EXHIBIT 10.24
EMPLOYMENT AGREEMENT
This Agreement is made and entered this the 5th day of March, 1997,
effective as stated herein, by and between BroadBand Technologies, Inc., a
Delaware corporation (the "Corporation") and Xxxxx X. X. Xxxxxx
(the "Executive").
WHEREAS, the Corporation is engaged in the research, development,
manufacture and sale of broadband and narrowband fiber optic loop systems and
related equipment for marketing and sale to customers throughout the world; and
WHEREAS, the Executive acknowledges that the success of the
Corporation's venture into the development, manufacturing, marketing and sale of
fiber optic loop systems is dependent in large part upon its ability to attract
capital, which in turn is dependent on the ability of the Corporation to assure
investors that the technologies and other proprietary information developed and
obtained by the Corporation, as well as the skills and know-how developed by the
Executive by reason of employment with the Corporation, will not become
available to a business which competes with the Corporation; and
WHEREAS, when the Corporation hired the Executive, the Corporation
informed the Executive it would seek venture capital to finance its operations
and growth and that venture capital investors may, as a condition to such
investment, require the Executive and others to enter into a noncompetition
agreement satisfactory to the investors, and, as an inducement to the
Corporation's agreement to hire the Executive, the Executive agreed to enter
into such a noncompetition agreement; and
WHEREAS, certain venture capital investors conditioned their investment
on the Executive and others executing a noncompetition agreement; and
WHEREAS, the Executive and the Corporation entered into a
noncompetition agreement dated as of December 16, 1988 (the "Original
Agreement"), in exchange for a cash payment and certain severance benefits to
which the Executive was not otherwise entitled; and
WHEREAS, the Executive is currently employed by the Corporation as its
Chief Executive Officer and President (hereinafter referred to as "CEO"); and
WHEREAS, the Executive and the Corporation desire the Corporation to
select a new CEO to replace the Executive as CEO; and
WHEREAS, the Executive and the Corporation desire the Executive to
focus on other executive duties as set forth herein; and
WHEREAS, the Executive desires to be employed by the Corporation on a
full-time basis upon such terms and conditions as are provided herein; and
WHEREAS, the Executive desires to receive from the Corporation certain
enhancements in the severance benefits and certain other benefits in the event
of a change in control of the Corporation, as set forth herein; and
WHEREAS, the Executive acknowledges that this employment contract and
these enhancements and benefits are valuable consideration to which he is not
otherwise entitled; and
WHEREAS, the Corporation desires to receive from the Executive certain
promises contained herein and certain modifications to his noncompetition
agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree to amend and restate the Original
Agreement to read as follows:
EMPLOYMENT. SUBJECT TO AND UPON THE TERMS AND CONDITIONS
HEREIN PROVIDED, THE CORPORATION HEREBY AGREES TO EMPLOY THE EXECUTIVE AND THE
EXECUTIVE HEREBY AGREES TO BE EMPLOYED BY THE CORPORATION DURING THE TERM OF
AGREEMENT AS DEFINED IN SECTION 2 HEREOF.
2. Term of Agreement and Duties. The term of this Agreement shall
commence as of March 5, 1997 (the "Effective Date") and shall terminate on the
first to occur of (i) the termination of this Agreement as provided herein, or
(ii) February 28, 1998 (the "Expiration Date"); provided, however, that on each
anniversary of the Effective Date (a "Renewal Date"), the Expiration Date shall
automatically be extended for a period of one (1) additional consecutive year
unless either the Corporation or the Executive provides written notice to the
other party at least ninety (90) days prior to the applicable Renewal Date that
the Agreement and the Executive's employment with the Corporation shall
terminate on the Expiration Date or anniversary of the Expiration Date, as
applicable. The period during which this Agreement is in effect is referred to
herein as the "Term of Agreement".
3. Position and Responsibilities. During the Term of Agreement, the
Executive shall initially be employed as CEO of the Corporation until such time
as the Corporation shall select another CEO. Upon being advised of the selection
of a new CEO, the Executive shall immediately resign as CEO and continue to be
employed with the Corporation as a Corporation Executive (which position shall
be a member of Senior Management) as such position may be established from time
to time by the Board of Directors of the Corporation (the "Board"). While so
employed, the Executive agrees to devote his full time and attention to carrying
out his duties and responsibilities under this Agreement and all duties and
responsibilities directed by the Board, and the Executive shall use his best
efforts, skills and abilities to further the interests of the Corporation. The
Executive shall serve under the direction and supervision of the Board. Except
as specifically provided herein, the Executive may not serve on the board of
directors of any other business entity unless (i) such entity is not engaged,
directly or indirectly, in competition with the business of the Corporation, as
determined by the Board in its discretion, (ii) such service would not interfere
with the Executive's obligations to the Corporation, (iii) the Executive obtains
the prior express written consent of the Board, which consent shall not be
unreasonably withheld, and (iv) the Executive adheres to such limitations as may
imposed by the Board in granting such consent. It is acknowledged that the
Executive is currently
serving on the boards of directors of certain business and not for
profit/community entities listed in Exhibit A attached hereto and that the
Executive may continue to serve as a member of the boards of directors specified
in Exhibit A unless the Board shall provide him with advance written notice to
resign from one or more of such boards at the expiration of his current term. As
to any business or not for profit/community boards the Executive joins subject
to the terms of this Agreement after execution of the Agreement, Executive
agrees to resign from such board within 90 days after receiving notice from the
Board for Executive to resign.
