EXHIBIT 10-k-12
EMPLOYMENT AGREEMENT
     This EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of the
                     day of August, 2007, by and between Conexant Systems, Inc.,
a Delaware corporation (the “Company”), and Karen Roscher (the “Executive”).
     WHEREAS, the parties hereto wish to enter into the arrangements set forth
herein with respect to the terms and conditions of the Executive’s employment
with the Company from and after the Effective Date (as defined in Section 2);
     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 are hereby 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
and in the positions and with the duties set forth in Section 3. Terms used
herein with initial capitalization are defined in Section 24.
     2. Term. Unless earlier terminated pursuant to Section 8, the term of the
Executive’s employment hereunder in the positions referenced under Section 3
will begin as of September 10, 2007 (the “Effective Date”) and will conclude on
September 9, 2009 (the “Employment Period”); provided that, beginning on
September 10, 2009 and on each anniversary of that date thereafter, the
Employment Period will automatically be extended for a one-year period unless
either party gives written notice to the other party at least sixty days before
the end of the Employment Period (or extended Employment Period, as the case may
be) that it no longer wishes such automatic one year extensions to continue.
     3. Position and Duties. The Executive will serve as Senior Vice President &
Chief Financial Officer of the Company during the Employment Period. As Senior
Vice President & Chief Financial Officer of the Company, the Executive will be
an executive officer of the Company and 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 President &
Chief Executive Officer with regard to the Executive’s status and position
within the Company. The Executive will report directly to the President & Chief
Executive Officer. The Executive will 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

 

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and affairs of the Company during the Employment Period, it being understood
that the Executive may, consistent with the other provisions of this Agreement,
pursue other outside interests, including but not limited to devoting time to
managing the Executive’s personal investments and to charitable and community
activities.
     4. Place of Performance. During the Employment Period, the Executive’s
primary place of employment and work location will be Newport Beach, California,
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 will pay to the
Executive an annual base salary (the “Base Salary”), which initially will be
$325,000. The Base Salary will be reviewed by the Board or the Compensation and
Management Development Committee of the Board (the “Compensation Committee”) no
less frequently than annually and may be increased (but not decreased) at the
discretion of the Board or the Compensation Committee. If the Executive’s Base
Salary is increased, the increased amount will be the Base Salary for the
remainder of the Employment Period. The Base Salary will be payable monthly or
in such other installments as will be consistent with the Company’s payroll
procedures in effect from time to time.
     (b) Bonus. (i) During the Employment Period, the Executive will be eligible
to earn an annual performance bonus in an amount determined at the discretion of
the Board or the Compensation Committee for each fiscal year. It is the
intention of the parties hereto that the Company shall establish a target bonus
for the Executive with respect to each fiscal year of the Employment Period
based upon overall performance of the Company and upon the Executive’s
individual performance. The Executive’s initial full year annual target bonus
will be 60% of the Base Salary (pro-rata for the time worked in the fiscal
year). In the event that a target bonus is not established with respect to any
subsequent year, the Executive’s target bonus shall be deemed to be the target
bonus established under this Agreement for the immediately preceding year. Not
withstanding the foregoing, for the fiscal year 2008 (which commences in
October 2007), the Executive will be guaranteed a bonus of not less than
$100,000, to be disbursed when normal company bonuses are paid.
     (ii) In addition to any annual performance bonus payable under this
Section 5(b), the Company shall pay the Executive within thirty (30) days of
commencing employment, a special “one time” bonus in the gross amount (before
applicable taxes) of $150,000 (of which $50,000 is targeted to assisting you
assimilate to the higher cost area geography of Orange County, California) .
While this “special” bonus will be paid within thirty (30) days of commencing
employment, it will not be considered fully earned until

 

