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Exhibit 10.46
RESTATED EMPLOYMENT AND CONSULTING AGREEMENT
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This Agreement is dated as of March 26, 1996 is by and between Xxxx X.
Xxxxxxxx of 00 Xxxxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx (the "Executive") and
Telco Systems, Inc., a Delaware corporation with its principal place of business
at 00 Xxxxxxx Xxxxxx, Xxxxxxx Xxxxxxxxxxxxx 00000 (the "Company").
R E C I T A L S
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The Executive is currently employed full time as vice chairman of the
board of directors of the Company. It is contemplated that the Executive will
continue in this capacity until January 1, 1997, on which date he will become a
consultant to the Company. The purpose of this agreement is to formalize these
relationships and to provide for the specific terms of the Executive's
employment and consulting arrangement. This Agreement supersedes in all respects
the Employment and Consulting Agreement between the parties dated as of March
15, 1995.
1. Continued Employment.
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The Executive shall continue to be employed on a full-time basis until
such employment is terminated pursuant to the provisions of section 2 hereof.
During such employment period, the Executive shall be subject to the supervision
of, and shall have such authority as is delegated to him by, the Company's board
of directors in a manner consistent with the terms of this agreement. The
Executive agrees that during such employment he will devote his full business
time, attention and energies to the business and interests of the Company, and
will faithfully, competently and to
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the best of his skill and ability serve in such capacity or capacities as he may
occupy with the Company from time to time.
2. Termination of Employment.
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The Executive's employment by the Company under section 1 shall continue
until terminated in accordance with one of the following provisions:
2.1 VOLUNTARY TERMINATION. The Executive may voluntarily terminate his
employment hereunder at any time prior to January 1, 1997 by giving the Company
30 days' notice of termination. Upon the effective date of such termination, the
Executive shall become a consultant to the Company under the terms and
provisions of section 4 hereof, except that the initial two-year consulting term
shall commence on the effective date of such termination and all payment and
other dates provided for in section 4 shall be correspondingly advanced.
2.2 TERMINATION BY THE COMPANY WITHOUT CAUSE PRIOR TO DECEMBER 31, 1996.
The Company may terminate the Executive's employment hereunder without cause at
any time prior to December 31, 1996, upon written notice to the Executive, which
termination shall be effective immediately or on such date as is specified in
the notice. Any material reduction in the title, or the compensation and
benefits, of the Executive shall be deemed to be a termination by the Company
without cause under the provisions of this section 2.2. In the event of
termination under the provisions of this section 2.2, the Executive shall
forthwith become a consultant under the consulting arrangements described in
section 4 hereof (with appropriate advancement of the term and dates as
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described in section 2.1), and the Company shall in addition make the payments
described in section 3.3 hereof.
2.3 TERMINATION FOR CAUSE. The Executive's employment hereunder may be
terminated by the Company at any time for cause, effective upon written notice
thereof to the Executive. For purposes of this agreement, the term "cause" shall
have the meaning as set forth in section 3(a)(iii) of the Senior Executive
Benefits Agreement dated as of October 4, 1989 between the Company and the
Executive (the "Golden Parachute Agreement"). In the event of termination
pursuant to this section 2.3, the Company shall be under no further obligation
to the Executive, under the consulting arrangements described in section 4 or
otherwise, other than to pay the Executive his then current salary through the
effective date of such termination.
2.4 TERMINATION ON DEATH OR DISABILITY. The Executive's employment
pursuant to section 1 hereof shall terminate on the death or disability of the
Executive. For purposes of this agreement, the term "disability" shall mean the
Executive's inability by reason of illness or other physical or other mental
disability to perform the duties required by his employment hereunder for any
consecutive period of 180 calendar days, provided that notice of any termination
by the company because of the Executive's disability shall have been given to
the Executive prior to the full resumption by him of the performance of such
duties. In the event of termination under this section 2.4, the Company shall
pay to the Executive or his estate, as the case may be, the payments described
in section 3.3 hereof and the Execu-
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tive's salary and bonus, if any, prorated through the effective date of
termination of employment, in full discharge of all of the Company's further
obligations to the Executive hereunder.
2.5 CHANGE OF CONTROL. This agreement shall terminate in all respects,
and be of no further force and effect, if at any time prior to January 1, 1997
the Executive shall become entitled to severance benefits under the
circumstances and as described in section 3 of the Golden Parachute Agreement.
