1
EXHIBIT 10.23
BAY NETWORKS, INC.
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Agreement is amended and restated as of September 12, 1997, and
supersedes any other oral or written agreements or understandings between Bay
Networks, Inc. (the "Company"), and Xxxxx Xxxxxxxx ("Executive") regarding the
subject matter of this Agreement.
1. Duties and Scope of Employment.
(a) Position; Employment Commencement Date. The Company shall employ the
Executive as the Executive Vice President responsible for world-wide
sales, service and marketing, reporting to the Chief Executive Officer
of the Company. Executive's employment with the Company pursuant to this
Agreement shall commence on November 6, 1996 (the "Effective Date").
(b) Obligations. Executive shall devote his full business efforts and
time to the Company. Executive agrees not to actively engage in any
other employment, occupation or consulting activity for any direct or
indirect remuneration without the prior approval of the Board; provided,
however, that Executive may serve in any capacity with any civic,
educational or charitable organization without the approval of the
Board, so long as such activities do not interfere with his duties and
obligations under this Agreement; provided, further, that for a
reasonable period of time following the Effective Date, on the order of
six months, Executive may devote a reasonable amount of time to
assisting his prior employer.
2. Employee and Fringe Benefits. During his employment hereunder, Executive
shall be eligible to participate in the employee benefit and fringe
benefit plans and programs maintained by the Company for its senior
executives at a level comparable to that of other senior executives of
the Company.
3. Compensation and Stock Options.
(a) Base Salary. While employed by the Company pursuant to this
Agreement, the Company shall pay the Executive as compensation for his
services a base salary at the minimum annualized rate of $250,000 (the
"Base Salary"). Such salary shall be paid periodically In accordance
with normal Company payroll practices and subject to the usual, required
withholding. Executive's salary shall be reviewed annually for possible
raises in light of Executive's performance of his duties, as determined
by the Board.
(b) Bonus.
(i) Fiscal Year Bonuses. Executive shall receive a bonus on
account of the Company's 1997 fiscal year equal to three hundred
thousand dollars ($300,000), pro-rated for the number of days Executive
is employed by the Company in the 1997 fiscal year, payable in a lump
sum (subject to applicable withholding) promptly upon the close of the
fiscal year. In subsequent fiscal years of the Company, Executive's
bonus target amount, of at least $300,000, shall be reviewed annually
for possible increases in light of Executive's performance of his
duties, as determined by the Board.
(ii) Replacement Bonus. In the event that Executive does not
receive the Intel 1996 Executive Bonus, the Company shall pay to
Executive a replacement bonus of $250,000, subject to applicable
withholding.
(iii) Special Bonus.
(A) First Anniversary Bonus. If Executive remains employed by
the Company as of the first anniversary of the Effective Date
(the "First Anniversary"), then within ten (10) days following
the First Anniversary, the Company shall pay to Executive a cash
bonus (subject to applicable withholding) equal to one million
dollars ($1,000,000) minus three hundred thousand times* the
dollar amount obtained by subtracting $20.375* from the closing
sales price of Company common stock as listed on the New York
Stock Exchange on the last trading day on or before the First
Anniversary (the "First Anniversary Bonus") see subsection (L)
below for an explanation of the asterisk (*).
EXAMPLE: Executive is employed by the Company on the First
Anniversary. On the First Anniversary, which is a trading day,
the closing sales price of the Company common stock on
Amended and Restated Employment Agreement
September 12, 1997
Page 1
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the New York Stock Exchange is $22.375 (or $20.375* plus $2.00).
The First Anniversary Bonus is $1,000,000 minus [300,000* x $2]
and thus equals $400,000, less applicable withholding.
(B) Second Anniversary Bonus. If Executive remains employed by
the Company as of the second anniversary of the Effective Date
(the "Second Anniversary") then within ten (10) days following
the Second Anniversary, the Company shall pay to Executive a
cash bonus (subject to applicable withholding) equal to two
million three hundred thousand dollars ($2,300,000) minus (i)
four hundred thousand times the dollar amount obtained by
subtracting $20.375 from the closing sales price of Company
common stock as listed on the New York Stock Exchange on the
last trading day on or before the Second Anniversary, and (ii)
the gross amount, if any, of the First Anniversary Bonus (the
"Second Anniversary Bonus").
