EXHIBIT 10.7
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement")is entered into as of this 1st day
of October 2001, by and among GlobeSpan, Inc., a Delaware corporation (the
"Company"), and Xxxxxxx Xxxxx (the "Executive").
WHEREAS, the Executive is currently employed as Chief Executive Officer of
the Company;
WHEREAS, pursuant to that Merger Agreement among the Company, Wine
Acquisition Corp. and Virata Corporation ("Virata")(the "Merger Agreement"),
Virata will be merged into a subsidiary of the Company and will survive as a
wholly owned subsidiary of the Company (the "Merger"); and
WHEREAS, the parties hereto wish to enter into the arrangements set forth
herein with respect to the terms and conditions of the Executive's continued
employment with the Company from and after the date of the consummation of the
Merger.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
1. Employment Agreement. On the terms and conditions set forth in this
Agreement, the Company agrees to employ the Executive and the Executive agrees
to be employed by the Company for the Employment Period set forth in Section 2
hereof and in the position and with the duties set forth in Section 3 hereof.
Terms used herein with initial capitalization are defined in Section 22 below.
This Agreement shall be effective as of the Effective Time of the Merger (as
defined in the Merger Agreement), and, at the Effective Time, shall replace and
supersede any employment agreement between the Executive and the Company or one
of its Affiliates or predecessors (the "Current Agreement"). This Agreement
shall be of no effect unless, and until, the Merger is consummated.
2. Term. Unless earlier terminated pursuant to Section 8, the term of the
Executive's employment hereunder shall commence on the day in which the
Effective Time of the Merger occurs (the "Effective Date")and shall conclude on
the second anniversary of the Effective Date (the "Employment Period");
provided, however, that beginning on the day following the Effective Date, and
on each day thereafter, the Employment Period shall automatically be extended
for one additional day, unless either party gives written notice to the other
party (a "Notice of Non-Renewal")that it no longer wishes such automatic
extensions to continue.
3. Position and Duties. The Executive shall serve as Chief Executive
Officer of the Company during the Employment Period, and shall serve as a member
of the Board during the Employment Period. As the Chief Executive Officer of the
Company, the Executive shall render executive, policy and other management
services to the Company of the type customarily performed by persons serving in
a similar capacity and as reasonably determined by the Board with regard to the
Executive's status and position within the Company. The Executive shall
devote the Executive's reasonable best efforts and substantially full business
time to the performance of the Executive's duties hereunder and the advancement
of the business and affairs of the Company during the Employment Period
(provided that the Executive may devote time to managing his personal
investments and to charitable and community activities, and, with the consent of
the Board, take up other offices and positions during the Employment Period).
4. Place of Performance. During the Employment Period, the Executive's
primary place of employment and work location shall be Redbank, New Jersey,
except for reasonable travel on Company business and as otherwise consented to
by the Executive.
5. Compensation.
(a) Base Salary. During the Employment Period, the Company shall pay to the
Executive an annual base salary (the "Base Salary"), which initially shall be no
less favorable than his current annual base salary in effect immediately prior
to the effectiveness of this Agreement. The Base Salary shall be reviewed by the
Board no less frequently than annually and may be increased (but not
decreased)at the discretion of the Board. If the Executive's Base Salary is
increased, the increased amount shall be the Base Salary for the remainder of
the Employment Period. The Base Salary shall be payable monthly or in such other
installments as shall be consistent with the Company's payroll procedures in
effect from time to time.
(b) Bonus. During the Employment Period, the Executive shall be eligible to
earn an annual performance bonus in an amount determined at the discretion of
the Board for each fiscal year; provided, however, that the Executive's total
cash compensation in any calendar year shall be no less than $500,000. It is the
intention of the parties hereto that the Company shall establish a target bonus
for the Executive with respect to each year of the Employment Period (it being
understood and agreed that the target bonus shall neither be considered a floor
nor a ceiling with respect to the actual amount of the annual bonus that is paid
to the Executive in any period). In the event that a target bonus is not
established with respect to any such year, the Executive 's target bonus shall
be deemed to be the target bonus established under this Agreement for the
immediately preceding year.
