Exhibit 99.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of December 10, 2002 (the “Effective Date”), by and between APPLIED MICRO CIRCUITS CORPORATION, a Delaware corporation (the “Company”), and DAVID M. RICKEY (“Executive”).

 

RECITALS

 

A. Before the Effective Date, Executive has had an “at will” employment relationship with the Company.

 

B. The Company desires assurance of the continued association and services of Executive in order to retain Executive’s experience, skills, abilities, background and knowledge, desires to incentivize Executive to provide valuable future services to the Company, and is willing to employ Executive on the terms and conditions set forth in this Agreement.

 

C. Executive desires to be in the employ of the Company, and is willing to accept such employment on the terms and conditions set forth in this Agreement.

 

D. None of the Company’s or Executive’s respective rights or duties under this Agreement has accrued before the Effective Date, and Executive’s services to the Company prior to the Effective Date form no part of the consideration for this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and agreements herein contained, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1. EMPLOYMENT.

 

1.1 Positions. The Company shall employ Executive as President and Chief Executive Officer of the Company. Executive shall also serve as Chairman of the Board of Directors of the Company (the “Board”) so long as (a) he is a director of the Company and (b) he is elected to such office by the Board.

 

1.2 Term. The term of this Agreement (the “Term”) shall commence on the Effective Date and, subject to early termination in accordance with Section 3 below, shall continue until December 1, 2005; provided, however, that the Term may be extended beyond December 1, 2005 by a writing signed by Executive and an authorized officer of the Company other than Executive.

 

1.3 Duties. Executive shall report directly to the Board and shall perform such duties as are normally carried out by a President and Chief Executive Officer and such other duties as may reasonably be assigned to him from time to time by the Board, including the duties of a Chairman of the Board.

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1.4 Policies and Practices. The employment relationship between the Company and Executive shall be governed by the Company’s employment policies and practices and employee handbook, each as in effect from time to time; provided, however, that in the event that the terms of this Agreement differ from or are in conflict with such policies, practices or employee handbook, the terms of this Agreement shall control.

 

1.5 Full Time Employment. During the Term, Executive shall devote substantially all of his business time and efforts to the performance of his duties under this Agreement; provided, however, that Executive shall be allowed to serve on corporate, civic or charitable boards or committees but only in accordance with the Company’s policies and practices.

 

2. COMPENSATION, BENEFITS AND EXPENSES.

 

2.1 Base Salary. During the Term, the Company shall pay to Executive an annual base salary of $350,000 (the “Base Salary”), less standard deductions and withholdings, payable in accordance with the Company’s payroll practices in effect from time to time. The Base Salary shall be subject to review and adjustment by the Compensation Committee of the Board, no less often than annually.

 

2.2 Bonus. During the Term and at the discretion of the Compensation Committee, Executive shall be eligible for such bonus or other incentive programs as the Compensation Committee may institute from time to time.

 

2.3 Stock Options. In consideration of Executive entering into this Agreement, Executive shall be granted options to purchase an aggregate of 3,000,000 shares of the Company’s Common Stock as described in this Section 2.3.

 

(a) On the Effective Date, Executive shall be granted an option to purchase 2,440,000 shares of Common Stock at an exercise price equal to the fair market value of the Common Stock on the date of grant under the Company’s 1992 Stock Option Plan (the “1992 Plan”) pursuant to a Notice of Grant and Stock Option Agreement in the form attached hereto as Exhibit A (the “First Option”).

 

(b) On April 1, 2003, if Executive remains in the employ of the Company at that time, Executive shall be granted an option to purchase 560,000 shares of Common Stock at an exercise price equal to the fair market value of the Common Stock on the date of grant under the 1992 Plan pursuant to a Notice of Grant and Stock Option Agreement in the form attached hereto as Exhibit B (the “Second Option”).

 

(c) Other than the First Option and the Second Option, Executive acknowledges and agrees that he is not entitled to receive any additional options to purchase Common Stock prior to December 1, 2005.

 

2.4 Benefits. During the Term and subject to the limitations expressly set forth in this Section 2, Executive shall be entitled to participate in any benefit plans made generally available

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to the Company’s executive personnel, as such plans may be adopted or in effect from time to time.

 

2.5 Vacation, Holidays and Sick Leave. During the Term, Executive shall be entitled to paid vacation, holidays and sick leave each year in accordance with the Company’s policies in effect from time to time.

 

2.6 Reimbursement of Expenses. Executive shall be reimbursed by the Company for ordinary and necessary business expenses incurred by Executive in the performance of his duties under this Agreement, in accordance with the Company’s reimbursement policies in effect from time to time.

 

3. TERMINATION.

 

3.1 “At Will” Employment.

 

(a) Executive’s employment with the Company is at will and may be terminated by Executive or by the Company at any time for any reason, with or without cause, subject to the terms and conditions set forth in this Agreement.

 

(b) In the event of such termination, Executive shall be entitled to receive his accrued Base Salary and accrued and unused vacation benefits earned through the Termination Date (as defined below); the Company shall have no further obligations to Executive except as expressly provided in this Agreement.