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the first anniversary date of the “Effective Date” of this Agreement. Should the
Executive voluntarily terminate her employment for any reason (other than as a
result of death or Disability) or be terminated for Cause before the first
anniversary date of this Agreement, the Executive will owe the gross amount back
to the Company within 30 days of her Termination Date. If the Executive is
involuntarily terminated for any other reason than Cause before the first
anniversary date of this Agreement, the Executive will be deemed to have earned
the “special” bonus.
     (c) Equity Compensation. (i) On the Effective Date, the Company will grant
to the Executive options to purchase 1,000,000 shares of Company Common Stock
(“Stock Options”), with an exercise price equal to the fair market value of the
Company Common Stock on the date of grant, such options to become exercisable as
follows: (A) one-third of the options will become exercisable on the first
anniversary of the Effective Date; (B) one-third of the options will be come
exercisable on the second anniversary of the Effective Date; and (C) one-third
of the options will become exercisable on the third anniversary of the Effective
Date. In addition, on the Effective Date, you will be granted 360,000 Restricted
Stock Units (“Non-Performance RSU’s”). These Non-Performance RSU’s will vest
one-third each year on the first, second and third anniversary dates of the
Effective Date. On the Effective Date, you will also be made a grant of 250,000
Performance Restricted Stock Units (“Performance RSU’s”). These Performance
RSU’s are subject to vest under the following conditions: (A) one-third will
vest if the Company’s Common Stock sustains an average closing price of $3.00
over a 60 calendar day period; (B) one-third will vest if the Company’s Common
Stock sustains an average closing price of $4.50 over a 60 calendar day period;
and (C) one-third will vest if the Company’s Common Stock sustains an average
closing price of $6.00 over a 60 calendar day period. Any unvested portion of
the initial Performance RSU grant after five (5) years will be forfeited.
          (ii) Notwithstanding the foregoing, in the event of a Change of
Control, any unvested Stock Options, Non-Performance RSUs and shares of
non-performance based Restricted Company Common Stock will become fully vested
contingent upon and immediately prior to such Change of Control. In addition, in
the event of a Change of Control, if and to the extent not already vested, (A)
one-third of the Performance RSUs granted as of the Effective Date will vest
contingent upon and immediately prior to such Change of Control if the closing
price of the Company’s Common Stock (or, in the event of a Change of Control
that is a Corporate Transaction, the price per share of Common Stock in such
Corporate Transaction) is at least $3.00 on the date of such Change of Control,
(B) an additional one-third of such Performance RSUs will vest contingent upon
and immediately prior to such Change of Control if the closing price of the
Company’s Common Stock (or, in the event of a Change of Control that is a
Corporate Transaction, the price per share of Common Stock in such Corporate
Transaction) is at least $4.50 on the date of such Change of Control, and
(C) the

 

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remaining one-third of such Performance RSUs will vest contingent upon and
immediately prior to such Change of Control if the closing price of the
Company’s Common Stock (or, in the event of a Change of Control that is a
Corporate Transaction, the price per share of Common Stock in such Corporate
Transaction) is at least $6.00 on the date of such Change of Control.
          (iii) Notwithstanding any other provision of this Agreement to the
contrary, except as otherwise provided in Section 1 of the respective
Non-Performance RSU and Performance RSU award agreements, any vested
Non-Performance RSUs or Performance RSUs will be paid out immediately upon
vesting and in any event no later than March 15th of the calendar year of the
year following the year in which such Non-Performance RSUs or Performance RSUs
vest.
     (d) Benefits. During the Employment Period, the Executive will be entitled
to all employee benefits and perquisites made available to senior executives of
the Company. Nothing contained in this Agreement will prevent the Company from
terminating plans, changing carriers or effecting modifications in employee
benefits coverage for the Executive as long as such modifications affect all
similarly situated employees and/or officers of the Company.
Upon the Executive’s start date, the Executive will be eligible to utilize the
Company’s relocation benefits as outlined in the summary sheet included in her
offer package. Upon formal acceptance, a relocation coordinator will be assigned
to the Executive to help facilitate the move process. Per Company policy, the
Executive will be required to sign an employee reimbursement agreement in order
to initiate relocation benefits. Such agreement outlines the Executive’s
responsibilities (repayment of relocation costs) should she voluntarily
terminate her employment or be terminated for Cause within 24 months of the
Executive’s relocation date. The repayment schedule would be 100% within the
first 12 months after the relocation and a pro-rata schedule in the second
twelve months (at the same percentage rates found in Appendix A). The Executive
will have twelve months from her start date to exercise her relocation benefits.
     (e) Vacation; Holidays. During the Employment Period, the Executive will 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 vacation days will be taken at a reasonable time or times. The
Executive will initially be entitled to four (4) weeks vacation per year.
     (f) Withholding Taxes and Other Deductions. To the extent required by law,
the Company will 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.