EXAMPLE: Executive is employed by the Company on the Second
Anniversary. On the Second Anniversary, which is a trading day,
the closing sales price of the Company common stock on the New
York Stock Exchange is $24.375 ($20.375 plus $4.00). The First
Anniversary Bonus was $400,000. The Second Anniversary Bonus is
$2,300,000 minus [400,000 x $4] minus $400,000, and thus equals
$300,000, less applicable withholding.
(C) Modification of Special Bonus if Death or Disability
Benefits Are Triggered On or Prior to First Anniversary. If
Executive's benefits under Section 9 hereof are triggered on or
prior to the First Anniversary, then (i) the First Anniversary
Bonus shall be equal to one million dollars ($1,000,000) minus
six hundred thousand (600,000) times the dollar amount obtained
by subtracting $20.375 from the closing sales price of Company
common stock as listed on the New York Stock Exchange on the
last trading day on or before the First Anniversary (subject to
applicable withholding), and (ii) the Second Anniversary Bonus
shall be equal to two million three hundred thousand dollars
($2,300,000) minus (x) six hundred thousand (600,000) times the
dollar amount obtained by subtracting $20.375 from the closing
sales price of Company common stock as listed on the New York
Stock Exchange on the last trading day on or before the Second
Anniversary, and (y) the gross amount, if any, of the First
Anniversary Bonus (less applicable withholding).
EXAMPLE: Executive's benefits under Section 9 of this Agreement
are triggered prior to the First Anniversary. On the First
Anniversary, which is a trading day, the closing sales price of
the Company common stock on the New York Stock Exchange is
$22.375 ($20.375 plus $2.00). The First Anniversary Bonus is
equal to $1,000,000 minus [600,000 x $2] and thus no payment is
made. On the Second Anniversary, which is a trading day, the
closing sales price of the Company common stock on the New York
Stock Exchange is $23.375 ($20.375 plus $3.00). The Second
Anniversary Bonus is equal to $2,300,000 minus [600,000 x $3]
and thus equals $500,000 (less applicable withholding).
(D) Modification of Second Anniversary Bonus if Death or
Disability Benefits Are Triggered After First Anniversary and On
or Prior to Second Anniversary. If Executive's benefits under
Section 9 hereof are triggered after the First Anniversary and
on or prior to the Second Anniversary, then, notwithstanding any
other provisions of this subsection 3(b)(iii), the Second
Anniversary Bonus shall be equal to two million three hundred
thousand dollars ($2,300,000) minus (i) six hundred thousand
(600,000)' times the dollar amount obtained by subtracting
$20.375' from the closing sales price of Company common stock as
listed on the New York Stock Exchange on the last trading day on
or before the Second Anniversary, and (ii) the gross amount, if
any, of the First Anniversary Bonus (less applicable
withholding).
(E) Modification of Special Bonus if Section 6 and 7 Benefits
Were Both Triggered On or Prior to First Anniversary. If
Executive's benefits under Sections 6 and 7 hereof are both
triggered on or prior to the First Anniversary, then (i) the
First Anniversary Bonus shall be equal to one million dollars
($1,000,000) minus the product obtained by multiplying three
hundred thousand (300,000)* plus the product obtained by
multiplying eight thousand three hundred and thirty-three
(8,333) times the number equal to (x) twelve (12) plus (y) the
number of full months following the Effective Date that elapsed
prior to the triggering of benefits under Section 6, by the
dollar amount obtained by subtracting $20.375' from the closing
sales price
Amended and Restated Employment Agreement
September 12, 1997
Page 2
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of Company common stock as listed on the New York Stock Exchange
on the last trading day on or before the First Anniversary (less
applicable withholding), and (ii) the Second Anniversary Bonus
shall be equal to two million three hundred thousand dollars
($2,300,000) minus (x) the product obtained by multiplying three
hundred thousand (300,000)* plus the product obtained by
multiplying eight thousand three hundred and thirty-three
(8,333)* times the number equal to (A) twelve (12) plus (B) the
number of full months following the Effective Date that elapsed
prior to the triggering of benefits under Section 6, by the
dollar amount obtained by subtracting $20.375* from the closing
sales price of Company common stock as listed on the New York
Stock Exchange on the last trading day on or before the Second
Anniversary and (y) the gross amount, if any, of the First
Anniversary Bonus (less applicable withholding).
