Exhibit 10.1

 

LOGO [g364549g47g14.jpg]   

May 30, 2012

Omid Tahernia

[Address]

[City, State, Zip]

Dear Omid:

On behalf of the Board of Directors, I am pleased to extend an offer of
employment with Ikanos Communications Inc. (the “Company” or “Ikanos”) under the
terms and conditions that follow. This offer is contingent upon approval by the
Board.

Position and Duties:

You are being offered the position of President and Chief Executive Officer,
reporting to the Company’s Board of Directors (the “Board”). You will perform
the duties and responsibilities of President and Chief Executive Officer, as
well as such additional duties and responsibilities that are consistent with
such position as the Board assigns to you from time to time. Upon your
employment, you will also be appointed to serve as a director on the Board, and
the Company and the other members of the Board, consistent with their fiduciary
obligations, will use their best efforts to ensure that you remain a member of
the Board throughout your employment with the Company. You will not be entitled
to any Board fees or equity grants for your service as a director.

You will be employed by Ikanos, working in Fremont, California, as a regular
full-time, salaried, exempt employee, which does not qualify you for overtime
pay.

Compensation and Benefits:

During your employment, the Company will provide you with the following pay and
benefits as compensation for all services you perform for the Company and its
affiliates:

(a) Base Salary. Your starting semi-monthly salary will be $16,666.67,
equivalent to an annualized amount of $400,000, which will be payable according
to the regular payroll practices of the Company. From time-to-time, the Company
may elect to increase, but not decrease, your base salary, as determined by the
Board in its sole discretion.

(b) Executive Incentive Plan. You will also be eligible to participate in the
Executive Incentive Plan at an annual target bonus potential of 100% of your
base salary, subject to the terms and conditions of the Executive Incentive
Plan, as amended from time to time (the “Incentive Plan”) and pro-rated for
partial service during 2012. Performance goals for your incentive for future
years will be established by the Board after consultation with you, and shall be
based upon financial and other forms of Company performance as well as
individual performance. Any payments earned under the Incentive Plan will be
made no later than 2-1/2 months following the end of the calendar year (or, if
later, the Company’s taxable year) in which such incentive is earned.

--------------------------------------------------------------------------------

Omid Tahernia

May 30, 2012

Page 2

 

(c) Participation in Employee Benefit Plans. You will be eligible to participate
in all of the employee benefit plans that the Company customarily maintains from
time to time for full-time employees of similar positions and responsibilities,
except to the extent that such plans are duplicative of benefits otherwise
provided to you pursuant to this letter agreement. Your participation will be
subject to the terms of the applicable plan documents and other applicable
Company policies.

(d) Equity Awards. An important component of our compensation package includes
the opportunity for ownership in our Company. Subject to Board approval, you
will be granted an option to purchase up to 2,100,000 shares of the Company’s
common stock (the “Option”) on your employment start date. The per-share
exercise price of the Option will equal the closing market price of the
Company’s common stock on the day the Option is granted. Starting on your first
day of employment with the Company, the Option will begin vesting with respect
to 1,500,000 shares (the “Time-Based Option Shares”) and the Time-Based Option
Shares will continue to vest, subject to your continued employment, over a four
year period, with 25% of such shares vesting on the first anniversary of your
employment start date and the balance vesting in equal quarterly installments
over the succeeding twelve (12) quarters.

The remaining 600,000 shares (the “Performance-Based Option Shares”) will vest
over a one year period beginning upon the date(s) that certain stock price goals
are achieved. Specifically, vesting of the Performance-Based Option Shares will
be dependent upon your continued employment and the attainment of average
closing prices for the Company’s common stock for any period of twenty
(20) consecutive trading days as follows: (i) 300,000 shares begin vesting at a
$2.50 average closing stock price; and (ii) the remaining 300,000 shares begin
vesting at a $3.50 average closing stock price. Once vesting begins,
Performance-Based Option Shares will vest in equal quarterly installments over
the one year period after the applicable average closing stock price target is
achieved, subject to your continued employment. For example, if the closing
stock price equals or exceeds $2.50/share for any period of twenty
(20) consecutive trading days, then the first tranche of 300,000 shares will
vest over the following one year period (beginning on the day after the
referenced 20-day period), because the stock price had equaled or exceeded the
first price target.

