Document:

exv10w1

 

Exhibit 10.1

April 21, 2008

Mr. Daniel Artusi

2505 Barton’s Bluff Court

Austin, Texas 78746

     Re: Separation Agreement and Release

Dear Dan:

     This letter agreement, including the general release attached as Exhibit A (this “Agreement”)
sets forth the terms of your separation from employment with Conexant Systems, Inc. (the
“Company”).

	1.	 	Separation from Employment. The Company has elected to terminate your employment
without “cause” in accordance with Section 8(b)(ii) of the Employment Agreement dated June 21,
2007 between you and the Company (the “Employment Agreement”). This Agreement constitutes
your “Notice of Termination” under the Employment Agreement. Your last day of employment with
the Company shall be April 25, 2008 (the “Date of Termination”). By executing this Agreement,
you also hereby resign, effective as of the Date of Termination, (i) from any officer,
director or similar positions that you hold with the Company or any of its affiliates (defined
as any entity controlling, controlled by or under common control with the Company, and the
term “control” means the ownership of a majority of the voting interests of such entity) or
subsidiaries (collectively with the Company, the “Company Entities”), and (ii) from any
positions that you hold on any committees within the Company Entities, including committees of
the Board of Directors and similar governing bodies. You agree to take any action reasonably
required of you by the Company Entities to effectuate any such resignation.
	 
	2.	 	Accrued Obligations. Within thirty (30) days after the Date of Termination, you will
be paid any accrued but unpaid portions of your Annual Base Salary and any unused vacation
benefits that you have accrued through the Date of Termination. In addition, any other
amounts or benefits required to be paid or provided, or which you are entitled to receive,
under any plan, program, policy or practice of the Company or its affiliates to the extent
unpaid will be payable in accordance with the terms of the plan, program, policy or practice
under which the compensation was deferred (as such may have been amended to comply with
Section 409A).
	 
	3.	 	Mutual Non-Disparagement. You and the Company each agree not to make any defamatory
or disparaging statements about the reputation, business dealings, or character of the other.
However, you agree that the Company shall only be responsible for (i) such statements
made by, or at the express direction of, any board member or executive officer of the Company,
or (ii) such statements made in an official public statement by the Company (such as a press
release, press conference, analyst call, etc.); provided, that the Company shall use

 

	 	 	commercially reasonable efforts to stop any such statements by Company employees and agents
should you advise the Company with specific information that such statements are occurring.
	 
	4.	 	Separation Benefits. Subject to your executing and not revoking this Agreement, you
will be paid a lump sum payment of $2,716,438 within thirty (30) days of the Date of
Termination, as payment of your total Separation Benefits as defined in the Employment
Agreement. Your total Separation Benefits consist of (a) pro-rata portion of the current
fiscal year bonus ($316,438) payable pursuant to Section 9 (e)(i)(B) of the Employment
Agreement, (b) two times your base salary ($550,000) payable pursuant to Section 9(e)(i)(C) of
the Employment Agreement, (c) two times your annual target bonus ($550,000) payable pursuant
to Section 9(e)(i)(D) of the Employment Agreement, and (d) $200,000 payable pursuant to
Section 9(e)(i)(E) of the Employment Agreement.
	 
	5.	 	COBRA Reimbursement. For up to eighteen (18) months after the Date of Termination,
the Company will reimburse you the cost of your COBRA premiums for continued health coverage
under the Company’s medical and dental plans, provided that you timely elect COBRA coverage
and submit proof of premium payment to the Company. These benefits are provided pursuant to
Section 9(e)(ii) of the Employment Agreement and subject to your executing and not revoking
this Agreement.
	 