(F) Modification of Special Bonus if Section 7 Benefits Are
Triggered On or Prior to First Anniversary and Section 6
Benefits Are Triggered Following the First Anniversary and On or
Prior to the Second Anniversary. If Executive's Section 7
benefits are triggered on or prior to First Anniversary and
Executive's Section 6 benefits are triggered following the First
Anniversary and on or prior to the Second Anniversary, then (i)
the First Anniversary Bonus shall be equal to one million
dollars ($1,000,000) minus the product obtained by multiplying
four hundred thousand (400,000)* by the dollar amount obtained
by subtracting $20.375 from the closing sales price of Company
common stock as listed on the New York Stock Exchange on the
last trading day on or before the First Anniversary (less
applicable withholding), and (ii) the Second Anniversary Bonus
shall be equal to two million three hundred thousand dollars
($2,300,000) minus (A) the product obtained by multiplying four
hundred thousand (400,000)* plus the product obtained by
multiplying eight thousand three hundred and thirty-three
(8,333)* times the number of full months following the Effective
Date that elapsed prior to the triggering of benefits under
Section 6, by the dollar amount obtained by subtracting $20.375*
from the closing sales price of Company common stock as listed
on the New York Stock Exchange on the last trading day on or
before the Second Anniversary, and (B) the gross amount, if any,
of the First Anniversary Bonus (less applicable withholding).
(G) Modification of Second Anniversary Bonus if Section 6 and 7
Benefits Are Both Triggered Following the First Anniversary and
On or Prior to the Second Anniversary. If Executive's benefits
under Sections 6 and 7 hereof are both triggered following the
First Anniversary and on or prior to the Second Anniversary,
then the Second Anniversary Bonus shall be equal to two million
three hundred thousand dollars ($2,300,000) minus (x) the
product obtained by multiplying four hundred thousand (400,000)*
plus the product obtained by multiplying eight thousand three
hundred and thirty-three (8,333)* times the number of full
months following the Effective Date that elapsed prior to the
triggering of benefits under Section 6, by the dollar amount
obtained by subtracting $20.375* from the closing sales price of
Company common stock as listed on the New York Stock Exchange on
the last trading day on or before the Second Anniversary, and
(y) the gross amount, if any, of the First Anniversary Bonus
(less applicable withholding).
(H) Modification of Special Bonus if Section 7 Benefits Are
Triggered on or Prior to First Anniversary and the Section 6
Benefit Is Not Triggered On or Prior to the Second Anniversary.
If Executive's benefits under Section 7 hereof are triggered on
or prior to the First Anniversary and the Section 6 benefit is
not triggered on or Prior to the Second Anniversary, then (i)
the First Anniversary Bonus shall be equal to one million
dollars ($1,000,000) minus the product obtained by multiplying
four hundred thousand (400,000)* by the dollar amount obtained
by subtracting $20.375* from the closing sales price of Company
common stock as listed on the New York Stock Exchange on the
last trading day on or before the First Anniversary (less
applicable withholding), and (ii) the Second Anniversary Bonus
shall be equal to two million three hundred thousand dollars
($2,300,000) minus (x) the product obtained by multiplying five
hundred thousand (500,000)* by the dollar amount obtained by
subtracting $20.375* from the closing sales price of Company
common stock as listed on the New York Stock Exchange on the
last trading day on or before the Second Anniversary and (y) the
gross amount, if any, of the First Anniversary Bonus (less
applicable withholding).
Amended and Restated Employment Agreement
September 12, 1997
Page 3
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(I) Modification of Special Bonus if Section 6 Benefits Are
Triggered On or Prior to First Anniversary and Section 7 Benefit
Is Not Triggered Prior Thereto. If Executive's benefits under
Section 6 hereof are triggered on or prior to the First
Anniversary and the Section 7 benefit is not triggered on or
prior thereto, then (i) the First Anniversary Bonus shall be
equal to one million dollars ($1,000,000) minus the product
obtained by multiplying three hundred thousand (300,000)* plus
the product obtained by multiplying eight thousand three hundred
and thirty-three (8,333)* times the number of full months
following the Effective Date that elapsed prior to the
triggering of benefits under Section 6, by the dollar amount
obtained by subtracting $20.375* from the closing sales price of
Company common stock as listed on the New York Stock Exchange on
the last trading day on or before the First Anniversary (less
applicable withholding), and (ii) the Second Anniversary Bonus
shall be equal to two million three hundred thousand dollars
($2,300,000) minus (x) the product obtained by multiplying three
hundred thousand (300,000)* plus the product obtained by
multiplying eight thousand three hundred and thirty-three
(8,333)* times the number of full months following the Effective
Date that elapsed prior to the triggering of benefits under
Section 6, by the dollar amount obtained by subtracting $20.375*
from the closing sales price of Company common stock as listed
on the New York Stock Exchange on the last trading day on or
before the Second Anniversary, and (y) the gross amount, if any,
of the First Anniversary Bonus (less applicable withholding).
