EXHIBIT 10.9
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 10, 2001 between Entrada Networks, Inc., a
Delaware Corporation (the "Company"), having a principal place of business at
00000 Xxxx Xxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, and Xxxxxx X.X. Xxxxxx, Ph.D.
(the "Employee"), having an [address].
WITNESSETH
WHEREAS, the Employee possesses substantial knowledge with respect to
the industry in which the Company conducts its business by reason of his
employment and may acquire further knowledge of such business by reason of his
employment as hereinafter provided; and
WHEREAS, the Company desires to procure the services of the Employee,
and to secure the Employee's agreement not to compete and to treat as
confidential and as the property of the Company certain information gained in
the course of the Employee's employment by the Company both before and after the
effective date of this Agreement, as the case may be, and the Employee is
willing to continue in the employment of and to so agree with the Company, all
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the Company and the Employee agree as follows:
1. Employment. The Company agrees to employ the Employee, and the
Employee accepts the employment, on the terms and conditions hereinafter set
forth. During the term of employment hereunder, the Employee shall serve in such
capacity as may from time to time be determined by or pursuant to authority
granted by the Board of Directors of the Company, and during such term of
employment, the Employee shall devote his best efforts, knowledge and skill and
his full time to the Company's business and affairs. Subject to the authority of
the Board of Directors of the Company, the Company will employ the Employee in
the capacity of President and Chief Executive Officer. The Employee shall report
directly to the Board of Directors.
2. Term of Employment: Termination.
2.1. The Employee agrees to work for the Company for a period
of forty eight (48) months commencing on the date of hire, which was April 14,
2000. However, the Company may terminate the Employee's employment at any time,
for any reason (or no reason), and with or Without Cause, by providing the
Employee with thirty (30) days' written notice. If employment continues
following the end of the four (4)-year term of this Agreement (the "Term"), it
will continue on an "at-will" basis, which means that either the Employee or the
Company may terminate the
1.
Employee's employment at any time, for any reason (or no reason), and with or
Without Cause, by providing the other party with thirty (30) days written
notice.
2.2. If the Company terminates the Employee's employment
Without Cause, or if the Employee resigns his employment for Good Reason, or if
this Agreement terminates pursuant to paragraph 2.3 below, prior to the end of
the Term, the Employee, or his legal representatives, as the case may be, shall
receive: (i) all salary and bonus earned by the Employee through the last day of
his employment; (ii) continuation of the Employee's base salary for a period of
two (2) years after the date of the termination of the Employee's employment;
(iii) immediate vesting of all outstanding shares of the Employee's Company
stock options, notwithstanding anything to the contrary in the agreement(s)
granting such options; and (iv) the Company's right to repurchase shares as
provided in paragraph 3.4.1 below and to cancel unexercised vested options, as
provided in the Stock Option Agreement or elsewhere, shall terminate. However,
if: (i) the Employee resigns at any time Without Good Reason; (ii) the Company
terminates the Employee's employment for Cause prior to the end of the Term; or
(iii) the Company terminates the Employee's employment with Cause, or if the
Employee resigns, Without Good Reason, after the end of the Term, the Employee
will only be entitled to all salary earned by him through the last day of his
employment.
For purposes of this Agreement, "Cause" shall mean a good faith
determination by the Board of Directors of the Company, following a reasonable
factual investigation, of the occurrence of any one or more of the following
events or circumstances, provided however, such event or circumstance will not
constitute Cause unless Employee has failed to cure such event or circumstance
within 30 days after receipt by Employee of written notice thereof: (i) Employee
willfully engages in wrongful conduct that results in material damage to the
Company; (ii) any willful and material failure to perform Employee's duties
hereunder; (iii) Employee is convicted of a felony, including a plea of no
contest, (iv) employee engages in fraud or one or more acts of dishonesty which
materially damages the Company; or (v) Employee materially breaches this
Agreement or the Proprietary Information and Invention Agreement, which material
breach results in material damage to the Company. No act or failure to act on
Employee's part shall be deemed "willful" unless it is done, or omitted to be
done, by Employee not in good faith and such that a reasonable person would
believe that the act, or failure to act, was not in the best interests of the
Company.
For purposes under this Agreement, "Good Reason" for Employee's
resignation will exist if Employee resigns within sixty days of any of the
following: (i) any reduction in his base salary or bonus, if any; (ii) any
material reduction in his benefits; (iii) a change in Employee's position with
the Company or a successor company which materially reduces Employee's duties or
level of responsibility; or (iv) any requirement that Employee's relocate his
place of employment by more than thirty-five (35) miles from his then current
office, provided such reduction, change or relocation is effected by the Company
without his written consent. A resignation by Employee under any other
circumstances or for any other reasons will be a resignation "Without Good
Reason."
