EXHIBIT 10.F.5
EMPLOYMENT AGREEMENT
AGREEMENT by and between Conexant Systems, Inc., a Delaware
corporation (the "Company") and Xxxxx Xxxxxx (the "Executive"), dated as of the
18th day of December, 2002 ("Date of this Agreement").
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its shareholders
to employ the Executive under this Employment and Change of Control Agreement.
The Board has also determined that it is in the best interests of the company
and its shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility, threat or
occurrence of a Change of Control (as defined below) of the Company; or the
uncertainty associated with the Company's plans to separate the Mindspeed
Technologies business. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal uncertainties
and risks created by these issues and to encourage the Executive's full
attention and dedication to the Company throughout the period of this Agreement.
Therefore, in order to accomplish these objectives, the Company and the
Executive enter into the following Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Effective Date of Agreement. (a) The "Effective Date"
shall mean the date on which the Executive and the Company sign the Agreement.
(b) As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or under common
control with the Company.
2. Change of Control. For the purpose of this Agreement,
a "Change of Control" shall mean:
(a) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company or
(iv) any acquisition by any corporation pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of subsection (c) of this Section 3; or
(b) Individuals who, as of the Date of this Agreement,
constitute the Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; pro-
vided, however, that any individual becoming a director subsequent to the Date
of this Agreement whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company or the acquisition of assets of another entity (a
"Business Combination"), in each case, unless, following such Business Com-
bination, (i) all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be, (ii) no
Person (excluding any employee benefit plan (or related trust) of the company,
of Conexant Systems, Inc. or of such corporation resulting from such Business
combination) beneficially owns, directly or indirectly, 20% or more, of,
respectively, the then outstanding share of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such Business combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
(e) Stock Option Treatment Upon Change of Control.
Subject to the provisions of 2(a), (b), (c), and (d), in the event a Change of
Control shall occur, one-fourth of all awards granted on or before December 31,
2001 shall accelerate in vesting. Further, if within two years following the
Change of Control event, Executive's position is eliminated or Executive's
duties are changed in such a way that a substantial diminution of status and
responsibilities occurs, an additional one-fourth of all awards granted on or
before December 31, 2001 then outstanding, shall accelerate in vesting.
3. Pending Conexant Reorganization and Business Plans.
For purposes of this Agreement, the contemplated separation of the Conexant
Systems, Inc. business into multiple
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companies by means of a "spin-off" distribution to shareholders or similar
methodology that results in distinct independent public companies will not be
considered a Change of Control. Specifically, the separation of Conexant
Systems, Inc. and Mindspeed Technologies into two distinct companies will not
constitute a Change of Control.
4. Employment Period. Subject to the provisions of
Section 6, hereof, and Executive's right to voluntarily terminate employment at
any time during the Employment Period, the Company hereby employs, and agrees to
continue the Executive in its employ, and the Executive hereby agrees to
remain in the employ of the Company subject to the terms and conditions of this
Agreement, for the period commencing on the Effective Date of this Agreement and
ending on the second anniversary of the Date of the separation of the Mindspeed
Technologies business, or August 31, 2005, whichever is sooner.
5. Terms of Employment. (a) Position and Duties. (i)
From the effective date of this Agreement through the separation of Mindspeed
Technologies, Inc., the Executive shall be employed as Senior Vice President and
Chief Accounting Officer, located in Newport Beach, California. Upon the
re-filing of Minspeed Technologies, Inc. spin-off documents with the Securites
and Exchange Commission and continuing upon the separation of Mindspeed
Technologies, Ind., the Executive shall be employed as Senior Vice President and
CFO for the continuing Conexant Systems, Inc, and will report to the Company's
Chief Executive Officer. Executive shall have the authority typically held by
the chief financial officer of a major corporation.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote his full attention and time during normal business
hours to the business and affairs of the Company and, to the extend necessary to
discharge the responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions or (C) manage personal investments, so long as
such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary ("Annual Base
Salary"), which shall be paid at a monthly rate. During the Employment Period,
the Annual Base Salary shall be reviewed at least annually. Any increase in
Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not be reduced
after any increase and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased.
(ii) Incentive Bonus. In addition to Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending during the
Employment Period, an incentive bonus (the "Incentive Bonus"). For Fiscal Year
2003, the Incentive Bonus (Peak Performance Plan) shall be
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delivered as a cash-based award subject to achievement of pre-determined
operating profit goals. After Fiscal Year 2003, the Incentive Bonus may be
delivered as either a cash payment, stock option grant, or other such
compensation vehicle as the Conexant Board of Directors deems appropriate.