(J) Modification of Second Anniversary Bonus if Neither Section
6 nor Section 7 Benefits Are Triggered On or Prior to the First
Anniversary and Section 6. But Not Section 7 Benefits Are
Triggered Following the First Anniversary and On or Prior to the
Second Anniversary. If neither of Executive's benefits under
Section 6 nor Section 7 are triggered on or prior to the First
Anniversary and (i) Executive's benefits under Section 6 hereof
are triggered, and (ii) Executive's benefits under Section 7
hereof are not triggered, following the First Anniversary and on
or prior to the Second Anniversary, then the Second Anniversary
Bonus shall be equal to two million three hundred thousand
dollars ($2,300,000) minus (x) the product obtained by
multiplying three hundred thousand (300,000)* plus the product
obtained by multiplying eight thousand three hundred and
thirty-three (8,333)* times the number of full months following
the Effective Date that elapsed prior to the triggering of
benefits under Section 6 by the dollar amount obtained by
subtracting $20.375* from the closing sales price of Company
common stock as listed on the New York Stock Exchange on the
last trading day on or before the Second Anniversary and (y) the
gross amount, if any, of the First Anniversary Bonus (less
applicable withholding).
(K) Modification of Second Anniversary Bonus if Neither Section
6 nor Section 7 Benefits Are Triggered On or Prior to the First
Anniversary and Section 7 But Not Section 6 Benefits Are
Triggered Following the First Anniversary and On or Prior to the
Second Anniversary. If neither of Executive's benefits under
Section 6 nor Section 7 are triggered on or prior to the First
Anniversary and (i) Executive's benefits under Section 7 hereof
are triggered, and (ii) Executive's benefits under Section 6
hereof are not triggered, following the First Anniversary and on
or Prior to the Second Anniversary, then the Second Anniversary
Bonus shall be equal to two million three hundred thousand
dollars ($2,300,000) minus (x) the product obtained by
multiplying five hundred thousand (500,000)* by the dollar
amount obtained by subtracting $20.375* from the closing sales
price of Company common stock as listed on the New York Stock
Exchange on the last trading day on or before the Second
Anniversary and (y) the gross amount, if any, of the First
Anniversary Bonus (less applicable withholding).
(L) Special Bonus Clarifications. Executive shall not be
entitled to more than one First Anniversary Bonus and one Second
Anniversary Bonus hereunder. Once paid, neither the First
Anniversary Bonus nor the Second Anniversary Bonus shall be
subject to any reduction or diminishment. Except if benefits
have been triggered under Sections 6, 7 or 9 hereof, Executive
must be employed by the Company on the First Anniversary Date to
receive the First Anniversary Bonus and on the Second
Anniversary Date to receive the Second Anniversary Bonus.
Numbers marked with an asterisk throughout the preceding
sections shall be adjusted in proportion to future stock
dividends which may be issued or splits in Company stock.
Amended and Restated Employment Agreement
September 12, 1997
Page 4
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(c) Stock Options. Executive shall be granted a stock option, which
shall be, to the extent possible under the $100,000 rule of Section
422(d) of the Internal Revenue Code of 1986, as amended (the "Code") an
"incentive stock option" (as defined in Section 422 of the Code) to
purchase a total of six hundred thousand (600,000) shares of Company
common stock, with a per share exercise price equal to $20.375. This
option shall be for a term of eight years and shall vest as to 300,000
shares one year from the Effective Date and as to one thirty-sixth of
the shares originally subject to the option each month thereafter (so as
to be 100% vested four years after the Effective Date), conditioned upon
Executive's continued employment with the Company as of each vesting
date. The option shall be exercisable at any time, including by means of
Executive entering into a fully recourse promissory note covering the
aggregate exercise price, subject to Executive entering into a
restricted stock purchase agreement with the Company with respect to any
unvested shares. The shares covered by the stock option shall be
registered on Form S-8 by the Company prior to the date of any vesting.
