EXHIBIT 10.12
EMPLOYMENT AGREEMENT
This Agreement ("Agreement") is made and entered into this 12th day of
May, 1999, by and between Elastic Networks Inc., a Delaware corporation
("Elastic"), with its principal place of business at 0000 Xxxxxxxx Xxxxxxx,
Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000 and Xxx X. Xxxx, an individual residing
at 0000 Xxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000 ("Executive").
WITNESSETH:
WHEREAS, Elastic shall employ employees to conduct its business on the
Commencement Date;
WHEREAS, conditioned upon the closing of the Private Placement, Elastic
desires to employ the Executive during the Term under the terms and
conditions set forth in this Agreement;
WHEREAS, the Executive desires to accept employment with Elastic during
the Term on the terms and conditions set forth in this Agreement;
WHEREAS, it is a condition precedent to the closing of the agreements
related to the Private Placement that Elastic and the Executive enter into
this Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties
hereto, the Executive and Elastic agree as follows:
1. Definitions.
For purposes of this Agreement, the following terms shall have the
meanings set forth below:
(a) "Acquisition Event" shall mean: (i) any merger or consolidation which
results in the voting securities of Elastic outstanding immediately
prior thereto representing immediately thereafter (either by remaining
outstanding or by being converted into voting securities of the
surviving or acquiring entity) less than 50% of the combined voting
power of the voting securities of Elastic or such surviving or
acquiring entity outstanding immediately after such merger or
consolidation; (ii) any sale of all or substantially all of the assets
of Elastic; or (iii) the complete liquidation of Elastic.
Notwithstanding the foregoing, the election of any Purchaser (as
defined in the Right of First Offer Agreement) to sell its Shares (as
defined in the Right of First Offer Agreement) to Nortel Networks Inc.
pursuant to Section 6 of the Right of First Offer Agreement, and the
purchase of any such Shares by Nortel Networks Inc., shall not be
deemed to be an Acquisition Event.
(b) "Agreement" shall have the meaning set forth in the preamble hereto.
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(a) "Award" shall mean Options, restricted stock, or other stock based awards
under the Plan.
(d) "Board" shall mean the Board of Directors of Elastic.
(e) "Cause" shall mean (i) the Executive's material breach of this Agreement,
which includes, but is not limited to, a breach of Sections 9 or 10 of this
Agreement or any sub-section thereof, (ii) a good faith finding by the
Board of the Executive's dishonesty, fraud, malfeasance, gross negligence
or willful misconduct with respect to Elastic or any Co-Employer, (iii) the
Executive's continued failure to satisfactorily perform his duties with the
Company, to follow the lawful direction (consistent with the Executive's
duties) of the Board or to follow the established and lawful policies,
procedures and rules of Elastic or any Co-Employer (other than any such
failure resulting from incapacity due to mental or physical illness or
injury that is certified by a physician satisfactory to Elastic); or (iv)
Executive's indictment for (or similar finding of probable cause with
respect to the Executive's commission of) or conviction of, or the
Executive's entry of a pleading of guilty or nolo contendere to, a crime
involving moral turpitude or a felony (other than an offense based solely
on a traffic violation). With respect to clauses (ii) and (iii) above,
prior to terminating the Executive for Cause as provided in Section 8(a)(1)
hereof, the Board shall deliver a written notice to the Executive stating
in reasonable detail the facts and circumstances regarding the Executive's
offense or failure and provide the Executive with sixty calendar (60) days
to correct such offense or failure; PROVIDED, HOWEVER, that no such notice
shall be required, and the Board may immediately terminate the Executive
for Cause, if the Board in good faith determines that the Executive's
offense or failure is or is likely to be immediately or materially
injurious to Elastic or the Co-Employer or Executive has previously
received a written notice of an offense or failure under clause (ii) or
(iii) above in the twelve (12) month period immediately preceding the
occurrence of the offense or failure at issue. The Executive shall not
participate in the Board's determinations regarding Cause with respect to
the Executive even if the Executive is a member of the Board.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended and any
regulations promulgated thereunder.
(g) "Co-Employer" shall mean that third party, if any, which pursuant to an
agreement with Elastic, provides certain human resources and payroll
services with respect to Elastic employees and, with regard to such
services, is viewed as the employer of Elastic employees.
(h) "Commencement Date" shall mean the day immediately following closing of
Private Placement.
(i) "Developments" shasll have the meaning set forth in Section 10(b)(l) of
this Agreement.
