EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of March 23, 2000
(the "Effective Date") by and between MicroTune, Inc., a Texas corporation (the
"Company"), and Xxxxxxx X. Xxxxxx ("Employee").
The parties hereby agree as follows:
1. Employment.
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(a) As of the Effective Date, Employee shall serve as the Chief
Executive Officer of the Company. Employee agrees to perform such reasonable
responsibilities and duties as may be required of him by the Board of Directors
of the Company (the "Board") in such capacity. Employee shall report directly to
the Board. In addition, during the Term (as defined below), Employee shall be
elected to the position of Chairman of the Board. Employee agrees not to
terminate the Term prior to the third (3rd) anniversary of the Effective Date,
except for Certain Reasons (as defined below).
(b) The Board may terminate the Term at any time, by giving Employee
thirty (30) days' advance notice in writing. However, if the Board terminates
the Term without Cause (as defined below) within five (5) years after the
Effective Date, the Company shall pay Employee severance benefits as set forth
in Section 6. Any termination of employment by the Company or by Employee for
any reason whatsoever during the term of this Agreement shall be communicated by
written notice of termination to the other party hereto ("Notice of
Termination").
(c) In the event of a Change of Control (as defined below) of the
Company that results in termination of the Term, the Company shall pay Employee
severance benefits as set forth in Section 7.
2. Duties and Scope of Employment.
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(a) Positions and Duties. Employee will continue to serve as Chief
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Executive Officer of the Company while employed hereunder. Employee will render
such business and professional services in the performance of his duties,
consistent with Employee's position within the Company, as shall reasonably be
assigned to him by the Board.
(b) Obligations. During the Term, Employee will perform his duties
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faithfully and to the best of his ability and will devote his full business
efforts and time to the Company.
(c) Term. The term of the Employee's employment under this Agreement
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shall commence as of the Effective Date and shall continue for a period of three
(3) years from the date hereof (the "Initial Term"). The Initial Term hereof
will be automatically renewed for additional
terms (each a "Renewal Term," and, together, with the Initial Term, collectively
the "Term") of one (1) year unless either party hereto provides the other party
hereto written notice of its election not to renew this Agreement thirty (30)
days prior to the expiration of the Initial Term, or, if applicable, thirty (30)
days prior to the expiration of any Renewal Term.
3. Compensation.
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(a) Employee's initial base salary shall be paid at a rate of
$150,000 per year. Employee's base salary will be reviewed annually by the
compensation committee of the Board, or by the Board if at such time there is no
compensation committee.
(b) During the Term, Employee 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,
dependent care, life insurance, flexible-spending account and 401(k) plans. The
Company reserves the right to cancel or change the benefit plans and programs it
offers to its employees at any time.
(c) The Company will reimburse Employee for reasonable travel,
entertainment or other expenses incurred by Employee in the furtherance of or in
connection with the performance of Employee's duties hereunder, in accordance
with the Company's expense reimbursement policy as in effect from time to time.
4. Covenant Not to Compete or Solicit.
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(a) Non-Competition. Employee agrees that if the Company terminates
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his employment for Cause or Employee terminates his employment with the Company
other than for Certain Reasons, then for three (3) years from the Date of
Termination he will not directly or indirectly engage in (whether as an
employee, consultant, proprietor, partner, director or otherwise), or have any
ownership interest in, or participate in the financing, operation, management or
control of, any person, firm, corporation or business that engages in or (to
Employee's knowledge, after due inquiry) intends to engage in a Restricted
Business (as defined below).
Ownership of (i) no more than one percent (1%) of the outstanding
voting stock of a publicly traded corporation, or (ii) any stock presently owned
by Employee, shall not constitute a violation of this provision.
(b) Non-Solicitation. For a period of three (3) years from the Date
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of Termination, Employee shall not:
(i) solicit, encourage, or take any other action which is
intended to induce any other employee of the Company to terminate his employment
with the Company, or
(ii) interfere in any manner with the contractual or employment
relationship between the Company and any such employee of the Company.
The foregoing shall not prohibit any entity with which the Employee
may be affiliated from hiring a former employee of the Company.
(c) Worldwide. The parties acknowledge that the market for radio
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frequency tuner products is worldwide, and that, in this market, products from
any nation compete with products from all other nations. Accordingly, in order
to secure to the Company all possible benefits, the parties agree that the
provisions of this Section 4 shall apply to each of the states and counties of
the United States, and to each nation worldwide.