(d) Loan. Promptly following the Effective Date, the Company will loan
Executive an amount sufficient to retire Executive's outstanding loan
with his prior employer with a principal amount of $500,000, on the same
terms and conditions as set forth in the promissory note between
Executive and his prior employer relating to such loan, attached hereto
as Exhibit A.
4. Expenses. The Company will pay or reimburse Executive for reasonable
travel, entertainment or other expenses incurred by Executive in the
furtherance of or in connection with the performance of Executive's
duties hereunder in accordance with the Company's established policies.
5. Life Insurance. The Company will obtain and pay premiums for, during
the term of Executive's employment hereunder, term life insurance for
Executive in the amount of $1,000,000 payable to the beneficiary
designated by Executive. Executive shall be fully "grossed-up" by the
Company for this benefit so that the economic effect to Executive is the
same as if this benefit was provided to Executive on a non-taxable
basis.
6. Severance Benefits. If Executive's employment with the Company
terminates involuntarily or if Executive terminates his employment with
the Company voluntarily for "Good Reason" (as defined herein), then (i)
Executive shall be entitled to receive a lump-sum severance payment from
the Company, within 30 days of such termination, equal to twelve months'
of Executive's Base Salary as in effect as of the date of such
termination, plus 100~o of Executive's target bonus for the year in
which the termination occurs, plus a pro-rated target bonus equal to the
bonus target amount for the year in which the termination occurs
multiplied by a fraction, the numerator of which is the number of days
from the Effective Date until the date of termination and the
denominator of which is three hundred and sixty-five (all less
applicable withholding), (ii) Executive's outstanding stock options and
any stock subject to restricted stock purchase agreements shall have
their vesting accelerated as to one year's additional vesting as of the
date of termination, (iii) Executive shall receive (but only if and to
the extent that he has not already received such) the First Anniversary
Bonus and the Second Anniversary Bonus, (iv) to the extent permitted by
law, Executive's accounts under any Company deferred compensation plans
or arrangements shall have their vesting accelerated as to one year's
additional vesting as of the date of termination, including as to any
amounts contributed by the Company, and (v) the Company shall provide to
Executive one hundred percent (100~) Company-paid health, dental, vision
and life insurance coverage at the same level of coverage as was
provided to Executive immediately prior to the date of termination (the
"Company-Paid Coverage"). If such coverage included the Executive's
dependents immediately prior to the date of termination, such dependents
shall also be covered at Company expense. Company-Paid Coverage shall
continue until the earlier of (x) one year from the date of termination,
or (y) the date that the Executive and his dependents become covered
under another employer's group health, dental, vision and life insurance
plans that provide Executive and his dependents with comparable benefits
and levels of coverage. For purposes of Title X of the Consolidated
Budget Reconciliation Act of 1985 ("COBRA"), the date of the "qualifying
event" for Executive and his dependents shall be the date upon which the
Company-Paid Coverage terminates.
For this purpose, "Good Reason" is defined as (i) the significant
reduction of the Executive's title, duties, authority, responsibilities,
relative to the Executive's title, duties, authority or responsibilities
as in effect immediately prior to such reduction, or a reduction in the
office to whom Executive reports
Amended and Restated Employment Agreement
September 12, 1997
Page 5
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(i.e., the Chief Executive Officer); (ii) a reduction by the Company in
the Base Salary or bonus target amount of the Executive as in effect
immediately prior to such reduction; (iii) the relocation of the
Executive to a facility or a location more than thirty (30) miles from
the Executive's then present location, without the Executive's express
written consent; (iv) any material breach of this Agreement by the
Company; or (v) any act or set of facts or circumstances which would,
under California case law or statute, constitute a constructive
termination of the Executive.