(j) "Disability" shall mean the inability of the Executive to perform the
duties set forth in Section 3 of this Agreement because of an illness or
accidental injury for a period of one hundred eighty (180) calendar days,
whether or not consecutive, during any three hundred sixty (360) calendar
day period, as certified by a physician satisfactory to Elastic and the
Executive. If Elastic and the Executive do not agree on a physician, the
Executive and Elastic shall each
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select a physician and those two (2) physicians shall together select
a third physician, whose determination as to disability shall be
binding on all parties.
(k) "Elastic" shall have the meaning set forth in the preamble to this
Agreement.
(l) "Elastic's Affiliates" shall mean any individual or entity that
directly or indirectly, through one or more intermediaries,
controls, is controlled by or is under common control with Elastic.
For purposes of this definition, "control" means the power to
direct the management and policies of another, whether through the
ownership of voting securities, by contract or otherwise.
(m) "Employment Period" shall mean the Term and any period immediately
following the Term during which Elastic and the Executive have
mutually agreed to continue the Executive's employment.
(n) "Entity" shall mean a corporation, partnership, limited liability
company, trust, joint venture, association, organization, sole
proprietorship or entity in any other form.
(o) "Executive" shall have the meaning set forth in the preamble to this
Agreement.
(p) "Good Reason" shall mean (i) the assignment of the Executive, without
the Executive's consent, to a principal place of work which
increases the Executive's commuting distance from his residence to
his principal place of work by fifty (50) miles or more; (ii) the
assignment to the Executive of job duties that are inconsistent
with the Executive's position as set forth on Schedule A or a
substantial adverse alteration of the Executive's position,
reporting relationship or duties as set forth on Schedule A without
the Executive's consent; or (iii) a reduction of the Executive's
annual base salary then in effect without the Executive's consent;
PROVIDED, however, that "Good Reason" shall not include any event
or circumstance that occurs more than one hundred twenty (120)
calendar days prior to Elastic's receipt of the Executive's written
notice of his intention to terminate for Good Reason as established
in Section 8, below, a reduction in the Executive's base salary
that is applied to all or substantially all Elastic employees or a
reduction or suspension in base salary that occurs as a result of
the Executive's receipt of disability payments under a fringe
benefit plan in which he participates as an Elastic employee.
Notwithstanding the occurrence of any event or circumstance set
forth in clauses (i) through (iii), above, such occurrence shall
not be deemed to constitute Good Reason if, while the Executive is
employed during the Notice Period, such event or circumstance has
been fully corrected and the Executive has been reasonably
compensated or any losses or damages resulting therefrom (provided
that such right of correction by Elastic shall only apply to the
first notice of termination for Good Reason given by the Executive).
(q) "Notice Period" shall mean the ninety (90) calendar day period
immediately following the date on which Elastic receives the
Executive's written notice of his intent to terminate employment
under Section 8(b) of this Agreement.
(r) "Options" shall mean those options granted by the Board under the
Plan for the purchase of shares of Elastic common stock.
(s) "Plan" shall mean the Elastic Networks Inc. 1999 Stock Incentive
Plan.
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(t) "Private Placement" shall mean the first sale of Elastic securities to
any person or entity other than the Nortel Networks Inc.,
specifically excluding any issuance of Elastic securities or any right
to acquire Elastic securities granted to employees, vendors or
consultants.
(u) "Proprietary Information" shall have the meaning set forth in Section
10(a)(l).
(v) "Right of First Offer Agreement" shall mean the Right of First Offer
and Co-Sale Agreement, dated as of May 1999, and as amended from time
to time by and among Elastic, Nortel Networks Inc. and the persons and
entities listed on Exhibit A thereto.
(w) "Severance Period" shall mean the shorter of the following periods:
(i) the eighteen (18) month period immediately following the
Executive's termination of employment and (ii) the period immediately
following the Executive's termination through the fourth anniversary
of the Commencement Date, PROVIDED, however, that such Severance
Period shall in no event be less than the twelve (12) month period
immediately following the Executive's termination of employment.
