EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "AGREEMENT") is made as of the Effective
Date indicated below by and between Sync Research, Inc., a Delaware corporation
("Parent") and Xxxxxxx Xxxx ("EMPLOYEE").
BACKGROUND
This Agreement is entered into in connection with and is ancillary to an
Agreement and Plan of Reorganization (the "PLAN") dated as of June 27, 1996
among Parent, SR Acquisition Corp., a Delaware corporation and wholly owned
subsidiary of Parent ("MERGER SUB"), and TyLink Corporation, a Delaware
corporation ("COMPANY"), pursuant to which Merger Sub is to merge with and into
Company, Company will continue as the surviving corporation in the merger and
will become a wholly owned subsidiary of Parent, and the shares of Company
capital stock outstanding immediately prior to the effective time of the merger
will be converted into shares of Parent Common Stock, all as set forth in the
Plan (the "MERGER"). The date on which the Merger becomes effective will be the
effective date of this Agreement (the "EFFECTIVE DATE").
Employee is Vice President of Engineering of Company and has been actively
involved in the development and/or marketing of Company's products. Parent
intends to continue the business of Company after the Merger and integrate such
business into Parent's ongoing business as a subsidiary of Parent. To preserve
and protect the assets of Company, including Company's goodwill, customers and
trade secrets of which Employee has and will have knowledge in Employee's role
as an employee of Parent and to preserve and protect Parent's goodwill and
business interests going forward, and in consideration for Parent's entering
into and performing under the Plan, Employee has agreed to enter into this
Agreement.
In addition, as required by and defined in Section 7 below, Employee is
concurrently herewith entering into a Proprietary Information Agreement in favor
of Parent designed to protect Parent's proprietary rights.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
of the parties contained herein, Parent and Employee hereby agree as follows:
1. EMPLOYMENT. Parent will employ Employee and Employee accepts
employment with Parent for a period of two years from the Effective Date (the
"INITIAL PERIOD"), unless Employee's employment is terminated during the Initial
Period in accordance with this Agreement. Employee's employment may continue
after this Initial Period but will then be terminable by either party at will,
with or without cause. The obligations of Parent and Employee set forth in the
"Proprietary Information Agreement" (referring to confidentiality) and in
Section 8 hereof (referring to termination) and, to the extent specifically
provided therein, the obligations of Parent and Employee set forth in Section 5
(referring to employee benefits) and Section 6 (referring to reimbursement of
expenses), will survive the termination of Employee's employment, regardless of
cause.
2. DUTIES. Employee will be employed as a full-time employee of Parent
and initially will serve as Vice President of Platform Systems. Employee agrees
that, to the best of Employee's ability and experience, Employee will at all
times conscientiously perform all of the duties and obligations assigned to
Employee in accordance with this Agreement.
3. FULL-TIME EMPLOYMENT. Employee's employment will be on a full-time
basis, in accordance with standard employee policies for Parent. Except for
such activities, if any, as may be set forth in SCHEDULE A attached hereto or as
may hereafter be consented to by Parent in its sole discretion, Employee will
not engage in any other business or render any commercial or professional
services, directly or indirectly, to any other person or organization, whether
for compensation or otherwise, provided that Employee may (i) provide incidental
assistance to family members on matters of family business, and (ii) sit on the
boards of charitable and nonprofit organizations which do not, at the time of
Employee's appointment or election, to Employee's knowledge, compete with
Parent, provided in each case that such activities do not conflict with or
interfere with Employee's obligations to Parent. Employee may make personal
investments in nonpublicly traded corporations, partnerships or other entities,
which, to the knowledge of Employee, do not at the time of such investment
design, research, distribute or otherwise market, sell, license or support
products competitive with Parent in the following markets: networking products
that adapt Systems Network Architecture ("SNA") networks to frame relay,
integrated services digital network, asynchronous transfer mode or other
switched wide area network services, or products that provide circuit or network
management capabilities for such networks (the foregoing description of business
activities and markets shall be referred to in this Agreement as "COMPETITIVE
BUSINESSES"). Notwithstanding anything to the contrary contained in this
Agreement, Employee may make personal investments in publicly traded
corporations regardless of the business they are engaged in, provided that
Employee does not at any time own in excess of 1% of the issued and outstanding
stock of any such publicly traded corporation that is engaged in any Competitive
Businesses.
