EMPLOYMENT AGREEMENT
EXHIBIT 10.20
THIS AGREEMENT is made by and between Larscom Incorporated, a
California corporation (“EMPLOYER”), and Xxxxxx X. Xxxxxxx (“EMPLOYEE”) as of November 26, 2001.
2.1 Title/Responsibilities. EMPLOYEE shall serve as an employee of EMPLOYER and hold the position of President and Chief Executive
Officer of EMPLOYER, having the powers and responsibilities consistent with such position, all subject to the ultimate direction and management of EMPLOYER’s Board of Directors. EMPLOYEE shall also perform all duties which from time to time are
assigned to him by EMPLOYER’s Board of Directors, and shall provide the Board with periodic reports upon request. EMPLOYEE’s primary job location (subject to change at the discretion of the Board) shall be Milpitas, California.
(a) Subject to Section 6.5, if
this Agreement and/or EMPLOYEE’s employment is terminated by EMPLOYER (including any successor company) other than for Cause, EMPLOYEE shall be (subject to the provisions of this Section 6.2) entitled to the Section 6.2 Benefits, and nothing
more. “Voluntary” resignation because of a material breach by EMPLOYER of its obligations under this Agreement, assignment to a position with titles or duties substantially diminished in nature, status or prestige from those previously had
(including after an acquisition), a material reduction in EMPLOYEE’s base salary, or reassignment of EMPLOYEE to a location outside the Silicon Valley/San Francisco Bay area shall be deemed to constitute termination by EMPLOYER other than for
Cause.
(b) No Section 6.2 Benefits shall be paid unless EMPLOYEE has first executed
and delivered to EMPLOYER a General Release and Settlement Agreement in the form attached hereto as Exhibit B and such General Release and Settlement Agreement has become irrevocable by EMPLOYEE.
(c) All Section 6.2 Benefits shall be reduced by any applicable tax withholding.
“Section 6.2 Benefits” shall be defined to mean:
(a) 12 months of
salary continuation payments to EMPLOYEE, at the same rate as EMPLOYEE’s termination-date base salary rate. Such salary continuation payments (less applicable tax withholding) shall be paid, semimonthly in arrears, until the first anniversary
of the date of termination (the “Termination Date”);
(b) if EMPLOYEE elects
to maintain his and his eligible dependents’ participation in EMPLOYER’s group medical and dental insurance plans pursuant to the terms of the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), payment by EMPLOYER of COBRA
Premium Portions on behalf of EMPLOYEE, from the Termination Date until the earlier of the first anniversary of the Termination Date or the earliest date EMPLOYEE could be eligible for medical insurance coverage under any new regular full-time
employment or equivalent service (the “COBRA Severance End Date”). “Equivalent service” means a consulting arrangement which is, in terms of time required, nature of duties, level of compensation, and intended/expected
permanence, tantamount to regular full-time employment. The COBRA Premium Portion shall mean the same portion of the COBRA premium which EMPLOYER would have paid in respect of such coverage if EMPLOYEE were in fact an employee during such period.
EMPLOYEE shall have personal responsibility to pay the remainder of such COBRA premiums. If EMPLOYEE so requests in writing, EMPLOYER shall arrange for such payments to be made, between the Termination Date and the COBRA Severance End Date, by
withholding from salary continuation payments. Nothing herein shall limit the right of EMPLOYER to change the provider and/or the terms of its group medical and/or dental insurance plan at any time hereafter;
(c) payment by EMPLOYER, to the provider, of an amount not to exceed $15,000 for outplacement services
commenced before the first anniversary of the Termination Date, with a service provider selected by EMPLOYEE and approved by the Compensation Committee of EMPLOYER’s Board of Directors, which approval shall not be unreasonably withheld;
(d) if the termination was in connection with or
within one year after an acquisition of EMPLOYER, payment (at the customary time for bonus payment) of a prorated portion of any cash bonus which EMPLOYEE would have received for such year but for such termination; and
(e) if EMPLOYEE “voluntarily” resigns because of a material breach by EMPLOYER of its obligations
under this Agreement or reassignment of EMPLOYEE to a location outside the Silicon Valley/San Francisco Bay area, payment (at the customary time for bonus payment) of a prorated portion of any cash bonus which EMPLOYEE would have received for such
year but for such “voluntary” resignation.
