Exhibit 10.19
EMPLOYMENT AGREEMENT
AGREEMENT by and between Sonus Networks, Inc., a Delaware
corporation (the "Parent"), telecom technologies, inc., a Texas corporation
(the "Company") and Xxxxxxxx Xxxxxx (the "Executive"), dated as of the second
day of November, 2000.
WHEREAS, pursuant to that certain Agreement and Plan of Merger and
Reorganization, dated as of November 2, 2000, by and among the Company, a
wholly owned subsidiary of Parent ("Merger Subsidiary"), and Parent (the
"Merger Agreement"), Merger Subsidiary will merge with and into the Company
(the "Merger") and the Company shall be the surviving corporation;
WHEREAS, the Company has determined that it is in the best interests
of the Company and its shareholders to assure that the Company will have the
dedicated employment of the Executive pending the Merger and to provide the
Company, which will be the surviving corporation after the Merger, with
continuity of management;
WHEREAS, pursuant to the Merger Agreement Parent is acquiring the
Company and issuing to its stockholders an aggregate of 9.6 million shares of
common stock, $0.001 par value per share ("Parent Common Stock"), and, should
certain conditions relating to the performance of the Company be satisfied after
the effectiveness of the Merger by the Company, the Company's stockholders will
receive up to an additional 5.4 million shares of Parent Common Stock;
WHEREAS, the Executive is one of the founders and the principal
stockholders of the Company, and has been, and will continue to be, integral to
the success of the Company and will be responsible for key management decisions
concerning the Company;
WHEREAS, the Executive and Parent agree and acknowledge that the future
success and value of the Company is largely dependant upon the Executive
contributing to the development and growth of the Company after the Merger has
been consummated, and that the Parent is not willing to consummate the Merger
unless the Executive agrees to be bound by the terms of this Agreement;
WHEREAS, Parent and the Executive acknowledge that if the Executive's
employment hereunder terminates under certain circumstances described herein, it
would result in severe injury and damage to the Company and Parent; and
WHEREAS, the Executive is willing to provide the services described in
this Agreement on the terms and conditions set forth herein, and Parent is
willing to employ executive on such basis;
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, RECEIPT OF WHICH
IS HEREBY ACKNOWLEDGED, IT IS HEREBY AGREED AS FOLLOWS:
1. EFFECTIVE DATE. The "Effective Date" shall mean the date on which
the Effective Time of the Merger (as defined in the Merger Agreement) occurs.
2. EMPLOYMENT PERIOD. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to enter into the employ of the
Company subject to the terms and conditions of this Agreement, for the period
commencing on the Effective Date and ending on January 1, 2003 (the "Employment
Period"), unless sooner terminated in accordance with Section 4 hereof. If the
Merger Agreement is terminated prior to the consummation of the Merger, this
Agreement shall be of no force and effect. From and after the Employment Period,
the Executive shall be an "at-will" employee of the Company.
3. TERMS OF EMPLOYMENT. (a) POSITION AND DUTIES. (i) During the
Employment Period, (A) the Executive shall serve as a senior executive of the
Parent with the title of General Manager and Vice President responsible for the
business division of the Parent conducting the business of the Company, with
such authority, duties and responsibilities as are assigned to the "Manager" in
the Management Covenants contained in Section 10.8 of the Merger Agreement (the
"Management Covenants"), which covenants and obligations of the Company and the
Parent are incorporated by reference in their entirety into this Agreement, to
the extent that the Executive remains the Manager, (B) the Executive shall
report directly to the Chief Executive Officer of the Parent, and (C) the
Executive's services shall be performed at the Company's principal executive
offices, which shall be at the location of such offices as of the Effective
Date, or within 30 miles of such location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote her attention and time during normal business hours to the business
and affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees (B) deliver lectures, fulfill speaking engagements, or,
subject to the policies generally applicable to similarly situated executives of
the Parent, if any, that may be adopted by the Board of Directors of the Parent,
teach at educational institutions and (C) manage personal investments, so long
as such activities do not interfere (other than incidentally) with the
performance of the Executive's responsibilities as an employee of the Company in
accordance with this Agreement or violate any of the other terms and conditions
hereof, including those of Section 8 below. It is expressly understood and
agreed that to the extent that any such activities have been conducted by the
Executive prior to the Effective Date and are listed on Schedule 3(ii) hereto,
the continued conduct of such activities subsequent to the Effective Date shall
not thereafter be deemed to significantly interfere with the performance of the
Executive's responsibilities to the Company and, in the case of the continued
conduct of such activities, shall not be treated as a violation of Section
8(a)(i).