2.
2.3. This Agreement shall automatically terminate in the event
of the Employee's death or Permanent Disability. "Permanent Disability" is
defined as physical or mental incapacity rendering the Employee unable to
perform substantially all of his duties for a period of at least four (4)
consecutive months or an aggregate of at least six (6) months over any twelve
(12) month period.
3. Compensation.
3.1. Salary. As full compensation for the services to be
rendered by the Employee hereunder and as consideration for the observance of
the provisions of Section 4 hereof, the Company shall pay the Employee, and the
Employee shall accept, a salary at the rate of One Hundred Ninety Five Thousand
Dollars ($195,000.00) per annum for the first year & $220,000.00 for the second
year and this new second year salary to start on July 16, 2001 for this year
only. Such salary shall be payable not less frequently than once a month. In the
event that the Employee's employment shall be terminated by death or Permanent
Disability, the Employee, or his legal representatives, as the case may be,
shall receive: (i) all salary earned by the Employee through the last day of his
employment; and (ii) immediate vesting of all outstanding shares of the
Employee's Company stock options, notwithstanding anything to the contrary in
the agreement(s) granting such options.
3.2. Bonus. Employee shall be entitled to participate on an
annual or quarterly basis in the Company's Executive Cash Incentive Plan,
subject to the terms and condition governing said Plan.
3.3. Benefits. Participation in group life, medical, pension,
profit sharing and other employee benefit plans (collectively hereinafter
referred to as "Fringe Benefit Plans"), and other provisions of the Employee's
employment not herein specifically provided for shall be consistent with that
provided to senior executives of the Company.
3.4. Stock Options.
3.4.1. Option Grant. The Company has granted Employee an
option to purchase 500,000 shares of the Company's common stock. The per share
exercise price of the option is $3.19 for 80,000 shares and $4.375 for the
balance of 420,000 shares. The Company will grant an option to purchase 160,000
shares of the Company's common stock at the Employee's first anniversary on
April 15, 2001 with an exercise price of $1.18 per share. The term of such
option is 10 years, subject to earlier expiration in the event of the
termination of Employee's employment. Such option is immediately exercisable,
but the purchased shares shall be subject to repurchase by the Company at the
exercise price paid per share in the event that Employee's employment terminates
prior to vesting in the shares. The Employee shall acquire a vested interest in,
and the Company's repurchase right shall accordingly lapse with respect to, (i)
twenty-five percent (25%) of the Option Shares upon Employee's completion of one
(1) year of Service measured from his date of hire and (ii) the balance of the
Option Shares in a series of thirty-six (36) successive equal monthly
installments upon Employee's completion of each additional month of Service over
the thirty-six (36)-month period measured from the first anniversary of the date
of hire. In no event shall any additional Option Shares vest after Employee's
cessation of Service.
3.
3.4.2. Exercise of Option. The option grant made pursuant
to Section 3.4.1 above shall be subject to the Company's standard form of Stock
Option Agreement
(Together with Notice of Grant), a copy of which is attached hereto as an
exhibit, and which notice must be executed as a condition of the grant.
3.5. Effect of Change in Control. This Agreement is subject to
that certain Agreement dated December 1, 2000, between Employee and the Company,
relating to the effect of a change of control of the Company that is attached
hereto as Exhibit A. In the event of an inconsistency between the December 1,
2000 Agreement and this Agreement, the December 1, 2000 Agreement shall control.
4. No Solicitations. The Employee agrees that for a period of one (1)
year following the termination of the Employee's employment for any reason, the
Employee shall not directly or indirectly, personally or through others, solicit
or attempt to solicit (on the Employee's behalf or on behalf of any other person
or entity) for hire any employee or consultant of the Company.
5. Corporate Opportunities. The Employee agrees that during his
employment hereunder he will not take any action which might divert from the
Company or any subsidiary or affiliate of the Company any opportunity which
would be within the scope of any of the present or future businesses thereof.
6. Nondisclosure of Confidential Information; Non-competition.
6.1. The Employee shall not, without the prior written consent
of the Company, use, divulge, disclose or make accessible to any other person,
firm, partnership, corporation or other entity any Confidential Information
pertaining to the business of the Company or any of its affiliates, except when
required to do so by a court of competent jurisdiction, by any governmental
agency having supervisory authority over the business of the Company, or by any
administrative body or legislative body (including a committee thereof) with
jurisdiction to order the Employee to divulge, disclose or make accessible such
information. For purposes of this Agreement, "Confidential Information" shall
mean non-public information concerning the financial data, strategic business
plans, product development, proprietary product data, customer lists, technology
(whether or not patented or copyrighted), marketing plans and other non-public,
proprietary and confidential information of the Company and its affiliates and
customers that, in any case, is not otherwise available to the public.