“Cause” shall be defined to mean:
(f) EMPLOYEE’s repudiation of this Agreement;
(g) EMPLOYEE being formally charged with the commission of a felony, or being convicted of a misdemeanor involving moral turpitude;
(h) EMPLOYEE’s demonstrable embezzlement, theft, fraud or dishonesty;
(i) EMPLOYEE’s use of alcohol, drugs or any illegal substance in such a manner as to interfere with the
performance of his duties under this Agreement;
(j) EMPLOYEE’s intentional,
reckless or grossly negligent action materially detrimental to the best interest of the EMPLOYER, including any misappropriation or unauthorized use of EMPLOYER’s property or improper use or disclosure of confidential information (but excluding
any good faith exercise of business judgment);
(k) EMPLOYEE’s intentional failure
to perform, or neglect of or inattention to, material duties under this Agreement if such failure has continued for 15 days after EMPLOYEE has been notified in writing by EMPLOYER of the nature of EMPLOYEE’s failure to perform (provided, that
poor performance by EMPLOYER shall not itself be deemed to constitute poor performance by EMPLOYEE);
(l) EMPLOYEE’s chronic absence from work for reasons other than illness or permitted paid-time-off; or
(m) EMPLOYEE’s violation of policies in EMPLOYER’s official Employee Handbook, as it may be amended from time to time, or policies or directives of EMPLOYER’s Board of Directors.
(a) death;
(b) permanent disability (defined as EMPLOYEE’s inability to perform, with or without reasonable accommodation, the essential functions of
his position for any 50 business days — exclusive of paid-time-off taken — within any continuous period of 200 days by reason of physical or mental illness or incapacity);
(c) termination by EMPLOYER for Cause;
(d) voluntary resignation (other than because of a material breach by EMPLOYER of its obligations under this Agreement, assignment to a position
with titles or duties substantially diminished in nature, status or prestige from those previously had, a material reduction in EMPLOYEE’s base salary, or reassignment of EMPLOYEE to a location outside the Silicon Valley/San Francisco Bay
area).
7.1 Final and Binding Arbitration. Any controversy, claim or dispute between (a) a party to this Agreement, on the one hand, and (b) the
other party to this Agreement and/or such second party’s parents, subsidiaries or affiliates and/or any of their directors, officers, employees, agents, successors, assigns, heirs, executors, administrators, or legal representatives, on the
other hand, arising out of, in connection with, or in relation to (t) the interpretation, validity, performance or breach of this Agreement, (u) EMPLOYEE’s stock options and the underlying shares, (v) EMPLOYEE’s employment by EMPLOYER, (w)
any termination of such employment, (x) any actions during or with respect to EMPLOYEE’s work for EMPLOYER, (y) any claims for breach of contract, tort, or breach of the covenant of good faith and fair dealing, or (z) any claims of
discrimination or other claims under any federal, state or local law or regulation now in existence or hereinafter enacted and as amended from time to time concerning in any way the subject of EMPLOYEE’s employment with EMPLOYER or its
termination, shall, at the request of either party, be resolved to the exclusion of a court of law by binding arbitration in Palo Alto, California, in accordance with Exhibit A hereto. Each of EMPLOYEE and EMPLOYER understands and agrees that the
arbitration shall be instead of any civil litigation and that the arbitrator’s decision shall be final and binding to the fullest extent permitted by law and enforceable by any court having jurisdiction thereof. The only claims not covered by
this Section 7.1 are claims for benefits under the workers’ compensation laws, claims for unemployment insurance benefits, and matters within the jurisdiction of the California Labor Commissioner, which will be resolved pursuant to those laws,
and claims for equitable relief under the Proprietary Information and Inventions Agreement, which shall be heard and resolved in a court of law.
