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Exhibit 10.1
Next Level Communications, Inc.
6085 State Farm Drive
Rohnert Park, CA 94928
(707) 584-6820
(888) 653-8354 (fax)
_____________, 2000
[name]
[address]
[phone]
[fax]
Dear _______________:
The Board of Directors (the "Board") of Next Level Communications, Inc.,
a Delaware corporation (the "Corporation"), has determined that it is in the
best interests of the Corporation and its stockholders to assure that the
Corporation will continue to have your dedication and services notwithstanding
the possibility, threat or occurrence of a Change in Control (as defined
herein). The Board believes it is imperative to diminish the distraction that
you would face by virtue of the personal uncertainties created by a pending or
threatened Change in Control and to encourage your full attention and dedication
to the Corporation currently and in the event of any threatened or pending
Change in Control. Further, the Board desires to provide you with compensation
and benefits arrangements upon a Change in Control which ensure that your
compensation and benefits expectations will be satisfied and which are
competitive with those of other corporations. Therefore, in order to accomplish
these objectives, the Board has caused the Corporation to enter into this
Agreement (the "Agreement").
1. Term of Agreement. The terms of this Agreement shall become
effective upon the execution hereof by the Corporation and shall continue unless
terminated by written agreement between you and the Corporation; provided, that
if a Change in Control occurs, then the term of this Agreement shall continue in
effect for a period of not less than twenty-four (24) months beyond the date
(the "Change in Control Date") on which a Change in Control occurs. No benefits
shall be payable hereunder unless there has been a Change in Control.
2. Change in Control. 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 in Sections 2.1 through 2.5 below:
2.1 Acquisition of Stock by Third Party. Any Person (as defined
below) is or becomes the Beneficial Owner (as defined below), directly or
indirectly, of securities of the Corporation representing thirty-three and one
third percent (33-1/3%) or more of the combined voting power of the
Corporation's then outstanding securities and Motorola, Inc. ("Motorola") then
owns less than fifty percent (50%) of such securities;
2.2 Change in Board of Directors. During any period of two (2)
consecutive years (not including any period prior to the execution of this
Agreement),
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individuals who at the beginning of such period constitute the Board, and any
new director (other than a director designated by a person who has entered into
an agreement with the Corporation to effect a transaction described in Sections
2.1, 2.3 or 2.4) whose election by the Board or nomination for election by the
Corporation'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;
2.3 Corporate Transactions. The effective date of a merger or
consolidation of the Corporation with any other entity, other than a merger or
consolidation which would result in the voting securities of the Corporation
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;
2.4 Liquidation. The approval by the stockholders of the
Corporation of a complete liquidation of the Corporation or an agreement for the
sale or disposition by the Corporation of all or substantially all of the
Corporation's assets;
2.5 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
Corporation is then subject to such reporting requirement; or
2.6 Motorola Acquisition. Notwithstanding the foregoing, a
Change in Control shall not include any acquisition by Motorola of all or
substantially all of the total voting power represented by the Corporation's
then outstanding voting securities, whether through a tender offer, merger, or
any other means (a "Motorola Acquisition"). Subject to Section 3, in the event
of a Motorola Acquisition, and regardless of whether your employment with the
Corporation is terminated in connection with the Motorola Acquisition, fifty
percent (50%) of the unvested stock options granted for the Corporation's
securities held by you shall become fully vested and immediately exercisable
immediately prior to the consummation of the Motorola Acquisition and shall be
exercisable to the extent then so vested in accordance with the provisions of
the stock option agreement and stock option plan pursuant to which such stock
option was granted, with the remainder of your unvested stock options vesting in
accordance with the original vesting schedule of the stock option agreement and
stock option plan pursuant to which such stock option was granted for the period
commencing on the consummation of the Motorola Acquisition and ending on the
twelve (12) month anniversary following such Motorola Acquisition, except that
all unvested stock options shall vest on such twelve (12) month anniversary
following such Motorola Acquisition, provided, however, that you are an employee
of the Corporation or a successor entity to the Corporation on such twelve (12)
month anniversary, provided, further, that all of your unvested stock options
will vest upon your termination without Cause or your termination of your
employment for Good Reason that occurs within such twelve (12) month period.
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2.7 Acceleration upon a Change in Control. Subject to Section
2.6 and Section 3, all unvested stock options held by you shall immediately
prior to the consummation of a Change in Control vest and become exercisable in
full and shall remain exercisable for the period specified in such options,
notwithstanding any vesting schedule or other provisions to the contrary in the
agreements or plans evidencing such options.
2.8 Certain Definitions. The following terms shall have the
following meanings:
"Approval Date" shall mean the date on which the stockholders of
the Corporation approve a transaction the consummation of which would result in
the occurrence of a Change in Control.
"Beneficial Owner" shall have the meaning given to such term in
Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner
shall exclude any Person otherwise becoming a Beneficial Owner by reason of the
stockholders of the Corporation approving a merger of the Corporation with
another entity.
