Exhibit 10.47
INTEGRATED TELECOM EXPRESS, INC.
XXXXX X. XXXXXXXX EMPLOYMENT AGREEMENT
This Agreement is entered into as of October 8, 2001, (the "Effective
Date") by and between Integrated Telecom Express, Inc. (the "Company"), and
Xxxxx X. Xxxxxxxx ("Executive").
1. Duties and Scope of Employment.
------------------------------
(a) Positions and Duties. As of the Effective Date, Executive will
--------------------
serve as Senior Vice President Finance, Treasurer and Chief Financial Officer of
the Company. Executive will render such business and professional services in
the performance of his duties, consistent with Executive's position within the
Company, as shall reasonably be assigned to him by the Company's Chief Executive
Officer (the "CEO"). The period of Executive's employment under this Agreement
is referred to herein as the "Employment Term."
(b) Obligations. During the Employment Term, Executive will perform
-----------
his duties faithfully and to the best of his ability and will devote his full
business efforts and time to the Company. For the duration of the Employment
Term, Executive agrees not to actively engage in any other employment,
occupation or consulting activity for any direct or indirect remuneration
without the prior approval of the CEO.
2. At-Will Employment. The parties agree that Executive's employment with
------------------
the Company will be "at-will" employment and may be terminated at any time with
or without cause or notice. Executive understands and agrees that neither his
job performance nor promotions, commendations, bonuses or the like from the
Company give rise to or in any way serve as the basis for modification,
amendment, or extension, by implication or otherwise, of his employment with the
Company.
3. Compensation.
------------
(a) Base Salary. During the Employment Term, the Company will pay
-----------
Executive an annual salary of $225,000 as compensation for his services (the
"Base Salary"). The Base Salary will be paid periodically in accordance with the
Company's normal payroll practices and be subject to the usual, required
withholding. Executive's salary will be subject to review and adjustments will
be made based upon the Company's normal performance review practices.
(b) Sign-On Bonus. Within thirty (30) days of the Effective Date,
-------------
Employee shall receive a lump sum payment (less all applicable withholding
taxes) of $25,000 (the "Sign-On Bonus"). If before the first anniversary of the
Effective Date (i) Executive terminates his employment with the Company for any
reason or (ii) the Company terminates Executive for Cause, then Executive must
repay to the Company the entire amount of the Sign-On Bonus.
(c) Stock Options.
-------------
(i) First Option. Subject to approval by the Board, as soon as
------------
administratively practicable following the Effective Date, Executive shall be
granted a stock option to purchase 500,000 shares of the Company's Common Stock
at an exercise price equal to the fair market value of such Common Stock on the
date of grant (the "First Option"). Subject to the accelerated vesting
provisions set forth herein, the First Option shall vest as to 25% of the shares
subject to such First Option one year after its vesting commencement date, and
as to 1/48th of the shares subject to such First Option monthly thereafter, so
that the First Option will be fully vested and exercisable four (4) years from
the vesting commencement date, subject to Executive's continued service to the
Company on the relevant vesting dates. The vesting commencement date for the
First Option will be the date Executive begins employment with the Company
pursuant to this Agreement. The First Option will be subject to the terms,
definitions and provisions of the Company's Nonstatutory Stock Option Plan (the
"Option Plan") and the stock option agreement to be executed by Executive and
the Company (the "First Option Agreement"), both of which documents are to be
approved by the Board and will be at that time incorporated herein by reference.
(ii) Second Option. Subject to approval by the Board, as soon as
-------------
administratively practicable following the Effective Date, Executive shall be
granted a stock option to purchase 250,000 shares of the Company's Common Stock
at an exercise price equal to the fair market value of such common stock on the
date of grant (the "Second Option"). The First Option together with the Second
Option shall each be referred to as an "Option" and collectively as the
"Options." The Second Option shall vest as to 100% of the shares subject to such
Option five (5) years following its date of grant. Notwithstanding the
foregoing, if within six (6) months following the Effective Date the Board
approves the Executive's business plan for the Company (prepared jointly by the
CEO, COO and CFO), which such approval shall not be unreasonably withheld, the
Second Option shall vest as to 25% of the shares subject to such Option eighteen
(18) months following the Effective Date, and as to 1/48th of the shares subject
to such Option monthly thereafter, so that the Second Option will be fully
vested and exercisable fifty-four (54) months from the Effective Date, subject
to Executive's continued service to the Company on the relevant vesting dates.
