EXHIBIT 10.5
CORVIS CORPORATION
0000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
July 22, 1999
Xxxxx Xxxxxx
0000 X. Xxxxxxxxxxx Xxxxx
Xxxx, XX 00000
Re: Employment Agreement
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Dear Xxxxx:
This will confirm our understanding as to the terms of your employment by
Corvis Corporation (the "Company"):
1. Position. You will be employed as Executive Vice President of the
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Company, effective as of July 26, 1999 (the "Effective Date").
2. Salary. Your initial base salary will be at the annual rate of
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$165,000, subject to increase at the discretion of the Board of Directors of the
Company ("Board"), and will be payable in accordance with the Company's policies
for its senior executives. We will also pay you a signing bonus of $120,000
payable in 18 equal monthly installments with the payment of such bonus being
contingent on your continued employment by the Company, except as otherwise set
out in this Letter Agreement.
3. Benefits. The payments provided to you under Paragraph 2, are in
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addition to any other benefits to which you may be, or may become, entitled
under any of the Company's group hospitalization, health, dental care, and/or
sick-leave plans; life, other insurance and/or death benefit plans; travel
and/or accident insurance plans; deferred compensation plans; capital
accumulation programs; retirement income and/or pension plans; supplemental
pension plans; excess benefit plans; stock option, short- and long-term
disability programs; and other present and future group employee benefit plans
and programs for which the Company's key employees, including you, are or shall
become eligible. Nothing in this Agreement shall require the Company to adopt
any such plans or programs or to maintain any benefits thereunder at any
specific level. You shall be entitled to participate in or receive benefits
under any employment benefit plan or arrangement made available by the Company
in the future to its executives and key management employees, subject to, and on
a basis consistent with, the terms, conditions and overall administration of
such plan or arrangement and at a level generally commensurate with such other
executives and key management employees.
As of the Effective Date you shall be entitled to a combined vacation and sick
leave in the amount of 15 days per year, consistent with Company policies.
The Company will guarantee a loan for up to $200,000 for a home purchase or
remodeling. The Company will pay the interest on the $200,000 loan for a period
of two years. You will be responsible, however, for the repayment of the
principal of the loan. The Company will work with you to structure such
guarantee to fit your desired financing structure.
The Company agrees to indemnify you for up to $400,000 that you may become
obligated to pay Nortel pursuant to a "claw-back" or similar provision that
compels disgorgement of stock option profits upon commencement of work for a
competitor of Nortel. The Company would have the right to defend you against
such claims. You would be obligated to repay the Company any amounts the
Company is obligated to pay under this paragraph upon the occurrence of an IPO
or a change of control of the Company, to the extent you receive after tax
consideration in cash or stock equal to or greater than the reimbursement to
which the Company is entitled.
Within two days after the Effective Date, the Company agrees to pay you a
relocation allowance of $60,000, grossed up to cover associated tax costs.
4. Options. Effective as of the Effective Date, the Company will grant
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you options to purchase 300,000 shares of Common Stock of the Company with an
exercise price of $4.08 per share pursuant to the terms of the incentive Stock
Option Agreement attached as Exhibit A hereto. The Company agrees to loan within
one week after the Effective Date an amount equal the exercise price of the
options.
5. Severance.
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(a) Termination Other Than for Cause. If at any time during the
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period ending three years after the Effective Date the Company terminates you as
an employee other than for "cause" (as such term is hereinafter defined) or if
your employment with the Company terminates during such period as a result of
death or disability, you or your designated beneficiary will be entitled to
receive an amount equal to your monthly base salary (plus the monthly payments
for unpaid portions of the signing bonus) as of the date of such termination
("Termination Date"), payable monthly until the earlier to occur of (i) the date
three years after the Effective Date, (ii) or one year after the Termination
Date and (iii) your commencing full-time employment, or a substantially full-
time consulting position, with another person or entity other than the Company;
but only if you execute and do not revoke a General Release in the form attached
hereto as Exhibit B. If you commence part-time employment or a part-time
consulting position, the amount the Company is obligated to pay pursuant to the
preceding sentence shall be reduced by the amount you earn from such part-time
employment or from your part-time consulting position. You will also be entitled
to continue to receive all medical and life insurance benefits that you were
receiving at the Termination Date, for such period.
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(b) Termination for Cause. If you are terminated for cause or if you
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terminate your employment with the Company, you shall only receive your base
salary owing to you through the Termination Date and shall not be entitled to
any additional payments from the Company.
