EXHIBIT 10.24
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), dated as of August 6, 2001,
is entered into by Next Level Communications, Inc., a Delaware corporation (the
"Company"), and Xxxxxxx Xxxxxx (the "Executive").
WHEREAS, the Company is engaged in the business of designing and
marketing broadband communications equipment and desires to employ the Executive
as President and Chief Executive Officer of the Company; and
WHEREAS, the Executive is willing to accept employment with the Company
on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth in this Agreement, the Company and the Executive agree as
follows:
1. TERM OF EMPLOYMENT. Subject to the termination provisions hereinafter
set forth, the Company will employ the Executive, and the Executive accepts
employment with the Company, for a period of one year (the "Term") commencing on
December 4, 2000 (the "Effective Date"). The Term shall be automatically renewed
for successive one year periods unless either party gives thirty (30) days
written notice of nonrenewal. The giving by the Company of a notice of
nonrenewal shall be deemed to be a notice of termination under the provisions of
Section 6(a) and Section 6(b) hereof, as applicable.
2. DUTIES. The Executive will serve as the President and Chief Executive
Officer of the Company and will discharge such duties and responsibilities, and
enjoy such authorities, as are customary for such offices. The Executive will
devote his full time and attention to the affairs of the Company and will not
enter the employ of or serve as a consultant to, or in any way perform any
services, with or without compensation, for any other person, business or
organization, where such conduct would be inconsistent with, or prevent the
Executive from carrying out, his duties under this Agreement. The Executive will
perform his services at the general headquarters offices of the Company in
Rohnert Park, California, or such other place to which such offices may be
relocated ("Work Location"), except that the Executive agrees to travel from
time to time to other offices of the Company, or other locations, to the extent
reasonably required for the performance of his duties.
3. COMPENSATION AND EXPENSES.
(a) Salary. During the Term, the Company will pay the Executive
an annual salary of $425,000 (the "Base Salary"); provided that such salary may
be reduced to the extent that the Executive elects to defer any portion thereof
under the terms of any deferred compensation or savings plan maintained by the
Company. The Company will pay the Executive his salary in equal installments no
less frequently than monthly.
(b) Hiring Bonus. The Executive shall be paid a $100,000 hiring
bonus on the Effective Date.
(c) Incentive Payment. The Executive shall be eligible for an
incentive bonus
payment ("Bonus") each calendar year based upon satisfactory performance by the
Executive, as determined by the Board of Directors of the Company or a
designated committee thereof in accordance with the provisions of the Company's
Annual Incentive Plan. The target incentive Bonus ("Target Bonus") shall be
eighty percent (80%) of the Executive's Base Salary. The range of the Bonus
shall be from fifty percent (50%) to one-hundred and fifty percent (150%) of the
Executive's Base Salary.
(d) Options. As soon as possible after the Effective Date, and
subject to approval by the Board of Directors or a designated committee thereof,
the Company will grant to the Executive options ("Options") to purchase 600,000
shares of the Company's common stock ("Common Stock") pursuant to the Company's
1999 Equity Incentive Plan. The general terms of such Options shall include the
following:
(i) the exercise price shall be the fair market value
per share on the date of grant; and
(ii) twenty-five percent (25%) of the Options shall vest
on the first anniversary of the date of grant, with
the remainder vesting monthly for the remaining
three years.
(e) Expenses. During the Term of this Agreement, the Company will
obtain for the Executive, or shall reimburse the Executive for the Executive's
cost of obtaining the following:
(i) a house in the Santa Xxxx area to be used by the
Executive according to the terms presented to the
Compensation Committee of the Company's Board of
Directors on May 29, 2001; and
(ii) airfare for ten round trips per year for spousal
travel from Chicago, Illinois to Santa Rosa,
California, with such airfare treated as taxable
income to the Employee.
4. DEFINITIONS.
(a) "Approval Date" shall mean the date on which the stockholders
of the Company approve a transaction the consummation of which would result in
the occurrence of a Change in Control.
(b) "Beneficial Owner" shall have the meaning given to such term
in Rule 13d-3 under the Exchange Act.