4. Chairman of Board. The Corporation and the Board currently intend to
cause the election of the Executive as Chairman of the Board at or around such
time as is reasonable in the normal course of operations after the Executive
ceases to be CEO of the Corporation, and, the Executive agrees to accept such
election, and to serve in such capacity during all or any part of the Term of
Agreement, without any additional compensation therefor. Failure to cause the
election of the Executive as Chairman of the Board will not constitute a breach
of this Agreement but will entitle the Executive to treat his employment as
terminated without Cause (as defined in Section 8.6(a) below) as provided in
Section 8.5 below.
5. Compensation. For all services rendered by the Executive during the
Term of Agreement, the Corporation shall pay the Executive as compensation a
base salary, in periodic installments in accordance with the Corporation's usual
payroll practice for senior management-level employees of the Corporation, at an
annual rate of $252,000, which amount may be increased by the Board in its
discretion as part of its annual compensation review process. However, at any
time during the Term of Agreement, in the event of a salary reduction for other
senior management-level employees of the Corporation other than the CEO, such
group to be determined by the Corporation in its discretion from time to time
(such group is referred to herein as "Senior Management"), the Corporation shall
be entitled to decrease the Executive's Base Salary to any amount it deems
appropriate consistent with the adjustments made to the compensation of other
members of Senior Management. In addition, during the period beginning on March
5, 1997 and ending on February 28, 1998, the Executive shall be entitled to
participate in the Corporation's incentive compensation program in accordance
with its terms, as determined by the Board in its discretion. During the Term of
Agreement, the Corporation shall allow the Executive to participate in all
incentive compensation programs in which any other member of Senior Management
participates, if any, in accordance with their terms.
6. Employee Benefits, Perquisites and Expenses.
6.1 Benefit Plans. Except as specifically provided herein, the
Executive shall be entitled to participate in all of the Corporation's
health, retirement, stock option, disability and other benefit plans,
programs or practices from time to time in effect for members of Senior
Management in accordance with their terms. However, Executive shall not
be entitled to participate in any severance plan or program that may be
established by the Corporation from time to time.
6.2 Vacation. The Executive shall be entitled to participate
in the Corporation's holiday, sick leave and vacation policies in
effect for full-time members of Senior Management, as may be
established from time to time; provided, however, that in no event
shall the Executive's annual vacation entitlement be less than the
maximum amount of vacation to which any full-time member of Senior
Management is entitled under such policies. The Executive shall
receive, within thirty (30) days after his employment terminates, a
payment (based on his base salary in effect at the time of termination)
for any accrued but unused vacation at the termination of the
employment of the Executive in accordance with the Corporation's
vacation policy in effect at the time of termination, which shall
comply with applicable law.
6.3 Expenses. The Corporation shall reimburse the Executive
for all reasonable and documented expenses incurred in connection with
the performance of his duties hereunder and incurred in accordance with
policies and procedures established from time to time by the
Corporation. The Executive shall keep reasonably detailed and accurate
records of expenses incurred in connection with the performance of his
duties hereunder, and reimbursement therefor shall be made in
accordance with policies and procedures to be established from time to
time by the Corporation.
6.4 Office. The Executive shall be entitled to reasonable
office space within the Corporation's executive office facility, as
determined by the Board. In the event the Corporation terminates the
Executive's employment with the Corporation without Cause (as defined
in Section 8.6(a) below), the Corporation shall furnish the Executive
with outplacement services or shall provide off-premises office space
and related support for the Executive for up to two years at a total
cost for either option not to exceed each year 15% of Executive's base
salary in effect at the time of termination. The Corporation shall make
any payments required by this Section 6.4 on a pro-rata, monthly basis
unless the Corporation determines, in its discretion, to accelerate
such payments. In the event Executive obtains other permanent full-time
gainful employment prior to the expiration of the two year period,
whether as an
employee, consultant, contractor or in any other gainful capacity, the
Corporation's obligations under this Section 6.4 will immediately
cease.
7. Noncompetition and Nonsolicitation Covenants.
7.1 Need for Covenants. The Executive acknowledges that the
Corporation has expended, and is expected to expend, large amounts of
time, money and effort in researching, developing, designing and
testing its products, developing and keeping a committed management
team, and manufacturing and marketing its products. The Executive
further acknowledges that crucial to the success of the Corporation
will be its ability to continuously develop superior design and
manufacturing technologies for broadband and narrowband fiber optic
loop systems which are trade secrets of the Corporation and which are
not known to others engaged in similar businesses or ventures. The
Executive further acknowledges that he has learned, and will continue
to learn, a great deal of information about the business of the
Corporation, including its trade secrets and confidential information,
including, but not limited to, customer and supplier lists, know-how,
processes, and methods of doing business, and the Executive agrees that
the Corporation is entitled to be protected from the possibility, both
during and after the Executive's employment terminates, of the
Executive becoming associated with a business which competes with the
Corporation. The Executive further acknowledges that if he did become
associated with such a business, such business would compete unfairly
with the business of the Corporation in view of the trade secrets and
confidential, proprietary information which has and will become known
to the Executive by reason of being employed by the Corporation. The
Executive further acknowledges that the nature of the Corporation's
products are such that its natural market will be worldwide because
fiber optic loop systems can be used worldwide wherever fiber optic
cable and equipment can be used, and the Corporation's competition in
fiber optic loop systems research and development is located throughout
the world and competes in a worldwide market. Accordingly, the
Executive hereby agrees that the time, geographic and other
restrictions contained in this Agreement are reasonable to protect the
legitimate interests of the Corporation and do not unfairly restrict or
penalize the Executive.
