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                                                                   EXHIBIT 10.49

                        INTEGRATED TELECOM EXPRESS, INC.

           JAMES E. WILLIAMS AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     This Amended and Restated Employment Agreement (the "Agreement") is entered
into as of May 16, 2002 (the "Effective Date") by and between Integrated Telecom
Express, Inc. (the "Company") and James E. Williams ("Executive"), and replaces
and supercedes in its entirety the employment agreement entered into between the
Company and Executive as of October 8, 2001 (the "Old Employment Agreement").

                                    RECITALS

     A.   The Company's Board of Directors (the "Board") has adopted and
announced a plan to wind up and liquidate the Company (the "Liquidation"),
pursuant to which the Company will discontinue all of its operations and,
subject to stockholder approval, distribute the assets of the Company to the
Company's stockholders.

     B.   The Board and Executive now desire to amend the Old Employment
Agreement to provide appropriate compensation and incentive to Executive in
light of the Liquidation.

     1.   Duties and Scope of Employment.

          (a)    Positions and Duties. As of the Effective Date, Executive will
continue to serve as Senior Vice President Finance, Treasurer and Chief
Financial Officer of the Company. Executive will render such business and
professional services in the performance of his duties, consistent with
Executive's position within the Company, as shall reasonably be assigned to him
by the Company's Chief Executive Officer (the "CEO") and the Board, including
managing and overseeing the Liquidation. The period of Executive's employment
under this Agreement is referred to herein as the "Employment Term."

          (b)    Obligations. During the Employment Term, Executive will perform
his duties faithfully and to the best of his ability and will devote his full
business efforts, time and energies to the Company. For the duration of the
Employment Term, Executive agrees not to actively engage in any other
employment, occupation or consulting activity for any direct or indirect
remuneration without the prior approval of the Board, which approval shall not
be unreasonably withheld or delayed, provided however that this Section 1(b)
shall not restrict or prohibit Executive from searching for or interviewing for
other positions so long as those activities do not interfere with the discharge
of his duties to the Company.

     2.   At-Will Employment. The parties agree that Executive's employment with
the Company will be "at-will" employment and may be terminated at any time with
or without cause or notice. Executive understands and agrees that neither his
job performance nor promotions, commendations, bonuses or the like from the
Company give rise to or in any way serve as the basis for modification,
amendment, or extension, by implication or otherwise, of his employment with the
Company.



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     3.   Compensation.

          (a)    Base Salary. During the Employment Term, the Company will pay
Executive an annual salary of $225,000 as compensation for his services (the
"Base Salary"). The Base Salary will be paid periodically in accordance with the
Company's normal payroll practices and be subject to the usual, required
withholding. Executive's salary will be subject to review and adjustments will
be made based upon the Company's normal performance review practices.

          (b)    Sign-On Bonus. Pursuant to the provisions of the Old Employment
Agreement, Executive received a lump-sum payment of $25,000 (less all applicable
withholding taxes) (the "Sign-On Bonus"). As required under Old Employment
Agreement and as modified in this Agreement, if before the earlier of (i)
October 8, 2002 or (ii) Executive's completion of the last Liquidation Task (as
defined in Section 3(c)), (A) Executive voluntarily terminates his employment
with the Company for any reason other than a reason that constitutes an
"Involuntary Termination" (as defined below), or (B) the Company terminates
Executive for Cause, then Executive must repay to the Company the entire amount
of the Sign-On Bonus.

          (c)    Performance Bonus. As of the Effective Date, Executive shall be
deemed to have earned $35,000 of his target performance bonus of $70,000. The
Company shall pay Executive such earned bonus, less applicable withholding, on
the first regular payroll date following the Effective Date. Following the
Effective Date, upon completion of each applicable Liquidation Task (as defined
below) prior to Executive's termination of employment, the Company shall, on the
first regular payroll date following the completion of such Liquidation Task,
pay to Executive a portion of the remaining target performance bonus in a
lump-sum payment equal to the amount described below. A "Liquidation Task" shall
mean one of the tasks described below in Section 3(c)(i) through (vii), each of
which the Company believes is critical to the consummation of the Liquidation
(collectively, the "Liquidation Tasks").

