Document:

exv10w23

 

Exhibit 10.23

Employment Agreement

          This Agreement  is entered into as of July 22, 2005, by and between
Mark Richman (the “Employee”) and Terayon Communication systems,
Inc. , a Delaware corporation (the “Company”).

Recitals

          WHEREAS, the parties entered into an Offer Letter dated as of November 10, 2004 and a
Severance Agreement dated as of March 24, 2005 (collectively, the “Original Employment
Agreements”); and

          WHEREAS, the parties desire to amend and restate the Original Employment Agreements in their
entirety.

          NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the
parties hereby agree as follows:

          1. Duties and Scope of Employment.

          (a) Position. For the term of his employment under this Agreement (the “Employment”), the
Company agrees to employ the Employee in the position of Chief Financial Officer or in such other
similar position as the Company subsequently may assign to the Employee. The Employee shall report
to the Company’s Chief Executive Officer.

          (b) Obligations to the Company. During his Employment, the Employee (i) shall devote his full
business efforts and time to the Company, (ii) shall not engage in any other employment, consulting
or other business activity that would create a conflict of interest with the Company, (iii) shall
not assist any person or entity in competing with the Company or in preparing to compete with the
Company and (iv) shall comply with the Company’s policies and rules, as they may be in effect from
time to time.

          (c) No Conflicting Obligations. The Employee represents and warrants to the Company that he
is under no obligations or commitments, whether contractual or otherwise, that are inconsistent
with his obligations under this Agreement. The Employee represents and warrants that he will not
use or disclose, in connection with his Employment, any trade secrets or other proprietary
information or intellectual property in which the Employee or any other person has any right, title
or interest and that his Employment will not infringe or violate the rights of any other person.
The Employee represents and warrants to the Company that he has returned all property and
confidential information belonging to any prior employer.

          (d) Commencement Date. The Employee commenced full-time Employment with the Company on
November 30, 2004. The terms of this Agreement shall be applicable from the date of this
Agreement, and except as otherwise required by law Employee hereby agrees that

 

 

the Company shall not be liable for any obligations relating to periods of service by Employee
prior to the date hereof or under the Original Employment Agreements.

          2. Cash and Incentive Compensation.

          (a) Salary. The Company shall pay the Employee as compensation for his services a base salary
at a gross annual rate of not less than $300,000. Such salary shall be payable in accordance with
the Company’s standard payroll procedures. (The annual compensation specified in this Subsection
(a), together with any increases in such compensation that the Company may grant from time to time,
is referred to in this Agreement as “Base Salary.”)

          (b) Incentive Bonuses. If the Company approves a bonus arrangement for any calendar year
during the Employee’s Employment, then the Employee shall be eligible for an annual incentive bonus
of up to 75% of his Base Salary. Such bonus (if any) shall be awarded based on objective or
subjective criteria established in advance by the Company’s Board of Directors (the “Board”) or its
Compensation Committee. The determinations of the Board or its Compensation Committee with respect
to any such bonus shall be final and binding. The Employee will not be eligible for any such
annual bonus if he is not employed by the Company on both December 31st of the year to
which such bonus pertains (“December 31st”) and the date when such bonus is payable (the
“Payment Date”); provided, however, that if the Employee is subject to an Involuntary Termination
(as defined in Section 11) after December 31st but prior to the Payment Date, then the
Employee shall be entitled to receive any bonus that the Board or Compensation Committee determines
was earned by the Employee on the Payment Date.

          3. Vacation and Employee Benefits. During his Employment, the Employee shall be eligible for
paid vacations in accordance with the Company’s vacation policy, as it may be amended from time to
time. During his Employment, the Employee shall be eligible to participate in the employee benefit
plans maintained by the Company, subject in each case to the generally applicable terms and
conditions of the plan in question and to the determinations of any person or committee
administering such plan.

          4. Business Expenses. During his Employment, the Employee shall be authorized to incur
necessary and reasonable travel, entertainment and other business expenses in connection with his
duties hereunder. The Company shall reimburse the Employee for such expenses upon presentation of
an itemized account and appropriate supporting documentation, all in accordance with the Company’s
generally applicable policies.