In the event of a Change of Control (as defined below), the above stock price
performance targets (if not previously achieved) will be evaluated against the
Change of Control deal price. (If either or both of the above stock price
targets have been achieved prior to a Change of Control, the respective
tranche(s) of Performance-Based Option Shares will fully vest upon the close of
the Change of Control.) To the extent that the deal price is equal to or in
excess of the first or second stock price targets, the corresponding tranche(s)
of the Performance-Based Option Shares will fully vest upon the close of the
Change of Control. If the deal price is equal to or in excess of $1.75 per
share, but less than the stock price target for a tranche, a pro rata portion of
the shares subject to that tranche will vest upon the close of the Change of
Control based on the ratio of (x) the excess of the deal price over the exercise
price, to (y) the excess of the applicable stock price target over the exercise
price, multiplied by the number of shares

 

2

--------------------------------------------------------------------------------

Omid Tahernia

May 30, 2012

Page 3

 

subject to that tranche, and the balance of the shares subject to that tranche
will terminate as of the close of the Change of Control. For example, if the
exercise price is $1.00 per share, and the deal price is $2.25 per share,
125/150 of the 300,000 shares subject to the $2.50 stock price target tranche
will vest, and 125/250 of the 300,000 shares subject to the $3.50 stock price
target tranche will vest. If the deal price is less than $1.75 per share, each
tranche will terminate as of the close of the Change in Control.

The Option will have a term of seven years, subject to earlier termination upon
termination of service, and will be subject to the terms and conditions of a
stock option agreement between you and the Company in a form approved by the
Board.

(e) Involuntary Termination.

(1) Not in Connection with a Change of Control. In the event the Company
terminates your employment without Cause (as defined below), or you terminate
your employment for Good Reason (as defined below), then subject to your
execution and nonrevocation of a Release (as described below), the Company shall
provide you with the following:

(i) a lump sum cash severance payment equal to twelve (12) months of your
then-current base salary, plus an amount equal to a pro-rated portion of your
then-current annual target bonus under the Incentive Plan for the year in which
your employment terminates (pro-rated based on the number of days that you are
employed during the year in which your employment terminates), payable on the
sixtieth (60th) day following your termination of employment,

(ii) payment by the Company of the premiums necessary for you and your eligible
dependents to continue your/their Company group health insurance benefits under
the Consolidated Omnibus Reconciliation Act of 1985 (COBRA) for twelve
(12) months from the termination date (which premium payment obligation will
terminate upon your acceptance of subsequent employment with a company where
comparable health insurance benefits are offered),

(iii) accelerated vesting of the Time-Based Option Shares that would have vested
during the period through and including the quarterly installment vesting date
that falls on (if your termination date is a quarterly installment vesting
date), or the first such date that falls after (if your termination date is not
a quarterly installment vesting date), the anniversary of your termination date,
and

(iv) if either or both of the above stock price targets ($2.50/$3.50) for the
Performance-Based Option Shares have been achieved prior to the date on which
your employment terminates, the respective tranche(s) of Performance-Based
Option Shares will fully vest upon your date of termination. If the average
closing price of the Company’s common stock over the twenty (20) consecutive
trading day period ending on (and including) your date of termination (or ending
on the last trading day before your termination date if you are terminated on a
Saturday, Sunday, or holiday) (the “Closing Price”) is equal to or in excess of
$1.75 per share, but less than the stock price target for a tranche, a pro rata
portion of the shares subject to that tranche will vest upon your date of
termination based on the ratio of (x) the excess of the Closing

 

3

--------------------------------------------------------------------------------

Omid Tahernia

May 30, 2012

Page 4

 

Price over the exercise price, to (y) the excess of the applicable stock price
target over the exercise price, multiplied by the number of shares subject to
that tranche, and the balance of the shares subject to that tranche will
terminate as of the date of your termination. For example, if the exercise price
is $1.00 per share, and the Closing Price is $2.25 per share, 125/150 of the
300,000 shares subject to the $2.50 stock price target tranche will vest, and
125/250 of the 300,000 shares subject to the $3.50 stock price target tranche
will vest. If the Closing Price is less than $1.75 per share, each tranche will
terminate as of the date of your termination.

