EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 1st day of July, 1998, by and
among FiveCom, Inc., a Massachusetts corporation with its principal place of
business in Waltham, Massachusetts (hereinafter referred to as the "Company"),
and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ of Norfolk, Massachusetts (hereinafter referred to as the
"Employee").
WHEREAS, the Company desires to employ the Employee; and
WHEREAS, the Employee desires to serve in the employ of the Company on
a full-time basis for the period provided in this Employment Agreement
(hereinafter referred to as the "Agreement") on the terms and conditions
hereinafter set forth; and
WHEREAS, the Company and the Employee wish to set forth the terms and
conditions under which such employment will occur.
NOW, THEREFORE, in consideration of the offer of employment by the
Company and the acceptance of employment by the Employee, and the mutual
promises and covenants contained herein, the Company and the Employee hereby
agree as follows:
1. Term of Agreement.
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(a) Term. The term of this Agreement shall begin on the date
hereof (hereinafter referred to as the "Effective Date") and shall expire on the
later of the third anniversary of the Effective Date or the third anniversary of
the initial public offering of the Company's Common Stock (or the initial public
offering of the Common Stock of the Company's successor, as the case may be).
(b) Expiration. Notwithstanding anything to the contrary in
this Section 1, except as to vested benefits, this Agreement and all obligations
hereunder shall terminate on the earliest to occur of (i) the date of the
Employee's death, (ii) 30 days after the Company gives notice to the Employee
that the Company is terminating the Employee's employment for reason of Total
Disability or Cause (as defined below); or (iii) the applicable term of the
Agreement as specified in Section 1(a) above.
2. Definitions. The following terms shall have the meanings set forth
below:
"Affiliate" means a person that directly or indirectly through one or
more intermediaries controls, is controlled by, or is under common control with,
the Company.
"Board" means the Board of Directors of the Company.
"Cause" means any of the following events or occurrences:
(i) Any act of material dishonesty taken by, or committed
at the direction of, the Employee.
(ii) Any illegal or unethical conduct which would impair
the business reputation of the Company.
(iii) Conviction of a felony.
(iv) The continued failure of the Employee to perform his
responsibilities and duties under this Agreement in a
satisfactory manner, 30 days after demand for
performance has been
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delivered in writing to the Employee specifying the
manner in which the Company believes that the
Employee is not performing.
"Constructive Discharge" means:
(i) any reduction in the Employee's annual base salary in
effect as of the Effective Date of this Agreement, or
as the same may be increased from time to time;
(ii) a substantial reduction in the nature or scope of the
Employee's responsibilities, duties or authority from
those described in Section 3(c) of this Agreement;
(iii) a material adverse change in the Employee's title or
position; or (iv) relocation of the Employee's place
of employment from the Company's principal Employee
offices to a place more than 50 miles from Waltham,
Massachusetts without the Employee's consent.
"Severance Benefits" means the benefits set forth in Section 5 of this
Agreement.
"Total Disability" means the complete and permanent inability of the
Employee to perform all of his duties under this Agreement on a full-time basis
for a period of at least six consecutive months, as determined upon the basis of
reasonable evidence, which may include independent medical reports and data.
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3. Employment.
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(a) Position. The Company hereby agrees to employ the Employee
in the capacity of Chief Financial Officer, and in such other capacities as the
Board of Directors or an executive designated by the Board of Directors may,
from time to time, assign to him, and the Employee hereby agrees to be so
employed by the Company for the period beginning on the Effective Date and
ending on the date on which the Employee's employment is terminated in
accordance with this Agreement (the "Employment Period"). This Agreement shall
not restrict in any way the right of the Company to terminate the Employee's
employment at whatever time and for whatever reason it deems appropriate
(subject to the Company's obligations under Section 5 of this Agreement), nor
shall it limit the right of the Employee to terminate employment at any time for
whatever reason he deems appropriate.
(b) Performance. The Employee agrees that during the
Employment Period he shall devote substantially all his business attention and
time to the business and affairs of the Company, and use his best efforts to
perform faithfully and efficiently the duties and responsibilities of the
Employee under this Agreement. It is expressly understood that (i) the Employee
may devote a reasonable amount of time to such industry associations and
charitable and civic endeavors as shall not interfere with the services that the
Employee is required to render under this Agreement, and (ii) the Employee may
serve as a member of one or more boards of directors of companies that are not
affiliated with the Company and do not compete with the
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Company or any of its Affiliates so long as such membership does not materially
interfere with the Employee's duties hereunder.
(c) Job Duties. The following listing of job duties shall
represent the Employee's primary responsibilities. Such responsibilities may be
expanded or decreased as the business needs of the Company require. The
Employee's primary job responsibilities shall include but not be limited to,
management and development of all financial aspects of the Company's business.