          5. Term of Employment.

          (a) Termination of Employment. The Company may terminate the Employee’s Employment at any
time and for any reason (or no reason), and with or without Cause, by giving the Employee notice in
writing. The Employee may terminate his Employment by giving the Company 10 business days’ advance
notice in writing. The Employee’s Employment shall terminate automatically in the event of his
death.

2

 

          (b) Employment at Will. The Employee’s Employment with the Company shall be “at will,”
meaning that either the Employee or the Company shall be entitled to terminate the Employee’s
Employment at any time and for any reason, with or without Cause. Any contrary representations
that may have been made to the Employee shall be superseded by this Agreement. This Agreement
shall constitute the full and complete agreement between the Employee and the Company on the “at
will” nature of the Employee’s Employment, which may only be changed in an express written
agreement signed by the Employee and the Company’s Chief Executive Officer.

          (c) Rights Upon Termination. Except as expressly provided in Section 6, upon the termination
of the Employee’s Employment, the Employee shall only be entitled to the compensation, benefits and

expense reimbursements that the Employee has earned under this Agreement before the effective date
of the termination. The payments under this Agreement shall fully discharge all responsibilities
of the Company to the Employee.

          6. Termination Benefits.

          (a) Preconditions. Any other provision of this Agreement notwithstanding, Subsections (b),
(c), (d) and (e) below shall not apply unless the Employee:

          (i) Has executed a general release of all claims (in a form prescribed by the
Company);

          (ii) Has returned all property of the Company in the Employee’s possession; and

          (iii) If requested by the Board, has resigned as a member of the Board and as a
member of the Boards of Directors of all subsidiaries of the Company, to the extent
applicable.

          (b) Severance Pay. If, during the term of this Agreement, the Employee is subject to an
Involuntary Termination, then the Company shall pay the Employee, within 10 days after the release
described in Subsection (a)(i) above has become effective, a lump-sum cash payment equal to the sum
of 1 times (i) the Employee’s Base Salary at the rate in effect at the time of termination of
Employment and (ii) the greater of Employee’s annual performance bonus (excluding any one-time
retention or hiring bonuses) for the most recent calendar year completed prior to the date when the
termination of Employee’s Employment is effective or the Employee’s target performance bonus in
effect for the year in which the Employee’s Employment is terminated (the “Bonus Amount”).

          (c) Change in Control Severance Pay. If, during the term of this Agreement, the Company is
subject to a Change in Control (as defined in Section 11) and the Employee is subject to an
Involuntary Termination within 12 months after that Change in Control, then the Company shall pay
the Employee, within 10 days after the release described in Subsection (a)(i) above has become
effective, a lump-sum cash payment equal to the sum of 2 times (i) the Employee’s Base Salary (at
the rate in effect at the time of termination of

3

 

Employment, or, if greater, the rate in effect immediately prior to the Change in Control) and
(ii) the Bonus Amount. Severance pay under this Subsection (c) and Subsection (b) above shall be
mutually exclusive and severance under one subsection will prevent severance under the other.

          (d) Health Insurance. If Subsection (b) or (c) above applies, and if the Employee timely
elects to continue health insurance coverage under the Consolidated Omnibus Budget Reconciliation
Act (“COBRA”) for himself and, if applicable, his dependents following the termination of his
Employment, then the Company shall pay the monthly premium under COBRA (for the same level of
medical, dental and vision coverage as in effect at the time of termination of employment) for the
Employee and, if applicable, such dependents until the earliest of (i) the close of the 12 month
period following the termination of Employee’s Employment (the “Continuation Period”), (ii) the
expiration of the Employee’s continuation coverage under COBRA or (iii) the date when the Employee
receives substantially equivalent health insurance coverage in connection with new employment or
self-employment. Notwithstanding the foregoing, if Subsection (c) applies then the Continuation
Period shall be 24 months following the termination of Employee’s Employment.

          (e) Vesting. If Subsection (c) above applies, then the Employee shall fully vest in all
option shares as of the date of termination of Employee’s Employment.

