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Exhibit 10.17
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into by and
between FTP Software, Inc., a Massachusetts corporation (the "Company"), and
Xxxxxx Xxxxx ("Employee"), effective as of the 12th day of December, 1997 (the
"Effective Date").
In consideration of the mutual promises, terms and conditions set forth in this
Agreement, the parties hereby agree as follows:
1. EMPLOYMENT. Subject to the terms and conditions set forth in this
Agreement, the Company hereby offers and Employee hereby accepts employment.
2. TERM. Subject to earlier termination pursuant to Section 5, the term of
Employee's employment hereunder shall be one year, commencing on the Effective
Date; PROVIDED, that unless written notice pursuant to Sections 5.c, d, e, f or
g to the contrary is given by either party hereto to the other at least thirty
(30) days prior to the expiration of the original or any renewal term (in which
case this Agreement shall terminate as of the last day of such term or, if
earlier, the date such notice becomes effective in accordance with such Section,
in each case with the effect provided in such Section), the term of Employee's
employment hereunder shall automatically renew for successive terms of one year
each; PROVIDED, FURTHER, that if a Change of Control (as defined in Section 5)
occurs, the then-current term shall be automatically extended so that the
remainder of the term is not less than twelve (12) full calendar months from the
date of the Change of Control. The term of this Agreement, as from time to time
renewed or extended, is referred to herein as the "Term."
3. DUTIES; CONFLICTING INTERESTS. During the Term, Employee agrees to
serve the Company as its Senior Vice President/General Manager, VIP Network
Applications Business Unit, or in such other executive position as the Board of
Directors of the Company (the "Board") or the President of the Company (the
"President") may designate from time to time with Employee's consent. In
addition, and without further compensation, Employee shall serve as a director
and/or officer of one or more of the Company's Affiliates (as hereafter defined)
if so elected or appointed from time to time. Employee shall, on a full-time
basis, perform such duties and responsibilities for the Company and its
Affiliates as are intrinsic to Employee's position and status with the Company
or as may otherwise reasonably be designated from time to time by the Board or
by the President or any designees of the President. Employee shall devote his
best efforts, business judgment, skill and knowledge exclusively to the
advancement of the business and interests of the Company and its Affiliates.
Employee shall not engage in any other business activity (whether or not such
business activity is pursued for gain, profit or other pecuniary advantage) or
serve on any other board of directors or in any industry, trade, professional,
governmental or academic position during the term of this Agreement, except as
may be expressly approved in advance in writing by the Board or the President,
which approval shall not be unreasonably withheld, delayed or conditioned.
For the purposes of this Agreement, the term "Affiliates" shall mean
all persons and entities directly or indirectly controlling, controlled by or
under common control with the Company, where control may be by either management
authority or equity interest.
4. COMPENSATION AND BENEFITS.
a. BASE SALARY. During the Term, the Company shall pay Employee a
base salary at the rate of Two Hundred and Twenty-Five Thousand Dollars
($225,000) per annum, payable in accordance with the payroll practices of the
Company and subject to adjustment from time to time by the Board in its sole
discretion. Such base salary, as adjusted from time to time, is referred to as
the "Base Salary."
b. CASH INCENTIVE AND BONUS COMPENSATION. If a cash incentive or
bonus compensation plan is made available to executives of the Company generally
and Employee is not then covered by any other cash incentive or bonus
compensation plan, Employee shall be entitled during the Term to participate in
such plan (if any) in
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accordance with the plan's then current terms. Any compensation paid to Employee
under any incentive or bonus compensation plan (hereafter, "Bonus") shall be in
addition to the Base Salary. Except as otherwise provided under the terms of
such incentive or bonus compensation plan or this Agreement, any Bonus payable
to Employee shall be pro-rated during Employee's first and last year of service
as an executive officer of the Company, provided, in each case, that Employee
has been employed for at least three (3) months of the twelve (12) month period
on which the cash incentive or bonus compensation plan is based.
