Document:

Exhibit 10.1

 

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”) is entered into as of November 30, 2011 (the “Effective Date”) by and between Vitesse Semiconductor Corporation, a Delaware corporation (“Vitesse”) and Martin Nuss (the “Executive”).

 

In consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, Vitesse and Executive hereby agree as follows:

 

1.                                       POSITION AND COMPENSATION

 

It is hereby agreed that Executive shall be employed by Vitesse as its Vice President of Technology & Strategy. Executive shall be employed at a base salary of $235,000 per year. Vitesse and Executive further agree that Executive’s base salary shall be reviewed not less than once per year from the Effective Date of this Agreement. Executive shall be eligible to participate in Vitesse’s bonus plan for senior executives as from time to time in effect, subject to the terms and conditions in the governing documents of such plan.

 

2.                                       EMPLOYEE STOCK INCENTIVE PLAN

 

(a)                                  Executive shall be eligible to receive equity compensation awards under the Vitesse Semiconductor Corporation 2010 Incentive Plan (“2010 Incentive Plan”) as determined by the Board of Directors of Vitesse or any duly authorized committee thereof (the “Board”) and consistent with his position as Vice President of Technology & Strategy. Subject to approval from Vitesse’s Compensation Committee, Executive may be eligible for evergreen grants pursuant to Vitesse’s applicable policies and plan.

 

(b)                                 Acceleration of Vesting: In the event of a Change of Control Event (as defined in the 2010 Incentive Plan) of the Company (or its successor) and any involuntary termination other than For Cause (as defined below) or Constructive Termination (as defined below) of Executive’s employment within one year of such Change of Control Event, then, any vesting associated with any equity compensation awards which Executive has been granted prior to any such Change of Control Event shall be accelerated and shall immediately become vested as though Executive had completed an additional two (2) years of service with Vitesse, and shall be exercisable for an additional 90 days following the date of termination of Executive’s employment with the Company.

 

(c)                                  “Constructive Termination” shall mean Executive’s resignation for Good Reason; provided, however, that the term Constructive Termination is applicable only to Section 2(b) of this Agreement, and this Agreement shall not be deemed to establish or evidence that Executive’s resignation for Good Reason constitutes a constructive termination, as that term is used under California law.

 

 

 

3.                                       BENEFITS

 

Employment benefits shall be provided to Executive in accordance with Vitesse’s programs then available to its senior executives, as amended from time to time. Executive will be eligible for sick leave as needed, subject to Vitesse’s then-effective policies. Executive may participate in Vitesse’s Employee Stock Purchase Plan, on the terms and conditions set out in such plan. Vitesse will provide Executive with life insurance, with a benefit payable in the amount of $280,000. Vitesse will provide Executive with long-term disability insurance, with a benefit payable in the monthly amount of 60% of Executive’s monthly salary, up to a limit of $10,000. Executive may, at his own expense, purchase additional long-term disability insurance, with a benefit payable in the monthly amount of 66.6% of Executive’s monthly salary, up to a limit of $15,000. Executive shall also be eligible to participate in such health and other voluntary insurance plans as may then be in effect for Vitesse employees.

 

4.                                       VACATION

 

Executive shall be entitled to three weeks of paid vacation per year. Unused vacation time is subject to a limit on accrual and may be carried forward only to the extent consistent with Vitesse’s then current policy with respect to vacation time.

 

5.                                       TERMINATION OF EMPLOYMENT

 

Vitesse and Executive understand and agree that Executive’s employment may be terminated under the circumstances and in accordance with the terms set forth below:

 

(a)                                  By mutual agreement at any time with or without notice; provided that such agreement must be stated in writing and signed and dated by Executive and an authorized agent of Vitesse.

 

(b)                                 By either Vitesse or Executive at any time and for any reason in writing, with or without prior notice.

 

(c)                                  By Vitesse For Cause. A termination of employment “For Cause” is defined as termination by reason of (i) Executive’s conviction of a felony or plea of guilty or nolo contendere to a felony; (ii) Executive’s intentional failure or refusal to perform his employment duties and responsibilities; (iii) Executive’s intentional misconduct that injures Vitesse’s business; (iv) Executive’s intentional violation of any other material provision of this Agreement or Vitesse’s code of business conduct and ethics; or (v) as provided in Section 8 of this Agreement. Executive’s inability to perform his duties because of death or Disability shall not constitute a basis for Vitesse’s termination of Executive’s employment For Cause. Notwithstanding the foregoing, Executive’s employment shall not be subject to termination For Cause without Vitesse’s delivery to Executive of a written notice of intention to terminate. Such notice must describe the reasons for the proposed employment termination For Cause, and must be delivered to Executive at least fifteen (15) days prior to the proposed termination date (the “Notice Period”). Executive shall be provided an opportunity within the Notice Period to cure any such breach (if curable) giving rise to the proposed termination, and shall be provided an opportunity to be heard before the Board. Thereafter, the Board shall deliver to Executive a written notice of termination after the expiration of the Notice Period stating that a majority of the members of the Board have found that Executive engaged in the conduct described in this Paragraph 5(c).