The Second Option will be subject to the terms, definitions and provisions of
the Option Plan and the stock option agreement to be executed by Executive and
the Company (the "Second Option Agreement"), both of which documents are to be
approved by the Board and will be at that time incorporated herein by reference.
The First Option Agreement together with the Second Option Agreement shall each
be referred to as the "Option Agreement" or collectively as the "Option
Agreements."
4. Employee Benefits. During the Employment Term, Executive will be
-----------------
entitled to participate in the employee benefit plans currently and hereafter
maintained by the Company of general applicability to other senior executives of
the Company, including, without limitation, the Company's group medical, dental,
vision, disability, life insurance, and flexible-spending account plans. The
Company reserves the right to cancel or change the benefit plans and programs it
offers to its employees at any time.
5. Paid Time Off. Executive shall proportionately accrue paid time off of
-------------
up to 18 days per year in accordance with Company policies, with the timing and
duration of specific time off mutually and reasonably agreed to by the parties
hereto.
-2-
6. Expenses. The Company will reimburse Executive for reasonable travel,
--------
entertainment or other expenses incurred by Executive in the furtherance of or
in connection with the performance of Executive's duties hereunder, in
accordance with the Company's expense reimbursement policy as in effect from
time to time.
7. Severance.
---------
(a) Involuntary Termination. If Executive's employment with the
-----------------------
Company is involuntarily terminated for other than for "Cause" (as defined
below), and Executive signs and does not revoke a standard release of claims
with the Company, then, subject to Section 12, Executive shall be entitled to
(i) receive continuing payments of severance pay (less applicable withholding
taxes) at a rate equal to his Base Salary rate, as then in effect, for a period
of six (6) months from the date of such termination, to be paid periodically in
accordance with the Company's normal payroll policies; and (ii) continued
payment by the Company of the group health continuation coverage premiums for
Executive and Executive's eligible dependents under Title X of the Consolidated
Budget Reconciliation Act of 1985, as amended ("COBRA") as in effect through the
lesser of (x) six (6) months from the effective date of such termination, (y)
the date upon which Executive and Executive's eligible dependents become covered
under similar plans, or (z) the date Executive no longer constitutes a
"Qualified Beneficiary" (as such term is defined in Section 4980B(g) of the
Internal Revenue Code of 1986, as amended (the "Code")); provided, however, that
Executive will be solely responsible for electing such coverage within the
required time periods.
(b) Voluntary Termination; Termination for Cause. Except as provided
--------------------------------------------
in Section 8(c), if Executive's employment with the Company terminates
voluntarily by Executive or for Cause by the Company, then (i) all vesting of
the Options will terminate immediately, (ii) all payments of compensation by the
Company to Executive hereunder will terminate immediately (except as to amounts
already earned), and (iii) Executive will only be eligible for severance
benefits in accordance with the Company's established policies as then in
effect.
8. Change of Control Benefits.
--------------------------
(a) Acceleration of Options.
-----------------------
(i) Change of Control Prior to Six Months From the Effective
--------------------------------------------------------
Date. In the event of a "Change of Control" (as defined below) that occurs prior
----
to Executive's termination of employment and prior to the date that is six (6)
months following the Effective Date, 50% of the unvested shares subject to the
Options shall immediately vest and become exercisable. Thereafter the Options
shall continue vesting at the same rate and in the same amounts as prior to such
acceleration. In all other respects, the Options will continue to be subject to
the terms, definitions and provisions of the Option Plan and Option Agreements.