(b) COMPENSATION. (i) BASE SALARY. During the Employment Period, the
Executive shall receive a minimum annual base salary of not less than $150,000
(the "Annual Base Salary"). Any increase in Annual Base Salary shall not serve
to limit or reduce any other obligation to the Executive under this Agreement.
(ii) ANNUAL BONUS. With respect to each of the calendar years
ending during the Employment Period, the Executive shall receive an annual cash
bonus to be determined on the same basis as the Parent determines annual bonuses
for its senior executives (the "Annual Bonus"), which Annual Bonus shall be paid
in accordance with the Parent's practices for senior executives as in effect
from time to time.
(iii) RETENTION STOCK AWARD. Effective as of the Effective Time,
the Parent shall grant the Executive a retention stock award for 750,000 shares
of Parent Common Stock (the "Retention Stock Award") pursuant to the Parent's
2000 Retention Plan, a copy of which is attached as Exhibit A hereto. As of the
Effective Date, the Executive and the Company shall enter into a Retention Stock
Award agreement substantially in the form attached hereto as Exhibit B.
(iv) EXECUTIVE BENEFITS. During the Employment Period, except as
otherwise expressly provided herein, the Executive shall be entitled to
participate in all employee benefit, welfare, performance, fringe benefit and
other plans, practices, policies and programs applicable to senior executives of
the Parent.
(v) EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the policies of the Parent applicable to its
senior executives of the Parent.
(vi) VACATION. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the plans, policies, programs and
practices of the Parent applicable to senior executives of the Parent.
(vii) INDEMNITY. The Executive shall be indemnified by the Parent
against claims arising in connection with the Executive's status as an employee,
officer, director or agent of the Company, the Parent or their affiliates in
accordance with the Parent's indemnity policies for its senior executives to the
full extent permitted by the Parent's or Company's Charter and By-laws.
4. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Parent determines in good faith that the Disability of
the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 11(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Parent or its insurers and
acceptable to the Executive or the Executive's legal representative.
(b) CAUSE. The Company and the Parent may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean:
(i) the continued failure of the Executive to perform substantially
the Executive's duties with the Company, including refusal to obey any lawful
resolution of or direction by the Board which is consistent with her duties
hereunder and not inconsistent with the terms of the Management Covenants (other
than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered to the
Executive by the Chief Executive Officer of the Parent or the Board of Directors
of the Parent that specifically identifies the manner in which the Chief
Executive Officer or the Board believes that the Executive has not substantially
performed the Executive's duties and the Executive has failed to cure such
failure after a period of 30 days following the Executive's receipt of such
written demand, or
(ii) the willful engaging by the Executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the Company
or the Parent, or
(iii) the commission by the Executive of an act of fraud,
embezzlement or misappropriation against the Company or involving the Company's
property which is demonstrably injurious to the Company or the Parent, or
(iv) conviction of a felony or guilty or nolo contendere plea by
the Executive with respect thereto, or
(v) a willful violation of the covenants contained in Section 8
hereof which is materially and demonstrably injurious to the Company or the
Parent and is not remedied by the Executive within 30 days after receipt of
notice thereof given by the Company or the Parent.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company and the
Parent. Any act, or failure to act, based upon the instructions of the Chief
Executive Officer of the Parent or the Board of Directors of the Parent shall be
conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The Executive may be
terminated for Cause only pursuant to a resolution affirmatively adopted by at
least a majority of the entire Board of Directors of the Parent, at a meeting of
the Board of Directors of the Parent called and held for such purpose (after
reasonable notice is provided to the Executing and the Executive is given an
opportunity to be heard before the Board of Directors of the Parent).
(c) GOOD REASON. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean in the absence of a written consent of the Executive:
(i) any failure by the Company or the Parent to comply with any of
the provisions of Section 3(b) of this Agreement, other than an isolated,
insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company or the Parent promptly after receipt of notice thereof given by the
Executive, or
(ii) the Company's or the Parent's failure to comply with the terms
of the Management Covenants, other than a breach which is remedied by the
Company or the Parent not more than 30 days after receipt of "Notice of Alleged
Breach" (as defined in the Management Covenants) given by the Executive in
accordance with the terms of Section 10.8 of the Merger Agreement, or
(iii) the Company or the Parent's failure to comply in all material
respects with the terms of Section 2 of the Escrow Agreement relating to the
release or other terms and conditions of the Executive's escrowed shares of
Parent Common Stock held for the benefit of the Executive, or
(iv) the Parent's requiring the Executive to be based at any office
or location other than that provided in Section 3(a)(i)(C) hereof, or
(v) any purported termination by the Parent of the Executive's
employment other than as expressly permitted by this Agreement, or
(vi) any failure by the Company to comply with and satisfy Section
10(c) of this Agreement.