8.1 Governing Law. This Agreement and the rights of the parties thereunder shall be governed by and interpreted under California law.
TO
EMPLOYER:
Chairman, Larscom Incorporated |
0000 XxXxxxxxxx Xxxxx |
Xxxxxxxx, XX 00000 |
Copy to:
Xxxxxx X. Xxxxxxx |
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP |
00000 Xx Xxxxxx Xxxx |
Xxx Xxxxx, XX 00000 |
TO EMPLOYEE:
00000 Xxxx Xxxxx Xxxx |
Xxx Xxxxx, XX 00000 |
8.11 Conditions. EMPLOYER shall have no obligations under this Agreement, and EMPLOYEE’s employment shall not begin, unless and until EMPLOYEE (a) executes
and delivers to EMPLOYER a Proprietary Information and Inventions Agreement in EMPLOYER’s standard form, (b) passes EMPLOYER’s drug test, and (c) provides satisfactory proof of eligibility for employment.
IN WITNESS WHEREOF, the parties have executed and delivered this Employment Agreement in
Milpitas, California as of the date first written above.
LARSCOM INCORPORATED | ||
By: |
/s/ XXXXXXXX X.
XXXXXXXX | |
Xxxxxxxx X. Xxxxxxxx, Chairman | ||
/s/ XXXXXX X. XXXXXXX | ||
Xxxxxx X. Xxxxxxx |
Attachments: Exhibit A (Arbitration Procedures)
Exhibit B (General Release and Settlement Agreement)
EXHIBIT A
ARBITRATION PROCEDURES
In the event that there is any dispute relating to, regarding or arising in connection with EMPLOYEE’s employment with EMPLOYER which cannot be
resolved through direct discussion or mediation, regardless of the kind or type of dispute (excluding claims for workers’ compensation, unemployment insurance or any matters within the jurisdiction of the California Labor Commissioner), all
such disputes shall be submitted exclusively to final and binding arbitration pursuant to the provisions of the Federal Arbitration Act or, if inapplicable, the Uniform Arbitration Act (California Code of Civil Procedure § 1280 et seq.), upon
request submitted in writing to the Chairman of EMPLOYER within one year from the date the dispute first arose, or within one year of the date of termination of employment, whichever occurs first. This procedure shall be the exclusive method for
resolving all claims relating to the termination of EMPLOYEE’s employment, including but not limited to any alleged violations of federal, state and/or local statutes; all claims based upon any purported breach of duty arising in contract or
tort, including but not limited to breach of contract, breach of the covenant of good faith and fair dealing, or violation of public policy; and any other alleged violation of an employee’s statutory, contractual or common law rights.
Any failure to request arbitration in accordance with the foregoing provisions shall constitute a waiver of all rights to raise
or present any claims in any form, in any forum, arising out of any dispute that was subject to arbitration.
All disputes subject to arbitration will be resolved by a single arbitrator selected from a list provided by the
California Mediation and Conciliation Service from its Employment Arbitration Panel. The parties shall select the arbitrator by alternately striking names from the list, and the last name remaining on the list shall be the arbitrator selected to
resolve the dispute. The arbitrator must be selected within thirty (30) days of receipt of the written request for arbitration. The arbitration hearing shall be held in Palo Alto, California, at a neutral location selected by the parties or, in the
event the parties are unable to agree, at a location designated by the arbitrator.
The arbitrator shall only be authorized to exercise the powers specifically enumerated by this procedure and to decide the
dispute in accordance with governing principles of law and equity. The arbitrator shall have no authority to modify the powers granted by the terms of this procedure or to modify the terms of the employee handbook, except as required by law. The
arbitrator shall have the authority to rule on motions by the parties, to issue protective orders upon motion of any party or third party, and to determine only the disputes submitted by the parties based upon the grounds presented. Any dispute or
argument not presented by the parties is outside the scope of the arbitrator’s jurisdiction and any award invoking such disputes or arguments is subject to a motion to vacate; provided, however, the arbitrator shall have exclusive authority to
resolve any dispute relating to the validity, interpretation and enforcement of these arbitration procedures.