"Cause" shall mean termination by the Corporation of your
employment (a) upon your willful and continued failure to perform substantially
your duties with the Corporation (other than any such failure resulting from
your incapacity due to physical or mental illness or any such actual or
anticipated failure after your issuance of a Notice of Termination for Good
Reason), after a written demand for substantial performance is delivered to you
by the Board which demand specifically identifies the manner in which the Board
believes that you have not substantially performed your duties, (b) upon your
willful and continued failure to follow and comply substantially with the
specific and lawful directives of the Board, as reasonably determined by the
Board (other than any such failure resulting from your incapacity due to
physical or mental illness or any such actual or anticipated failure after your
issuance of a Notice of Termination for Good Reason), after a written demand for
substantial performance is delivered to you by the Board, which demand
specifically identifies the manner in which the Board believes that you have not
substantially followed or complied with the directives of the Board, (c) upon
your willful commission of an act of fraud or dishonesty resulting in material
economic or financial injury to the Corporation, or (d) upon your willful
engagement in illegal conduct which is materially and demonstrably injurious to
the Corporation. For purposes of this definition of "Cause" no act, or failure
to act, on your part shall be deemed "willful" unless done, or omitted to be
done, by you not in good faith. Notwithstanding the foregoing, you shall not be
deemed terminated for Cause pursuant to (a), (b), (c) or (d) hereof unless and
until there shall have been delivered to you a copy of a resolution duly adopted
by the affirmative vote of not less than three-quarters of the entire membership
of the Board at a meeting of the Board (after reasonable notice to you, an
opportunity for you, together with your counsel, to be heard before the Board
and a reasonable opportunity to cure), finding that in the Board's good faith
opinion you were guilty of conduct set forth above in (a), (b), (c) or (d) and
specifying the particulars thereof in reasonable detail. In the event of a
Change in Control under Section 2.3 pursuant to which the Corporation 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 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.
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"Date of Termination" shall mean (a) if your employment is
terminated due to your death, the date of your death; (b) if your employment is
terminated for Disability, thirty (30) days after Notice of Termination is given
(provided that you shall not have returned to the full-time performance of your
duties during such thirty (30) day period), and (c) if your 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 (which, in the case
of a termination for Cause shall not be less than thirty (30) days from the date
such Notice of Termination is given, and in the case of a termination for Good
Reason shall not be less than fifteen (15) nor more than sixty (60) days from
the date such Notice of Termination is given). 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 (i) 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 (ii) in the event of your death pending a dispute, and the
resolution of such dispute is ultimately in your favor, then the Date of
Termination shall be the date specified in the Notice of Termination.
"Disability" shall mean you shall have been absent from the
full-time performance of your duties with the Corporation for six (6)
consecutive months as a result of your incapacity due to physical or mental
illness.
"Dispute" shall mean any disagreement, dispute, controversy,
claim, suit, action or proceeding arising out of or relating to this Agreement
or the interpretation of this Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Good Reason" shall mean, without your express written consent,
the occurrence after the Approval Date of any of the following circumstances
unless, in the case of (a), (f), (g), or (h) below, 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:
(a) the assignment to you of any duties inconsistent with the
position in the Corporation that you held immediately prior to the Approval
Date, a significant adverse alteration in the nature or status of your
responsibilities or the conditions of your employment from those in effect
immediately prior to the Approval Date, or any other action by the
Corporation that results in a material diminution in your position,
authority, title, duties or responsibilities;
(b) the Corporation's reduction of your annual base salary as in
effect on the Approval Date or as the same may be increased from time to
time;
(c) the relocation of the Corporation's offices at which you are
principally employed immediately prior to the Approval Date (your
"Principal Location")
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to a location more than twenty-five (25) miles from such location or the
Corporation's requiring you, without your written consent, to be based
anywhere other than your Principal Location, except for required travel on
the Corporation's business to an extent substantially consistent with your
present business travel obligations;
(d) the Corporation's failure to pay to you any portion of your
current compensation or to pay to you any portion of an installment of
deferred compensation under any deferred compensation program of the
Corporation within seven (7) days of the date such compensation is due;
(e) the Corporation's failure to continue in effect any material
compensation or benefit plan or practice in which you are eligible to
participate in on the Approval Date (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
Corporation's failure to continue your 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 your
participation relative to other participants, as existed at the time of the
Approval Date;
(f) the Corporation's failure to continue to provide you with
benefits substantially similar in the aggregate to those enjoyed by you
under any of the Corporation's life insurance, medical, health and
accident, disability, pension, retirement, or other benefit plans or
practices in which you and your eligible family members were eligible to
participate in on the Approval Date (other than any equity based plans),
the taking of any action by the Corporation which would directly or
indirectly materially reduce any of such benefits, or the failure by the
Corporation to provide you with the number of paid vacation days to which
you are entitled on the basis of years of service with the Corporation in
accordance with the Corporation's normal vacation policy in effect on the
Approval Date;
(g) the Corporation's failure to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 4 hereof; or
(h) any purported termination of your employment that is not
effected pursuant to a Notice of Termination, which purported termination
shall not be effective for purposes of this Agreement.
Your continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstance constituting Good Reason
hereunder.
"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 your employment under the provision so
indicated.
