Exhibit 10.3
CONFIDENTIAL September 17, 2003
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Xx. Xxxxxxx X. Xxxxxx
0000 Xxxxxxx Xxxxx Xxxxx
Xxx Xxxx, XX 00000
Dear Xxxx,
On behalf of Procera Networks, Inc. (the "Company"), I am pleased to offer you
the position of President, CEO and Chairman of the Board of the Company. You
will report directly to the Company's board of directors (the "Board").
EFFECTIVE DATE: The effective date of this Agreement is October 1, 2003.
SALARY: Your salary shall increase to $245,000 annually (subject to normal
withholdings) when the Company successfully closes its current private placement
raising a minimum of $4 million (the "Private Placement"). Performance reviews
will take place annually on the anniversary of this Agreement. Compensation
adjustments will be determined by the Board or the Compensation Committee
thereof (the "Compensation Committee").
ANNUAL PERFORMANCE BONUS: You will be eligible to receive an annual performance
bonus of 80% of your base salary if you achieve performance goals as determined
mutually by you and the Board. Performance bonuses will be paid out annually as
soon as practical after your annual review.
BENEFITS: You will be entitled to receive the following benefits: (i)
Health/Dental/Vision Insurance Benefits. The Company shall provide insurance
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for you and your immediate family for medical, dental and vision coverage, and
shall pay 100% of the premiums for such coverage commensurate with Company
policy; (ii) Disability Insurance: The Company shall provide you with long term
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disability insurance coverage at the rate of sixty percent (60%) of your base
compensation in the event that you becomes "permanently disabled" as that term
is defined by such insurance disability policy; (iii) Life Insurance; The
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Company shall make payments to you for the payment by you of a term life
insurance policy with a death benefit of $1,000,000 for the benefit of your
designated beneficiary(ies) for as long as you remain an employee; (iv) Vacation
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and Holidays. You shall not accrue compensation for vacation or holidays.
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However, the Company acknowledges that four weeks of vacation per year and all
company declared holidays are allowable, paid personal days off for you.
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PAYMENT OF PAST DUE OBLIGATIONS: The Company is 16 months in arrears on payment
of compensation to you. The total obligation now stands at $159,840 on a pretax
basis. In consideration of the mutual covenants contained in this Agreement,
the Company agrees to pay to you $59,220 pretax on your execution of this
agreement and $59,220 pretax on the completion of the Private Placement.
EMPLOYMENT AT WILL. Your employment with the Company pursuant to this agreement
(the "Employment") shall be "at will," meaning that either you or the Company
shall be entitled to terminate your Employment at any time and for any reason,
with or without cause. Either you or the Company may terminate your Employment
at any time and for any reason (or no reason), and with or without cause, by
giving the other party notice in writing.
INVOLUNTARY TERMINATION OTHER THAN FOR CAUSE OR DEATH: Should your Employment be
involuntarily terminated for any reason other than cause or death, the Company
will continue to pay your then current base salary for an additional 18 months
provided you execute a general release of all known and unknown claims against
the company. Involuntary termination includes cause, death, disability or a
reduction without your consent in your title, compensation or responsibility as
further defined below. If your Employment terminates by reason of your voluntary
resignation, cause or death then you shall not be entitled to receive severance
benefits under this Agreement. Your benefits will continue under the Company's
then existing benefits plans and policies in accordance with such plans and
policies in effect on the date of termination as such plans and policies apply
to terminated employees.
DEFINITIONS. For the purposes of this Agreement, "Cause" shall mean (i) the
commission by you of an act of fraud or embezzlement, (ii) your material breach
of the Proprietary Information and Inventions Agreement previously executed by
you, (iii) your conviction of a felony, (iv) your willful misconduct, or (v)
your willful failure to render services to the Company in accordance with your
Employment which failure amounts to a material neglect of your duties to the
Company. Permanent Disability shall not constitute cause. For all purposes
under this Agreement, "Permanent Disability" shall mean that the, at the time
notice is given, you have failed to perform your duties under this Agreement
for a period of not less than 90 consecutive days as the result of your
incapacity due to physical or mental injury, disability or illness.
"Involuntary Termination" shall mean the termination of your Employment which
occurs by reason of your death, involuntary dismissal or discharge by the
Company for reasons other than Cause, or your voluntary resignation following
(i) a change in your position with the Company which materially reduces or
materially and adversely alters your duties or responsibility, or (ii) the
relocation of your principal place of employment by more than 50 miles, provided
and only if such reduction or alteration or relocation is effected by the
Company without his consent.
INDEMNIFICATION: To the fullest extent permitted by applicable law, the Company
agrees to indemnify, defend and hold you harmless from any and all claims,
actions, costs, expenses, damages and liabilities, including without limitation,
reasonable attorneys' fees, hereafter or heretofore arising out of or in
connection with your Employment. To the fullest extent permitted by applicable
law, the Company shall advance to you expenses of defending any such action,
claim or proceeding. However, the Company shall not indemnify you or defend you
against, or hold him harmless from, any claims, damages, expenses or
liabilities, including attorneys' fees, resulting from the gross negligence or
willful misconduct on your part or otherwise falling
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outside the scope of your Employment. For purposes of this paragraph, no act, or
failure to act, on your part shall be considered "willful" unless done, or
omitted to be done, not in good faith and without reasonable belief by you that
your action or omission was in the best interests of the Company. The duty to
indemnify shall survive the expiration or early termination of this Agreement as
to any claims based on facts or conditions, which occurred or are alleged to
have occurred prior to expiration or termination
TERMINATION OF AGREEMENT. This Agreement shall terminate when all obligations
of the parties hereunder have been satisfied.
DISPUTES SETTLED BY ARBITRATION: The parties agree to submit all disputes
arising out of this agreement to binding arbitration in the state of California
and in accordance with the provisions of the California Civil Procedure.
OUTSIDE ACTIVITIES: While you render services to the Company, you will not
assist any person or organization in competing with the Company, in preparing to
compete with the Company or in hiring any employees of the Company.
ENTIRE AGREEMENT: This letter contains all of the terms of your Employment with
the Company and supersedes any prior understandings or agreements, whether oral
or written, between you and the Company.
AMENDMENT AND GOVERNING LAW: This letter agreement may not be amended or
modified except by an express written agreement signed by you and a duly
authorized officer of the Company. The terms of this letter agreement
California law will govern agreement and the resolution of any disputes.
Sincerely,
Procera Networks, Inc.
By: /s/ Xxx Xxxxxxxx
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Xxx Xxxxxxxx
A member of the Board of Directors
Accepted By:
Xxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx Date: September 17, 2003
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