	6.	 	Equity Arrangements. Subject to your executing and not revoking this Agreement, all
unvested options to purchase Company Common Stock held by you will become fully exercisable on
the later of (i) the Date of Termination and (ii) the Effective Date of this Agreement. You
will be entitled to exercise all such options until the earlier of (a) the second anniversary
of your Date of Termination, and (b) the expiration date of the option set forth in the grant
notice for the option award. In the event that you do not exercise any or all of your stock
options during such exercise periods, all such stock options will terminate upon the
expiration of the date(s) described in the immediately preceding sentence. In addition, all
Non-Performance RSUs and/or shares of Non-Performance based Restricted Company Common Stock
held by you will be fully vested on the first trading day of the next open trading window
after the Effective Date of this Agreement. You acknowledge and agree that the conditions upon
which you would vest any Performance-Based RSU’s and/or shares of Performance-Based Restricted
Company Stock were not satisfied and, thus, are forfeited on the Date of Termination.
	 
	7.	 	No Other Compensation. You acknowledge and agree that as of the Date of Termination,
you will not be eligible for any further compensation or benefits from the Company, except as
set forth in this Agreement and the Surviving Agreements.
	 
	8.	 	Business Expenses. The Company will reimburse you for any un-reimbursed, reasonable
business expenses incurred by you on or before the Date of Termination, pursuant to the
Company’s reimbursement policies, provided that you present all expense reports to the Company
in accordance with such policies. Executive acknowledges and agrees that any pending charges
on his Conexant Corporate American Express Card are his responsibility to pay and settle,
provided that he may submit all proper business expenses to the Company for reimbursement. In
addition, the Company will pay on your behalf the reasonable attorney’s fees and expenses
incurred by you in connection with this Agreement and the Release up to a

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	 	 	maximum amount of $10,000, and subject to appropriate tax reporting requirements, provided that
you present an expense report to the Company for such attorney’s fees and expenses. All such
expense reports must be submitted within thirty (30) days following the Effective Date of this
Agreement.
	 
	9.	 	Withholding Taxes and Other Deductions. The Company will withhold from any payments
which are made to you, but only at the time such payments are actually made to you under this
Agreement, any applicable federal, state, local, and any other taxes, and such other
deductions as are prescribed by law.
	 
	10.	 	Return of Company Property. You are obligated to return any and all equipment,
products, and property, including but not limited to work files and computers, either
belonging to the Company or associated with your employment with the Company, that are
currently in your possession or under your control, to a designated Company representative on
the Date of Termination.
	 
	11.	 	Cooperation. You agree to cooperate with the Company and be reasonably available to
the Company with respect to continuing or future matters arising out of your employment or any
other relationship with the Company, whether such matters are business-related, legal, or
otherwise. It is agreed that (a) the Company will provide you with reasonable advance notice
regarding these activities, (b) any requests made hereunder by the Company will be made in
good faith and will not unreasonably interfere with your duties to any subsequent employer,
and (c) the Company will reimburse you for any out-of-pocket expenses incurred in connection
with such cooperation.
	 
	12.	 	General Release. As a condition to the payment of the Separation Benefits and any
other benefits provided under this Agreement, you must execute the Release attached hereto as
Exhibit A.
	 
	13.	 	Neutral Reference and Verification of Employment. If requested, the Company will
provide your prospective employers with a neutral reference. Generally, such reference is
limited to a verification of your date of hire, last date of employment, and job title with
the Company.
	 
	14.	 	Entire Agreement. This Agreement, together with (i) the Conexant Systems, Inc. 2004
New-Hire Equity Incentive Plan adopted on February 6, 2004, (ii) the Conexant Systems, Inc.
Stock Option Grant Notice dated July 9, 2007 awarding you 3,000,000 options to purchase the
Company’s common stock, (iii) the Conexant Systems, Inc. Restricted Stock Unit Award Grant
Notice dated July 9, 2007 awarding you 1,000,000 restricted stock units, (iv) the Conexant
Systems, Inc. Restricted Stock Unit Award Grant Notice dated July 9, 2007 awarding you 500,000
restricted stock units, (v) Sections 7, 9, 10, 11, 12, and 23 of the Employment Agreement,
together with any obligation of the Company to make payments under the Employment Agreement
that survive pursuant to the terms of the Employment Agreement, and (vi) your rights to
indemnification as an officer or director of the Company or any affiliate of the Company,
whether set forth in the certificate of incorporation, bylaws or other organizational
documents, insurance or agreement (together, (i)-(vi) above, the “Surviving Agreements”), sets
forth the entire agreement of the parties hereto with respect to your separation from
employment with the Company, and except as otherwise specified in this Agreement, supersedes
any and all prior agreements, oral or written, with respect thereto,