                 (i)   Mailing of Proxy. On the date the Company mails to its
stockholders the proxy statement for the special meeting of stockholders at
which the Company's stockholders will consider a proposal to approve the
Liquidation, the Company shall pay to Executive $3,500, less applicable
withholding taxes (with payment due on the first regular payroll date following
the completion of this Liquidation Task).

                 (ii)  Filing of Certificate of Dissolution. On the date the
Company files the certificate of dissolution following the date the Company's
stockholders approve the Liquidation, the Company shall pay to Executive $3,500,
less applicable withholding taxes (with payment due on the first regular payroll
date following the completion of this Liquidation Task).

                 (iii) Completion of Plan for Liquidation. On the date Executive
completes a plan outlining in reasonable detail the essential elements and tasks
intended to establish that the Company and the Board have acted in due care in
consummating the Liquidation, the Company shall pay to Executive $8,750, less
applicable withholding (with payment due on the first regular payroll date
following the completion of this Liquidation Task).

                 (iv)  Resolution of Leaseholds. On the date the Company reaches
a final written agreement with the landlord for its facilities at 400 Race
Street, San Jose, California with

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respect to the Company's obligations under the lease for such facility, the
Company shall pay to Executive $3,500, less applicable withholding (with payment
due on the first regular payroll date following the completion of this
Liquidation Task).

                 (v)   Employee Terminations. On the date the Company completes
the final termination of Company employees, other than those employees necessary
to assist in the consummation of the Liquidation as determined in good faith by
Executive, the Company shall pay to Executive $3,500, less applicable
withholding (with payment due on the first regular payroll date following the
completion of this Liquidation Task).

                 (vi)  Initial Distribution. On the date the Company makes its
initial distribution of assets to the Company's stockholders in connection with
the Liquidation (the "Initial Distribution"), the Company shall pay to Executive
$8,750, less applicable withholding (with payment due on the first regular
payroll date following the completion of this Liquidation Task).

                 (vii) Final Tax Filings. On the date the Company has provided
to its independent accountants all information reasonably requested by such
accountants in connection with the preparation of the Company's corporate tax
returns and any other tax related filings for the tax year in which the Initial
Distribution occurs, the Company shall pay to Executive $3,500, less applicable
withholding (with payment due on the first regular payroll date following the
completion of this Liquidation Task). The Company shall use its reasonable
efforts to cause its independent accountants to deliver a request for
information as soon as practicable after the Effective Date. After Executive has
provided such information as he reasonably determines satisfies this Liquidation
Task, the Company shall in writing make a final inquiry of its independent
accountants regarding their need for additional information. If the independent
accountants confirm that they have received all reasonably requested information
(or fail to respond to such inquiry within twenty (20) calendar days), then this
Liquidation Task shall be deemed completed. If the independent accountants
reasonably request additional information, then this Liquidation Task shall be
deemed completed upon delivery of such additional information.

          (d)    Stock Options.

                 (i)   First Option. Pursuant to the provisions of the Old
Employment Agreement, Executive was granted a stock option to purchase 500,000
shares of the Company's Common Stock at an exercise price equal to the fair
market value of such Common Stock on the date of grant (the "First Option").
Subject to the accelerated vesting provisions set forth herein, the First Option
shall continue to vest as provided in the Old Employment Agreement (that is, as
to 25% of the shares subject to such First Option one year after its vesting
commencement date, and as to 1/48th of the shares subject to such First Option
monthly thereafter, so that the First Option will be fully vested and
exercisable four (4) years from the vesting commencement date, subject to
Executive's continued service to the Company on the relevant vesting dates). The
vesting commencement date for the First Option is the date Executive began
employment with the Company pursuant to the Old Employment Agreement. The First
Option will continue to be subject to the terms, definitions and provisions of
the Company's Nonstatutory Stock Option Plan (the "Option Plan") and the stock
option agreement executed by Executive and the Company (the "First Option
Agreement"), both of which documents have been approved by the Board and are
incorporated herein by reference.

