Newport Fab, LLC Contribution Agreement

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Exhibit 10.5


NEWPORT FAB, LLC CONTRIBUTION AGREEMENT


between:

CONEXANT SYSTEMS, INC.,
a Delaware corporation

and

NEWPORT FAB, LLC,
a Delaware limited liability company.


Dated as of February 23, 2002


Confidential treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request. Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission.

TABLE OF CONTENTS


Page 1. CONTRIBUTION OF ASSETS; RELATED TRANSACTIONS 1


1.1

Contributions by Conexant

1


1.2

Consideration for Contributed Assets

3


1.3

Sales Taxes

4


1.4

Closing

4
2.

MISCELLANEOUS PROVISIONS

4


2.1

Further Assurances

4


2.2

Governing Law

5


2.3

Successors and Assigns; Parties in Interest

5


2.4

Remedies Cumulative; Specific Performance

5


2.5

Waiver

5


2.6

Construction

5


2.7

Dispute Resolution; Arbitration

5

i

NEWPORT FAB, LLC CONTRIBUTION AGREEMENT

THIS NEWPORT FAB, LLC CONTRIBUTION AGREEMENT (this " Agreement ") is entered into as of February 23, 2002, by and between: CONEXANT SYSTEMS, INC., a Delaware corporation (" Conexant "); and NEWPORT FAB, LLC, a Delaware limited liability company ("the Company "). Certain capitalized terms used in this Agreement are defined in Exhibit A .

RECITALS

WHEREAS, Conexant currently conducts, and historically has conducted, semiconductor wafer fabrication and manufacturing operations at Conexant's Newport Beach California facilities (the " Wafer Fabrication Operations "), which operations include (i) the semiconductor wafer fabrication and probing operations located at the facilities surrounding, or physically housed, either in part or in whole, in Buildings 501, 503 and 505 located at 4311 Jamboree Road, Newport Beach, California (buildings 503 and 505 being referred to collectively as the " El Capitan Buildings ") and (ii) certain research and development, design support service and other support operations ( "Wafer Fabrication Support Operations" ); and

WHEREAS, Conexant wishes to contribute to the Company and the Company wishes Conexant to contribute to the Company certain assets related to the Wafer Fabrication Operations, in exchange for all the membership and other ownership interests in the Company (the " Membership Interests ").

AGREEMENT

NOW, THEREFORE , the parties to this Agreement, intending to be legally bound, agree as follows:

1. CONTRIBUTION OF ASSETS; RELATED TRANSACTIONS.

1.1 Contributions by Conexant.

(a) Conexant shall contribute, assign, transfer, convey and deliver to the Company, and the Company shall accept from Conexant, at the Closing (as defined in Section 1.4), good and valid title to the Contributed Assets, free and clear of any Encumbrances, other than Permitted Encumbrances, on the terms and subject to the conditions set forth in this Agreement. For purposes of this Agreement, " Contributed Assets " shall mean all right, title, and interest of Conexant in and to only the following assets and properties:

(i) except as set forth on Schedule 1.1(a)(i)(1), all equipment, machinery, computers, tools, trade fixtures, improvements (including waste treatment and pollution control systems, raised floors, walls, HEPA filters, exhaust ductwork, gas and liquid lines, etc.) supplies, materials, furniture, and other tangible personal property used or held for use in the conduct of the Wafer Fabrication Operations and that are physically located within the blue shaded areas on the floor plan building schematics for Buildings 503 and 505 located at 4311 Jamboree Road, Newport Beach, California attached hereto as Schedule 1.1(a)(i)(2) (the "Identified WFO Property "), and all furniture, personal computers, calculators and other personal property used by or held for use by the Transferred Employees (the "Transferred Employees' Property" );

(ii) all equipment, machinery, computers, tools, fixtures, supplies, materials, furniture, and other tangible property related to the Wafer Fabrication Support Operations that are specifically listed on Schedule 1.1.(a)(ii) (together with the Identified WFO Property and the Transferred Employees' Property, the " Tangible Personal Property ");

(iii) the Inventory owned by Conexant as of the Closing Date (as defined in Section 1.4);

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(iv) the spare parts used in the Wafer Fabrication Operations and owned by Conexant as of the Closing Date;

(v) all contracts listed on Schedule 1.1(a)(v), including any purchase orders related to such contracts (the "Transferred Contracts" );

(vi) except as set forth on Schedule 1.1(a)(vi)(1) and except for any patent and patent applications not listed on Schedule 1.1(a)(vi)(1) that are primarily related to the Product Technology (collectively, the " Excluded Patent Rights "), the patent and patent applications set forth on Schedule 1.1(a)(vi)(2) and all other patents, patent applications and worldwide patent rights to all invention disclosures (which invention disclosures have been submitted to Conexant in writing as of the date of the Closing) primarily related to the Process Technology (collectively, the " Transferred Patents "). Notwithstanding the foregoing, the Excluded Patent Rights shall not include any patents, patent applications or disclosures set forth on Schedule 1.1(a)(vi)(2);

(vii) the know-how, trade secrets and other intellectual property primarily related to the Process Technology, including, without limitation, the know how, trade secrets, and other intellectual property rights described on Schedule 1.1(a)(vii) (collectively, the "Transferred Know-How" );

(viii) all Governmental Authorizations primarily relating to the operation of the Wafer Fabrication Operations, to the extent such Governmental Authorizations are transferable by Conexant in connection with the transactions contemplated by this Agreement (the "Transferred Permits" );

