EXHIBIT 10.16
November 30, 1998
Mr. Charles M. Boesenberg
13936 Albar Court
Saratoga, CA 95070
Re: EMPLOYMENT WITH INTEGRATED SYSTEMS, INC.
Dear Chuck:
Integrated Systems, Inc. ("ISI" or the "Company") is pleased to offer you a
position as Chief Executive Officer & President of the Company and a seat on its
Board of Directors, on the terms set forth in this letter agreement.
1. REPORTING DUTIES AND RESPONSIBILITIES. This offer is for a full-time
position, located at the offices of the Company, except as travel to
other locations may be necessary to fulfill your responsibilities. In
this position you will report to the Board of Directors of the Company.
Upon your becoming the Company's Chief Executive Officer & President,
the Board of Directors will elect you to fill a vacancy on the Company's
Board of Directors, and while you remain the Chief Executive Officer &
President of the Company, the Board of Directors will continue to
nominate you for a position on the Board of Directors of the Company.
2. SALARY AND BONUS. Your initial base salary will be at an annualized rate
of $400,000, payable in accordance with the Company's customary payroll
practice as in effect from time to time, subject to future adjustment by
the Company's Board of Directors. You will also be eligible to earn an
annual bonus in the amount of $300,000, payable yearly, based on the
achievement of objectives which you and the Company's Board of Directors
will mutually determine in good faith. Both your initial salary and
bonus as described above will apply for the Company's fiscal year,
beginning on March 1, 1999 and ending on February 29, 2000. For the
period of time from your start date to February 28, 1999, your salary
and bonus will be paid on a pro rata basis.
3. ONE-TIME BONUS. After your start date, you will receive a one-time cash
bonus payment of $750,000 on or before January 31, 1999. In the event
that you are terminated for cause (as defined in paragraph 9 below) or
you voluntarily resign from ISI at any time within your first twelve
months of employment, without good reason, (as defined in paragraph 9)
ISI would be entitled to a full refund from you of the $750,000 bonus
payment.
4. BENEFITS. You will also receive the Company's standard benefits package
and will be subject to the Company's vacation policy, as such package
and policy are in effect from time to time.
5. STOCK OPTIONS. Effective within two weeks of your start date and subject
to the Board of Directors' approval, the Company will grant you a
nonqualified option to purchase 700,000 shares of the Company's Common
Stock pursuant to the Company's 1998 Stock Option Plan and standard
Stock Option Agreement. All options will have an exercise price that
will be equal to the fair market value of the Company's Common Stock at
the date of grant. The options will become exercisable over a four-year
exercise schedule with 25% of the shares vesting at the end of your
first twelve months of service, and with an additional 2.083% vesting
per month thereafter, at the close of each month during which you remain
employed with the Company. In the event that a change of control
(defined in paragraph 6 below) occurs, the vesting period of these
options held by you will be accelerated by twenty-four months as long as
you continue to fulfill your duties until the effective date of the
change of control and you assist the Company to facilitate a smooth
transition following the change of control over a reasonable period that
will not exceed six months.
6. CHANGE OF CONTROL PROVISION. "Change of Control" shall mean, (i) the
sale, lease, conveyance or other disposition of all or substantially all
of the Company's assets as an entirety or substantially as an entirety
to any person, entity or group of persons acting in concert other than
in the ordinary course of business; (ii) any transaction or series of
related transactions (as a result of a tender offer, merger,
consolidation or otherwise) that results in any Person (as defined in
Section 13(h)(8)(E) under the Securities Exchange Act of 1934) becoming
the beneficial owner (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934), directly or indirectly, of more than 50% of the
aggregate voting power of all classes of common equity of the Company,
except if such Person is (A) a subsidiary of the Company, (B) an
employee stock ownership plan for employees
of the Company or (C) a company formed to hold the Company's common
equity securities and whose shareholders constituted, at the time such
company became such holding company, substantially all the shareholders
of the Company; or, (iii) a change in the composition of the Company's
Board of Directors over a period of thirty-six (36) consecutive months
or less such that a majority of the then current Board members ceases to
be comprised of individuals who either (a) have been Board members
continuously since the beginning of such period, or (b) have been
elected or nominated for election as Board members during such period by
at least a majority of the Board members described in clause (a) who
were still in office at the time such election or nomination was
approved by the Board.