c. STOCK OPTIONS. Upon a "Change of Control," as hereafter
defined, any and all stock options granted to Employee by the Company and not
yet exercised, expired, surrendered or canceled shall automatically vest and
become exercisable in full, but shall remain exercisable only in accordance with
the terms of any applicable stock option plan, certificate or agreement.
d. OTHER BENEFITS. During the Term, Employee shall be entitled to
participate in any and all employee benefit plans from time to time in effect
for employees of the Company generally, except to the extent such plans are in a
category of benefit otherwise provided to Employee. Such participation shall be
subject to the terms of the applicable plan documents and generally applicable
Company policies.
5. TERMINATION OF EMPLOYMENT AND SEVERANCE BENEFITS. Notwithstanding the
provisions of Section 2, Employee's employment hereunder shall terminate under
the following circumstances.
a. DEATH. In the event of Employee's death, Employee's employment
hereunder shall immediately and automatically terminate and the Company shall
pay to Employee's designated beneficiary or, if none, to Employee's estate, a
sum equal to three (3) months' Base Salary plus any Bonus due Employee,
pro-rated through the date of Employee's death.
b. DISABILITY.
i. The Company may terminate Employee's employment
hereunder, upon written notice to Employee, if Employee becomes disabled
(whether physically or mentally) and, as a result, is unable to perform
substantially all of his duties and responsibilities hereunder for any 180
(whether or not consecutive) days during any period of 365 consecutive calendar
days.
ii. Notwithstanding that someone else may be performing
Employee's tasks while Employee is disabled, Employee shall continue to receive
the Base Salary in accordance with Section 4.a and benefits in accordance with
Section 4.d to the extent permitted by the then-current terms of the applicable
benefit plans, until Employee becomes eligible for disability income benefits
under the Company's disability income plan or until the termination of
Employee's employment, whichever occurs first. While receiving disability income
payments under the Company's disability income plan, Employee shall not be
entitled to receive any Base Salary under Section 4.a, but shall continue to
participate in Company benefit plans in accordance with Section 4.d (to the
extent permitted by the then-current terms of such plans) until the termination
of Employee's employment.
iii. If any question arises as to whether during any
period Employee is disabled so as to be unable to perform substantially all of
his duties and responsibilities hereunder, Employee, at the request of the
Company, shall submit to a medical examination by a physician reasonably
selected by the Company to determine whether Employee is so disabled and such
determination shall for the purposes of this Agreement be conclusive of the
issue. If such question arises and Employee fails to submit to such medical
examination, the Company's determination of the issue shall be binding on
Employee.
c. BY THE COMPANY FOR CAUSE. The Company may terminate Employee's
employment hereunder for Cause at any time upon written notice to Employee
setting forth in reasonable detail the nature of such Cause. The following, as
determined by the Board, shall constitute Cause for termination by the Company:
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i. Employee's willful failure to perform (other than by
reason of disability), or gross negligence in the performance of, Employee's
duties and responsibilities to the Company or any of its Affiliates; or
ii. Material breach by Employee of any provision of this
Agreement or the Employee Confidentiality and Inventions Agreement dated as of
June 17, 1997 between the Company and Employee (the "Confidentiality and
Inventions Agreement"); or
iii. Fraud, embezzlement or other material dishonesty on
the part of Employee with respect to the Company or any of its Affiliates or
conviction of or plea of nolo contendere by Employee to a felony or any crime
involving moral turpitude.
Upon the giving of notice of termination of Employee's employment hereunder for
Cause, the Company shall have no further obligation or liability to Employee,
other than for Base Salary earned and unpaid at the date of termination.