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	 	 	including without limitation the remainder of the Employment Agreement. In the event of any
terms of the Surviving Agreements contravene this Agreement, the terms of this Agreement shall
control. Each of the Surviving Agreements (or surviving portions thereof) shall be deemed
incorporated by reference into, and made a part of, this Agreement.
	 
	15.	 	Amendment; Waiver. This Agreement may 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, will 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.
	 
	16.	 	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 Texas without giving effect to its conflict of laws principles.
	 
	17.	 	Acknowledgements. Each party acknowledges that the consideration given to such party
under this Agreement is in excess of any obligations that the other party may otherwise have
to such party. You also acknowledge that this Agreement is voluntarily entered into by you in
consideration of the undertakings by the Company as set forth herein and that you have been
advised to consult with an attorney prior to signing this Agreement. This Agreement is
entered into without reliance on any promise or representation, written or oral, other than
those expressly contained herein.
	 
	18.	 	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.

          Please sign both copies of this letter below, indicating your acceptance.

	 	 	 	 	 
	 	CONEXANT SYSTEMS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

AGREED as of the date

first above written

                                                            

Daniel Artusi

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Exhibit A

GENERAL RELEASE AGREEMENT

     FOR AND IN CONSIDERATION OF certain separation benefits set forth in the Separation and
Release Agreement dated April 25, 2008 between Conexant Systems, Inc. (the “Company”) and me (the
“Separation Agreement”), I, Daniel Artusi, agree, on behalf of myself, my heirs, executors,
administrators, and assigns, to release and discharge the Company and its current and former
officers, directors, employees, agents, owners, subsidiaries, predecessors, divisions, parents,
successors, and assigns (the “Company Released Parties”) from any and all manner of actions and
causes of action, suits, debts, dues, accounts, bonds, covenants, contracts, agreements, judgments,
charges, claims, and demands whatsoever (“Losses”) which I, my heirs, executors, administrators,
and assigns have, or may hereafter have, against the Company Released Parties or any of them
arising out of or by reason of any cause, matter, or thing whatsoever from the beginning of the
world to the date hereof, including without limitation, my employment by the Company and the
cessation thereof, any predecessor employment and/or relocation agreements, all matters arising
under any federal, state, or local statute, rule, or regulation, or principle of contract law or
common law, including but not limited to, the Worker Adjustment and Retraining Notification Act of
1988, as amended, 29 U.S.C. §§ 2101 et seq., the Fair Labor
Standards Act of 1938, as amended, 29 U.S.C. §§ 201 et seq., the
Family and Medical Leave Act of 1993, as amended, 29 U.S.C. §§ 2601 et
seq., Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §§
2000e et seq., the Age Discrimination in Employment Act of 1967, as
amended, 29 U.S.C. §§ 621 et seq. (the “ADEA”), the Americans with
Disabilities Act of 1990, as amended, 42 U.S.C. §§ 12101 et seq.,
the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §§ 1001
et seq., the National Labor Relations Act of 1935, as amended, 29 U.S.C. §§ 151
et seq., the California Fair Employment and Housing Act, as
amended, Cal. Gov’t Code §§ 12900 et seq., and any other equivalent
federal, state, or local statute; provided, however, that I do not release or
discharge the Company Released Parties (i) from any Losses arising under the ADEA which arise after
the date on which I execute this General Release, (ii) from any claims for benefits in which I am
vested that I may have under the terms of any of the Company’s benefit plans applicable to me,
(iii) from any claims for a breach by the Company of its obligations under the Separation
Agreement, or any right I may have to enforce the terms of such agreement, or (iv) any rights to
indemnification or directors and officers liability insurance to which I may be entitled. It is
understood that nothing in this General Release is to be construed as an admission on behalf of the
Company Released Parties of any wrongdoing with respect to me, any such wrongdoing being expressly
denied.