 

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     6. Expenses. The Executive is expected and is authorized, subject to the
business expense policies as determined by the Company, to incur reasonable
expenses in the performance of the Executive’s duties hereunder, including the
costs of entertainment, travel, and similar business expenses. The Company will
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 and their predecessors of which the Executive
becomes aware during such period. Therefore, the Executive agrees that the
Executive 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 and their predecessors 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

 

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in the course of the Executive’s work for any of the foregoing entities will be
deemed a “work made for hire” under the copyright laws, and the Company will own
all rights therein. To the extent that it is determined, by any authority having
jurisdiction, that any such Copyrightable Work is not a “work made for hire,”
the Executive hereby assigns and agrees to assign to the Company all of the
Executive’s rights, title and interest, including, without limitation, copyright
in and to such Copyrightable Work. The Executive will 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 will 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 will 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 will be communicated by written Notice of
Termination to the other party hereto in accordance with Section 12. For
purposes of this Agreement, a “Notice of Termination” will mean a notice which
will indicate the specific termination provision in this Agreement relied upon,
if any, and will 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 will take effect on
the Date of Termination. The Employment Period will be terminated under the
following circumstances:
     (a) Death. The Employment Period will terminate upon the Executive’s death;
     (b) By the Company. The Company may terminate the Employment Period (i) if
the Executive will 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 will continue for more than three consecutive
months, or any six months in a twelve-month period (a “Disability”), or
(ii) with or without Cause;

 

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     (c) By the Executive. The Executive may terminate the Employment Period at
any time; or
     (d) Non-Renewal. The Employment Period may terminate pursuant to the terms
of Section 2. The expiration of the Employment Period due to a notice of
non-renewal tendered by the Company to the Executive will be treated as a
termination of the Employment Period by the Company without Cause. The
expiration of the Employment Period due to a notice of non-renewal tendered by
the Executive to the Company will be treated as a voluntary termination of the
Employment Period by the Executive.
     9. Compensation upon Termination. The Executive’s employment as Senior Vice
President and Chief Financial Officer of the Company must be terminated in order
for the Executive to receive any payment or other benefit under this Section 9.
     (a) Death. If the Employment Period terminates as a result of the
Executive’s death, the Company will 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. 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), (c) and (d) will be paid in accordance with
the terms of such arrangements. In addition, if the Employment period terminates
as a result of the Executive’s death, then all unvested Stock Options,
Non-Performance RSUs and shares of non-performance based Restricted Company
Common Stock held by the Executive will become fully vested and, in the case of
the Stock Options, fully exercisable on the Date of Termination, and the
Executive will be entitled to exercise all such options until the earlier of
(i) the third anniversary of the Executive’s Date of Termination and (ii) the
expiration date of such option set forth in the grant notice for the option
award. The Company will 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 will promptly pay to the Executive after
the Date of Termination any accrued but unpaid Base Salary through the Date of
Termination. 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), (c) and (d) will be paid in accordance with
the terms of such arrangements. In addition, if the Company terminates the
Employment Period because of the Executive’s Disability, then the Executive will
be entitled to the equity and health insurance portions of the Separation

 

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Benefits set forth in Section 9(e)(ii) and (iii). The Company will 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 For Any Reason. If the
Company terminates the Employment Period for Cause or if the Executive
terminates the Employment Period for any reason, the Company will promptly pay
to the Executive after the Date of Termination any accrued but unpaid Base
Salary through the Date of Termination. 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), (c) and (d) will be
paid in accordance with the terms of such arrangements.
          Other than as set forth in this Section 9(c), the Company will have no
further obligations to the Executive under this Agreement or otherwise (other
than pursuant to any employee benefit plan).
          (d) By the Company Without Cause. If the Company terminates the
Employment Period other than for Cause, Disability or death, the Executive will
be entitled to the Separation Benefits (as defined in Section 9(e)). Other than
as set forth herein, the Company will have no further obligations to the
Executive under this Agreement or otherwise (other than pursuant to any employee
benefit plan).
          If requested by the Company, the Executive will execute a customary
general release in a form satisfactory to the Company in furtherance of this
Agreement and as a condition to the receipt of any Separation Benefits. Nothing
in this Section 9(d) will be deemed to operate or will operate as a release,
settlement or discharge of any liability of the Executive to the Company or
others for any action or omission by the Executive, including without limitation
any actions which formed, or could have formed, the basis for termination of the
Executive’s employment for Cause.
          (e) Separation Benefits. For purposes of this Agreement, “Separation
Benefits” will mean:
          (i) payment by the Company to the Executive of 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;

 

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  (B)   one (1) times the Executive’s base salary;     (C)   one (1) times
Executive’s “annual target bonus”; and     (D)   an additional payment of
$50,000;