 

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(d)                                 Vitesse may terminate Executive’s employment immediately upon his death or upon Vitesse’s provision to Executive of not less than fifteen (15) days written notice to Executive that Vitesse has determined that Executive is unable to continue to perform his job duties due to Disability. “Disability” means a physical or mental impairment of Executive as certified in a written statement from a licensed physician selected or approved by the Board that renders Executive unable to perform his duties under this Agreement (after reasonable accommodation, if necessary, by Vitesse that does not impose an undue hardship on Vitesse) for one hundred and fifty (150) consecutive days or for at least two hundred and ten (210) days (regardless of whether such days are consecutive) during any period of three hundred sixty-five (365) consecutive days, unless otherwise required by law. In conjunction with determining the existence of a Disability, Executive consents to any reasonable medical examinations (at Vitesse’s expense) that the Board determines are relevant to a determination of Executive’s Disability, and agrees that Vitesse is entitled to receive the written results of such examinations. To give effect to this provision, Executive agrees to sign a written waiver of HIPAA rights in conjunction with such examination(s). Executive agrees to waive any applicable physician-patient privilege which may arise with respect to such examinations.

 

6.                                       SEVERANCE PAY

 

(a)                                  If Executive’s employment is terminated (i) by mutual agreement, (ii) by Vitesse For Cause (iii) by Executive for other than Good Reason (as defined below) or (iv) because of Executive’s Disability or death, Executive (or Executive’s estate in the case of Executive’s death) shall receive (A) Executive’s base salary and accrued, but unused, vacation pay through Executive’s final day of employment, all of which shall be payable in a lump sum on the date of termination of employment, and (B) any fully accrued and unpaid bonus, if any has so accrued, but shall not be eligible to receive any Severance Pay (as defined below) or any other bonus or other compensation, unless agreed upon by both parties.

 

(b)                                 Benefits Payable Upon Certain Terminations.

 

(i)                                     If Executive’s employment is terminated by Vitesse other than For Cause or by Executive for Good Reason and such termination does not occur within the 12 month period following a Change in Control Event, Executive shall receive (A) his base salary and accrued, but unused, vacation pay through the termination date of his employment, all of which shall be payable in a lump sum on the date of termination of employment, and (B) 12 months of base salary. Base salary is defined at the rate prior to any short-term salary reduction that may have occurred.

 

(ii)                                  If Executive’s employment is terminated by Vitesse other than For Cause or by Executive for Good Reason and such termination occurs within the 12 months period following a Change in Control Event, Executive shall receive (A) his base salary and accrued, but unused, vacation pay through the termination date of his employment, all of which shall be payable in a lump sum on the date of termination of employment, (B) Severance Pay, (C) Earned Bonus, (D) an additional bonus equal to fifty percent (50%) of Executive’s maximum potential annual bonus for the fiscal year in which such termination occurs; (E) cash payment (subject to applicable withholding) equal to twelve (12) months of Executive’s medical and dental premiums in effect on the day of termination pursuant to COBRA, and (F) acceleration of Vesting as described in Section 2(b).

 

(iii)                               Executive’s right to receive any of the benefits under Section 2(b) or under this Section 6 shall be conditioned upon Executive’s execution of Vitesse’s then standard form of waiver and release of claims.

 

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(c)                                  “Good Reason” means, without Executive’s written consent, the occurrence of any of the following actions unless the action is fully corrected (if possible) within fifteen (15) days after the Board receives written notice from Executive of such action (which notice shall have been provided by Executive within thirty (30) days of the occurrence of such action), and provided that Executive actually terminates employment within thirty (30) days following the end of such fifteen (15) day period:  (i) Vitesse’s material reduction in Executive’s base salary; (ii) Vitesse’s failure to pay Executive any material amount that is expressly required to be paid under this Agreement; (iii) Vitesse’s material and adverse reduction of the nature of Executive’s duties and responsibilities, disregarding mere changes in title (for purposes of clarity, it is expressly agreed that if there is a Change of Control Event (as defined below) and Executive is not offered the position of Vice President of Technology & Strategy of the ultimate parent entity resulting from the Change of Control Event on terms that are substantially equivalent to the compensation paid to Vice Presidents of Technology & Strategy of similarly sized technology companies, Executive shall have suffered a material and adverse reduction of the nature of his duties and responsibilities); (iv) Vitesse’s requirement that Executive perform his principal employment duties at an office that is more than sixty (60) miles from Boulder, Colorado or (v) Vitesse terminates this Agreement in accordance with Section 15 hereof (it being understood by Executive that if prior to the termination date of this Agreement Executive elects to terminate his employment for Good Reason based upon this clause (v), Executive shall not have the right to set a termination date for his employment prior to the termination date of this Agreement).