(iii) Incentive and Savings Plans. During the Employment
Period, the Executive shall be entitled to participate in all incentive and
savings plans, practices, policies and programs applicable generally to other
peer executives of the Company and its affiliated companies.
(iv) Welfare Benefit Plans. During the Employment Period,
the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and its
affiliated companies (including, without limitation, medical, prescription,
dental, disability, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other peer executives of the Company and its affiliated companies. The Company
offers a comprehensive benefits package, which includes medical, dental, vision
and life insurance coverage. Executive may also participate in the 401(k)
Savings Plan which allows contributions of up to 17% of eligible earnings on a
pre and/or post tax basis. Currently, the Company matches the first 4% of Annual
Base Salary to a maximum of 100%.
(v) Stock Options. Executive shall be eligible to
participate in Conexant's Stock Option Program and shall receive periodic stock
option awards consistent with Executive's position and performance, which shall
typically vest over a four-year period, at 25% per year. The stock price shall
be established on the grant date. Executive shall receive confirmation of the
number of shares and option price from Stock Administration.
(vi) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures of the Company and its affiliated companies.
(vii) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, including, without limitation,
reimbursement for financial planning and income tax preparation services from
the AYCO Company, valued at $15,000 annually; participation in the Company's
executive physical program; and an annual membership in a health club of
Executive's choice up to $4,000 annually.
(viii) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies
with respect to other peer executives of the Company and its affiliated
companies
6. Termination of Employment. (a) Death or Disability.
The Executive's employment shall terminate automatically upon the Executive's
death during the Employment Period. If the Company determines in good faith that
the Disability of the Executive has occurred during
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the Employment Period (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in accordance with Section
15(b) of this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative.
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall only mean:
(i) the willful and continued failure of
the Executive to perform substantially all of the Executive's duties with the
Company or one of its affiliates (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to the Executive by the Board or the Chief
Executive Officer of the Company which specifically identifies the manner in
which the Board or Chief Executive Officer believes that the Executive has not
substantially performed the Executive's duties. For purposes of this provision,
the Company's actions must be in good faith; or
(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and demonstrably injurious to
the Company.
(c) Good Reason - Initiated By The Executive. The
Executive's employment may be terminated by the Executive for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean:
(i) Mindspeed Technologies is not separated from Conexant
Systems, Inc. on or before August 31, 2003, and the Executive is not employed as
Senior Vice President and CFO for the continuing Conexant Systems, Inc,
reporting to the Company's Chief Executive Officer, as described and defined in
Section 5(a) of this Agreement. The Executive has a 120-day election window
beginning August 31, 2003, in which to terminate for this specific Good Reason;
(ii) With or without a Mindspeed Technologies business
separation on or before August 31, 2003, the assignment to the Executive of
duties materially inconsistent with respect to the Executive's position,
authority, duties or responsibilities as defined in Section 5(a) of this
Agreement;
(iii) With or without a Mindspeed Technologies business
separation on or before August 31, 2003, the Company's requiring the Executive
to be based at any office or location other than as provided in Section 5(a) (i)
hereof;
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(iv) With or without a Mindspeed Technologies business
separation on or before August 31, 2003, any purported termination by the
Company of the Executive's employment other than as expressly permitted by this
Agreement; or
(v) With or without a Mindspeed Technologies business
separation on or before August 31, 2003, any failure by the Company to comply
with and satisfy Section 14(c) of this Agreement.
For purposes of Section 6(c) of this Agreement, any good faith
determination of "Good Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company
for Cause, or by the Executive for Good Reason, shall be communicated by Notice
of Termination to the other party hereto given in accordance with Section 15(b)
of this Agreement. For purposes of this Agreement, a "Notice of Termination"
means a written notice which (i) indicates the specific termination provision
in this Agreement relied upon, (ii) to the extent applicable, sets forth in rea-
sonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated and
(iii) if the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date shall be not
more than thirty days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting such fact
or circumstance in enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i)
if the Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability,
the Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the
case may be.