7.2 Noncompetition Covenant. During the Restricted Period (as
defined in Section 7.4 below) the Executive shall not Compete (as
defined in Section 7.4 below), directly or indirectly, with the
Corporation or any Affiliate (as defined in Section 7.4 below) of the
Corporation by engaging in any line of business (as defined in Section
7.4 below) in which on the Termination Date (as defined in Section 7.4
below) the Corporation or any Affiliate of the Corporation is engaged
(or is planning to engage) in any Prohibited Location (as defined in
Section 7.4 below).
7.3 Nonsolicitation Covenant. During the entire Restricted
Period (as defined in Section 7.4 below), the Executive: (i) shall not
interfere with, or seek to interfere with, the relationship between the
Corporation or any Affiliate, and any of the employees of such
entities, (ii) shall not interfere with, or seek to interfere with, the
relationship between the Corporation or any Affiliate, and any of the
suppliers of such entities, (iii) shall not solicit or otherwise
encourage any employee of the Corporation or of any Affiliate to leave
the employ of the Corporation or of any Affiliate, (iv) shall not
interfere with, or seek to interfere with, the relationship between the
Corporation or any Affiliate, and any customers of such entities, and
(v) shall not utilize or disclose any personnel information about any
employee of the Corporation or of any Affiliate, including but not
limited to information regarding the employee's performance, abilities,
responsibilities or functions.
7.4 Definitions.
(a). The terms "Compete" and "Competition," as used
herein, shall be deemed to include, without limitation,
becoming or being an employee, owner, partner, consultant,
agent, stockholder, director, officer of any person,
partnership, firm, corporation or other entity (other than the
Corporation or any Affiliate) which engages directly in (i)
the business of broadband or narrowband fiber optic
residential or small business access systems, or any systems
that perform substantially similar functions, but does not
include parts, software, components, or subsystems of said
systems that the Corporation purchases from third party
vendors for inclusion in the Corporation's systems without
modification by the Corporation and/or (ii) any other business
conducted by the Corporation or any Affiliate immediately
prior to the date of termination of Executive's employment or
in which the Corporation or any Affiliate shall at the time of
termination of the Executive's employment with the Corporation
be actively preparing to enter.
Notwithstanding the foregoing, the following shall
not constitute competition with the Corporation (i) ownership
of five (5%) percent or less of any class of securities of any
entity whose securities are publicly traded, or (ii)
employment by a person or entity engaged in the business
described above if all the following conditions are met: (1)
the business described above constitutes less than five (5%)
percent of the gross sales of the new employer on a
consolidated basis, (2) the employer's stock or the stock of a
parent company is publicly traded, (3) Executive shows to the
satisfaction of the Corporation that Executive is employed in
a division or department not engaged in the business described
above and the duties of Executive do not require contact with
the division or department engaged in the business described
above, and (4) prior to the date of such employment Executive
and Executive's new employer execute and deliver to the
Corporation an agreement in form and substance reasonably
satisfactory to the Corporation in which (x) Executive and his
new employer represent that the conditions set forth in
clauses (1), (2), and (3) above have been satisfied, (y) the
new employer agrees not to obtain from Executive any
proprietary information of the Corporation or to use, retain
or disclose any such proprietary information of the
Corporation which Executive may willfully or inadvertently
disclose to such new employer in violation of any agreement
between Executive and the Corporation, and (z) Executive
reaffirms to the Corporation all obligations of Executive with
respect to proprietary information of the Corporation
contained in any agreement between the Corporation and
Executive.
(b). The phrases "engage in a business" or "engage in
a line of business" and similar phrases shall be deemed to
include marketing or otherwise selling products or
researching, developing, designing, testing or manufacturing
products or services or otherwise preparing to market or sell
products or services.
(c). The term "Affiliate" shall mean any corporation,
partnership or other entity (i) which owns more than 50% of
the voting securities of the Corporation, or (ii) in which the
Corporation owns more than 50% of its voting securities, or
(iii) more than 50% of the voting securities of which are
owned by a person or entity that owns more than 50% of the
voting securities of the Corporation.
(d). The term "Prohibited Location" means the
following:
(i). Any location within the United
States;
(ii). Any location within Canada;
(iii). Any location within England;
(iv). Any location within France;
(v). Any location within Italy;
(vi). Any location within Germany;
(vii). Any location within Taiwan; and
(viii). Any location within Korea.
A competitor located outside a Prohibited Location shall be
deemed to be competing in a Prohibited Location if the
competitor either (i) Competes in the Prohibited Location by
selling products in Competition in the Prohibited Location, or
(ii) is actively preparing to Compete in the Prohibited
Location.
With respect to the covenant contained in Section 7.2 above,
it is acknowledged by the Executive that the Corporation's
competition in fiber optic loop systems research, development,
marketing and sales is located throughout the world and
competes in a worldwide market, and that unfair competition
can only be prevented by enforcing this specific covenant in
these prohibited locations specifically set forth in Section
7.4(d) above.
(e). The term "Restricted Period" shall mean the
period commencing on the date of the Original Agreement and
ending upon the second anniversary of the Termination Date.
(f). The term "Termination Date" means the date on
which the Executive's employment with the Corporation and its
Affiliates terminates for any reason or no reason.