          (f) Offset. The severance payments under Subsections (b) or (c) shall be reduced by the
amount of any severance pay or pay in lieu of notice that the Employee receives from the Company
under a federal or state statute (including, without limitation, the Worker Adjustment and
Retraining Notification Act).

          (g) Section 409A Savings Clause. The Company reserves the right, in its sole discretion, to
accelerate or delay the timing of the payment of any severance benefits under this Agreement to the
extent the Company deems it advisable to avoid adverse tax treatment for the Employee under
Internal Revenue Code Section 409A(a).

          7. Proprietary Information and Invention Assignment Agreement. The Proprietary Information
and Invention Assignment Agreement between Employee and the Company dated as of November 10, 2004
shall remain in full force and effect.

          8. Gross-up Payment.

          (a) Gross-Up Payment. If it is determined that any payment or distribution of any type to the
Employee or for his benefit by the Company, any of its affiliates, any person who acquires
ownership or effective control of the Company or ownership of a substantial portion of the
Company’s assets (within the meaning of section 280G of the Internal Revenue Code of 1986, as
amended (the “Code”), and the regulations thereunder) or any affiliate of such person, whether paid
or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise
(the “Total Payments”), would be subject to the excise tax imposed by section 4999 of the Code or
any interest or penalties with respect to such excise tax (such excise tax and any such interest or
penalties are collectively referred to as the “Excise Tax”), then Employee shall be responsible for
the first $200,000 in Excise Tax imposed on the Total

4

 

Payments and, if the amount of Excise Tax exceeds $200,000, then the Employee shall be
entitled to receive an additional payment (a “Gross-Up Payment”) in an amount calculated to ensure
that after the Employee pays all taxes (and any interest or penalties imposed with respect to such
taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the Employee retains an amount
of the Gross-Up Payment equal to the amount of the Excise Tax imposed upon the Total Payments that
exceeds $200,000.

          (b) Determination by Accountant. All determinations and calculations required to be made
under this Section 8 shall be made by an independent accounting firm selected by the Employee from
among the largest ten accounting firms in the United States (the “Accounting Firm”). The
Accounting Firm shall provide its determination (the “Determination”), together with detailed
supporting calculations regarding the amount of any Gross-Up Payment and any other relevant matter,
to the Employee and the Company within five days after the Employee or the Company made a request
(if the Employee reasonably believes that any of the Total Payments may be subject to the Excise
Tax). If the Accounting Firm determines that no Excise Tax is payable by the Employee, it shall
furnish the Employee with a written statement that it has concluded that no Excise Tax is payable
(including the reasons therefor) and that the Employee has substantial authority not to report any
Excise Tax on his federal income tax return. If a Gross-Up Payment is determined to be payable, it
shall be paid to the Employee within five days after the Determination has been delivered to him or
the Company. Any determination by the Accounting Firm shall be binding upon the Company and the
Employee, absent manifest error.

          (c) Over- and Underpayments. As a result of uncertainty in the application of section 4999 of
the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments not made by the Company should have been made (“Underpayment”) or that
Gross-Up Payments will have been made by the Company that should not have been made
(“Overpayment”). In either event, the Accounting Firm shall determine the amount of the
Underpayment or Overpayment that has occurred. In the case of an Underpayment, the Company shall
promptly pay the amount of such Underpayment to the Employee or for his benefit. In the case of an
Overpayment, the Employee shall, at the direction and expense of the Company, take such steps as
are reasonably necessary (including the filing of returns and claims for refund), follow reasonable
instructions from, and procedures established by, the Company, and otherwise reasonably cooperate
with the Company to correct such Overpayment, provided, however, that (i) the Employee shall in no
event be obligated to return to the Company an amount greater than the net after-tax portion of the
Overpayment that the Employee has retained or has recovered as a refund from the applicable taxing
authorities and (ii) this provision shall be interpreted in a manner consistent with the intent of
Subsection (a) above, which is to make the Employee whole, on an after-tax basis, from the
application of the Excise Tax greater than $200,000, it being understood that the correction of an
Overpayment may result in the Employee’s repaying to the Company an amount that is less than the
Overpayment.