(ii) Change of Control After Six Months From the Effective Date
----------------------------------------------------------
but Prior to Twelve Months from the Effective Date. In the event of a Change of
--------------------------------------------------
Control that occurs prior to Executive's termination of employment and following
the date that is six (6) months from the Effective Date but prior to the date
that is twelve (12) months from the Effective Date, 75% of the unvested shares
subject to the Options shall immediately vest and become exercisable. Thereafter
the Options shall continue vesting at the same rate and in the same amounts as
prior to such
-3-
acceleration. In all other respects, the Options will continue to be subject to
the terms, definitions and provisions of the Option Plan and Option Agreements.
(iii) Change of Control After Twelve Months from the Effective
--------------------------------------------------------
Date. In the event of a Change of Control that occurs prior to Executive's
----
termination of employment and after the date that is twelve (12) months from the
Effective Date, 100% of the unvested shares subject to the Options shall
immediately vest and become exercisable. In all other respects, the Options will
continue to be subject to the terms, definitions and provisions of the Option
Plan and Option Agreements.
(iv) Contingent Accelerated Vesting of Second Option.
-----------------------------------------------
Notwithstanding the foregoing acceleration provisions, in the event the Board
does not approve Executive's business plan for the Company within six (6) months
of the Effective Date, then the vesting of the Second Option shall not
accelerate pursuant to the foregoing provisions of this Section 8(a).
(b) Termination Following a Change of Control. If within twelve (12)
-----------------------------------------
months following a Change of Control (i) Executive terminates his employment
with the Company due to an "Involuntary Termination" (as defined below) or (ii)
the Company terminates Executive's employment with the Company for other than
Cause, death or disability, then, subject to Executive signing and not revoking
a standard release of claims in a form acceptable to the Company, Executive
shall be entitled to (x) receive continuing payments of severance pay (less
applicable withholding taxes) at a rate equal to his Base Salary rate, as then
in effect, for a period of six (6) months from the date of such termination, to
be paid periodically in accordance with the Company's normal payroll policies,
(y) continued payment by the Company of the group health continuation coverage
premiums for Executive and Executive's eligible dependents under COBRA as in
effect through the lesser of (A) six (6) months from the effective date of such
termination, (B) the date upon which Executive and Executive's eligible
dependents become covered under similar plans, or (C) the date Executive no
longer constitutes a Qualified Beneficiary; provided, however, that Executive
will be solely responsible for electing such coverage within the required time
periods, and (z) exercise the Options, to the extent vested, for a period of one
(1) year following such termination or such longer period as may be provided for
in the applicable Option Agreement.
(c) Voluntary Termination; Termination for Cause. If within the twelve
--------------------------------------------
(12) months following a Change of Control Executive's employment with the
Company terminates voluntarily by Executive (other than due to an Involuntary
Termination) or for Cause by the Company, then (i) all vesting of the Options
will terminate immediately, (ii) all payments of compensation by the Company to
Executive hereunder will terminate immediately (except as to amounts already
earned), and (iii) Executive will only be eligible for severance benefits in
accordance with the Company's established policies as then in effect.
9. Limitation on Payments. In the event that the severance and other
----------------------
benefits provided for in this Agreement or otherwise payable to the Executive
(i) constitute "parachute payments" within the meaning of Section 280G of the
Code and (ii) but for this Section 8, would be subject to the excise tax imposed
by Section 4999 of the Code, then the Executive's severance benefits under
Section 7 shall be either:
-4-
(a) delivered in full, or
(b) delivered as to such lesser extent which would result in no
portion of such severance benefits being subject to excise tax
under Section 4999 of the Code,
whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by the Executive on an after-tax basis, of the greatest amount of
severance benefits, notwithstanding that all or some portion of such severance
benefits may be taxable under Section 4999 of the Code. Unless the Company and
the Executive otherwise agree in writing, any determination required under this
Section 8 shall be made in writing by an independent public accountant selected
by the Company, immediately prior to Change of Control (the "Accountants"),
whose determination shall be conclusive and binding upon the Executive and the
Company for all purposes. For purposes of making the calculations required by
this Section 8, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of Sections 280G and 4999 of
the Code. The Company and the Executive shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 8.