2. Term.
Conditioned upon (i) the closing of the Private Placement, (ii) the
Executive's status as an active employee of Nortel Networks Inc. as of the
closing of the Private Placement, (iii) the Executive providing
documentation required by the Immigration Reform and Control Act of 1986
and (iv) the Executive's completion of employment forms required by any
Co-Employer, Elastic hereby agrees, as the sole employer or jointly with a
Co-Employer, to employ the Executive, and the Executive hereby accepts
employment with Elastic, upon the terms and conditions set forth in this
Agreement, for the Term. If the Executive and Elastic desire to continue
the Executive's employment after the Term, such employment shall be upon
terms and conditions mutually agreed upon by Elastic and the Executive.
3. Duties.
The Executive shall have the job, duties and reporting relationship set
forth in Schedule A. Except as otherwise provided in this Section 3, the
Executive shall devote his full working time, attention, skill, knowledge,
experience and energies to the performance of his duties set forth on
Schedule A. Notwithstanding the preceding sentence, the Executive shall not
be prohibited from engaging in activities from time to time on his behalf
or on the behalf of non-profit organizations or industry associations,
provided that such activities do not interfere with the performance of his
duties or obligations under this Agreement. With the consent of the Board,
the Executive may serve on the boards of directors or trustees of other
companies or organizations and devote a reasonable amount of working time
to such approved activities. The Executive shall abide by, and comply with,
all rules, policies and procedures of Elastic and any Co-Employer and all
applicable laws and regulations including, but not limited to, those
relating to antitrust. The Executive's principal place of work shall be
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx
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30005, until such time as the Board (or any other individual or entity to
whom the Executive reports), in its or his discretion, designates another
location as the Executive's principal place of work.
4. Compensation.
(a) BASE SALARY. The Executive shall receive the annual base salary set
forth in Schedule B, which shall be payable in installments in
accordance with such payroll schedule as is then in effect with
respect to all Elastic executive employees.
(b) DEDUCTIONS. Elastic or the Co-Employer, as applicable, is authorized
to deduct from the Executive's compensation such sums as may be
required to be deducted or withheld under the provisions of any
applicable law now in effect or hereafter put into effect,
including, but not limited to, social security, unemployment and
income tax withholding, and such other deductions permitted by
Elastic or the Co-Employer which the Executive may authorize from
time to time.
5. Plan Incentives.
(a) INITIAL AWARD. Subject to the Board's adoption of the Plan, which
shall be substantially similar to Draft Stock Incentive Plan that
is attached hereto as Schedule C, the Executive shall be eligible
to participate in the Plan. Conditioned upon the Board's approval
and in accordance with the terms and conditions of the Plan,
effective on the Commencement Date the Executive shall be granted
an Option(s) to purchase a number of shares of Elastic common stock
that is equal to Five Percent (5%) of the sum of the number of
shares of Elastic common and preferred stock issued and outstanding
on the grant date plus the number of shares of Elastic common stock
authorized for grant under the Plan, with an exercise price to be
determined by the Board. The vesting, rights and obligations with
respect to such Option(s) shall be determined by the Board in
accordance with the Plan and shall be set forth in appropriate
option agreements which shall be substantially similar to the Draft
Incentive Stock Option Agreement and Draft NonStatutory Stock
Option Agreement attached hereto as Schedules D and E,
respectively. Notwithstanding anything in the preceding sentence to
the contrary, the outstanding Option(s) granted to the Executive
pursuant to this Section 5(a) shall (i) upon the occurrence of an
Acquisition Event, be assumed or an equivalent option or award
substituted by the successor corporation or a parent or subsidiary
of the successor corporation, provided that any such Options
substituted for Incentive Stock Options shall satisfy, in the
determination of the Board, the requirements of Section 424(a) of
the Code, unless the successor corporation refuses to assume or
substitute for the Option(s), in which case the Executive shall
have the right to exercise the Option(s) in full, including with
respect to shares of Common Stock as to which it would not
otherwise be exercisable, and such Option(s) shall be exercisable
for a period of not less than forty-five (45) days from the date on
which the Board gives the Executive written notice that such
Option(s) are fully exercisable and shall terminate upon the
expiration of such period; and (ii) upon Elastic's termination of
the Executive's employment without Cause, as provided in Section
8(a)(2) hereof, or the Executive's termination of his employment
for Good Reason, as provided in Section 8(b)(2) hereof, be
immediately exercisable in full.
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(b) PERFORMANCE BASED AWARDS. The Executive shall be eligible to receive
additional Awards under the Plan at the sole discretion of the Board.
The Executive shall not participate in decisions to grant Awards to
the Executive under the Stock Plan even if the Executive is a member
of the Board.
