EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into as of
June 26, 2006, (the "Effective Date") by and between Vitesse Semiconductor
Corporation, a Delaware corporation ("Vitesse") and Christopher Gardner (the
"Executive").
RECITALS
A. Executive serves as Vitesse's Chief Executive Officer as of the
date of this Agreement.
B. Vitesse and Executive desire to set forth in this Agreement the
terms and conditions upon which the Executive shall continue to
serve as Vitesse's Chief Executive Officer.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, Vitesse and Executive hereby agree as follows:
1. POSITION AND COMPENSATION
It is hereby agreed that Executive shall continue to be employed by Vitesse
in the position of Chief Executive Officer at a base salary of $310,000 per
year. Vitesse and Executive further agree that Executive's base salary shall be
reviewed not less than once per year from the Effective Date of this Agreement.
Changes in Executive's compensation shall be recorded in a Compensation
Adjustment form signed and dated by Vitesse and Executive. In addition to
salary, Executive shall also be eligible to participate in the Vitesse's bonus
plan for senior executives as from time to time in effect.
2. EMPLOYEE STOCK INCENTIVE PLAN
Executive shall be eligible to receive options under the Vitesse
Semiconductor Corporation 2001 Stock Incentive Plan ("SIP") as determined by the
Compensation Committee of the Board of Directors of Vitesse (the "Board") and
consistent with his position as Chief Executive Officer.
3. BENEFITS
Employment benefits shall be provided to Executive in accordance with the
programs of Vitesse then available to its senior executives, as amended from
time to time.
4. VACATION
Executive shall be entitled to five weeks of paid vacation per year. Unused
vacation time may be carried forward only to the extent consistent with
Vitesse's then current policy with respect to vacation time.
5. TERMINATION OF EMPLOYMENT
Vitesse and Executive understand and agree that Executive's employment may
be terminated under the circumstances and in accordance with the terms set forth
below:
A. By mutual agreement at any time with or without notice; provided that
such agreement must be stated in writing and signed and dated by
Executive and an authorized agent of Vitesse.
B. By either Vitesse or Executive upon sixty (60) days written notice
delivered to the other party; provided, however, that Vitesse may at
its sole discretion elect to provide sixty (60) days pay to Executive
in lieu of notice.
C. By Vitesse For Cause. A termination of employment "For Cause" is
defined as termination by reason of (i) Executive's conviction of a
felony or plea of guilty or nolo contendere to a felony; (ii)
Executive's intentional failure or refusal to perform his employment
duties and responsibilities; (iii) Executive's intentional misconduct
that injures Vitesse's business; (iv) Executive's intentional
violation of any other material provision of this Agreement or
Vitesse's code of business conduct and ethics; or (v) as provided in
Section 8 of this Agreement. Executive's inability to perform his
duties because of death or disability shall not constitute a basis for
Vitesse's termination of Executive's employment For Cause.
Notwithstanding the foregoing, Executive's employment shall not be
subject to termination For Cause without Vitesse's delivery to
Executive of a written notice of intention to terminate. Such notice
must describe the reasons for the proposed employment termination For
Cause, and must be delivered to Executive at least fifteen (15) days
prior to the proposed termination date ("the Notice Period").
Executive shall be provided an opportunity within the Notice Period to
cure any such breach (if curable) giving rise to the proposed
termination, and shall be provided an opportunity to be heard before
the Board. Thereafter, the Board shall deliver to Executive a written
notice of termination after the expiration of the Notice Period
stating that a majority of the members of the Board have found that
Executive engaged in the conduct described in this Paragraph 5.C.
D. Vitesse may terminate Executive's employment immediately upon his
death or upon Vitesse's provision to Executive of not less than
fifteen (15) days written notice to Executive that Vitesse has
determined that Executive is unable to continue to perform his job
duties due to Disability. "Disability" means a physical or mental
impairment of Executive as certified in a written statement from a
licensed physician selected or approved by the Board that renders
Executive unable to perform his duties under this Agreement (after
reasonable accommodation, if necessary, by Vitesse that does not
impose an undue hardship on Vitesse) for one hundred and fifty (150)
consecutive days or for at least two hundred and ten (210) days
(regardless of whether such days are consecutive) during any period of
three hundred sixty-five (365) consecutive days. In conjunction with
determining the existence of a Disability, Executive consents to any
reasonable medical examinations (at Vitesse's expense) that the Board
determ ines are relevant to a determination of Executive's Disability,
and agrees that Vitesse is entitled to receive the written results of
such examinations. Executive agrees to waive any applicable
physician-patient privilege which may arise with respect to such
examinations.