(d) Severability. The parties intend that the covenants contained
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in the preceding paragraphs shall be construed as a series of separate
covenants, one for each state of the Union, and each nation. Except for
geographic coverage, each such separate covenant shall be deemed identical in
terms to the covenant contained in proceeding paragraphs. If, in any judicial
proceeding, a court shall refuse to enforce any of the separate covenants (or
any part thereof) deemed included in said paragraphs, then such unenforceable
covenant (or such part) shall be deemed eliminated from this Agreement for the
purpose of those proceedings to the extent necessary to permit the remaining
separate covenants (or portions thereof) to be enforced. In the event that the
provisions of this Section 4 should ever be deemed to exceed the time or
geographic limitations, or the scope of this covenant, permitted by applicable
law, then such provisions shall be reformed to the maximum time or geographic
limitations, as the case may be, permitted by applicable laws.
5. Certain Definitions. For the purposes of this Agreement, the
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following terms have the meanings set forth below.
(a) "Base Compensation" means Employee's rate of annual salary, as in
effect for the twelve-month period ending on the date six months prior to any
Change of Control or on the Date of Termination, whichever is higher. Base
Compensation does not include elements such as bonuses, reimbursement of
interest paid on guaranteed loans, auto allowances, nor any income from equity
based compensation, such as may result from the exercise of stock options or
stock appreciation rights, or the receipt of restricted stock awards or the
lapse of the restrictions on such awards. If Employee is employed by the Company
and/or any of its subsidiaries for less than one full calendar year immediately
preceding the Change of Control, Employee's "highest annual bonus" will be
determined by annualizing the bonus earned during employee's period of
employment.
(b) "Cause", for purposes of this Agreement, means (i) if Employee is
determined by a court of law or pursuant to arbitration to have committed a
willful act of embezzlement, fraud or dishonesty which resulted in material
loss, material damage or material injury to the Company, (ii) Employee's
conviction of, or plea of nolo contendere to, a felony, or (iii) Employee's
continued substantial violations of his employment duties after Employee has
received a written demand for performance from the Company which specifically
sets forth the factual basis the Company's belief that Employee has not
substantially performed his duties. In such an event, at the election of the
Company, Employee shall have no rights under this Agreement other than payment
of compensation and reimbursement of business expenses pursuant to this
Agreement through the date of termination. Notwithstanding the foregoing,
Employee shall not be deemed to have been terminated for Cause without (i)
reasonable notice to Employee setting forth the reasons for the Company's
intention to
terminate for Cause, and (ii) an opportunity for Employee, together with
counsel, if any, to be heard before the Board.
(c) "Certain Reasons" means (A) a reduction in cash compensation
(exclusive of bonuses) or a material reduction in benefits, except as part of a
salary or benefit reduction program by the Company that is applicable generally
to all executives, (B) a material demotion in responsibilities or duties, (C)
relocation of Employee's workplace to any place more than fifty miles from
Dallas, Texas, without Employee's consent or (D) a material breach by the
Company of this Agreement or any other material agreement between the Company
and Employee.
(d) "Change of Control" means a change of control of a nature which
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended
("Exchange Act"), or in response to any other form or report to the Securities
and Exchange Commission or any stock exchange or the Nasdaq National Market on
which the Company's shares are listed which requires the reporting of a change
of control. In addition, a Change of Control shall be deemed to have occurred if
any person (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the beneficial owner, directly or indirectly, of securities
of the Company representing more than 35% of the combined voting power of the
Company's then outstanding securities.
Notwithstanding the foregoing definition, "Change of Control"
for purposes of this Agreement, shall exclude the acquisition of securities
representing more than 35% of the combined voting power of the Company by any of
its wholly owned subsidiaries, or any trustee or other fiduciary holding
securities of the Company under an employee benefit plan now or hereafter
established by the Company. As used herein, the term "beneficial owner" shall
have the same meaning as under Section 13(d) of the Exchange Act, and related
case law.
(e) "Constructive Termination" means the resignation by Employee due
to any diminution or adverse change in the circumstances of employment
including, without limitation, reporting relationships, job description, duties,
responsibilities, compensation, perquisites, office or location of employment.
The Board will determine in good faith whether a Constructive Termination has
occurred after (i) Employee has provided the Board reasonable notice setting
forth the reasons as to why he believes there has been a Constructive
Termination, and (ii) Employee, together with counsel, if any, is given an
opportunity to be heard before the Board.