7. Change of Control. In the event of a change of control of the Company
(i) Executive's outstanding stock options and any stock subject to
restricted stock purchase agreements shall have their vesting
accelerated as to one year's additional vesting, and (ii) if a change of
control of the Company occurs within one year after the Effective Date,
the Company shall pay Executive an amount equal to twelve months' of
Executive's Base Salary as in effect as of the date immediately prior to
such change of control, plus 100~o of Executive's target bonus for the
year in which the change of control occurs, plus a pro-rated target
bonus equal to the bonus target amount for the year in which the change
of control occurs multiplied by a fraction, the numerator of which is
the number of days from the Effective Date until the date of the change
of control and the denominator of which is three hundred and sixty-five
(all less applicable withholding). For this purpose, "change of control
of the Company" is defined as:
(a) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended) becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 50~o or more of
the total voting power represented by the Company's then outstanding
voting securities; or
(b) A change in the composition of the Board of Directors of the Company
occurring within a two-year period, as a result of which fewer than a
majority of the directors are Incumbent Directors; provided, however,
that such provision shall not be effective until November 5, 1997 (and
the determination of who is an Incumbent Director shall be made as of
such date) if Proposition 211 is approved by the voters of California on
November 5, 1996. "Incumbent Directors" shall mean directors who either
(A) are directors of the Company as of the date hereof (or, if
Proposition 211 is approved, as of November 5, 1997), or (B) are
elected, or nominated for election, to the Board of Directors of the
Company with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election or nomination (but
shall not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to the
election of directors to the Company); or
(c) The consummation of a merger or consolidation of the Company with
any other corporation 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) at
least fifty percent (50%) of the total voting power represented by the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or
(d) The consummation of the sale or disposition by the Company of all or
substantially all of the Company's assets.
8. Golden Parachute Excise Tax Gross-Up. In the event that the benefits
provided for in this Agreement or otherwise payable to the Executive
constitute "parachute payments" within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code") and will be
subject to the excise tax imposed by Section 4999 of the Code, then the
Executive shall receive (i) a payment from the Company sufficient to pay
such excise tax, and (ii) an additional payment from the Company
sufficient to pay the excise tax and federal and state income taxes
arising from the payments made by the Company to Executive pursuant to
this sentence. Unless the Company and the Executive otherwise agree in
writing, the determination of Executive's excise tax liability and the
amount required to be paid under this Section 8 shall be made in writing
by the Accountants. For purposes of making the calculations required by
this Section 8, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable,
good faith interpretations concerning the application of Sections 280G
and 4999 of the Code. The Company and the Executive shall furnish to the
Accountants such information and
Amended and Restated Employment Agreement
September 12, 1997
Page 6
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documents as the Accountants may reasonably request in order to make a
determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 8.
9. Death and Disability. If (i) Executive dies or becomes partially or
permanently disabled while employed by the Company, and (ii) the Company
appoints a new Executive Vice President responsible for world-wide
sales, service and marketing or takes any action that would constitute
Good Reason under Section 6 hereof, then Executive's outstanding stock
options and any stock subject to restricted stock purchase agreements
shall have their vesting accelerated in full so as to become 100% vested
and Executive shall be entitled to the Special Bonus as set forth in
Section 3(b)(iii) hereof
10. Indemnification: Insurance. Upon the commencement of his employment with
the Company, Executive shall be offered an indemnification agreement
comparable in form and substance to indemnification agreements entered
into by and between the Company and its executive officers and members
of the Board. During the period of Executive's employment with the
Company, the Company agrees to maintain director and officer liability
insurance in scope and amounts reasonably satisfactory to Executive, to
the extent available. Following the termination of Executive's
employment or directorship for any reason, the Company agrees to honor
the indemnification agreement previously entered into with Executive.
11. Vacation. During the term hereof, Executive shall be entitled to paid
vacation of a minimum of four weeks per year.
12. Enforcement. In the event of any action to enforce the terms of this
Agreement, the prevailing party in such action shall be entitled to such
party's reasonable costs and expenses of enforcement including, without
limitation, reasonable attorneys' fees.
13. Assignment. This Agreement shall be binding upon and inure to the
benefit of (a) the heirs, executors and legal representatives of
Executive upon Executive's death and (b) any successor of the Company.
Any such successor of the Company shall be deemed substituted for the
Company under the terms of this Agreement for all purposes. As used
herein, "successor" shall include any person, firm, corporation or other
business entity which at any time, whether by purchase, merger or
otherwise, directly or indirectly acquires all or substantially all of
the assets or business of the Company.