7. Obligations of the Company upon Termination. (a) Good
Reason - Initiated By The Executive; Other Than for Cause, Death or
Disability. Executive may trigger one of the following separation packages by
making a written request, in accordance with Sections 6(d) and 15(b) of this
Agreement:
(i) If (a) Mindspeed Technologies is not separated from
Conexant Systems, Inc. on or before August 31, 2003, and (b) Executive
is not appointed as the Senior Vice President and CFO of Conexant
Systems, Inc. on or before August 31, 2003;
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(1) A period of salary continuation (bi-weekly
pay periods), at the then base salary rate,
to run for two years from the date of
written request; and
(2) A period of continued benefit plan
eligibility and coverage to run for two
years from the date of written request; and
(3) Continued option vesting to run for one year
from the date of written request, if
Mindspeed Technologies is separated from
Conexant Systems by December 31, 2003;
otherwise option vesting to run run for two
years from the date of written request.
(ii) If (a) Mindspeed Technologies is separated from
Conexant Systems, Inc. on or before August 31, 2003; and (b) Executive is not
appointed as the Senior Vice President and CFO of Conexant Systems, Inc. on or
before August 31, 2003;
(1) A period of salary continuation (bi-weekly
pay periods), at the then base salary rate,
to run for two years from the date of
written request; and
(2) A period of continued benefit plan
eligibility and coverage to run for two
years from the date of written request; and
(3) Continued option vesting to run for two
years from the date of written request.
(iii) If (a) Mindspeed Technologies is separated from
Conexant Systems, Inc. and Executive assumes the Senior Vice President and CFO
position for the continuing Conexant Systems, Inc.; and (b) Executive terminates
for Good Reason as defined in Section 6(c)(ii), (iii), (iv), (v), or is
terminated by the Company for other than Cause, Death, or Disability within the
two years following the separation of Mindspeed Technologies; then
(1) A period of salary continuation (bi-weekly
pay periods), at the then base salary rate,
to run for two years from the date of
written request; and
(2) A period of continued benefit plan
eligibility and coverage to run for two
years from the date of written request; and
(3) Continued option vesting to run for 12
months.
(b) Death. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of Other Benefits, the term Other Benefits as
utilized in this Section 5(b) shall include, without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to receive, benefits
at least equal to the most favorable
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benefits provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and affiliated companies under
such plans, programs, practices and policies relating to death benefits, if any,
as in effect with respect to other peer executives and their beneficiaries on
the date of the Executive's death.
(c) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during the Employment Period,
this Agreement shall terminate without further obligations to the Executive,
other than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to the Executive
in a lump sum in cash within 30 days of the Date of Termination, With respect to
the provision of Other Benefits, the term Other Benefits as utilized in this
Section 5(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by the Company and its
affiliated companies to disabled executives and/or their families in accordance
with such plans, programs, practices and policies relating to disability, if
any, as in effect generally with respect to other peer executives and their
families as of the Disability Effective Date.
(d) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive other
than the obligation to pay to the Executive (x) his Annual Base Salary through
the Date of Termination, (y) the amount of any compensation previously deferred
by the Executive, and (z) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the Employment
Period, excluding a termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than the timely payment of
his Annual Base Salary through the Date of Termination, for Accrued
Obligations and the timely payment or provision of Other Benefits. In such case,
all Accrued Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination.
8. Non-Exclusivity of Rights. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any of its
affiliated companies and for which the Executive may qualify, nor, shall
anything herein limit or otherwise affect such rights as the Executive may have
under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Company or any of its affiliated companies at
or subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
9. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek
8
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and such
amounts shall not be reduced whether or not the Executive obtains other
employment. The Company agrees to pay as incurred, to the full extent permitted
by law, all legal fees and expenses which the Executive may reasonably incur as
a result of any contest (regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or liability under,
any provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case interest on any delayed
payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of
the Internal Revenue Code of 1986, as amended (the "Code").
10. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding and except as set forth below, in the event it shall be
determined that any payment or distribution by the Company or its affiliates
to or for the benefit of the Executive (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 10) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions
of this Section 10(a), if it shall be determined that the Executive is entitled
to a Gross-Up Payment, but that the Payments do not exceed 110% of the greatest
amount (the "Reduced Amount") that could be paid to the Executive such that the
receipt of Payments would not give rise to any Excise Tax, then no Gross-Up
Payment shall be made to the Executive and the Payments, in the aggregate, shall
be reduced to the Reduced Amount.