For purposes of this definition of Good Reason, the Executive shall provide the
Parent with written notice setting forth the basis for the Good Reason and give
the Parent 30 days to cure such basis, provided that, with respect to clause
(ii) above, the Executive's delivery of the Notice of Alleged Breach shall
satisfy the 30 day notice requirement hereunder.
(d) NOTICE OF TERMINATION. Any termination by the Company or the Parent
for Cause, or by the Executive for Good Reason, shall be communicated by Notice
of Termination to the other party or parties hereto given in accordance with
Section 11(b) of this Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is other than
the date of receipt of such notice, specifies the termination date (which date
shall be not more than thirty days after the giving of such notice). The failure
by the Executive or the Company to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive, the Company or the Parent,
respectively, hereunder or preclude the Executive, the Company or the Executive,
respectively, from asserting such fact or circumstance in enforcing the
Executive's, the Parent's or the Company's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company or the Parent for Cause, or
by the Executive for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein within 30 days of such notice,
as the case may be, (ii) if the Executive's employment is terminated by the
Company or the Parent other than for Cause or Disability, the Date of
Termination shall be
the date on which the Company or the Parent notifies the Executive of such
termination and (iii) if the Executive's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be.
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) GOOD REASON; OTHER
THAN FOR CAUSE, DEATH OR DISABILITY. If, during the Employment Period, the
Company or the Parent shall terminate the Executive's employment other than for
Cause or Disability or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive the following amounts:
A. an immediate lump-sum payment equal to the sum of (1) the
Executive's Annual Base Salary earned through the Date of Termination,
(2) any Annual Bonus amounts earned but unpaid with respect to a
calendar year ending prior to the Date of Termination, and (3) any
compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon), in each case to the extent not
theretofore paid (the sum of the amounts described in clauses (1), (2)
and (3), shall be hereinafter referred to as the "Accrued
Obligations"); and
B. any additional severance amounts and benefits payable to
senior executives of the Parent in accordance with the Parent's most
favorable policies and procedures or, if greater, an immediate lump
sum payment equal to the Executive's Annual Base Salary for the
remainder of the Employment Period; and
(ii) any lockup agreement with respect to shares of Parent Common
Stock to be entered into pursuant to Section 6 of the Registration Rights
Agreement to be entered into by the Parent and the Executive, among others,
pursuant to the Merger Agreement, shall expire; and
(iii) the Retention Stock Award shall immediately and fully vest
and become free of restrictions without regard to the achievement of the
Performance Goals; and
(iv) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to receive
under any plan, program, policy or practice or contract or agreement of the
Company or the Parent through the Date of Termination (such other amounts and
benefits shall be hereinafter referred to as the "Other Benefits").
(b) DEATH. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive's legal representatives under this
Agreement, other than for payment of Accrued Obligations, and the timely payment
or provision of Other Benefits and the continuation of the Retention Stock Award
pursuant to its terms. In addition, all restriction on the transfer of Parent
Common Stock held by the Executive, including any restrictions on transfer (but
not any other conditions on issuance or release of such shares, except as
provided in another applicable agreement) set forth in the Registration Rights
Agreement, the Merger Agreement and
any escrow agreement, shall immediately lapse in full. Accrued Obligations shall
be paid to the Executive's estate or beneficiary, as applicable, a lump sum in
cash within 30 days of the Date of Termination with the Parent's policies. With
respect to the provision of Other Benefits, the term Other Benefits as utilized
in this Section 5(b) shall include death benefits offered by the Parent as in
effect on the date of the Executive's death.
(c) DISABILITY. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations, the timely payment or provision of Other Benefits, and
the continuation of the Retention Stock Award pursuant to its terms. In
addition, all restrictions on the transfer of Parent Common Stock held by the
Executive, including any restrictions on transfer (but not any other conditions
on issuance or release of such shares, except as provided in another applicable
agreement) set forth in the Registration Rights Agreement, the Merger Agreement
and any escrow agreement, shall immediately lapse in full. Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days of the Date
of Termination. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 5(c) shall include, and the Executive shall
be entitled after the Disability Effective Date to receive, disability and other
benefits as in effect at any time thereafter with respect to senior executives
of the Parent.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's employment
shall be terminated for Cause or the Executive terminates her employment without
Good Reason during the Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation to pay to the
Executive (i) the Accrued Obligations (other than the Pro-Rata Bonus) and (ii)
Other Benefits, in each case to the extent theretofore unpaid.
6. NON-EXCLUSIVITY OF RIGHTS. Except as specifically provided, nothing
in this Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the Parent or
the Company and for which the Executive may qualify, nor, subject to Section
11(g), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or the
Parent. Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Company or the Parent at or subsequent to the
Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement.
