EXHIBIT 10-F-5

EX-10.F.5 8 a94750exv10wfw5.txt EXHIBIT 10-F-5 EXHIBIT 10.F.5 EMPLOYMENT AGREEMENT AGREEMENT by and between Conexant Systems, Inc., a Delaware corporation (the "Company") and Scott Blouin (the "Executive"), dated as of the 18th day of December, 2002 ("Date of this Agreement"). The Board of Directors of the Company (the "Board"), has determined that it is in the best interests of the Company and its shareholders to employ the Executive under this Employment and Change of Control Agreement. The Board has also determined that it is in the best interests of the company and its shareholders to assure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company; or the uncertainty associated with the Company's plans to separate the Mindspeed Technologies business. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by these issues and to encourage the Executive's full attention and dedication to the Company throughout the period of this Agreement. Therefore, in order to accomplish these objectives, the Company and the Executive enter into the following Agreement. NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. Effective Date of Agreement. (a) The "Effective Date" shall mean the date on which the Executive and the Company sign the Agreement. (b) As used in this Agreement, the term "affiliated companies" shall include any company controlled by, controlling or under common control with the Company. 2. Change of Control. For the purpose of this Agreement, a "Change of Control" shall mean: (a) 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 20% or more of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) 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 subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 3; or (b) Individuals who, as of the Date of this Agreement, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; pro- vided, however, that any individual becoming a director subsequent to the Date of this Agreement whose election, or nomination for election by the Company's shareholders, 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; or (c) 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 "Business Combination"), in each case, unless, following such Business Com- bination, (i) 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 Business Combination beneficially own, directly or indirectly, more than 60% 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 Business Combination (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 Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any employee benefit plan (or related trust) of the company, of Conexant Systems, Inc. or of such corporation resulting from such Business combination) beneficially owns, directly or indirectly, 20% or more, of, respectively, the then outstanding share of common stock of the corporation resulting from such Business Combination 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 Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. (e) Stock Option Treatment Upon Change of Control. Subject to the provisions of 2(a), (b), (c), and (d), in the event a Change of Control shall occur, one-fourth of all awards granted on or before December 31, 2001 shall accelerate in vesting. Further, if within two years following the Change of Control event, Executive's position is eliminated or Executive's duties are changed in such a way that a substantial diminution of status and responsibilities occurs, an additional one-fourth of all awards granted on or before December 31, 2001 then outstanding, shall accelerate in vesting. 3. Pending Conexant Reorganization and Business Plans. For purposes of this Agreement, the contemplated separation of the Conexant Systems, Inc. business into multiple 2 companies by means of a "spin-off" distribution to shareholders or similar methodology that results in distinct independent public companies will not be considered a Change of Control. Specifically, the separation of Conexant Systems, Inc. and Mindspeed Technologies into two distinct companies will not constitute a Change of Control. 4. Employment Period. Subject to the provisions of Section 6, hereof, and Executive's right to voluntarily terminate employment at any time during the Employment Period, the Company hereby employs, and agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date of this Agreement and ending on the second anniversary of the Date of the separation of the Mindspeed Technologies business, or August 31, 2005, whichever is sooner. 5. Terms of Employment. (a) Position and Duties. (i) From the effective date of this Agreement through the separation of Mindspeed Technologies, Inc., the Executive shall be employed as Senior Vice President and Chief Accounting Officer, located in Newport Beach, California. Upon the re-filing of Minspeed Technologies, Inc. spin-off documents with the Securites and Exchange Commission and continuing upon the separation of Mindspeed Technologies, Ind., the Executive shall be employed as Senior Vice President and CFO for the continuing Conexant Systems, Inc, and will report to the Company's Chief Executive Officer. Executive shall have the authority typically held by the chief financial officer of a major corporation. (ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote his full attention and time during normal business hours to the business and affairs of the Company and, to the extend necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive's reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions or (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company in accordance with this Agreement. (b) Compensation. (i) Base Salary. During the Employment Period, the Executive shall receive an annual base salary ("Annual Base Salary"), which shall be paid at a monthly rate. During the Employment Period, the Annual Base Salary shall be reviewed at least annually. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced after any increase and the term Annual Base Salary as utilized in this Agreement shall refer to Annual Base Salary as so increased. (ii) Incentive Bonus. In addition to Annual Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Period, an incentive bonus (the "Incentive Bonus"). For Fiscal Year 2003, the Incentive Bonus (Peak Performance Plan) shall be 3 delivered as a cash-based award subject to achievement of pre-determined operating profit goals. After Fiscal Year 2003, the Incentive Bonus may be delivered as either a cash payment, stock option grant, or other such compensation vehicle as the Conexant Board of Directors deems appropriate. (iii) Incentive and Savings Plans. During the Employment Period, the Executive shall be entitled to participate in all incentive and savings plans, practices, policies and programs applicable generally to other peer executives of the Company and its affiliated companies. (iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer executives of the Company and its affiliated companies. The Company offers a comprehensive benefits package, which includes medical, dental, vision and life insurance coverage. Executive may also participate in the 401(k) Savings Plan which allows contributions of up to 17% of eligible earnings on a pre and/or post tax basis. Currently, the Company matches the first 4% of Annual Base Salary to a maximum of 100%. (v) Stock Options. Executive shall be eligible to participate in Conexant's Stock Option Program and shall receive periodic stock option awards consistent with Executive's position and performance, which shall typically vest over a four-year period, at 25% per year. The stock price shall be established on the grant date. Executive shall receive confirmation of the number of shares and option price from Stock Administration. (vi) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies, practices and procedures of the Company and its affiliated companies. (vii) Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits, including, without limitation, reimbursement for financial planning and income tax preparation services from the AYCO Company, valued at $15,000 annually; participation in the Company's executive physical program; and an annual membership in a health club of Executive's choice up to $4,000 annually. (viii) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Company and its affiliated companies with respect to other peer executives of the Company and its affiliated companies 6. Termination of Employment. (a) Death or Disability. The Executive's employment shall terminate automatically upon the Executive's death during the Employment Period. If the Company determines in good faith that the Disability of the Executive has occurred during 4 the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 15(b) of this Agreement of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" shall mean the absence of the Executive from the Executive's duties with the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive's legal representative. (b) Cause. The Company may terminate the Executive's employment during the Employment Period for Cause. For purposes of this Agreement, "Cause" shall only mean: (i) the willful and continued failure of the Executive to perform substantially all of the Executive's duties with the Company or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board or the Chief Executive Officer of the Company which specifically identifies the manner in which the Board or Chief Executive Officer believes that the Executive has not substantially performed the Executive's duties. For purposes of this provision, the Company's actions must be in good faith; or (ii) the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company. (c) Good Reason - Initiated By The Executive. The Executive's employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall mean: (i) Mindspeed Technologies is not separated from Conexant Systems, Inc. on or before August 31, 2003, and the Executive is not employed as Senior Vice President and CFO for the continuing Conexant Systems, Inc, reporting to the Company's Chief Executive Officer, as described and defined in Section 5(a) of this Agreement. The Executive has a 120-day election window beginning August 31, 2003, in which to terminate for this specific Good Reason; (ii) With or without a Mindspeed Technologies business separation on or before August 31, 2003, the assignment to the Executive of duties materially inconsistent with respect to the Executive's position, authority, duties or responsibilities as defined in Section 5(a) of this Agreement; (iii) With or without a Mindspeed Technologies business separation on or before August 31, 2003, the Company's requiring the Executive to be based at any office or location other than as provided in Section 5(a) (i) hereof; 5 (iv) With or without a Mindspeed Technologies business separation on or before August 31, 2003, any purported termination by the Company of the Executive's employment other than as expressly permitted by this Agreement; or (v) With or without a Mindspeed Technologies business separation on or before August 31, 2003, any failure by the Company to comply with and satisfy Section 14(c) of this Agreement. For purposes of Section 6(c) of this Agreement, any good faith determination of "Good Reason" made by the Executive shall be conclusive. (d) Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 15(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in rea- sonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive's or the Company's rights hereunder. (e) Date of Termination. "Date of Termination" means (i) if the Executive's employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination and (iii) if the Executive's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be. 7. Obligations of the Company upon Termination. (a) Good Reason - Initiated By The Executive; Other