7.5 Benefits Conditioned upon Enforceability. Notwithstanding
anything to the contrary contained in this Agreement, in the event that
Sections 7.2 and/or 7.3 of this Agreement are determined to be
unenforceable, to any extent, by a court or arbitration panel, whether
by
preliminary or final adjudication, the Corporation shall not be
liable for any payments or benefits under Sections 8.1(a)(iii),
8.1(a)(iv), 8.4 or 10 and the stock option described in Section 9 shall
terminate to the extent not already exercised.
8. Payment to the Executive Upon Termination of Employment.
8.1 Termination With and Without Cause.
(a). The Corporation shall have the right to
terminate the Executive's employment at any time with Cause
(as defined in Section 8.6(a) below) or upon ninety (90) days
advance written notice without Cause (as defined in Section
8.6(a) below). If the Corporation terminates the employment of
the Executive without Cause (as defined in Section 8.6(a)
below), the Term of Agreement shall terminate immediately
thereafter and:
(i). the Corporation shall pay the
Executive the portion of his base salary in effect at
the time of termination as he may be entitled to
receive for services rendered prior to the date of
such termination;
(ii). the Corporation shall pay the
Executive for any accrued but unused vacation as set
forth in Section 6.2;
(iii). subject to the restrictions set forth
in Sections 7.5 and 11, the Corporation shall pay the
Executive, at the end of each month for the first
twenty-four (24) months following the date on which
the Executive executes the release described in
Section 11 below (the "Release Date"), an amount
equal to one twelfth (1/12) of the sum of (x) his
base salary in effect at the time of termination,
plus (y) his target bonus for the year in which the
termination occurs (as determined by the Board in its
discretion).
If the Executive has foregone receiving all or a
portion of his regular salary as authorized by the
Board, any committee thereof or any officer
authorized to determine salaries, payment to the
Executive under this subsection (iii) shall
constitute full payment of all such amounts.
(iv). subject to the restrictions set forth
in Sections 7.5 and 11, the Corporation shall provide
one of the following two benefits to the Executive
until the end of the twenty-four (24) month period
commencing on the Release Date:
(A). continued coverage under the
Corporation's health, life, and disability
insurance plans for the Executive and his
dependents; or
(B). in lieu of any one or more of
the coverages specified in clause (A) above,
a lump sum payment to the Executive of an
amount equal to (x) the cost to the
Executive of obtaining equivalent coverage
for such period, plus (y) an amount that
will compensate the Executive for the
differences
in the tax treatment of the benefit
specified in this clause (B) and the
benefit specified in clause (A) above.
The Corporation shall determine which benefit
described in this subsection (iv) shall be provided
to the Executive in its sole discretion. The
provision of benefits under this subsection (iv) is
in no way intended to increase or expand or reduce or
limit any continuation coverage under the
Corporation's health plan to which the Executive and
any of his qualified beneficiaries may become
entitled under the provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as
amended.
8.2 Release from Executive's Obligations. Notwithstanding any
other provision of this Agreement, if at the time of the termination of
the Executive's employment the Corporation releases the Executive in
writing from his obligations under Section 7 of this Agreement, the
Corporation shall have no obligation to pay any severance benefits to
the Executive under Section 8.1(a)(iii) - (iv) above. Subject to the
restrictions set forth in Section 11, the Corporation, however, should
it release Executive as provided in this Section 8.2, shall pay
Executive, within one month after Executive executes the release
described in Section 11 below, an amount equal to the Executive's
annual base salary and target bonus for the year in which the
termination occurs (as determined by the Board in its discretion).
8.3 Termination with Cause, Death or Disability. If the
Corporation terminates the employment of the Executive with Cause (as
defined in Section 8.6(a) below), or upon the death or Disability (as
hereinafter defined) of the Executive, the Term of Agreement shall
terminate immediately thereafter and the Corporation shall pay the
Executive or his beneficiary such compensation as is set forth in
Sections 8.1(a)(i) and 8.1(a)(ii) herein.
8.4 Voluntary Termination. If the Executive voluntarily
terminates this Agreement and his employment as provided in Section 2
above or at any other time upon ninety (90) days advance written
notice, the Term of Agreement shall terminate immediately thereafter
and the Corporation shall pay the Executive or his beneficiary such
compensation as is set forth in Sections 8.1(a)(i) and 8.1(a)(ii)
herein as well as an amount equal to one-twelfth (1/12th) of his base
salary in effect at the time of termination.
8.5 Change in Position. Any change in the basis of the
Executive's employment with the Corporation, except any breach by the
Corporation of Section 5 hereof, or any enlargement of or diminution in
his duties or responsibilities to the Corporation, including a change
from his current position as CEO to another executive position with the
Corporation, shall not constitute a termination of the Executive's
employment with the Corporation for purposes of this Agreement or the
Original Agreement. The Executive's employment with the Corporation
shall be viewed as terminated for purposes of this Agreement only if he
is no longer employed by the Corporation in any executive capacity.
Notwithstanding the foregoing, should the Executive not be chosen as
Chairman of the Board following his ceasing to be CEO of the
Corporation as contemplated by the parties at the time of entering into
this Agreement, or should the Executive not be reelected as Chairman of
the Board at subsequent organizational meetings of the Board after
being chosen as such, then he shall be entitled to elect to be
treated as though his employment with the Corporation was terminated
without Cause (as defined in Section 8.6(a) below) for purposes of
receiving payments and benefits under Section 8.1(a) above unless the
Executive were to accept continued employment with the Corporation in
another capacity.
