Exhibit 10.14
EMPLOYMENT AGREEMENT BETWEEN
SORRENTO NETWORKS CORPORATION AND XXX XXXXXXXXX
This EMPLOYMENT AGREEMENT (the "Agreement") is effective as of the 17th
day of May, 2002. The parties to this Agreement are Sorrento Networks
Corporation, a New Jersey corporation ("the Company") and Xxx Xxxxxxxxx
("Executive").
This Agreement is made with reference to the following facts:
A. The Company desires to engage Executive's services on the terms and
conditions set forth in this Agreement.
B. Executive desires to be employed by the Company on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. EMPLOYMENT.
1.1 The Company hereby employs Executive, and Executive hereby
accepts employment by the Company, upon the terms and conditions
set forth in this Agreement.
1.2 Executive shall serve as Chief Financial Officer of the Company
and shall report directly to the Company's Chairman and CEO. It
is possible that Executive may additionally be appointed to other
leadership positions with the Company's subsidiaries. If so, this
Agreement, including the compensation provisions, will apply to
any such additional positions.
1.3 Executive shall do and perform all services, acts or things
necessary to manage the financial and administrative affairs of
the Company, consistent with the bylaws of the Company and as
required by the Chairman and CEO, which are customarily associated
with the position of CFO These duties shall include, without
limitation, overseeing the financial aspects of the Company's
business, preparation of balance sheets, profit and loss
statements and all other financial reports and statements required
by the Company and governmental authorities, and insuring that
such statements and reports are accurate and in compliance with
the Company's policies and all applicable laws and regulations,
1.4 Unless the parties otherwise agree in writing, during the term of
this Agreement, Executive shall perform his services at the
Company's corporate offices; provided, however, that the Company
may from time to time require Executive to travel to other
locations in connection with the Company's business.
2. LOYAL AND CONSCIENTIOUS PERFORMANCE; NONCOMPETITION.
2.1 Executive shall devote his full business energies, interest,
abilities and productive time to the Company. Except with the
prior written consent of the Board, during his employment with the
Company, Executive will not accept other employment, consulting
work or render other services to any person, business or
organization; provided, however, this paragraph shall not preclude
Executive from engaging in civic, charitable or religious
activities, or from serving on boards of directors of companies or
organizations that do not present any conflict with the interests
of the Company or otherwise adversely affect the performance of
Executive's duties.
2.2 Except as permitted herein, Executive agrees not to acquire,
assume or participate in, directly or indirectly, any position,
investment or interest that Executive knows or should know is
adverse or antagonistic to the Company, its business, clients,
strategic partners, investors or prospects. The passive ownership
of less than five percent (5%) of the outstanding shares of
capital stock of any publicly-traded corporation shall not
constitute a breach of this paragraph.
3. COMPENSATION.
3.1 The Company shall pay Executive an annual salary of Two Hundred
Thousand Dollars ($200,000) per year, payable in accordance with
the Company's regular payroll practices, effective as of the
Effective Date of this Agreement. Executive's annual salary shall
be prorated for any partial year of employment.
3.2 Executive's annual salary shall be reviewed annually by the Board
and may be increased by the Board in its sole discretion.
3.3 Executive shall be paid a lump-sum bonus of $20,000 on June
1, 2002.
3.4 Executive shall be entitled to such other bonuses (if any) or
stock options (if any) in addition to the stock options described
in this Agreement, as is determined by the Board in its sole
discretion.
3.5 All of Executive's compensation shall be subject to customary
withholding taxes and any other employment taxes as are commonly
required to be collected or withheld by the Company.
3.6 The Company agrees to reimburse Executive for all reasonable and
necessary business expenses incurred during Executive's
employment, subject to the Company's standard documentation
requirements. Additionally, the Company shall pay the applicable
mileage rate for Executive's commute from the Newport Beach area.
3.7 Executive shall, in accordance with Company policy and the terms
of the applicable plan documents, be eligible to participate in
benefits under any benefit plan that may be in effect from time to
time and made available to its executives or key management
employees. The Company may modify or cancel its benefit plan(s) in
its discretion, consistent with the requirements of state or
federal law.
3.8 Executive shall, in accordance with Company policy, be entitled to
five weeks of paid vacation, accrued daily, per year. Executive
shall not accrue more than ten weeks of vacation, and shall use
such vacation in a manner that is minimally disruptive to
Company's business.
3.9 The Company agrees to defend and indemnify Executive pursuant to
the Indemnification Agreement attached as Exhibit D.
