Exhibit 10.38
SEPARATION
AGREEMENT
This Separation Agreement (the
“ Agreement ”) is effective as of August 1,
2008, by and between Mercedes Johnson (“ Employee
”) and Avago Technologies Limited, a company organized under
the laws of Singapore (the “ Company ”), with
reference to the following facts:
A. Employee’s status as an
employee and officer of Avago Technologies U.S. Inc., a subsidiary
of the Company (“ Avago U.S. ”), the Company and
their subsidiaries and affiliates will end due to a voluntary
resignation from such employment and office effective on
August 1, 2008.
B. Employee and the Company desire
to assure a smooth and effective transition of Employee’s
duties to her successor and to wind-up their employment
relationship amicably.
NOW, THEREFORE, in consideration of
the mutual covenants and agreements hereinafter set forth, the
parties agree as follows:
1. Termination Date .
Employee acknowledges that her status as an employee and officer of
Avago U.S., the Company and their subsidiaries and affiliates shall
end due to her voluntary resignation from such employment and
office on August 1, 2008 (the “ Termination Date
”).
2. Separation Payments and
Benefits . Without admission of any liability, fact or claim,
the Company hereby agrees, subject to the execution hereof by both
parties and Employee’s continuing performance of her
obligations pursuant to this Agreement, that certain Management
Shareholders Agreement among the Company, Employee and Bali
Investments S.a.r.1. dated December 1, 2005, as amended from
time to time, and that certain Agreement Regarding Confidential
Information and Proprietary Developments between the Company and
Employee dated December 1, 2005 (the “ ARCIPD
”), to provide Employee the severance benefits as
follows:
(a) Base Salary and
Accrued Benefits. The Company shall cause Avago U.S. to pay
to Employee any unpaid base salary and accrued but unpaid vacation
along with any other payments required by applicable law through
the Termination Date in accordance with Avago U.S.’s normal
payroll practices.
(b) Healthcare. Employee may,
if eligible, elect to receive continued healthcare coverage
pursuant to the provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“ COBRA
”) for herself and any covered dependents at her own
expense.
(c) Equity .
(i) The Company and Employee
acknowledge that subject to the Management Shareholders Agreement
and pursuant to the terms of the Equity Incentive Plan for
Executive Employees of Avago Technologies Limited and Subsidiaries,
as amended from time to time (the “ Equity Incentive
Plan ”), Employee has purchased 60,000 ordinary shares of
the Company (the “ Coinvestment Shares ”) and
has been granted an option (the “ 2005 Option ”)
to purchase 415,000 ordinary shares of the Company at $5.00 per
share and an option (the “ 2007 Option ” and,
together with the 2005 Option, the “ Options ”)
to purchase 185,000 ordinary shares of the Company at $10.22 per
share. The Company and Employee acknowledge that absent this
Agreement, as of the Termination Date, the 2005 Option remains
unvested with respect to 249,000 of the ordinary shares subject
thereto (the “ 2005 Unvested Shares ”) and the
2007 Option remains unvested with respect to all of the
ordinary
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shares subject thereto (together
with the 2005 Unvested Shares, the “ Unvested Shares
”). The Company and Employee acknowledge and agree that the
2005 Option and the 2007 Option shall each terminate with respect
to all Unvested Shares except for the Accelerated Shares (as
defined below) as of the Termination Date.
(ii) The Company and Employee agree
that, subject to the execution and non-revocation of this
Agreement, the 2005 Option shall become vested with respect to an
additional 83,000 of the 2005 Unvested Shares (the “
Accelerated Shares ”). The 2005 Option shall be
exercisable as of immediately prior to the Termination Date with
respect to 41,500 of the Accelerated Shares and the 2005 Option
shall be exercisable for the remaining 41,500 of the Accelerated
Shares during the ninety (90) day period commencing on the
first anniversary of the initial public offering of the
Company’s ordinary shares. Notwithstanding the foregoing, the
2005 Option shall terminate with respect to any Accelerated Shares
which remain unexercised as of December 1, 2010 in exchange
for a cash payment in the positive amount, if any, calculated by
subtracting the aggregate exercise price of the 2005 Option with
respect to such Accelerated Shares from the aggregate fair market
value of such Accelerated Shares as of December 1, 2010, as
determined by the Company, payable in a cash lump sum prior to
December 31, 2010. The Company and Employee agree that the
agreement evidencing the 2005 Option shall be deemed amended to the
extent necessary to give effect to this subsection.