          9. Successors.

5

 

          (a) Company’s Successors. This Agreement shall be binding upon any successor (whether direct
or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all
or substantially all of the Company’s business and/or assets. For all purposes under this
Agreement, the term “Company” shall include any successor to the Company’s business and/or assets
which becomes bound by this Agreement.

          (b) Employee’s Successors. This Agreement and all rights of the Employee hereunder shall
inure to the benefit of, and be enforceable by, the Employee’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and legatees.

          10. Miscellaneous Provisions.

          (a) Notice. Notices and all other communications contemplated by this Agreement shall be in
writing and shall be deemed to have been duly given when personally delivered, when delivered by
FedEx with delivery charges prepaid, or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Employee, mailed notices shall be
addressed to him at the home address that he most recently communicated to the Company in writing.
In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and
all notices shall be directed to the attention of its Secretary.

          (b) Modifications and Waivers. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing and signed by the
Employee and by the Company’s Chief Executive Officer. No waiver by either party of any breach of,
or of compliance with, any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition or provision at
another time.

          (c) Whole Agreement. This Agreement supersedes the Original Employment Agreements. No other
agreements, representations or understandings (whether oral or written and whether express or
implied) that are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof. This Agreement and the Proprietary
Information and Inventions Agreement contain the entire understanding of the parties with respect
to the subject matter hereof.

          (d) Withholding Taxes. All payments made under this Agreement shall be subject to reduction
to reflect taxes or other charges required to be withheld by law.

          (e) Choice of Law and Severability. This Agreement shall be interpreted in accordance with
the laws of the State of California (except their provisions governing the choice of law). If any
provision of this Agreement becomes or is deemed invalid, illegal or unenforceable in any
applicable jurisdiction by reason of the scope, extent or duration of its coverage, then such
provision shall be deemed amended to the minimum extent necessary to conform to applicable law so
as to be valid and enforceable or, if such provision cannot be so amended without materially
altering the intention of the parties, then such provision shall be stricken and the remainder of
this Agreement shall continue in full force and effect. If any

6

 

provision of this Agreement is rendered illegal by any present or future statute, law,
ordinance or regulation (collectively the “Law”), then such provision shall be curtailed or limited
only to the minimum extent necessary to bring such provision into compliance with the Law. All the
other terms and provisions of this Agreement shall continue in full force and effect without
impairment or limitation.

          (f) No Assignment. This Agreement and all rights and obligations of the Employee hereunder
are personal to the Employee and may not be transferred or assigned by the Employee at any time.
The Company may assign its rights under this Agreement to any entity that assumes the Company’s
obligations hereunder in connection with any sale or transfer of all or a substantial portion of
the Company’s assets to such entity.

          (g) Counterparts. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same
instrument.

          11. Definitions. The following terms shall have the following meanings whenever they are used
in this Agreement.

          (a) Definition of “Cause.” For all purposes under this Agreement, “Cause” shall mean:

          (i) An unauthorized use or disclosure by the Employee of the Company’s
confidential information or trade secrets, which use or disclosure causes material
harm to the Company;

          (ii) A material breach by the Employee of any agreement between the Employee
and the Company;

          (iii) A material failure by the Employee to comply with the Company’s written
policies or rules;

          (iv) The Employee’s conviction of, or plea of “guilty” or “no contest” to, a
felony under the laws of the United States or any State thereof;

          (v) The Employee’s gross misconduct;

          (vi) A continuing failure by the Employee to perform assigned duties after
receiving written notification of such failure from the Board; or

          (vii) A failure by the Employee to cooperate in good faith with a governmental
or internal investigation of the Company or its directors, officers or employees, if
the Company has requested the Employee’s cooperation.