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                 (ii)  Second Option. Pursuant to the provisions of the Old
Employment Agreement, Executive was granted a stock option to purchase 250,000
shares of the Company's Common Stock at an exercise price equal to the fair
market value of such common stock on the date of grant (the "Second Option").
The First Option together with the Second Option shall each be referred to as an
"Option" and collectively as the "Options." Subject to the accelerated vesting
provisions set forth herein, and because the Board voted that it would deem that
the Executive met the milestone for approval of Executive's business plan for
the Company (prepared jointly by the CEO, COO and CFO) by April 8, 2002, the
Second Option shall continue to vest as provided in the Old Employment Agreement
(that is, as to 25% of the shares subject to such Option eighteen (18) months
following the effective date of the Old Employment Agreement, and as to 1/48th
of the shares subject to such Option monthly thereafter, so that the Second
Option will be fully vested and exercisable fifty-four (54) months from the
effective date of the Old Employment Agreement, subject to Executive's continued
service to the Company on the relevant vesting dates). The Second Option will
continue to be subject to the terms, definitions and provisions of the Option
Plan and the stock option agreement executed by Executive and the Company (the
"Second Option Agreement"), both of which documents have been approved by the
Board and are incorporated herein by reference. The First Option Agreement
together with the Second Option Agreement shall each be referred to as the
"Option Agreement" or collectively as the "Option Agreements."

                 (iii) Accelerated Vesting Upon Stockholder Meeting Date. Upon
the date on which the stockholders of the Company approve the Liquidation at a
duly noticed and held stockholders' meeting (the "Stockholders' Meeting Date"),
provided that the Stockholders' Meeting Date occurs prior to Executive's
termination of employment, the Options shall immediately vest and become
exercisable as to 100% of the shares subject to such Options, but in no event
shall the number of shares that so vest exceed the number of shares subject to
such Options. Thereafter, the Options shall continue to be bound by and be
subject to the Option Plan and Option Agreements.

                 (iv)  Payment of Exercise Price. In order to facilitate payment
of the exercise price of the Options, at the request of the Executive, Executive
as borrower shall be permitted to issue to the Company a secured non-recourse
promissory note (the "Secured Note") with principal amount equal to the
aggregate exercise price of any Options exercised by the Executive plus the
amount of any withholding taxes due by Executive as a result of such exercise.
The Secured Note shall include commercially reasonable terms and shall include
the following additional terms: (i) the Secured Note shall be payable on the
date the Company makes the Initial Distribution and shall be repaid in full from
Executive's distributions received with respect to his Company Common Stock
acquired pursuant to exercise of the Options (provided, however, that if the
amount received by Executive in the Initial Distribution is less than the amount
then outstanding under the Secured Note, then the excess amount due shall not be
payable until such time as Executive receives proceeds from subsequent
distributions equal to such excess amount), (ii) the Secured Note shall bear
interest at the applicable federal rate necessary to avoid imputed income to
Executive, and (iii) the Secured Note shall be fully secured by 100% of the
shares of Company Common Stock issued upon the exercise of the Options related
thereto and any distributions received with respect to such shares in connection
with the Liquidation.

     4.   Employee Benefits. During the Employment Term, Executive will be
entitled to participate in the employee benefit plans currently and hereafter
maintained by the Company of general applicability to other senior executives of
the Company, including, without limitation, the

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Company's group medical, dental, vision, disability, life insurance, and
flexible-spending account plans. The Company reserves the right to cancel or
change the benefit plans and programs it offers to its employees at any time.

     5.   Paid Time Off. Executive shall proportionately accrue paid time off of
up to eighteen (18) days per year in accordance with Company policies, with the
timing and duration of specific time off mutually and reasonably agreed to by
the parties hereto.

     6.   Expenses.  The Company will reimburse Executive for reasonable travel,
entertainment or other expenses incurred by Executive in the furtherance of or
in connection with the performance of Executive's duties hereunder, in
accordance with the Company's expense reimbursement policy as in effect from
time to time.

