employ_swift.htm


    February
2, 2006

    


    Mr.
Stephen J. Swift

    San
Diego, CA 

    


    


    Dear
Stephen:

    


    I am
pleased to confirm the modification of your terms of employment as Senior Vice
President and General Manager, ULP of Zarlink Semiconductor Inc.
(“Zarlink”).  This document will replace all previous employment terms
and once signed, will constitute the entire terms relating to your ongoing
employment with Zarlink.

    


    Your
place of work will continue to be the Zarlink offices located in San Diego,
California.

    


    
      	
              1.  

            	
              Work
      Responsibilities

            


    

    


    You will
continue reporting to me and will be employed full-time in the position of
Senior Vice President and General Manager, ULP or in such other role as I assign
to you from time to time.

    


    In your
position, you will devote your best efforts, and your full time, skill and
attention to carrying out your duties and to promoting the interests of the
company.  You will well and faithfully perform all services and duties
customarily associated with your position, together with such additional duties
and responsibilities as may be assigned by myself from time to
time.

    


    You agree
not to be employed or engaged in any other capacity (including as a director) in
promoting, undertaking or carrying on any other business apart from that of
Zarlink, without my prior written authorization.  This does not
preclude you from any passive or personal investments that you may wish to hold,
unless with a competitor of the company, in which case you will advise the Board
prior to making such investments, unless the investments are made through an
independently managed fund or your ownership represents less than 0.1 % of a
corporation’s publicly traded shares.

     

    
      	
              2.  

            	
              Salary and
      Bonus

            


    

    


    Your
annual base salary will continue to be Two Hundred and Fifty Thousand ($250,000)
U.S. dollars.

    


    In
addition, you will be eligible to earn an annual incentive payment, conditional
upon successful achievement of the annual objectives of Zarlink’s incentive plan
(as it changes from time to time).  If all objectives and conditions
of the incentive plan including company budget profitability are met, your
target incentive payment, at the Board’s discretion, will be 50% of your base
salary.  If the Financial Component of the Plan is exceeded, you can
earn up to 150% on that portion of your individual incentive plan attributed to
the financial performance of the Company (currently 60% of your target
incentive).

    


    Incentive
objectives for each fiscal year will be reviewed and finalized with the Board
and communicated to you by the end of May each year.

    


    By the
middle of May each year (the “Incentive Assessment Date”), Zarlink assesses the
achievement of the previous year’s objectives, and calculates any earned
incentive amounts.  Any incentive earned will be paid to you by the
end of Q1.  Please note that you must be employed by Zarlink on the
Incentive Assessment Date in order to be eligible to receive any incentive for
the prior fiscal year.

    


    3. Stock
Options

    


    You are
included among those executives whose stock options will be subject to
accelerated vesting in the event of a Change in Control, as defined by and in
accordance with the enclosed Board Resolution dated January 11,
2000.

    


    4. Health, Dental and other
Benefits

    


    Benefits
coverage for you and your family will be in accordance with the terms and
conditions of the U.S. Benefits Plan.

    


    5. Car
Lease

    


    Zarlink
will provide you company car benefits in accordance with the terms of the U.S.
Company Car Plan.

    


    6. Pension

    


    You will
be entitled to participate in the Zarlink U.S. employee 401K
Plan.  Zarlink will provide an annual company match payment in
accordance with the terms of the plan.

    


    7. Vacation

    


    Zarlink
will provide you with 4 weeks of paid vacation leave per annum in accordance
with U.S. Vacation Policy.

    


    8. Confidentiality of
Information and Ownership of Proprietary Property

    


    As a
condition of this agreement, you are required to continue to be bound by the
terms of Zarlink’s confidentiality terms and conditions, a copy of which is
attached hereto.