          (b) Definition of “Change in Control.” For all purposes under this Agreement, “Change in
Control” shall mean:

7

 

          (i) The consummation of a merger or consolidation of the Company with or into
another entity or any other corporate reorganization, if persons who were not
stockholders of the Company immediately prior to such merger, consolidation or other
reorganization own immediately after such merger, consolidation or other
reorganization 50% or more of the voting power of the outstanding securities of each
of (i) the continuing or surviving entity and (ii) any direct or indirect parent
corporation of such continuing or surviving entity;

          (ii) The sale, transfer or other disposition of all or substantially all of the
Company’s assets; or

          (iii) Any transaction as a result of which any person is the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing at least 50% of the total voting power
represented by the Company’s then outstanding voting securities. For purposes of
this Subsection (d), the term “person” shall have the same meaning as when used in
sections 13(d) and 14(d) of the Exchange Act but shall exclude (i) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company or
of a Parent or Subsidiary and (ii) a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as their ownership
of the common stock of the Company.

A transaction shall not constitute a Change in Control if its sole purpose is to change the state
of the Company’s incorporation or to create a holding company that will be owned in substantially
the same proportions by the persons who held the Company’s securities immediately before such
transaction.

          (c) Definition of “Involuntary Termination.” For all purposes under this Agreement,
“Involuntary Termination” shall mean the termination of the Employee’s Employment by reason of:

          (i) The involuntary discharge of the Employee by the Company for reasons other
than Cause or Permanent Disability; or

          (ii) The voluntary resignation of the Employee within 30 days following (A) a
material adverse change in Employee’s title, authority or responsibilities with the
Company, including, without limitation, a material adverse change in reporting
authority or in the persons who report directly to Employee, (B) a material
reduction in Employee’s Base Salary or (C) receipt of notice that Employee’s
principal workplace will be relocated by more than 25 miles from Santa Clara,
California.

          (d) Definition of “Permanent Disability.” For all purposes under this Agreement, “Permanent
Disability” shall mean the Employee’s inability to perform the essential functions of the
Employee’s position, with or without reasonable accommodation, for a period of at least 120
consecutive days because of a physical or mental impairment.

8

 

          IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the
Company by its duly authorized officer, as of the day and year first above written.

	 	 	 	 	 
	 	 	/s/ Mark Richman
	 	 	 
	 	 	Mark Richman
	 
	 	 	 	 
	 	 	Terayon Communication Systems, Inc.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jerry D. Chase
	 	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:
	 	 CEO

9exv10w24

 

Exhibit 10.24

Employment Agreement

     This Agreement is entered into as of July 27, 2005, by and between
Matt Aden (the “Employee”) and Terayon Communication systems,
Inc. , a Delaware corporation (the “Company”).

Recitals

     WHEREAS, the parties entered into an Offer Letter dated as of July 27, 2005 (the “Offer
Letter”); and

     WHEREAS, the parties desire to amend and restate the Offer Letter in its entirety.

     NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the
parties hereby agree as follows:

1. Duties and Scope of Employment.

(a) Position. For the term of his employment under this Agreement (the “Employment”), the Company
agrees to employ the Employee in the position of Senior Vice President, Sales or in such other
position as the Company subsequently may assign to the Employee. The Employee shall report to the
Chief Executive Officer or to such other person as the Company subsequently may determine.

(b) Obligations to the Company. During his Employment, the Employee (i) shall devote his full
business efforts and time to the Company, (ii) shall not engage in any other employment, consulting
or other business activity that would create a conflict of interest with the Company, (iii) shall
not assist any person or entity in competing with the Company or in preparing to compete with the
Company and (iv) shall comply with the Company’s policies and rules, as they may be in effect from
time to time.

(c) No Conflicting Obligations. The Employee represents and warrants to the Company that he is
under no obligations or commitments, whether contractual or otherwise, that are inconsistent with
his obligations under this Agreement. The Employee represents and warrants that he will not use or
disclose, in connection with his Employment, any trade secrets or other proprietary information or
intellectual property in which the Employee or any other person has any right, title or interest
and that his Employment will not infringe or violate the rights of any other person. The Employee
represents and warrants to the Company that he has returned all property and confidential
information belonging to any prior employer.

(d) Commencement Date. The Employee commenced full-time Employment with the Company on July 27,
2005. The terms of this Agreement shall be applicable from the date of this Agreement, and except
as otherwise required by law Employee hereby agrees that the Company shall not be liable for any
obligations relating to periods of service by Employee prior to the date hereof or under the Offer
Letter.