     7.   Severance.

          (a)    Involuntary Termination. If (i) Executive terminates his
employment with the Company due to an "Involuntary Termination" (as defined
below) or (ii) the Company terminates Executive's employment with the Company
for other than "Cause" (as defined below), death or disability, then, subject to
Section 12 and Executive signing and not revoking a standard release of claims
in a form acceptable to the Company, Executive shall be entitled to (i) receive
a lump-sum severance payment (less applicable withholding taxes) equal to his
Base Salary rate, as then in effect, over a period of twelve (12) months to be
paid within seven (7) days from the date of such termination, (ii) payment of
the remaining unearned target performance bonus, if any, as set forth in Section
3(c), as if the Liquidation Tasks had been completed in full, (iii) immediate
vesting and exercisability of 100% of the unvested shares subject to the
Options, and (iv) continued payment by the Company of the group health
continuation coverage premiums for Executive and Executive's eligible dependents
under Title X of the Consolidated Budget Reconciliation Act of 1985, as amended
("COBRA") as in effect through the lesser of (x) eighteen (18) months from the
effective date of such termination, (y) the date upon which Executive and
Executive's eligible dependents become covered under similar plans, or (z) the
date Executive no longer constitutes a "Qualified Beneficiary" (as such term is
defined in Section 4980B(g) of the Internal Revenue Code of 1986, as amended
(the "Code")); provided, however, that Executive will be solely responsible for
electing such coverage within the required time periods.

          (b)    Voluntary Termination; Termination for Cause.  If Executive's
employment with the Company terminates voluntarily by Executive (other than due
to an Involuntary Termination) or for Cause by the Company, then (i) all vesting
of the Options will terminate immediately, (ii) all payments of compensation by
the Company to Executive hereunder will terminate immediately (except as to
amounts already earned), and (iii) Executive will only be eligible for severance
benefits in accordance with the Company's established policies as then in
effect.

     8.   Change of Control Benefits.

          (a)    Acceleration of Options Upon a Change of Control.  In the event
of a Change of Control that occurs prior to Executive's termination of
employment, 100% of the unvested shares subject to the Options shall immediately
vest and become exercisable. In all other respects, the

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Options will continue to be subject to the terms, definitions and provisions of
the Option Plan and Option Agreements.

          (b)    Termination Following a Change of Control. If within twelve
(12) months following a Change of Control (other than the Company's stockholders
approving the Liquidation) (i) Executive terminates his employment with the
Company due to an Involuntary Termination, or (ii) the Company terminates
Executive's employment with the Company for other than Cause, death or
disability, then, subject to Executive signing and not revoking a standard
release of claims in a form acceptable to the Company, in lieu of benefits
described in Section 7(a), Executive shall be entitled to (x) receive continuing
payments of severance pay (less applicable withholding taxes) at a rate equal to
his Base Salary rate, as then in effect, for a period of twelve (12) months from
the date of such termination, to be paid periodically in accordance with the
Company's normal payroll policies, (y) continued payment by the Company of the
group health continuation coverage premiums for Executive and Executive's
eligible dependents under COBRA as in effect through the lesser of (A) twelve
(12) months from the effective date of such termination, (B) the date upon which
Executive and Executive's eligible dependents become covered under similar
plans, or (C) the date Executive no longer constitutes a Qualified Beneficiary;
provided, however, that Executive will be solely responsible for electing such
coverage within the required time periods, and (z) exercise the Options, to the
extent vested, for a period of one (1) year following such termination or such
longer period as may be provided for in the applicable Option Agreement.

          (c)    Voluntary Termination: Termination for Cause.  If within the
twelve (12) months following a Change of Control Executive's employment with the
Company terminates voluntarily by Executive (other than due to an Involuntary
Termination) or for Cause by the Company, then (i) all vesting of the Options
will terminate immediately, (ii) all payments of compensation by the Company to
Executive hereunder will terminate immediately (except as to amounts already
earned), and (iii) Executive will only be eligible for severance benefits in
accordance with the Company's established policies as then in effect.

     9.   Limitation on Payments. In the event that the severance and other
benefits provided for in this Agreement or otherwise payable to the Executive
(i) constitute "parachute payments" within the meaning of Section 280G of the
Code and (ii) but for this Section 9, would be subject to the excise tax imposed
by Section 4999 of the Code, then the Executive's severance benefits under
Sections 7 or 8 shall be either:

          (a)    delivered in full, or

          (b)    delivered as to such lesser extent which would result in no
portion of such severance 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 the Executive on an after-tax basis, of
the greatest amount of severance benefits, notwithstanding that all or some
portion of such severance benefits may be taxable under Section 4999 of the
Code. Unless the Company and the Executive otherwise agree in writing, any
determination required under this Section 9 shall be made in writing by an
independent public accountant selected by the Company, immediately prior to
Change of Control (the "Accountants"), whose determination shall be conclusive
and binding upon the Executive and the Company for all purposes. For purposes of
making the calculations required by

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this Section 9, 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 the Executive shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 9.