(c) Cause. For purposes of this Agreement, the term "cause" shall
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mean (i) an act of embezzlement or conversion to your own use of any property or
business opportunity of the Company; (ii) your willful misfeasance or
nonfeasance of duty intended to injure or materially injuring the reputation,
business, or business relationships of the Company; (iii) your conviction upon a
charge of any crime involving moral turpitude or upon conviction of, or
indictment for, or entering of a guilty plea or plea of no contest with respect
to, a felony; (iv) your failure, neglect, or refusal to substantially perform
your duties and responsibilities following written notice from the Company
specifically identifying the manner in which you have not substantially
performed your duties; (v) your abuse of alcohol or drugs (legal or illegal)
that, in the Board's sole and absolute judgment, is deemed to materially impair
your ability to perform your duties hereunder; or (vi) your material breach of
any of the covenants contained in this letter.
(d) Release. You agree that, in consideration of the severance
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payment to be made to you under Paragraph 5(a) of this letter, you will execute
the general release annexed hereto as Exhibit B, which you understand is a
condition to your receiving such payment.
6. Covenants.
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(a) Restrictions Upon Termination Within Three Years of Effective
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Date. In consideration of the amounts to be paid to you by the Company and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged if your employment with the Company or any of its affiliates
or subsidiaries terminates for any reason (other than death or termination by
the Company without cause) within three (3) years of the Effective Date, for a
period of one (1) year beyond the "Termination Date" you shall not directly or
indirectly, for yourself or on behalf of or in conjunction with any other
person, company, partnership, business, group, venturer, or other entity (each,
a "Person"):
(i) be employed by or otherwise associated, as a technician,
officer, director, shareholder, owner, partner, joint venturer, or in a
managerial capacity, whether as an employee, independent contractor,
consultant, advisor, or sales representative of the CIENA Corporation
("CIENA");
(ii) employ or solicit any person who is, on the Termination
Date, or has been, within one year prior to the Termination Date, an
employee of the Company or any affiliate or subsidiary; or
(iii) call upon any person who or that is, on the Termination
Date, or has been, within one year prior to the Termination Date, a
customer of the Company or an affiliate or a subsidiary for the purpose of
(A) soliciting or selling services in competition with services that the
Company or an affiliate or a subsidiary offers or has under
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development on the Termination Date, or (B) causing any such customers to
refrain from doing business with or patronizing the Company or an affiliate
or a subsidiary.
(b) Permitted Investments. The foregoing covenants shall not be
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deemed to prohibit you from acquiring as an investment not more than one percent
of the capital stock of CIENA.
(c) Severability. The covenants in this Paragraph 6 are severable and
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separate, and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. If any provisions of this Paragraph 6
relating to the time period of the restrictive covenants shall be declared by a
court of competent jurisdiction to exceed the maximum time period that such
court deems reasonable and enforceable, said time period shall be deemed to be,
and thereafter shall become, the maximum time period that such court deems
reasonable and enforceable and this letter shall automatically be considered to
have been amended and revised to reflect such determination.
(d) Independence. The existence of any claim or cause of action
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against the Company, whether predicated on this letter or otherwise, shall not
constitute a defense to the enforcement by the Company of the covenants
contained in this Paragraph 6. It is specifically agreed that the periods of
time stated at the beginning of this Paragraph 6, during which the agreements
and covenants made by you in this Paragraph 6 shall be effective, shall be
computed by excluding from such computation any time during which you are in
violation of any provision of this Paragraph 6.
(e) Your Agreement. You have carefully read and considered the
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provisions of this Paragraph 6 and, having done so, agree that the restrictive
covenants in this Paragraph 6 impose a fair and reasonable restraint on you and
you are reasonably required to comply with such covenants to protect the
interests of the Company.
(f) Injunctive Relief. You acknowledge that any remedy at law for
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breach of the provisions of this letter may be inadequate, and that, in the
event of a breach of this Paragraph 6 by you, any remedy at law would be
inadequate in that any such breach would cause irreparable competitive harm to
the Company. Consequently, in addition to any other relief that may be
available, a court may order temporary and permanent injunctive relief,
including, without limitation, specific performance, and other equitable relief,
without the necessity of the enforcing party proving actual damages and without
regard to the adequacy of any remedy at law to prevent or redress the violation
of any of Employee's obligations under this Paragraph 6.
7. Miscellaneous.
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(a) Employee-at-Will Status. You expressly acknowledge that you are
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an employee-at-will of the Company, subject to the Company's obligation to pay
severance pursuant to Paragraph 4.