(b) Subject to the provisions of Section 10(c), all
determinations required to be made under this Section 10, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be
made by Deloitte & Touche LLP or such other certified public accounting firm as
may be designated by the Executive (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Executive within
15 business days of the receipt of notice from the Executive that there has been
a Payment, or such earlier time as is requested by the Company. In the event
that the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting a Change of Control, the Executive shall appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as deter-
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mined pursuant to this Section 10, shall be paid by the Company to the Executive
within five days of the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 10(c) and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
(c) The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall apprise the Company
of the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim,
the Executive shall:
(i) give the Company any information reasonably requested
by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses. Without limitation on
the foregoing provisions of this Section 10(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and xxx for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the Ex-
10
ecutive to pay such claim and xxx for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income
with respect to such advance; and further provided that any extension of the
statute of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Further-more, the Company's control
of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to settle
or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 10(c), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of Section 10(c))
promptly pay to the Company the amount of such refund (together with any inter-
est paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 10(c), a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to the
expiration of 30 days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.
11. Non-Competition. The Executive agrees that during the
period of salary continuation, or through a one-year period immediately
following the date of termination, whichever is longer, the Employee shall
not, in any country in which Conexant conducts business, engage, without the
express prior written consent of Conexant, in any business or activity, whether
as an employee, consultant, partner, principal, agent, representative, equity
holder, or in any other individual, corporate, or representative capacity
(without limitation by specific enumeration of the foregoing), or render any
services or provided any advice to any Competing Business. A competing
business, for purposes of this Agreement, is any of the following companies:
Broadcom Corporation, ST Microelectronics, LSI Logic Corporation, Globespan
Virata, Texas Instruments Inc., or Philips Electronics. Notwithstanding the
foregoing (and, so long as the Executive is an employee of Conexant, subject
to written employee policies of Conexant), the Executive may as a passive
investment own, directly or indirectly, up to one percent (1%) of any class of
Publicly Traded Securities of any Person which owns or operates a business that
is a Competing Business. "Publicly Traded Securities" shall mean securities that
are traded on a national securities exchange or listed on the Nasdaq National
Market. In the event the Executive joins one of the competing businesses listed
above as either an employee, consultant, partner, principal, agent, or
representative, prior to the end of his salary continuance period, all
remaining salary continuation and other benefits of this Agreement will be
immediately forfeited by the Executive.
12. Non-Solicitation. The Executive agrees that during
the period of salary continuation, or through a one-year period immediately
following the termination of such em-
11
ployment, whichever is longer, the Employee will not, directly or indirectly:
(i) solicit or divert away any business, clients, customers, or employees who
became'known to the Executive during his employment with Conexant, and/or its
affiliates; (ii) induce customers, clients, suppliers, agents, employees, or
other persons under contract or otherwise associated or doing business with
Conexant, and/or its affiliates who were made known to the Executive during his
employment with Conexant to reduce or alter any such association or business
with Conexant, and/or its affiliates;
13. Confidential Information. The Executive shall hold in
a fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). The Company and the Executive agree that the existence and
terms of this agreement are to remain confidential to the maximum extent
allowable under existing and future securities laws and reporting requirements.
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 11 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
14. Successors. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and/or assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business and/or assets
as aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
15. Miscellaneous. (a) This Agreement shall be governed
by and construed in accordance with the laws of the State of California, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
12
(b) All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Xxxxx Xxxxxx
00 Xxxxxxxx Xxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
If to the Company:
Conexant Systems, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxx Xxxxx, XX 00000-0000
Attention: General Counsel
or to such other address as either party shall have furnished
to the other in writing in accordance herewith. Notice and communications shall
be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement or the failure to
assert any right the Executive or the Company may have hereunder, including,
without limitation, the right of the Executive to terminate employment for Good
Reason pursuant to Section 6(c) (i) - (v) of this Agreement, shall not be deemed
to be a waiver of such provision or right or any other provision or right of
this Agreement.
(f) The Executive and the Company acknowledge that,
except as defined under this written agreement between the Executive and the
Company, the employment of the Executive by the Company is "at will". From and
after the Date of this Agreement, this Agreement shall supersede any other
agreement between the parties with respect to the subject matter hereof.
13
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed in its name on
its behalf, all as of the day and year first above written.
/s/ Xxxxx Xxxxxx
----------------------------------
Xxxxx Xxxxxx
CONEXANT SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Xxxxxx X. Xxxxxx, Chairman & CEO
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