 

 

2. Cash and Incentive Compensation.

(a) Salary. The Company shall pay the Employee as compensation for his services a base salary at a
gross annual rate of not less than $325,000.00 Such salary shall be payable in accordance with the
Company’s standard payroll procedures. (The annual compensation specified in this Subsection (a),
together with any increases in such compensation that the Company may grant from time to time, is
referred to in this Agreement as “Base Salary.”)

(b) Sales Commission. Employee will be eligible for a sales commission plan with a target payout
of 100% of your Base Salary (which shall be pro-rated for fiscal year 2005), the payment of which
will be based on the achievement of sales goals to be defined by the Chief Executive Officer and
approved by the Board of Directors. Sales commission payments are subject to the terms and
conditions of the Company’s Sales Compensation Plan as defined each year.

3. Vacation and Employee Benefits. During his Employment, the Employee shall be eligible for paid
vacations in accordance with the Company’s vacation policy, as it may be amended from time to time.
During his Employment, the Employee shall be eligible to participate in the employee benefit plans
maintained by the Company, subject in each case to the generally applicable terms and conditions of
the plan in question and to the determinations of any person or committee administering such plan.

4. Business Expenses. During his Employment, the Employee shall be authorized to incur necessary
and reasonable travel, entertainment and other business expenses in connection with his duties
hereunder. The Company shall reimburse the Employee for such expenses upon presentation of an
itemized account and appropriate supporting documentation, all in accordance with the Company’s
generally applicable policies.

5. Term of Employment.

(a) Termination of Employment. The Company may terminate the Employee’s Employment at any time and
for any reason (or no reason), and with or without Cause, by giving the Employee notice in writing.
The Employee may terminate his Employment by giving the Company 10 business days’ advance notice
in writing. The Employee’s Employment shall terminate automatically in the event of his death.

(b) Employment at Will. The Employee’s Employment with the Company shall be “at will,” meaning
that either the Employee or the Company shall be entitled to terminate the Employee’s Employment at
any time and for any reason, with or without Cause. Any contrary representations that may have
been made to the Employee shall be superseded by this Agreement. This Agreement shall constitute
the full and complete agreement between the Employee and the Company on the “at will” nature of the
Employee’s Employment, which may only be changed in an express written agreement signed by the
Employee and a duly authorized officer of the Company.

(c) Rights Upon Termination. Except as expressly provided in Section 6, upon the termination of
the Employee’s Employment, the Employee shall only be entitled to the

2

 

compensation, benefits and expense reimbursements that the Employee has earned under this Agreement
before the effective date of the termination. The payments under this Agreement shall fully
discharge all responsibilities of the Company to the Employee.

6. Termination Benefits.

(a) Preconditions. Any other provision of this Agreement notwithstanding, Subsections (b), (c),
(d) and (e) below shall not apply unless the Employee:

(i) Has executed a general release of all claims (in a form prescribed by the Company);

(ii) Has returned all property of the Company in the Employee’s possession; and

(iii) If requested by the Board, has resigned as a member of the Board and as a member of
the Boards of Directors of all subsidiaries of the Company, to the extent applicable.

(b) Severance Pay. If, during the term of this Agreement, the Employee is subject to an
Involuntary Termination, then the Company shall pay the Employee, within 10 days after the release
described in Subsection (a)(i) above has become effective, a lump-sum cash payment equal to the sum
of 1 times the Employee’s Base Salary at the rate in effect at the time of termination of
Employment.

(c) Change in Control Severance Pay. If, during the term of this Agreement, the Company is subject
to a Change in Control (as defined in Section 11) and the Employee is subject to an Involuntary
Termination within 12 months after that Change in Control, then the Company shall pay the Employee,
within 10 days after the release described in Subsection (a)(i) above has become effective, a
lump-sum cash payment equal to the sum of (i) 2 times the Employee’s Base Salary (at the rate in
effect at the time of termination of Employment, or, if greater, the rate in effect immediately
prior to the Change in Control) and (ii) 2 times the greater of Employee’s annual sales commission
payments for the most recent year completed prior to the date when the termination of Employee’s
Employment is effective or the Employee’s target sales commission payments in effect for the year
in which the Employee’s Employment is terminated. Severance pay under this Subsection (c) and
Subsection (b) above shall be mutually exclusive and severance under one subsection will prevent
severance under the other.