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(b) No Prior Agreements. You hereby represent and warrant to the
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Company that the execution of this letter by you, your employment by the
Company, and the performance of your duties hereunder will not violate or be a
breach of any agreement with a former employer, client, or any other Person.
Further, you agreed to indemnify and hold harmless the Company, its affiliates,
or subsidiaries and each of the officers and representatives of the Company,
each affiliate and each subsidiary for any claim, including, but not limited to,
reasonable attorneys' fees and expenses of investigation, of any such third
party that such third party may now have or may hereafter come to have against
the Company or its subsidiaries or affiliates, based upon or arising out of any
non-competition agreement, secrecy, or other agreement between you and such
third party.
(c) Assignment; Binding Effect. You understand that you have been
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selected for employment by the Company on the basis of your personal
qualifications, experience, and skills. You agree, therefore, that you cannot
assign or delegate all or any portion of your performance hereunder. This
letter may not be assigned or transferred by the Company without your prior
written consent. Subject to the preceding two sentences, this letter shall be
binding upon, inure to the benefit of, and be enforceable by the parties hereto
and their respective heirs, legal representatives, successors, and assigns.
Notwithstanding the foregoing, if you accept employment with a subsidiary or
affiliate of the Company, unless you and your new employer agree otherwise in
writing, this letter shall automatically be deemed to have been assigned to such
new employer (which shall thereafter be an additional beneficiary of the
covenants contained herein, as appropriate), such assignment shall be considered
a condition of employment by such new employer, and references to the "Company"
in this Agreement shall be deemed to refer to such new employer.
(d) Entire Agreement. This Agreement, the Proprietary Information and
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Inventions Agreement and the Stock Option Agreement between the Company and you
contain the entire understanding between the parties hereto. To the extent that
you had any prior oral or written employment agreement or understanding with the
Company, this letter shall automatically supersede such agreement or
understanding, and upon execution of this letter by you and the Company, such
prior agreement or understanding automatically shall be deemed to have been
terminated and shall be null and void.
(e) Waiver. Either you or the Company may by written notice to the
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other (i) extend the time for the performance of any of the obligations or other
actions of the other under this letter; (iii) waive compliance with any of the
conditions or covenants of the other contained in this letter; and (iii) waive
or modify performance of any of the obligations of the other under this letter.
Except as provided in the preceding sentence, no action taken pursuant to this
letter, including, without limitation, any investigation by or on behalf of any
party, shall be deemed to constitute a waiver by the party taking such action of
compliance with any representation, warranty, covenant, or agreement contained
herein. The waiver by any party hereto of a breach of any provision of this
letter shall not operate or be construed as a waiver of any preceding or
succeeding breach, and no failure by either party to exercise any right or
privilege hereunder shall be deemed a waiver of such party's rights or
privileges hereunder or shall be deemed a waiver of such party's rights to
exercise that right or privilege at any subsequent time or times hereunder.
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(f) Amendment. This letter may be terminated, amended, modified, or
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supplemented only by a written instrument executed by you and the Company.
(g) Governing Law. The provisions of this letter shall be governed by
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and construed in accordance with the law of the State of Maryland, regardless of
the law that might be applied under principles of conflict of laws.
(h) Consolidation, Merger, or Sale of Assets. Nothing in this letter
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shall preclude the Company from consolidating or merging into or with, or
transferring all or substantially all of its assets to, another corporation,
corporations, or partnership. Upon such a consolidation, merger, or transfer of
assets and the assumption by the acquirer of the Company's obligations under
this letter, the term "the Company," as used herein, shall mean such other
corporation or corporations, or partnership, and this letter shall continue in
full force and effect and such other corporation or corporations shall be liable
for all obligations of the Company under this letter.
(i) No Duty to Mitigate. Except as otherwise provided herein, you
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shall not be required to mitigate the amount of any payment provided for in this
letter by seeking other employment or otherwise, nor shall any amounts received
from other employment or otherwise by you offset in any manner the obligations
of the Company hereunder.
(j) No Attachment. Except as required by law, no right to receive
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payments under this letter shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
the execution, attachment, levy, or similar process or assignment by operation
of law, and any attempt, voluntary or involuntary, to effect any such action
shall be null, void and of no effect.
(k) General Creditor. All payments required hereunder shall be made
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from the Company's general assets and you shall have no rights greater than the
rights of a general creditor of the Company, except as required by law.