3.10 Subject to the Board's approval through a duly enacted resolution,
and subject to the provisions below, Executive will be granted an
option to purchase 210,000 additional shares of FIBR stock ("the
Option").
(a) Except as otherwise specifically provided in this Agreement,
the terms of the Option shall be governed by the Company's
standard stock option and/or stock plan documentation.
(b) The exercise price of the Option shall be the NASDAQ closing
price on June 14 2002.
(c) The Option shall vest and become exercisable in accordance
with the following schedule:
o 35,000 shares on June 15, 2002 and 35,000 shares on
December 1, 2002;
o 7,000 shares on the first of each month from January 1,
2003 until all the remaining shares are vested.
4. TERM.
This Agreement shall be effective as of May 17, 2002. Executive's
employment under this Agreement is for no specified term. Executive
shall be an at-will employee, such that either the Company or Executive
may terminate Executive's employment at any time, with or without cause
or notice, and with or without reason, subject to the parties' rights
and obligations as provided in this Agreement. This Agreement shall
also terminate upon Executive's death or disability, as that term is
defined in paragraph 6.4 below.
5. SEVERANCE AND POST-EMPLOYMENT OBLIGATIONS.
5.1 Upon the termination of Executive's employment for any reason,
Executive shall be paid his accrued salary plus any accrued and
unused vacation through the effective date of termination. Except
as expressly set forth below, Executive's entitlement to salary,
benefits or other compensation shall cease upon the termination of
Executive's employment.
5.2 If Executive's employment is terminated by the Company without
Cause (as defined in section 6.3(b)), or by Executive for Good
Reason (as defined in section 6.3(a)), Executive and the Company
each agree that they shall be bound by the terms of the Consulting
Agreement attached hereto as Exhibit A. In addition, if, after
being notified by the Company of his obligation to sign the waiver
and general release, Executive executes a waiver and general
release of claims substantially in the form of Exhibit B within 20
days of the effective date of termination of his employment, the
Company will immediately vest Executive's then-unvested stock
options and will, within 72 hours, pay Executive a lump sum amount
equal to one times (1x) his then-current annual salary. The
Company will also continue Executive's health and life insurance
and other benefits for a one (1) year period.
5.3 If Executive's employment is terminated by the Company for Cause,
or by the Executive for other than Good Reason, Executive's
entitlement to salary, benefits or other compensation ends as of
Executive's termination date. In addition, Executive and the
Company each agree that they shall be bound by the terms of the
Consulting Agreement attached hereto as Exhibit A.
(a) "Good Reason" as used in this Agreement means (i) any breach
by the Company of this Agreement, which breach has not been
cured within ten (10) business
days after written notice of such breach has been given by
Executive to the Company; (ii) any materially adverse change
in Executive's status, position or responsibilities; or (iii)
any "Change of Control," if Executive tenders his resignation
within ninety (90) days of the "Change of Control."
(b) "Cause" as used in this Agreement means:
(i) the failure or refusal by Executive to perform his
duties hereunder that has not been remedied within ten
(10) business days after written demand for substantial
performance has been delivered to Executive by the
Company, which demand identifies the manner in which
Company believes that the Executive has not performed
such duties and the steps required to cure such failure
to perform;
(ii) the conviction of Executive of, or the entering of a
plea of nolo contendere by Executive with respect to, a
felony;
(iii) Executive's drug or alcohol addiction; or
(iv) Executive's death or any disability which prevents
Executive from substantially performing the essential
functions of his position for a period of 60 days or
more. However, in the event of Executive's death,
Executive's stock options shall continue to vest for
twelve (12) months.
(v) Failure by Executive to follow applicable accounting
policies, laws and regulations, and all other applicable
local, state, federal laws and regulations governing the
Company, including those promulgated by NASDQ, SEC and
any other government agencies.