6. SEVERANCE PAY AND CHANGE IN STATUS
If employment is terminated by mutual agreement, by Vitesse For Cause, or
by Executive upon sixty (60) days notice of intent to terminate employment for
other than Good Reason (as defined below), Executive shall receive his base
salary and any vested bonus prorated through his final day of employment, but
shall not be eligible to receive any Severance Pay (as defined below) or Change
in Status (as defined below).
If employment is terminated by Vitesse upon sixty (60) days notice of
intent to terminate employment or pay in lieu of notice other than For Cause, or
by Executive upon sixty (60) days notice of intent to terminate employment for
Good Reason, Executive shall receive his base salary and any vested bonus
prorated through his final day of employment and Severance Pay and a Change in
Status.
If employment is terminated because of Executive's Disability, Executive
shall receive his base salary and any vested bonus prorated through his final
day of receipt of base salary, but shall not be entitled to any Severance Pay or
Change in Status.
If employment is terminated because of Executive's death, Executive's
estate shall receive Executive's base salary and any vested bonus prorated until
the date of death, but shall not be entitled to any Severance Pay or Change in
Status.
"Good Reason" means, without Executive's written consent, the occurrence of
any of the following actions unless the action is fully corrected (if possible)
within fifteen (15) days after Vitesse receives written notice of the action
from Executive: (a) Vitesse's reduction in Executive's base salary; (b)
Vitesse's failure to pay Executive any amount that is expressly required to be
paid under this Agreement; (c) Vitesse's material and adverse reduction of the
nature of Executive's duties and responsibilities, disregarding mere changes in
title; (d) Vitesse's requirement that Executive perform his principal employment
duties at an office that is more than twenty (20) miles from Camarillo,
California; or, (e) a Change of Control of Vitesse (as defined below). "Change
Of Control" means each occurrence of any of the following:
(a) the acquisition, directly or indirectly, by any person or group (within
the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended), of beneficial ownership of more than 51% of the aggregate outstanding
voting power of the capital stock of Vitesse;
(b) (i) Vitesse consolidates with or merges into another entity and is not
the surviving entity or conveys, transfers or leases all or substantially all of
its property and assets to another person, or (ii) any entity consolidates with
or merges into Vitesse in a transaction pursuant to which the outstanding voting
capital stock of Vitesse is reclassified or changed into or exchanged for cash,
securities or other property, other than any such transaction described in this
clause (ii) in which no person or group (within the meaning of Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended) has, directly or indirectly,
acquired beneficial ownership of more than 51% of the aggregate outstanding
voting capital stock of Vitesse; or
(c) approval by Vitesse's shareholders of the complete liquidation or
dissolution of Vitesse.
"Severance Pay" means twelve (12) months of Executive's base salary (at the
amount before any proposed reduction or the amount required to maintain
Executive's base salary above that of all other Vitesse employees) payable in a
lump sum on the date of termination of employment.
"Change In Status" means Executive shall continue to perform services as a
Consultant for Vitesse and receive compensation at a guaranteed rate of not less
than Three Thousand Dollars ($3,000) per month for a period not to exceed three
(3) years following the termination of Executive's employment. Vitesse agrees
that Executive shall not be required to perform more than ten (10) hours of
services per month as a Consultant, and shall receive additional compensation at
the rate of Three Hundred Dollars ($300) per hour for all services performed in
excess of ten (10) hours per month. Executive's guaranteed monthly compensation
for consulting shall expire on the earlier of either three (3) years after the
date of termination of his employment or the day Vitesse has an effective
registration statement under the Securities Act of 1933 with respect to the
shares to be issued upon exercise of options granted to Executive under
Vitesse's SIP.
7. EMPLOYMENT DUTIES
Executive will report to Vitesse's Board and shall perform all duties
assigned to him by the Board. Executive's duties may be conveyed to him through
a job description, or through other written or verbal instructions from
Vitesse's Board. Executive's duties are expected to involve travel from time to
time to various locations and events, and are expected to involve significant
unpaid overtime.
8. COMPLIANCE WITH VITESSE POLICIES AND PROCEDURES
As a member of Vitesse management, Executive will be expected to comply
with all provisions of the Vitesse Policies and Procedures Manual and Employee
Handbook, as amended from time to time. Executive acknowledges, by signature on
this Agreement, that failure to comply with and ensure enforcement of Vitesse's
policies, procedures and all federal/state laws relating to business operations
may result in immediate termination of employment For Cause.
