Document:

exv10w5

 

Exhibit 10.5

EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of the 18th day of February,
2008, by and between Conexant Systems, Inc., a Delaware corporation (the “Company”), and Mark
Peterson (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);

     WHEREAS, the Executive acknowledges he is not constrained by any conflicts of interest,
covenants or agreements which would prevent him from being employed by the Company;

     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 23. This
Agreement shall be of no force or effect unless, and until, the Executive commences employment with
the Company.

     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 March 19, 2008
(the “Effective Date”) and will conclude on March 18, 2010 (the “Employment Period”); provided
that, beginning on March 19, 2010 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
Legal Officer & Secretary, of the company during the Employment Period. As Senior Vice President,
Chief Legal Officer & Secretary, the Executive will be an executive officer of the Company and 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 President &
Chief Executive Officer with regard to the Executive’s status and position within the Company.

 

 

The Executive will initially 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 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 $312,500. 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 commenced 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 30 days of his start date, a special “one

 

 

time” bonus in the gross amount (before applicable taxes) of $75,000. While this “special”
bonus will be paid within 30 days of his start date, it will not be considered fully earned until
the first anniversary date of the “Effective Date” of this Agreement. Should the Executive
voluntarily terminate his employment for any reason (other than as a result of (i) death; or (ii)
disability) or be terminated for Cause before the first anniversary date of this Agreement, the
Executive will repay back to the Company any amounts actually received by the Executive within 30
days of his 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 850,000 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 250,000 Non-Performance Restricted Stock Units. These Non-Performance
RSU’s will vest one-third each year on the first, second and third anniversary dates of the
Effective Date.

          (ii) Notwithstanding the foregoing, in the event of a Change of Control, any unvested Stock
Options, Non-Performance based 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.

          (iii) Notwithstanding any other provision of this Agreement to the contrary, except as
otherwise provided in Section 1 of the RSU award agreement, any vested Non-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 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.

 

 

     (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 11. 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 the Executive’s principal 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;

     (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 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 without Good Reason.

     9. Compensation upon Termination. The Executive’s employment as Senior Vice
President, General Counsel & Secretary, 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’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 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 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 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; 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).

     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;
	 
	 	(B)	 	one (1) times the Executive’s annual 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 the Executive and any eligible dependents covered prior to the Date of
Termination 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 22.

     (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 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 money damages would be an inadequate remedy for any breach of any
provision of this Agreement. Therefore, in the event of a breach or threatened breach by the
Executive of any provision of this Agreement, the Company may, in addition to other rights and
remedies existing in its favor, apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce, or prevent any violations of,
the provisions hereof (without posting a bond or other security).

     11. Notices. All notices, demands, requests or other communications required or
permitted to be given or made hereunder 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.

 

 

     12. 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.

     13. Survival. It is the express intention and agreement of the parties hereto that
the provisions of Sections 7, 9, 10, 11 and 22 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.

     14. 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.

     15. 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.

     16. 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.

     17. 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.

 

 

     18. 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).

     19. 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.

     20. 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.

     21. 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.

     22. 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 Section 9 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.

     23. 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, as reasonably determined by the Board, if such breach is not
cured within thirty (30) days after the Executive receives written notice thereof.

     “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.

     “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 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.

     “Good Reason” means, in the absence of a written consent of the Executive the
Company’s requiring the Executive to be based at any office or location more than fifty miles from
that identified in Section 4 hereof. Notwithstanding the foregoing, (A) the Executive must notify
the Company in writing of the event described in the preceding sentence within 90 days of the
initial existence of such event, (B) the Company will have at least 30 days after receipt of such
notice from the Executive to cure such initial event or condition, and (C) the Executive must
separate from service with the Company within 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.

	 	 	 	 	 	 	 
	 	 	CONEXANT SYSTEMS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	MARK PETERSON	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Dateexv10w42

 

FIRST AMENDMENT TO SECOND

AMENDED AND RESTATED LEASE AGREEMENT

     This First Amendment to Second Amended and Restated Lease Agreement (this “Amendment”) is made
as of the 1st day of March, 2008, between MHC TT Leasing Company, Inc., a Delaware corporation
(“Landlord”), and Thousand Trails Operations Holding Company, L.P., a Delaware limited partnership
(“Tenant”).

RECITALS

     A. Landlord and Tenant entered into that certain Second Amended and Restated Lease Agreement
dated as of January 1, 2008 (such Lease Agreement as heretofore amended, including all of the
Exhibits thereto, being herein called the “Lease”), whereby Landlord leased to Tenant the Premises
described in the Lease.

     B. An affiliate of Landlord has acquired the Grandy Creek Preserve, and Landlord and Tenant
desire to amend Exhibit A-1(a) to the Lease to add the Grandy Creek Preserve as part of the
Premises.

     C. MHC Tropic Winds, L.L.C., a Delaware limited liability company (“MHC Tropic Winds”), has
leased to Landlord certain recreational vehicle sites at Tropic Winds, located at 1501 North Loop
Road, Harlingen, Texas, as set forth on Exhibit C attached hereto (the “Tropic Winds
Sites”), pursuant to that certain Lease Agreement dated as of February ___, 2008, by and between
MHC Tropic Winds and Landlord.

     D. Landlord and Tenant desire to amend the definition of “Premises” in the Lease to add the
Tropic Winds Sites on the terms set forth below.

     E. Landlord and Tenant desire to Section 38(f) of the Lease as set forth below.

     NOW, THEREFORE, Landlord and Tenant agree as follows:

     1. Amendment of Exhibit A-1(a). Exhibit A-1(a) to the Lease is hereby amended
by adding the property described on Exhibit A attached hereto (the “Grandy Creek Preserve”)
as part of the Premises.