     I represent and warrant that I fully understand the terms of this General Release, that I have
had the benefit of advice of counsel or have knowingly waived such advice,

 

 

and that I knowingly and voluntarily, of my own free will, without any duress, being fully
informed, and after due deliberation, accepts its terms and sign the same as my own free act. I
understand that as a result of executing this General Release, I will not have the right to assert
that the Company violated any of my rights in connection with my employment or with the termination
of such employment.

     I acknowledge that I am familiar with Section 1542 of the Civil Code of the State of
California, which provides as follows:

A general release does not extend to claims which the creditor does not
know of or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor.

I hereby waive and relinquish any rights and benefits which I have or may have under Section 1542
of the Civil Code of the State of California, to the full extent permitted by law.

     I affirm that I have not filed, and agree, to the maximum extent permitted by law, not to
initiate or cause to be initiated on my behalf, any complaint, charge, claim, or proceeding against
the Company Released Parties before any federal, state, or local agency, court, or other body
relating to my employment or the cessation thereof, and agree not to voluntarily participate in
such a proceeding. However, nothing in this General Release will preclude or prevent me from
filing a claim with the Equal Employment Opportunity Commission that challenges the validity of
this General Release solely with respect to my waiver of any Losses arising under the ADEA on or
before the date on which I execute this General Release.

     I acknowledge that I have twenty-one (21) days in which to consider whether to execute this
General Release. I understand that such 21-day consideration period may be waived by me and that I
may execute this General Release before the expiration of such consideration period. I understand
that upon my execution of this General Release, I will have seven (7) days after such execution in
which I may revoke my execution of this General Release. In the event of revocation, I must
present written notice of such revocation to Michael H. Vishny at the Company, 4000 MacArthur
Boulevard, West Tower, Newport Beach, CA 92660, Fax (949-483-9462).

     After seven (7) days pass without Mr. Vishny’s receipt of a written notice of revocation, this
General Release will become binding and effective on the eighth day
(the “Effective Date”).

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     This General Release will be governed by the laws of the State of Texas without giving effect
to its conflict of laws principles.

	 	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	Daniel Artusi

	 	Date
	 	 

3exv10w2

 

Exhibit 10.2

EMPLOYMENT AGREEMENT

          This EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of the 14th day of April, 2008, by
and between Conexant Systems, Inc., a Delaware corporation (the “Company”), and D. Scott Mercer
(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 April 14, 2008
(the “Effective Date”) and will conclude on April 13, 2009 (the “Employment Period”); provided
that, on April 14, 2009, the Employment Period will automatically be extended for a single one
(1)-year period unless either party gives written notice to the other party at least sixty (60)
days before the end of the Employment Period that it does not wish such automatic one (1) year
extension to occur.

          3. Position and Duties. The Executive will serve as Chief Executive Officer of the
Company during the Employment Period. As Chief Executive Officer of the Company, the Executive
will 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 of
Directors of the Company (the “Board”) with regard to the Executive’s status and position within
the Company. The Executive will remain a member of the Board of Directors and will continue to
serve as such member for the duration of the Employment Period. The Executive will report directly
to the Board. The Executive will devote the Executive’s reasonable best efforts to the performance
of his duties hereunder and the advancement of the business 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 the Executive’s
other Board positions and

 

 

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 $550,000. 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 materially
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. 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 for the 2008 fiscal year will be
one hundred percent (100%) of the Base Salary (pro-rata for the time worked in the 2008 fiscal
year). In the event that a target bonus is not established with respect to the 2009 fiscal year or
any subsequent year, the Executive’s target bonus shall be deemed to be the target bonus
established under this Agreement for the immediately preceding fiscal year.

