through which Participants may elect to
participate, amend their participation, or withdraw from participation in this
Plan, pursuant to the terms and conditions of this Plan.
"New Exercise Date" has the meaning set forth in Section 18(b).
"Offering Period" means one of the following periods during which an option
granted pursuant to this Plan may be exercised:
(a) The first Offering Period will be the period of approximately
twenty-three (23) months commencing on September 4, 2001 and terminating on
July 31, 2003.
(b) The second Offering Period will be a period of twenty-three (23)
months commencing on March 1, 2002 and terminating on January 31, 2004.
(c) Subsequent Offering Periods commencing after March 1, 2002 will be
the following periods:
(i) The period commencing on any February 1 (or first Trading Day
thereafter) and terminating on the last Trading Day in January next
preceding the second annual anniversary of the commencement of such
period.
(ii) The period commencing on any August 1 (or the first Trading
Day thereafter) and terminating on the last Trading Day in July next
preceding the second annual anniversary of the commencement of such
period.
Notwithstanding the foregoing, each Offering Period shall terminate on the
seventh (7th) Trading Day prior to the Distribution Record Date, and a new
Offering Period shall begin on the seventh (7th) Trading Day after the
Distribution Date and shall end on either the January 31 or July 31 that falls
at least eighteen months but less than twenty-four months after the Grant Date
for such new Offering Period. For this purpose, the "Distribution Record Date"
shall mean the record date for the distribution of shares of common stock, par
value $1.00 per share, of New Conexant, Inc. to the stockholders of the Company
and the "Distribution Date" shall mean the date of the distribution of such
shares of common stock to the stockholders of the Company.
B-2
"Officer" means a person who is an officer of the Company, within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
"Parent" means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if, on the relevant date, each of
the corporations other than the Company owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain.
"Participant" means an Eligible Employee who has elected to participate in
the Plan, in accordance with the provisions of Section 5.
"Participating Subsidiary" means any domestic Subsidiary of the Company.
"Plan" means this Conexant Systems, Inc. 2001 Employee Stock Purchase Plan.
"Reserves" has the meaning set forth in Section 18(a).
"Subsidiary" means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if, on the relevant date, each
of the corporations other than the last corporation in the unbroken chain owns
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
"Trading Day" means a day on which the National Stock Exchanges and the
National Association of Securities Dealers Automated Quotation (NASDAQ) System
are open for trading.
"Web" means Mellon Employee Service Direct System that is used to
facilitate Plan transactions and is accessible through Conexant NextWeb.
3. ELIGIBILITY.
(a) Any Employee who has been continuously employed by the Company or a
Participating Subsidiary who is employed by the Company or a Participating
Subsidiary as of the Enrollment Date of an Enrollment Period will be eligible to
participate in this Plan during such Offering Period, subject to the
requirements of Section 5(a) and the limitations imposed by Section 423(b) of
the Code.
(b) Any provisions of this Plan to the contrary notwithstanding, and
regardless of whether the Plan qualifies as an Employee Stock Purchase Plan
under Section 423 of the Code; no Employee will be granted an option under this
Plan if (i) immediately after the grant, such Employee (or any other person
whose stock would be attributed to such Employee pursuant to Section 424(d) of
the Code) would own stock and/or hold outstanding options to purchase stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any Subsidiary or any Parent; or
(ii) as determined under Section 423(b)(8) of the Code, such option would permit
his or her rights to purchase stock under all employee stock purchase plans
(described in Section 423 of the Code) of the Company and its Subsidiaries and
Parents to accrue at a rate that exceeds Twenty-Five Thousand Dollars ($25,000)
of the Fair Market Value of such stock (determined at the time such option is
granted) for each calendar year in which such option is outstanding at any time.
4. IMPLEMENTATION. This Plan will be implemented by a series of Offering
Periods, as specified under Section 2. The Board will have the power to change
the duration and/or the frequency of Offering Periods and Exercise Dates with
respect to future offerings without shareowner approval.
5. PARTICIPATION.
(a) An Eligible Employee may become a Participant in this Plan by enrolling
through an IVR System, the Web or other electronic form of subscription
agreement during any Enrollment Period of any Offering Period. Each election to
enroll in this Plan (whether through the IVR System, the Web or by manual or
electronic form of subscription agreement) will identify the percentage of the
Participant's Compensation to be paid as Contributions pursuant to this Plan (as
provided in Section 6), and will continue in effect until the Participant makes
a new enrollment election through the IVR System or the Web (or other electronic
form of
B-3
enrollment provided by the Company) pursuant to the provisions of this Section
5, or amends or terminates his or her participation in this Plan pursuant to the
provisions of Sections 6 and 10.
(b) If the Fair Market Value of a share of Common Stock on the Grant Date
of an Offering Period (the "Reset Offering Period") is less than or equal to the
Fair Market Value of a share of Common Stock on the Grant Date of any prior
Offering Period, such prior Offering Period shall terminate immediately
following the Exercise Date of the prior Offering Period next preceding the
Grant Date of the Reset Offering Period. All Participants participating in such
prior Offering Period shall terminate participation in such prior Offering
Period, and all options with respect to such prior Offering Period shall
terminate, effective immediately following the purchases of shares of Common
Stock by such Participants on such Exercise Date. Each such Participant shall be
automatically enrolled in the Reset Offering Period and shall be granted an
option for such Reset Offering Period and shall be treated as electing to make
Contributions in the amount of the percentage of such Participant's Compensation
elected with respect to the prior Offering Period and in effect on such Exercise
Date. Any Contributions credited to such Participant's account after such
Participant's purchase of shares of Common Stock will be paid to him or her
promptly after such termination of participation.
6. METHOD OF PAYMENT OF CONTRIBUTIONS.
(a) A Participant will elect to deduct automatically on each payday during
an Offering Period not less than one percent (1%) nor more than ten percent
(10%) (in whole percentages only) of his or her Compensation, to be paid as
Contributions pursuant to this Plan. Such deductions shall be determined based
on the Participant's election in effect on the payday on which such Compensation
is paid. Payroll deductions will commence on the first payday following the
Grant Date and shall end on the last payday during the Offering Period, unless
(i) the Participant's participation in such Offering Period terminates pursuant
to Section 5(c) or (ii) the Participant amends or terminates his or her
participation in this Plan pursuant to the provisions of Sections 6 and 10 of
the Plan. All payroll deductions made by a Participant will be credited to his
or her account under this Plan. A Participant may not make any additional
payments into such account.
(b) A Participant may discontinue his or her participation in this Plan as
provided in Section 10 or, at any time during each Offering Period, may increase
or decrease the rate of his or her Contributions by payroll deductions to any
whole percentage of not less than one percent (1%) and not more than ten percent
(10%), or may suspend Contributions by payroll deductions, by making a
Contribution increase, decrease or suspension request through the IVR System or
the Web (or by submitting a new written or electronic subscription agreement if
the IVR System or the Web is not available). A Participant's election to suspend
Contributions during an Offering Period shall not limit such Participant's right
to resume payroll deductions at a later date during the Offering Period by
electing an increase in Contributions to any whole percentage of not less than
one percent (1%) and not more than ten percent (10%). The increase, decrease or
suspension in Contributions will be effective as soon as administratively
practicable following the date of the Contribution increase, decrease or
suspension request.
(c) Notwithstanding the foregoing, and regardless of whether the Plan
qualifies as an Employee Stock Purchase Plan under Section 423 of the Code, to
the extent necessary to comply with Section 423(b)(8) of the Code and Section
3(b), the Company may reduce a Participant's Contributions to zero at such time
during any Offering Period that is scheduled to end during the current calendar
year that the aggregate of all Contributions accumulated with respect to such
Offering Period and any other Offering Period would exceed the limitations
imposed by such Sections. Payroll deductions will re-commence at the rate
provided by the Participant in his or her IVR System or Web enrollment (or
subscription agreement, if applicable) to the extent such additional
Contributions may be applied to purchase shares of Common Stock in accordance
with Code Section 423(b)(8) and Section 3(b) and the Plan, unless terminated by
the Participant as provided in Section 10.