(c) AMENDMENT OF THE PLAN. Notwithstanding anything to the contrary in
this Agreement, the Board may amend, suspend or terminate the Plan or
any portion thereof at any time except as otherwise provided by
applicable law.
6. Fringe Benefits.
(a) FRINGE BENEFITS OTHER THAN VACATION. The Executive shall be
eligible to participate in the fringe benefit plans and programs
generally made available by Elastic or, if applicable, the
Co-Employer, to Elastic executive employees in accordance with the
terms of those plans and programs. Elastic shall make contributions
for the Executive's participation in such fringe benefit plans and
programs as it generally makes for its other executive employees.
Except as otherwise provided by law, Elastic or the Co-Employer, as
applicable, has the right to modify, add to or eliminate any or all
of its fringe benefit plans or programs at any time and for any
reason.
(b) VACATION. The Executive shall be entitled to five (5) weeks
(twenty-five (25) business days) of paid vacation for each year of
the Term, to be taken at such time as may be approved by the Board
or its designee. The Executive shall accrue such annual vacation on
a prorata basis each month starting with the Commencement Date.
Accrual of paid vacation shall cease once the Executive has accrued
five (5) weeks of paid vacation and shall not resume until the
accrued vacation is reduced by reason of vacation taken by the
Executive.
(c) COUNTRY CLUB MEMBERSHIP. During the Term the Executive shall retain
the membership in Country Club of the South that he held as an
employee of Nortel Networks Inc., and Elastic shall reimburse the
Executive for the annual dues and assessments of such membership. Upon
the expiration of the Term, the Executive shall assign or return such
membership to Elastic, as determined by Elastic.
7. Reimbursement of Expenses.
(a) BUSINESS EXPENSES. Elastic shall reimburse the Executive for expenses
incurred by the Executive in carrying out those duties set forth in
Section 3 of this Agreement in accordance with Elastic's policies and
procedures relating to expense reimbursement of executive employees.
(b) FINANCIAL AND ESTATE PLANNING, TAX ASSISTANCE AND AUTOMOBILE EXPENSE.
Elastic shall reimburse the Executive for expenses incurred by the
Executive for personal financial and estate planning and tax
assistance services and automobile operating expenses, including
automobile insurance, property taxes, fuel and maintenance expenses,
up to a total of Ten Thousand Dollars ($10,000) for each year of the
Term; PROVIDED, HOWEVER, that reimbursement for such automobile
operating expenses shall not exceed Two Thousand Four Hundred Dollars
($2,400) for each year of the Term and reimbursement for personal
financial and estate planning and tax assistance services shall be
conditioned upon Executive's submission of appropriate receipts
documenting the Executive's payment for such services.
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(c) ATTORNEY'S FEES WITH RESPECT TO THIS AGREEMENT. Elastic shall
reimburse the Executive for one hundred percent (100%) of the
reasonable expenses incurred by the Executive for the services of an
attorney with respect to the review of this Agreement upon the
Executive's submission of appropriate receipts documenting the
Executive's payment for such services.
8. Employment Termination.
(a) BY ELASTIC. Elastic shall have the right to terminate the employment
of the Executive at any time during the Term, including, without
limitation, for Cause or without Cause.
(1) If Elastic terminates the employment of the Executive upon the
occurrence of the expiration of the Term on the fourth
anniversary of the Commencement Date, the death or Disability
of the Executive or with Cause, Elastic shall pay to the
Executive, or, in the event of the Executive's death, the
estate of the Executive, the compensation and benefits
ordinarily payable to him under this Agreement through and
until the last day of his actual employment by Elastic.