     10.  Definitions.

          (a) Cause. For purposes of this Agreement, "Cause" is defined as (i)
an act of dishonesty made by Executive in connection with Executive's
responsibilities as an employee, (ii) Executive's conviction of, or plea of nolo
contendere to, a felony, (iii) Executive's gross misconduct, or (iv) Executive's
continued substantial violations of his employment duties after Executive has
received a written demand for performance from the Company which specifically
sets forth the factual basis for the Company's belief that Executive has not
substantially performed his duties.

          (b) Change of Control. For purposes of this Agreement, "Change of
Control" of the Company is defined as:

              (i)   any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the
"beneficial owner" (as defined in Rule l3d-3 under said Act), directly or
indirectly, of securities of the Company representing 50% or more of the total
voting power represented by the Company's then outstanding voting securities; or

              (ii)  a change in the composition of the Board occurring within a
two-year period, as a result of which fewer than a majority of the directors are
Incumbent Directors. "Incumbent Directors" will mean directors who either (A)
are directors of the Company as of the date hereof, or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or nomination
(but will not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to the election
of directors to the Company); or

              (iii) the date of the consummation of a merger or consolidation of
the Company with any other corporation that has been approved by the
stockholders of the Company, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation, or the stockholders of the Company approve a plan of complete
liquidation of the Company; or

              (iv)  the date of the consummation of the sale or disposition by
the Company of all or substantially all the Company's assets.

          (c) Involuntary Termination. For purposes of this Agreement,
"Involuntary Termination" shall mean without the Executive's express written
consent (i) a significant reduction of the Executive's duties, position or
responsibilities, or the removal of the Executive from such

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position and responsibilities, unless the Executive is provided with a
comparable position (i.e., a position of equal or greater organizational level,
duties, authority, compensation and status); provided, however, that a reduction
in duties, position or responsibilities solely by virtue of (A) the Liquidation,
or (B) the Company being acquired and made part of a larger entity (as, for
example, when the Chief Executive Officer of the Company remains as such
following a Change of Control but is not made the Chief Executive Officer of the
acquiring corporation) shall not constitute an "Involuntary Termination"; (ii) a
significant reduction by the Company in the Base Salary of the Executive as in
effect immediately prior to such reduction; (iii) a material reduction by the
Company in the kind or level of employee benefits to which the Executive is
entitled immediately prior to such reduction with the result that the
Executive's overall benefits package is significantly reduced, except for any
reductions directly related to, or as the result of, the Liquidation; (iv) the
relocation of the Executive to a facility or a location more than fifty (50)
miles from the Executive's then present location, or (v) the completion of all
of the Liquidation Tasks as set forth in Section 3(c).

     11.  Confidential Information. Executive entered into the Company's
standard Confidential Information and Invention Assignment Agreement (the
"Confidential Information Agreement") upon commencing employment hereunder,
which such agreement is incorporated herein by reference.

     12.  Conditional Nature of Severance Payments.

          (a) Noncompete. To avoid the inevitable disclosure of the Company's
trade secrets and confidential information, Executive agrees and acknowledges
that Executive's right to receive the severance payments set forth in Sections 7
and 8 (to the extent Executive is otherwise entitled to such payments) shall be
conditioned upon Executive not directly or indirectly engaging in (whether as an
employee, consultant, agent, proprietor, principal, partner, stockholder,
corporate officer, director or otherwise), nor having any ownership interested
in or participating in the financing, operation, management or control of, any
person, firm, corporation or business that competes with Company or is a
customer of the Company. Upon any breach of this section, all severance payments
pursuant to this Agreement shall immediately cease.