(iii) The Company and Employee
acknowledge that the Management Shareholders Agreement and each
option agreement evidencing the Options remain in full force and
effect in accordance with their terms, as amended by the preceding
subsection, and, with respect to the Options, the terms of the
Equity Incentive Plan.
(d) Call Right. The Company
and Employee acknowledge that pursuant to the Management
Shareholders Agreement, the Coinvestment Shares and the Options are
subject to a call right in favor of the Company (the “
Call Right ”) upon the termination of Employee’s
employment with the Company and its subsidiaries as contemplated
hereunder. The Company agrees to exercise its Call Right with
respect to the Coinvestment Shares using a repurchase price of
$10.68 per share, for an aggregate amount of $640,800 with respect
to the Coinvestment Shares, and with respect to the 207,500
ordinary shares subject to the 2005 Options which, after giving
effect to this Agreement, are exercisable as of the Termination
Date using a repurchase price of $5.68 per share, for an aggregate
amount of $1,178,600 with respect to the 2005 Options. Such
payments shall be made within sixty days following the Termination
Date.
(e) Bonus and Other Compensation
Arrangements. The Company and Employee acknowledge and agree
that Employee will not be eligible to receive any bonus
compensation or any other award under Company bonus, equity or
other compensation plan except as set forth herein.
(f) Taxes. Employee
understands and agrees that all payments under this Agreement will
be subject to appropriate tax withholding and other deductions, as
and to the extent required by law. To the extent any taxes may be
payable by the Employee for the benefits provided to her by this
Agreement beyond those withheld by the Company, the Employee agrees
to pay them herself and to indemnify and hold the Company and the
other entities released herein harmless for any tax claims or
penalties, and associated attorneys’ fees and costs,
resulting from any failure by her to make required
payments
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(g) Sole Separation Benefit.
Employee agrees that the benefits provided by subsections
(c) and (d) above are not required under the
Company’s normal policies and procedures and are provided
solely in connection with this Agreement. Employee further
acknowledges and agrees that the payments referenced in this
Agreement constitute adequate and valuable consideration, in and of
themselves, for the promises contained in this
Agreement.
3. Full Payment; Termination of
Employment Agreement; Survival . Employee acknowledges that the
payment and arrangements herein shall constitute full and complete
satisfaction of any and all amounts properly due and owing to
Employee as a result of her employment with the Company and any
subsidiary or affiliate thereof, and the termination thereof.
Nothing in this Section 3 shall diminish the obligations of
the Company or Employee under the Management Shareholders Agreement
and the ARCIPD.
4. General Release . As a
material inducement for the Company to enter into this Agreement,
and in exchange for the performance of the Company’s
obligations under this Agreement provided for herein, Employee
knowingly and voluntarily waives and releases all rights and
claims, known and unknown, which Employee may have against the
Company and/or any of the Company’s related or affiliated
entities or successors, or any of their current or former officers,
directors, managers, employees, agents, insurance carriers,
auditors, accountants, attorneys or representatives, including any
and all charges, complaints, claims, liabilities, obligations,
promises, agreements, contracts, controversies, damages, actions,
causes of action, suits, rights, demands, costs, losses, debts and
expenses of any kind. This includes, but is not limited to, claims
for employment discrimination, harassment, wrongful termination,
constructive termination, violation of public policy, breach of any
express or implied contract, breach of any implied covenant, fraud,
intentional or negligent misrepresentation, emotional distress,
defamation, or any other claims relating to Employee’s
relationship with the Company. This also includes a release of any
claims under any federal, state or local laws or regulations,
including, but not limited to: (1) Title VII of the Civil
Rights Act of 1964, 42 U.S.C. § 2000(e) et seq .
(race, color, religion, sex, and national origin discrimination);
(2) the Age Discrimination in Employment Act, as amended, 29
U.S.C. § 621 et seq . (the “ ADEA
’) (age discrimination); (3) Section 1981 of the
Civil Rights Act of 1866, 42 U.S.C. 1981 (race discrimination);
(4) the Equal Pay Act of 1963, 29 U.S.C. § 206 (equal
pay); (5) the Fair Labor Standards Act, 29 U.S.C. § 201,
et seq . (wage and hour matters, including
overti
