June 12, 2006 Ms. Mercedes Johnson SVP, Finance and CFO Avago Technologies Limited 350 West Trimble Road San Jose, California 95131 Re: Severance Benefits Agreement Dear Mercedes,
EXHIBIT
10.27
June 12, 2006
Ms. Xxxxxxxx Xxxxxxx
SVP, Finance and CFO
Avago Technologies Limited
000 Xxxx Xxxxxxx Xxxx
Xxx Xxxx, Xxxxxxxxxx 00000
SVP, Finance and CFO
Avago Technologies Limited
000 Xxxx Xxxxxxx Xxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Dear Mercedes,
This letter constitutes the Severance Benefits Agreement (the “Agreement”) between you and
Avago Technologies Limited (the “Company”). Please confirm your acceptance of these terms by
returning a signed copy of this Agreement to me.
Termination without Cause, with Good Reason or Because of Death or Disability. If your employment
by the Company and its subsidiaries is terminated by the Company or its subsidiaries without Cause
(as defined below), or if you voluntarily terminate your employment for Good Reason (as defined
below), and if you provide the Company with a signed customary and reasonable general release of
all claims against the Company and its affiliates in a form acceptable to the Company, the Company
or one of its subsidiaries shall provide you with continuation of your base salary for a period of
six (6) months after your termination date at the rate in effect immediately prior to your
termination of employment, less applicable withholdings and payment of an amount equal to fifty
percent (50%) of the lesser of (a) your prior year’s bonus or (b) your prior year’s target bonus,
both payable in six (6) substantially equal installments pursuant to the Company or its
subsidiary’s normal and customary payroll procedures; provided, however, that for your first year
of employment, your prior year’s bonus and your prior year’s target bonus shall both be deemed to
be your first year’s target bonus; provided further, however, that to the extent required to comply
with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), if you are deemed
to be a “specified employee” for purposes of Section 409A(a)(2)(B) of the Code, you agree that the
installments due to you under this paragraph in connection with a termination of your employment
that would otherwise have been payable at any time during the six-month period immediately
following such termination of employment shall not be paid prior to, and shall instead be payable
in a lump sum as soon as practicable following, the expiration of such six-month period. The
Company or one of its subsidiaries shall also pay the group health, dental and vision plan
continuation coverage premiums for you and, if relevant, your covered dependents’ COBRA for the
lesser of (i) six (6) months from the date of your termination of employment, or (ii) the date upon
which you and your covered dependents are covered by similar plans of a new employer. In the event
of your death or disability, upon provision to the Company of a signed general release of all
claims against the Company and its affiliates in a form acceptable to the Company, you (or your
estate) will receive the severance benefits described in this paragraph.
Terminations in Connection with a Change in Control. If your employment by the Company and its
subsidiaries is terminated by the Company or its subsidiaries without Cause, or if you
voluntarily terminate your employment for Good Reason, or if you die or become disabled,
in each case within the three (3) month period immediately prior to or the twelve (12)
month period commencing on a Change in Control (as defined below), and if you provide the
Company with a signed customary and reasonable general release of all claims against the
Company and its affiliates in a form acceptable to the Company, then in lieu of the
severance benefits described in the preceding paragraph, the Company or one of its
subsidiaries shall provide you (or your estate) with continuation of your base salary for
a period of twelve (12) months after your termination date at the rate in effect
immediately prior to your termination of employment, less applicable withholdings, and
payment of an amount equal to the lesser of (a) your prior year’s bonus and (b) your prior
year’s target bonus, both payable in twelve (12) substantially equal installments pursuant
to the Company or such subsidiary’s normal and customary payroll procedures; provided,
however, that for your first year of employment, your prior year’s bonus and your prior
year’s target bonus shall both be deemed to be your first year’s target bonus; provided
further, however, that to the extent required to comply with Section 409A of the Code, if
you are deemed to be a “specified employee” for purposes of Section 409A(a)(2)(B) of the
Code, you agree that the installments due to you under this paragraph in connection with a
termination of your employment that would otherwise have been payable at any time during
the six-month period immediately following such termination of employment shall not be
paid prior to, and shall instead be payable in a lump sum as soon as practicable
following, the expiration of such six-month period. The Company or one of its subsidiaries
shall also pay the group health, dental and vision plan continuation coverage premiums for
you and, if relevant, your covered dependents’ COBRA for the lesser of (i) twelve (12)
months from the date of your termination of employment, or (ii) the date upon which you
and your covered dependents are covered by similar plans of a new employer. Finally, if
not otherwise provided for in the relevant plan or option agreement (in which case the
relevant plan or option agreement terms shall apply), your then outstanding options shall
immediately accelerate and become vested and exercisable for that number of shares subject
thereto with respect to which such options would have become vested and exercisable over
the succeeding twelve (12) month period based solely on the passage of time and your
performance of services (i.e., you will receive twelve (12) month accelerated vesting on
your time vesting options).
Gross-Up
Payment. Prior to the Company becoming listed on an established stock exchange or
national market system, Kohlberg Kravis & Xxxxxxx Co., L.P. and Silver Lake Partners, LLC
(the “Sponsors”) shall use commercially reasonable efforts to obtain shareholder approval
for any payments that would otherwise result in an excise tax liability under Section
4999 of the Code following your timely, written request therefor. In the event the
Company becomes listed on any established stock exchange or a national market system, the
Board shall negotiate in good faith with you regarding whether to amend this Agreement to
provide for a payment to offset any excise taxes imposed by Section 4999 of the Code.