14. Notices. All notices, requests, demands and other communications called
for hereunder shall be in writing and shall be deemed given if delivered
personally or three (3) days after being mailed by registered or
certified mail, or sent by Federal Express or a similar private delivery
company, return receipt requested, prepaid and addressed to the parties
or their successors in interest at the following addresses, or at such
other addresses as the parties may designate by written notice in the
manner aforesaid:
Amended and Restated Employment Agreement
September 12, 1997
Page 7
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If to the Company: Bay Networks, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxx Xxxxx XX 00000
If to Executive: Xxxxx Xxxxxxxx
HOME ADDRESS REDACTED
15. Severability. In the event that any provision hereof becomes or
is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and
effect without said provision.
16. Entire Agreement. This Agreement represents the entire agreement
and understanding between the Company and Executive concerning Executive's
employment relationship with the Company, and supersedes and replaces any and
all prior agreements and understandings concerning Executive's employment
relationship with the Company.
17. No Oral Modification, Cancellation or Discharge. This Agreement
may only be amended, canceled or discharged in writing signed by Executive and
the Company.
18. Governing Law. This Agreement shall be governed by the laws of
the State of California.
19. Effective Date. This Agreement is effective immediately after it
has been signed.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
respective dates set forth below.
BAY NETWORKS, INC.
By: /s/ XXXXX X. HOUSE
----------------------------------
Xxxxx X. House
Chairman of the Board, President
and Chief Executive Officer
Date: 9/11/97
--------------
XXXXX XXXXXXXX
/s/ XXXXX X. XXXXXXXX
---------------------------------
Signature
Date: 9/11/97
----------------
Amended and Restated Employment Agreement
September 12, 1997
Page 8
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EXHIBIT A
PROMISSORY NOTE
THIS NOTE CONTAINS AN ACCELERATION CLAUSE
Date: November 26, 1996
Principal amount: $542,166.67
Lender: Bay Networks, Inc.
Borrower: Xxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxxxx
Residence address: REDACTED
City of Los Gatos, County of Santa Xxxxx, State of California
FOR VALUE RECEIVED, the undersigned, Xxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxxxx
(collectively, "Borrower"), hereby promise to pay to Bay Networks, Inc., a
Delaware corporation having its principal office at 0000 Xxxxx Xxxxxxx Xxxxxxx,
Xxxxx Xxxxx, XX 00000 - 8185 ("Lender), the sum of Five-hundred-forty-two-
thousand-one-hundred-sixty-six and 67/100 dollars ($542,166.67) plus interest
on the unpaid balance at the rates and under the terms as set forth below.
1. Definitions
a. "Applicable Federal Rate" shall mean the monthly short-term
applicable Federal Rate (as defined in the Code) as of the
date of the occurrence of the event which on the terms and
conditions of this Note causes interest to accrue at the
Applicable Federal Rate.
b. "Borrower" shall mean Xxxxx X. Xxxxxxxx and Xxxxx X.
Xxxxxxxx, who are married residents of California.
c. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
d. "Due Date" shall mean the earliest to occur of any of the
following:
i. June 9, 2000;
ii. the sale, conveyance, alienation, or other
transfer by Borrower of all or any portion of its
interest in the Principal Residence, whether
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PROMISSORY NOTE Page 2
Xxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxxxx November 26, 1996
voluntary or involuntary, by act of law or
otherwise (except to a living trust of which
Borrower is the trustee);
iii. the refinancing of any loan secured by a Deed of
Trust or Mortgage on the Principal Residence;
iv. upon the Termination of Employment of Employee by
Lender;
v. any other change that removes Borrower as a holder
of record of title to the Principal Residence;
vi. Employee ceases to occupy the Principal Residence
as Employee's principal residence for any reason;
vii. such earlier date as may be required by Lender
upon acceleration of the Due Date in accordance
with Section 5 of this Note.
e. "Employee" shall mean Xxxxx X. Xxxxxxxx who is an employee
of Lender.
f. "Lender" shall mean Bay Networks, Inc., a Delaware
corporation.
g. "Principal Residence" shall mean the personal residence used
by Employee as a principal residence within the meaning of
Section 217 of the Code and the Regulations thereunder,
which Principal Residence is located at HOME ADDRESS
REDACTED and more fully described in the Deed of Trust
attached hereto as EXHIBIT A.
h. "Termination of Employment" shall mean the termination of
Employee's employment relationship with Lender for any
reason or no reason, with or without cause, including the
death, disability or retirement of Employee.