          Notwithstanding the foregoing, for the fiscal year 2008, the Executive will be guaranteed a
bonus of not less than $250,000, to be disbursed when normal company bonuses are paid. For fiscal
year 2009 (which commences October 1, 2008), the Executive will be guaranteed a bonus of not less
than $250,000, to be disbursed when normal company bonuses are paid. To be eligible for these
bonuses, the Executive must be employed by the Company as CEO at the time the bonuses are paid.

          (c) Initial Equity Compensation. (i) On the Effective Date, Executive will be granted
two million (2,000,000) Restricted Stock Units (“Non-Performance RSU’s”). These Non-Performance
RSU’s will vest fifty percent (50%) on the six (6)

 

 

month anniversary date of the Effective Date and fifty percent (50%) on the twelve (12) month
anniversary of the Effective Date, subject to the Executive’s continued employment as Chief
Executive Officer (or continuous service as an on going member of the Board of Directors) with the
Company through such date. All Non-Performance RSUs shall be subject to the terms of this
Agreement and the relevant stock unit agreements and relevant stock plan under which the
Non-Performance RSUs are granted.

               (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 stock in Company
common stock held by the Executive will become fully vested contingent upon and immediately prior
to the first Change of Control to occur following the Effective Date.

               (iii) Notwithstanding any other provision of this Agreement to the contrary, except as
otherwise provided in Section 1 of the respective Non-Performance RSU award agreement, any vested
Non-Performance RSUs will be paid out immediately upon vesting and in no event after the later of
(i) two and one-half (2 1/2) months after the end of the Company’s fiscal year in which such
Non-Performance RSUs vest, or (ii) March 15 following the calendar year in which such
Non-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. In addition,
during the Employment Period, the Executive will be paid $10,000 (subject to applicable taxes) per
month for living and transportation expenses.

          (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.

          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 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 may 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 if the termination is being effected by the Company for
Cause or by the Executive for Good Reason. 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 has a Disability, or (ii) with or without Cause;

          (c) By the Executive. The Executive may terminate the Employment Period at any time
for Good Reason or without Good Reason; 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 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 termination of the Employment Period by the Executive without Good
Reason. Any failure by the Company to extend Executive’s employment beyond April 13, 2010 will not
trigger any compensation obligation by the Company under Section 9 below.

          9. Compensation upon Termination. The Executive’s services as both a Board Member
(whether Chairman, Chairman of a Committee or otherwise) and Chief Executive Officer of the Company
must be terminated in order for the Executive to receive any payment or other benefit under this
Section 9. Executive acknowledges and agrees that if he is replaced in his role as the Chief
Executive Officer, but is permitted to retain his seat on the Company’s Board, he is entitled to no
compensation under this Section 9 (other than continued vesting of stock and/or options pursuant to
applicable plan documents).

          (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 any such plans or programs. 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 stock in Company
common stock held by the Executive will become fully vested immediately prior to Executive’s death
and, in the case of the stock options, fully exercisable as of the Date of Termination, and the
Executive’s estate will be entitled to exercise all such options until the earlier of: (i) the
third anniversary of the Executive’s Date of Termination or (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 any such plans or programs. 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 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 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 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 any
such plans or programs.

          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; 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, 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).

          As an express condition precedent to Executive receiving any Separation Benefits under this
Section 9, Executive must execute and not revoke a unilateral general release of claims in a form
satisfactory to the Company within sixty (60) calendar days of the Date of Termination. 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;
	 
	 	(B)	 	a pro-rata portion of the Executive’s target bonus for
the fiscal year in which the Date of Termination occurs (such pro rata
amount to be determined by multiplying such target bonus by a fraction, the
numerator of which is the number of days of the then current fiscal year
that have elapsed before the Date of Termination, and the denominator of
which is three hundred and sixty-five (365) and if such amount were to be
paid FY08, no more than $250,000);
	 