8.6 Definitions.
(a). For purposes of the Agreement, the term "Cause"
shall be limited to the following events: (i) drug abuse by
the Executive; (ii) alcohol abuse by the Executive if it
interferes with the efficient conduct of business by the
Executive; (iii) theft, embezzlement or other similar act by
the Executive of any tangible or intangible asset of the
Corporation or any customer, supplier or investor of the
Corporation; (iv) commission of any other criminal act by the
Executive (whether or not the Executive is prosecuted and
convicted) if such act causes or is likely to cause damage to
the business of the Corporation; (v) a material breach by the
Executive of any written agreement between the Corporation and
the Executive, including, without limitation, this Agreement,
the Proprietary Information and Inventions Agreement, or any
written policy of the Corporation known by and applicable to
all its employees, if the Executive fails to cure his breach
within ten (10) days after notice of breach is given to the
Executive by the Corporation; (vi) gross negligence or willful
misconduct by the Executive in his conduct of the business of
the Corporation, but a mere mistake in business judgment shall
not constitute cause unless it is part of a continuing pattern
of bad judgment that has caused actual damage to the
Corporation or its business, and (vii) willful failure by the
Executive to follow the instructions of the Board, or an
officer for other supervisory employee of the Corporation duly
authorized by the Board, the Bylaws of the Corporation or an
officer of the Corporation to give instructions to the
Executive, to the extent such instructions are reasonably
related to the business of the Corporation, are given in good
faith to promote the interest of the Corporation, would not
require the Executive to commit any illegal act and are not
given to provide the Corporation with cause for terminating
the Executive. This definition of cause shall not create in
the Executive any right to employment or cause of action on
account of termination of the Executive's employment with the
Corporation without Cause.
(b). For purposes of this Agreement, the Executive's
employment with the Corporation shall be deemed to have
terminated on account of "Disability" on the date on which the
Executive is eligible to receive, and commences receipt of,
benefits under the Corporation's program of long-term
disability insurance.
9. Incentive Stock Option. The Corporation shall grant the Executive an
incentive stock option within the meaning of section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), to purchase 45,000 shares of the common
stock of the Corporation (the "ISO"). Subject to the restrictions set forth in
Sections 7.5 and 11 herein, the ISO shall become fully vested and exercisable on
September 30, 2005, provided the Executive is employed with the Corporation on
such date, and shall contain the following additional provisions:
9.1. Corporation Survives Change in Control. If a Change in
Control shall occur during the Term of Agreement, and the Corporation
shall be the surviving entity following such Change in Control, the ISO
shall become vested and exercisable as follows: (i) with respect to
15,000 shares of the common stock of the Corporation on the effective
date of the Change in Control (the "Vesting Date"), (ii) with respect
to an additional 15,000 shares of the common stock of the Corporation
on the first anniversary of the Vesting Date, provided that the
Executive is employed with the Corporation on such date, and (iii) with
respect to an additional 15,000 shares of the common stock of the
Corporation on the second anniversary of the Vesting Date, provided
that the Executive is employed with the Corporation on such date.
9.2. Corporation does not Survive Change in Control. If a
Change in Control shall occur during the Term of Agreement, and the
Corporation shall not be the surviving entity following such Change in
Control, the Corporation shall either:
(a). arrange for the surviving entity to assume the
ISO, with appropriate adjustments in the terms of the ISO to
reflect the Change in Control which adjustments shall preserve
the intended treatment of the ISO as an incentive stock option
within the meaning of Code section 422; or
(b). make a payment to the Executive in an amount
that would place the Executive in the same position as if the
ISO were assumed by the surviving entity as provided in
subsection (a) above and the Executive were to exercise the
ISO, as assumed, in accordance with its terms and immediately
sell the underlying shares of stock at its fair market value
on the deemed exercise date. The amount of the payment
described in this subsection (b) shall be determined by the
Corporation in its discretion and such payment shall be made
to the Executive as of the date on which the Executive
notifies the Corporation that he desires that the ISO to be
deemed exercised for purposes of this subsection (b). An
example of this subsection (b) follows:
Assume the exercise price under the ISO is $20 per share and
that this exercise price and the number of shares covered by
the ISO remain unchanged following the deemed assumption of
the ISO following a Change in Control in which the Corporation
is not the surviving entity. Pursuant to its terms, the ISO
will become fully vested and exercisable on the second
anniversary of the date on which the Change in Control occurs.
Assume that the Executive does not exercise any portion of the
ISO that became exercisable upon the Change in Control. The
Executive then notifies the Corporation that he desires for
the ISO to be deemed exercised in its entirety as of the
second anniversary of the date on which the Change in Control
occurred, on which date the fair market value of the stock of
the surviving entity is $50 per share. The Corporation shall
make a payment to the Executive of an amount equal to
$1,350,000 (45,000 shares multiplied by ($50-$20)).
9.3. Conditions. Sections 9.1 or 9.2 above, as applicable,
shall apply upon a Change in Control only if the Executive receives and
accepts an offer of full-time employment with the Corporation or the
surviving entity, as applicable, following the Change in Control for
the period of at least two (2) years following the Change in Control in
a
position of equal pay and substantially equal status as his position
with the Corporation immediately preceding the Change in Control, as
determined by the Corporation in it discretion.