7. OPTION GRANTS.
(a) On the Grant Date of each Offering Period, each Participant in such
Offering Period will be granted an option to purchase, on each Exercise Date of
such Offering Period, a number of shares of Common Stock determined by dividing
such Participant's Contributions accumulated prior to such Exercise Date and
retained
B-4
in the Participant's account as of the Exercise Date by the lesser of (i)
eighty-five percent (85%) of the Fair Market Value of a share of Common Stock on
the Grant Date, or (ii) eighty-five percent (85%) of the Fair Market Value of a
share of Common Stock on the Exercise Date; provided, however, that such
Participant may not purchase more than 20,000 shares of Common Stock under such
option; subject to adjustment upon changes in capitalization of the Company, as
provided in Section 18, and, provided, further, that, such Participant may not
purchase more than 5,000 shares of Common Stock under such option on any
Exercise Date; subject to adjustment upon changes in capitalization of the
Company, as provided in Section 18, and, provided, further, that such purchases
will be subject to the limitations set forth in Section 3(b) and Section 12.
(b) The option price per share of the shares offered in a given Offering
Period will be the lesser of (i) eighty-five percent (85%) of the Fair Market
Value of a share of Common Stock on the Grant Date; or (ii) eighty-five percent
(85%) of the Fair Market Value of a share of Common Stock on the Exercise Date.
The Fair Market Value of a share of Common Stock on a given date will be
determined by the Board in its discretion, based on the closing price of the
Common Stock for such date (or, in the event that the Common Stock is not traded
on such date, on the immediately preceding Trading Day), as reported by the
National Association of Securities Dealers Automated Quotation (Nasdaq) National
Market or, if such price is not reported, the mean of the bid and asked prices
per share of the Common Stock as reported by Nasdaq or, in the event the Common
Stock is listed on a stock exchange, the Fair Market Value per share will be the
closing price on such exchange on such date (or, in the event that the Common
Stock is not traded on such date, on the immediately preceding Trading Day), as
reported in The Wall Street Journal.
8. EXERCISE OF OPTION.
(a) Unless a Participant withdraws from this Plan as provided in Section
10, his or her option to purchase shares of Common Stock will be exercised
automatically on each Exercise Date of an Offering Period, and the maximum
number of full shares subject to the option will be purchased at the applicable
option price with the accumulated Contributions in his or her account. If the
stockholders of the Company do not approve this Plan within twelve (12) months
of the adoption of this Plan by the Company's Board, then the Company shall
satisfy any federal, state, or local tax withholding obligations relating to a
Participant's purchase of Common Stock by withholding the entire minimum
required withholding amount from such Participant's paycheck(s) as soon as
administratively practicable following such purchase until paid in full. The
shares purchased upon exercise of an option hereunder will be deemed to be
transferred to the Participant on the Exercise Date. During his or her lifetime,
a Participant's option to purchase shares hereunder is exercisable only by him
or her.
(b) Following the purchase of shares of Common Stock by a Participant on an
Exercise Date in accordance with subsection (a) above, any Contributions
remaining in such Participant's account immediately following the purchase of
shares on such Exercise Date shall be returned to the Participant as promptly as
administratively practicable and in no event shall such remaining Contributions
be applied towards the purchase of shares of Common Stock by such Participant on
any subsequent Exercise Date.
9. DEPOSIT OF SHARES. As promptly as practicable after each Exercise Date,
the Company will arrange for the deposit, into each Participant's account with
the Agent designated by the Company to administer this Plan, of the number of
shares purchased upon exercise of his or her option.
10. VOLUNTARY WITHDRAWAL; TERMINATION OF EMPLOYMENT.
(a) A Participant may withdraw all, but not less than all, of the
Contributions credited to his or her account under this Plan at any time before
the tenth (10th) calendar day prior to an Exercise Date, by notifying the
Company through the IVR System or the Web (or in writing, if the IVR System or
the Web is not available). All of the Participant's Contributions credited to
his or her account will be paid to him or her as soon as administratively
practicable after receipt of his or her notice of withdrawal; the Participant's
option for the current Offering Period will be automatically terminated; and no
further Contributions for the purchase of shares will be made during the
Offering Period.
B-5
(b) Upon termination of a Participant's Continuous Status as an Employee
prior to an Exercise Date for any reason, including retirement or death, the
Contributions credited to his or her account will be returned to the Participant
or, in the case of his or her death, to the person or persons entitled thereto
under Section 14, and the Participant's option will be automatically terminated.
(c) A Participant's withdrawal from this Plan during an Offering Period
will not have any effect upon his or her eligibility to participate in this Plan
during any succeeding Offering Period or in any similar plan that may hereafter
be adopted by the Company.
11. INTEREST. No interest will accrue on the Contributions of a Participant
in this Plan.
12. COMMON STOCK.
(a) The maximum number of shares of the Company's Common Stock that will be
made available for sale under this Plan will be five million (5,000,000) shares,
subject to adjustment upon changes in capitalization of the Company, as provided
in Section 18. Such shares may be newly issued shares or shares reacquired in
private transactions or open market purchases. If and to the extent that any
right to purchase reserved shares shall not be exercised by any Participant for
any reason, or if such right to purchase shall terminate as provided herein,
shares that have not been so purchased hereunder shall again become available
for the purposes of this Plan, unless this Plan shall have been terminated, but
all shares sold under this Plan, regardless of source, shall be counted against
the limitation set forth above. If the total number of shares that would
otherwise be subject to options granted pursuant to Section 7(a) on the Grant
Date of an Offering Period exceeds the number of shares then available under
this Plan (after deduction of all shares for which options have been exercised
or are then outstanding), the Company will make a pro rata allocation of the
shares remaining available for option grant in as uniform a manner as will be
practicable and as it will determine to be equitable. In such event, the Company
will give written notice of such reduction of the number of shares subject to
the option to each Participant affected thereby and will similarly reduce the
rate of Contributions, if necessary.
(b) Participants will have no interests or voting rights in Common Stock
covered by their options until such options have been exercised.
(c) Shares to be delivered to a Participant under this Plan will be
registered in the name of the Participant.
13. ADMINISTRATION. The Board, or a committee appointed by the Board, will
supervise and administer this Plan and will have full power to adopt, amend and
rescind any rules deemed desirable and appropriate for the administration of
this Plan and not inconsistent with this Plan, to construe and interpret this
Plan, and to make all other determinations necessary or advisable for the
administration of this Plan. The composition of the committee will be in
accordance with the requirements to obtain or retain any available exemption
from the operation of Section 16(b) of the Exchange Act, pursuant to Rule 16b-3
promulgated thereunder.
14. DESIGNATION OF BENEFICIARY.
(a) A Participant may file a written designation of a beneficiary who is to
receive any shares and cash, if any, from the Participant's account under this
Plan in the event of such Participant's death. If a Participant is married and
the designated beneficiary is not the spouse, spousal consent will be required
for such designation to be effective.
(b) Such designation of beneficiary may be changed by the Participant (and
his or her spouse, if any) at any time by written notice. In the event of the
death of a Participant and in the absence of a beneficiary validly designated
under this Plan who is living at the time of such Participant's death, the
Company will deliver such shares and/or cash to the executor or administrator of
the estate of the Participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its discretion, may
deliver such shares and/or cash to the spouse or to any one or more dependents
or relatives of the Participant, or if no spouse, dependent or relative is known
to the Company, then to such other person as the Company may designate.
B-6
15. TRANSFERABILITY. Neither Contributions credited to a Participant's
account nor any rights with regard to the exercise of an option or to receive
shares under this Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and
distribution, or as provided in Section 14) by the Participant. Any such attempt
at assignment, transfer, pledge or other disposition will be without effect,
except that the Company may treat such act as an election to withdraw funds in
accordance with Section 10.
16. USE OF FUNDS. All Contributions received or held by the Company under
this Plan may be used by the Company for any corporate purpose, and the Company
will not be obligated to segregate such Contributions. No interest will accrue
or be credited with respect to such Contributions.