	 	(C)	 	the Base Salary multiplied by two (2);
	 
	 	(D)	 	the Executive’s “annual target bonus” multiplied by two (2); and
	 
	 	(E)	 	an additional payment of $200,000;

          (ii) reimbursement by the Company for the cost of coverage of Executive and/or
Executive’s covered dependents pursuant to the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, or similar state statute (“COBRA”) for premiums under the
Company’s group health insurance plans for a period of eighteen (18) months beginning on
the Date of Termination; and

          (iii) all unvested stock options, Non-Performance RSUs and shares of non-performance
based restricted stock in Company common stock held by the Executive will become fully
vested and, in the case of the stock options, fully exercisable immediately prior to
Executive’s Date of Termination, and the Executive will be entitled to exercise all such
options until the earlier of: (A) the second anniversary of the Executive’s Date of
Termination or (B) the expiration date of such option set forth in the grant notice for the
option award. For purposes of this Section 9(e), the Executive’s “annual target bonus”
will be equal to the Executive’s Base Salary then if effect.

          Any cash payment pursuant this Section 9(e), payment of Non-Performance RSUs or issuance of
shares of non-performance based restricted stock in Company common stock pursuant to Section
9(e)(iii) will be made by the Company within thirty (30) days following the Date of Termination,
except for any delay period required by

 

 

Section 23 of this Agreement. Reimbursements pursuant to Section 9(e)(ii) shall be made as
soon as administratively feasible following the Company’s receipt of appropriate documentation, but
in no event after the later of (i) two and one-half (2 1/2) months after the end of the Company’s
fiscal year in which such costs are incurred, or (ii) March 15 following the calendar year in which
such costs are incurred. Notwithstanding the foregoing, and to the extent applicable, the timing
of such reimbursements, if any, shall be subject to any delay period required by Section 23 of this
Agreement.

          (f) Damages. 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 amounts will be in lieu of all other claims for damages 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 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 and the
Company jointly acknowledge that Executive’s initial and principal place of employment is Newport
Beach, California, and therefore, this section 10 (a) is NOT in force and effect on the Effective
Date. However, the Executive further acknowledges that in the course of the Executive’s employment
with the Company and its Affiliates and their predecessors, the Executive has and will continue to
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 if his principal place of employment becomes a state other than California, then 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. Executive agrees that, during the Employment Period and for a
period of twelve (12) months following the termination of the Employment Period for any reason, the
Executive will not directly or indirectly (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 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 one hundred and ten percent (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. Any reduction in payments and/or benefits
required by this Section 11 shall occur in the following order unless Executive elects in writing a
different order prior to the date on which the event that triggers the severance payments and
benefits due hereunder occurs: (1) reduction of cash payments; (2) cancellation of accelerated
vesting of equity awards other than stock options; (3) cancellation of accelerated vesting of stock
options; and (4) reduction of other benefits paid to Executive. In the event that acceleration of
vesting of equity award compensation is to be reduced, such acceleration of vesting shall be
cancelled in the reverse order of the date of grant for Executive’s equity awards. In all cases,
any Gross-Up Payment made in accordance with this Section 11 will be made no later than the end of
the calendar year in which the Executive pays the Excise Tax and in compliance with Section 409A.

          (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 or law 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 (15) business days of
the receipt of notice from the Executive that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is serving as 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 or law firm to make the determinations required hereunder (which accounting or law firm
will then be referred to as the Accounting Firm hereunder). All fees and expenses of the
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 (5) 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 and will be made no later than the end of the calendar year in which the
Underpayment is determined.

          (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 (10) 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 (30)-day period following the date on which it gives
such notice to the Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in writing 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

 

 

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 (30) 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.

          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 (3) 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 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, together with any stock or option agreements
executed by Executive and the Company, 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 (up to $5,000)
for reasonable attorneys’ fees 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.