(c) Benefits. During the Employment Period, the Executive will be entitled
to all employee benefits and perquisites (including health, welfare, life
insurance, pension and incentive plans and other arrangements)made available to
similarly situated executives of the Company. Nothing contained in this
Agreement shall prevent the Company from terminating plans, changing carriers or
from effecting modifications in employee benefits coverage for the Executive as
long as such modifications are Company-wide modifications that affect all
similarly situated employees of the Company.
(d) Vacation; Holidays. During the Employment Period, the Executive shall
be entitled to all public holidays observed by the Company and vacation days in
accordance with the applicable vacation policies for senior executives of the
Company, which shall be taken at a reasonable time or times.
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(e) Withholding Taxes and Other Deductions. To the extent required by law,
the Company shall withhold from any payments due to the Executive under this
Agreement any applicable federal, state or local taxes and such other deductions
as are prescribed by law.
6. Expenses. The Executive is expected and is authorized, subject to the
business expense policies as determined by the Board, to incur reasonable
expenses in the performance of his duties hereunder, including the costs of
entertainment, travel, and similar business expenses. The Company shall promptly
reimburse the Executive for all such expenses upon periodic presentation by the
Executive of an accounting of such expenses on terms applicable to senior
executives of the Company.
7. Confidentiality; Work Product.
(a) Information. The Executive acknowledges that the information,
observations and data obtained by the Executive concerning the business and
affairs of the Company and its Affiliates and their predecessors during the
course of the Executive's performance of services for, or employment with, any
of the foregoing persons (whether or not compensated for such services)are the
property of the Company and its Affiliates, including information concerning
acquisition opportunities in or reasonably related to the business or industry
of the Company or its Affiliates of which the Executive becomes aware during
such period. Therefore, the Executive agrees that he will not at any time
(whether during or after the Employment Period)disclose to any unauthorized
person or, directly or indirectly, use for the Executive's own account, any of
such information, observations, data or any Work Product (as defined below)or
Copyrightable Work (as defined below)without the Board's consent, unless and to
the extent that the aforementioned matters become generally known to and
available for use by the public other than as a direct or indirect result of the
Executive's acts or omissions to act or the acts or omissions to act of other
senior or junior management employees of the Company and its Affiliates, The
Executive agrees to deliver to the Company at the termination of the Executive's
employment, or at any other time the Company may request in writing (whether
during or after the Employment Period), all memoranda, notes, plans, records,
reports and other documents, regardless of the format or media (and copies
thereof), relating to the business of the Company and its Affiliates and their
predecessors (including, without limitation, all acquisition prospects, lists
and contact information)which the Executive may then possess or have under the
Executive's control.
(b) Intellectual Property. The Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports, trade secrets, know-how, ideas, computer programs, and all similar or
related information (whether or not patentable)that relate to the actual or
anticipated business, research and development or existing or future products or
services of the Company or its Affiliates that are conceived, developed, made or
reduced to practice by the Executive while employed by the Company or any of its
predecessors ("Work Product")belong to the Company and the Executive hereby
assigns, and agrees to assign, all of the Executive's rights, title and interest
in and to the Work Product to the Company. Any copyrightable work
("Copyrightable Work")prepared in whole or in part by the Executive in the
course of the Executive 's work for any of the foregoing entities shall be
deemed a "work made for hire" under the copyright laws, and the Company shall
own all rights therein. To the extent that it is determined, by any authority
having jurisdiction, that any such
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Copyrightable Work is not a "work made for hire," the Executive hereby assigns
and agrees to assign to the Company all the Executive's rights, title and
interest, including, without limitation, copyright in and to such Copyrightable
Work. The Executive shall promptly disclose such Work Product and Copyrightable
Work to the Board and perform all actions reasonably requested by the Board
(whether during or after the Employment Period)to establish and confirm the
Company's ownership (including, without limitation, assignments, consents,
powers of attorney and other instruments).