The arbitrator shall have the power, in addition to determining the merits of the dispute submitted, to permit discovery
regarding the subject matter of arbitration and to enforce the rights, remedies, procedures, duties, liabilities and obligations of discovery by the imposition of the same terms, conditions, consequences, liabilities, sanctions and penalties as may
be imposed in like circumstances by a Superior Court under the California Code of Civil Procedure. All discovery must be completed thirty (30) days prior to the date set for the arbitration hearing.
The
issue(s) submitted to the arbitrator must be set forth in the request for arbitration. The arbitrator shall have no authority to frame the statement of the issue(s). Unless otherwise agreed by the parties, the arbitration hearing shall be governed
by the formal rules of evidence contained in the California Evidence Code. The parties shall mutually agree on the number of days required for hearing. The hearing shall be recorded and transcribed verbatim by a certified shorthand reporter. Each
party shall bear its own costs with respect to a copy of the transcript of the hearing; however, the parties shall each be responsible for one-half the cost of the court reporter’s fee and the arbitrator’s copy of the hearing transcript.
Each party shall have the right to present closing argument at the conclusion of all sworn testimony and, in addition to or in lieu of closing argument, either party shall have the right to submit post-hearing briefs.
The due date and
procedure for exchanging post-hearing briefs shall be mutually agreed upon by the parties or as directed by the arbitrator.
The arbitrator shall issue a written opinion
and award within sixty (60) days of closing arguments or the receipt of post-hearing briefs, whichever is later. The arbitration award and opinion shall be signed and dated by the arbitrator and shall decide all issues submitted and set forth the
legal principles supporting each aspect of the opinion and award. The arbitrator shall only be permitted to award those remedies in law or equity which are requested by the parties and which are supported by the credible, relevant evidence. The
arbitrator shall have no authority to award punitive or exemplary damages under any circumstances or for any reason.
Each party shall be responsible for its own attorney’s fees, except as provided by law, and for all costs
associated with discovery unless otherwise ordered by the arbitrator. Each party shall also be responsible for one-half of the arbitrator’s fee and one-half of any costs associated with the facilities for the arbitration hearing.
In the event that any provision of this procedure is determined by the arbitrator or by a court of competent jurisdiction to be illegal, invalid, or unenforceable to any extent, such term or provision shall be enforced to the extent
permissible under law and all remaining terms and provisions hereof shall continue in full force and effect.
EXHIBIT B
GENERAL RELEASE AND SETTLEMENT AGREEMENT
This General Release and Settlement Agreement
(hereinafter “Agreement”) is made and entered into in Milpitas, California by and between Xxxxxx X. Xxxxxxx (hereinafter “XXXXXXX”) and Larscom Incorporated (hereinafter “COMPANY”) as of
, 200 (the “Termination Date”). (XXXXXXX and COMPANY are sometimes hereinafter referred to
collectively as the “Parties.”)
X. XXXXXXX has resigned, effective as of the Termination Date, from all his positions as Chief Executive Officer, President, Director, officer and employee of
COMPANY and all its subsidiaries and affiliates, and hereby confirms such resignation;
B. As of the
Termination Date, XXXXXXX held options under COMPANY’s Stock Incentive Plan to purchase shares of COMPANY’s Class A common stock (“Options”). As of the
Termination Date, XXXXXXX had acquired vested interests in of such Options (the “Vested Options”), and had not yet acquired vested rights in
of such Options (the “Unvested Options”). Of the Vested Options, are incentive stock options
and have an exercise price of $ per share, are non-qualified stock options and have an exercise price of
$ per share, and are non-qualified stock options and have an exercise price of
$ per share.
X. XXXXXXX and
COMPANY wish to resolve permanently and amicably any and all disputes arising or which may ever arise out of SCHARRE’s employment with COMPANY.
Except as expressly provided in this Section 1, XXXXXXX hereby waives and renounces any and all other amounts which are or may become due to him under his Employment Agreement dated November 26, 2001, and under any
other written or oral compensation arrangement.