(2) In Connection with a Change of Control. If the Company terminates your
employment without Cause, or you terminate your employment for Good Reason,
within 90 days prior to, or on or within twelve (12) months following, a Change
of Control of the Company (as defined below), then subject to your execution and
nonrevocation of a Release (as described below), the Company shall provide you
with the following compensation and benefits in lieu of those described in
subsection (1) above:

(i) a lump sum cash severance payment equal to:

(A) if the Change of Control closes within the first twelve (12) months of your
employment, twenty-four (24) months of your then-current base salary, plus an
amount equal to a pro-rated portion of your then-current target annual bonus
under the Incentive Plan for the year in which your employment terminates
(pro-rated based on the number of days that you are employed during the year in
which your employment terminates), payable on the sixtieth (60th) day following
the later of your termination of employment or the close of the Change of
Control, or

(B) if the Change of Control closes after the first twelve (12) months of your
employment, twelve (12) months of your then-current base salary, plus an amount
equal to one times your then-current target annual bonus under the Incentive
Plan, plus an amount equal to a pro-rated portion of your then-current target
annual bonus under the Incentive Plan for the year in which your employment
terminates (pro-rated based on the number of days that you are employed during
the year in which your employment terminates), payable on the sixtieth
(60th) day following the later of your termination of employment or the close of
the Change of Control,

(ii) payment by the Company of the premiums necessary for you and your eligible
dependents to continue your/their Company group health insurance benefits under
the Consolidated Omnibus Reconciliation Act of 1985 (COBRA) for twelve
(12) months from the termination date (which premium payment obligation will
terminate upon your acceptance of subsequent employment with a company where
comparable health insurance benefits are offered),

(iii) the Time-Based Option Shares will become fully vested upon such
termination or, if later, the close of the Change of Control, and

(iv) if such termination occurs within ninety (90) days prior to the Change of
Control, you will be entitled to accelerated vesting of the Performance-Based
Option Shares as described in the third paragraph of section (d) (“Equity
Awards”) above based on the Change of Control “deal price” as if you were still
employed through the close of the Change of Control.

 

4

--------------------------------------------------------------------------------

Omid Tahernia

May 30, 2012

Page 5

 

The above severance compensation and benefits are referred to collectively as
the “Severance Benefits”.

“Cause” as used herein means your willful and continued refusal to adhere to, or
to carry out, in any material respect, any legal and reasonable directive of the
Board after your receipt of written notice from the Board of, and a reasonable
opportunity to cure, such refusal, your engaging in any act of dishonesty, fraud
or misrepresentation in connection with your employment with the Company; your
knowing violation of any federal or state law or regulation directly applicable
to the business of the Company or its affiliates; your breach of any
confidentiality agreement or invention assignment agreement between you and the
Company; or your being convicted of, or entering a plea of nolo contendere to,
any crime which reflects conduct or character that the Board reasonably and in
good faith determines is inconsistent with continued employment.