(c) "Change of Control" shall have occurred if:
(i) a majority of the directors of the Company are persons
other than persons: (A) for whose election proxies shall
have been solicited by the Board of Directors of the
Company, or (B) who are then serving as directors
appointed by the Board of Directors to fill vacancies on
the Board of Directors caused by death or resignation
(but not by removal) or to fill newly-created
directorships; or
(ii) fifty-one percent (51%) or more of the outstanding
voting power of the Company shall have been acquired
after the date hereof (as defined in Rule 13d-3 under
the 1934 Act or any successor rule thereto) by any
person, or group of two or more persons acting as a
partnership, limited partnership, syndicate, or other
group acting in concert for the purpose of acquiring,
holding or disposing of voting stock of the Company; or
(iii) a reorganization, merger, consolidation or other
corporate transaction or sale or liquidation or other
disposition of all or substantially all of the assets of
the Company occurs (other than (i) a transaction with a
subsidiary of the Company other than Sorrento Networks,
Inc. or (ii) a transaction in which the holders of
voting stock of the Company immediately before such
disposition as a class continue to hold immediately
after the merger at least fifty percent (50%) of all
outstanding voting power of the surviving or resulting
corporation or its parent (including, without
limitation, a company which owns directly or indirectly
the Company or all or substantially all of its
pre-acquisition assets) in substantially the same
proportion as their ownership of common stock of the
Company immediately before the transaction).
6. CONFIDENTIAL AND PROPRIETARY INFORMATION; NONSOLICITATION.
6.1 Executive agrees to execute and abide by the Proprietary
Information and Inventions Agreement attached to this Agreement as
Exhibit C.
6.2 Executive recognizes that his employment with the Company will
involve contact with information of substantial value to the
Company, which is not generally known, and which gives the Company
an advantage over its actual or potential competitors who do not
know or use it. This confidential information includes, but is not
limited to, techniques, designs, drawings, processes, inventions,
developments, plans, code, equipment, prototypes, and employee,
sales, marketing, and customer, business and financial information
relating to the business, products, practices and techniques of
the Company (hereinafter referred to as "Confidential and
Proprietary Information"). During his employment and thereafter,
Executive will at all times regard and preserve as confidential
such Confidential and Proprietary Information and will not publish
or disclose any part of such Confidential and Proprietary
Information in any manner at any time, or use any Confidential and
Proprietary Information except on behalf of the Company, without
the prior written consent of the Company.
6.3 While employed by the Company and for one (1) year thereafter,
Executive agrees that in order to protect the Company's
Confidential and Proprietary Information from unauthorized use,
that Executive will not, either directly or through others,
solicit, attempt to solicit or provide any assistance to anyone
soliciting or attempting to solicit: (i) any employee, consultant
or independent contractor of the Company to terminate his or her
relationship with the Company in order to become an employee,
consultant or independent contractor to or for any other person or
business entity; or (ii) the business of any customer, partner or
strategic alliance of the Company which, at the time of
termination or immediately prior thereto, was doing business with
the Company, to the extent that that business involves and
developing, designing, producing, or marketing any product or
service being developed, designed, produced, or marketed by the
Company as of the date of termination or immediately prior
thereto.
7. TRADE SECRETS OF OTHERS.
It is the understanding of both the Company and Executive that
Executive shall not divulge to the Company any confidential information
or trade secrets belonging to others, including Executive's former
employers, nor shall the Company seek to elicit from Executive any such
information. Consistent with the foregoing, Executive shall not provide
to the Company, and the Company shall not request, any documents or
copies of documents containing such information.
8. ASSIGNMENT AND BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of
Executive and Executive's heirs, executors, personal representatives,
assigns, administrators and legal representatives. Due to the unique
and personal nature of Executive's duties under this Agreement, neither
this Agreement nor any rights or obligations under this Agreement shall
be assignable by Executive. This Agreement shall be binding upon and
inure to the benefit of the Company and its successors, assigns and
legal representatives. The Company will require any successor to all or
substantially all of the business and/or assets of the Company, to
expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it
if no such succession had taken place.
9. NOTICES.
9.1 All notices or demands of any kind required or permitted to be
given by the Company or Executive under this Agreement shall be
given in writing and shall be personally
delivered (and receipted for) or mailed by certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Company:
Sorrento Networks Corporation
0000 Xxxx Xxx Xxxx
Xxx Xxxxx, XX 00000
If to Executive:
Xxx Xxxxxxxxx
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Any such written notice shall be deemed received when
personally delivered or three (3) days after its deposit in
the United States mail as specified above. Either party may
change its address for notices by giving notice to the other
party in the manner specified in this section.
10. INTERPRETATION; CONSTRUCTION.
The headings set forth in this Agreement are for convenience of
reference only and shall not be used in interpreting this Agreement.
This Agreement has been drafted by legal counsel representing the
Company, but Executive has consulted with his own independent counsel
with respect to the terms of this Agreement. Each party and its counsel
has reviewed and revised, or had an opportunity to review and revise,
this Agreement, and the normal rule that any ambiguities are to be
resolved against the drafting party shall not be employed in the
interpretation of this Agreement.