          (ii) continued provision by the Company of coverage under the
Company’s health insurance plan for a period of 18 months beginning on the Date
of Termination; and
          (iii) all unvested Stock Options, Non-Performance RSUs and shares of
non-performance based Restricted Company Common Stock held by the Executive will
become fully vested and, in the case of the Stock Options, fully exercisable on
the Date of Termination, and the Executive will be entitled to exercise all such
options until the earlier of (A) the fifteenth (15th) month anniversary of the
Executive’s Date of Termination and (B) the expiration date of such option set
forth in the grant notice for the option award.
          Any cash payment pursuant this Section 9(e), payment of
Non-Performance RSUs or issuance of shares of non-performance based Restricted
Company Common Stock pursuant to Section 9(e)(iii) will be made by the Company
within thirty days following the Date of Termination, except as may be provided
otherwise in Section 23.
          (f) Liquidated Damages. The parties acknowledge and agree that damages
suffered by the Executive as a result of a termination by the Company without
Cause will be extremely difficult or impossible to establish or prove, and agree
that the payments and benefits provided pursuant to Section 9(d) will 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
will be in lieu of all other claims that the Executive may make with respect to
the termination of the Executive’s employment, the Employment Period or any such
breach of this Agreement. In no event will 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(e), such amounts
will not be reduced whether or not the Executive obtains other employment.
          10. Noncompetition and Nonsolicitation.
          (a) Noncompetition. THIS SECTION 10(a) WILL HAVE NO FORCE OR EFFECT,
AND WILL NOT BE DEEMED A PART OF THIS AGREEMENT, DURING

 

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ANY AND ALL PERIODS IN WHICH THE EXECUTIVE PERFORMS SERVICES AS AN EMPLOYEE OF
THE COMPANY PRINCIPALLY IN THE STATE OF CALIFORNIA, BUT WILL BECOME IMMEDIATELY
EFFECTIVE IF AND TO THE EXTENT THE EXECUTIVE PERFORMS SERVICES AS AN EMPLOYEE OF
THE COMPANY PRINCIPALLY IN A JURISDICTION OTHER THAN THE STATE OF CALIFORNIA.
The Executive acknowledges that in the course of the Executive’s employment with
the Company and its Affiliates and their predecessors, the Executive will become
familiar with the trade secrets of, and other confidential information
concerning, the Company and its Affiliates and their predecessors, 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 termination of the Employment Period
for any reason (the “Restricted Period”), the Executive will 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 and
the Executive’s other current positions and activities described in Section 3
will not be prohibited hereby.
     (b) Nonsolicitation. During the Restricted Period, the Executive will 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 will be substituted for
the stated period, scope or area and that the court will 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 will be deemed illegal by
any jurisdiction, the provisions in this Section 10 will 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

 

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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. 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 will 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 11) (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 will 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), 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 11(a), if it will 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 the Payments would not give rise to any Excise Tax, then no
Gross-Up Payment will be made to the Executive and the Payments, in the
aggregate, will be reduced to the Reduced Amount.
     (b) Subject to the provisions of Section 11(c), all determinations required
to be made under this Section 11, 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 determinations, will be made by Deloitte & Touche
LLP or such other nationally recognized public accounting firm agreed to by the
Executive and the Company (the “Accounting Firm”) which will provide detailed
supporting calculations both to the Company and the Executive within fifteen
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 an accountant or auditor for the individual,
entity or group (other than the Company) effecting the change of control
resulting in an Excise Tax, the Executive will appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm will then be referred to as the Accounting Firm hereunder). All
fees and expenses of the

 

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Accounting Firm will be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 11, will 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 will 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 11(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
will determine the amount of the Underpayment that has occurred and any such
Underpayment will be promptly paid by the Company to or for the benefit of the
Executive.
     (c) The Executive will 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 will be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and will apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
will not pay such claim before the expiration of the thirty-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 before the expiration of such
period that it desires to contest such claim, the Executive will:
     (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 will 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 will bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and will 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

 

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such representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 11(c), the Company will control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego 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 sue 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 will determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company will advance the
amount of such payment to the Executive, on an interest-free basis and will
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, the Company’s control of the
contest will be limited to issues with respect to which a Gross-Up Payment would
be payable hereunder and the Executive will 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 11(c), the Executive becomes entitled to receive any
refund with respect to such claim, the Executive will (subject to the Company’s
complying with the requirements of Section 11(c)) promptly pay to the Company
the amount of such refund (together with any interest 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 11(c), a determination is
made that the Executive will 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 before the expiration of thirty days after such
determination, then such advance will be forgiven and will not be required to be
repaid and the amount of such advance will offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid.
     (e) Any Gross-Up Payment, Underpayment or other gross-up payment under this
Section 11 will be made to the Executive by the end of the calendar year
following the year in which the Executive pays the related taxes that are being
“grossed-up” under this Section 11. If no such taxes are payable, the payment
will be made to the Executive by the end of the calendar year following the year
in which (i) any related tax audit is completed or (ii) any related tax
litigation if fully resolved and not subject to appeal.