 

(c) Executive acknowledges reading and understanding Section 2924 of the Labor Code of the State of California:

 

An employment for a specified term may be terminated at any time by the employer in case of any willful breach of duty by the employee in the course of his employment, or in case of his habitual neglect of his duty or continued incapacity to perform it.

 

Executive hereby expressly waives and relinquishes all rights and benefits under that section and any law or legal principle of similar effect in any jurisdiction with respect to the termination of employment for a specified term.

 

3.2 Termination Notice. Any termination of this Agreement prior to December 1, 2005 shall require the terminating party to provide advance written notice to the other party specifying the effective date of the termination (the “Termination Date”), which shall be no earlier than six months following the date such written notice is provided.

 

3.3 Post-Termination Medical Insurance Program. If Executive shall have remained continuously employed by the Company through December 1, 2005, upon termination of his employment by the Company, the Company shall allow Executive, at Executive’s expense, to participate in the Company’s Post-Termination Medical Insurance Program, which program shall provide no less than a continuation of Executive’s medical insurance benefit in effect as of

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the Termination Date until the earlier of (i) Executive’s 65th birthday or (ii) the date Executive receives a comparable medical insurance benefit from another employer. If at any time while Executive is participating in the Post-Termination Medical Insurance Program, the Company extends a superior post-termination medical insurance benefit to another executive officer of the Company, Executive shall be entitled to receive such superior benefit in lieu of the Post-Termination Medical Insurance Program benefit.

 

3.4 Post-Termination Consulting. Upon termination of this Agreement, the Company shall have an option to retain Executive’s services as a consultant for a period not to exceed one year following the Termination Date. In the event the Company exercises such option, the Company and Executive shall enter into a consulting agreement providing for the payment to Consultant of a monthly consulting fee equal to at least one-half of Executive’s monthly salary and containing other reasonable and customary terms.

 

4. MISCELLANEOUS.

 

4.1 Assignment; Binding Effect. This Agreement shall be binding upon and inure to the benefit of Executive and his heirs, executors, personal representatives, assigns, administrators and legal representatives. Because of the unique and personal nature of Executive’s duties under this Agreement, neither this Agreement nor any rights or obligations under this Agreement shall be assignable by Executive. This Agreement shall be binding upon and inure to the benefit of the Company and its successors, assigns and legal representatives.

 

4.2 Notices. All notices, demands and requests required by this Agreement shall be in writing and shall be deemed to have been given for all purposes as follows: (a) upon personal delivery, (b) one day after being sent, when sent by professional overnight courier service from and to locations within the continental United States, (c) five days after posting when sent by registered or certified mail or (d) on the date of transmission (if transmitted during normal business hours, or otherwise, on the next succeeding business day) when sent by facsimile, all of which addressed or sent to the parties at their addresses or facsimile numbers set forth on the signature pages hereof. Any party may from time to time designate a different mailing address or facsimile number by notice in writing served upon the other party as provided above. All notices, demands and requests to or of the Company, by or on behalf of Executive shall be addressed to the Board care of the Secretary of the Company.

 

4.3 Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California. The Company and Executive hereby irrevocably submit to the exclusive jurisdiction of the state and federal courts in San Diego County, California in connection with any legal proceeding arising out of or related to this Agreement.

 

4.4 Entire Agreement. This Agreement, including the Exhibits hereto, contains the entire understanding between the parties with respect to the subject matter hereof and supersedes all prior written and oral agreements, understanding, commitments and practices between the parties. Notwithstanding the foregoing, the Invention and Secrecy Agreements entered into

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between Executive and the Company on August 23, 1993 and February 12, 1996 shall not be superseded by this Agreement and shall remain in full force and effect according to their terms.

 

4.5 Amendment. This Agreement may be amended only by a writing signed by Executive and an authorized officer of the Company other than Executive.

 

4.6 Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions hereof, which shall remain in full force and effect.

 

4.7 Headings. The headings and captions of this Agreement are provided for convenience of reference only, and are intended to have no effect in construing or interpreting this Agreement.

 

4.8 Rights Cumulative. The rights and remedies provided by this Agreement are cumulative to any other rights the parties may have by law, statute, ordinance or otherwise, and the exercise of any right or remedy by any party, whether pursuant to this Agreement or to law, shall not preclude or waive such party’s right to exercise any or all other rights and remedies.

 

4.9 Counterparts; Facsimile. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Facsimile signatures shall be as effective as original signatures.

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IN WITNESS WHEREOF, the parties have executed this EMPLOYMENT AGREEMENT as of the Effective Date.

 

COMPANY:

 

APPLIED MICRO CIRCUITS CORPORATION,

a Delaware corporation

 

 

 

By:

 

/S/    ROGER A. SMULLEN, SR.


 

 

 

Roger A. Smullen, Sr.

Vice Chairman

 

 

 

Address:

 

6290 Sequence Drive

San Diego, California 92121

 

 

 

Facsimile No.:

 

(858) 535-6800

 

 

EXECUTIVE:

 

/S/    DAVID M. RICKEY


 

David M. Rickey

 

 

 

Address:

 

15629 Boulder Mountain Road

Poway, CA 92064

 

 

 

Facsimile No.:

 

(858) 679-7505