    


    9. Cessation of
Employment

    


    
      	
              (i)  

            	
              Definitions

            


    

    


    For the
purposes of this employment agreement, the following definitions apply:



    


    “Incapacity” means any
permanent physical or mental incapacity or disability which prevents you from
performing the essential duties of your position, with no reasonable prospect of
recovery, as determined by Zarlink on the basis of medical evidence satisfactory
to the Board.

    


    “Good Just Cause” means any
grounds at common law for which an employer is entitled to dismiss an employee
without notice or compensation in lieu of notice.

    


    “Termination Date”
means:

    


    
      	
              (A)  

            	
              if
      Zarlink terminates your employment, the date designated by the company as
      the last day of your employment (without reference to any applicable
      notice period to which you may be entitled, whether under statute, common
      law, contract or otherwise);

            


    

    


    
      	
              (B)  

            	
              if
      you resign your employment with Zarlink, the date which is the end of the
      one month notice period or such shorter notice period as the parties
      agree;

            


    

    


    
      	
                                                    

            	
               
      (C )  

            	
              if
      you die, the date of death;

            


    

    


    
      	
              (D)  

            	
              if
      this employment agreement is frustrated, which includes but is not limited
      to Incapacity, the date designated by Zarlink as the last day of your
      employment.

            


    

    


    
      	
              (ii)  

            	
              Notice of
      Resignation

            


    

    


    You may
resign at any time, for any reason, upon giving a minimum of one month advance
written notice to Zarlink.  Zarlink reserves the right to require you
to immediately return all company property at any point during the resignation
notice period, and to require you to refrain from attending at the workplace
during any portion of the resignation notice period.

    


    
      	
              (iii)  

            	
              Entitlements upon
      Resignation, Termination for Good Just
  Cause

            


    

    


    If you
resign or your employment is terminated for Good Just Cause, then you will be
entitled to receive any compensation, benefits and perquisites which have
accrued up to the Termination Date, but you will not be entitled to receive
other compensation of any nature, whether under contract, statute, common law or
otherwise.  Your rights respecting any options, which have been
granted to you, will be determined in accordance with the terms of the Zarlink
1991 Stock Option Plan.

    


    
      	
              (iv)  

            	
              Entitlements upon
      Death, Frustration of
Contract

            


    

    


    If you
die, or frustration of this employment agreement occurs (which includes but is
not limited to Incapacity), then you (or your estate, in the event of your
death) will be entitled to receive any compensation, benefits and perquisites
which have accrued up to the Termination Date, but you will not be entitled to
receive other compensation (except as provided in insurance plans) of any
nature, whether under contract, statute, common law or
otherwise.  Your rights respecting any options, which have been
granted to you, will be determined in accordance with the terms of the Zarlink
1991 Stock Option Plan.

    


    
      	
              (v)  

            	
              Entitlements upon
      Termination without Good Just
Cause

            


    

    


    If
Zarlink terminates your employment without Good Just Cause, you will be provided
with the following termination package (which is inclusive of any statutory
entitlements you may have under applicable employment standards
legislation.)  Payment will be provided after withholding any tax and
other required or authorized deductions:

    


    (A)              You
will be paid for all time worked and your accrued vacation balance through to
the Termination Date.  This payment will be made on the Termination
Date.

    


    (B)              You
will be paid in a lump sum an amount equal to one times your then current annual
base salary.  This payment will be made within 30 business days
following the Termination Date.

    


    (C
)              You
will be paid in a lump sum an amount in lieu of bonus equal to one times your
average earned annual bonus over the previous three years or such shorter period
if the period of employment is shorter than three years.  (Note that
any special project bonus arrangements will be excluded from this
calculation.)  This payment will be made within 30 business days
following the Termination Date.

    


    (D)              You
will receive an amount equivalent to the company’s one-year cost of your current
life, health and dental insurance coverage.  You would be eligible to
participate in benefits through COBRA following the Termination
Date.  You would need to contact our insurance carrier (currently
Unum) for conversion or portability of your group life insurance
policy.