 

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     12. Notices. All notices, demands, requests or other communications
required or permitted to be given or made hereunder will be in writing and will
be delivered, telecopied or mailed by first class registered or certified mail,
postage prepaid, addressed as follows:

  (a)   If to the Company:

Conexant Systems, Inc.
4000 MacArthur Boulevard, West Tower
Newport Beach, CA 92660
Fax: (949) 483-9475
Attention: Michael Vishny, Senior Vice President, Human Resources

  (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
will be given or made in the manner described above will 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.
     13. Severability. The invalidity or unenforceability of any one or more
provisions of this Agreement will not affect the validity or enforceability of
the other provisions of this Agreement, which will remain in full force and
effect.
     14. Survival. It is the express intention and agreement of the parties
hereto that the provisions of Sections 7, 9, 10, 11, 12 and 23 will survive the
termination of employment of the Executive. In addition, all obligations of the
Company to make payments hereunder will survive any termination of this
Agreement on the terms and conditions set forth herein.
     15. Assignment. The rights and obligations of the parties to this Agreement
will 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, will have the right to receive any
amount owing and unpaid to the Executive hereunder, and (ii) the rights and
obligations of the Company hereunder will be assignable and delegable in
connection with any merger, consolidation or sale of all or substantially all of
the assets of the Company and any similar event with respect to any successor
corporation. Notwithstanding anything herein to the contrary, the rights and

 

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obligations of the Company hereunder will inure to the benefit of, and will be
binding upon, any successor to the Company or its business by merger or
otherwise, whether or not there is an express assignment, delegation or
assumption of such rights and obligations.
     16. Binding Effect. Subject to any provisions hereof restricting
assignment, this Agreement will be binding upon the parties hereto and will
inure to the benefit of the parties and their respective heirs, devisees,
executors, administrators, legal representatives, successors and assigns.
     17. Amendment; Waiver. This Agreement will not be amended, altered or
modified except by an instrument in writing duly executed by the parties hereto.
No waiver by either of the parties hereto of a breach of or a default under any
of the provisions of this Agreement will thereafter be construed as a waiver of
any subsequent breach or default of a similar nature. 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 will not be construed
as a waiver of any such provisions, rights or privileges hereunder, or a waiver
of any subsequent breach or default of a similar nature.
     18. Headings. Section and subsection headings contained in this Agreement
are inserted for convenience of reference only, will not be deemed to be a part
of this Agreement for any purpose, and will not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
     19. Governing Law. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto, will be governed by
and construed in accordance with the laws of the State of California (but not
including the choice of law rules thereof).
     20. Entire Agreement. This Agreement constitutes the entire agreement
between the parties respecting the employment of the Executive, there being no
representations, warranties or commitments between the parties except as set
forth herein.
     21. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be an original and all of which will be deemed
to constitute one and the same instrument.
     22. Legal Expenses. The Company will pay or reimburse the Executive for
reasonable attorneys’ fees (up to a maximum of $5,000) incurred by the Executive
in connection with the negotiation of this Agreement and the Executive’s
commencement of employment hereunder. Any such reimbursement will be made no
later than the calendar year following the year in which such expense was
incurred.