For purposes of this Agreement, no act, or failure to act, on
Employee's part shall be considered "willful" unless such act, or failure to
act, was not in good faith and was without reasonable belief that Employee's
action or omission was in the best interest of the Company.
d. BY THE COMPANY OTHER THAN FOR CAUSE. The Company may terminate
Employee's employment hereunder other than for Cause at any time upon written
notice to Employee. If such termination occurs either before or after a Change
of Control Period (as defined in Section 5.g) and provided that Employee
executes a release of claims in the form attached hereto and marked "A" (the
"Employee Release") and does not revoke the same within the period stated in
Employee Release, then the Company shall (i) pay Employee, within ten (10)
business days after such termination, a lump sum payment equal to twelve (12)
months' Base Salary at the rate in effect on the date of termination and (ii)
shall pay the full cost of Employee's continued participation in the Company's
group health and dental insurance plans for so long as Employee remains entitled
to continue such participation under the federal law known as "COBRA" or any
successor law and the applicable plan terms.
e. BY EMPLOYEE FOR GOOD REASON. Employee may terminate employment
hereunder for Good Reason at any time upon written notice to the Company setting
forth in reasonable detail the nature of such Good Reason. The following shall
constitute Good Reason for termination by Employee:
i. Failure of the Company to continue Employee in the
position of Senior Vice President/General Manager, VIP Network Applications
Business Unit, of the Company or in such other position to which Employee may
subsequently be assigned with Employee's consent; or
ii. Material diminution in the nature or scope of
Employee's responsibilities, duties or authority; provided, however, that the
Company's failure to continue Employee in the position of director or officer of
any of its Affiliates and any diminution of the business of the Company or any
of its Affiliates, including without limitation the sale or transfer of any or
all of the assets of the Company or any of its Affiliates, shall not constitute
"Good Reason"; or
iii. Permanent transfer of Employee, without Employee's
consent, to a work site located such that Employee's commute to and from work is
more than fifty (50) miles each way; or
iv. A decrease in the Base Salary of more than fifteen
percent (15%) or the material failure of the Company to provide Employee
benefits in accordance with the terms of Section 4.b or 4.d hereof.
In the event of termination in accordance with this Section 5.e, the Company
shall provide Employee pay and benefits in accordance with Section 5.d, provided
that Employee executes the Employee Release and does not revoke the same within
the period stated in the Employee Release.
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f. BY EMPLOYEE OTHER THAN FOR GOOD REASON. Employee may terminate
employment hereunder at any time upon thirty (30) days' prior written notice to
the Company.
g. UPON A CHANGE OF CONTROL.
i. If a Change of Control occurs and if on the date of, or within
one year following, such Change of Control (a "Change of Control Period"), the
Company terminates Employee's employment with the Company other than for Cause
or Employee terminates his employment with the Company for Good Reason and, in
either event, Employee executes the Employee Release and does not revoke the
same within the period stated in the Employee Release, then the Company: (A)
shall pay Employee an amount (the "Change of Control Payment") equal to two
times the greater of (1) the sum of the Base Salary and the amount of any Bonus
paid or payable during the twelve (12) months following the date on which such
termination occurs or (2) the sum of the Base Salary and the amount of any Bonus
paid or payable to Employee during the twelve (12) months preceding the date on
which such termination occurs, payable as provided below; and (B) shall pay the
full cost of Employee's continued participation in the Company's group health
and dental insurance plans for so long as Employee remains entitled to continue
such participation under COBRA or any successor law and the applicable plan
terms. Any decrease in Employee's Bonus and any decrease in Employee's Base
Salary that occur after the date a Change of Control occurs (the "Change of
Control Date") shall be disregarded for purposes of the calculation set forth in
the preceding clause (A). The Change of Control Payment shall be in lieu of any
payments to or on behalf of Employee that may otherwise be required pursuant to
Sections 5.d or 5.e.
