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Exhibit
10.3
CARRIER ACCESS
CORPORATION
CHANGE OF CONTROL
SEVERANCE AGREEMENT
This Change of Control
Severance Agreement (the “Agreement”) is made and
entered into by and between David Whalen (“Executive”)
and Carrier Access Corporation (the “Company”),
effective as of July 31, 2007 (the “Effective
Date”).
RECITALS
1. It is expected that the
Company from time to time will consider the possibility of an
acquisition by another company or other change of control. The
Board of Directors of the Company (the “Board”)
recognizes that such consideration can be a distraction to
Executive and can cause Executive to consider alternative
employment opportunities. The Board has determined that it is in
the best interests of the Company and its stockholders to assure
that the Company will have the continued dedication and objectivity
of Executive, notwithstanding the possibility, threat or occurrence
of a Change of Control (as defined herein) of the
Company.
2. The Board believes that it
is in the best interests of the Company and its stockholders to
provide Executive with an incentive to continue his or her
employment and to motivate Executive to maximize the value of the
Company upon a Change of Control for the benefit of its
stockholders.
3. The Board believes that it
is imperative to provide Executive with certain benefits upon a
Change of Control and with certain severance benefits upon
Executive’s termination of employment following a Change of
Control. These benefits will provide Executive with enhanced
financial security and incentive and encouragement to remain with
the Company notwithstanding the possibility of a Change of
Control.
4. Certain capitalized terms
used in the Agreement are defined in Section 8
below.
AGREEMENT
NOW, THEREFORE, in
consideration of the mutual covenants contained herein, the parties
hereto agree as follows:
1. Term of Agreement .
This Agreement is effective as of the Effective Date and will
remain in effect through the third anniversary of the Effective
Date, except in the event of a Change of Control during such term,
in which case this Agreement will remain in effect through, and
automatically terminate upon, the completion of all payments under
the terms of this Agreement (the “Agreement Term”). No
severance benefits will be paid under this Agreement with respect
to any termination of employment effective after the date of the
Agreement’s termination.
2. At-Will Employment
. The Company and Executive acknowledge that Executive’s
employment is and will continue to be at-will, as defined under
applicable law, except as may otherwise be specifically provided
under the terms of any written formal employment agreement between
the Company and Executive (an “Employment Agreement”).
If Executive’s employment
terminates for any reason, including
(without limitation) any termination in Connection with a Change of
Control (as defined herein), Executive will not be entitled to any
payments, benefits, damages, awards or compensation other than as
provided by this Agreement.
3. Termination of
Employment . In the event Executive’s employment with the
Company terminates for any reason, Executive will be entitled to
any: (i) unpaid base salary accrued up to the effective date
of termination, (ii) unpaid, but earned and accrued annual
incentive for any completed fiscal year as of his or her
termination of employment, (iii) pay for accrued but unused
vacation, (iv) benefits or compensation as provided under the
terms of any employee benefit and compensation agreements or plans
applicable to Executive, (v) unreimbursed business expenses
required to be reimbursed to Executive, and (vi) rights to
indemnification Executive may have under the Company’s
Articles of Incorporation, Bylaws, or separate indemnification
agreement, as applicable. In addition, if the termination is by the
Company without Cause or if Executive resigns for Good Reason,
Executive will be entitled to the amounts and benefits specified in
Section 4.
4. Severance Benefits
.
(a) Termination Without
Cause or Resignation for Good Reason other than in Connection with
a Change of Control . If Executive’s employment is
terminated by the Company without Cause (as defined herein) or if
Executive resigns for Good Reason (as defined herein), and such
termination is not in Connection with a Change of Control, then,
subject to Section 5, Executive will receive: (i) a lump
sum payment equal to six (6) months of the Executive’s
annual base salary for the year in which the termination occurs
(less applicable tax withholdings), such amount to be paid within
ten (10) calendar days after the separation agreement and
release agreement required under Section 5 becomes effective,
and (ii) with respect to Executive’s then outstanding
unvested equity awards, accelerated vesting as to that number of
shares of Company common stock that would have vested prior to the
date of Executive’s termination had the awards been subject
to a monthly vesting schedule (with monthly vesting of a pro rata
portion occurring on the same day of the month as the applicable
grant date or, if there is no corresponding day, on the last day of
the month); provided, however, that Executive will not be entitled
to accelerated vesting with respect to any equity award subject to
performance criteria that has not been achieved (as determined in
accordance with the applicable equity award agreement) prior to
Executive’s termination, and (iii) reimbursement for
premiums paid for continued health benefits for Executive (and any
eligible dependents) under the Company’s health plans until
the earlier of (A) six (6) months, payable when such
premiums are due (provided Executive validly elects to continue
coverage under the Consolidated Omnibus Budget Reconciliation Act
(“COBRA”)), or (B) the date upon which Executive
and Executive’s eligible dependents become covered under
similar plans.