 

(d)                                 “Severance Pay” means nine (9) months of Executive’s base salary, plus 1 week of base salary for every 12 months employed by the Company. Base salary is defined at the rate prior to any short-term salary reduction that may have occurred.

 

(e)                                  “Earned Bonus” means with respect to the bonus plan applicable to Executive for the fiscal year when such termination occurs (A) a pro-rata portion of Executive’s maximum potential annual bonus (subject, however, to all threshold requirements in the bonus plan adopted by Vitesse’s Board of Directors for the fiscal year in which such termination occurs, including any performance standards or milestones that must be met before any such bonus is payable), multiplied by (B) a pro-rata portion of the fiscal year when such termination occurs (including the day of such termination), and multiple by (C) a pro-rata portion of the bonus applicable to any other goals satisfied by Executive, provided that the Board shall make a good faith determination within 10 business days following Executive’s Termination Date of the extent to which Executive either has satisfied such goals as of such date or the extent to which he would have been reasonably likely to have satisfied such goals during the fiscal year if Executive’s employment had not otherwise terminated.

 

Example:

 

If

(A)                              Executive’s maximum bonus under the bonus plan in effect at the time of Executive’s termination of employment was 50% of Executive’s base salary;

(B)                                Executive’s employment is terminated 55 days following the start of the fiscal year; and

(C)                                in making the determination of the amount of the Earned Bonus the Board determines that Executive has satisfied 75% of his/her bonus goals.

 

Then

Executive’s Earned Bonus = Executive’s base salary * 0.50 * 55/365 * 0.75.

 

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7.                                       EMPLOYMENT DUTIES

 

Executive will report to Vitesse’s Chief Executive Officer and shall perform all duties assigned to him by the Chief Executive Officer. Executive’s duties may be conveyed to him through a job description, or through other written or verbal instructions from Vitesse’s Chief Executive Officer. Executive’s duties are expected to involve travel from time to time to various locations and events, and are expected to involve significant unpaid overtime. Executive will be deemed an officer of Vitesse, and will be required to comply with and will be subject to all SEC regulations applicable to officers pursuant to Section 16 of the Securities Exchange Act of 1934.

 

8.                                       COMPLIANCE WITH VITESSE POLICIES AND PROCEDURES

 

As a member of Vitesse management, Executive will be expected to comply with all provisions of Vitesse’s Policies and Procedures and Employee Handbook, as amended from time to time. Executive acknowledges, by signature on this Agreement, that failure to comply with and ensure enforcement of Vitesse’s policies and procedures and all federal and applicable state and local laws as well as any applicable laws of any foreign country or political subdivision thereof in the jurisdiction of which Vitesse conducts business, as such laws relate to business operations, may result in immediate termination of employment For Cause.

 

9.                                       CONFLICT OF INTEREST

 

Executive acknowledges that his position is a full-time position and agrees to devote his entire productive time, ability and attention to Vitesse’s business. Executive further agrees that while employed by Vitesse, he will not directly or indirectly engage in outside employment, consulting or other business activities unless he has obtained written consent from the Vitesse Board.

 

10.                                 NO SOLICITATION OF CUSTOMERS

 

Executive promises and agrees that during the term of this Agreement, Executive will not, directly or indirectly, individually or as a consultant to, or as an employee, officer, stockholder, director or other owner or participant in any business, influence or attempt to influence customers, vendors, suppliers, joint venturers, associates, consultants, agents, or partners of  Vitesse, either directly or indirectly, to divert their business away from Vitesse, to any individual, partnership, firm, corporation or other entity then in competition with the business of Vitesse, and he will not otherwise materially interfere with any business relationship of Vitesse.

 

11.                                 SOLICITATION OF EMPLOYEES

 

Executive promises and agrees that during the term of this Agreement and for a period of two (2) years thereafter, Executive will not, directly or indirectly, individually or as a consultant to, or as an employee, officer, stockholder, director or other owner of or participant in any business, solicit (or assist in soliciting) any person who is then, or at any time within six (6) months prior thereto was, an employee of Vitesse who earned annually $25,000 or more as an employee of Vitesse during the last six (6) months of his or her own employment to work for (as an employee, consultant or otherwise) any business, individual, partnership, firm, corporation, or other entity whether or not engaged in competitive business with Vitesse.

 

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12.                                 LIMITATION ON PAYMENTS

 

In the event that the severance and other benefits provided for in this Agreement or otherwise payable to Executive (i) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Executive’s benefits under this Agreement shall be either (a) delivered in full, or (b) delivered as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Executive on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code. The payments or benefits subject to any such reduction shall be reduced by Vitesse in its reasonable discretion in the following order: (i) reduction of any payments and benefits otherwise payable to Executive that are exempt from Section 409A of the Code, and (ii) reduction of any other payments and benefits otherwise payable to Executive on a pro-rata basis or such other manner that complies with Section 409A of the Code, as determined by Vitesse.