10. Definitions.
-----------
(a) Cause. For purposes of this Agreement, "Cause" is defined as (i)
-----
an act of dishonesty made by Executive in connection with Executive's
responsibilities as an employee, (ii) Executive's conviction of, or plea of nolo
contendere to, a felony, (iii) Executive's gross misconduct, or (iv) Executive's
continued substantial violations of his employment duties after Executive has
received a written demand for performance from the Company which specifically
sets forth the factual basis for the Company's belief that Executive has not
substantially performed his duties.
(b) Change of Control. For purposes of this Agreement, "Change of
-----------------
Control" of the Company is defined as:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 50% or more of the total
voting power represented by the Company's then outstanding voting securities; or
(ii) a change in the composition of the Board occurring within a
two-year period, as a result of which fewer than a majority of the directors are
Incumbent Directors. "Incumbent Directors" will mean directors who either (A)
are directors of the Company as of the date hereof, or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or nomination
(but will not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to the election
of directors to the Company); or
(iii) the date of the consummation of a merger or consolidation
of the Company with any other corporation that has been approved by the
stockholders of the Company,
-5-
other than a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the stockholders
of the Company approve a plan of complete liquidation of the Company; or
(iv) the date of the consummation of the sale or disposition by
the Company of all or substantially all the Company's assets.
(c) Involuntary Termination. For purposes of this Agreement,
-----------------------
"Involuntary Termination" shall mean without the Executive's express written
consent (i) a significant reduction of the Executive's duties, position or
responsibilities, or the removal of the Executive from such position and
responsibilities, unless the Executive is provided with a comparable position
(i.e., a position of equal or greater organizational level, duties, authority,
compensation and status); provided, however, that a reduction in duties,
position or responsibilities solely by virtue of the Company being acquired and
made part of a larger entity (as, for example, when the Chief Executive Officer
of the Company remains as such following a Change of Control but is not made the
Chief Executive Officer of the acquiring corporation) shall not constitute an
"Involuntary Termination"; (ii) a significant reduction by the Company in the
Base Salary of the Executive as in effect immediately prior to such reduction;
(iii) a material reduction by the Company in the kind or level of employee
benefits to which the Executive is entitled immediately prior to such reduction
with the result that the Executive's overall benefits package is significantly
reduced; or (iv) the relocation of the Executive to a facility or a location
more than fifty (50) miles from the Executive's then present location.
11. Confidential Information. Executive agrees to enter into the Company's
------------------------
standard Confidential Information and Invention Assignment Agreement (the
"Confidential Information Agreement") upon commencing employment hereunder.
12. Conditional Nature of Severance Payments.
----------------------------------------
(a) Noncompete. To avoid the inevitable disclosure of the Company's
----------
trade secrets and confidential information, Executive agrees and acknowledges
that Executive's right to receive the severance payments set forth in Sections 7
and 8 (to the extent Executive is otherwise entitled to such payments) shall be
conditioned upon Executive not directly or indirectly engaging in (whether as an
employee, consultant, agent, proprietor, principal, partner, stockholder,
corporate officer, director or otherwise), nor having any ownership interested
in or participating in the financing, operation, management or control of, any
person, firm, corporation or business that competes with Company or is a
customer of the Company. Upon any breach of this section, all severance payments
pursuant to this Agreement shall immediately cease.
(b) Non-Solicitation. Until the date one (1) year after the
----------------
termination of Executive's employment with the Company for any reason, Executive
agrees not, either directly or indirectly, to solicit, induce, attempt to hire,
recruit, encourage, take away, hire any employee of the Parent or the Company or
cause an employee to leave his or her employment either for Executive or for any
other entity or person. Additionally, Executive acknowledges that Executive's
right to
-6-
receive the severance payments set forth in Sections 7 and 8 (to the extent
Executive is otherwise entitled to such payments) are contingent upon Executive
complying with this Section 12(b) and upon any breach of this section all
severance payments pursuant to this Agreement shall immediately cease.