(c) "Cause" shall mean termination by the Company of the
Executive's employment:
(i) upon the Executive's willful and continued failure
to perform substantially his duties with the
Company resulting in material economic or financial
injury to the Company (other than any such failure
resulting from his incapacity due to physical or
mental illness or any such actual or anticipated
failure after his issuance of a Notice of
Termination for Good Reason), after a written
demand for
substantial performance is delivered to him by the
Board of Directors which demand specifically
identifies the manner in which the Board of
Directors believes that he has not substantially
performed his duties;
(ii) upon the Executive's willful and continued failure
to follow and comply substantially with the
specific and lawful directives of the Board of
Directors, as reasonably determined by the Board of
Directors resulting in material economic or
financial injury to the Company (other than any
such failure resulting from the Executive's
incapacity due to physical or mental illness or any
such actual or anticipated failure after the
Executive's issuance of a Notice of Termination for
Good Reason), after a written demand for
substantial performance is delivered to the
Executive by the Board of Directors, which demand
specifically identifies the manner in which the
Board of Directors believes that the Executive has
not substantially followed or complied with the
directives of the Board of Directors;
(iii) upon the Executive's conviction of a felony;
(iv) upon the Executive's conviction of a misdemeanor
involving fraud or dishonesty of moral turpitude
resulting in material economic or financial injury
to the Company; or
(v) upon the Executive's willful engagement in illegal
conduct which is materially and demonstrably
injurious to the Company.
For purposes of this definition of "Cause" no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted to be done,
by the Executive not in good faith. In the event of a Change in Control pursuant
to which the Company is not the surviving entity, then on and after the Change
in Control Date all determinations and actions required to be taken by the Board
of Directors under this definition shall be made or taken by the board of
directors of the surviving entity, or if the surviving entity is a subsidiary,
then by the board of directors of the ultimate parent corporation of the
surviving entity.
(d) A "Change in Control" shall be deemed to occur upon the
earliest to occur after the date of this Agreement of any of the events set
forth below:
(i) Acquisition of Stock by Third Party. Any Person is
or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company
representing thirty-three and one third percent (33
1/3%) or more of the combined voting power of the
Company's then outstanding securities and Motorola,
Inc. ("Motorola") then owns less than fifty percent
(50%) of such securities, or Motorola acquires all
of the total voting power represented by the
Company's then outstanding voting securities,
whether through a tender offer, merger, or any
other means;
(ii) Change in Board of Directors. During any period of
two (2) consecutive years (not including any period
prior to the execution of this Agreement),
individuals who at the beginning of such period
constitute the Board of Directors, and any new
director (other than a
director designated by a person who has entered
into an agreement with the Company to effect a
transaction described (i), (iii) or (iv)) whose
election by the Board of Directors or nomination
for election by the Company's stockholders was
approved by a vote of at least two-thirds of the
directors then still in office who either were
directors at the beginning of the period or whose
election or nomination for election was previously
so approved, cease for any reason to constitute at
least a majority of the members of the Board of
Directors;
(iii) Corporate Transactions. The effective date of a
merger or consolidation of the Company with any
other entity, other than a merger or consolidation
which would result in the voting securities of the
Company outstanding immediately prior to such
merger or consolidation continuing to represent
(either by remaining outstanding or by being
converted into voting securities of the surviving
entity) more than 51% of the combined voting power
of the voting securities of the surviving entity
outstanding immediately after such merger or
consolidation and with the power to elect at least
a majority of the board of directors or other
governing body of such surviving entity;
(iv) Liquidation. The approval by the stockholders of
the Company of a complete liquidation of the
Company or an agreement for the sale or disposition
by the Company of all or substantially all of the
Company's assets; or
(v) Other Events. There occurs any other event of a
nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation
14A (or a response to any similar item on any
similar schedule or form) promulgated under the
Exchange Act (as defined below), whether or not the
Company is then subject to such reporting
requirement.
(e) "Date of Termination" shall mean:
(i) if the Executive's employment is terminated due to
the Executive's death, the date of the Executive's
death;
(ii) if the Executive's employment is terminated for
Disability, thirty (30) days after Notice of
Termination is given (provided that the Executive
shall not have returned to the full-time
performance of the Executive's duties during such
thirty (30) day period); and
(iii) if the Executive's employment is terminated for
Cause or Good Reason or for any other reason (other
than death or Disability), the date specified in
the Notice of Termination.