“Good Reason” as used herein means any of the following that occurs without your
express written consent: a material reduction of your duties, position,
authority, or responsibilities (provided that for this purpose, your duties,
position, authority, and responsibilities will not be deemed to be materially
reduced if following a Change of Control (as defined below) you retain the same
duties, position, authority, and responsibilities with respect to the Company
business or the business with which such business is operationally merged or
subsumed (as, for example, where you remain the Chief Executive Officer of the
Company as the surviving entity following a Change of Control, but are not made
the Chief Executive Officer of the acquirer); a material reduction by the
Company in your base salary as in effect immediately prior to such reduction; a
material reduction by the Company in the kind or level of employee benefits to
which you are entitled immediately prior to such reduction with the result that
your overall benefits package is materially reduced; or a material change in the
geographic location at which you must perform services (in other words, your
relocation to a facility or a location more than fifty (50) miles from your
current residence on your employment commencement date); provided, however, that
termination of employment shall not be considered for “Good Reason” unless you
terminate your employment within ninety (90) days following the initial
occurrence of one of the foregoing events, after providing the Company with
written notice of the occurrence thereof and an opportunity to cure of at least
(30) days.

“Change of Control” as used herein means a “Change in Control” as defined in the
Company’s Amended and Restated 2004 Equity Incentive Plan, as amended.

As a condition of receipt of the Severance Benefits provided above, you must
deliver to the Company an executed copy of a general release and waiver of
claims against the Company, and its affiliates, directors, officers, and
employees (the “Release”) in the form provided by the Company. Such Release will
include, without limitation, a mutual non-disparagement provision, and it will
not affect any indemnification rights owed to you by the Company under any
contract, statute, or common law. The executed Release must be delivered by you
to the Company prior to the end of the consideration period stated in the
Release, which consideration period will end

 

5

--------------------------------------------------------------------------------

Omid Tahernia

May 30, 2012

Page 6

 

not later than fifty (50) days following your termination of employment. If you
fail to deliver the Release within the consideration period stated in the
Release or you exercise any right provided to you in the Release to revoke the
Release, you will not be eligible to receive the Severance Benefits.

(t) Code Section 409A.

Notwithstanding anything to the contrary contained in this letter agreement:

(1) The parties agree that this letter agreement shall be interpreted to comply
with or be exempt from Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), and the regulations and guidance promulgated thereunder to
the extent applicable (collectively “Code Section 409A”), and all provisions of
this letter agreement shall be construed in a manner consistent with the
requirements for avoiding taxes or penalties under Code Section 409A. In no
event whatsoever will the Company be liable for any additional tax, interest or
penalties that may be imposed on you under Code Section 409A or any damages for
failing to comply with Code Section 409A.

(2) A termination of employment shall not be deemed to have occurred for
purposes of any provision of this letter agreement providing for the payment of
any amounts or benefits considered “nonqualified deferred compensation” under
Code Section 409A upon or following a termination of employment unless such
termination is also a “separation from service” within the meaning of Code
Section 409A and, for purposes of any such provision of this letter agreement,
references to a “termination,” “termination of employment” or like terms shall
mean “separation from service.” If you are deemed on the date of termination to
be a “specified employee” within the meaning of that term under Code
Section 409A(a)(2)(B), then with regard to any payment or the provision of any
benefit that is considered nonqualified deferred compensation under Code
Section 409A payable on account of a “separation from service,” such payment or
benefit shall be made or provided at the date which is the earlier of(i) the
expiration of the six (6)-month period measured from the date of your
“separation from service”, and (ii) the date of your death (the “Delay Period”).
Upon the expiration of the Delay Period, all payments and benefits delayed
pursuant to this paragraph (whether they would have otherwise been payable in a
single sum or in installments in the absence of such delay) shall be paid or
reimbursed on the first business day following the expiration of the Delay
Period to you in a lump sum with interest during the Delay Period at the prime
rate, and any remaining payments and benefits due under this letter agreement
shall be paid or provided in accordance with the normal payment dates specified
for them herein.