    


    (E)              You
will have six months following the Termination Date (or until the natural expiry
date of your stock options, whichever is earlier), to exercise any stock options
which have been granted to you under the Zarlink 1991 Stock Option Plan and
which have vested as of the last day of that 6 month period.  In all
other respects, your rights respecting any options, which have been granted to
you will be determined in accordance with the terms of the Zarlink 1991 Stock
Option Plan.

     

    (F)   
All
perquisites such as company cars and the like will cease 30 days following the
Termination Date.

    



    
      	
              (vi)  

            	
              Resignation of
      Office

            


    

    


    If your
employment ends for any reason, you agree to resign in writing effective upon
the Termination Date from any office or directorship held with Zarlink of with
any subsidiary or affiliated company.

    


    


    
      	
              10.  

            	
              Non-Competition and
      Non-Solicitation Obligations

            


    

    


    You agree
that it could seriously harm Zarlink’s legitimate business interests if you took
unfair advantage of the special knowledge you will gain in your executive
position, to compete with Zarlink.  Accordingly, you agree that the
restrictions set out below are reasonably required to protect Zarlink and its
goodwill from unfair competition.  You also acknowledge that your
agreement to such restrictions is of essence to this employment agreement, and
that Zarlink would not enter into this employment agreement without your
agreement to the restrictions set out in this paragraph.

    


    If your
employment with ZARLINK ceases in the case of (i) due to termination by Zarlink
without Good Just Cause and in the case of (ii) and (iii) for any reason, you
agree that for a period of one (1) year from the Termination Date:

    


            (i)  you will
not participate (as an employee or consultant, executive, director or
significant investor (greater than 20%) in any business operating anywhere in
the world that competes directly with the principal businesses of Zarlink (or
its successor);

    


     (ii) you will
not directly or indirectly solicit any of Zarlink’s customers for business in
competition with Zarlink (or its successors); and,

    


    (iii) you will
not solicit, entice, approach or induce any of Zarlink’s employees or
consultants to leave their employment or to end their consultancy arrangements
with Zarlink (or its successors) or to join another business or
organization.

    


    
      	
              11.  

            	
              Choice of Law and
      Jurisdiction

            


    

    


    This
employment agreement will be governed by and construed in accordance with the
laws of the Province of Ontario, Canada without regard to the principles of
conflicts of law, and will in all respects be treated as an Ontario, Canada
contract.

    


    12. 
Whole
Agreement

    


    By
accepting this amendment of employment terms and conditions, you are agreeing
that the terms and conditions set out in this agreement (including the terms and
conditions of any documents enclosed) represent the entire agreement relating to
your employment with the Company; that any and all previous agreements or
representations, written or oral, are hereby terminated and cancelled; and that
you hereby release Zarlink from any and all claims whatsoever under or in
respect of any such previous agreements or representations.


    To
signify your acceptance, please sign below, and return one complete signed
original of this Agreement to my attention no later than close of business,
February 28, 2006.

    


    


    


    


    Zarlink
Semiconductor Inc.

    


    


    


    


    Per:  /s/ Kirk
Mandy_____________________

             Kirk
Mandy

             President
and Chief Executive Officer

    


    


    


    


    


    


    Acknowledgement and
Acceptance

    


    I,
Stephen J. Swift, have read and reviewed, in its entirety, this employment
agreement dated February 2, 2006 and the documents referred to
therein.  I had an opportunity to ensure that I clearly understood the
terms and conditions of my employment with Zarlink in advance of signing this
employment agreement.  I accept this employment
agreement.

    


    


    Dated at
__San
Diego_________________ this __26___ day of
February, 2006.

    


    


    Executive                                                                Witness:
/s/ Kelly Kristopher

    


    


    /s/
Stephen J.
Swift                                                Kelly
Kristopher

    ______________________________             ______________________________

    Stephen
J.
Swift                                                     Witness
name (please print)