3. COMPENSATION AND BENEFITS RELATING TO EMPLOYMENT.
The provisions of this section 3 shall apply so long as the Executive
continues to be employed pursuant to section 1 hereof.
3.1 SALARY AND BONUS. During such employment, the Executive shall be
entitled to a salary at an annual rate fixed by the Company's board of
directors, but not less than the rate in effect as of the date of this
agreement. The Executive shall during such employment be entitled to full
participation in the Company's Management Incentive Plan at the target MIP
percentage participation as in effect as of the date of this agreement;
provided, however, that the determination of the amount of the payments to be
actually made to the Executive with respect to any period subsequent to August
25, 1996, if any, shall be determined by the Company's Compensation Committee,
in its sole discretion.
3.2 BENEFITS. During the period of his employment under section 1 hereof,
the Executive shall be entitled to all executive fringe benefits to which he is
presently entitled, subject only to such changes in such benefits as shall
affect all senior executives of the Company.
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3.3 SEVERANCE PAY. In the event that the Executive's employment by the
Company pursuant to section 1 is terminated by the Company under section 2.2 or
terminates under section 2.4 hereof, the Company shall pay the Executive or his
legal representative a severance amount equal to 1.5 times his annual salary as
then in effect, payable in equal installments bi-weekly over the one-year period
commencing with the date of termination of such employment. Such payment shall
be made notwithstanding that the Executive shall in the event of termination
under section 2.2 be concurrently being paid as a consultant under section 4
hereof.
4. Consulting Services.
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The provisions of this section 4 shall apply in the event that, and at
such time as, the Executive becomes a consultant to the Company upon termination
of his employment under section 2.1 or 2.2 hereof.
4.1 TERM OF CONSULTING SERVICES. The initial term of the Executive's
consulting services shall be two years, commencing on January 1, 1997 or, if
applicable, such earlier date on which the Executive's employment under section
1 is terminated under section 2.1 or 2.2 hereof. The Executive shall continue to
perform consulting services for consecutive one-year periods after the end of
the initial two-year term of such services unless not less than 30 days prior to
the end of a consulting year one party shall give the other written notice of
the termination of such consulting services at the end of such consulting year.
During any such consulting year subsequent to the initial term, the Executive
shall
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perform services on the same basis as was applicable to the initial term.
4.2 DESCRIPTION OF SERVICES. During the initial two-year term of the
consulting period, the Executive shall perform such services as shall be
assigned to him by the board of directors or chief executive officer of the
Company, including without limitation performing the duties of chief financial
officer of the Company, on a temporary basis, and services involving shareholder
relations and strategic planning. Such services shall be performed at such times
and places, within or outside the United States, and in such a manner, as shall
be agreed by the Executive and the Company; provided, however, that the
Executive shall not be required to devote more than one-half of his business
time (an average of 20 hours per week) in performing consulting services.
4.3 COMPENSATION. As full compensation for consulting services under
this section 4, the Company shall pay the Executive a fee for each full year of
such services equal to $165,375. The fee for the first full year of such
services shall be paid in a lump sum on the first day of the initial two-year
term of the Executive's consulting services. Subsequent to such first year and
during the balance of the term of his consulting services hereunder, the
Executive shall receive his consulting fee in equal monthly installments of
$13,781.25 on the first day of each month, in advance. The aforesaid lump sum
payment for the first year shall be non-refundable (except as set forth in
section 4.10) under any circumstances, including the death of the Executive
during such year. The fees provided for in this section 4.3 shall
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be payable notwithstanding that the Executive may perform, or may have
performed, no services whatsoever on behalf of the Company during a payment
period.
4.4 BENEFITS. During the period that the Executive is acting as a
consultant under this section 4, he shall receive at no cost to him the benefits
to which he is entitled pursuant to section 3.2 hereof, subject only to such
changes in such benefits as shall affect all senior executives of the Company.
4.5 EXPENSES. The Company shall reimburse the Executive for all
reasonable out-of-pocket expenses incurred in performing consulting services
hereunder, including reasonable travel expenses. Reimbursement by the Company as
aforesaid shall occur upon submission to the Company by the Executive of an
itemized account thereof in reasonable detail.
4.6 NO AGENCY. In performing services hereunder the Executive shall be
an independent contractor and shall have no power or authority to bind the
Company or create any obligation or responsibility, express or implied, in the
name or on behalf of the Company.