(iv) Notwithstanding anything to the contrary contained
in this definition, if within fifteen (15) days
after any Notice of Termination is given, the party
receiving such Notice of Termination notifies the
other party that a dispute exists concerning the
termination, then the Date of
Termination shall be the date on which the dispute
is finally determined, either by mutual written
agreement of the parties, or otherwise; provided,
however, that (A) the Date of Termination shall be
extended by a notice of dispute only if such notice
is given in good faith and the party giving such
notice pursues the resolution of such dispute with
reasonable diligence; and (B) in the event of the
Executive's death pending a dispute, and the
resolution of such dispute is ultimately in the
Executive's favor, then the Date of Termination
shall be the date specified in the Notice of
Termination.
(f) "Disability" shall mean the Executive shall have been absent
from the full-time performance of the Executive's duties with the Company for
six (6) consecutive months as a result of the Executive's incapacity due to
physical or mental illness.
(g) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(h) "Good Reason" shall mean, without the Executive's express
written consent, the occurrence of any of the following circumstances unless
such circumstances are fully corrected (provided such circumstances are capable
of correction) prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:
(i) the assignment to the Executive of any duties
inconsistent with the position in the Company, a
significant adverse alteration in the nature or
status of the Executive's responsibilities or the
conditions of the Executive's employment, or any
other action by the Company that results in a
material diminution in the Executive's position,
authority, title, duties or responsibilities;
(ii) the Company's reduction of the Executive's annual
base salary;
(iii) the Company's failure to pay to the Executive any
portion of the Executive's current compensation or
to pay to the Executive any portion of an
installment of deferred compensation under any
deferred compensation program of the Company within
seven (7) days of the date such compensation is
due;
(iv) the Company's failure to continue in effect any
material compensation or benefit plan or practice
in which the Executive is eligible to participate
in (other than any equity based plan), unless an
equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with
respect to such plan, or the Company's failure to
continue the Executive's participation therein (or
in such substitute or alternative plan) on a basis
not materially less favorable, both in terms of the
amount of benefits provided and the level of the
Executive's participation relative to other
participants;
(v) the Company's failure to obtain a satisfactory
agreement from any successor to assume and agree to
perform this Agreement; or
(vi) any purported termination of the Executive's
employment that is not effected pursuant to a
Notice of Termination, which purported termination
shall not be effective for purposes of this
Agreement.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstance constituting Good Reason
hereunder.
(i) "Notice of Termination" shall mean a notice that shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
(j) "Person" shall have the meaning as set forth in Sections
13(d) and 14(d) of the Exchange Act; provided, however, that Person shall
exclude (i) the Company, (ii) any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, (iii) any corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company and (iv) Motorola.
5. BENEFITS.
(a) Vacation. For each calendar year during the Term of this
Agreement, the Executive will be entitled to three weeks of paid vacation
without loss of compensation or other benefits to which he is entitled under
this Agreement, to be taken at such times as the Executive may select and the
affairs of the Company may permit and prorated for any partial calendar year.
(b) Employee Benefit Program. Without limiting the compensation
to which the Executive is entitled pursuant to the provisions of Section 3 or
this Section 5, the Executive will be entitled during the Term of this Agreement
to participate in any stock option, pension, insurance or other benefit plan
that is maintained at that time by the Company for executive employees.
6. TERMINATION.
(a) Termination by the Company Without Cause. The Company may
terminate the Executive's employment under this Agreement without Cause at any
time by giving written notice to the Executive. Such termination will become
effective upon the date specified in such notice, provided that such date is at
least 30 days after the date of such notice. Upon any such termination prior to
a Change of Control, one-hundred percent (100%) of the Executive's unvested
Options shall immediately vest and the Company will pay the Executive, within
five days of the effective date of termination and subject to the Executive's
execution and delivery of such documents of release as the Company may
reasonably request, an amount equal to two-hundred percent (200%) of the
Executive's Base Salary plus the Executive's Target Bonus for the year in which
the termination occurs ("Severance Payment"). Upon delivery of the Severance
Payment, the Company shall have no further obligation of any kind to the
Executive under this Agreement.
(b) Termination by the Company for Cause. The Company may
immediately terminate the Executive's employment at any time for Cause by giving
written notice to the Executive. Upon any such termination for Cause, the
Executive shall have no right to compensation under Section 3 or, except as
required by law, to participate in any employee benefit programs under Section 5
for any period subsequent to the date of termination.
(c) Death or Disability. This Agreement and the obligations of
the Company hereunder will terminate upon the death or Disability of the
Executive.