Than for Cause, Death or Disability. Executive may trigger one of the following separation packages by making a written request, in accordance with Sections 6(d) and 15(b) of this Agreement: (i) If (a) Mindspeed Technologies is not separated from Conexant Systems, Inc. on or before August 31, 2003, and (b) Executive is not appointed as the Senior Vice President and CFO of Conexant Systems, Inc. on or before August 31, 2003; 6 (1) A period of salary continuation (bi-weekly pay periods), at the then base salary rate, to run for two years from the date of written request; and (2) A period of continued benefit plan eligibility and coverage to run for two years from the date of written request; and (3) Continued option vesting to run for one year from the date of written request, if Mindspeed Technologies is separated from Conexant Systems by December 31, 2003; otherwise option vesting to run run for two years from the date of written request. (ii) If (a) Mindspeed Technologies is separated from Conexant Systems, Inc. on or before August 31, 2003; and (b) Executive is not appointed as the Senior Vice President and CFO of Conexant Systems, Inc. on or before August 31, 2003; (1) A period of salary continuation (bi-weekly pay periods), at the then base salary rate, to run for two years from the date of written request; and (2) A period of continued benefit plan eligibility and coverage to run for two years from the date of written request; and (3) Continued option vesting to run for two years from the date of written request. (iii) If (a) Mindspeed Technologies is separated from Conexant Systems, Inc. and Executive assumes the Senior Vice President and CFO position for the continuing Conexant Systems, Inc.; and (b) Executive terminates for Good Reason as defined in Section 6(c)(ii), (iii), (iv), (v), or is terminated by the Company for other than Cause, Death, or Disability within the two years following the separation of Mindspeed Technologies; then (1) A period of salary continuation (bi-weekly pay periods), at the then base salary rate, to run for two years from the date of written request; and (2) A period of continued benefit plan eligibility and coverage to run for two years from the date of written request; and (3) Continued option vesting to run for 12 months. (b) Death. If the Executive's employment is terminated by reason of the Executive's death during the Employment Period, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive's estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 5(b) shall include, without limitation, and the Executive's estate and/or beneficiaries shall be entitled to receive, benefits at least equal to the most favorable 7 benefits provided by the Company and affiliated companies to the estates and beneficiaries of peer executives of the Company and affiliated companies under such plans, programs, practices and policies relating to death benefits, if any, as in effect with respect to other peer executives and their beneficiaries on the date of the Executive's death. (c) Disability. If the Executive's employment is terminated by reason of the Executive's Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination, With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 5(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits at least equal to the most favorable of those generally provided by the Company and its affiliated companies to disabled executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, as in effect generally with respect to other peer executives and their families as of the Disability Effective Date. (d) Cause; Other than for Good Reason. If the Executive's employment shall be terminated for Cause during the Employment Period, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive (x) his Annual Base Salary through the Date of Termination, (y) the amount of any compensation previously deferred by the Executive, and (z) Other Benefits, in each case to the extent theretofore unpaid. If the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the Executive, other than the timely payment of his Annual Base Salary through the Date of Termination, for Accrued Obligations and the timely payment or provision of Other Benefits. In such case, all Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. 8. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies and for which the Executive may qualify, nor, shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement. 9. Full Settlement. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek 8 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 such amounts shall not be reduced whether or not the Executive obtains other employment. The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). 10. 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 shall 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 10) (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 shall 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), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) 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 10(a), if it shall be determined that the Executive is entitled to a Gross-Up Payment, but that the Payments do not exceed 110% of the greatest amount (the "Reduced Amount") that could be paid to the Executive such that the receipt of Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to the Executive and the Payments, in the aggregate, shall be reduced to the Reduced Amount. (b) Subject to the provisions of Section 10(c), all determinations required to be made under this Section 10, 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 determination, shall be made by Deloitte & Touche LLP or such other certified public accounting firm as may be designated by the Executive (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Executive within 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 accountant or auditor for the individual, entity