(f) "Date of Termination" shall mean a date which is (1) specified in
the Notice of Termination if the Term is terminated by Employee; or (2) thirty
(30) days from the date on which a Notice of Termination is delivered to
Employee, if the Term is terminated by the Company.
(g) "Disability" means that Employee is unable by reason of accident
or illness (including mental illness) to perform the material duties of his
regular position with the Company after a physician acceptable to both the
Company and Employee (which acceptance will not be unreasonably withheld)
determines that such inability is certain or likely to continue for a period of
more than ninety (90) days. Employee will cooperate fully with the physician. If
the physician determines that Employee is disabled, the physician will certify
to the Company that Employee is
disabled and the physician's determination in that respect will be conclusive.
The Company will pay the physician's fee.
(h) "Restricted Business" means any business that is engaged in or
(to Employee's knowledge, after due inquiry) preparing to engage in the design,
manufacture, marketing, sale or distribution of semiconductors or modules (or
components thereof) which provide the function of a radio frequency tuner or
compete with radio frequency products under development by the Company at the
time of this Agreement or during Employee's tenure as an executive of the
Company.
6. Severance Benefits for Termination resulting from other than a Change
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of Control.
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(a) Involuntary Termination. If Employee's employment is terminated
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by the Board other than for Cause, or if Employee terminates his employment for
Certain Reasons, then (i) Employee shall be paid compensation at a rate equal to
his then current Base Compensation and the highest annual bonus paid to Employee
during the prior three (3) years until one year following Date of Termination as
severance benefits, (ii) options granted to Employee under the Company's
employee stock plans, if any, shall immediately vest and become exercisable as
to the number of shares which would have otherwise vested had Employee continued
to be employed for twelve (12) months following the Date of Termination (but in
no event may the shares which so vest exceed the number of shares subject to
such options), (iii) the Company will continue to provide Employee coverage
under a plan providing whatever medical, dental, disability, life or insurance
benefits were in effect at the time of such termination for two (2) years
following the Date of Termination and (iv) any repurchase rights held by the
Company on options exercised or stock owned by the Employee will be canceled on
the Date of Termination.
(b) Voluntary Termination; Termination for Cause. No severance
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benefits shall be paid if Employee's employment is terminated by the Company for
Cause or by Employee without Certain Reasons.
7. Termination of Employment Following Change of Control. If within two
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(2) years following a Change of Control, Employee's employment with the Company
terminates as the result of a Constructive Termination or is terminated by the
Company for other than Cause, then the Company shall provide to Employee as soon
as practicable, but not more than ten (10) business days following the Date of
Termination, each of the following benefits:
(a) Severance Benefits. The Company shall pay Employee a lump sum
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severance benefit which shall equal two (2) times the sum of (i) Employee Base
Compensation, plus (ii) the highest annual bonus paid to Employee during the
last three (3) full calendar years immediately prior to the Change of Control.
(b) Equity Compensation. All unvested stock options, stock
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appreciation rights and restricted stock awards held by Employee on the Date of
Termination shall be deemed fully vested and exercisable on such Date of
Termination, provided that if any option, right or award would, as a result of
such accelerated exercisability no longer qualify for exemption under section 16
of the Exchange Act, then such option, right or award shall be fully vested but
shall not become exercisable until the earliest date on which it could become
exercisable and also qualify for exemption from
section 16 of the Exchange Act. All vested options held by Employee, including
those deemed fully vested as of the Date of Termination, shall remain
exercisable for a period of one (1) year from the Date of Termination; provided,
however, in no event shall any option remain exercisable beyond the maximum
period allowed therefor in the stock option plan under which it was granted. Any
repurchase rights held by the Company on stock owned or options exercised by the
Employee shall be canceled on the Date of Termination. This Agreement shall
serve as an amendment to all of Employee's outstanding stock options, restricted
stock awards, repurchase rights, and stock appreciation rights as of the Date of
Termination;
(c) Accrued Bonus. The Company shall pay Employee an amount equal
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to the pro rata amount of the annual bonus accrued under the Company's executive
officer bonus plan, if any, for the portion of the year prior to the Date of
Termination.
(d) Other Benefits. The Company shall provide to Employee for a
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period of twenty-four (24) months following the Date of Termination, coverage
under a plan providing health and welfare benefits, at least comparable to those
benefits in effect on the Date of Termination, including but not limited to
medical, dental, vision, disability, dependent care and life insurance coverage.