(d) Termination by the Executive. The Executive may terminate his
employment for Good Reason under this Agreement at any time by giving written
notice to the Company. Such termination will become effective upon the date
specified in such notice, provided that such date is at least 30 days after the
date of delivery of the notice. Upon any such termination prior to a Change of
Control, one-hundred percent (100%) of the Executive's unvested Options shall
immediately vest, and the Company will pay the Executive the Severance Payment.
Upon delivery of the Severance Payment, the Company shall be relieved of all of
its obligations under this Agreement.
(e) Termination without Cause or for Good Reason. If a Change of
Control of the Company occurs during the Term of the Executive's employment, and
either the Company terminates the Executive without Cause or the Executive
terminates for Good Reason within two years following the Change of Control: (A)
one-hundred percent (100%) of the Executive's unvested Options shall immediately
vest; and (B) the Company will pay the Executive upon cessation of the
Employee's employment an amount equal to three-hundred percent (300%) of the
Base Salary plus two-hundred percent (200%) of the Target Bonus.
7. TAXES. The Executive shall bear all expense of, and be solely
responsible for, all federal, state, local or foreign taxes due with respect to
any benefit received hereunder, including, without limitation, any excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"); provided, however, that any benefit received or to be received by the
Executive in connection with a Change in Control ("Contract Benefits") or any
other plan, arrangements or agreement with the Company or an affiliate
(collectively with the Contract Benefits, the "Total Benefits")) that would
constitute a "parachute payment" within the meaning of Section 280G of the Code,
shall be reduced to the extent necessary so that no portion thereof shall be
subject to the excise tax imposed by Section 4999 of the Code but only if, by
reason of such reduction, the net after-tax benefit received by the Executive
shall exceed the net after-tax benefit received by the Executive if no such
reduction was made. For purposes of this Section 7, "net after-tax benefit"
shall mean (i) the Total Benefits which the Executive receives or is then
entitled to receive from the Company that would constitute "parachute payments"
within the meaning of Section 280G of the Code, less (ii) the amount of all
federal, state and local income and employment taxes payable by the Executive
with respect to the foregoing calculated at the highest marginal income tax rate
for each year in which the foregoing shall be paid to the Executive (based on
the rate in effect for such year as set forth in the Code as in effect at the
time of the first receipt of the foregoing benefits), less (iii) the amount of
excise taxes imposed with respect to the benefits described in (i) above by
Section 4999 of the Code. The foregoing determination will be made by the
Company's independent certified public accountants serving immediately prior to
the Change in Control (the "Accountants"). In the event that the Accountants are
also serving as accountant or auditor for the individual, group or entity
effecting the Change in Control the Executive may appoint another nationally
recognized public accounting firm to make the determination required hereunder
(which firm shall then be referred to as the Accountants hereunder). All fees
and expenses of the Accountants shall be borne by the Company. The Executive
will direct the Accountants to submit their determination and detailed
supporting calculations to both the Executive and the Company within fifteen
(15) days of receipt from the Executive or the Company that the Executive has
received or will receive the Total Benefits. If the Accountants determine that
such reduction is required by this Section 7, the Executive, in the Executive's
sole and absolute discretion, may determine which Total Benefits shall be
reduced to the extent necessary so that no portion thereof shall be subject to
the excise tax
imposed by Section 4999 of the Code, and the Company shall pay such reduced
amount to the Executive. The Executive and the Company will each provide the
Accountants access to and copies of any books, records, and documents in the
possession of the Executive or the Company, as the case may be, reasonably
requested by the Accountants, and otherwise cooperate with the Accountants in
connection with the preparation and issuance of the determinations and
calculations contemplated by this Section 7.