Unless the Company and Employee agree otherwise in writing (in
which case the Company shall pay the Change of Control Payment, net of all
applicable federal and state taxes (including any excise tax), to Employee
within thirty (30) days following date of the applicable notice of termination
of Employee's employment), the Company shall continue to pay Employee his Base
Salary, at the rate in effect on the date of such written notice or, if greater,
the rate in effect immediately prior to the Change of Control Date, for a period
of not less than ninety (90) days nor more than nine (9) months following the
date of such written notice, as mutually agreed to by the Company and Employee
(the "Continuation Period"), PROVIDED, that (i) in the absence of agreement
between the Company and Employee as to the length of the Continuation Period,
such period shall be nine (9) months and (ii) in any event, Employee may, at his
option, terminate the Continuation Period after the ninetieth (90th) day thereof
upon thirty (30) days' prior written notice to the Company. Within thirty (30)
days following the last day of the Continuation Period, the Company shall pay to
Employee an amount equal to the Change of Control Payment minus all payments of
Base Salary paid to Employee for the Continuation Period, net of all applicable
federal and state taxes (including any excise tax). During the Continuation
Period, Employee shall continue to be considered an "employee" of the Company
for purposes of participation in the Company's employee benefit plans pursuant
to Section 1.d, subject to the terms of such plans, and for purposes of the
Company's stock option plans and the stock option certificates covering the
options then held by Employee. The Company hereby agrees to waive the provisions
of Section 3 hereof during the Continuation Period, provided that Employee does
not violate the provisions of Section 7 hereof during such period.
ii. Notwithstanding the foregoing, the payments and
benefits to which Employee would be entitled pursuant to Section 5.g.i as a
result of a Change of Control shall be reduced to the maximum amount for which
the Company will not be limited in its deduction pursuant to Section 280G of the
Internal Revenue Code or any successor provision. Any such reduction shall be
applied to the amounts due under Section 5.g.i as Employee may reasonably
determine or, if Employee fails to make such determination promptly following
notice from the Company, as the Company may reasonably determine.
The limitations of the immediately preceding paragraph shall
not apply if (A) the present value, net of all federal, state and other income
and excise taxes, of all payments and benefits to which Employee is entitled
hereunder without such limitations exceeds (B) the present value, net of all
federal, state and other income and excise taxes, of all payments and benefits
to which Employee would be entitled hereunder if such limitations applied.
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iii. A Change of Control shall be deemed to take place if
after the Effective Date: (A) within twenty-four (24) months after the
commencement of a tender offer or exchange offer for voting securities of the
Company (other than by the Company or any of its Affiliates), the individuals
who were directors of the Company immediately prior to the commencement of such
offer shall cease to constitute a majority of the Board; or (B) the stockholders
of the Company approve a merger or consolidation of the Company with any Person,
other than a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than seventy-five percent (75%) of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; or (C) there occurs
a closing of a sale or other disposition by the Company of all or substantially
all of the assets of the Company other than to any of its Affiliates or any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any of its Affiliates.
iv. The Company shall promptly reimburse Employee for the
amount of all reasonable attorneys' fees and expenses incurred by Employee in
seeking to obtain or enforce any right or benefit provided Employee under this
Section 5.g.
6. EFFECT OF TERMINATION OF EMPLOYMENT. The provisions of this Section 6
shall apply to any termination of employment hereunder.
a. Payment by the Company of any Base Salary, pro-rated Bonus or
contributions to the cost of Employee's continued participation in the Company's
group health and dental plans or other amounts that may be due Employee in each
case as expressly provided for under the applicable termination provision of
Section 5 hereof shall constitute the entire obligation of the Company to
Employee. Employee shall promptly give the Company notice of all facts necessary
for the Company to determine the amount and duration of its obligations in
connection with any termination pursuant to Section 5.d, 5.e or 5.g.
b. Except for medical and dental plan coverage continued pursuant
to Section 5.d, 5.e or 5.g, benefits shall terminate pursuant to the term of the
applicable benefit plans based on the date of termination of Employee's
employment without regard to any continuation of Base Salary or other payment to
Employee following such date of termination, except as otherwise provided in
Section 5.g.
c. The obligations of Employee set forth in Sections 7 and 10 and
in the Confidentiality and Inventions Agreement shall survive the termination of
Employee's employment hereunder. Employee recognizes that, except as expressly
provided in Section 5.d, 5.e or 5.g, as applicable, no compensation is earned
after termination of employment.