If the Executive's employment terminates voluntarily or with Cause (as
defined in Section 8.6(a) above) during such two (2) year period, (i)
he shall forfeit the remaining portion of the benefit specified in
Section 9.1, if applicable, or (ii) he shall forfeit a pro-rata share
(calculated with respect to the portion of the two (2) year period of
employment that he has completed as of the date of termination) of
sixty-six and two-thirds percent (66-2/3%) of the benefit specified in
Section 9.2 above, if applicable.
9.4. Executive does not Accept Employment. If a Change in
Control shall occur during the Term of Agreement, and the Executive is
offered but does not accept an offer of full-time employment with the
Corporation or the surviving entity, as applicable, following the
Change in Control in the same position or in a position of equal pay
and substantially equal status as his position with the Corporation
immediately preceding the Change in Control, as determined by the
Corporation in its discretion, the ISO, to the extent not otherwise
vested and exercisable, shall become fully vested and exercisable with
respect to 15,000 shares of the common stock of the Corporation on the
effective date of the Change in Control.
9.5 Executive not Offered Employment. If a Change in Control
shall occur during the Term of Agreement, and the Executive is not
offered full-time employment with the Corporation or the surviving
entity, as applicable, following the Change in Control for the period
of at least two (2) years following the Change in Control in the same
position or in a position of equal pay and substantially equal status
as his position with the Corporation immediately preceding the Change
in Control, as determined by the Corporation in its discretion, the
ISO, to the extent not otherwise vested and exercisable, shall become
fully vested and exercisable with respect to 45,000 shares of the
common stock of the Corporation on the effective date of the Change in
Control; provided, however, that the Executive shall be entitled to
benefits under this Section 9.5 only if he agrees to be available to
consult with the entity that survives the Change in Control for a
reasonable amount of time during the period of two (2) years following
the effective date of the Change in Control given reasonable notice and
reasonable consulting fees.
9.6 Offer and Acceptance of Employment. An offer and
acceptance of employment for purposes of Section 9.3 above shall
include employment that continues by operation of law following a
Change in Control. If the Executive voluntarily terminates his
employment at the time of a Change in Control, he will be deemed to
have received an offer of employment for purposes of Section 9.4 above.
10. Change in Control. The Corporation shall provide the
Executive with the following benefits upon a Change in Control that
occurs while the Executive is serving as CEO of the Corporation:
10.1 Stock Options. The Corporation shall provide one of the
following two benefits to the Executive with respect to each stock
option, other than the ISO, that is held by the Executive on the
effective date of the Change in Control and that is not already fully
vested and exercisable on the effective date of the Change in Control
(an "Option"):
(a). the Corporation shall take all action
necessary to provide that the Option shall become fully
vested and exercisable as of the effective date of the Change
in Control; or
(b). the Corporation shall make a lump sum payment to
the Executive in an amount equal to the value lost under the
Option, payable as soon as administratively possible after the
effective date of the Change in Control.
The Corporation shall determine which benefit described in this Section
10.1 shall be provided to the Executive in its sole discretion. For
purposes of subsection (b) above, the value lost under an Option shall
be determined by calculating the net benefit lost by the Executive
under the Option, exclusive of taxes, assuming that the Option was
fully vested and exercisable on the effective date of the Change in
Control, that the Executive exercised the Option as of the effective
date of the Change in Control, and that Executive sold the shares of
Corporation stock acquired by exercise of the Option on the effective
date of the Change in Control.
10.2 Lump Sum Payments. If the Executive receives and accepts
an offer of full-time employment with the Corporation or the surviving
entity, as applicable, following a Change in Control in the same
position or in a position of equal pay and substantially equal status
as his position with the Corporation immediately preceding the Change
in Control, as determined by the Corporation in its discretion, the
Executive shall be entitled to three lump sum payments by the
Corporation, each in an amount equal to his base salary in effect at
the time of the Change in Control and his target bonus for the year in
which the Change in Control occurs. The first such payment shall be
made as of the effective date of the Change in Control, the second such
payment shall be made as of the first anniversary of the effective date
of the Change in Control, and the third such payment shall be made as
of the second anniversary of the Change in Control. Notwithstanding the
foregoing, if the Executive's employment terminates voluntarily or with
Cause (as defined in Section 8.6(a) above) during such two (2) year
period following the Change in Control, the Executive shall forfeit a
pro-rata share (calculated with respect to the portion of the two (2)
year period of employment that he has completed as of the date of
termination) of sixty-six and two-thirds percent (66-2/3%) of the
benefit specified in this Section 10.2.
10.3 Executive does not Accept Employment. If the Executive is
offered but does not accept employment with the Corporation or the
surviving entity, as applicable, following the Change in Control in the
same position or in a position of equal pay and substantially equal
status as his position with the Corporation immediately preceding the
Change in Control, as determined by the Corporation in its discretion,
the Executive shall be entitled to a lump sum payments by the
Corporation of an amount equal to the sum of his base salary in effect
at the time of the Change in Control and his target bonus for the year
in which the Change in Control occurs. Such payment shall be made as of
the effective date of the Change in Control.
10.4 Executive not Offered Employment. If the Executive does
not receive an offer of full-time employment following the Change in
Control with the Corporation or the surviving entity, as applicable, in
the same position or in a position of equal pay and substantially equal
status as his position with the Corporation immediately preceding the
Change in Control, as determined
by the Corporation in its discretion,
the Executive shall be entitled to (i) the severance benefits described
in Section 8 above on account of his termination of employment without
Cause, and (ii) the payments described in Section 10.2 above on account
of the Change in Control; provided, however, that the Executive shall
be entitled to benefits under this Section 10.4 only if he agrees to be
available to consult with the entity that survives the Change in
Control for a reasonable amount of time during the period of two (2)
years following the effective date of the Change in Control given
reasonable notice and reasonable consulting fees.