(3) With regard to any provision herein that provides for reimbursement of costs
and expenses or in-kind benefits that are considered “nonqualified deferred
compensation” subject to Code Section 409A, then except as permitted by Code
Section 409A, (i) the right to reimbursement or in-kind benefits shall not be
subject to liquidation or exchange for another benefit, (ii) the amount of
expenses eligible for reimbursement, or in-kind benefits, provided during any
taxable year shall not affect the expenses eligible for reimbursement, or
in-kind benefits, to be provided in any other taxable year, provided, that, this
clause (ii) shall not be

 

6

--------------------------------------------------------------------------------

Omid Tahernia

May 30, 2012

Page 7

 

violated with regard to expenses reimbursed under any arrangement covered by
Internal Revenue Code Section 105(b) solely because such expenses are subject to
a limit related to the period the arrangement is in effect and (iii) such
payments shall be made on or before the last day of your taxable year following
the taxable year in which the expense occurred.

(4) For purposes of Code Section 409A, your right to receive any installment
payments pursuant to this letter agreement shall be treated as a right to
receive a series of separate and distinct payments.

At-Will Employment:

This letter agreement and your response are not meant to constitute a contract
of employment for a specific term. Your employment with Ikanos is “at-will,”
which means that if you accept this offer, both you and the Company will retain
the right to terminate your employment at any time, with or without prior notice
or cause. We do ask that you give two (2) weeks of written notice if you decide
to resign; provided, however, that this notice requirement shall not apply to
any resignation for Good Reason.

Attorneys’ Fees:

The Company will reimburse you for up to $5,000 of attorneys’ or other
professional fees incurred by you in the review/negotiation/drafting of this
agreement.

Miscellaneous Provisions:

This letter agreement and the accompanying Ikanos Employee Confidential
Information and Invention Assignment Agreement set forth all of the terms of
your employment with Ikanos and no prior and contemporaneous communication,
agreements and understandings, whether written or oral shall apply, with respect
to the terms and conditions of your employment and the additional matters
provided for herein. You agree that there were no promises or commitments made
to you regarding your employment with Ikanos except as set forth in this letter
agreement or in the Employee Confidential Information and Invention Assignment
Agreement.

The provisions contained herein shall be construed and interpreted in accordance
with the laws of the State of California, without regard to the conflict of laws
principles thereof. Each such provision is severable from the others, and if any
provision hereof shall be declared illegal or unenforceable by a court of
competent jurisdiction, the remainder shall continue to be enforceable to the
fullest extent permitted by law, as if such offending provision had not been a
part of this letter agreement.

The Company may withhold from any amounts payable under this letter agreement
such federal, state or local taxes as shall be required to be withheld pursuant
to any applicable law or regulation.

This offer is contingent upon the successful completion of each of the
following: (i) your executing this letter agreement; (ii) your executing the
Employee Confidential Information and

 

7

--------------------------------------------------------------------------------

Omid Tahernia

May 30, 2012

Page 8

 

Invention Assignment Agreement; (iii) your providing documentation of your legal
right to work in the United States with three (3) business days of your date of
hire; and (iv) the completion of a satisfactory reference and background check.

If the foregoing is acceptable to you, please sign this letter agreement in the
space provided below and return to Jim Murphy, Vice President Worldwide Human
Resources by fax at 510-952-4370 or by email to jmurohy@ikanos.com within three
(3) business days. We look forward to hearing from you soon. If you have any
questions about this offer, please contact me.

Omid, Ikanos is an exciting endeavor. We offer an exciting, rewarding work
environment and you, and your contributions will be an important component of
our on-going success. We look forward to working with you at Ikanos.

Very sincerely yours,

Ikanos Communications Inc.

 

/s/ George Pavlov George Pavlov Chairman, Compensation Committee of the Board of
Directors

 

Enclosures: Duplicate Original Offer Letter agreement

     Employee Confidential Information and Invention Assignment Agreement

 

8

--------------------------------------------------------------------------------

Omid Tahernia

May 30, 2012

Page 9

 

Acceptance:

I, Omid Tahernia, have read and accept the terms of this offer of employment
with Ikanos Communications Inc. and I agree to the terms set forth above and in
the Employee Confidential Information and Invention Assignment Agreement.

I look forward to reporting to work no later than June 18, 2012.

 

/s/ Omid Tahernia

   

May 31, 2012

Signature     Date

 

9