 

Unless Vitesse and Executive otherwise agree in writing, any determination required under this section shall be made in writing by Vitesse’s independent public accountants (the “Accountants”), whose determination shall be conclusive and binding upon Executive and Vitesse for all purposes. For purposes of making the calculations required by this section, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. Vitesse and 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. Vitesse shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this section.

 

13.                                 SECTION 409

 

Vitesse makes no representations or warranties to Executive with respect to any tax, economic or legal consequences of this letter or any payments or other benefits provided hereunder, including without limitation under Section 409A of the Code. However, the parties intend that this Agreement and the payments and other benefits provided hereunder be exempt from the requirements of Section 409A of the Code to the maximum extent possible, whether pursuant to the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4), the involuntary separation pay plan exception described in Treasury Regulation Section 1.409A-1(b)(9)(iii), or otherwise. To the extent Section 409A of the Code is applicable to this Agreement (and such payments and benefits), the parties intend that this Agreement (and such payments and benefits) comply with the deferral, payout and other limitations and restrictions imposed under Section 409A of the Code. Notwithstanding any other provision of this Agreement to the contrary, this Agreement shall be interpreted, operated and administered in a manner consistent with such intentions. Without limiting the generality of the foregoing, and notwithstanding any other provision of this Agreement to the contrary, with respect to any payments and benefits under this letter to which Section 409A of the Code applies, all references in this letter to the termination of Executive’s employment are intended to mean Executive’s “separation from service,” within the meaning of Section 409A(a)(2)(A)(i) of the Code. In addition, if Executive is a “specified employee,” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then to the extent necessary to avoid subjecting Executive to the imposition of any additional tax under Section 409A of the Code, amounts that would otherwise be payable under this Agreement during the six-month period immediately following Executive’s “separation from service,” within the meaning of Section 409A(a)(2)(A)(i) of the Code, will not be paid to Executive during such period, but will instead be accumulated and paid to Executive (or, in the event of Executive’s death, Executive’s estate) in a lump sum on the first business day following the earlier of (a) the date that is six months after Executive’s separation from service or (b) Executive’s death. It is intended that each installment, if any, of any severance payments shall be treated as a separate “payment” for purposes of Section 409A.

 

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14.                                 ARBITRATION

 

In the event of any dispute, controversy, or claim relating to or arising out of Executive’s employment relationship with Vitesse; this Agreement or any alleged breach, default, or misrepresentation in connection with any of the provisions of this Agreement; or the termination of Executive’s employment with Vitesse for any reason (including, but not limited to, any claims of breach of contract, wrongful termination, or age, sex, race, national origin, sexual orientation, religion, disability or other discrimination or harassment), Executive and Vitesse agree that all such disputes shall be fully, finally, and exclusively resolved by binding arbitration before a sole neutral arbitrator to the fullest extent permitted by law. The arbitration will be conducted by JAMS in Ventura County, California in accordance with its “Employment Arbitration Rules & Procedures” or such later-adopted successor rules then in effect and shall be subject to JAMS Policy on Employment Arbitration Minimum Standards of Procedural Fairness. Information regarding the rules of JAMS and copies of such rules can be found at http://www.jamsadr.com. The parties will select a neutral arbitrator, or if they cannot agree on one, JAMS will select a neutral arbitrator. The Company will pay any costs of arbitration, including the arbitrator’s fees, that would not be borne by an individual filing an action in court. Each party shall have the right to such discovery as is reasonably necessary to develop and prosecute his, her, or its case. The parties agree that in any proceeding with respect to such matters, each party shall bear its own attorney’s fees and costs, unless the arbitrator otherwise orders. The arbitrator may grant any relief that would be available in a court of competent jurisdiction. The arbitrator will render a written decision that sets out his or her findings and reasoning in sufficient detail to allow for review of the decision. This is a mutual agreement; Executive and Vitesse are both required to arbitrate all such disputes relating to or arising out of Executive’s employment relationship with Vitesse. The parties acknowledge and agree that they are hereby waiving any rights to trial by jury in any action, proceeding or counterclaim brought by either of the parties against the other in connection with any matter whatsoever arising out of or in any way connected with any of the matters referenced in this section. Except with respect to actions seeking injunctive relief pursuant to Code of Civil Procedure section 1281.8, Executive and Vitesse both waive their rights to file an action in court with regard to any matter referred to in this section. Judgment on the arbitrator’s award may be entered in any court having jurisdiction.