8. CHOICE OF LAW; ARBITRATION. The internal laws of the State of
California, United States of America, applicable to contracts entered into and
wholly to be performed in California by California residents, without reference
to any principles concerning conflicts of law, shall govern the validity of this
Agreement, the construction of its terms and the interpretation of the rights
and duties of the parties hereunder; provided, however, that this Section 8 and
the parties' rights under this Section 8 shall be governed by and construed in
accordance with the Federal Arbitration Act, 9 U.S.C. Section 1 et seq. Any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, shall be settled by the following procedures: Either party may send the
other written notice identifying the matter in dispute and involving the
procedures of this Section 8. Within fourteen (14) days after such written
notice is given, one or more principals of each party shall meet at a mutually
agreeable location in San Francisco, California, for the purpose of determining
whether they can resolve the dispute themselves by written agreement, and, if
not, whether they can agree upon a third-party impartial arbitrator (the
"Arbitrator") to whom to submit the matter in dispute for final and binding
arbitration. If the parties fail to resolve the dispute by written agreement or
agree on the Arbitrator within such twenty-one (21) day period, either party may
make written application to the Judicial Arbitration and Mediation Services
("JAMS"), JAMS, 0 Xxxxxxxxxxx Xxxxxx Xxxxx 0000, Xxx Xxxxxxxxx, XX 00000, for
the appointment of a single Arbitrator to resolve the dispute by arbitration and
at the request of JAMS, the parties shall meet with JAMS at its offices or
confer with JAMS by telephone within ten (10) calendar days of such request to
discuss the dispute and the qualifications and experience which each party
respectively believes the Arbitrator should have; provided, however, the
selection of the Arbitrator shall be the exclusive decision of JAMS and shall be
made within thirty (30) days of the written application to JAMS. Within 30 days
of the selection of the Arbitrator, the parties shall meet in San Francisco,
California with such Arbitrator at a place and time designated by the Arbitrator
after consultation with the parties and present their respective positions on
the dispute. Each party shall have no longer than one day to present its
position, the entire proceedings before the Arbitrator shall be on no more than
three consecutive days, and the award shall be made in writing no more than 30
days following the end of the proceeding. Such award shall be a final and
binding determination of the dispute and shall be fully enforceable as an
arbitration award in any court having jurisdiction and venue over the parties.
The prevailing party (as determined by the Arbitrator) shall in addition be
awarded by the Arbitrator such party's own attorneys' fees and expenses in
connection with such proceeding. The non-prevailing party (as determined by the
Arbitrator) shall pay the Arbitrator's fees and expenses.
9. MISCELLANEOUS.
(a) Continuing Effect. Unless otherwise expressly provided
herein, any provision of this Agreement that would by its terms or natural
import survive the expiration of this Agreement pursuant to Section 1 or
termination pursuant to Section 6 shall also survive.
(b) Assignment. The rights and obligations of the parties under
this Agreement shall inure to the benefit of and be binding upon their
respective successors and assigns. The Executive agrees that the Company may
assign its rights and obligations under this Agreement to
any successor-in-interest. The Executive may assign his rights and obligations
hereunder only with the express written consent of the Company, except that the
rights under this Agreement shall inure to the benefit of the Executive's heirs
or assigns in the event of his death. Except as expressly provided in this
paragraph, no party may assign its rights and obligations hereunder, and any
attempt to do so will be void.
(c) Severability. If any provision of this Agreement otherwise is
deemed to be invalid or unenforceable or is prohibited by the laws of the state
or jurisdiction where it is to be performed, this Agreement shall be considered
divisible as to such provision, and such provision shall be inoperative in such
state or jurisdiction and shall not be part of the consideration moving from any
of the parties to any other. The remaining provisions of this Agreement shall be
valid and binding and of like effect as though such provision were not included.
(d) Notice. Notices given pursuant to the provisions of this
Agreement shall be delivered personally or sent by certified mail, postage
pre-paid, or by overnight courier, or by telex, telecopier or telegraph, charges
prepaid, to the following addresses:
To the Company:
Next Level Communications, Inc.
0000 Xxxxx Xxxx Xxxxx
Xxxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Zar
To the Executive:
J. Xxxxxxx Xxxxxx
000 X. Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may, from time to time, designate any other address to which any such
notice to it or him shall be sent. Any such notice shall be deemed to have been
delivered upon receipt.
(e) Waiver; Amendment. The waiver by any party to this Agreement
of a breach of any provision hereof by any other party shall not be construed as
a waiver of any subsequent breach. No provision of this Agreement may be
terminated, amended, supplemented, waived or modified other than by an
instrument in writing, signed by the party against whom the enforcement of the
termination, amendment, supplement, waiver or modification is sought.
(f) Entire Agreement. This Agreement represents the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersedes any previous agreement or understanding.
IN WITNESS WHEREOF, the Company and the Executive have executed
this Agreement as of the day and year first above written.
COMPANY EXECUTIVE
By:/s/ Next Level Communications, Inc. /s/ J. Xxxxxxx Xxxxxx
----------------------------------- -----------------------------------
Title: Senior Vice President
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