 

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     23. Provisions Regarding Code Section 409A.
     (a) Six-Month Wait for Key Employees Under Separation from Service. To the
extent any amount payable under this Agreement constitutes amounts payable under
a “nonqualified deferred compensation plan” (as defined in Code Section 409A)
following a “separation from service” (as defined in Code Section 409A),
including any amount payable under Sections 9 or 11 of this Agreement, then,
notwithstanding any other provision in this Agreement to the contrary, such
payment will not be made until the date that is six months following the
Executive’s “separation from service,” but only if the Executive is then deemed
to be a “specified employee” under Code Section 409A as of the date he
“separates from service”.
     (b) Necessary Amendments Due to Code Section 409A. The parties hereto
acknowledge that the requirements of Code Section 409A are still being developed
and interpreted by government agencies, that certain issues under Code
Section 409A remain unclear at this time, and that the parties hereto have made
a good faith effort to comply with current guidance under Code Section 409A.
Notwithstanding anything in this Agreement to the contrary, in the event that
amendments to this Agreement are necessary in order to comply with future
guidance or interpretations under Code Section 409A, including amendments
necessary to ensure that compensation will not be subject to Code Section 409A,
the Executive agrees that the Company will be permitted to make such amendments,
on a prospective and/or retroactive basis, in its sole discretion, provided that
it has first negotiated with the Executive on a good faith basis to construct an
amendment that would be mutually satisfactory to the parties hereto.
     (c) Gross-Up for Code Section 409A Liabilities. Notwithstanding anything in
this Agreement to the contrary, in the event that it will be determined that any
compensation, 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) would be
subject to the interest and additional 20% tax imposed by Code Section 409A (a
“409A Amount”), then the Executive will be entitled to receive a payment (a
“409A Gross-Up Payment”) in an amount such that after payment by the Executive
of the interest and the additional 20% tax imposed under Code
Section 409A(a)(1)(B) (including any interest and additional 20% tax imposed
with respect to such payment) and any income taxes imposed on the 409A Gross-Up
Payment only (and any interest and penalties imposed with respect thereto), the
Executive retains an amount equal to the 409A Amount. Any 409A Gross-Up Payment
will be made no later than the end of the calendar year following the year
Executive pays the 409A Amount.

 

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     24. Definitions.
     “Affiliate” means any entity from time to time designated by the Board and
any 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 meanings correlative to the foregoing.
     “Board” means the board of directors of the Company.
     “Cause” means: (i) the Executive’s indictment or conviction of or entering
into a plea of guilty or no contest to 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(s) 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.
     “Change of Control” means:
     (i) 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 30% or more of
either (A) the then outstanding shares of Common Stock of the Company (the
Outstanding Company Common Stock) or (B) 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 subparagraph (i), the following acquisitions
will not constitute a Change of Control: (w) any acquisition directly from the
Company, (x) any acquisition by the Company, (y) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (z) any acquisition pursuant to a
transaction which complies with clauses (A), (B) and (C) of subsection (iii) of
this definition; or
     (ii) Individuals who, as of the date hereof, constitute the Board of
Directors (the Incumbent Board) cease for any reason to constitute at least a
majority of the Board of Directors; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company’s shareowners, 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

 

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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 of Directors; or
     (iii) 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 Corporate Transaction), in each
case, unless, following such Corporate Transaction, (A) 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 Corporate Transaction beneficially own, directly or
indirectly, more than 50% 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 Corporate Transaction (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 Corporate Transaction of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may
be, (B) no Person (excluding any employee benefit plan (or related trust) of the
Corporation or such corporation resulting from such Corporate Transaction)
beneficially owns, directly or indirectly, 30% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
Corporate Transaction 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 Corporate Transaction, and (C) at least a majority of the
members of the board of directors of the corporation resulting from such
Corporate Transaction were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board of Directors,
providing for such Corporate Transaction; or
     (iv) Approval by the Company’s shareowners of a complete liquidation or
dissolution of the Company.
     “Code” means the Internal Revenue Code of 1986, as amended.
     “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 will 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

 

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the Notice of Termination; (iv) if the Executive’s employment is terminated
during the Employment Period for any other reason, the date specified in the
Notice of Termination; or (v) if the Executive’s employment is terminated due
the non-renewal of the Employment Period in accordance with Section 2 hereof,
the date on which the Employment Period expires by its terms.
     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.

            CONEXANT SYSTEMS, INC.
      By:           Name:           Title:        

            KAREN ROSCHER
            Date         

 

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Appendix A
The repayment schedule for the Executive’s relocation expense/costs pursuant to
Section 5(d) should the Executive voluntarily terminate her employment for any
reason or be terminated for Cause prior to the second anniversary date of this
Agreement is as follows:

         
Month 1 through 12:
    100%   
Month 13
    95%   
Month 14
    90%   
Month 15
    85%   
Month 16
    80%   
Month 17
    75%   
Month 18
    70%   
Month 19
    65%   
Month 20
    55%   
Month 21
    45%   
Month 22
    35%   
Month 23
    25%   
Month 24
    15%