 

15.                                 AT-WILL EMPLOYMENT

 

Vitesse agrees to employ Executive, and Executive agrees to serve Vitesse in accordance with the terms of this Agreement. Executive’s employment shall be AT WILL employment, meaning that Executive’s employment can be terminated by Vitesse or by Executive at any time, with or without notice, for any reason or for no reason. Such termination may, however, be subject to payment of a Severance Package, as more particularly described in Section 6.

 

16.                                TERM

 

Subject to the provisions of Sections 5 and 15 herein, the Term of this Agreement, shall be indefinite.

 

17.                                 PARTIAL INVALIDITY

 

It is the desire and intent of Vitesse and Executive that the provisions of this Agreement be enforced to the fullest extent permissible under applicable federal, state and municipal laws. Accordingly, if any specific provision or portion of this Agreement is determined to be invalid or unenforceable within the particular jurisdiction in which enforcement is sought, that portion of the Agreement will be considered as deleted for the purposes of adjudication. All other portions of this Agreement will be considered valid and enforceable within that jurisdiction.

 

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18.                                 ENTIRE AGREEMENT

 

Vitesse and Executive understand and agree that this Agreement constitutes the full and complete understanding and agreement between them regarding the terms of Executive’s employment and supersedes all prior understandings, representations, and agreements with respect to the employment. Vitesse and Executive understand that the Vitesse SIP and the Compensation Adjustment forms (if any) referred to in this Agreement shall be fully incorporated into this Agreement by reference. The parties rights and obligations hereunder may not be assigned without the consent of each party hereto, except that Vitesse may assign its rights and obligations hereunder to any successor entity. Executive agrees that following a Change in Control Event, “Vitesse” shall refer to any successor entity.

 

19.                                 EXECUTIVE ACKNOWLEDGEMENT

 

Executive acknowledges that he has read and understands this Employment Agreement and agrees to the terms and conditions contained herein. Executive agrees that he has had the opportunity to confer with legal counsel of his choosing regarding this Agreement. Executive further acknowledges that this Agreement has not been executed by Executive in reliance upon any representation or promise except those contained herein, and that Vitesse has made no guarantee regarding Executive’s employment other than those specified in this Agreement.

 

20.                                 GOVERNING LAW

 

This Agreement shall be construed in accordance with and governed by the laws of the State of California without regard to conflicts of law principles.

 

	
 
    	
“EXECUTIVE”
    
	
 
    	
 
    
	
 
    	
 
    
	
1/18/2012
    	
 
    	
/s/ Martin Nuss
    
	
Dated
    	
 
    	
Martin   Nuss
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
VITESSE   SEMICONDUCTOR CORPORATION,
   a Delaware Corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
1/23/2012
    	
 
    	
/s/ Christopher   Gardner
    
	
Dated
    	
 
    	
Christopher   Gardner
   Chief Executive Officer
    

 

8Exhibit 10.2

 

 

Fiscal Year 2012 Executive Bonus Plan

 

1.                                      PURPOSE OF PLAN

 

The purpose of this Vitesse Semiconductor Corporation Fiscal Year 2012 Executive Bonus Plan (this “Plan”) is to provide members of the executive staff (“Executive”) of Vitesse Semiconductor Corporation, a Delaware corporation, (the “Corporation”) with the opportunity to earn incentive bonuses based on (a) the Corporation’s attainment of specific financial performance objectives for the 2012 Fiscal Year (as defined below) and (b) the executive’s achievement of designated personal performance goals during the 2012 Fiscal Year.

 

2.                                      DEFINITIONS

 

2.1                               “2012 Fiscal Year” means the fiscal year of the Corporation that began on October 1, 2011 and will end on September 30, 2012.

 

2.2                               “Adjusted EBITDA” means net income before interest, expenses for taxes, depreciation, amortization, deferred stock compensation and non-recurring professional fees. The Administrator may, from time-to-time, make other exceptions to the definition as it deems appropriate with respect to unusual or non-recurring events such as balance sheet adjustments, mergers, acquisitions, and divestitures.

 

2.3                               “Administrator” means the Compensation Committee of the Board of Directors of the Corporation.

 

2.4                               “Base Salary” means a Participant’s Base Salary paid (or deferred) in the 2012 Fiscal Year. Base Salary does not include bonuses or any form of compensation other than salary.

 

2.5                               “Eligible Person” is (a) any “officer” as that term is defined in Rule 16a-1(f) under the Securities Exchange Act of 1934 (except the President/Chief Executive Officer) or (b) any vice-president who is a member of the Corporation’s executive staff.

 

2.6                               “Goals” means the individual personal performance goals established by the Corporation’s Chief Executive Officer for each Participant for the 2012 Fiscal Year.

 

2.7                               “Participant” means an Eligible Person who has been designated by the Administrator as eligible to earn a Bonus for the 2012 Fiscal Year.

 

2.8                               “Total Bonus” means the portion of a Participant’s Bonus, if any, that is based on both the Participant’s achievement of his or her Personal Goals and the Corporation’s level of Adjusted EBITDA for the 2012 Fiscal Year.