(d) Health Insurance. If Subsection (b) or (c) above applies, and if the Employee elects to
continue health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act
(“COBRA”) for himself and, if applicable, his dependents following the termination of his
Employment, then the Company shall pay the monthly premium under COBRA for the Employee and, if
applicable, such dependents until the earliest of (i) the close of the 12 month period following
the termination of Employee’s Employment (the “Continuation Period”), (ii) the expiration of the
Employee’s continuation coverage under COBRA or (iii) the date when the Employee receives
substantially equivalent health insurance coverage in connection with new employment or
self-employment. Notwithstanding the foregoing, if Subsection (c) applies then

3

 

the Continuation Period shall be 24 months following the termination of Employee’s Employment.

(e) Vesting. If Subsection (c) above applies, then the Employee shall fully vest in all option
shares as of the date of termination of Employee’s Employment.

(f) Offset. The severance payments under Subsections (b) or (c) shall be reduced by the amount of
any severance pay or pay in lieu of notice that the Employee receives from the Company under a
federal or state statute (including, without limitation, the Worker Adjustment and Retraining
Notification Act).

(g) Section 409A Savings Clause. The Company reserves the right, in its sole discretion, to
accelerate or delay the timing of the payment of any severance benefits under this Agreement to the
extent the Company deems it advisable to avoid adverse tax treatment for the Employee under
Internal Revenue Code Section 409A(a).

7. Proprietary Information and Invention Assignment Agreement. The Proprietary Information and
Invention Assignment Agreement between Employee and the Company dated as of July 27, 2005 shall
remain in full force and effect.

8. Successors.

(a) Company’s Successors. This Agreement shall be binding upon any successor (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or
substantially all of the Company’s business and/or assets. For all purposes under this Agreement,
the term “Company” shall include any successor to the Company’s business and/or assets which
becomes bound by this Agreement.

(b) Employee’s Successors. This Agreement and all rights of the Employee hereunder shall inure to
the benefit of, and be enforceable by, the Employee’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.

9. Miscellaneous Provisions.

(a) Notice. Notices and all other communications contemplated by this Agreement shall be in
writing and shall be deemed to have been duly given when personally delivered, when delivered by
FedEx with delivery charges prepaid, or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Employee, mailed notices shall be
addressed to him at the home address that he most recently communicated to the Company in writing.
In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and
all notices shall be directed to the attention of its Secretary.

(b) Modifications and Waivers. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing and signed by the
Employee and by an authorized officer of the Company (other than the Employee). No waiver by
either party of any breach of, or of compliance with, any condition or provision of this

4

 

Agreement by the other party shall be considered a waiver of any other condition or provision or of
the same condition or provision at another time.

(c) Whole Agreement. This Agreement supersedes the Offer Letter. No other agreements,
representations or understandings (whether oral or written and whether express or implied) that are
not expressly set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof. This Agreement and the Proprietary Information and
Inventions Agreement contain the entire understanding of the parties with respect to the subject
matter hereof.

(d) Withholding Taxes. All payments made under this Agreement shall be subject to reduction to
reflect taxes or other charges required to be withheld by law.

(e) Choice of Law and Severability. This Agreement shall be interpreted in accordance with the
laws of the State of California (except their provisions governing the choice of law). If any
provision of this Agreement becomes or is deemed invalid, illegal or unenforceable in any
applicable jurisdiction by reason of the scope, extent or duration of its coverage, then such
provision shall be deemed amended to the minimum extent necessary to conform to applicable law so
as to be valid and enforceable or, if such provision cannot be so amended without materially
altering the intention of the parties, then such provision shall be stricken and the remainder of
this Agreement shall continue in full force and effect. If any provision of this Agreement is
rendered illegal by any present or future statute, law, ordinance or regulation (collectively the
“Law”), then such provision shall be curtailed or limited only to the minimum extent necessary to
bring such provision into compliance with the Law. All the other terms and provisions of this
Agreement shall continue in full force and effect without impairment or limitation.