4. Compensation and Benefits.
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(a) During the Employment Period, the Employee shall be
compensated as follows:
(i) Salary. The Employee shall receive an annual
base salary, the amount of which shall be
reviewed regularly and determined from time
to time, but which shall not be less than
$125,000. His salary shall be payable in
accordance with the Company's usual payroll
practices.
(ii) Bonus. The Employee shall be eligible to
participate in an executive incentive plan
adopted by the Company, which among other
things, will provide an opportunity for the
Employee to earn an annual target incentive
of 25% of his base salary, as determined by
the Board of Directors in its sole
discretion.
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(iii) Participation in Salaried Employee Plans.
The Employee shall be entitled to
participate in any and all plans and
programs maintained by the Company from time
to time to provide benefits for its salaried
employees generally, including without
limitation any savings and investment,
stock option and stock purchase or group
medical, dental, life, accident or
disability insurance plan or program,
subject to all eligibility requirements of
general applicability, to the extent that
Employees are not excluded from
participation therein under the terms
thereof or under the terms of any Employee
plan or program or any approval or adoption
thereof.
(iv) Other Fringe Benefits. The Employee shall
be entitled to all fringe benefits generally
provided by the Company at any time to its
full-time salaries employees, including
without limitation three weeks annual paid
vacation, holidays and sick leave but
excluding severance pay, in accordance with
generally applicable Company policies
with respect to such benefits. In addition,
the Company shall provide the Employee with
the use of a vehicle, at the Company's
expense, of like quality with the vehicles
provided to other senior executives of the
Company.
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(v) The Company shall grant options to the
Employee to purchase shares of the Common
Stock of the Company substantially on the
terms set forth on Exhibit A to this
Agreement.
(b) Withholding. All compensation payable under this Section 4
shall be subject to normal payroll deductions for withholding income taxes,
social security taxes and the like.
5. Severance Benefits. If the Employee's employment with the Company is
terminated during the Employment Period either (i) by the Company for any reason
other than death, Total Disability or Cause, or (ii) by the Employee within six
calendar months of a Constructive Discharge, the Company shall pay the Employee,
in one lump sum payment within 60 days following the date of termination of
employment as defined in Section 6 below, an amount equal to one times the
Employee's annual base salary in effect on the date immediately preceding the
date of termination, or preceding the date of a Constructive Discharge
attributable to a base salary reduction if applicable.
6. Date of Termination. For purposes of this Agreement, the date of
termination of the Employee's employment shall be the date notice is given to
the Employee by the Company and/or any successor or, in the case of a
Constructive Discharge, the date set forth in a written notice given to the
Company or any successor by the Employee, provided that the Employee gives such
notice within six
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calendar months of the Constructive Discharge, and specifies therein the event
constituting the Constructive Discharge.
7. Taxes. All amounts payable to the Employee under this Agreement
shall be subject to applicable withholding of income, wage and other taxes.
8. Non-Competition, Confidentiality and Cooperation.
(a) The Employee agrees that:
(i) During the Employment Period and for one
year after the termination of the Employee's
employment with the Company for Cause or by
the Employee, the Employee shall not serve
as a director, officer, employee, partner or
consultant or in any other capacity in any
business that is a competitor of the
Company, or solicit Company employees for
employment or other participation in any
such business, or take any other action
intended to advance the interests of such
business.
(ii) During, and for five years after the
termination of the Employee's employment
with the Company for any reason, he shall
not divulge or appropriate to his own use or
the use of others any secret, proprietary or
confidential information or knowledge
pertaining to the business of the Company,
or any of its Affiliates, obtained during
his employment with the Company.
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(iii) During the Employment Period, he shall
support the Company's interests and efforts
in all regulatory, administrative, judicial
or other proceedings affecting the
Company and, after the termination of his
employment with the Company, he shall use
best efforts to comply with all reasonable
requests of the Company that he cooperate
with the Company, whether by giving
testimony or otherwise, in regulatory,
administrative, judicial or other
proceedings affecting the Company except any
proceeding in which he may be in a position
adverse to that of the Company. After the
termination of employment, the Company shall
reimburse the Employee for his reasonable
expenses and his time, at a reasonable rate
to be determined, for the Employee's
cooperation with the Company in any such
proceeding.
(iv) The term "Company" as used in this Section 8
shall include the Company, any Affiliate of
the Company (determined as of the date of
termination), any successor to the business
or operations of the Company, and any
business entity spun- off, divested, or
distributed to shareholders which shall
continue the operations of the Company. The
provisions of this Section 8 shall survive
the expiration or termination
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of this Agreement. The Employee agrees that
the Company shall be entitled to injunctive
relief to prevent any breach or threatened
breach of these provisions. In the event of
a failure to comply with part (i), (ii) or
(iii) of this Section 8, the Employee agrees
that the Company shall have no further
obligations to pay the Employee any
Severance Benefits under Section 5 of this
Agreement.