 

3.                                      PLAN ADMINISTRATION

 

3.1                               Administration. This Plan shall be administered by and all awards under this Plan shall be authorized by the Administrator.

 

741 Calle Plano, Camarillo, CA 93012 USA

 

 

3.2                               Powers of the Administrator. Subject to the express provisions of this Plan, the Administrator is authorized and empowered to do all things necessary or desirable in connection with the authorization of awards and the administration of this Plan, including, without limitation, the authority to:

 

(a)                                  determine the Eligible Persons and, from among the Eligible Persons, designate those who are Participants;

 

(b)                                 approve the Goals established by the Corporation’s Chief Executive Officer for each Participant;

 

(c)                                  determine and approve the amount of the actual Bonus for each Participant; and

 

(d)                                 construe and interpret this Plan and any agreements defining the rights and obligations of the Corporation and Participants under this Plan, further define the terms used in this Plan, and prescribe, amend and rescind rules and regulations relating to the administration of this Plan or the Bonus payments under this Plan.

 

3.3                               Binding Determinations. Any action taken by, or inaction of, the Corporation, the Corporation’s Chief Executive Officer, or the Administrator relating or pursuant to this Plan and within its or his authority hereunder or under applicable law shall be within the absolute discretion of that entity, person or body and shall be conclusive and binding upon all persons. Neither the Corporation’s Chief Executive Officer, the Administrator, nor any person acting at the direction thereof, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with this Plan (or any award made under this Plan), and all such persons shall be entitled to indemnification and reimbursement by the Corporation in respect of any claim, loss, damage or expense (including, without limitation, attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors and officers liability insurance coverage that may be in effect from time to time.

 

3.4                               Reliance on Experts. In making any determination or in taking or not taking any action under this Plan, the Administrator may obtain and may rely upon the advice of experts, including employees and professional advisors to the Corporation. No director, officer or agent of the Corporation shall be liable for any such action or determination taken or made or omitted in good faith.

 

3.5                               Delegation. The Administrator may delegate ministerial, non-discretionary functions to individuals who are officers or employees of the Corporation or to third parties.

 

4.                                      ELIGIBILITY

 

The Administrator may grant Bonus opportunities under this Plan only to those persons that the Administrator determines to be Eligible Persons. The Administrator shall notify each Participant of his or her eligibility to earn a Bonus under this Plan by the later of December 15, 2011 or the 45th day following the date that the Participant becomes an Eligible Person. Such notice shall be in writing and shall include a description of the Participant’s Goals.

 

5.                                      BONUS CALCULATIONS

 

5.1                               Goals

 

5.1.1                     Establishment. The Corporation’s Chief Executive Officer shall establish Goals for each Participant by the later of December 31, 2011 or the 45th day following the date the Participant becomes an Eligible Person.

 

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5.1.2                     Adjustment. To preserve the intended incentives and benefits of a Goal Bonus opportunity, the Chief Executive Officer may (i) adjust the Goals to reflect any material change in corporate capitalization, any material corporate transaction (such as a reorganization, combination, separation, merger, acquisition or any combination of the foregoing), or any complete or partial liquidation of the Corporation or (ii) make other appropriate adjustments to the Goals.

 

5.1.3                     Determination of Achievement of Goals. The Corporation’s Chief Executive Officer shall, in his sole discretion, determine the extent to which each Participant has attained the Goals established for such Participant for the 2012 Fiscal Year, which shall be expressed as a whole percentage from 0% to 100%. The Chief Executive Officer shall make that determination within 90 days following the end of the 2012 Fiscal Year and notify the Administrator and the Participant of that determination as soon thereafter as practicable.

 

5.2                               Total Bonus

 

Each Participant’s Total Bonus, if any, shall be an amount equal to (a) times (b) times (c), where (a) equals the Participant’s Base Salary, (b) equals the percentage of Total Bonus with 100% of Goals Achieved for the respective Adjusted EBITDA and (c) equals the percentage of the Participants achievement of his or her Goals; provided, however, that such Total Bonus shall be prorated for any Participant who is first employed by the Corporation after October 1, 2011, to reflect the portion of the 2012 Fiscal Year during which he or she was a Participant.

 

The formula can also be stated as:

 

(Base Salary) X (% of Total Bonus with 100% of Goals Achieved for the respective Adjusted EBITDA) X (% of Goals Attained), as described in Table 1 below.

 

An additional bonus will be paid to the VP of Sales only as:

 

(Base Salary) X (% of Revenue Bonus Goals Achieved + % of Design Win Bonus Goals Achieved), as described in Table 2 below.

 

6.                                      VESTING

 

6.1                               Vesting. A Participant’s right to receive a Bonus under this Plan shall vest on September 30, 2012, subject to the employment and performance requirements set forth in this Section 6 (and subject to the levels of (a) the Participant’s achievement of Goals and (b) the Company’s Adjusted EBITDA).