(2) If Elastic terminates the employment of the Executive without
Cause, subject to the conditions set forth below, Elastic shall
pay the Executive a lump sum amount which is equal to the sum of
(i) the Executive's base salary, in effect on his termination
date (or, if higher, the highest base salary in effect at any
time during the six (6) months prior to his termination date)
calculated for the Severance Period, (ii) the expense the
Executive incurs during the Severance Period to continue those
health and life insurance benefits offered under the Consolidated
Omnibus Budget Reconciliation Act of 1985 and benefit conversion
options, respectively, less contributions the Executive would
have made for such coverage as an Elastic employee and (iii) a
bonus payment in an amount equal to the target bonus for the
Executive at one hundred percent (100%) performance on all
factors under the bonus plan in which the Executive is
participating, if any, as of his employment termination date,
multiplied by a fraction, the numerator of which is the
Executive's calendar months of participation as an active
employee under such plan and the denominator of which is the term
of such plan in calendar months. The foregoing payment shall be
conditioned upon the Executives execution of a Settlement
Agreement with Elastic, the form of which shall be determined by
the Board and shall contain, at a minimum, the Executive's (x)
release of all claims against Elastic and Elastic's Affiliates,
(y) obligation to notify Elastic of his employment by any person
or Entity during the Severance Period and (z) agreement to repay
that portion of the foregoing lump sum amount relating to any
part of the Severance Period during which the Executive is
employed by Elastic or any of Elastic's Affiliates or is in
breach of any provisions of this Agreement that survive the
termination of this Agreement or relating to the continuation
of the Executive's health or life insurance benefits on or after
the Executive terminates such benefits or the Executive's
employment by an Entity or person offering Executive comparable
benefits or benefits that would result in the termination of the
Executive's opportunity to continue Elastic health benefits under
the Consolidated Omnibus Budget Reconciliation Act of 1985.
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(b) BY EXECUTIVE. The Executive shall have the right to terminate his
employment with Elastic during the Term for any reason, including,
without limitation for Good Reason or for other than Good Reason:
PROVIDED, however, that the Executive shall give Elastic ninety
(90) calendar days prior written notice of his intention to
terminate his employment and shall continue his employment during
all or such part of the Notice Period as determined by the Board.
In order to terminate for Good Reason, the Executive must also
state in such written notice the facts and circumstances giving
rise to Good Reason in reasonable detail.
(1) If the Executive terminates his employment with Elastic for
other than Good Reason and satisfies the conditions set forth
in Section 8(b), above, Elastic shall pay the Executive the
compensation and benefits ordinarily payable to him under this
Agreement through and until the last day of his actual
employment by Elastic and his base salary only with respect to
any portion of the Notice Period remaining following the last
day of his actual employment.
(2) If the Executive terminates his employment with Elastic for
Good Reason and satisfies the conditions set forth in Section
8(b), above, Elastic shall pay the Executive the compensation
and benefits ordinarily payable to him under this Agreement
through and until the last day of his actual employment by
Elastic. Additionally, Elastic shall pay the Executive the
lump sum amount that would be payable to the Executive under
Section 8(a)(2) above as if Elastic terminated the Executive's
employment without Cause, conditioned upon the Executive's
execution of a Settlement Agreement as described in Section
8(a)(2) above.
9. Restrictive Covenants.
(a) During the Employment Period and for a period of one (1) year after
the termination or expiration thereof, the Executive shall not
directly or indirectly:
(1) as an owner, partner, officer, director, employee, consultant,
contractor, joint venturer, investor, lender or shareholder
(other than as the holder of not more than one percent (1%) of
the total outstanding stock of a publicly held company),
participate or obtain interest in the ownership, management,
operation or control of any Entity or person competitive with
the business of Elastic or those Elastic Affiliates that
Elastic controls in the United States without the written
permission of Elastic; or
(2) recruit, solicit or induce, or attempt to induce, any employee,
consultant or contractor of Elastic or Elastic's Affiliates to
terminate their employment with, or otherwise cease their
relationship with, Elastic or Elastic's Affiliates; or
(3) solicit, divert or take away, or attempt to divert or to take
away, the business or patronage of any of the clients,
customers or accounts, or prospective clients, customers or
accounts, of Elastic or Elastic's Affiliates which were
contacted, solicited or served by the Executive during the
Employment Period.
(b) If any restriction set forth in this Section 9 is found by any
court of competent jurisdiction to be unenforceable because it
extends for too long a period of time,
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in too broad a geographic area or over too great a range of
activities, it shall be interpreted to extend only over the maximum
period of time, geographic area or range of activities as to which
it may be enforceable.
(c) The Executive recognizes, understands and agrees that this
Agreement is entered into in connection with the spin-off of
Elastic and is a condition to the provision of financing of certain
investors. The Executive further recognizes, understands and agrees
that the geographic area specified in Section 9(a)(1) is reasonable
in light of the national and international scope of Elastic's
business, the expected expansion of Elastic's business during the
Employment Period and the Executive's expected ownership, as result
of Options(s) issued pursuant to Section 5(a) of this Agreement, of
a number of shares of Elastic common stock equal to Five Percent
(5%) of the sum of the number of shares of Elastic common and
preferred stock issued and outstanding on the grant date plus the
number of shares of Elastic common stock authorized for grant under
the Plan. The Executive further recognizes, understands and agrees
that the foregoing limitations are properly required for the
adequate protection of Elastic's legitimate business interests and
do not preclude the Executive from pursuing his livelihood. The
Executive further recognizes, understands and agrees that the
consideration provided in this Agreement, including, but not
limited to, any payment provided pursuant to Section 8 of this
Agreement, is sufficient consideration for the foregoing
limitations.