(b) Termination Without
Cause or Resignation for Good Reason in Connection with a Change of
Control . If Executive’s employment is terminated by the
Company without Cause or if Executive resigns for Good Reason, and
such termination is in Connection with a Change of Control, then,
subject to Section 5, Executive will receive: (i) a lump
sum payment equal to six (6) months of the Executive’s
annual base salary for the year in which the termination occurs
(less applicable tax withholdings), such amount to be paid within
ten (10) calendar days after the separation agreement and
release agreement required under Section 5 becomes effective,
(ii) full vesting and deemed achievement at target levels of
all performance criteria with respect to
Executive’s
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then outstanding unvested equity awards,
and (iii) reimbursement for premiums paid for continued health
benefits for Executive (and any eligible dependents) under the
Company’s health plans until the earlier of (A) six
(6) months, payable when such premiums are due (provided
Executive validly elects to continue coverage under COBRA), or
(B) the date upon which Executive and Executive’s
eligible dependents become covered under similar plans.
(c) Voluntary Resignation;
Termination For Cause . If Executive’s employment with
the Company terminates (i) voluntarily by Executive (except
upon a termination for Good Reason) or (ii) for Cause by the
Company (or any parent or subsidiary of the Company), then
Executive will not be entitled to receive severance or other
benefits except for those (if any) as may then be established under
the Company’s then existing severance and benefits plans and
practices or pursuant to other written agreements with the Company,
including, without limitation, any Employment Agreement.
(d) Disability; Death
. If the Company terminates Executive’s employment as a
result of Executive’s Disability (as defined herein), or
Executive’s employment terminates due to his or her death,
then Executive will not be entitled to receive severance or other
benefits except for those (if any) as may then be established under
the Company’s then existing written severance and benefits
plans and practices or pursuant to other written agreements with
the Company, including, without limitation, any Employment
Agreement.
(e) Exclusive Remedy .
In the event of a termination of Executive’s employment with
the Company (or any parent or subsidiary of the Company), the
provisions of this Section 4 are intended to be and are
exclusive and in lieu of any other rights or remedies to which
Executive or the Company may otherwise be entitled, whether at law,
tort or contract, in equity, or under this Agreement. Executive
will be entitled to no benefits, compensation or other payments or
rights upon termination of employment other than those benefits
expressly set forth in this Section 4. The parties understand
and acknowledge that this Agreement is intended to represent
Executive’s sole entitlement to severance payments and
benefits as a result of the termination of his or her employment
and supersedes and replaces Executive’s entitlement to
severance payments and benefits pursuant to the Employment Offer
Letter dated December 13, 2006 by and between Executive and
the Company.
(f) Section 409A
.
(i) Distributions .
Notwithstanding anything to the contrary in this Agreement, if
Executive is a “specified employee” within the meaning
of Section 409A of the Code and any final regulations and
guidance promulgated thereunder (“Section 409A”) at the
time of Executive’s termination, and the payment of any
portion of the severance payments under this Agreement, when
considered together with any other severance payments or separation
benefits which may be considered deferred compensation under
Section 409A (together, the “Deferred Compensation
Separation Benefits”), will result in the imposition of
additional tax under Section 409A if paid to Executive on or
within the six (6) month period following Executive’s
termination, then the portion of the Deferred Compensation
Separation Benefits that would cause the imposition of additional
tax under Section 409A will accrue during such six
(6) month period and will become payable in a lump sum payment
on the date six (6) months and one (1) day following the
date of Executive’s termination of employment. All subsequent
payments, if any, will be payable in accordance with the payment
schedule applicable to each payment or benefit.
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(ii) Amendment . It is
the intent of this Agreement to comply with the requirements of
Section 409A so that none of the severance payments and
benefits to be provided hereunder will be subject to the additional
tax imposed under Section 409A, and any ambiguities herein
will be interpreted to so comply. The Company and Executive agree
to work together in good faith to consider amendments to this
Agreement and to take such reasonable actions which are necessary,
appropriate or desirable to avoid imposition of any additional tax
or income recognition under Section 409A prior to actual
payment to Executive.
5. Conditions to Receipt
of Severance; No Duty to Mitigate .
(a) Separation Agreement
and Release of Claims . The receipt of any severance or other
benefits pursuant to Section 4 will be subject to Executive
signing and not revoking a separation agreement and release of
claims in a form acceptable to the Company. No severance or other
benefits will be paid or provided until the separation agreement
and release agreement becomes effective.
(b) Non-solicitation and
Non-competition . The receipt of any severance or
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