7. EXCISE TAX PROVISION. In the event that the severance and other benefits
provided to you under this Agreement (i) constitute "parachute payments"
within the meaning of Section 280G of the Internal Revenue Code of 1986,
as amended (the "Code") and (ii) but for this Section 5, such severance
and benefits would be subject to the excise tax imposed by Section 4999
of the Code, then your severance benefits under this Paragraph 7 shall
be payable either:
(a) in full,
(b) as to such lesser amount which would result in no
portion of such severance and other 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 you on an after-tax basis, of the greatest
amount of severance benefits under this Agreement.
Unless the Company and you otherwise agree in writing,
any determination required under this Paragraph 7 shall
be made in writing by independent public accountants
agreed to by the Company and you (the "Accountants"),
whose determination shall be conclusive and binding upon
you and the Company for all purposes. For purposes of
making the calculations required by this Paragraph 7,
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 you shall furnish to the Accountants such
information and documents as the Accountants may
reasonably request in order to make a determination
under this Paragraph 7. The Company shall bear all costs
the Accountants may reasonably incur in connection with
any calculations contemplated by this Paragraph 7.
8. CONFIDENTIAL INFORMATION. As an employee of the Company, you will have
access to certain Company confidential information and you may, during
the course of your employment, develop certain information or inventions
which will be the property of the Company. To protect the interest of
the Company, you will need to sign the Company's standard "Employee
Inventions and Confidentiality Agreement" as a condition of your
employment. We wish to impress upon you that we do not wish you to bring
with you any confidential or proprietary material of any former employer
or to violate any other obligation to your former employers.
9. SEVERANCE PAYMENTS/ACCELERATION UPON TERMINATION. If the Board of
Directors terminates your employment with the Company for any reason
without cause ("cause" being defined as conviction of a felony, fraud or
willful malfeasance, (or similar wrongful acts), or after notice willful
and neglect of duties) or you resign for good reason, the Company will
pay you a severance amount equal to your then base salary for the period
of twelve months. You agree that the payments set forth in this offer
letter constitute all payments that you shall be entitled to, and under
any theory, in the event of any termination of employment. In the event
you are terminated without cause or if you resign for good reason (as
defined below) at any time prior to your first year anniversary date,
other than following a change of control, (as defined in paragraph 6)
85,000 shares of the Company's Common Stock will immediately vest. "Good
reason" shall mean a material reduction in your title or duties or if
your principal office is moved by the Company to a location more than
sixty miles away from Sunnyvale, California.
10. AT-WILL EMPLOYMENT. While we look forward to a long-term relationship,
should you decide to accept our offer, you will be an at-will employee
of the Company, which means the employment relationship can be
terminated by either of us for any reason at any time. Any statements or
representations to the contrary (and, indeed, any statements
contradicting any provision in this letter) should be regarded by you as
ineffective. Further, your participation in any stock option or benefit
program is not to be regarded as assuring you of continuing employment
for any particular period of time.
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11. AUTHORIZATION TO WORK. Because of Federal regulations adopted in the
Immigration Reform and Control Act of 1986, you will need to present
documentation demonstrating that you have authorization to work in the
United States. If you have any questions about this requirement, which
applies to U.S. citizens and non-U.S. citizens alike, please contact our
human resources department.
12. ARBITRATION PROVISION. The Company and you agree that any dispute
regarding the interpretation or enforcement of this Agreement shall be
decided by confidential, final and binding arbitration conducted by
Judicial Arbitration and Mediation Services ("JAMS") under the
then-existing JAMS rules, rather than by litigation in court, trial by
jury, administrative proceeding, or in any other forum.
13. TERM OF OFFER. This offer will remain open until November 30, 1998. If
you decide to accept our offer, and I hope that you will, please sign
the enclosed copy of this letter in the space indicated and return it to
me. Upon your signature below, this will become our binding agreement
with respect to the subject matter of this letter, superseding in their
entirety all other or prior agreements by you with the Company as to the
specific subjects of this letter, will be binding upon and inure to the
benefit of our respective successors and assigns, and your heirs,
administrators and executors, will be governed by California law, and
may only be amended in a writing signed by you and the Company.
14. START DATE. This offer is made with the understanding that you will be
available to start employment with Integrated Systems, Inc. on or about
December 14, 1998 (the "start date").
Chuck, we are excited and pleased to have you join the ISI team. I am confident
that we will successfully capitalize on our enormous market opportunity.
Sincerely,
/s/ NAREN K. GUPTA
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Naren K. Gupta
Chairman
Acknowledged, Accepted and Agreed:
/s/ CHARLES M. BOESENBERG November 30, 1998
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Charles M. Boesenberg Date
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