9. No Mitigation. The Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment.
10. Assignment. This Agreement and the rights and obligations of the
Company hereunder shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company, including without limitation any
corporation or other entity acquiring all or substantially all of the business
or assets of the Company whether by operation of law or otherwise. This
Agreement and the rights of the Employee hereunder shall not be assignable by
the Employee, and any assignment by the Employee shall be null and void.
11. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Boston, Massachusetts, in accordance with the rules of the American Arbitration
Association then in effect. The pendency of any such dispute or controversy
shall not affect any
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rights or obligations under this Agreement. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
12. Waiver; Amendment. The failure of either party to enforce, or any
delay in enforcing, any rights under this Agreement shall not be deemed to be a
waiver of such rights, unless such waiver is an express written waiver which has
been signed by the waiving party. Waiver of any one breach shall not be deemed
to be a waiver of any other breach of the same or any other provision hereof.
This Agreement can be amended only by written instrument signed by each party
hereto and no course of dealing or practice or failure to enforce or delay in
enforcing any rights hereunder may be claimed to have effected an amendment of
this Agreement.
13. Singular Contract. This Agreement is a singular agreement between
the Employee and the Company, and is not part of a general "plan" or "program"
for employees as a group. This Agreement shall, under no circumstances, be
deemed to be an "employee welfare benefit plan" or an "employee pension benefit
plan" as defined in the Employment Retirement Income Security Act of 1974
(hereinafter referred to as "ERISA"). Notwithstanding, the Company may submit a
letter to the Department of Labor indicating the possible establishment of a
so-called unfunded "top hat" plan for the benefit of a select group of
management and highly compensated employees to avoid the costs and uncertainties
which may occur in the event of a Department of Labor audit and challenge
relative to compliance with any allegedly applicable provisions of ERISA. The
Employee specifically acknowledges and agrees that the filing of the so-called
"top hat" letter notice by the Company shall
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not be construed or interpreted as an admission on the part of the Company that
this Agreement constitutes an ERISA plan, and the Company hereby categorically
states, and the Employee hereby agrees, that this Agreement is an ad hoc
individual contract with the Employee.
14. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and sent by first-class, registered
or certified mail or hand-delivered to the Employee at the last residence
address he has provided to the Company or, in the case of the Company, at its
principal Employee offices to the attention of the Corporation Secretary.
15. Titles and Captions. The section and paragraph titles and captions
contained herein are for convenience only and shall not be held to explain,
modify, amplify, or aid in the interpretation, construction or meaning of the
provisions of this Agreement.
16. Miscellaneous. This Agreement shall be construed and enforced in
accordance with the laws of the Commonwealth of Massachusetts. In the event that
any provisions of this Agreement shall be held to be invalid, the other
provisions hereof shall remain in full force and effect.
17. Entire Agreement. The terms of this Agreement are intended by the
parties to be the final expression of their agreement with respect to the
employment of the Employee by the Company and may not be contradicted by
evidence of any prior or contemporaneous oral or written agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the Effective Date written above.
THE COMPANY:
WITNESS: FIVECOM, INC.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
President
THE EMPLOYEE:
WITNESS:
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------- ---------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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EXHIBIT A
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STOCK OPTION TERMS
The Company shall grant to the Employee an option under the Company's
1998 Stock Incentive Plan to purchase up to a number of shares of the Company's
Common Stock which is equivalent to 1% of the issued and outstanding Common
Stock of the Company on a fully-diluted basis as of, and after giving effect to,
the closing of the initial public offering of the Company's Common Stock (the
"IPO") (but not including the exercise, if any, of the over-allotment option
granted to the underwriters in connection with the IPO), which option shall be
conditioned upon the closing of the IPO and shall become exercisable (i) as to
25% of the number of shares subject to such option on the closing of the IPO,
(ii) as to an additional 25% of the number of shares subject to such option as
of the first anniversary of the Effective Date, (iii) an additional 25% of the
number of shares subject to such option on the second anniversary of the
Effective Date, and (iv) an additional 25% of the number of shares subject to
such option on the third anniversary of the Effective Date. This option shall be
evidenced by an Option Agreement on customary terms and conditions (including
the condition that vesting occur only for so long as the Employee is employed by
the Company) and shall be granted under and subject to the terms and conditions
of the Company's 1998 Stock Incentive Plan. This option shall have an exercise
price equal to the price at which the Company's Common Stock is offered to the
public in the IPO. For purposes of this Exhibit A, the "Company" shall mean
FiveCom, Inc. or the successor corporation resulting from the reorganization of
FiveCom, Inc. and its subsidiaries and the reincorporation of FiveCom, Inc. in
Delaware.
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