          23. Provisions Regarding Code Section 409A.

          (a) Six-Month Wait for Key Employees Under Separation from Service. Notwithstanding
anything to the contrary in this Agreement, if the Executive is a “specified employee” within the
meaning of Section 409A of the Internal Revenue Code

 

 

of 1986, as amended and any final regulations and guidance promulgated thereunder (“Section
409A”) at the time of the Executive’s termination, then the severance and benefits payable to the
Executive pursuant to this Agreement (other than due to death), if any, and any other severance
payments or separation benefits which may be considered deferred compensation under Section 409A
(together, the “Deferred Compensation Separation Benefits”), which are otherwise due to the
Executive on or within the six (6) month period following the Executive’s termination will accrue
during such six (6) month period and will become payable in a lump sum payment on the date six (6)
months and one (1) day following the date of the Executive’s termination of employment or the date
of death, if earlier. All subsequent Deferred Compensation Separation Benefits, if any, will be
payable in accordance with the payment schedule applicable to each payment or benefit.

          (b) Necessary Amendments Due to Code Section 409A. The parties hereto acknowledge
that the requirements of Section 409A are still being developed and interpreted by government
agencies, that certain issues under Section 409A remain unclear at this time, and that the parties
hereto have made a good faith effort to comply with current guidance under 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 Section
409A, including amendments necessary to ensure that compensation will not be subject to 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 twenty percent (20%) tax imposed by
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 twenty percent (20%) tax imposed under Section 409A(a)(1)(B) (including any interest and
additional twenty percent (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 in which the Executive pays the 409A Amount.

          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 (30) 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

 

 

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.

     Notwithstanding the foregoing, a Company transaction that does not constitute a change in
control event under Treasury Regulation 1.409A-3(i)(5)(v)-(vii) shall be not be considered a Change
of Control.

          “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 (30) 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 (30)-day period; (iii) if the
Executive’s employment is terminated by the Company for Cause, the date specified in 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 to the non-renewal of the Employment Period in accordance with Section 2 hereof,
the date on which the Employment Period expires by its terms.

          “Disability” means: as provided under Section 409A(a)(2)(C) and Treasury regulation
1.409A-3(i)(4) and other official guidance issued thereunder, that Executive (i) is unable to
engage in any substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically
determinable physical or mental impairment, which can be expected to last for a continuous period
of not less than twelve (12) months, receiving income replacement benefits for a period of not less
than three (3) months under an accident and health plan covering Company employees.
Notwithstanding, Executive shall be deemed Disabled if he is determined to be totally disabled by
the United States Social Security Administration or by the then-current disability insurance
program of the Company; provided that, the definition of disability applied under such disability
insurance program complies with the requirements of Section 409A and the applicable Treasury
regulations and other official guidance issued thereunder.

          “Good Reason” means, in the absence of consent of the Executive: (i) a material
diminution in the Executive’s authority, duties or responsibilities, as contemplated by Section 3
of this Agreement; (ii) a material diminution in the Executive’s Base Salary; or (iii) a material
change in the geographic location at which Executive must perform services (for purposes of this
Agreement, the relocation of Executive to a facility or a location less than fifty (50) miles from
Executive’s location as identified in Section 4 hereof shall not be considered a material change in
geographic location). Notwithstanding the foregoing, (A) Executive acknowledges and agrees that if
he is replaced in his role as Chief Executive Officer by a proper vote of the Board, but is
permitted to retain a seat on the Company’s Board, such acts will not constitute “Good Reason” for
purposes of this Agreement, and Executive will not be entitled to any Severance Benefits; (B) the
Executive must notify the Company in writing of any event or condition described in subsection (i),
(ii) or (iii) above within ninety (90) days of the initial existence of such event or condition,
(B) the Company will have at least thirty (30) days after receipt of such notice from the Executive
to cure such event or condition, and (C) the Executive must separate from service with the Company
within ninety (90) days after the end of the cure period described in (B) hereof.

 

 

          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.

	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	CONEXANT SYSTEMS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	D. SCOTT MERCER	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date

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