(ix) all claims, causes of action and rights of set-off relating to any of the Contributed Assets, other than claims, causes of action and rights of set-off for infringement, misappropriation or violation of the Transferred Intellectual Property that occurred prior to the Closing Date; and

(x) (a) all records and lists of Conexant primarily relating to the Wafer Fabrication Operations and the assets described in clauses (i) through (ix) of this Section 1.1, including without limitation all records and lists pertaining to all external customers and suppliers of and to the Wafer Fabrication Operations, (b) all product, business, and marketing plans of Conexant primarily pertaining to the Wafer Fabrication Operations, (c) all books, ledgers, files, reports, plans, drawings, and operating records related primarily to the Wafer Fabrication Operations or the assets described in clauses (i) through (ix) of this Section 1.1, and (d) to the extent permitted by applicable Legal Requirements, personnel records for all Transferred Employees (collectively, the "Books and Records" ); provided that Conexant shall be entitled to retain a copy of such Books and Records for internal use.

(b) Notwithstanding anything in this Agreement to the contrary, (i) all assets of Conexant not specifically identified as a Contributed Asset under Section 1.1(a) (including but not limited to those assets set forth in Schedule 1.1(a)(i)(1) and all assets physically located in the unshaded areas on the floor plan building schematics for Buildings 503 and 505 located at 4311 Jamboree Road, Newport Beach, California, attached hereto as Schedule 1.1(a)(i)(2)) above and (ii) the assets listed on Schedule 1.1(b) and the assets physically located in the unshaded area on the floor plan attached to Schedule 1.1(b) (the assets listed on Schedule 1.1(b) being referred to as the " Specified Excluded Assets ") shall not be contributed or transferred hereunder, shall be excluded from the definition of Contributed Assets and shall remain the property of Conexant.

(c) Following the Closing, and for a period of eighteen (18) months thereafter, the parties shall cooperate with each other to identify any assets that were (i) not designated as part of the Contributed Assets at the Closing but which relate primarily to the Wafer Fabrication Operations

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(the "Nontransferred WFO Assets" ), and (ii) designated as part of the Contributed Assets but which do not relate to the Wafer Fabrication Operations and which should not have been transferred to the Company (the "Transferred Conexant Assets" ). To the extent that any Transferred Conexant Assets are identified and the Company is legally and contractually permitted to transfer such assets, then the Company shall, [...***...] take all actions to transfer the Transferred Conexant Assets to Conexant. In the event that the Company is required to obtain the consent or approval of any Person prior to the transfer of any Transferred Conexant Assets, then the Company shall, [...***...] obtain such approval or consent, and upon obtaining such approval or consent, shall promptly transfer such Transferred Conexant Assets to Conexant. To the extent any Nontransferred WFO Assets are identified and Conexant is legally and contractually permitted to transfer such assets, Conexant shall, [...***...] take all actions to transfer such Nontransferred WFO Assets to the Company. In the event Conexant is required to obtain the consent or approval of any Person prior to the transfer of any Nontransferred WFO Asset, then Conexant shall, [...***...] obtain such approval or consent, and upon obtaining such approval or consent, shall promptly transfer such Nontransferred WFO Asset to the Company. In the event Conexant is unable to obtain such approval or consent, then Conexant and the Company shall discuss in good faith an appropriate resolution for the disposition of such Nontransferred WFO Asset. In the event Conexant and the Company are unable within a reasonable period of time to agree upon an appropriate resolution with respect to the transfer of any Transferred Conexant Asset or Nontransferred WFO Asset as the case may be, then such dispute shall be resolved in accordance with the arbitration procedures set forth in Section 2.7. Notwithstanding the foregoing, Conexant shall not be obligated to transfer to the Company any Nontransferred WFO Asset unless the Company shall make arrangements to provide Conexant with the benefit of such asset to the extent such asset is used in Conexant's other operations. Notwithstanding any provision of this Agreement to the contrary, nothing herein shall be deemed to constitute an agreement to assign any Transferred Contract or any right or privilege arising thereunder if an attempted assignment thereof, without the consent of the other party or parties thereto, would constitute a breach thereof unless such consent has been obtained.

1.2 Consideration for Contributed Assets.

(a) As consideration for the contribution of the Contributed Assets by Conexant to the Company set forth in Section 1.1 above, the Company shall:

(i) at the Closing, issue to Conexant 100% of the Membership Interests in the Company; and

(ii) at the Closing, assume the Assumed Liabilities (as defined in Section 1.2(b)) and be responsible for their timely discharge or satisfaction.

(b) For purposes of this Agreement " Assumed Liabilities " shall mean only the following liabilities:

(i) all Liabilities arising under or out of the Transferred Contracts (other than Liabilities arising out of breaches or violations by Conexant occurring prior to the Closing Date) for performance of or payments to be made under the Transferred Contracts that accrue in respect of events following the Closing Date; provided however , that any payment obligations arising under the Transferred Contracts for products or services received by Conexant prior to the Closing Date shall not be deemed an Assumed Liability, and Conexant shall remain liable for any such payments;

(ii) all employment related liabilities set forth on Schedule 1.2(b)(ii);

(iii) all Liabilities arising, accruing or occurring under or out of that certain Labor Agreement, effective May 1, 1998 between Conexant and Local Union No. 2295 of the International Brotherhood of Electrical Workers (the " Collective Bargaining Agreement ") on or after May 1, 2002 to the extent provided in the Employee Matters Agreement;

Confidential treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request. Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission.

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(iv) all Liabilities other than Excluded Liabilities ari ...