17. REPORTS. Individual accounts will be maintained for each Participant in
this Plan. Statements of account will be given to Participants promptly
following each Exercise Date, which statements will set forth the amounts of
Contributions, the per share purchase price, the number of shares purchased and
the remaining cash balance, if any.
18.ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE TRANSACTIONS.
(a) Adjustment. Subject to any required action by the shareowners of the
Company, the number of shares of Common Stock covered by each option under this
Plan that has not yet been exercised and the number of shares of Common Stock
that have been authorized for issuance under this Plan but have not yet been
placed under option (collectively, the "Reserves"), as well as the price per
share of Common Stock covered by each option under this Plan that has not yet
been exercised, will be proportionately adjusted for any increase or decrease in
the number of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, or any other increase or decrease in the number of shares of
Common Stock effected, without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
will not be deemed to have been "effected without receipt of consideration."
Such adjustment will be made by the Board, whose determination in that respect
will be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, will affect, and no adjustment by
reason thereof will be made with respect to, the number or price of shares of
Common Stock subject to an option.
(b) Corporate Transactions. In the event of the proposed dissolution or
liquidation of the Company, the Offering Period will terminate immediately prior
to the consummation of such proposed action, unless otherwise provided by the
Board. In the event of a proposed sale of all or substantially all of the assets
of the Company, or the merger of the Company with or into another corporation,
each option under this Plan will be assumed or an equivalent option will be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless the Board determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution, to shorten the
Offering Period then in progress by setting a new Exercise Date (the "New
Exercise Date"). If the Board shortens the Offering Period then in progress in
lieu of assumption or substitution in the event of a merger or sale of assets,
the Board will notify each Participant in writing, at least ten (10) days prior
to the New Exercise Date, that the Exercise Date for his or her option has been
changed to the New Exercise Date and that his or her option will be exercised
automatically on the New Exercise Date, unless prior to such date he or she has
withdrawn from the Offering Period as provided in Section 10. For purposes of
this Section, an option granted under this Plan will be deemed to be assumed if,
following the sale of assets or merger, the option confers the right to
purchase, for each share of option stock subject to the option immediately prior
to the sale of assets or merger, the consideration (whether stock, cash or other
securities or property) received in the sale of assets or merger by holders of
Common Stock for each share of Common Stock held on the effective date of the
transaction (and, if such holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
shares of Common Stock); provided, however, that if such consideration received
in the sale of assets or merger was not solely common stock of the successor
corporation or its parent (as defined in Section 424(e) of the Code), the Board
may, with the consent of the successor corporation and the Participant, provide
for the consideration to be received upon exercise of the option to be solely
common stock of the successor corporation or its parent
B-7
equal in fair market value to the per share consideration received by holders of
Common Stock and the sale of assets or merger.
The Board may, if it so determines in the exercise of its sole discretion,
also make provision for adjusting the Reserves, as well as the price per share
of Common Stock covered by each outstanding option, in the event that the
Company effects one or more reorganizations, recapitalizations, rights offerings
or other increases or reductions of shares of its outstanding Common Stock, and
in the event of the Company being consolidated with or merged into any other
corporation.
19. AMENDMENT OR TERMINATION.
(a) The Board may at any time terminate or amend this Plan; provided,
however, that (i) if the stockholders of the Company approve this Plan within
twelve (12) months of the adoption of this Plan, then to the extent that the
Company desires that the Plan be qualified under Section 423 of the Code, the
Company will obtain shareowner approval of any amendment that would increase the
number of shares of Common Stock that may be issued under the Plan or would make
a change in the designation of corporations whose employees may be offered
options under this Plan; (ii) except as provided in Section 18, no such
termination may affect options previously granted, nor may an amendment make any
change in any option theretofore granted that adversely affects the rights of
any Participant; and (iii) to the extent necessary to comply with Rule 16b-3
under the Exchange Act, and if the stockholders of the Company approve this Plan
within twelve (12) months of the adoption of this Plan, then to the extent the
Company desires that the Plan be qualified under Section 423 of the Code (or any
successor rule or provision or any applicable law or regulation), the Company
will obtain shareowner approval in such a manner and to such a degree as so
desired.
(b) Without shareowner consent and without regard to whether any
Participant rights may be considered to have been adversely affected, the Board
(or its committee) will be entitled to change the Offering Periods and Exercise
Dates, limit the frequency and/or number of changes in the amount withheld
during an Offering Period, establish the exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, permit payroll withholding in
excess of the amount designated by a Participant in order to adjust for delays
or mistakes in the Company's processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods and/or accounting
and crediting procedures to ensure that amounts applied toward the purchase of
Common Stock for each Participant properly correspond with amounts withheld from
the Participant's Compensation, and establish such other limitations or
procedures as the Board (or its committee) determines in its sole discretion
advisable that are consistent with this Plan.
20. NOTICES. All notices or other communications by a Participant to the
Company under or in connection with this Plan will be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
21. CONDITIONS UPON ISSUANCE OF SHARES. Shares will not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto will comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the shares may then be listed, and will be further subject to the approval of
counsel for the Company with respect to such compliance.
As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.
22. TERM OF PLAN; EFFECTIVE DATE. This Plan will become effective upon its
approval by the shareowners of the Company. It will continue in effect for a
term of twenty (20) years unless sooner terminated under Section 19.
B-8
23. ADDITIONAL RESTRICTIONS OF RULE 16B-3. The terms and conditions of
options granted hereunder to, and the purchase of shares by, persons subject to
Section 16 of the Exchange Act will comply with the applicable provisions of
Rule 16b-3. This Plan will be deemed to contain, and such options will contain,
and the shares issued upon exercise thereof will be subject to, such additional
conditions and restrictions as may be required by Rule 16b-3 to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
24. Equal Rights and Privileges. All Eligible Employees of the Company (or
of any Participating Subsidiary) will have equal rights and privileges under
this Plan so that this Plan may qualify as an "employee stock purchase plan"
within the meaning of Section 423 of the Code or applicable Treasury regulations
thereunder. Any provision of this Plan that is inconsistent with Section 423 or
applicable Treasury regulations will, without further act or amendment by the
Company or the Board, be reformed to comply with the equal rights and privileges
requirement of Section 423 or applicable Treasury regulations.
B-9
BROWN PROXY CARD
Where a vote is not specified, the proxies will vote the shares represented by
the proxy FOR the election of directors and FOR proposal 2, FOR proposal 3 and
FOR proposal 4 and will vote in accordance with their discretion on such other
matters as may properly come before the meeting.
Please mark your votes as indicated in this example
|X|
1. ELECTION OF TWO DIRECTORS - Nominees: 01 R. M. Bressler 02 R. J. Cicerone
WITHHOLD
FOR FOR ALL
|_| |_|
Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
___________________________________
2. AMENDMENTS TO THE DIRECTORS PLAN
FOR AGAINST ABSTAIN
|_| |_| |_|
3. APPROVAL OF THE 2001 EMPLOYEE STOCK PURCHASE PLAN.
FOR AGAINST ABSTAIN
|_| |_| |_|
4. RATIFICATION OF APPOINTMENT OF AUDITORS
FOR AGAINST ABSTAIN
|_| |_| |_|
I/We consent to future access of the Annual Reports and Proxy Materials
electronically via the Internet. I/We understand that the Company may no longer
distribute printed materials to me/us for any future shareowner meeting until
such consent is revoked. I/We understand that I/we may revoke my/our consent at
any time.
|_|
I/We plan to attend the meeting. (Please detach and bring admission ticket)
|_|
Comments on other side
|_|
Signature ____________ Signature if held jointly ___________ Date: _______, 2002
If signing as attorney, executor, administrator, trustee or guardian, please
give full title as such, and, if signing for a corporation, please give your
title. When shares are in the name of more than one person, each person should
sign. Please sign, date and return the direction card promptly using the
enclosed envelope.
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your direction card.
Internet
http://www.eproxy.com/cnxt
Use the Internet to vote. Have your direction card in hand when you access the
web site. You will be prompted to enter your control number, located in the box
below, to create and submit an electronic ballot.