(c) Enforcement. The Executive acknowledges that the restrictions contained
in this Section 7 are reasonable and necessary, in view of the nature of the
Company's business, in order to protect the legitimate interests of the
Company, and that any violation thereof would result in irreparable injury to
the Company. Therefore, the Executive agrees that in the event of a breach or
threatened breach by the Executive of the provisions of this Section 7, the
Company shall be entitled to obtain from any court of competent jurisdiction,
preliminary or permanent injunctive relief restraining the Executive from
disclosing or using any such confidential information. Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies available
to it for such breach or threatened breach, including, without limitation,
recovery of damages from the Executive.
8. Termination of Employment. Any termination of the Employment Period by
the Company or the Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 11 hereof.
For purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in this Agreement relied
upon, if any, and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employment
Period under the provision so indicated. Termination of the Employment Period
shall take effect on the Date of Termination. The Employment Period shall be
terminated under the following circumstances:
(a) Death. The Employment Period shall terminate upon the Executive's
death;
(b) By the Company. The Company may terminate the Employment Period (i) if
the Executive shall have been unable to perform all of the Executive 's duties
hereunder by reason of illness, physical or mental disability or other similar
incapacity, which inability shall continue for more than three consecutive
months, or any six months in a twelve-month period (a "Disability"); or (ii)with
or without Cause; provided, however, that with respect to any termination by the
Company during the first two years after the Effective Date, any purported
termination by the Company of the Executive's employment hereunder for any
reason shall only be effective upon the affirmative vote, in writing, of
directors constituting at least seventy-five percent of the then current members
of the full Board, after a duly constituted meeting of the Board held to
consider such matter, with reasonable advance notice to the Executive that such
Board meeting is to occur, and with an opportunity provided to the Executive to
be represented at such Board meeting with counsel (and, after such period, such
termination shall be effectuated upon a simple majority vote of the Board);
(c) By the Executive. The Executive may terminate the Employment Period at
any time for Good Reason or without Good Reason; or
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(d) Non-Renewal. The Employment Period may terminate pursuant to the terms
of Section 2.
9. Comnensation unon Termination.
(a) Death. If the Employment Period terminates as a result of the
Executive's death, the Company shall promptly pay to the Executive's estate, or
as may be directed by the legal representatives of such estate, after the Date
of Termination any accrued but unpaid Base Salary through the Date of
Termination and all other unpaid amounts, if any, which the Executive has
accrued and is entitled to as of the Date of Termination in connection with any
fringe benefits or under any bonus or incentive compensation plan or program of
the Company pursuant to Sections 5(b) and (c)hereof, and the Company shall have
no further obligations to the Executive under this Agreement or otherwise (other
than pursuant to any employee benefit plan and any life insurance, death in
service or other equivalent policy for the benefit of the Executive).
(b) Disability. If the Company terminates the Employment Period because of
the Executive's Disability, the Company shall promptly pay to the Executive
after the Date of Termination any accrued but unpaid Base Salary through the
Date of Termination and all other unpaid amounts, if any, which the Executive
has accrued and is entitled to as of the Date of Termination in connection with
any fringe benefits or under any bonus or incentive compensation plan or program
of the Company pursuant to Sections 5(b)and (c) hereof, and the Company shall
have no further obligations to the Executive under this Agreement or otherwise
(other than pursuant to any employee benefit plan and any disability or other
medical insurance policy for the benefit of the Executive).