4. COMPENSATION.
(a) SALARY. Employee's annualized base salary from the date hereof
through December 31, 1996 will be $126,000, pro rated from the date hereof
through December 31, 1996. Employee's annualized base salary for calendar year
1997 will be determined by Parent on or before January 1, 1997, PROVIDED HOWEVER
that Employee's annualized base salary for calendar year 1997 will be no less
than $126,000.
(b) BONUS. Beginning in calendar year 1997, Employee will be
eligible for participation in any management bonus plan adopted by Parent's
Board of Directors in amounts as may be determined by the Board. If a bonus
plan is adopted by Parent's Board of Directors, Employee's bonus opportunity
thereunder will be substantially similar to the bonus opportunity provided to
other executives of Parent who are at a similar level of seniority as is
Employee, PROVIDED HOWEVER that Parent is not obligated to adopt any such bonus
plan.
(c) STOCK OPTIONS. In addition to the stock options to purchase
Parent's Common Stock provided for in Section 5.13 of the Plan, Employee will be
granted stock options to purchase 35,000 shares of Parent's Common Stock at a
price equal to the closing sales price
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per share of such Common Stock on the closing date of the Merger, as quoted on
the Nasdaq National Market and as reported in the Wall Street Journal. The
stock options will be granted as nonqualified stock options. If and when the
Employee sells any shares issued upon exercise of any stock options, the
Employee will promptly notify Parent of such sale in writing. The stock options
will vest 25% on the first anniversary of the Effective Date and will vest
1/48th per month thereafter, so that they will be fully vested on the fourth
anniversary of the Effective Date. The stock options will have a term of ten
years and will be subject to the terms and conditions set forth on the form of
stock option agreement approved by the Board of Directors of Parent.
5. EMPLOYEE BENEFITS. Employee will be entitled to insurance, vacation
and other benefits commensurate with Employee's position in accordance with
Parent's standard employee policies in effect from time to time. For purposes
of satisfying the terms and conditions of such benefit plans, Parent shall give
full credit for eligibility, vesting or benefit accrual for each participant's
period of service with Company prior to the Effective Date. Employee has
received a summary of Parent's standard employee benefits policies in effect as
of the date hereof. Employee shall receive credit for 60.06 hours of vacation
accrued at Company, in accordance with Parent's standard employee policies.
6. REIMBURSEMENT OF BUSINESS EXPENSES. Parent will, in accordance with
Parent's policies in effect from time to time, reimburse Employee for all
reasonable business expenses incurred by Employee in connection with the
performance of Employee's duties under this Agreement, including, without
limitation, reasonable expenditures for office space, supplies, equipment and
expenses and for business entertainment and travel, upon submission of the
required documentation required pursuant to Parent's standard policies and
record keeping procedures.
7. CONFIDENTIALITY. Simultaneously with the execution of this Agreement,
Employee is executing and delivering and hereby adopts and agrees to be bound by
Parent's standard Proprietary Information and Inventions Agreement, a copy of
which is attached to this Agreement as Attachment A (the "Proprietary
Information Agreement") and deemed a part of this Agreement for the purposes
hereof.
8. TERMINATION.
(a) BY PARENT WITHOUT CAUSE. Parent may terminate Employee's
employment at will, at any time without cause upon written notice to Employee.
(b) BY PARENT WITH CAUSE. Parent may terminate Employee's employment
at any time for "cause" upon written notice to Employee.
(c) BY EMPLOYEE FOR BREACH. Employee may terminate Employee's
employment upon written notice to Parent in the event that Parent is in material
breach of this Agreement, provided that such termination will become effective
only upon the expiration of 30 days following such notice and then only if the
alleged breach remains uncured.
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(d) BY EMPLOYEE FOR GOOD REASON. Employee may terminate Employee's
employment at any time for Good Reason upon written notice to Parent.
(e) BY EMPLOYEE FOR OTHER REASONS. Employee may terminate Employee's
employment at any time for any reason other than as set forth in Section 8(c) or
(d) upon written notice to Parent.
(f) DEFINITION OF "CAUSE". As used in Section 8(b) of this
Agreement, the term "cause" shall mean:
(i) Employee personally engaging in knowing and intentional
illegal conduct that is seriously injurious to Parent or its affiliates;
(ii) Employee being convicted of a felony, or committing an
act of dishonesty or fraud against, or the misappropriation of property
belonging to, Parent or its affiliates;
(iii) Employee's commencement of employment with another
employer while employed by Parent; or
(iv) any material breach by Employee of any material provision
of the Proprietary Information Agreement, and any material breach by Employee of
any material provision of this Agreement, which continues uncured for 30 days
following notice thereof.