OR
Telephone
1-800-435-6710
Use any touch-tone telephone to vote your proxy. Have your direction card in
hand when you call. You will be prompted to enter your control number, located
in the box below, and then follow the directions given.
OR
Mail
Mark, sign and date your direction card and return it in the enclosed
postage-paid envelope.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back
your direction card.
TO VIEW THE ANNUAL REPORT AND PROXY MATERIALS ONLINE GO TO:
http://www.conexant.com
DIRECTION CARD
ROCKWELL RETIREMENT SAVINGS PLAN FOR REPRESENTED HOURLY EMPLOYEES
TO: WELLS FARGO BANK, N.A., TRUSTEE
You are hereby directed to vote, with respect to the proposals listed on
the other side of this Direction Card, the number of shares of Conexant Systems,
Inc. Common Stock held for my account in the Rockwell Retirement Savings Plan
for Represented Hourly Employees (the "Plan") at the Annual Meeting of
Shareowners of Conexant Systems, Inc. to be held on February 27, 2002, or any
adjournment thereof, as follows:
To vote in accordance with the Board of Directors' recommendations check
the boxes FOR each proposal listed on the other side, then sign, date and return
this card.
Please vote in accordance with the instructions on the reverse side of
this card by February 21, 2002. If you do not properly vote by that date, Wells
Fargo Bank, N.A., Trustee for the Plan, will vote the shares allocated to your
Plan account as it deems proper.
(Continued, and to be marked, dated and signed, on the other side)
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Bring this admission ticket with you to the meeting on February 27, 2002. Do not
mail.
This admission ticket admits you to the meeting. You will not be let in to
the meeting without an admission ticket or other proof of stock ownership as of
January 2, 2002, the record date.
ADMISSION TICKET
CONEXANT SYSTEMS
2002 Annual Meeting of Shareowners
February 27, 2002
10:00 A.M.
Hyatt Regency Hotel
711 South Hope Street
Los Angeles, CA 90017
NON-TRANSFERABLE NON-TRANSFERABLE
DARK BLUE PROXY CARD
Where a vote is not specified, the proxies will vote the shares represented by
the proxy FOR the election of directors and FOR proposal 2, FOR proposal 3 and
FOR proposal 4 and will vote in accordance with their discretion on such other
matters as may properly come before the meeting.
Please mark your votes as indicated in this example
|X|
1. ELECTION OF TWO DIRECTORS - Nominees: 01 R. M. Bressler 02 R. J. Cicerone
WITHHOLD
FOR FOR ALL
|_| |_|
Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
___________________________________
2. AMENDMENTS TO THE DIRECTORS PLAN
FOR AGAINST ABSTAIN
|_| |_| |_|
3. APPROVAL OF THE 2001 EMPLOYEE STOCK PURCHASE PLAN.
FOR AGAINST ABSTAIN
|_| |_| |_|
4. RATIFICATION OF APPOINTMENT OF AUDITORS
FOR AGAINST ABSTAIN
|_| |_| |_|
I/We consent to future access of the Annual Reports and Proxy Materials
electronically via the Internet. I/We understand that the Company may no longer
distribute printed materials to me/us for any future shareowner meeting until
such consent is revoked. I/We understand that I/we may revoke my/our consent at
any time.
|_|
I/We plan to attend the meeting. (Please detach and bring admission ticket)
|_|
Comments on other side
|_|
Signature ____________ Signature if held jointly ____________ Date: ______, 2002
If signing as attorney, executor, administrator, trustee or guardian, please
give full title as such, and, if signing for a corporation, please give your
title. When shares are in the name of more than one person, each person should
sign. Please sign, date and return the direction card promptly using the
enclosed envelope.
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your direction card.
Internet
http://www.eproxy.com/cnxt
Use the Internet to vote. Have your direction card in hand when you access the
web site. You will be prompted to enter your control number, located in the box
below, to create and submit an electronic ballot.
OR
Telephone
1-800-435-6710
Use any touch-tone telephone to vote your proxy. Have your direction card in
hand when you call. You will be prompted to enter your control number, located
in the box below, and then follow the directions given.
OR
Mail
Mark, sign and date your direction card and return it in the enclosed
postage-paid envelope.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back
your direction card.
TO VIEW THE ANNUAL REPORT AND PROXY MATERIALS ONLINE GO TO:
http://www.conexant.com
DIRECTION CARD
ROCKWELL COLLINS RETIREMENT SAVINGS PLAN FOR HOURLY EMPLOYEES
TO: WELLS FARGO BANK, N.A., TRUSTEE
You are hereby directed to vote, with respect to the proposals listed on
the other side of this Direction Card, the number of shares of Conexant Systems,
Inc. Common Stock held for my account in the Rockwell Collins Retirement Savings
Plan for Hourly Employees (the "Plan") at the Annual Meeting of Shareowners of
Conexant Systems, Inc. to be held on February 27, 2002, or any adjournment
thereof, as follows:
To vote in accordance with the Board of Directors' recommendations check
the boxes FOR each proposal listed on the other side, then sign, date and return
this card.
Please vote in accordance with the instructions on the reverse side of
this card by February 21, 2002. If you do not properly vote by that date, Wells
Fargo Bank, N.A., Trustee for the Plan, will vote the shares allocated to your
Plan account as it deems proper.
(Continued, and to be marked, dated and signed, on the other side)
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Bring this admission ticket with you to the meeting on February 27, 2002. Do not
mail.
This admission ticket admits you to the meeting. You will not be let in to
the meeting without an admission ticket or other proof of stock ownership as of
January 2, 2002, the record date.
ADMISSION TICKET
CONEXANT SYSTEMS
2002 Annual Meeting of Shareowners
February 27, 2002
10:00 A.M.
Hyatt Regency Hotel
711 South Hope Street
Los Angeles, CA 90017
NON-TRANSFERABLE NON-TRANSFERABLE
GREEN PROXY CARD
Where a vote is not specified, the proxies will vote the shares represented by
the proxy FOR the election of directors and FOR proposal 2, FOR proposal 3 and
FOR proposal 4 and will vote in accordance with their discretion on such other
matters as may properly come before the meeting.
Please mark your votes as indicated in this example
|X|
1. ELECTION OF TWO DIRECTORS - Nominees: 01 R. M. Bressler 02 R. J. Cicerone
WITHHOLD
FOR FOR ALL
|_| |_|
Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
___________________________________
2. AMENDMENTS TO THE DIRECTORS PLAN
FOR AGAINST ABSTAIN
|_| |_| |_|
3. APPROVAL OF THE 2001 EMPLOYEE STOCK PURCHASE PLAN.
FOR AGAINST ABSTAIN
|_| |_| |_|
4. RATIFICATION OF APPOINTMENT OF AUDITORS
FOR AGAINST ABSTAIN
|_| |_| |_|
I/We consent to future access of the Annual Reports and Proxy Materials
electronically via the Internet. I/We understand that the Company may no longer
distribute printed materials to me/us for any future shareowner meeting until
such consent is revoked. I/We understand that I/we may revoke my/our consent at
any time.
|_|
I/We plan to attend the meeting. (Please detach and bring admission ticket)
|_|
Comments on other side
|_|
Signature _____________ Signature if held jointly ____________ Date: _____, 2002
If signing as attorney, executor, administrator, trustee or guardian, please
give full title as such, and, if signing for a corporation, please give your
title. When shares are in the name of more than one person, each person should
sign. Please sign, date and return the direction card promptly using the
enclosed envelope.
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your direction card.
Internet
http://www.eproxy.com/cnxt
Use the Internet to vote. Have your direction card in hand when you access the
web site. You will be prompted to enter your control number, located in the box
below, to create and submit an electronic ballot.
OR
Telephone
1-800-435-6710
Use any touch-tone telephone to vote your proxy. Have your direction card in
hand when you call. You will be prompted to enter your control number, located
in the box below, and then follow the directions given.
OR
Mail
Mark, sign and date your direction card and return it in the enclosed
postage-paid envelope.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back
your direction card.