4.
6.2. Given the Employee's role in the Company, during the
period of the Employee's employment, whether pursuant to this Agreement or
otherwise, the Employee agrees that, without the prior written consent of the
Company, he will not, directly or indirectly, either as principal, manager,
agent, consultant, officer, stockholder, partner, investor, lender or employee
or in any other capacity, carry on, be engaged in, or have any financial
interest in any business in the United States which is in competition with the
business of the Company or any of its subsidiaries or affiliates; provided that
the foregoing shall not prevent the Employee from being a stockholder of less
than five percent (5%) of the issued and outstanding securities of any class of
a corporation listed on a national securities exchange or designated as national
market system securities on an inter-dealer quotation system by the National
Association of Securities Dealers, Inc.
6.3. The Employee and the Company agree that this covenant not
to compete is a reasonable covenant under the circumstances, and further agree
that if in the opinion of any court of competent jurisdiction such restraint is
not reasonable in any respect, such court shall have the right, power and
authority to modify such provision or provisions of this covenant to the extent
the court determines such restraint is not reasonable and to enforce the
covenant as so amended.
6.4. The Employee and the Company agree that any breach of the
covenants contained in this Section 6 would irreparably injure the Employee or
the Company. Accordingly, the Employee and the Company mutually agree that
either party may, in addition to pursuing any other remedies it may have in law
or in equity, obtain an injunction against the other from any court having
jurisdiction over the matter restraining any violation of Section 6 this
Agreement by either party.
6.5 As a condition of employment, employee will execute the
Company's standard Proprietary Information and Invention Agreement, a copy of
which is attached.
7. Successors. This Agreement shall be binding upon and inure to the
benefit of the Company and their respective successors and assigns by merger,
consolidation, transfer of business and properties or otherwise, and upon the
Employee and his heirs and legal representatives.
5.
8. Arbitration. Any disputes or claims arising out of or concerning
this Agreement or under any applicable statutes, including those relating to the
Employee's employment or termination thereof, shall be settled by arbitration in
San Diego County, California, in accordance with the commercial rules of the
American Arbitration Association then in effect, except as modified by this
Agreement. The arbitrator will have authority in his or her discretion to grant
injunctive relief, award specific performance and impose sanctions upon any
party to any such arbitration. The arbitrator's decision shall be final and
binding on both parties. Judgment upon the award rendered by the arbitrator may
be entered in any court of competent jurisdiction. In recognition of the fact
that resolution of any disputes or claims in the courts is rarely timely or cost
effective for either party, the Company and the Employee enter this mutual
agreement to arbitrate in order to gain the benefits of a speedy, impartial and
cost-effective dispute resolution procedure.
(a) The prevailing party may recover from the other
party costs for fees and expenses of the arbitrator and attorney fees and costs
incurred in such amount as the arbitrator or the court in such judicial action,
as the case may be, may determine to be reasonable and appropriate under the
circumstances.
(b) Any decision of an arbitrator under this provision
shall be in writing, signed by the arbitrator, and shall contain a statement
regarding the reasons for the disposition of any claim.
(c) In a contractual claim under this Agreement, the
arbitrator shall have no authority to add, delete or modify any term of this
Agreement.
9. Notices. All notices hereunder shall be in writing, sent by
overnight courier, providing written proof of delivery, or registered or
certified mail, return receipt requested, to the address first set forth above,
or to such address as a party may indicate by like notice.
10.Miscellaneous. Except as expressly provided herein, this Agreement
contains the entire agreement between the parties relating to the subject matter
hereof. Neither this Agreement nor any term hereof may be modified, amended,
waived, discharged or terminated except by a written instrument executed by the
party against which enforcement of such modification, amendment, waiver,
discharge or termination is sought. Any agreement or understanding, written or
otherwise, prior to the effective date of this Agreement between the Employee
and the Company relating to the employment of the Employee is hereby terminated
and discharged. California law shall govern the execution, delivery and
performance of this Agreement.
6.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
/s/ Xxxxxx X.X. Xxxxxx
______________________________________
Xxxxxx X. X. Xxxxxx, Ph.D.
Employee
ENTRADA NETWORKS, INC.
By: /s/ Xxxxxxx Xxxxxxxx
__________________________________
Title: General Counsel