or group effecting a Change of Control, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as deter- 9 mined pursuant to this Section 10, shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall 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 10(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive. (c) The Executive shall 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 shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 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 prior to the expiration of such period that it desires to contest such claim, the Executive shall: (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 shall 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 shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall 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 10(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo 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 shall determine; provided, however, that if the Company directs the Ex- 10 ecutive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall 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-more, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall 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 10(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company's complying with the requirements of Section 10(c)) promptly pay to the Company the amount of such refund (together with any inter- est 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 10(c), a determination is made that the Executive shall 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 prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 11. Non-Competition. The Executive agrees that during the period of salary continuation, or through a one-year period immediately following the date of termination, whichever is longer, the Employee shall not, in any country in which Conexant conducts business, engage, without the express prior written consent of Conexant, in any business or activity, whether as an employee, consultant, partner, principal, agent, representative, equity holder, or in any other individual, corporate, or representative capacity (without limitation by specific enumeration of the foregoing), or render any services or provided any advice to any Competing Business. A competing business, for purposes of this Agreement, is any of the following companies: Broadcom Corporation, ST Microelectronics, LSI Logic Corporation, Globespan Virata, Texas Instruments Inc., or Philips Electronics. Notwithstanding the foregoing (and, so long as the Executive is an employee of Conexant, subject to written employee policies of Conexant), the Executive may as a passive investment own, directly or indirectly, up to one percent (1%) of any class of Publicly Traded Securities of any Person which owns or operates a business that is a Competing Business. "Publicly Traded Securities" shall mean securities that are traded on a national securities exchange or listed on the Nasdaq National Market. In the event the Executive joins one of the competing businesses listed above as either an employee, consultant, partner, principal, agent, or representative, prior to the end of his salary continuance period, all remaining salary continuation and other benefits of this Agreement will be immediately forfeited by the Executive. 12. Non-Solicitation. The Executive agrees that during the period of salary continuation, or through a one-year period immediately following the termination of such em- 11 ployment, whichever is longer, the Employee will not, directly or indirectly: (i) solicit or divert away any business, clients, customers, or employees who became'known to the Executive during his employment with Conexant, and/or its affiliates; (ii) induce customers, clients, suppliers, agents, employees, or other persons under contract or otherwise associated or doing business with Conexant, and/or its affiliates who were made known to the Executive during his employment with Conexant to reduce or alter any such association or business with Conexant, and/or its affiliates; 13. Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive's employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). The Company and the Executive agree that the existence and terms of this agreement are to remain confidential to the maximum extent allowable under existing and future securities laws and reporting requirements. After termination of the Executive's employment with the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an asserted violation of the provisions of this Section 11 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. 14. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and/or assigns. (c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. 15. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of California, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. 12 (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: Scott Blouin 75 Monterey Pine Drive Newport Coast, CA 92657 If to the Company: Conexant Systems, Inc. 4311 Jamboree Road Newport Beach, CA ###-###-#### Attention: General Counsel or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. (d) The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) The Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 6(c) (i) - (v) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. (f) The Executive and the Company acknowledge that, except as defined under this written agreement between the Executive and the Company, the employment of the Executive by the Company is "at will". From and after the Date of this Agreement, this Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof. 13 IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written. /s/ Scott Blouin ---------------------------------- Scott Blouin CONEXANT SYSTEMS, INC. By: /s/ Dwight W. Decker ------------------------------ Dwight W. Decker, Chairman & CEO 14