10. Proprietary Information and Developments.
(a) PROPRIETARY INFORMATION.
(1) The Executive agrees that all information and know-how,
whether or not in writing, of a private, secret or
confidential nature concerning the business or financial
affairs of Elastic, any of Elastic's Affiliates, Nortel
Networks Inc. or Nortel Networks Corporation is and shall be
the exclusive property of Elastic, Elastic's Affiliates, Nortel
Networks Inc. or Nortel Networks Corporation, as applicable,
such information and know-how, including, but not limited to,
inventions, products, processes, methods, techniques,
formulas, compositions, compounds, projects, developments,
plans, research data, clinical data, financial data, personnel
data, computer programs, and customer and supplier lists
(collectively, "Proprietary Information"). The Executive shall
not disclose any Proprietary Information to others outside
Elastic, Elastic's Affiliates, Nortel Networks Inc. or Nortel
Networks Corporation or use the same for any unauthorized
purposes without written approval by an officer of Elastic,
either during or after the Employment Period, unless and until
such Proprietary Information has become public knowledge
without fault by the Executive or as otherwise required by law.
(2) The Executive agrees that all files, letters, memoranda,
reports, records, data, sketches, drawings, laboratory
notebooks, program listings, or other written, photographic,
or other tangible material containing Proprietary Information,
whether created by the Executive or others, which shall come
into his custody or possession, shall be and are the exclusive
property of Elastic, Elastic's Affiliates, Nortel Networks
Inc. or Nortel Networks Corporation, as applicable, to be used
by the Executive only in the performance of his duties for
Elastic. The Executive agrees to deliver to
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Elastic upon the expiration of the Employment Period such
material containing Proprietary Information.
(3) The Executive agrees that his obligation not to disclose or
use information, know-how and records of the types set forth
in paragraphs (1) and (2) above, also extends to such types of
information, know-how, records and tangible property of
customers of Elastic, Elastic's Affiliates, Nortel Networks
Inc. or Nortel Networks Corporation or suppliers to Elastic or
Elastic's Affiliates or other third parties who may have
disclosed or entrusted the same to Elastic, Elastic's
Affiliates, Nortel Networks Inc. or Nortel Networks
Corporation or to the Executive in the course of Elastic's
business.
(b) DEVELOPMENTS
(1) The Executive shall make full and prompt disclosure to Elastic
of all inventions, improvements, discoveries, methods,
developments, software, and works of authorship, whether
patentable or not, which are created, made, conceived or
reduced to practice by the Executive or under his direction or
jointly with others during the Employment Period, whether or
not during normal working hours or on the premises of Elastic
or Elastic's Affiliates (collectively, "Developments").
(2) The Executive agrees to assign and does hereby assign to
Elastic (or any Entity designated by Elastic) all his right,
title and interest in and to all Developments and all related
patents, patent applications, copyrights and copyright
applications. The Executive also hereby waives all claims to
moral rights in any Developments. However, this Section
10(b)(2) shall not apply to Developments which do not relate
to the present or planned business or research and development
of Elastic or Elastic's Affiliates and which are made and
conceived by the Executive not during normal working hours, not
on the premises of Elastic or Elastic's Affiliates and not
using the tools, devices, equipment of Elastic or Elastic's
Affiliates or Proprietary Information.
(3) The Executive agrees to cooperate fully with Elastic or
Elastic's Affiliates, both during and after the Employment
Period, with respect to the procurement, maintenance and
enforcement of copyrights and patents (both in the United
States and foreign countries) relating to Developments. The
Executive shall sign all papers, including, without
limitation, copyright applications, patent applications,
declarations, oaths, formal assignments, assignment of
priority rights, and powers of attorney, which Elastic or
Elastic's Affiliates may deem necessary or desirable in order
to protect their rights and interests in any Development.