(c) By the Company for Cause; By the Executive Without Good Reason. If the
Company terminates the Employment Period for Cause or if the Executive
terminates the Employment Period without Good Reason, the Company shall promptly
pay to the Executive after the Date of Termination any accrued but unpaid Base
Salary through the Date of Termination and all other unpaid amounts, if any,
which the Executive has accrued and is entitled to as of the Date of Termination
in connection with any fringe benefits or under any bonus or incentive
compensation plan or program of the Company pursuant to Sections 5(b) and (c)
hereof, and other than pursuant to employee benefit plans, the Company shall
have no further obligations to the Executive under this Agreement.
(d) By the Company Without Cause; By the Executive for Good Reason. If the
Company terminates the Employment Period other than for Cause, Disability or
death, or the Executive terminates the Employment Period for Good Reason, (i)
the Company shall promptly pay to the Executive after the Date of Termination a
cash lump sum equal to (A) any accrued but unpaid Base Salary through the Date
of Termination and all other unpaid amounts, if any, which the Executive has
accrued and is entitled to as of the Date of Termination; (B) the product of (I)
100% of the Executive's target bonus for the calendar year in which the
termination of employment occurs times (II) a fraction, the numerator of which
is the number of days of the then current calendar year that have elapsed prior
to the Date of Termination, and the denominator of which is 365; (C) an amount
equal to the product of (I)the Base Salary and (II) two; (D) the Executive's
target bonus for the calendar year in which such termination of
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employment occurs; and (E) an additional payment of $500,000; (ii) the Company
shall continue to provide welfare benefits pursuant to Section 5(c) to the
Executive for the twelve-month period commencing on the Date of Termination (or,
to the extent such benefits cannot be so provided, the Company shall make a cash
payment to the Executive in an amount sufficient (on an after-tax basis) to
allow the Executive to obtain comparable benefits for such period), unless and
until the Executive receives any such or similar benefits while employed in any
capacity by any other employer during such twelve-month period; and (iii) all
unvested options to purchase Company stock and shares of restricted Company
stock held by the Executive shall become fully vested and, in the case of
options, fully exercisable on the date of Date of Termination, and the Executive
shall be entitled to exercise all such options for three years following the
Date of Termination. Other than as set forth herein, the Company shall have no
further obligations to the Executive under this Agreement or otherwise (except
pursuant to employee benefit plans and as otherwise set forth in this
Agreement).
(e) Liquidated Damages. The parties acknowledge and agree that damages
suffered by the Executive as a result of termination by the Company without
Cause shall be extremely difficult or impossible to establish or prove, and
agree that the payments and benefits provided pursuant to Section 9(d) shall
constitute liquidated damages for any breach of this Agreement by the Company
through the Date of Termination. The Executive agrees that, except for such
other payments and benefits to which the Executive may be entitled as expressly
provided by the terms of this Agreement or any applicable Company plan, such
liquidated damages shall be in lieu of all other claims that the Executive may
make with respect to termination of his employment, the Employment Period or any
such breach of this Agreement. In no event shall the Executive be obligated to
seek 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, except as specifically provided in clause (ii) of Section 9(d), such
amounts shall not be reduced whether or not the Executive obtains other
employment.
10. Noncompetition and Nonsolicitation.
(a) Noncompetition. The Executive acknowledges that in the course of his
employment with the Company and its Affiliates and their predecessors, he has
and will continue to become familiar with the trade secrets of, and other
confidential information concerning, the Company and its Affiliates, that the
Executive's services will be of special, unique and extraordinary value to the
Company and its Affiliates and that the Company's ability to accomplish its
purposes and to successfully pursue its business plan and compete in the
marketplace depends substantially on the skills and expertise of the Executive.
Therefore, and in further consideration of the compensation being paid to the
Executive hereunder, the Executive agrees that, during the Employment Period and
for a period of twelve months following the Executive's termination of
employment with the Company for any reason other than a termination of
employment in which Section 9(d) hereof applies (in which case the restrictions
set forth in Section 10 of this Agreement shall not apply) (the "Restricted
Period"), he shall not directly or indirectly own, manage, control, participate
in, consult with, render services for, or in any manner engage in any business
competing with the businesses of the Company or its Affiliates, in any country
where the Company or its Affiliates conducts business; provided, however, that
passive investments amounting to no more than three percent of the voting equity
of a business shall not be prohibited hereby.