At the Company's election, health benefits may be provided by reimbursing
Employee for the cost of converting a group policy to individual coverage, or
for the cost of extended COBRA coverage. The Company shall also pay to Employee
an amount calculated to pay any income taxes due as a result of the payment by
the Company on Employee's behalf for such health benefits. Such tax payment
shall be calculated to place Employee in the same after-tax position as if no
such income taxes had been imposed.
(e) Other Benefits Payable. The benefits described in subsections
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(a) through (d) above shall be payable in addition to, and not in lieu of, all
other accrued or vested or earned but deferred compensation, rights, options or
other benefits which may be owed to Employee following termination of
employment, irrespective of whether Employee's termination was preceded by a
Change of Control, including, without limitation, accrued vacation or sick pay,
amounts or benefits payable under any employment agreement or any bonus or other
compensation plans, stock option plan, stock ownership plan, stock purchase
plan, life insurance plan, health plan, disability plan or similar plan.
(f) Indemnification. For at least six years following a Change of
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Control, Employee shall continue to be indemnified under the Company's Articles
of Incorporation and Bylaws, each as may be amended from time to time, at least
to the same extent as prior to the Change of Control, and Employee shall be
covered by the directors' and officers' liability insurance, the fiduciary
liability insurance and the professional liability insurance policies that are
the same as, or provide coverage at least equivalent to, those the Company
carried prior to the Change of Control.
8. Payment Obligations Absolute. The Company's obligation to pay the
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benefits described herein shall be absolute and unconditional and shall not be
affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company or any of its
subsidiaries may have against Employee or anyone else. In the event of any
dispute concerning Employee's right to payment, the Company shall nevertheless
continue to pay to Employee the Base Compensation until the dispute is resolved.
Any such amounts paid following
Employee's termination of his employment shall be credited against the amounts
otherwise due to Employee under this Agreement or, in the event the Company
prevails, shall be repaid to the Company.
9. Legal Fees. The Company shall also pay forthwith upon written demand
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from Employee all legal fees and expenses reasonably incurred by Employee in
seeking to obtain or enforce any right or benefit provided by this Agreement. In
the event Employee does not prevail in any ensuing arbitration or litigation,
the Company shall absorb its own costs, expenses, and attorney's fees, and
Employee shall reimburse the Company for one-half of Employee's costs, expenses,
and attorney's fees.
10. Successors; Binding Agreement. The Company shall require any
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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 expressly assume 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. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle Employee to compensation from the Company in
the same amount and on the same terms as Employee would be entitled hereunder if
the Company had terminated Employee's employment without Cause after a Change of
Control, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean the Company as
defined herein and any successor to its business and/or assets as aforesaid
which executes and delivers the agreement provided for in this Section or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
11. Miscellaneous.
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(a) Notices. Any notice, report or other communication
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required or permitted to be given hereunder shall be in writing to both parties
and shall be deemed given on the date of delivery, if delivered, or three days
after mailing, if mailed first-class mail, postage prepaid, to the following
addresses:
(i) If to Employee, at the address set forth below
Employee's signature at the end hereof.
(ii) If to the Company:
Microtune, Inc.
0000 Xxxx Xxxxx Xxxxxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
Attention: Board of Directors, Compensation Committee
or to such other address as any party hereto may
designated by notice given as herein provided.
(b) Governing Law. This Agreement shall be governed by and
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construed and enforced in accordance with the laws of the State of Texas as
applied to agreements made and performed in Texas by residents of Texas.
(c) Amendments. This Agreement shall not be changed or
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modified in whole or in part except by an instrument in writing signed by each
party hereto.
(d) Counterparts. This Agreement may be executed in several
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counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(e) Effect of Headings. The section headings herein are for
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convenience only and shall not affect the construction or interpretation of
this Agreement.
12. Conflicting Terms. In the event that words or terms of this
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Employment Agreement conflict with the words or terms of any other agreement or
contract, including, without limitation, any stock plan, notice of grant, or
restricted stock purchase agreement or option agreement entered into in
connection with the employment of Employee by the Company, the interpretation of
this Agreement shall prevail.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
MICROTUNE, INC.
By: Compensation Committee of the Board of
Directors
By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
EMPLOYEE
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
0000 Xxxxxxx Xxxx Xx.
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(Print Address)
Xxxxxx, XX 00000
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000-000-0000
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(Print Telephone Number)