(c) OTHER AGREEMENT. The Executive hereby represents that he is not
bound by the terms of any agreement with any previous employer,
other than Elastic's Affiliates, or other party to refrain from
using or disclosing any trade secret or confidential or proprietary
information in the course of his employment with Elastic or to
refrain from competing, directly or indirectly, with the business
of such previous employer or any other party. The Executive further
represents that his performance of all the terms of this Agreement
and as an employee of Elastic does not and will not breach any
agreement, other than agreements with Elastic's Affiliates, to keep
in confidence proprietary information, knowledge or
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data acquired by him in confidence or in trust prior to his
employment with Elastic.
11. Breach of Covenants by the Executive.
The restrictions contained in Sections 9 and 10 of this Agreement are
necessary for the protection of the business and goodwill of Elastic or
Elastic's Affiliates and are considered by the Executive to be
reasonable for such purpose. The Executive agrees that any breach of
Sections 9 and 10 shall cause Elastic or Elastic's Affiliates
substantial and irrevocable damage and therefore, in the event of any
such breach, in addition to such other remedies which may be available,
Elastic or Elastic's Affiliates shall have the right to seek specific
performance and injunctive relief.
12. Survival of Certain Provisions after the Term.
Subject to the terms and conditions contained in this Agreement, the
provisions of Sections 8, 9, 10 and 11 shall survive and continue after
the Term as provided in such Sections.
13. Indemnification.
During the Term, Elastic shall indemnify the Executive as provided under
the Bylaws of Elastic.
14. Miscellaneous.
(a) The waiver by either party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any
subsequent breach by either party.
(b) Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing sent by certified mail to the
Executive's residence as it appears on the records of Elastic in
the case of the Executive or to the address set forth above with
respect to Elastic, or to such other address as either party may
hereafter specify in writing to the other.
(c) This agreement shall be binding upon and inure to the benefit of
both parties and their respective successors and assigns, including
Elastic's Affiliates and any corporation with which or into which
Elastic may be merged or which may succeed to its assets or
business, provided, however, that the obligations of the Executive
are personal and shall not be assigned by him.
(d) This Agreement constitutes the entire agreement between the parties
relating to the subject matter of this Agreement and there are no
representations, warranties, covenants or obligations except as set
forth in this Agreement. This Agreement supersedes all prior and
contemporaneous agreements, understandings, negotiations, and
discussions, written or oral, of the parties hereto, relating to
the subject matter of this Agreement. Nothing in this Agreement is
intended or shall be construed to confer upon or to give any person
other than the parties hereto any rights or remedies under or by
reason of this Agreement except as specifically set forth herein.
(e) This Agreement may be amended only in writing executed by the
parties hereto.
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(f) No delay or omission by Elastic in exercising any right under this
Agreement shall operate as a waiver of that or any other right. A
waiver or consent given by Elastic on any one occasion shall be
effective only in that instance and shall not be construed as a bar
or waiver of any right on any other occasion.
(g) The enumeration and headings contained in this Agreement are for
convenience of reference only and are not intended to have any
substantive significance in interpreting this Agreement.
(h) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such provision shall be enforced to the
maximum extent permissible so as to effect the intent of the
parties, and the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or
impaired thereby. If necessary to effect the intent of the parties,
the parties shall negotiate in good faith to amend this Agreement
to replace the unenforceable language with enforceable language
which as closely as possible reflects such intent.
(i) This Agreement shall be interpreted and enforced in accordance with
the laws of the State of Georgia, except for its rules with respect
to the conflict of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
Elastic Networks Inc. Executive
By: /s/ Xxx Xxxx /s/ Xxx Xxxx
------------------------------- -----------------------------
Title: President
-------------------------------
Date: May 12, 1999 Date: May 12, 1999
------------------------------- -----------------------------
/s/ Xxxxx Elop
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SCHEDULE A
POSITION/DUTIES/REPORTING RELATIONSHIP
Executive's Position: Chief Executive Officer and such additional
titles as the Board may assign from time to time.
Reports to: The Board.
Duties: Those duties customary to the position of Chief
Executive Officer in similar privately held or
public corporations, as applicable, and such other
duties as the Board may assign from time to time.
SCHEDULE B
Compensation
ANNUAL BASE SALARY: Two Hundred Sixty Thousand Dollars ($260,000)
The Executive's annual base salary stated above shall be subject to increase
or decrease from time to time as determined in the sole discretion of the
Board; provided that any reduction in the Executive's annual base salary
shall be subject to the applicable provisions of Section 1(p).