XXXXXXX acknowledges that effective upon his employment
termination he will be unable to continue his participation in COMPANY’s 401(k) plan or employee stock purchase plan or, except as allowed by COBRA or as specified in this Agreement, any other COMPANY perquisite, employee benefit plan or fringe
benefit plan.
The Vested Options shall in accordance with their terms remain exercisable until the earlier of
a Corporate Transaction or , 200 . The Parties acknowledge and agree that none of the Unvested Options
shall ever become exercisable or ever vest, and that XXXXXXX does not hold or have any right to receive any other COMPANY stock options, or have any right to receive any other COMPANY stock.
1.2 Additional Benefits. COMPANY agrees to give to XXXXXXX the benefits specified in Section 6.2 of the Employment Agreement, which the Parties
acknowledge XXXXXXX would not be entitled to receive but for this Agreement.
(a)
unemployment or any state disability insurance benefits pursuant to the terms of applicable state law;
(b)
workers’ compensation insurance benefits under the terms of any workers’ compensation insurance policy or fund of the COMPANY;
(c) continue participation in certain of the COMPANY’s group benefit plans pursuant to the terms and conditions of COBRA;
(d) any benefit entitlements vested as of the Termination Date, pursuant to written terms of any COMPANY employee benefit plan;
(e) arising out of the Vested Options (as amended herein); and
(f) arising under any written indemnification agreement or the indemnification provisions of COMPANY’s certificate of incorporation, bylaws or other similar
corporate documents or any indemnification otherwise provided by law;
and provided further that
“Claims” shall not include matters relating to SCHARRE’s rights under or arising out of this Agreement.
A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
This Agreement is in full accord, satisfaction and discharge of all of SCHARRE’s Claims against the COMPANY Releasees, or any of
them. This Agreement has been executed with the express intention of effectuating the full and final extinguishment of all such Claims.
matter which occurred before today (including without limitation all Claims. XXXXXXX further represents and warrants that neither XXXXXXX nor SCHARRE’s relatives, spouse, legal
representatives, agents, attorneys, assigns or affiliates, past or present, has instituted any action or claim against the COMPANY Releasees, or any of them, with respect to any matter. XXXXXXX agrees that if XXXXXXX violates this Section 4.b in any
manner or in any manner asserts against the COMPANY Releasees, or any of them, any of the Claims released hereunder, then XXXXXXX will pay to the COMPANY Releasees, and each of them, in addition to any other damages caused to the COMPANY Releasees
thereby, all attorneys’ fees incurred by the COMPANY Releasees in defending or otherwise responding to said action, etc. or Claim.
survive the expiration or termination of this AGREEMENT. XXXXXXX acknowledges that a remedy at law for any breach or threatened breach by him of the provisions of the Proprietary Information
Agreement or Section 8 of this Agreement would be inadequate, and he therefore agrees that COMPANY shall be entitled to injunctive relief in case of any such breach or threatened breach. XXXXXXX further agrees that the corporate affiliates of
COMPANY are included within the term “COMPANY” for purposes of Sections 7 and 8.
(a) To immediately relinquish COMPANY credit cards and keys and any other COMPANY property and otherwise comply with COMPANY’s practices and procedures for terminated employees. Without limitation, he shall not
retain copies of any COMPANY documents or files.
(b) Until the first anniversary of
the Termination Date, to notify the Chairman of the Board of COMPANY promptly, in writing, upon his acceptance of regular full-time employment or equivalent service with another firm and of the earliest date when his medical insurance coverage with
such firm could take effect.
(c) To respond to reasonable requests from COMPANY for
information, and, upon COMPANY’s request, to provide testimony and other assistance in any litigation or other proceeding in which he is not a party adverse to COMPANY.
case, and no single or partial exercise thereof shall preclude the full exercise or further exercise of any right, power, or privilege. No action taken pursuant to this Agreement shall be deemed
to constitute a waiver by the Party taking such action of compliance with any representations, warranties, covenants or agreements contained herein.
XXXXXX X. XXXXXXX
Date
LARSCOM INCORPORATED
By: |
| |
Chief Financial Officer |