2. Interest and Payments
a. Except as provided in Section 6, this Note shall bear simple
interest at the rate of six percent (6.00%) per annum.
b. No payment of principal or interest shall be due and payable
until the Due Date, at which time all unpaid accrued
interest and the principal balance of this Note shall be due
and payable.
c. In the event that all unpaid accrued interest and the
principal balance of this Note shall be due and payable as a
result of the Termination of Employment of Employee.
Borrower irrevocably consents and acknowledges that Lender
shall, at its election, be entitled to deduct from sums due
Employee from Lender (including, without limitation, salary,
bonus, incentive, 401(k) and refunds
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Xxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxxxx November 26, 1996
from the Bay Networks Employee Stock Purchase Plan and
termination pay) such sums as are necessary to repay this
Note in full or in part. No such deduction by Lender shall
operate to discharge any remaining unpaid amount due under
this Promissory Note.
d. All payments shall be applied first against accrued
interests, and then against principal.
e. All payments required or permitted under the terms of this
Note shall be made to Lender. Attention: Treasurer, at
Lender's principal place of business.
3. Prepayment. Borrower may prepay all or part of this Note without
penalty, fee or acceleration of the due date of this Note.
4. Security. This Note shall be secured by a Deed of Trust on the
Borrower's Principal Residence which is identified in said Deed of
Trust or Mortgage and which is attached hereto as EXHIBIT A.
5. Acceleration of Due Date. The entire unpaid principal balance of this
Note and accrued interest thereon, shall, at the election of Lender,
become immediately due and payable upon the occurrence of any of the
following, irrespective of the Due Date as otherwise defined in this
Note:
a. Any failure on the part of the Borrower to make any payment
when due;
b. Any failure on the part of the Borrower (i) to perform or
observe any of its obligations under the Deed of Trust
securing this Note, and (ii) to commence and proceed
diligently to cure such default within fifteen (15) days
after the written notice thereof is given by Lender, or
(iii) in any event to cure such default within thirty (30)
days after the date on which such notice is given;
c. The destruction or condemnation of the real property subject
to the Deed of Trust or Mortgage or any material portion
thereof.
6. Collection Costs Borne by Borrower. In the event of any failure on the
part of the Borrower to make any payment when the same is due, Lender
shall be entitled to recover from Borrower all costs of effecting
collection of the same, including reasonable attorneys' fees and all
costs of collection. After the date any payment is due, unpaid
principal and interest subject to collection shall bear interest
compounded monthly at the Applicable Federal Rate.
7. Purpose of Loan/Certification of Employee. This loan is being made by
Lender to Borrower pursuant to an offer of employment to Employee,
solely in order to repay a loan secured by the Principal Residence and
payable by Borrower to
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Xxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxxxx November 26, 1996
Employee's prior employer. Borrower hereby certifies that the proceeds
of this loan shall be used only for such purpose. Employee further
certifies that Employee reasonably expects to be entitled to and will
itemize deductions for each year during which this loan is
outstanding.
8. Governing Law. The Note shall be enforced in accordance with the laws
of the State of California and shall be construed in accordance
therewith.
9. Successors. This Note shall be binding upon and shall inure to the
benefit of the parties hereto and their respective representatives,
heirs, administrators, successors and assigns, except as otherwise
provided herein.
10. No Assignment. In no event shall the benefits provided by this Note be
transferred or assigned by Borrower.
11. Signatures. Borrower has set its band to this Note, intending to be
legally bound, effective as of the Date first set forth above.
/s/ XXXXX X. XXXXXXXX /s/ XXXXX X. XXXXXXXX
--------------------------------- ---------------------------------
Xxxxx X. Xxxxxxxx Xxxxx X. Xxxxxxxx
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) ss
COUNTY OF SANTA XXXXX )
On______________________,1997 before me, _____________________________personally
appeared XXXXX X. XXXXXXXX AND XXXXX X. XXXXXXXX, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the persons whose
names are subscribed to the within instrument and acknowledged to me that they
executed the same in their authorized capacities, and that by their signatures
on the instrument each such person(s), or the entity on behalf of which the
person acted, executed the instrument.
WITNESS my hand and official seal.
SIGNATURE
--------------------------------- (SEAL)