TO VIEW THE ANNUAL REPORT AND PROXY MATERIALS ONLINE GO TO:
http://www.conexant.com
DIRECTION CARD
ROCKWELL RETIREMENT SAVINGS PLAN FOR CERTAIN EMPLOYEES
TO: WELLS FARGO BANK, N.A., TRUSTEE
You are hereby directed to vote, with respect to the proposals listed on
the other side of this Direction Card, the number of shares of Conexant Systems,
Inc. Common Stock held for my account in the Rockwell Retirement Savings Plan
for Certain Employees (the "Plan") at the Annual Meeting of Shareowners of
Conexant Systems, Inc. to be held on February 27, 2002, or any adjournment
thereof, as follows:
To vote in accordance with the Board of Directors' recommendations check
the boxes FOR each proposal listed on the other side, then sign, date and return
this card.
Please vote in accordance with the instructions on the reverse side of
this card by February 21, 2002. If you do not properly vote by that date, Wells
Fargo Bank, N.A., Trustee for the Plan, will vote the shares allocated to your
Plan account as it deems proper.
(Continued, and to be marked, dated and signed, on the other side)
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Bring this admission ticket with you to the meeting on February 27, 2002. Do not
mail.
This admission ticket admits you to the meeting. You will not be let in to
the meeting without an admission ticket or other proof of stock ownership as of
January 2, 2002, the record date.
ADMISSION TICKET
CONEXANT SYSTEMS
2002 Annual Meeting of Shareowners
February 27, 2002
10:00 A.M.
Hyatt Regency Hotel
711 South Hope Street
Los Angeles, CA 90017
NON-TRANSFERABLE NON-TRANSFERABLE
GREY PROXY CARD
Where a vote is not specified, the proxies will vote the shares represented by
the proxy FOR the election of directors and FOR proposal 2, FOR proposal 3 and
FOR proposal 4 and will vote in accordance with their discretion on such other
matters as may properly come before the meeting.
Please mark your votes as indicated in this example
|X|
1. ELECTION OF TWO DIRECTORS - Nominees: 01 R. M. Bressler 02 R. J. Cicerone
WITHHOLD
FOR FOR ALL
|_| |_|
Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
___________________________________
2. AMENDMENTS TO THE DIRECTORS PLAN
FOR AGAINST ABSTAIN
|_| |_| |_|
3. APPROVAL OF THE 2001 EMPLOYEE STOCK PURCHASE PLAN.
FOR AGAINST ABSTAIN
|_| |_| |_|
4. RATIFICATION OF APPOINTMENT OF AUDITORS
FOR AGAINST ABSTAIN
|_| |_| |_|
I/We consent to future access of the Annual Reports and Proxy Materials
electronically via the Internet. I/We understand that the Company may no longer
distribute printed materials to me/us for any future shareowner meeting until
such consent is revoked. I/We understand that I/we may revoke my/our consent at
any time.
|_|
I/We plan to attend the meeting. (Please detach and bring admission ticket)
|_|
Comments on other side
|_|
Signature __________ Signature if held jointly _____________ Date: _______, 2002
If signing as attorney, executor, administrator, trustee or guardian, please
give full title as such, and, if signing for a corporation, please give your
title. When shares are in the name of more than one person, each person should
sign. Please sign, date and return the direction card promptly using the
enclosed envelope.
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your direction card.
Internet
http://www.eproxy.com/cnxt
Use the Internet to vote. Have your direction card in hand when you access the
web site. You will be prompted to enter your control number, located in the box
below, to create and submit an electronic ballot.
OR
Telephone
1-800-435-6710
Use any touch-tone telephone to vote your proxy. Have your direction card in
hand when you call. You will be prompted to enter your control number, located
in the box below, and then follow the directions given.
OR
Mail
Mark, sign and date your direction card and return it in the enclosed
postage-paid envelope.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back
your direction card.
TO VIEW THE ANNUAL REPORT AND PROXY MATERIALS ONLINE GO TO:
http://www.conexant.com
DIRECTION CARD
ROCKWELL SALARIED RETIREMENT SAVINGS PLAN
TO: WELLS FARGO BANK, N.A., TRUSTEE
You are hereby directed to vote, with respect to the proposals listed on
the other side of this Direction Card, the number of shares of Conexant Systems,
Inc. Common Stock held for my account in the Rockwell Salaried Retirement
Savings Plan (the "Plan") at the Annual Meeting of Shareowners of Conexant
Systems, Inc. to be held on February 27, 2002, or any adjournment thereof, as
follows:
To vote in accordance with the Board of Directors' recommendations check
the boxes FOR each proposal listed on the other side, then sign, date and return
this card.
Please vote in accordance with the instructions on the reverse side of
this card by February 21, 2002. If you do not properly vote by that date, Wells
Fargo Bank, N.A., Trustee for the Plan, will vote the shares allocated to your
Plan account as it deems proper.
(Continued, and to be marked, dated and signed, on the other side)
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Bring this admission ticket with you to the meeting on February 27, 2002. Do not
mail.
This admission ticket admits you to the meeting. You will not be let in to
the meeting without an admission ticket or other proof of stock ownership as of
January 2, 2002, the record date.
ADMISSION TICKET
CONEXANT SYSTEMS
2002 Annual Meeting of Shareowners
February 27, 2002
10:00 A.M.
Hyatt Regency Hotel
711 South Hope Street
Los Angeles, CA 90017
NON-TRANSFERABLE NON-TRANSFERABLE
LIGHT BLUE PROXY CARD
Where a vote is not specified, the proxies will vote the shares represented by
the proxy FOR the election of directors and FOR proposal 2, FOR proposal 3 and
FOR proposal 4 and will vote in accordance with their discretion on such other
matters as may properly come before the meeting.
Please mark your votes as indicated in this example
|X|
1. ELECTION OF TWO DIRECTORS - Nominees: 01 R. M. Bressler 02 R. J. Cicerone
WITHHOLD
FOR FOR ALL
|_| |_|
Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
___________________________________
2. AMENDMENTS TO THE DIRECTORS PLAN
FOR AGAINST ABSTAIN
|_| |_| |_|
3. APPROVAL OF THE 2001 EMPLOYEE STOCK PURCHASE PLAN.
FOR AGAINST ABSTAIN
|_| |_| |_|
4. RATIFICATION OF APPOINTMENT OF AUDITORS
FOR AGAINST ABSTAIN
|_| |_| |_|
I/We consent to future access of the Annual Reports and Proxy Materials
electronically via the Internet. I/We understand that the Company may no longer
distribute printed materials to me/us for any future shareowner meeting until
such consent is revoked. I/We understand that I/we may revoke my/our consent at
any time.
|_|
I/We plan to attend the meeting. (Please detach and bring admission ticket)
|_|
Comments on other side
|_|
Signature __________ Signature if held jointly ______________ Date: ______, 2002
If signing as attorney, executor, administrator, trustee or guardian, please
give full title as such, and, if signing for a corporation, please give your
title. When shares are in the name of more than one person, each person should
sign. Please sign, date and return the direction card promptly using the
enclosed envelope.
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your direction card.
Internet
http://www.eproxy.com/cnxt
Use the Internet to vote. Have your direction card in hand when you access the
web site. You will be prompted to enter your control number, located in the box
below, to create and submit an electronic ballot.
OR
Telephone
1-800-435-6710
Use any touch-tone telephone to vote your proxy. Have your direction card in
hand when you call. You will be prompted to enter your control number, located
in the box below, and then follow the directions given.
OR
Mail
Mark, sign and date your direction card and return it in the enclosed
postage-paid envelope.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back
your direction card.
TO VIEW THE ANNUAL REPORT AND PROXY MATERIALS ONLINE GO TO:
http://www.conexant.com
DIRECTION CARD
ROCKWELL EMPLOYEE SAVINGS AND INVESTMENT PLAN FOR
REPRESENTED HOURLY EMPLOYEES TO: WELLS FARGO BANK, N.A., TRUSTEE
You are hereby directed to vote, with respect to the proposals listed on
the other side of this Direction Card, the number of shares of Conexant Systems,
Inc. Common Stock held for my account in the Rockwell Employee Savings and
Investment Plan for Represented Hourly Employees (the "Plan") at the Annual
Meeting of Shareowners of Conexant Systems, Inc. to be held on February 27,
2002, or any adjournment thereof, as follows:
To vote in accordance with the Board of Directors' recommendations check
the boxes FOR each proposal listed on the other side, then sign, date and return
this card.