Termination by the Company with Cause or Termination by You. If your employment by the
Company and its subsidiaries is terminated by the Company or its subsidiaries with Cause,
or if you voluntarily terminate your employment with the Company and its subsidiaries
(other than for Good Reason), you shall not be entitled to any severance pay, severance
benefits, or any compensation or benefits from the Company or its subsidiaries
whatsoever, other than as required under applicable law.
Cause. For purposes of this Agreement, “Cause” shall mean (A) your willful refusal to
perform in any material respect your duties or responsibilities for the Company or its
affiliates or willful disregard in any material respect of any financial or other
budgetary limitations established in good faith by the Board or chief executive officer;
or (B) your material breach of any provision of this Agreement that is not cured upon ten
(10) days notice thereof; or (C) the engaging by you in conduct that causes material and
demonstrable injury, monetarily or otherwise, to the Company or any affiliates, including,
but not limited to, misappropriation or conversion of assets of the Company or any
affiliates (other than non-material assets); or (D) your engagement in an act of moral
turpitude or conviction of or entry of a plea of nolo contendere to a felony.
Change in Control. For purposes of this Agreement, “Change in Control” shall mean (i) the
sale of all or substantially all of the assets of the Company and its subsidiaries, taken
as a whole to a person who is not an affiliate of the Company or the Sponsors; (ii) a sale
by the Sponsors or any of their respective affiliates resulting in more than fifty percent
(50%) of the voting shares of the Company being held by a person or related group of
persons that does not include the Sponsors or any of their respective affiliates or (iii)
a merger or consolidation of the Company into another person which is not an affiliate of
the Company or the Sponsors, if and only if as a result of such merger or consolidation
the Sponsors lose the ability to elect a majority of the Board (or the resulting entity).
Good Reason. For purposes of this Agreement, the term “Good Reason” shall mean any of the
following: (A) a reduction in your base salary (other than as part of a broad salary
reduction program instituted because the Company or its affiliates is in financial
distress); (B) a substantial reduction in your duties and responsibilities; (C) the
elimination or reduction of your eligibility to participate in the Company or its
subsidiaries’ benefit programs that is inconsistent with the eligibility of executive
employees of the Company and its subsidiaries to participate therein; (D) the Company or
one of its subsidiaries informs you of its intention to transfer your primary workplace to
a location that is more than 50 miles from your workplace as set forth herein; (E) the
Company’s material breach of this Agreement that is not cured within sixty (60) days
written notice thereof; and (F) any serious chronic
mental or physical illness of a member of your family that requires you to terminate your
employment because of substantial interference with your duties at the Company and its
subsidiaries; provided, that at the Company’s request you shall provide the Company with a
written physician’s statement confirming the existence of such mental or physical illness.
This Agreement and the documents referenced herein (including, without limitation, the
equity-related documents) constitute the complete, final and exclusive embodiment of the
entire agreement between you and the Company and its subsidiaries with respect to
severance benefits payable to you upon your termination of employment with the Company and
its subsidiaries. This Agreement supersedes any other such promises, warranties,
representations, plans or agreements. This Agreement may not be amended or modified except
by a written instrument signed by you and an authorized representative of the Board or the
Company’s chief executive officer.
This Agreement will be governed by and construed in accordance with the laws of the
State of California without regard to the conflicts of law provisions thereof.
Dispute Resolution
To ensure the timely and economical resolution of disputes that arise in connection with
your employment with the Company and its subsidiaries, you and the Company agree that any
and all disputes, claims, or causes of action arising from or relating to the enforcement,
breach, performance or interpretation of this Agreement, your employment, or the
termination of your employment, shall be resolved to the fullest extent permitted by law
by final, binding and confidential arbitration, by a single arbitrator, in Santa Xxxxx
County, California, conducted by Judicial Arbitration and Mediation Services, Inc.
(“JAMS”) under the applicable JAMS employment rules. By agreeing to this arbitration
procedure, both you and the Company waive the right to resolve any such dispute through a
trial by jury or judge or administrative proceeding. The arbitrator shall: (a) have the
authority to compel adequate discovery for the resolution of the dispute and to award such
relief as would otherwise be permitted by law; and (b) issue a written arbitration
decision, to include the arbitrator’s essential findings and conclusions and a statement
of the award. The arbitrator shall be authorized to award any or all remedies that you or
the Company would be entitled to seek in a court of law. The Company shall pay all JAMS’
arbitration fees in excess of the amount of court fees that would be required if the
dispute were decided in a court of law. Nothing in this Agreement is intended to prevent
either you or the Company from obtaining injunctive relief in court to prevent irreparable
harm pending the conclusion of any such arbitration. Notwithstanding the foregoing, you
and the Company each have the right to resolve any issue or dispute over intellectual
property rights by Court action instead of arbitration.
If you choose to accept this Agreement under the terms described above, please return a
signed copy of this letter to my attention.
Sincerely,
/s/ Xxxx X. Xxx
Xxxx X. Xxx
President and Chief Executive Officer
Avago Technologies Limited
President and Chief Executive Officer
Avago Technologies Limited
Agreed and accepted this 14 day of June, 2006
/s/ Xxxxxxxx Xxxxxxx
Xxxxxxxx Xxxxxxx