(l) Notices. All notices and other communications required or
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permitted to be given under this letter shall be in writing and shall be deemed
to have been duly given if delivered personally or sent by certified mail,
return receipt requested, first-class postage prepaid, or by overnight delivery
service, fee prepaid, to the parties to this letter at the following addresses:
if to the Company at:
CORVIS Corporation
0000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, President
and
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if to you, at your home address
or to such other address as either party to this letter shall have last
designated by notice to the other party. All such notices and communications
shall be deemed to have been received on the earlier of the date of receipt or
the third business day after the date of mailing thereof.
(m) Venue. You irrevocably consent to the jurisdiction of the courts
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located in the State of Maryland to resolve any claim or controversy relating to
this letter. Each proceeding shall be heard by federal or state courts located
in the State of Maryland.
(n) Paragraph and Other Headings. The paragraph and other headings
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contained in this letter are for reference purposes only and shall not affect
the meaning or interpretation of this letter.
(o) Withholding of Taxes. The Company may withhold from amounts
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required to be paid to you hereunder any applicable federal, state, local, and
other taxes with respect thereto; provided, however, that the Company shall
promptly pay over the amounts so withheld to the appropriate taxing bodies and
provide to you appropriate statements on forms prescribed for such purposes on
the amounts so withheld.
(p) Severability. If, for any reason, any provision of this letter is
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held invalid, such invalidity shall not affect any other provision of this
letter not held so invalid, and each such other provision shall, to the full
extent consistent with law, continue in full force and effect. If any provision
of this letter shall be held invalid in part, such invalidity shall in no way
affect the rest of such provision not held so invalid, and the rest of such
provision, together with all other provisions of this letter, shall to the full
extent consistent with law continue in full force and effect.
(q) Counterparts. This letter may be executed in any number of
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counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
Please acknowledge your understanding of, and agreement with, the foregoing
by signing your name in the space indicated below, whereupon this letter will
become a binding agreement upon the parties.
Very truly yours,
CORVIS CORPORATION
/s/ Xxxxx X. Xxxxx
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By: Xxxxx X. Xxxxx
Its: President
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Agreed to and acknowledged as of the date first written above:
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
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EXHIBIT A
FORM OF GENERAL RELEASE
The undersigned (hereinafter the "Terminated Employee") hereby releases,
discharges and acquits CORVIS Corporation (the "Company"), its subsidiaries and
affiliates, and the Company's and its subsidiaries' and affiliates' agents,
employees, stockholders, directors, officers, successors, attorneys and assigns
(collectively, "Releasees") from any and all claims, demands, liabilities or
causes or action, known or unknown, against Releasees or any of them, which the
Terminated Employee now owns or holds or will own or hold at any time in the
future, by reason of any action, matter, cause or thing whatsoever related to
the termination of the Terminated Employee's employment with the Company or in
any way related to the employment relationship between the Terminated Employee
and the Company and/or arising out of the termination of that employment or
relationship, including but not limited to any and all claims pursuant to the
Age Discrimination in Employment Act, Americans with Disabilities Act of 1992,
the Civil Rights Act of 1969, 29 U.S.C. Section 621 et seq. and any other
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applicable law, statute, code or ordinance. It is the intention of the
Terminated Employee in executing this General Release that the general release
provided for herein shall be effective as a bar to each and every claim, demand
and cause of action hereinabove specified, and shall extend to claims that the
Terminated Employee does not know or suspect to exist in his or her favor at the
time of executing this General Release, which if known by the Terminated
Employee might have materially affected his or her entering into this General
Release.
The Terminated Employee acknowledges that he or she is aware that he or she
may hereafter discover facts different from or in addition to those he or she
now knows or believes to be true with respect to the matters herein released and
the Terminated Employee agrees that this General Release shall be and remain in
effect in all respects as a complete general release notwithstanding any such
different or additional facts.
The Terminated Employee acknowledges that he or she has been advised to
consult with an attorney prior to signing this General Release and that he or
she has in fact consulted with an attorney, that the Terminated Employee
understands that he or she is not waiving any claims that may arise after the
date of this General Release, that the Terminated Employee has been given a
period of at least 21 days in which to consider whether to enter into this
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General Release, and that the Terminated Employee is entering into this General
Release of his or her own free will.
The Terminated Employee further acknowledges and understands that he or she
may revoke this General Release within 7 days from the date it is executed by
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him or her and that this General Release shall not become effective or
enforceable until that 7-day period has expired. Such a revocation will
immediately void all of the promises and obligations set forth in this General
Release and Sections of that certain letter agreement dated as of July 22, 1999
between the Company and the Terminated Employee, including but not limited to
any of the Company's obligations to remit the sums set forth therein.
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Xxxxx Xxxxxx
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