Please vote in accordance with the instructions on the reverse side of
this card by February 21, 2002. If you do not properly vote by that date, Wells
Fargo Bank, N.A., Trustee for the Plan, will vote the shares allocated to your
Plan account as it deems proper.
(Continued, and to be marked, dated and signed, on the other side)
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Bring this admission ticket with you to the meeting on February 27, 2002. Do not
mail.
This admission ticket admits you to the meeting. You will not be let in to
the meeting without an admission ticket or other proof of stock ownership as of
January 2, 2002, the record date.
ADMISSION TICKET
CONEXANT SYSTEMS
2002 Annual Meeting of Shareowners
February 27, 2002
10:00 A.M.
Hyatt Regency Hotel
711 South Hope Street
Los Angeles, CA 90017
NON-TRANSFERABLE NON-TRANSFERABLE
MAROON PROXY CARD
Where a vote is not specified, the proxies will vote the shares represented by
the proxy FOR the election of directors and FOR proposal 2, FOR proposal 3 and
FOR proposal 4 and will vote in accordance with their discretion on such other
matters as may properly come before the meeting.
Please mark your votes as indicated in this example
|_|
1. ELECTION OF TWO DIRECTORS - Nominees: 01 R. M. Bressler 02 R. J. Cicerone
WITHHOLD
FOR FOR ALL
|_| |_|
Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
___________________________________
2. AMENDMENTS TO THE DIRECTORS PLAN
FOR AGAINST ABSTAIN
|_| |_| |_|
3. APPROVAL OF THE 2001 EMPLOYEE STOCK PURCHASE PLAN.
FOR AGAINST ABSTAIN
|_| |_| |_|
4. RATIFICATION OF APPOINTMENT OF AUDITORS
FOR AGAINST ABSTAIN
|_| |_| |_|
I/We consent to future access of the Annual Reports and Proxy Materials
electronically via the Internet. I/We understand that the Company may no longer
distribute printed materials to me/us for any future shareowner meeting until
such consent is revoked. I/We understand that I/we may revoke my/our consent at
any time.
|_|
I/We plan to attend the meeting. (Please detach and bring admission ticket)
|_|
Comments on other side
|_|
Signature __________ Signature if held jointly _____________ Date: _______, 2002
If signing as attorney, executor, administrator, trustee or guardian, please
give full title as such, and, if signing for a corporation, please give your
title. When shares are in the name of more than one person, each person should
sign. Please sign, date and return the direction card promptly using the
enclosed envelope.
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your direction card.
Internet
http://www.eproxy.com/cnxt
Use the Internet to vote. Have your direction card in hand when you access the
web site. You will be prompted to enter your control number, located in the box
below, to create and submit an electronic ballot.
OR
Telephone
1-800-435-6710
Use any touch-tone telephone to vote your proxy. Have your direction card in
hand when you call. You will be prompted to enter your control number, located
in the box below, and then follow the directions given.
OR
Mail
Mark, sign and date your direction card and return it in the enclosed
postage-paid envelope.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back
your direction card.
TO VIEW THE ANNUAL REPORT AND PROXY MATERIALS ONLINE GO TO:
http://www.conexant.com
DIRECTION CARD
ROCKWELL COLLINS RETIREMENT SAVINGS PLAN FOR BARGAINING UNIT EMPLOYEES
TO: WELLS FARGO BANK, N.A., TRUSTEE
You are hereby directed to vote, with respect to the proposals listed on
the other side of this Direction Card, the number of shares of Conexant Systems,
Inc. Common Stock held for my account in the Rockwell Collins Retirement Savings
Plan for Bargaining Unit Employees (the "Plan") at the Annual Meeting of
Shareowners of Conexant Systems, Inc. to be held on February 27, 2002, or any
adjournment thereof, as follows:
To vote in accordance with the Board of Directors' recommendations check
the boxes FOR each proposal listed on the other side, then sign, date and return
this card.
Please vote in accordance with the instructions on the reverse side of
this card by February 21, 2002. If you do not properly vote by that date, Wells
Fargo Bank, N.A., Trustee for the Plan, will vote the shares allocated to your
Plan account as it deems proper.
(Continued, and to be marked, dated and signed, on the other side)
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Bring this admission ticket with you to the meeting on February 27, 2002. Do not
mail.
This admission ticket admits you to the meeting. You will not be let in to
the meeting without an admission ticket or other proof of stock ownership as of
January 2, 2002, the record date.
ADMISSION TICKET
CONEXANT SYSTEMS
2002 Annual Meeting of Shareowners
February 27, 2002
10:00 A.M.
Hyatt Regency Hotel
711 South Hope Street
Los Angeles, CA 90017
NON-TRANSFERABLE NON-TRANSFERABLE
ORANGE PROXY CARD
Where a vote is not specified, the proxies will vote the shares represented by
the proxy FOR the election of directors and FOR proposal 2, FOR proposal 3 and
FOR proposal 4 and will vote in accordance with their discretion on such other
matters as may properly come before the meeting.
Please mark your votes as indicated in this example
|X|
1. ELECTION OF TWO DIRECTORS - Nominees: 01 R. M. Bressler 02 R. J. Cicerone
WITHHOLD
FOR FOR ALL
|_| |_|
Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
___________________________________
2. AMENDMENTS TO THE DIRECTORS PLAN
FOR AGAINST ABSTAIN
|_| |_| |_|
3. APPROVAL OF THE 2001 EMPLOYEE STOCK PURCHASE PLAN.
FOR AGAINST ABSTAIN
|_| |_| |_|
4. RATIFICATION OF APPOINTMENT OF AUDITORS
FOR AGAINST ABSTAIN
|_| |_| |_|
I/We consent to future access of the Annual Reports and Proxy Materials
electronically via the Internet. I/We understand that the Company may no longer
distribute printed materials to me/us for any future shareowner meeting until
such consent is revoked. I/We understand that I/we may revoke my/our consent at
any time.
|_|
I/We plan to attend the meeting. (Please detach and bring admission ticket)
|_|
Comments on other side
|_|
Signature __________ Signature if held jointly _____________ Date: _______, 2002
If signing as attorney, executor, administrator, trustee or guardian, please
give full title as such, and, if signing for a corporation, please give your
title. When shares are in the name of more than one person, each person should
sign. Please sign, date and return the direction card promptly using the
enclosed envelope.
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your direction card.
Internet
http://www.eproxy.com/cnxt
Use the Internet to vote. Have your direction card in hand when you access the
web site. You will be prompted to enter your control number, located in the box
below, to create and submit an electronic ballot.
OR
Telephone
1-800-435-6710
Use any touch-tone telephone to vote your proxy. Have your direction card in
hand when you call. You will be prompted to enter your control number, located
in the box below, and then follow the directions given.
OR
Mail
Mark, sign and date your direction card and return it in the enclosed
postage-paid envelope.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back
your direction card.
TO VIEW THE ANNUAL REPORT AND PROXY MATERIALS ONLINE GO TO:
http://www.conexant.com
DIRECTION CARD
ROCKWELL COLLINS RETIREMENT SAVINGS PLAN FOR SALARIED EMPLOYEES
TO: WELLS FARGO BANK, N.A., TRUSTEE
You are hereby directed to vote, with respect to the proposals listed on
the other side of this Direction Card, the number of shares of Conexant Systems,
Inc. Common Stock held for my account in the Rockwell Collins Retirement Savings
Plan for Salaried Employees (the "Plan") at the Annual Meeting of Shareowners of
Conexant Systems, Inc. to be held on February 27, 2002, or any adjournment
thereof, as follows:
To vote in accordance with the Board of Directors' recommendations check
the boxes FOR each proposal listed on the other side, then sign, date and return
this card.