(g) DEFINITION OF "GOOD REASON". As used in Section 8(d) of this
Agreement, the term "Good Reason" shall mean:
(i) a reduction in the Employee's annual base salary as
provided in Section 4(a) or as the same may be increased from time to time,
unless such reduction is pursuant to a general salary reduction undertaken by
the Parent with respect to its executive employees;
(ii) the failure by the Parent to provide the Employee with
pension benefits or life, medical, health and accident insurance or disability
plans at a level commensurate with other of Parent's employees who occupy
positions at Parent at a similar level of seniority as Employee occupied with
Company immediately before the execution hereof, which failure shall continue
for 30 days following notice thereof. For purposes of determining eligibility
under such benefits or plans, Employee shall receive credit for Employee's
period of service at Company;
(iii) the relocation of an Employee to an office that is more
than fifty (50) miles away from the Company's office at which the Employee was
based immediately prior to the execution hereof, without the Employee's consent,
provided however that required business travel consistent with the Employee's
position described in Section 2 hereof without such a relocation shall not
constitute Good Reason; or
(iv) a material reduction in the Employee's duties from those
initially established in connection with the Employee's position described in
Section 2 hereof, provided
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however that a change in title without such a material reduction in duties shall
not constitute Good Reason.
(h) TERMINATION PAYMENTS. Upon termination of Employee's employment
pursuant to Section 8(a), 8(c) or 8(d), Parent will continue to pay Employee on
a monthly basis and at a monthly rate based on the greater of: (x) Employee's
annualized base salary during 1996 as specified in Section 4(a), or (y)
Employee's annualized base salary at the time of termination, for the period
beginning on the date of such termination through the end of the Initial Period
(the "Severance Period"), regardless of whether Employee has found new
employment (the "TERMINATION PAYMENTS"), subject to applicable tax withholding.
Parent's obligation to make the Termination Payments pursuant to this Section
8(h) is in lieu of any damages or any other payment or benefits, if any, that
Parent might otherwise be obligated to pay Employee as a result of Employee's
termination of employment; PROVIDED, however, that the Termination Payments
shall not be in lieu of payments of such benefits due or accrued on the date of
termination of employment. Parent and Employee agree that, in view of the
nature of the issues likely to arise in the event of such a termination, it
would be impracticable or extremely difficult to fix the actual damages
resulting from such termination, and proving actual damages, causation and
foreseeability in the case of such termination would be costly, inconvenient and
difficult. In requiring Parent to make the Termination Payments as set forth
herein, it is the intent of the parties to provide, as of the date of this
Agreement, for a liquidated amount of damages to be paid by Parent to Employee.
Such liquidated amount shall be deemed full and adequate damages for such
termination and is not intended by either party to be a penalty.
(i) UPON DEATH. If Employee dies during the term of this Agreement,
Parent will pay Employee's estate an amount equal to all salary, bonuses and
benefits accrued as of the date of Employee's death.
(j) SURVIVAL. Employee's and Parent's obligations under Sections 5,
6, 7, 8 and 9 (i) of this Agreement will survive the termination of Employee's
employment by Parent.
9. MISCELLANEOUS.
(a) NOTICES. Any and all notices permitted or required to be given
under this Agreement must be in writing. Notices will be deemed given (i) when
personally received or when sent by facsimile transmission (to the receiving
party's facsimile number), (ii) on the first business day after having been sent
by commercial overnight courier with written verification of receipt, or (iii)
on the third business day after having been sent by registered or certified mail
from a location on the United States mainland, return receipt requested, postage
prepaid, whichever occurs first, at the address set forth below or at any new
address, notice of which will have been given in accordance with this Section
9(a):
If to Parent: SYNC RESEARCH, INC.
0 Xxxxxxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxx, President
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If to Employee: c/o TyLink Corporation
00 Xxxxxxxx Xxx
Xxxxxx, XX 00000
(b) AMENDMENTS. This Agreement, including the Exhibits hereto,
contains the entire agreement and supersedes and replaces all prior agreements
between Parent and Employee or Company and Employee concerning Employee's
employment. This Agreement may not be changed or modified in whole or in part
except by a writing signed by the party against whom enforcement of the change
or modification is sought.