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(b) Nonsolicitation. During the Restricted Period, the Executive shall not
directly or indirectly through another entity (i) induce or attempt to induce
any employee of the Company or any Affiliate to leave the employ of the Company
or such Affiliate, or in any way willfully interfere with the relationship
between the Company or any Affiliate and any employee thereof; or (ii) induce or
attempt to induce any customer, supplier, licensee or other business relation of
the Company or any Affiliate to cease doing business with the Company or such
Affiliate, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and the Company or any
Affiliate.
(c) Enforcement. If, at the time of enforcement of this Section 10, a court
holds that the restrictions stated herein are unreasonable under circumstances
then existing, the parties hereto agree that the maximum duration, scope or
geographical area reasonable under such circumstances shall be substituted for
the stated period, scope or area and that the court shall be allowed to revise
the restrictions contained herein to cover the maximum duration, scope and area
permitted by law. If the provisions of this Section 10 shall be deemed illegal
by any jurisdiction, the provisions in this Section 10 shall be deemed
ineffective within such jurisdiction. Because the Executive's services are
unique and because the Executive has access to confidential information, the
parties hereto agree that money damages would be an inadequate remedy for any
breach of any provision of this Agreement. Therefore, in the event of a breach
or threatened breach by the Executive of any provision of this Agreement, the
Company may, in addition to other rights and remedies existing in its favor,
apply to any court of competent jurisdiction for specific performance and/or
injunctive or other relief in order to enforce, or prevent any violations of,
the provisions hereof (without posting a bond or other security).
11. Notices. All notices, demands, requests or other communications
required or permitted to be given or made hereunder shall be in writing and
shall be delivered, telecopied or mailed by first class registered or certified
mail, postage prepaid, addressed as follows:
(a) If to the Company:
GlobeSpan, Inc.
000 Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxxxx 00000
Fax: (000)000-0000
Attention: Chief Financial Officer
With a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000)000-0000
Attention: Xxxxx Xxxx, Esq.
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(b) If to the Executive:
at the address on the books and records of the Company at the time of
such notice, or to such other address as may be designated by either party in a
notice to the other. Each notice, demand, request or other communication that
shall be given or made in the manner described above shall be deemed
sufficiently given or made for all purposes three days after it is deposited in
the U.S. mail, postage prepaid, or at such time as it is delivered to the
addressee (with the return receipt, the delivery receipt, the answer back or the
affidavit of messenger being deemed conclusive evidence of such delivery)or at
such time as delivery is refused by the addressee upon presentation.
12. Severability. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability of
the other provisions of this Agreement, which shall remain in full force and
effect.
13. Survival. It is the express intention and agreement of the parties
hereto that the provisions of Sections 7, 9, 10 and 11 hereof shall survive the
termination of employment of the Executive. In addition, all obligations of the
Company to make payments hereunder shall survive any termination of this
Agreement on the terms and conditions set forth herein.
14. Assignment. The rights and obligations of the parties to this Agreement
shall not be assignable or delegable, except that (i)in the event of the
Executive's death, the personal representative or legatees or distributees of
the Executive's estate, as the case may be, shall have the right to receive any
amount owing and unpaid to the Executive hereunder; and (ii) the rights and
obligations of the Company hereunder shall be assignable and delegable in
connection with any subsequent merger, consolidation, sale of all or
substantially all of the assets of the Company and any similar event with
respect to any successor corporation.
15. Binding Effect. Subject to any provisions hereof restricting
assignment, this Agreement shall be binding upon the parties hereto and shall
inure to the benefit of the parties and their respective heirs, devisees,
executors, administrators, legal representatives, successors and assigns.
16. Amendment; Waiver. This Agreement shall not be amended, altered or
modified except by an instrument in writing duly executed by the parties hereto.