9. CONFLICT OF INTEREST
Executive acknowledges that his position is a full-time position and agrees
to devote his entire productive time, ability and attention to Vitesse's
business. Executive further agrees that while employed by Vitesse, he will not
directly or indirectly engage in outside employment, consulting or other
business activities unless he has obtained written consent from the Vitesse
Board.
10. NO SOLICITATION OF CUSTOMERS
Executive promises and agrees that during the term of this Agreement and
for a period of two (2) years thereafter, Executive will not, directly or
indirectly, individually or as a consultant to, or as an employee, officer,
stockholder, director or other owner or participant in any business, influence
or attempt to influence customers, vendors, suppliers, joint venturers,
associates, consultants, agents, or partners of Vitesse, either directly or
indirectly, to divert their business away from Vitesse, to any individual,
partnership, firm, corporation or other entity then in competition with the
business of Vitesse, and he will not otherwise materially interfere with any
business relationship of Vitesse.
11. SOLICITATION OF EMPLOYEES
Executive promises and agrees that during the term of this Agreement and
for a period of two (2) years thereafter, Executive will not, directly or
indirectly, individually or as a consultant to, or as an employee, officer,
stockholder, director or other owner of or participant in any business, solicit
(or assist in soliciting) any person who is then, or at any time within six (6)
months prior thereto was, an employee of Vitesse who earned annually $25,000 or
more as an employee of Vitesse during the last six (6) months of his or her own
employment to work for (as an employee, consultant or otherwise) any business,
individual, partnership, firm, corporation, or other entity whether or not
engaged in competitive business with Vitesse.
12. ARBITRATION
Any controversy arising out of or relating to Executive's employment, any
termination of Executive's employment, this Agreement or because of an alleged
breach, default, or misrepresentation in connection with any of the provisions
of this Agreement, including (without limitation) any state or federal statutory
claims, shall be submitted to final and binding arbitration, to be held in
Ventura County, California before a sole neutral arbitrator. The arbitration
shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules
and Procedures. Judgment on the award may be entered in any court having
jurisdiction. The parties acknowledge and agree that they are hereby waiving any
rights to trial by jury in any action, proceeding or counterclaim brought by
either of the parties against the other in connection with any matter whatsoever
arising out of or in any way connected with any of the matters referenced in
this Section 12. The parties agree that in any proceeding with respect to such m
atters, each party shall bear its own attorney's fees and costs.
13. TERM
Subject to the provisions of Section 5 of this Agreement, the term of this
Agreement shall end on the second anniversary of the date of this Agreement.
14. PARTIAL INVALIDITY
It is the desire and intent of Vitesse and Executive that the provisions of
this Agreement be enforced to the fullest extent permissible under applicable
federal, state and municipal laws. Accordingly, if any specific provision or
portion of this Agreement are determined to be invalid or unenforceable within
the particular jurisdiction in which enforcement is sought, that portion of the
Agreement will be considered as deleted for the purposes of adjudication. All
other portions of this Agreement will be considered valid and enforceable within
that jurisdiction.
15. ENTIRE AGREEMENT
Vitesse and Executive understand and agree that this Agreement constitutes
the full and complete understanding and agreement between them regarding the
terms of Executive's employment and supersedes all prior understandings,
representations, and agreements with respect to the employment. Vitesse and
Executive understand that the Vitesse Semiconductor Corporation 2001 Stock
Incentive Plan and the Compensation Adjustment forms (if any) referred to in
this Agreement shall be fully incorporated into this Agreement by reference.
16. EXECUTIVE ACKNOWLEDGEMENT
Executive acknowledges that he has read and understands this Employment
Agreement and agrees to the terms and conditions contained herein. Executive
agrees that he has had the opportunity to confer with legal counsel of his
choosing regarding this Agreement. Executive further acknowledges that this
Agreement has not been executed by Executive in reliance upon any representation
or promise except those contained herein, and that Vitesse has made no guarantee
regarding Executive's employment other than those specified in this Agreement.
"Executive"
Dated July 5, 2006 /s/ CHRISTOPHER GARDNER
-------------------------------
Christopher Gardner
VITESSE SEMICONDUCTOR CORPORATION,
a Delaware Corporation
Dated June 28, 2006 By /s/ ALEX DALY
--------------------------------
Alex Daly
Chairman of the Compensation Committee