10.5 Offer and Acceptance of Employment. An offer and
acceptance of employment for purposes of Section 10.2 above shall
include employment that continues by operation of law following a
Change in Control. If the Executive voluntarily terminates his
employment at the time of a Change in Control, he will be deemed to
have received an offer of employment for purposes of Section 10.3
above.
11. Condition on Payment of Benefits: The Executive agrees that he
shall be entitled to payments and benefits under the terms of Sections
8.1(a)(iii), 8.1(a)(iv), 8.2, 9.2, 9.4, 9.5, 10.1, 10.2, 10.3 and/or 10.4 above,
as applicable, only if he executes a complete and general release in a form
substantially comparable to the release set forth in Exhibit B hereto and
incorporated herein by reference or in such other form as is determined to be
necessary or desirable by the Corporation in its discretion, which release shall
at least contain a release by the Executive and any beneficiary of the Executive
entitled to receive all or any portion of the benefits specified in such
Sections of any claims arising from the Executive's employment or associations
with the Corporation or otherwise existing against the Corporation and its
officers, directors, agents, employees, shareholders, and representatives at the
time of execution of the release. Notwithstanding any other provision set forth
herein, if the Executive elects not to execute such a general release, then the
Executive's benefits under Section 8.1(a)(iii), 8.1(a)(iv), 8.2, 9.2, 9.4, 9.5,
10.1, 10.2, 10.3 and/or 10.4 above, as applicable, shall consist solely of an
amount equal to one-half (1/2) of the Executive's base salary in effect at the
time of the termination.
12. Change in Control: For purposes of this Agreement, "Change in
Control" shall be deemed to have occurred if:
12.1 Tender Offer or Acquisition. Any "person" as defined in
section 3(a)(9) of the Securities Exchange Act of 1934 (the "Act"),
including a "group" (as that term is used in sections 13(d)(3) and
14(d)(2) of the Act), but excluding the Corporation and any employee
benefit plan sponsored or maintained by the Corporation, including any
trustee of such plan acting as trustee, who:
(a). makes a tender or exchange offer for any
shares of the Corporation's stock pursuant to which at
least fifty percent (50%) of the Corporation's stock is
purchased; or
(b). together with its "affiliates" and "associates"
(as those terms are defined in Rule 12b-2 under the Act)
becomes the "beneficial owner" (within the meaning of Rule
13d-3 under the Act) of at least fifty percent (50%) of the
Corporation's stock;
12.2 Merger or Consolidation. The shareholders of the
Corporation approve a definitive agreement or plan to merge or
consolidate the Corporation with or into another corporation, to sell
or otherwise dispose of all or substantially all of its assets, or to
liquidate the Corporation; or
12.3 Change in Board. When, during the Term of Agreement, the
individuals who, at the beginning of such period, constitute the Board
(the "Incumbent Directors") cease for any reason other than death or
retirement to constitute at least a majority thereof; provided,
however, that a director who was not a director at the beginning of the
Term of Agreement shall be deemed to have satisfied such requirement,
and be an Incumbent Director, if such director was elected by, or on
the recommendation of or with the approval of, at least two-thirds of
the directors who then qualified as Incumbent Directors either
actually, because they were directors at the beginning of the Term of
Agreement, or by prior operation of this Section 12.
13. No Conflicting Obligations. Executive represents and warrants that
he is under no contract, agreement or understanding with any third party which
would conflict with the terms and conditions of this Agreement or otherwise
impair his ability to perform fully his duties hereunder.
14. Investments. During the term of this Agreement, the Executive may
without limitation purchase and divest passive interests in public or privately
held incorporated or unincorporated business entities, provided such an interest
does not constitute Competition within the meaning of Section 7.4(a) above or
otherwise breach his obligations to the Corporation.
15. Indemnification. The Corporation represents and warrants that a
copy of the Corporation's Certificate of Incorporation is attached hereto as
Exhibit C.
16. Necessity of Agreement. The Executive acknowledges and agrees that
the covenants and provisions set forth in Sections 7.2 and 7.3 of this Agreement
are reasonably necessary for the protection of the Corporation and its
Affiliates and that such covenants and provisions are reasonably limited with
respect to the activities prohibited, the duration thereof, the geographical
area thereof, the scope thereof and the effect on the Executive and the general
public. The Executive further acknowledges and agrees that the purpose and
effect of such restrictive covenants and provisions is solely to protect the
Corporation and its Affiliates for a limited period of time from unfair
competition by the Executive, and that the issuance of securities of the
Corporation to the Executive, the employment of the Executive hereunder, and the
enhanced provisions contained in this revised Agreement are conditioned upon the
Executive agreeing to abide by and be bound by all of the covenants and
provisions contained in this Agreement.