Please vote in accordance with the instructions on the reverse side of
this card by February 21, 2002. If you do not properly vote by that date, Wells
Fargo Bank, N.A., Trustee for the Plan, will vote the shares allocated to your
Plan account as it deems proper.
(Continued, and to be marked, dated and signed, on the other side)
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Bring this admission ticket with you to the meeting on February 27, 2002. Do not
mail.
This admission ticket admits you to the meeting. You will not be let in to
the meeting without an admission ticket or other proof of stock ownership as of
January 2, 2002, the record date.
ADMISSION TICKET
CONEXANT SYSTEMS
2002 Annual Meeting of Shareowners
February 27, 2002
10:00 A.M.
Hyatt Regency Hotel
711 South Hope Street
Los Angeles, CA 90017
NON-TRANSFERABLE NON-TRANSFERABLE
PURPLE PROXY CARD
Where a vote is not specified, the proxies will vote the shares represented by
the proxy FOR the election of directors and FOR proposal 2, FOR proposal 3 and
FOR proposal 4 and will vote in accordance with their discretion on such other
matters as may properly come before the meeting.
Please mark your votes as indicated in this example
|X|
1. ELECTION OF TWO DIRECTORS - Nominees: 01 R. M. Bressler 02 R. J. Cicerone
WITHHOLD
FOR FOR ALL
|_| |_|
Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
___________________________________
2. AMENDMENTS TO THE DIRECTORS PLAN
FOR AGAINST ABSTAIN
|_| |_| |_|
3. APPROVAL OF THE 2001 EMPLOYEE STOCK PURCHASE PLAN.
FOR AGAINST ABSTAIN
|_| |_| |_|
4. RATIFICATION OF APPOINTMENT OF AUDITORS
FOR AGAINST ABSTAIN
|_| |_| |_|
I/We consent to future access of the Annual Reports and Proxy Materials
electronically via the Internet. I/We understand that the Company may no longer
distribute printed materials to me/us for any future shareowner meeting until
such consent is revoked. I/We understand that I/we may revoke my/our consent at
any time.
|_|
I/We plan to attend the meeting. (Please detach and bring admission ticket)
|_|
Comments on other side
|_|
Signature ____________ Signature if held jointly _____________ Date:______, 2002
If signing as attorney, executor, administrator, trustee or guardian, please
give full title as such, and, if signing for a corporation, please give your
title. When shares are in the name of more than one person, each person should
sign. Please sign, date and return the direction card promptly using the
enclosed envelope.
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your direction card.
Internet
http://www.eproxy.com/cnxt
Use the Internet to vote. Have your direction card in hand when you access the
web site. You will be prompted to enter your control number, located in the box
below, to create and submit an electronic ballot.
OR
Telephone
1-800-435-6710
Use any touch-tone telephone to vote your proxy. Have your direction card in
hand when you call. You will be prompted to enter your control number, located
in the box below, and then follow the directions given.
OR
Mail
Mark, sign and date your direction card and return it in the enclosed
postage-paid envelope.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back
your direction card.
TO VIEW THE ANNUAL REPORT AND PROXY MATERIALS ONLINE GO TO:
http://www.conexant.com
DIRECTION CARD
ROCKWELL NON-REPRESENTED HOURLY RETIREMENT SAVINGS PLAN
TO: WELLS FARGO BANK, N.A., TRUSTEE
You are hereby directed to vote, with respect to the proposals listed on
the other side of this Direction Card, the number of shares of Conexant Systems,
Inc. Common Stock held for my account in the Rockwell Non-Represented Hourly
Retirement Savings Plan (the "Plan") at the Annual Meeting of Shareowners of
Conexant Systems, Inc. to be held on February 27, 2002, or any adjournment
thereof, as follows:
To vote in accordance with the Board of Directors' recommendations check
the boxes FOR each proposal listed on the other side, then sign, date and return
this card.
Please vote in accordance with the instructions on the reverse side of
this card by February 21, 2002. If you do not properly vote by that date, Wells
Fargo Bank, N.A., Trustee for the Plan, will vote the shares allocated to your
Plan account as it deems proper.
(Continued, and to be marked, dated and signed, on the other side)
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Bring this admission ticket with you to the meeting on February 27, 2002.
Do not mail.
This admission ticket admits you to the meeting. You will not be let in to
the meeting without an admission ticket or other proof of stock ownership as of
January 2, 2002, the record date.
ADMISSION TICKET
CONEXANT SYSTEMS
2002 Annual Meeting of Shareowners
February 27, 2002
10:00 A.M.
Hyatt Regency Hotel
711 South Hope Street
Los Angeles, CA 90017
NON-TRANSFERABLE NON-TRANSFERABLE
RED PROXY CARD
Where a vote is not specified, the proxies will vote the shares represented by
the proxy FOR the election of directors and FOR proposal 2, FOR proposal 3 and
FOR proposal 4 and will vote in accordance with their discretion on such other
matters as may properly come before the meeting.
Please mark your votes as indicated in this example
|X|
1. ELECTION OF TWO DIRECTORS - Nominees: 01 R. M. Bressler 02 R. J. Cicerone
WITHHOLD
FOR FOR ALL
|_| |_|
Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
___________________________________
2. AMENDMENTS TO THE DIRECTORS PLAN
FOR AGAINST ABSTAIN
|_| |_| |_|
3. APPROVAL OF THE 2001 EMPLOYEE STOCK PURCHASE PLAN.
FOR AGAINST ABSTAIN
|_| |_| |_|
4. RATIFICATION OF APPOINTMENT OF AUDITORS
FOR AGAINST ABSTAIN
|_| |_| |_|
I/We consent to future access of the Annual Reports and Proxy Materials
electronically via the Internet. I/We understand that the Company may no longer
distribute printed materials to me/us for any future shareowner meeting until
such consent is revoked. I/We understand that I/we may revoke my/our consent at
any time.
|_|
I/We plan to attend the meeting. (Please detach and bring admission ticket)
|_|
Comments on other side
|_|
Signature ____________ Signature if held jointly __________ Date: ________, 2002
If signing as attorney, executor, administrator, trustee or guardian, please
give full title as such, and, if signing for a corporation, please give your
title. When shares are in the name of more than one person, each person should
sign. Please sign, date and return the direction card promptly using the
enclosed envelope.
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your direction card.
Internet
http://www.eproxy.com/cnxt
Use the Internet to vote. Have your direction card in hand when you access the
web site. You will be prompted to enter your control number, located in the box
below, to create and submit an electronic ballot.
OR
Telephone
1-800-435-6710
Use any touch-tone telephone to vote your proxy. Have your direction card in
hand when you call. You will be prompted to enter your control number, located
in the box below, and then follow the directions given.
OR
Mail
Mark, sign and date your direction card and return it in the enclosed
postage-paid envelope.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back
your direction card.
TO VIEW THE ANNUAL REPORT AND PROXY MATERIALS ONLINE GO TO:
http://www.conexant.com
DIRECTION CARD
CONEXANT SYSTEMS, INC. RETIREMENT SAVINGS PLAN
TO: FIDELITY MANAGEMENT TRUST COMPANY, TRUSTEE
You are hereby directed to vote, with respect to the proposals listed on
the other side of this Direction Card, the number of shares of Conexant Systems,
Inc. Common Stock held for my account in the Conexant Systems, Inc. Retirement
Savings Plan (the "Plan") at the Annual Meeting of Shareowners of Conexant
Systems, Inc. to be held on February 27, 2002, or any adjournment thereof, as
follows:
To vote in accordance with the Board of Directors' recommendations check
the boxes FOR each proposal listed on the other side, then sign, date and return
this card.
Please vote in accordance with the instructions on the reverse side of
this card by February 21, 2002. If you do not properly vote by that date,
Fidelity Management Trust Company, Trustee for the Plan, will vote the shares
allocated to your Plan account in the same proportion on each issue as it votes
the shares for which it has received voting directions from the other Plan
participants.
(Continued, and to be marked, dated and signed, on the other side)
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Bring this admission ticket with you to the meeting on February 27, 2002. Do not
mail.