     2. Tropic Winds Sites. The definition of “Premises” as set forth in the Lease is
hereby amended to add the Tropic Winds Sites located at Tropic Winds, 1501 North Loop Road,
Harlingen, Texas 78550 and depicted on Exhibit B attached to this Lease, on the terms set
forth below.

     2.1 Each business day, Tenant agrees to notify Landlord, in writing, of the names of the
individuals occupying Tropic Winds Sites, together with any other information as may be
reasonably requested by Landlord.

 

 

     2.2 Tenant shall make the Tropic Winds Sites available for its participants to use for
short-term, limited stays only, and shall not place, construct or install any structures or
other improvements on the Tropic Winds Sites.

     2.3 Notwithstanding anything to the contrary in the Lease, either Landlord or Tenant may
elect to terminate the Lease solely with respect to the Tropic Winds Sites on December 31,
2008, and on December 31 of each year thereafter by providing written notice of such election
to the other party not less than thirty (30) days before the effective date of such
termination.

     2.4 Solely with respect to the Tropic Winds Sites, Tenant shall pay to Landlord the sum
of Three Dollars ($3.00) per day per Tropic Winds Site occupied as Additional Rent. Said
payments shall be made on a monthly basis, upon submission of invoices by Landlord to Tenant.

     3. Amendment of Section 38(f). Section 38(f) of the Lease is hereby amended in its
entirety to read as follows:

Tenant shall not nor shall Tenant permit any of its Subsidiaries directly or indirectly
to declare, order, pay, make or set apart any sum for any Restricted Junior Payment,
except (i) for distributions in cash from Tenant’s operating account to Tenant’s
equity holders in an aggregate amount each calendar year equal to (x)(1) the amount of
taxable income of Tenant allocated to its equity holders for such calendar year
multiplied by (2) the combined maximum federal and state income tax rate to be applied
to such taxable income (calculated by using the highest maximum combined marginal
federal and state income tax rates for an individual resident of the relevant state of
residence of Tenant’s principal indirect individual equity holder in the states where
Tenant has taxable income and taking into account the deductibility of state income tax
for federal income tax purposes) and (y) an additional aggregate amount of $200,000 in
any twelve month period; (ii) a distribution or loan to PA, at the sole discretion of
PA, as of the date hereof in an amount equal to $4,000,000; and (iii) a distribution or
loan to PA, at the sole discretion of PA, on the third (3rd) anniversary of the Date of
Restatement in an amount equal to $2,000,000, but only to the extent that such amount
does not exceed the Available Cash, provided that Landlord hereby permits Tenant to set
apart an amount equal to $55,555 per month for the thirty six (36) months ending
12/31/2010 into a separate account which funds shall be usable for the purpose of
making such $2,000,000 distribution to PA (each distribution contained in clauses (i),
(ii) and (iii) being a “Permitted Distribution”). Landlord and Tenant acknowledge and
agree that the Permitted Distributions are not intended to be compensation to the
owners of Tenant’s parent. Conditions precedent to a Permitted Distribution are (i) no
Event of Default is existing at the time of the Permitted Distribution and (ii) prior
approval of the Permitted Distribution by the Board of Directors (or other governing
bodies) of PA and Tenant has been obtained.

2

 

     4. Integration of Lease and Controlling Language. This Amendment and the Lease shall
be deemed to be, for all purposes, one instrument. In the event of any conflict between the terms
and provisions of this Amendment and the terms and provisions of the Lease, the terms and
provisions of this Amendment, in all instances, shall control and prevail.

     5. Ratification. Except as specifically amended and modified hereby, the Lease shall
be and shall remain unchanged and in full force and effect in accordance with its terms, and, as
the Lease is amended and modified hereby, the Lease is hereby ratified, adopted and confirmed.

     6. Severability. If any provision of this Amendment or the application thereof to any
person or circumstance is or shall be deemed illegal, invalid or unenforceable, the remaining
provisions hereof shall remain in full force and effect and this Amendment shall be interpreted as
if such legal, invalid or unenforceable provision did not exist herein.

     7. Entire Agreement. This Amendment and the Lease contain the entire integrated
agreement between the parties respecting the subject matter of this Amendment and the Lease, and
supersede all prior and contemporaneous understandings and agreements, other than the Lease,
between the parties respecting the subject matter of this Amendment and the Lease.

     8. Counterparts. This Amendment may be executed in counterparts, each of which shall
be deemed to be an original and all of which, when taken together, shall constitute a fully
executed instrument.

(Signatures on Next Page)

3

 

     IN WITNESS WHEREOF, Landlord and Tenant have executed this First Amendment to the Lease as of
the date and year first above written.

	 	 	 	 	 
	 	LANDLORD:

MHC TT Leasing Company, Inc.,

a Delaware corporation

 	 
	 	By:  	/s/ Marguerite Nader
 	 
	 	Name:  	Marguerite Nader 	 
	 	Title:  	Senior Vice President 	 
	 
	 
	 	TENANT:

Thousand Trails Operations Holding Company, L.P.,

a Delaware limited partnership

By KTTI GP, LLC, its general partner

 	 
	 	By:  	/s/ Walter B. Jaccard
 	 
	 	Name:  	Walter B. Jaccard 	 
	 	Title:  	Vice President 	 
	 

4

 

Exhibit A

Legal Description of Grandy Creek Preserve

 

 

Exhibit B

Description of Tropic Winds Sites

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