          (b) Non-Solicitation. Until the date one (1) year after the
termination of Executive's employment with the Company for any reason, Executive
agrees not, either directly or indirectly, to solicit, induce, attempt to hire,
recruit, encourage, take away, hire any employee of the Parent or the Company or
cause an employee to leave his or her employment either for Executive or for any
other entity or person. Additionally, Executive acknowledges that Executive's
right to receive the severance payments set forth in Sections 7 and 8 (to the
extent Executive is otherwise entitled to such payments) are contingent upon
Executive complying with this Section 12(b) and upon any breach of this section
all severance payments pursuant to this Agreement shall immediately cease.

          (c) Understanding of Covenants. Executive represents that he (i) is
familiar with the foregoing covenants not to compete and not to solicit, and
(ii) is fully aware of his obligations hereunder, including, without limitation,
the reasonableness of the length of time, scope and geographic coverage of these
covenants.

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     13.  Assignment. This Agreement will be binding upon and inure to the
benefit of (a) the heirs, executors and legal representatives of Executive upon
Executive's death and (b) any successor of the Company. Any such successor of
the Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes. For this purpose, "successor" means any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. None of the rights
of Executive to receive any form of compensation payable pursuant to this
Agreement may be assigned or transferred except by will or the laws of descent
and distribution. Any other attempted assignment, transfer, conveyance or other
disposition of Executive's right to compensation or other benefits will be null
and void.

     14.  Notices. All notices, requests, demands and other communications
called for hereunder shall be in writing and shall be deemed given (i) on the
date of delivery if delivered personally, (ii) one (1) day after being sent by a
well established commercial overnight service, or (iii) four (4) days after
being mailed by registered or certified mail, return receipt requested, prepaid
and addressed to the parties or their successors at the following addresses, or
at such other addresses as the parties may later designate in writing:

          If to the Company:

          Integrated Telecom Express, Inc.
          400 Race Street
          San Jose, CA 95126
          Attn: President

          If to Executive:

          at the last residential address known by the Company.

     15.  Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement will continue in full force and effect without said
provision.

     16.  Arbitration.

          (a) General. In consideration of Executive's service to the Company,
its promise to arbitrate all employment related disputes and Executive's receipt
of the compensation, pay raises and other benefits paid to Executive by the
Company, at present and in the future, Executive agrees that any and all
controversies, claims, or disputes with anyone (including the Company and any
employee, officer, director, shareholder or benefit plan of the Company in their
capacity as such or otherwise) arising out of, relating to, or resulting from
Executive's service to the Company under this Agreement or otherwise or the
termination of Executive's service with the Company, including any breach of
this Agreement, shall be subject to binding arbitration under the Arbitration
Rules set forth in California Code of Civil Procedure Section 1280 through
1294.2, including Section 1283.05 (the "Rules") and pursuant to California law.
Disputes which Executive agrees to arbitrate, and thereby agrees to waive any
right to a trial by jury, include any statutory claims under state or federal
law, including, but not limited to, claims under Title VII of the Civil Rights
Act of 1964, the Americans with Disabilities Act of 1990, the Age Discrimination
in Employment Act of 1967, the

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Older Workers Benefit Protection Act, the California Fair Employment and Housing
Act, the California Labor Code, claims of harassment, discrimination or wrongful
termination and any statutory claims. Executive further understands that this
Agreement to arbitrate also applies to any disputes that the Company may have
with Executive.

          (b) Procedure. Executive agrees that any arbitration will be
administered by the American Arbitration Association ("AAA") and that a neutral
arbitrator will be selected in a manner consistent with its National Rules for
the Resolution of Employment Disputes. The arbitration proceedings will allow
for discovery according to the rules set forth in the National Rules for the
Resolution of Employment Disputes or California Code of Civil Procedure.
Executive agrees that the arbitrator shall have the power to decide any motions
brought by any party to the arbitration, including motions for summary judgment
and/or adjudication and motions to dismiss and demurrers, prior to any
arbitration hearing. Executive agrees that the arbitrator shall issue a written
decision on the merits. Executive also agrees that the arbitrator shall have the
power to award any remedies, including attorneys' fees and costs, available
under applicable law. Executive understands the Company will pay for any
administrative or hearing fees charged by the arbitrator or AAA except that
Executive shall pay the first $200.00 of any filing fees associated with any
arbitration Executive initiates. Executive agrees that the arbitrator shall
administer and conduct any arbitration in a manner consistent with the Rules and
that to the extent that the AAA's National Rules for the Resolution of
Employment Disputes conflict with the Rules, the Rules shall take precedence.