This admission ticket admits you to the meeting. You will not be let in to
the meeting without an admission ticket or other proof of stock ownership as of
January 2, 2002, the record date.
ADMISSION TICKET
CONEXANT SYSTEMS
2002 Annual Meeting of Shareowners
February 27, 2002
10:00 A.M.
Hyatt Regency Hotel
711 South Hope Street
Los Angeles, CA 90017
NON-TRANSFERABLE NON-TRANSFERABLE
WHITE PROXY CARD
Where a vote is not specified, the proxies will vote the shares represented by
the proxy FOR the election of directors and FOR proposal 2, FOR proposal 3 and
FOR proposal 4 and will vote in accordance with their discretion on such other
matters as may properly come before the meeting.
Please mark your votes as indicated in this example
|X|
1. ELECTION OF TWO DIRECTORS - Nominees: 01 R. M. Bressler 02 R. J. Cicerone
WITHHOLD
FOR FOR ALL
|_| |_|
Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
___________________________________
2. AMENDMENTS TO THE DIRECTORS PLAN
FOR AGAINST ABSTAIN
|_| |_| |_|
3. APPROVAL OF THE 2001 EMPLOYEE STOCK PURCHASE PLAN.
FOR AGAINST ABSTAIN
|_| |_| |_|
4. RATIFICATION OF APPOINTMENT OF AUDITORS
FOR AGAINST ABSTAIN
|_| |_| |_|
I/We consent to future access of the Annual Reports and Proxy Materials
electronically via the Internet. I/We understand that the Company may no longer
distribute printed materials to me/us for any future shareowner meeting until
such consent is revoked. I/We understand that I/we may revoke my/our consent at
any time.
|_|
I/We plan to attend the meeting. (Please detach and bring admission ticket)
|_|
Comments on other side
|_|
Signature __________ Signature if held jointly ____________ Date: _______, 2002
If signing as attorney, executor, administrator, trustee or guardian, please
give full title as such, and, if signing for a corporation, please give your
title. When shares are in the name of more than one person, each person should
sign. Please sign, date and return the proxy card promptly using the enclosed
envelope.
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
Internet
http://www.eproxy.com/cnxt
Use the Internet to vote your proxy. Have your proxy card in hand when you
access the web site. You will be prompted to enter your control number, located
in the box below, to create and submit an electronic ballot.
OR
Telephone
1-800-435-6710
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand
when you call. You will be prompted to enter your control number, located in the
box below, and then follow the directions given.
OR
Mail
Mark, sign and date your proxy card and return it in the enclosed postage-paid
envelope.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back
your proxy card.
TO VIEW THE ANNUAL REPORT AND PROXY MATERIALS ONLINE GO TO:
http://www.conexant.com
PROXY
CONEXANT SYSTEMS, INC.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Dwight W. Decker and Dennis E. O'Reilly,
and each of them, with power to act without the other and with full power of
substitution, as proxies and attorneys-in-fact and hereby authorizes them to
represent and vote, as provided on the other side, all the shares of Conexant
Systems, Inc. Common Stock which the undersigned is entitled to vote, and, in
their discretion, to vote upon such other business as may properly come before
the Annual Meeting of Shareowners of the Company to be held on February 27,
2002, or any adjournment thereof, with all powers which the undersigned would
possess if present at the Meeting.
To vote in accordance with the Board of Directors' recommendations just
sign and date the other side; no boxes need to be checked.
Comments:
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
(If you have written in the above space, please mark the "Comments" box on the
other side.)
(Continued, and to be marked, dated and signed, on the other side)
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Bring this admission ticket with you to the meeting on February 27, 2002. Do not
mail.
This admission ticket admits you to the meeting. You will not be let in to
the meeting without an admission ticket or other proof of stock ownership as of
January 2, 2002, the record date.
ADMISSION TICKET
CONEXANT SYSTEMS
2002 Annual Meeting of Shareowners
February 27, 2002
10:00 A.M.
Hyatt Regency Hotel
711 South Hope Street
Los Angeles, CA 90017
NON-TRANSFERABLE NON-TRANSFERABLE
YELLOW PROXY CARD
Where a vote is not specified, the proxies will vote the shares represented by
the proxy FOR the election of directors and FOR proposal 2, FOR proposal 3 and
FOR proposal 4 and will vote in accordance with their discretion on such other
matters as may properly come before the meeting.
Please mark your votes as indicated in this example
|X|
1. ELECTION OF TWO DIRECTORS - Nominees: 01 R. M. Bressler 02 R. J. Cicerone
WITHHOLD
FOR FOR ALL
|_| |_|
Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
___________________________________
2. AMENDMENTS TO THE DIRECTORS PLAN
FOR AGAINST ABSTAIN
|_| |_| |_|
3. APPROVAL OF THE 2001 EMPLOYEE STOCK PURCHASE PLAN.
FOR AGAINST ABSTAIN
|_| |_| |_|
4. RATIFICATION OF APPOINTMENT OF AUDITORS
FOR AGAINST ABSTAIN
|_| |_| |_|
I/We consent to future access of the Annual Reports and Proxy Materials
electronically via the Internet. I/We understand that the Company may no longer
distribute printed materials to me/us for any future shareowner meeting until
such consent is revoked. I/We understand that I/we may revoke my/our consent at
any time.
|_|
I/We plan to attend the meeting. (Please detach and bring admission ticket)
|_|
Comments on other side
|_|
Signature ____________ Signature if held jointly _____________ Date: _____, 2002
If signing as attorney, executor, administrator, trustee or guardian, please
give full title as such, and, if signing for a corporation, please give your
title. When shares are in the name of more than one person, each person should
sign. Please sign, date and return the direction card promptly using the
enclosed envelope.
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your direction card.
Internet
http://www.eproxy.com/cnxt
Use the Internet to vote. Have your direction card in hand when you access the
web site. You will be prompted to enter your control number, located in the box
below, to create and submit an electronic ballot.
OR
Telephone
1-800-435-6710
Use any touch-tone telephone to vote your proxy. Have your direction card in
hand when you call. You will be prompted to enter your control number, located
in the box below, and then follow the directions given.
OR
Mail
Mark, sign and date your direction card and return it in the enclosed
postage-paid envelope.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back
your direction card.
TO VIEW THE ANNUAL REPORT AND PROXY MATERIALS ONLINE GO TO:
http://www.conexant.com
DIRECTION CARD
CONEXANT SYSTEMS, INC. HOURLY EMPLOYEES' SAVINGS PLAN
TO: FIDELITY MANAGEMENT TRUST COMPANY, TRUSTEE
You are hereby directed to vote, with respect to the proposals listed on
the other side of this Direction Card, the number of shares of Conexant Systems,
Inc. Common Stock held for my account in the Conexant Systems, Inc. Hourly
Employees' Savings Plan (the "Plan") at the Annual Meeting of Shareowners of
Conexant Systems, Inc. to be held on February 27, 2002, or any adjournment
thereof, as follows:
To vote in accordance with the Board of Directors' recommendations check
the boxes FOR each proposal listed on the other side, then sign, date and return
this card.
Please vote in accordance with the instructions on the reverse side of
this card by February 21, 2002. If you do not properly vote by that date,
Fidelity Management Trust Company, Trustee for the Plan, will vote the shares
allocated to your Plan account in the same proportion on each issue as it votes
the shares for which it has received voting directions from the other Plan
participants.
(Continued, and to be marked, dated and signed, on the other side)
--------------------------------------------------------------------------------
(up arrow) FOLD AND DETACH HERE (up arrow)
Bring this admission ticket with you to the meeting on February 27, 2002. Do not
mail.
This admission ticket admits you to the meeting. You will not be let in to
the meeting without an admission ticket or other proof of stock ownership as of
January 2, 2002, the record date.
ADMISSION TICKET
CONEXANT SYSTEMS
2002 Annual Meeting of Shareowners
February 27, 2002
10:00 A.M.
Hyatt Regency Hotel
711 South Hope Street
Los Angeles, CA 90017
NON-TRANSFERABLE NON-TRANSFERABLE