"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 Corporation, (ii) any
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trustee or other fiduciary holding securities under an employee benefit plan of
the Corporation, (iii) any corporation owned, directly or indirectly, by the
stockholders of the Corporation in substantially the same proportions as their
ownership of stock of the Corporation and (iv) Motorola.
3. Taxes. You 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 you in
connection with a Change in Control or Motorola Acquisition ("Contract
Benefits") or any other plan, arrangements or agreement with the Corporation 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 you shall
exceed the net after-tax benefit received by you if no such reduction was made.
For purposes of this Section 3, "net after-tax benefit" shall mean (i) the Total
Benefits which you receive or are then entitled to receive from the Corporation
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 you with respect to the foregoing calculated at the
highest marginal income tax rate for each year in which the foregoing shall be
paid to you (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 Corporation's independent certified public accountants serving
immediately prior to the Change in Control or Motorola Acquisition (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
or Motorola Acquisition you 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 Corporation. You will direct the Accountants
to submit their determination and detailed supporting calculations to both you
and the Corporation within fifteen (15) days of receipt from you or the
Corporation that you have received or will receive the Total Benefits. If the
Accountants determine that such reduction is required by this Section 3, you, in
your 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 Corporation shall
pay such reduced amount to you. You and the Corporation will each provide the
Accountants access to and copies of any books, records, and documents in the
possession of you or the Corporation, 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 3.
4. Successors; Binding Agreement.
4.1 Successor to Assume Agreement. The Corporation shall require
any successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Corporation to expressly assume and agree to perform this Agreement. Unless
expressly provided otherwise, "Corporation" as used herein
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shall mean the Corporation as defined in this Agreement and any successor to its
business and/or assets as aforesaid.
4.2 Binding Agreement. This Agreement shall inure to the benefit
of and be enforceable by you and your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be payable to you
hereunder had you continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there is no such designee, to your
estate.
5. Notice. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy; the day after it is sent, if sent
for next day delivery to a domestic address by recognized overnight delivery
service (e.g., Federal Express); and upon receipt, if sent by certified or
registered mail, return receipt requested. All notices, requests, demands and
other communications shall be addressed to the respective addresses set forth on
the first page of this Agreement, provided that all notices to the Corporation
shall be directed to the attention of the Board with a copy to the Secretary of
the Corporation, or to such other address as either party may have furnished to
the other in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
6. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by you and such officer as may be specifically designated
by the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. All references to
sections of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any benefits provided for hereunder shall
be paid net of any applicable withholding required under federal, state or local
law. The section headings contained in this Agreement are for convenience only,
and shall not affect the interpretation of this Agreement.
7. Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
8. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
9. Suits, Actions, Proceedings, Etc.
9.1 Legal Fees. The Corporation shall pay to you all legal fees
and expenses incurred by you in connection with any Dispute arising out of or
relating to this
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Agreement or the interpretation thereof in which you are the prevailing party
(including, without limitation, all such fees and expenses, if any, incurred in
contesting or disputing any termination of your employment or in seeking to
obtain or enforce any right or benefit provided by this Agreement, or in
connection with any tax audit or proceeding to the extent attributable to the
application of section 4999 of the Code to any benefit provided hereunder).
9.2 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 9.2 and the parties' rights under this Section 9.2 shall be governed by
and construed in accordance with the Federal Arbitration Act, 9 U.S.C. ss. 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 9.2. 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, 2 Embarcadero Center Suite 1100, San
Francisco, CA 94111, 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.
10. Effect on Other Agreements. In the event that you are a party to
any employment agreement ("Employment Agreement") with the Corporation, it is
the intention that this Agreement provide benefits which are not otherwise
provided by any Employment Agreement. Therefore, in the event that during the
term of this Agreement you are entitled to benefits under both this Agreement
and any Employment Agreement, then you shall only receive the greater of the
benefits provided under either this Agreement or such Employment Agreement,
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but not both. In the event you receive benefits under this Agreement, you waive
all rights to receive any benefits under such Employment Agreement, and vice
versa.
11. Entire Agreement. This Agreement sets forth the entire agreement
of the parties hereto in respect of the subject matter contained herein and
supersedes all other prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein,
including, without limitation, any prior severance agreements, is hereby
terminated and canceled; provided, however, that any Employment Agreement as
amended by Section 10 hereof shall remain in full force and effect and shall,
pursuant to the terms and conditions thereof, provide certain severance benefits
to you upon certain terminations of employment. Any of your rights hereunder
shall be in addition to any rights you may otherwise have under benefit plans or
agreements of the Corporation to which you are a party or in which you are a
participant, including, but not limited to, any Corporation sponsored employee
benefit plans and stock options plans. Provisions of this Agreement shall not in
any way abrogate your rights under such other plans and agreements.
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If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Corporation the enclosed copy of this letter. A
duly authorized officer of the Corporation will sign this letter and a fully
executed copy will be returned to you, constituting our agreement on this
subject. Unless and until accepted in writing by the Corporation, this Agreement
is deemed to be neither executed nor effective.
Sincerely,
NEXT LEVEL COMMUNICATIONS, INC.
-----------------------------------
Name:
Title:
Agreed and Accepted,
this _____ day of ___________, 2000.
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[name]