11. REPRESENTATIONS AND WARRANTIES.
Executive represents and warrants that he is not restricted or
prohibited, contractually or otherwise, from entering into and
performing each of the terms and covenants contained in this Agreement,
and that his execution and performance of this Agreement will not
violate or breach any other agreements between Executive and any other
person or entity.
12. ARBITRATION.
12.1 The parties agree to arbitrate any dispute, claim, or controversy
arising from or concerning Executive's employment, his termination
from employment, any terms or conditions of his employment, the
interpretation or enforcement of this Agreement or the rights and
duties of any person in relation to this Agreement, including
without limitation claims of employment discrimination or
harassment under Title VII of the Civil Rights Act, the California
Fair Employment & Housing Act, the Age Discrimination in
Employment Act, the Americans with Disabilities Act, or 42 U.S.C.
section 1981, claims for violation of the Employment Retirement
Income Security Act, the California Labor Code, or the Fair Labor
Standards Act, claims for breach of employment contract or the
implied covenant of good faith and fair dealing, wrongful
discharge, or tortious conduct (whether intentional or negligent)
including defamation, misrepresentation, fraud or infliction of
emotional distress, but excluding claims for workers' compensation
benefits or claims for wages before the California Department of
Industrial Relations (collectively, "Covered Claims").
12.2 The arbitration shall be conducted by a single neutral arbitrator
in accordance with the then-current rules issued by the American
Arbitration Association ("AAA") for resolution of employment
disputes. The arbitration shall take place in the City of San
Diego. The
Company will pay the fee for the arbitration proceeding, as well
as any other charges by the AAA.
12.3 The parties hereby authorize the use of the AAA's Optional Rules
for Emergency Measures of Protection in any matter involving the
alleged breach of Executive's obligations regarding
confidentiality, inventions, non-solicitation or limitations on
other employment or activities outside of his employment with the
Company.
12.4 The Arbitrator shall issue a written award. The award shall be
final and binding upon the parties. The arbitrator shall have the
power to award any type of relief that would be available in a
court of competent jurisdiction. Any award may thereafter be
entered as a judgment in any court of competent jurisdiction.
12.5 The parties agree to file any demand for arbitration within the
time limit established by the applicable statute of limitations
for the asserted claims. Failure to demand arbitration within the
prescribed time period shall result in waiver of any claims.
12.6 It is the intent of the parties to provide for mandatory
arbitration to the fullest extent of, but not beyond what is
permitted by, applicable law. A court construing this arbitration
provision may modify or interpret it to the extent necessary so as
to render it enforceable. If the parties' agreement to arbitrate
is declared unenforceable and cannot be administered, interpreted,
or modified to be enforceable, Executive agrees to waive any right
he may have to a jury trial with respect to any Covered Claim.
13. LITIGATION COSTS.
Should any litigation, arbitration, or administrative action be
commenced concerning a Covered Claim, the party prevailing in such
action shall be entitled, in addition to such other relief as may be
granted, to a reasonable sum for that party's costs and attorney's
fees, which shall be determined by the court, arbitrator, or
administrative agency.
14. AMENDMENT AND WAIVER.
The provisions of this Agreement may be amended or waived only with the
prior written consent of the Company and Executive, and no course of
conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability
of this Agreement.
15. CHOICE OF LAW.
This Agreement is made in San Diego, California. The parties agree that
it shall be construed and interpreted in accordance with the laws of
the State of California.
16. INTEGRATION.
This Agreement (and any attached Exhibits) is the complete, final and
exclusive agreement of the parties relating to the subject matter of
this Agreement, and supersedes all prior implied, oral and/or written
agreements or arrangements between the parties unless otherwise
expressly provided herein.
17. ASSUMPTION.
The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially
all of the business or assets of the Company, expressly to assume and
agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such
succession had taken place.
18. SEVERABILITY.
The finding by a court or arbitrator of the unenforceability,
invalidity or illegality of any provision of this Agreement shall not
render any other provision of this Agreement unenforceable, invalid or
illegal. It is the parties' desire that such court or arbitrator should
modify or replace any invalid or unenforceable term or provision with a
valid and enforceable term or provision that will most accurately
represent the parties' intention with respect to the invalid or
unenforceable term or provision.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
SORRENTO NETWORKS CORPORATION
_________________________________________ ___________________________________
XXX XXXXXXXXX XXXXXXX X. XXXXXXX
Chairman, CEO and President
___________________________________
XXXXXX X. XXXXXXX
Chairman, Compensation Committee
Board of Directors