(c) Understanding of Covenants. Executive represents that he (i) is
--------------------------
familiar with the foregoing covenants not to compete and not to solicit, and
(ii) is fully aware of his obligations hereunder, including, without limitation,
the reasonableness of the length of time, scope and geographic coverage of these
covenants.
13. Assignment. This Agreement will be binding upon and inure to the
----------
benefit of (a) the heirs, executors and legal representatives of Executive upon
Executive's death and (b) any successor of the Company. Any such successor of
the Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes. For this purpose, "successor" means any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. None of the rights
of Executive to receive any form of compensation payable pursuant to this
Agreement may be assigned or transferred except by will or the laws of descent
and distribution. Any other attempted assignment, transfer, conveyance or other
disposition of Executive's right to compensation or other benefits will be null
and void.
14. Notices. All notices, requests, demands and other communications
-------
called for hereunder shall be in writing and shall be deemed given (i) on the
date of delivery if delivered personally, (ii) one (1) day after being sent by a
well established commercial overnight service, or (iii) four (4) days after
being mailed by registered or certified mail, return receipt requested, prepaid
and addressed to the parties or their successors at the following addresses, or
at such other addresses as the parties may later designate in writing:
If to the Company:
Integrated Telecom Express, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxx
----
If to Executive:
at the last residential address known by the Company.
15. Severability. In the event that any provision hereof becomes or is
------------
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement will continue in full force and effect without said
provision.
16. Arbitration.
-----------
(a) General. In consideration of Executive's service to the Company,
-------
its promise to arbitrate all employment related disputes and Executive's receipt
of the compensation, pay raises and other benefits paid to Executive by the
Company, at present and in the future, Executive agrees
-7-
that any and all controversies, claims, or disputes with anyone (including the
Company and any employee, officer, director, shareholder or benefit plan of the
Company in their capacity as such or otherwise) arising out of, relating to, or
resulting from Executive's service to the Company under this Agreement or
otherwise or the termination of Executive's service with the Company, including
any breach of this Agreement, shall be subject to binding arbitration under the
Arbitration Rules set forth in California Code of Civil Procedure Section 1280
through 1294.2, including Section 1283.05 (the "Rules") and pursuant to
California law. Disputes which Executive agrees to arbitrate, and thereby agrees
to waive any right to a trial by jury, include any statutory claims under state
or federal law, including, but not limited to, claims under Title VII of the
Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Age
Discrimination in Employment Act of 1967, the Older Workers Benefit Protection
Act, the California Fair Employment and Housing Act, the California Labor Code,
claims of harassment, discrimination or wrongful termination and any statutory
claims. Executive further understands that this Agreement to arbitrate also
applies to any disputes that the Company may have with Executive.
(b) Procedure. Executive agrees that any arbitration will be
---------
administered by the American Arbitration Association ("AAA") and that a neutral
arbitrator will be selected in a manner consistent with its National Rules for
the Resolution of Employment Disputes. The arbitration proceedings will allow
for discovery according to the rules set forth in the National Rules for the
Resolution of Employment Disputes or California Code of Civil Procedure.
Executive agrees that the arbitrator shall have the power to decide any motions
brought by any party to the arbitration, including motions for summary judgment
and/or adjudication and motions to dismiss and demurrers, prior to any
arbitration hearing. Executive agrees that the arbitrator shall issue a written
decision on the merits. Executive also agrees that the arbitrator shall have the
power to award any remedies, including attorneys' fees and costs, available
under applicable law. Executive understands the Company will pay for any
administrative or hearing fees charged by the arbitrator or AAA except that
Executive shall pay the first $200.00 of any filing fees associated with any
arbitration Executive initiates. Executive agrees that the arbitrator shall
administer and conduct any arbitration in a manner consistent with the Rules and
that to the extent that the AAA's National Rules for the Resolution of
Employment Disputes conflict with the Rules, the Rules shall take precedence.