 

6.2                               Continued Employment Required. A Participant must continue to be employed by the Corporation without performance deficiencies (as described in Section 6.5) until September 30, 2012 as a condition to vesting in the right to receive a Bonus payment under this Plan. Employment for only a portion of the vesting period, even if a substantial portion, will not entitle the Eligible Person to any proportionate vesting. An approved leave of absence by a Participant, either at the time of the vesting date, or at any time during the vesting period, will not prevent vesting of payments under the Plan.

 

6.3                               Effect of Termination Prior to Vesting. If a Participant’s employment with the Corporation terminates before September 30, 2012 for reason that is not governed by a Change in Control or employment agreement, his or her participation in the Plan will terminate immediately and he or she shall not be eligible for a Bonus.

 

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6.4                               Events Not Deemed Terminations of Service. Unless the express policy of the Corporation or the Administrator otherwise provides, the employment relationship shall not be considered terminated in the case of (a) sick leave, (b) military leave, or (c) any other leave of absence authorized by the Corporation or the Administrator; provided that, unless re-employment upon the expiration of such leave is guaranteed by contract or law or the Administrator otherwise provides, such leave is for a period of not more than three months.

 

6.5                               Effect of Performance Deficiencies. A Participant’s right to receive a Bonus will not become vested if, (a) at the close of the 2012 Fiscal Year, the Participant is on a Performance Improvement Plan, or (b) during the 2012 Fiscal Year, the Participant is otherwise notified that his or her job performance is deficient and he or she has failed to correct the deficiencies by the end of the 2012 Fiscal Year.

 

7.                                      TIME OF BONUS PAYMENTS

 

Each Participant’s Bonus, if any, shall be paid by the end of the first quarter of Fiscal Year 2013, or as soon as practicable after determination and certification of the actual financial performance levels for the year and grant of approval by the Compensation Committee in a duly held meeting, but, in no event, later than March 15, 2013.

 

8.                                      OTHER PROVISIONS

 

8.1                               Compliance with Laws. This Plan, the granting and vesting of awards under this Plan, and the payment of money under this Plan are subject to compliance with all applicable federal and state laws, rules and regulations (including, but not limited to, state and federal securities law) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Corporation, be necessary or advisable in connection therewith.

 

8.2                               No Rights to Awards. No person shall have any claim or rights to be granted awards (or additional awards, as the case may be) under this Plan, subject to any express contractual rights (set forth in a document other than this Plan) to the contrary.

 

8.3                               No Employment/Service Contract. Nothing contained in this Plan (or in any other documents under this Plan) shall confer upon any Eligible Person or Participant any right to continue in the employ or other service of the Corporation, constitute any contract or agreement of employment or other service or affect an employee’s status as an employee at will, nor shall interfere in any way with the right of the Corporation to change a person’s compensation or other benefits, or to terminate his or her employment or other service, with or without cause. Nothing in this Section 8.3, however, is intended to adversely affect any express independent right of such person under a separate employment or service contract.

 

8.4                               Plan Not Funded. Awards payable under this Plan shall be payable from the general assets of the Corporation and no special or separate reserve, fund or deposit shall be made to assure payment of such awards. No Participant, beneficiary or other person shall have any right, title or interest in any fund or in any specific asset of the Corporation by reason of any award hereunder. Neither the provisions of this Plan (or of any related documents), nor the creation or adoption of this Plan, nor any action taken pursuant to the provisions of this Plan shall create, or be construed to create, a trust of any kind or a fiduciary relationship between the Corporation and any Participant, beneficiary or other person. To the extent that a Participant, beneficiary or other person acquires a right to receive payment pursuant to any award hereunder, such right shall be no greater than the right of any unsecured general creditor of the Corporation.

 

4

 

8.5                               Tax Withholding. Upon any payment of any award, the Corporation shall deduct from any amount otherwise payable in cash to the Participant (or the Participant’s personal representative or beneficiary, as the case may be) the minimum amount of any taxes which the Corporation may be required to withhold with respect to such cash payment.

 

8.6                               Effective Date, Term, Amendments.

 

8.6.1                     Effective Date and Term. This Plan is effective as of October 1, 2011, the date of its approval by the Compensation Committee of the Board of Directors of the Corporation (the “Effective Date”) and shall be effective for the 2012 Fiscal Year. The Plan shall automatically terminate upon the payment of the Bonuses due hereunder or, if no Bonuses are payable hereunder, as of September 30, 2012.

 

8.6.2                     Board Authorization. The Administrator may, at any time, amend this Plan; provided that no amendment shall adversely affect any Participant’s opportunity to earn a Bonus for the 2012 Fiscal Year.