7. RESTRICTED ACTIVITIES. In consideration of the terms of this Agreement,
Employee agrees that some restrictions on Employee's activities during and after
employment are necessary to protect the goodwill, confidential information and
other legitimate interests of the Company and its Affiliates:
a. Employee hereby acknowledges that the activities carried on by
the Company and its Affiliates have worldwide business and commercial
implications for the Company and its Affiliates, without geographic limit. In
consideration of the payments set forth herein, Employee agrees not to engage,
directly or indirectly, for a period of six (6) months following the termination
of his employment for any reason whatsoever (the "Non-Competition Period"), in
any line of business which competes in the United States with a line of business
carried on by the Company or any of its Affiliates on the date of such
termination, or any line of business in which the Company or any of its
Affiliates, as of the date of such termination, has made definite plans to
become engaged in the United States. Employee will be deemed to have engaged in
such line of business if he participates therein as an employee, consultant,
partner, proprietor or investor (provided that Employee shall not be deemed to
have engaged in such line of business solely by reason of any passive equity
investment in any entity that does not exceed 5% of the outstanding capital
stock of such entity).
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b. Employee agrees that he shall not, during the Non-Competition
Period, engage in any activity for the purpose of (i) inducing, diverting or
taking away any employee of the Company or any of its Affiliates or (ii)
inducing, diverting or taking away any consultant of the Company in a manner
which would deprive the Company or any of its Affiliates of the consultant's
services.
8. ENFORCEMENT OF COVENANTS. Employee acknowledges and agrees that, were
Employee to breach any of the covenants contained in Section 7 or in the
Confidentiality and Inventions Agreement, the damage to the Company and its
Affiliates would be irreparable, that the damage would be extremely difficult to
ascertain, and that money damages alone would not be an adequate remedy.
Accordingly, Employee agrees that the Company and its Affiliates and their
successors and assigns, in addition to any other remedies available to them,
shall be entitled to preliminary and permanent injunctive relief against any
breach or threatened breach by Employee of any of said covenants, without having
to post bond. The parties further agree that, if any provision of Section 7 or
of the Confidentiality and Inventions Agreement shall be determined by any court
of competent jurisdiction to be unenforceable by reason of its being extended
over too great a time, too large a geographic area or too great a range of
activities, such provision shall be deemed to be modified to permit its
enforcement to the maximum extent permitted by applicable law.
9. CONFLICTING AGREEMENTS. Employee hereby represents and warrants that
the execution of this Agreement and the performance of Employee's obligations
hereunder will not breach or be in conflict with any other agreement to which
Employee is a party or is bound and that Employee is not now subject to any
covenants against competition, covenants of confidentiality or similar covenants
with any person or entity other than the Company that would affect the
performance of Employee's obligations hereunder. Employee shall not disclose to
or use on behalf of the Company any proprietary information of any third party
without such party's consent.
10. LITIGATION ASSISTANCE. Employee covenants and agrees that he shall,
upon reasonable notice, during the Term and for three (3) full years after the
termination of this Agreement, furnish such information and assistance to the
Company as may be reasonably required by the Company in connection with any
litigation in which it or any of its Affiliates is, or may become, a party. The
Company shall reimburse Employee for all reasonable out-of-pocket expenses
incurred by Employee in furnishing such information and assistance.
11. INDEMNIFICATION. The Company shall indemnify and hold Employee harmless
to the extent provided in its then-current Articles of Organization or By Laws.
Employee agrees to promptly notify the Company of any actual or threatened claim
arising out of or as a result of Employee's employment with the Company.
12. WITHHOLDING. All payments made by the Company under this Agreement
shall be reduced by any tax or other amounts required to be withheld by the
Company under applicable law.