(f) No Assignment. This Agreement and all rights and obligations of the Employee hereunder are
personal to the Employee and may not be transferred or assigned by the Employee at any time. The
Company may assign its rights under this Agreement to any entity that assumes the Company’s
obligations hereunder in connection with any sale or transfer of all or a substantial portion of
the Company’s assets to such entity.

(g) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the same instrument.

10. Definitions. The following terms shall have the following meanings whenever they are used in
this Agreement.

(a) Definition of “Cause.” For all purposes under this Agreement, “Cause” shall mean:

(i) An unauthorized use or disclosure by the Employee of the Company’s confidential
information or trade secrets, which use or disclosure causes material harm to the Company;

5

 

(ii) A material breach by the Employee of any agreement between the Employee and the
Company;

(iii) A material failure by the Employee to comply with the Company’s written policies or
rules;

(iv) The Employee’s conviction of, or plea of “guilty” or “no contest” to, a felony under
the laws of the United States or any State thereof;

(v) The Employee’s gross misconduct;

(vi) A continuing failure by the Employee to perform assigned duties after receiving
written notification of such failure from the Board; or

(vii) A failure by the Employee to cooperate in good faith with a governmental or internal
investigation of the Company or its directors, officers or employees, if the Company has
requested the Employee’s cooperation.

(b) Definition of “Change in Control.” For all purposes under this Agreement, “Change in Control”
shall mean:

(i) The consummation of a merger or consolidation of the Company with or into another
entity or any other corporate reorganization, if persons who were not stockholders of the
Company immediately prior to such merger, consolidation or other reorganization own
immediately after such merger, consolidation or other reorganization 50% or more of the
voting power of the outstanding securities of each of (i) the continuing or surviving
entity and (ii) any direct or indirect parent corporation of such continuing or surviving
entity;

(ii) The sale, transfer or other disposition of all or substantially all of the Company’s
assets; or

(iii) Any transaction as a result of which any person is the “beneficial owner” (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company
representing at least 50% of the total voting power represented by the Company’s then
outstanding voting securities. For purposes of this Subsection (d), the term “person”
shall have the same meaning as when used in sections 13(d) and 14(d) of the Exchange Act
but shall exclude (i) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or of a Parent or Subsidiary and (ii) a corporation owned
directly or indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of the common stock of the Company.

A transaction shall not constitute a Change in Control if its sole purpose is to change the state
of the Company’s incorporation or to create a holding company that will be owned in substantially
the same proportions by the persons who held the Company’s securities immediately before such
transaction.

6

 

(c) Definition of “Involuntary Termination.” For all purposes under this Agreement, “Involuntary
Termination” shall mean the termination of the Employee’s Employment by reason of:

(i) The involuntary discharge of the Employee by the Company for reasons other than Cause
or Permanent Disability; or

(ii) The voluntary resignation of the Employee within 30 days following (A) a material
adverse change in Employee’s title, authority or responsibilities with the Company,
including, without limitation, a material adverse change in reporting authority or in the
persons who report directly to Employee, (B) a material reduction in Employee’s Base Salary
or (C) receipt of notice that Employee’s principal workplace will be relocated by more than
25 miles from Santa Clara, California.

(d) Definition of “Permanent Disability.” For all purposes under this Agreement, “Permanent
Disability” shall mean the Employee’s inability to perform the essential functions of the
Employee’s position, with or without reasonable accommodation, for a period of at least 120
consecutive days because of a physical or mental impairment.

     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the
Company by its duly authorized officer, as of the day and year first above written.

	 	 	 	 	 
	 	 	/s/ Matt Aden
	 	 	 
	 	 	Matt Aden
	 
	 	 	 	 
	 	 	Terayon Communication Systems, Inc.
	 
	 	 	 	 
	 

	 	By
	 	/s/ Jerry D. Chase
	 	 	 	 	 
	 
	 	 	 	 
	 	 	Title: August 2, 2005

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00088-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00088-of-00352.parquet"}]]