          (c) Remedy. Except as provided by the Rules, arbitration shall be the
sole, exclusive and final remedy for any dispute between Executive and the
Company. Accordingly, except as provided for by the Rules, neither Executive nor
the Company will be permitted to pursue court action regarding claims that are
subject to arbitration. Notwithstanding, the arbitrator will not have the
authority to disregard or refuse to enforce any lawful Company policy, and the
arbitrator shall not order or require the Company to adopt a policy not
otherwise required by law that the Company has not adopted.

          (d) Availability of Injunctive Relief. In addition to the right under
the Rules to petition the court for provisional relief, Executive agrees that
any party may also petition the court for injunctive relief where either party
alleges or claims a violation of this Agreement or the Confidentiality Agreement
or any other agreement regarding trade secrets, confidential information,
nonsolicitation or Labor Code (S)2870. In the event either party seeks
injunctive relief, the prevailing party shall be entitled to recover reasonable
costs and attorneys' fees.

          (e) Administrative Relief. Executive understands that this Agreement
does not prohibit Executive from pursuing an administrative claim with a local,
state or federal administrative body such as the Department of Fair Employment
and Housing, the Equal Employment Opportunity Commission or the workers'
compensation board. This Agreement does, however, preclude Executive from
pursuing court action regarding any such claim.

          (f) Voluntary Nature of Agreement. Executive acknowledges and agrees
that Executive is executing this Agreement voluntarily and without any duress or
undue influence by the Company or anyone else. Executive further acknowledges
and agrees that Executive has carefully read this Agreement and that Executive
has asked any questions needed for Executive to understand the terms,
consequences and binding effect of this Agreement and fully understand it,
including that

                                                                            -10-

<PAGE>

Executive is waiving Executive's right to a jury trial. Finally, Executive
agrees that Executive has been provided an opportunity to seek the advice of an
attorney of Executive's choice before signing this Agreement.

     17. Attorneys' Fees. The Company shall reimburse Executive for attorneys'
fees incurred by Executive with respect to implementation and execution of this
Agreement, not to exceed $10,000, upon Executive's submission of receipts or
other reasonable documentation supporting such fees.

     18. Integration. This Agreement, together with the Option Plan, Option
Agreements and the Confidential Information Agreement, represent the entire
agreement and understanding between the parties as to the subject matter herein
and supersede all prior or contemporaneous agreements whether written or oral,
including the Old Employment Agreement. No waiver, alteration, or modification
of any of the provisions of this Agreement will be binding unless in writing and
signed by duly authorized representatives of the parties hereto.

     19. Waiver of Breach. The waiver of a breach of any term or provision of
this Agreement, which must be in writing, shall not operate as or be construed
to be a waiver of any other previous or subsequent breach of this Agreement.

     20. Headings. All captions and section headings used in this Agreement are
for convenient reference only and do not form a part of this Agreement.

     21. Tax Withholding. All payments made pursuant to this Agreement will be
subject to withholding of applicable taxes.

     22. Governing Law. This Agreement will be governed by the laws of the State
of California (with the exception of its conflict of laws provisions).

     23. Acknowledgment. Executive acknowledges that he has had the opportunity
to discuss this matter with and obtain advice from his private attorney, has had
sufficient time to, and has carefully read and fully understands all the
provisions of this Agreement, and is knowingly and voluntarily entering into
this Agreement.

     24. Counterparts. This Agreement may be executed in counterparts, and each
counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.

                  [Remainder of Page Intentionally Left Blank]

                                                                            -11-

<PAGE>

     IN WITNESS WHEREOF, each of the patties has executed this Agreement, is the
case of the Company by their duly authorized officers, as of the day and year
first above written.

COMPANY:

INTEGRATED TELECOM EXPRESS, INC.


By:   /s/ Peter Courture                        Date: May 2002
      ---------------------------------               --------------------------
Title: Secretary
       --------------------------------


EXECUTIVE:

/s/ James Williams                              Date: May 17, 2002
---------------------------------------               --------------------------
JAMES E. WILLIAMS