4.7 STOCK OPTIONS. Each outstanding stock option held by the Executive
at the commencement of his consulting pursuant to this section 4, and each
option granted to the Executive during his performance of consulting services
hereunder, shall continue to vest during the period of his consulting services
hereunder, and shall remain exercisable until 30 days after the date of
termination of such consulting services.
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4.8 SERVICES AS A DIRECTOR. In the event and to the extent that the
Executive continues to act as a director of the Company while he is performing
consulting services under this section 4, he shall (in addition to the
consulting fees payable pursuant to section 4.3) receive such fees and expenses
for services as a director as are paid to the Company's outside directors;
provided, however, that the Executive shall not be entitled to the annual
retainer, if any, payable to outside directors.
4.9 OFFICE. During the period that he is performing consulting services
under this section 4, the Company shall at its expense provide the Executive
with an executive office in the Boston financial district, at such location and
on such terms as the Company and the Executive shall agree.
4.10 EFFECT OF SUBSEQUENT EMPLOYMENT. In the event that the Executive
obtains full-time employment at any time during the initial two year term of his
consulting services hereunder, the Company shall pay the Executive an amount
equal to one-half of the aggregate consulting fees payable with respect to the
balance of such two-year period, in a single payment with appropriate credit for
the pre-payment of the first year's fee, and the Executive's consulting services
under this section 4 shall forthwith terminate and neither party shall have any
further obligation to the other with respect thereto. Such services shall also
terminate at such time, after the initial two-year term of his consulting
services hereunder, as the Executive obtains full-time employment as aforesaid.
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4.11 ILLNESS, INCAPACITY OR DEATH OF THE EXECUTIVE. In the event that
during the initial two-year term of his consulting services hereunder, the
Executive dies or is unable to perform his services by reason of disability (as
defined in section 2.5 hereof), the Company shall continue to make payments
pursuant to section 4.3 hereof to the Executive or his estate, as the case may
be, for the balance of such two-year period. Subsequent to the initial two-year
term of the Executive's consulting services hereunder, such services shall
terminate on the date of his death or disability.
5. Miscellaneous.
5.1 INVALIDITY. The invalidity or unenforceability of any provision of
this agreement shall not affect the validity or enforceability of any other
provision hereof.
5.2 ENTIRE AGREEMENT. This agreement supersedes all prior agreements,
written or oral between the Executive and the Company relating the subject
matter of this agreement, including without limitation the Employment and
Consulting Agreement between the parties dated as of March 15, 1995; provided,
however, that the Golden Parachute Agreement and the Executive's Invention,
Non-disclosure and Non-competition Agreement with the Company shall each remain
in full force and effect. It is acknowledged and agreed that the Golden
Parachute Agreement shall terminate in all respects on termination of the
Executive's employment under section 1 of this agreement.
5.3 AMENDMENTS. This agreement may not be amended, and no provision of
this agreement may be waived, in any respect except
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by a writing executed by the Executive and on behalf of the Company.
5.4 SUCCESSORS AND ASSIGNS. This agreement shall be binding upon and
inure to the benefit of the successors, assigns, executors, administrators and
personal representatives of the parties hereto.
5.5 GOVERNING LAW. This agreement shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts.
5.6 NOTICES. For purposes of this agreement, all notices and other
communications provided for herein shall be in writing and shall be deemed been
duly given when delivered, or mailed by certified mail, return receipt
requested, postage prepaid, addressed to a party at his or its addresses as set
forth on the first page of this agreement, or to such other address that either
party may furnish to the other in accordance herewith.
5.7 WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this agreement by the other party shall not operate or be construed
as a waiver of any subsequent breach by such other party.
5.8 BONUSES. Nothing contained in this agreement shall be construed to
prevent the Company from paying the Executive compensation in addition to that
provided for herein, in the form of bonuses or otherwise, in the event that the
board of directors of the Company shall deem it advisable to pay such
compensation. Nothing contained in this agreement shall, however, be construed
to obligate the Company to pay any such additional compensation.
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IN WITNESS WHEREOF, the Executive has executed this agreement, and the
Company has caused this agreement to be executed by a duly authorized officer,
as of the date first above written.
TELCO SYSTEMS, INC.
By /s/ Xxxx X. Xxxxxxxx
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Chairman of the Compensation
Committee, Duly Authorized
/s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