Neither the waiver by either of the parties hereto of a breach of or a default
under any of the provisions of this Agreement, nor the failure of either of the
parties, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right or privilege hereunder, shall thereafter be
construed as a waiver of any subsequent breach or default of a similar nature,
or as a waiver of any such provisions, rights or privileges hereunder.
17. Headings. Section and subsection headings contained in this Agreement
are inserted for convenience of reference only, shall not be deemed to be a part
of this Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
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18. Governing Law. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the laws of the State of New Jersey (but not
including the choice of law rules thereof).
19. Entire Agreement. This Agreement constitutes the entire agreement
between the parties respecting the employment of the Executive and supersedes
the Current Agreement upon commencement of the Employment Period, there being no
representations, warranties or commitments between the parties except as set
forth herein. The Executive agrees and acknowledges that following the Effective
Time, the Executive shall have no rights under the Current Agreement and shall
have no claim against the Company or Virata with respect to the Current
Agreement.
20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.
21. Legal Expenses. The Company shall pay or reimburse the Executive for
reasonable attorneys' fees incurred by him in connection with the negotiation of
this Agreement and his commencement of employment hereunder.
22. Definitions.
"Affiliates" means any entity, as may from time to time be designated by
the Board, and other entity directly or indirectly controlling or controlled by
or under common control with the Company. For purposes of this definition,
"control" means the power to direct the management and policies of such entity,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meaning correlative to the
foregoing.
"Board" means the board of directors of the Company.
"Cause" means (i)the Executive's indictment or conviction of a felony or
a crime involving moral turpitude or the intentional commission of any other act
or omission involving dishonesty or fraud that is materially injurious to the
Company or any of its Affiliates; (ii) the Executive's substantial and repeated
failure to perform duties of the office held by the Executive as reasonably
directed by the Board, if such failure is not cured within thirty days after the
Executive receives written notice thereof; (iii)gross negligence or willful
misconduct in the performance of the Executive's duties which materially
injures the Company or its reputation; or (iv) the Executive's willful breach of
the material covenants of this Agreement.
"Date of Termination" means (i) if the Executive's employment is
terminated by the Executive's death, the date of the Executive's death; (ii) if
the Executive's employment is terminated because of the Executive's Disability,
thirty days after Notice of Termination, provided that the Executive shall not
have returned to the performance of the Executive's duties on a full-time basis
during such thirty-day period; (iii) if the Executive's employment is terminated
by the Company for Cause, the date specified in the Notice of Termination; or
(iv) if
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the Executive's employment is terminated during the Employment Period for any
other reason, the date on which Notice of Termination is given.
"Good Reason" means, in the absence of a written consent of the Executive:
(i) the assignment to the Executive (other than an isolated, insubstantial or
inadvertent assignment not occurring in bad faith) of any duties inconsistent
with, or material reduction in or material change of, the Executive's position
(including status, offices, titles and reporting requirements), authority,
duties or responsibilities as contemplated by Section 3 of this Agreement and
which is not remedied by the Company within ten days after receipt of notice
thereof given by the Executive; (ii) any failure by the Company to comply with
any of the provisions of Section 5 of this Agreement, other than an isolated,
insubstantial or inadvertent failure not occurring in bad faith and which is
remedied by the Company within ten days after receipt of notice thereof given by
the Executive; (iii) the Company's requiring the Executive to be based at any
office or location more than fifty miles from that identified in Section 4
hereof; or (iv) the Company's delivery of a Notice of Non-Renewal to the
Executive.
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or
have caused this Agreement to be duly executed on their behalf, as of the day
and year first hereinabove written.
GLOBESPAN, INC.
By: /S/ XXXXXX XXXXXXXX
------------------------------------
Name: Xxxxxx XxXxxxxx
Time: Chief Financial Officer
XXXXXXX XXXXX
/S/ XXXXXXX XXXXX
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