 

8.7                               Governing Law; Construction; Severability.

 

8.7.1                     Choice of Law. This Plan and all other related documents shall be governed by, and construed in accordance with the laws of the State of Delaware.

 

8.7.2                     Severability. If a court of competent jurisdiction holds any provision invalid and unenforceable, the remaining provisions of this Plan shall continue in effect.

 

8.8                               Captions. Captions and headings are given to the sections and subsections of this Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Plan or any provision thereof.

 

8.9                               Non-Exclusivity of Plan. Nothing in this Plan shall limit or be deemed to limit the authority of the Board or the Administrator to grant any award or authorize any other compensation, under any other plan or authority. Awards under this Plan may be made in addition to, in combination with, as alternatives to or in payment of grants, awards or commitments under any other plans or arrangements of the Corporation.

 

8.10                        No Corporate Action Restriction. The existence of this Plan shall not limit, affect or restrict in any way the right or power of the Board or the stockholders of the Corporation to make or authorize (a) any adjustment, recapitalization, reorganization or other change in the capital structure or business of the Corporation, (b) any merger, amalgamation, consolidation or change in the ownership of the Corporation, (c) any issue of bonds, debentures, capital, preferred or prior preference stock ahead of or affecting the capital stock (or the rights thereof) of the Corporation, (d) any dissolution or liquidation of the Corporation, (e) any sale or transfer of all or any part of the assets or business of the Corporation, or (f) any other corporate act or proceeding by the Corporation. No Participant, beneficiary or any other person shall have any claim under any grant of a Bonus opportunity against any member of the Board or the Administrator, or the Corporation or any employees, officers or agents of the Corporation, as a result of any such action.

 

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INWITNESS WHEREOF, this Plan is executed by its duly authorized officer as of November 30, 2011.

 

VITESSE SEMICONDUCTOR CORPORATION

 

	
By
    	

    	
 
    
	
 
    	
 
    	
 
    
	
Name
    	
Christopher   R. Gardner
    	
 
    
	
 
    	
 
    	
 
    
	
Title
    	
President   / CEO
    	
 
    

 

6

 

EXHIBIT A

 

Table 1:                                                    Incentive Bonus Calculations based on Adjusted EBITDA and Assuming All Goals Are Achieved (as Percent of Base Salary)

 

	
Adjusted
    EBITDA
    ($M)
    	
 
    	
Total
    Bonus with
    100% of
    Goals
    Achieved
    (All VPs)
    	
 
    	
Total
    Bonus with
    100% of
    Goals
    Achieved
    (CFO)
    	
 
    	
 
    
	
<$[·](1)
    	
 
    	
0
    	
%
    	
0
    	
%
    	
Below   FY2012 Performance
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
$[·] – <$[·]
    	
 
    	
20
    	
%
    	
30
    	
%
    	
Minimum   Bonus
   Below FY2012 AOP; Meet Street
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
$[·] – <$[·]
    	
 
    	
30
    	
%
    	
40
    	
%
    	
Target AOP   = $[·]
   Meet FY2012 AOP; Beat Street
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
$[·] – <$[·]
    	
 
    	
40
    	
%
    	
50
    	
%
    	
Beat   FY2012 AOP, Beat Street
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
> $[·]
    	
 
    	
50
    	
%
    	
60
    	
%
    	
Maximum   Bonus
    Beat   FY2012 AOP; Beat Street
    

 

Table 2:                                                    Sales Incentive Bonus Calculations (as Percent of Base Salary) Applies to VP of Sales ONLY Paid IF and ONLY IF a minimum of $[·] Adjusted EBITDA is achieved

 

	
Revenue Achieved in FY2012
    (M$)
    	
 
    	
Revenue
    Bonus
    	
 
    	
Design Wins Achieved in
   FY2012
    (M$)
    	
 
    	
DW
    Bonus
    	
 
    	
 
    
	
<$[·] (Below Min)
    	
 
    	
[·]
    	
%
    	
<$[·]
    	
 
    	
[·]
    	
%
    	
Below   Min
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
$[·] – <$[·] (AOP minus 5%)
    	
 
    	
[·]
    	
%
    	
[·] – <$[·]
    	
 
    	
[·]
    	
%
    	
Min
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
$[·] – <$[·] (AOP = $[·])
    	
 
    	
[·]
    	
%
    	
$[·] – <$[·]
    	
 
    	
[·]
    	
%
    	
Target
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
$[·] – <$[·] (AOP plus 5%)
    	
 
    	
[·]
    	
%
    	
$[·] – <$[·]
    	
 
    	
[·]
    	
%
    	
Key   Plays
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
>$[·] (Stretch)
    	
 
    	
[·]
    	
%
    	
>$[·]
    	
 
    	
[·]
    	
%
    	
Max
    

 

(1)  Terms represented by this symbol are considered confidential.  These confidential terms have been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission (“SEC”) and have been filed separately with the SEC.

 

7

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