13. ASSIGNMENT. Neither the Company nor Employee may make any assignment of
this Agreement or any interest herein, by operation of law or otherwise, without
the prior written consent of the other; provided, however, that the Company may
assign its rights and obligations under this Agreement without the consent of
Employee if the Company shall hereafter effect a reorganization, consolidate
with or merge into any entity or transfer all or substantially all of its
properties or assets to any entity. This Agreement shall inure to the benefit of
and be binding upon the Company and Employee, their respective successors,
executors, administrators, heirs and permitted assigns.
14. SEVERABILITY. The terms of this Agreement are severable. If any portion
or provision of this Agreement shall to any extent be declared illegal or
unenforceable by a court of competent jurisdiction, then the remainder of this
Agreement, or the application of such portion or provision in circumstances
other than those as to which it is so declared illegal or unenforceable, shall
not be affected thereby, and each portion and provision of this Agreement shall
be valid and enforceable to the fullest extent permitted by law.
15. NOTICES. Any and all notices, requests, demands and other
communications provided for by this Agreement shall be in writing and shall be
effective when delivered in person or deposited in the United States mail,
postage prepaid, registered or certified, or by recognized overnight courier and
addressed to Employee at
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Employee's last known address on the books of the Company or, in the case of the
Company, at its principal place of business, attention of the President, or to
such other address as either party may specify by written notice to the other
actually received.
16. ENTIRE AGREEMENT; AMENDMENT AND WAIVER. This Agreement and the
Confidentiality and Inventions Agreement, which is incorporated herein
by reference, constitute the entire agreement between the parties and supersede
all prior communications, agreements and understandings, written or oral, with
respect to the terms and conditions of Employee's employment. This Agreement may
be amended or modified only by a written instrument signed by Employee and by an
expressly authorized representative of the Company. Employee and the Company
agree that their respective rights and remedies against the other are cumulative
and that they may be exercised singularly or collectively, successively or
concurrently. A waiver of any violation or failure to enforce any provision of
this Agreement shall not constitute a waiver of any rights under this Agreement
with respect to any other or continued violation of any provision of this
Agreement. Any waiver shall be enforceable only if in writing and signed by an
expressly authorized representative of the Company and by Employee.
17. HEADINGS, REFERENCES AND COUNTERPARTS. The headings and captions in
this Agreement are for convenience only and in no way define or describe the
scope or content of any provision of this Agreement. References in this
Agreement to Sections are references to the specified Sections of this
Agreement. This Agreement may be executed in two or more counterparts, each of
which shall be an original and all of which together shall constitute one and
the same instrument.
18. GOVERNING LAW. This is a Massachusetts contract and shall be construed
and enforced under and be governed in all respects by the laws of the
Commonwealth of Massachusetts, USA, without regard to the conflict of laws
principles thereof. Employee and the Company consent to the exclusive
jurisdiction of the state and federal courts of the Commonwealth of
Massachusetts, USA.
EMPLOYEE ACKNOWLEDGES THAT HE HAS CAREFULLY READ AND CONSIDERED ALL THE TERMS
AND CONDITIONS OF THIS AGREEMENT, INCLUDING THE RESTRAINTS IMPOSED UPON EMPLOYEE
PURSUANT TO SECTION 7 AND PURSUANT TO THE CONFIDENTIALITY AND INVENTIONS
AGREEMENT. EMPLOYEE AGREES THAT SAID RESTRAINTS ARE NECESSARY FOR THE REASONABLE
AND PROPER PROTECTION OF THE COMPANY AND ITS AFFILIATES AND THAT EACH AND EVERY
ONE OF THE RESTRAINTS IS REASONABLE IN RESPECT TO SUBJECT MATTER, LENGTH OF TIME
AND GEOGRAPHIC AREA.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by
the Company, by its duly authorized representative, and by Employee, effective
as of the Effective Date.
EMPLOYEE: FTP SOFTWARE, INC.
/s/ Xxxxxx Xxxxx By: /s/ Xxxxx X. Xxxxxx
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Xxxxxx Xxxxx Title: President
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