(c) Remedy. Except as provided by the Rules, arbitration shall be the
------
sole, exclusive and final remedy for any dispute between Executive and the
Company. Accordingly, except as provided for by the Rules, neither Executive nor
the Company will be permitted to pursue court action regarding claims that are
subject to arbitration. Notwithstanding, the arbitrator will not have the
authority to disregard or refuse to enforce any lawful Company policy, and the
arbitrator shall not order or require the Company to adopt a policy not
otherwise required by law which the Company has not adopted.
(d) Availability of Injunctive Relief. In addition to the right under
---------------------------------
the Rules to petition the court for provisional relief, Executive agrees that
any party may also petition the court for injunctive relief where either party
alleges or claims a violation of this Agreement or the Confidentiality Agreement
or any other agreement regarding trade secrets, confidential information,
nonsolicitation or Labor Code ss.2870. In the event either party seeks
injunctive relief, the prevailing party shall be entitled to recover reasonable
costs and attorneys fees.
-8-
(e) Administrative Relief. Executive understands that this Agreement
---------------------
does not prohibit Executive from pursuing an administrative claim with a local,
state or federal administrative body such as the Department of Fair Employment
and Housing, the Equal Employment Opportunity Commission or the workers'
compensation board. This Agreement does, however, preclude Executive from
pursuing court action regarding any such claim.
(f) Voluntary Nature of Agreement. Executive acknowledges and agrees
-----------------------------
that Executive is executing this Agreement voluntarily and without any duress or
undue influence by the Company or anyone else. Executive further acknowledges
and agrees that Executive has carefully read this Agreement and that Executive
has asked any questions needed for Executive to understand the terms,
consequences and binding effect of this Agreement and fully understand it,
including that Executive is waiving Executive's right to a jury trial. Finally,
Executive agrees that Executive has been provided an opportunity to seek the
advice of an attorney of Executive's choice before signing this Agreement.
17. Integration. This Agreement, together with the Option Plan, Option
-----------
Agreements and the Confidential Information Agreement, represent the entire
agreement and understanding between the parties as to the subject matter herein
and supersede all prior or contemporaneous agreements whether written or oral.
No waiver, alteration, or modification of any of the provisions of this
Agreement will be binding unless in writing and signed by duly authorized
representatives of the parties hereto.
18. Waiver of Breach. The waiver of a breach of any term or provision of
----------------
this Agreement, which must be in writing, shall not operate as or be construed
to be a waiver of any other previous or subsequent breach of this Agreement.
19. Headings. All captions and section headings used in this Agreement are
--------
for convenient reference only and do not form a part of this Agreement.
20. Tax Withholding. All payments made pursuant to this Agreement will be
---------------
subject to withholding of applicable taxes.
21. Governing Law. This Agreement will be governed by the laws of the
-------------
State of California (with the exception of its conflict of laws provisions).
22. Acknowledgment. Executive acknowledges that he has had the opportunity
--------------
to discuss this matter with and obtain advice from his private attorney, has had
sufficient time to, and has carefully read and fully understands all the
provisions of this Agreement, and is knowingly and voluntarily entering into
this Agreement.
23. Counterparts. This Agreement may be executed in counterparts, and each
------------
counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.
[Remainder of Page Intentionally Left Blank]
-9-
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by their duly authorized officers, as of the day and year
first above written.
COMPANY:
INTEGRATED TELECOM EXPRESS, INC.
By: /s/ Xxxxx Xxxxx Date: October 4, 2001
----------------------------------------- -----------------------
Title: President and Chief Executive Officer
--------------------------------------
EXECUTIVE:
/s/ Xxxxx Xxxxxxxx Date: October 8, 2001
---------------------------------------- ------------------------
XXXXX X. XXXXXXXX
-10-