(c) SUCCESSORS AND ASSIGNS. This Agreement will not be assignable by
either Employee or Parent, except that the rights and obligations of Parent
under this Agreement may be assigned to a corporation which becomes the
successor to Parent as the result of a merger or other corporate reorganization
and which continues the business of Parent, or any subsidiary of Parent,
provided that Parent guarantees the performance by such subsidiary of Parent's
obligations hereunder.
(d) GOVERNING LAW. This Agreement will be governed by and
interpreted according to the substantive laws of the State of Delaware without
regard to such state's conflicts law.
(e) NO WAIVER. The failure of either party to insist on strict
compliance with any of the terms of this Agreement in any instance or instances
will not be deemed to be a waiver of any term of this Agreement or of that
party's right to require strict compliance with the terms of this Agreement in
any other instance.
(f) SEVERABILITY. Employee and Parent recognize that the limitations
contained herein are reasonably and properly required for the adequate
protection of the interests of Parent. If for any reason a court of competent
jurisdiction or binding arbitration proceeding finds any provision of this
Agreement, or the application thereof, to be unenforceable, the remaining
provisions of this Agreement will be interpreted so as best to reasonably effect
the intent of the parties. The parties further agree that the court or
arbitrator shall replace any such invalid or unenforceable provisions with valid
and enforceable provisions designed to achieve, to the extent possible, the
business purposes and intent of such unenforceable provisions.
(g) COUNTERPARTS. This Agreement may be executed in counterparts
which when taken together will constitute one instrument. Any copy of this
Agreement with the original signatures of all parties appended will constitute
an original.
(h) EFFECT OF AGREEMENT. This Agreement will be void and have no
effect if the Effective Date does not occur on or before August 31, 1996.
(i) DISPUTE RESOLUTION.
(i) ARBITRATION OF DISPUTES. Any dispute under this
Agreement shall be resolved by arbitration in Boston, Massachusetts, and, except
as herein specifically stated, in
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accordance with the commercial arbitration rules of the American Arbitration
Association ("AAA Rules") then in effect. However, in all events, these
arbitration provisions shall govern over any conflicting rules which may now or
hereafter be contained in the AAA Rules. Any judgment upon the award rendered
by the arbitrator may be entered in any court having jurisdiction over the
subject matter thereof. The arbitrator shall have the authority to grant any
equitable and legal remedies that would be available in any judicial proceeding
instituted to resolve such dispute.
(ii) COMPENSATION OF ARBITRATOR. Any such arbitration will be
conducted before a single arbitrator who will be compensated for his or her
services at a rate to be determined by the parties or by the American
Arbitration Association, but based upon reasonable hourly or daily consulting
rates for the arbitrator in the event the parties are not able to agree upon his
or her rate of compensation.
(iii) PAYMENT OF COSTS. Parent and Employee will bear the
expense of deposits and advances required by the arbitrator in equal
proportions, but either party may advance such amounts, subject to recovery as
an addition or offset to any award. Each party will pay its own costs, fees and
expenses incurred in connection with the arbitration, including reasonable fees
and expenses of attorneys, accountants and other professionals, which each party
engages.
(iv) BURDEN OF PROOF. For any dispute submitted to
arbitration, the burden of proof will be as it would be if the claim were
litigated in a judicial proceeding.
(v) AWARD. Upon the conclusion of any arbitration
proceedings hereunder, the arbitrator will render findings of fact and
conclusions of law and a written opinion setting forth the basis and reasons for
any decision reached and will deliver such documents to each party to this
Agreement along with a signed copy of the award.
(vi) TERMS OF ARBITRATION. The arbitrator chosen in
accordance with these provisions will not have the power to alter, amend or
otherwise affect the terms of these arbitration provisions or the provisions of
this Agreement.
(vii) EXCLUSIVE REMEDY. Except as specifically otherwise
provided in this Agreement, arbitration will be the sole and exclusive remedy of
the parties for any dispute arising out of this Agreement.
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IN WITNESS WHEREOF, this Agreement is made and effective as of the
Effective Date.
SYNC RESEARCH, INC. EMPLOYEE
By: _____________________________________ ______________________________
Name: Xxxxx X. Xxxx Xxxxxxx Xxxx
Title: President and Chief Operating Officer
LIST OF EXHIBITS:
Attachment A Proprietary Information Agreement
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ATTACHMENT A
PROPRIETARY INFORMATION AGREEMENT
[omitted]