17. Irreparable Damage. The Executive acknowledges and agrees that any
breach of Sections 7.2 and/or 7.3 of this Agreement will result in irreparable
damage and continuing injury to the Corporation. Therefore, in the event of any
breach or threatened breach of any of the foregoing provisions of this Agreement
by the Executive, the Executive acknowledges and agrees that the Corporation or
any Affiliate shall be entitled, without limiting any other available legal or
equitable remedy (whether conferred by statute or otherwise), to an injunction
to be issued by any court of competent jurisdiction enjoining and restraining
the Executive from committing any violation or
threatened violation of this Agreement, and the Executive hereby consents to the
issuance of such injunction. The Corporation shall not be required to post any
bond to obtain any such injunction. The Executive agrees that all remedies
available to the Corporation or any Affiliate (or any of them) by reason of a
breach of any of the foregoing provisions of this Agreement are cumulative and
that none is exclusive and that all remedies may be exercised concurrently or
consecutively at the option of the Corporation or any Affiliate, as the case may
be.
18. Severability. The provisions of this Agreement shall be deemed
severable, and the invalidity or unenforceability of any provision (or part
thereof) of this Agreement shall in no way affect the validity or enforceability
of any other provisions (or remaining part thereof). If any part of any covenant
or provision contained in this Agreement is determined by a court of competent
jurisdiction, or by any arbitration panel to which a dispute is submitted, to be
invalid, illegal or incapable of being enforced, then the court or arbitration
panel so deciding shall interpret such provisions in a manner so as to enforce
them to the fullest extent of the law. Without limiting the foregoing, in the
event the restrictions on interference and solicitation as set forth in Section
7 or the geographic scope as set forth in Section 7.4 are determined to be
invalid or unenforceable, the provisions of these Sections shall be deemed
severable, and the invalidity or unenforceability of any provision (or part
thereof) shall in no way effect the validity or enforceability of any other
provision (or remaining part thereof).
19. Other Agreements. Excepts as provided otherwise in this Section 19,
this Agreement supersedes all prior agreements and understandings, oral or
written, between the Corporation and the Executive with respect to the subject
matter hereof (but not any Proprietary Information and Inventions Agreement to
which the Corporation and the Executive are parties). In the event, however,
that the provisions of the noncompetition covenant and/or nonsolicitation
covenant contained in Section 7.2 and 7.3 herein are determined to be invalid or
unenforceable, to any extent, the Executive shall continue to be subject to all
of his obligations to the Corporation under the Original Agreement.
20. Amendment. No change, modification, termination or attempted
waiver of any of the provisions of this Agreement shall be binding upon any
party hereto unless reduced to writing and signed by the party against whom
enforcement is sought.
21. Counterparts. Any number of counterparts of this Agreement
may be signed and delivered, each of which shall be considered an original and
all of which, together, shall constitute one and the same instrument.
22. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of North Carolina, without
reference to its conflict of law provisions.
23. Venue. Any litigation under this Agreement may be brought by the
Corporation in the State of North Carolina, notwithstanding that the Executive
is not at that time a resident of the State of North Carolina and cannot be
served process within that state. The Executive hereby irrevocably consents to
the jurisdiction of the courts of North Carolina (whether federal or state
courts) over his or her person.
24. Binding Effect. The provisions of this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their heirs,
assigns and successors in interest. The Corporation shall have the right to
assign this Agreement to an affiliate or subsidiary or surviving entity
(including in the event of a Change in Control), and all covenants and
agreements hereunder shall inure to the benefit of and be enforceable by any
such assignee. The Executive's rights and obligations under this Agreement shall
not be transferable by assignment or otherwise by the Executive, such rights
shall not be subject to commutation, encumbrance, or the claims of the
Executive's creditors, and any attempt to do any of the foregoing shall be null
and void.
25. Withholding of Taxes. The Corporation may withhold from any
compensation payable under this Agreement all federal, state, city, or other
taxes as shall be required pursuant to any law, regulation or ruling.
26. Headings. The headings contained in this Agreement are for
reference purposes only and shall not be deemed interpretation of this
Agreement.
27. Representation. The Executive represents and warrants that the
performance of the Executive's duties under this Agreement, and the execution of
this Agreement by him, will not violate any agreement between the Executive and
any other person, firm, partnership, corporation or any other organization. The
Executive represents and warrants that he has consulted with and received advice
from his own counsel (Xxxxxxx Xxxxxxxxxx) in electing to enter into this
Agreement.
28. Notices. Any notice given to either party hereto shall be in
writing and shall be deemed to have been given when delivered personally or sent
by certified or registered mail, postage prepaid, return receipt requested, duly
and properly addressed to the party concerned at the address indicated below or
to such changed address as party may subsequently give notice of:
If to the Corporation:
BroadBand Technologies, Inc.
0000 Xxxxxxx Xxxxx Xxxxx
P. O. Box 13737
Research Xxxxxxxx Xxxx, Xxxxx Xxxxxxxx 00000-0000
If to the Executive:
Xxxxx X. X. Xxxxxx
000 Xxxxxx Xxxx Xxxx
Xxxx, Xxxxx Xxxxxxxx 00000
29. Survival. The Executive and the Corporation agree that the
provisions of Section 6.4, Sections 7-12, and Sections 16-29 herein shall
survive the termination of this Agreement and the termination of the Executive's
employment hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
The Executive:
XXXXX X. X. XXXXXX
(Seal)
(Signature)
The Corporation:
BROADBAND TECHNOLOGIES, INC.
ATTEST: By:
(Signature)
[Corporate Seal]
Name: Xxxx X. Xxxxxxxx, III
_________________________
Title:
Chairman
Secretary
EXHIBIT A
List of Current Board Memberships
Not-For-Profit/Community
1. AEEG
2. NCEITA
3. A K Network - Council for USA, ITREB - USA
4. Al-Ummah
Business
1. Sentient Network Systems
2. SAS Investments