7. FULL SETTLEMENT. The obligation of the Company and the Parent to
make the payments provided for in this Agreement or the Retention Stock Award
and otherwise to perform their obligations hereunder shall not be affected by
any set off, counterclaim, recoupment, defense or other claim, right or action
which the Company or the Parent may have against the Executive or others, except
any arising pursuant to Section 9 of this Agreement. In no event shall the
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and, such amounts shall not be reduced whether or
not the Executive obtains other employment. The Parent agrees to pay, to the
full extent permitted by law, all legal fees and expenses which the Executive
may reasonably incur as a result of any contest by the Company, the
Parent, the Executive or others of the validity or enforceability of, or
liability under any provision of this Agreement or the Retention Stock Award or
any guarantee of performance thereof (including as a result of any contest by
the Executive about the amount of any payment pursuant to this Agreement), in
the event the Executive prevails in such contest, subject to an aggregate
maximum of $500,000 for all such contests.
8. NONCOMPETITION; PROPRIETARY INFORMATION; DEVELOPMENT. (a) While the
Executive is employed by the Company or the Parent during the Employment Period
and for a period ending on the later of (i) two years after the termination or
cessation of such employment during the Employment Period, or (ii) the fourth
anniversary of the Effective Date, the Executive will not directly or
indirectly: (A) as an individual proprietor, partner, stockholder, officer,
employee, director, joint venture, investor, lender, consultant, or in any other
capacity whatsoever (other than as the holder of not more than five percent of
the combined voting power of the outstanding stock of a publicly-held company,
or two percent, as a passive investor, if a non-publicly held entity), develop,
design, produce, market or sell (or assist any other person in developing,
designing, producing, marketing or selling) products or services competitive
with those developed, designed, produced, marketed or sold by the Company or the
Parent while the Executive was employed by the Company or the Parent; or (B)
recruit, solicit or hire any employee of the Company or the Parent (other than
Xxxxx Xxxxxx), or induce or attempt to induce any employee of the Company or the
Parent to terminate his or her employment with, or otherwise cease his or her
employment relationship with, the Company or the Parent, provided that it shall
not be a violation of this Agreement for the Executive to hire her spouse.
Notwithstanding the foregoing, in the event of the acquisition of all or
substantially all of the business and or assets of the Company or the Parent,
this Agreement may be assigned to the acquiror (as provided in Section 10(c))
and, following such acquisition, the Executive's continuing obligation not to
compete shall be limited to the line of business of the Company or the Parent
prior to the acquisition which is continued after the acquisition. The scope of
such covenant shall not be expanded to include other lines of business, products
or services of the entity surviving such acquisition, and if the Company's line
of business is terminated following such acquisition, this covenant shall
terminate.
(b) The Executive agrees that all information, whether or not in
writing, of a private, secret or confidential nature concerning the business,
business relationships or financial affairs of the Company and the Parent
(collectively, "Proprietary Information") is and shall be the exclusive property
of the Company and the Parent. By way of illustration, but not limitation,
Proprietary Information may include inventions, products, processes, methods,
techniques, formulas, compositions, compounds, projects, developments, plans,
research data, clinical data, financial data, personnel data, computer programs,
customer and supplier lists, and contacts at or knowledge of customers or
prospective customers of the Company or the Parent. The Executive will not
disclose any Proprietary Information to any person or entity other than
employees of the Company or the Parent or use the same for any purpose (other
than in the performance of her duties as an employee of the Company or the
Parent) without written approval by the President and Chief Executive Officer of
the Parent, either during or after her employment with the Company, unless and
until such Proprietary Information has become public knowledge without fault by
the Employee.
(c) 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
her custody or possession during her employment with the Company or the Parent,
shall be and are the exclusive property of the Company and the Parent to be used
by the Executive only in the performance of her duties for the Company or the
Parent. All such materials or copies thereof and all tangible property of the
Company or the Parent in the custody or possession of the Executive shall be
delivered to the Company, upon the earlier of (A) a request by the Company or
the Parent or (B) termination of her employment. After such delivery, the
Executive shall not retain any such materials or copies thereof or any such
tangible property.
(d) The Executive agrees that her obligation not to disclose or to use
information and materials of the types set forth in paragraphs (b) and (c)
above, and her obligation to return materials and tangible property, set forth
in paragraph (c) above, also extends to such types of information, materials and
tangible property of customers of the Company or the Parent or suppliers to the
Company or the Parent or other third parties who may have disclosed or entrusted
the same to the Company or the Parent, or to the Executive; PROVIDED, that such
materials would otherwise be described in such paragraphs.
(e) The Executive will make full and prompt disclosure to the Company
and the Parent 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 her or under her
direction or jointly with others during her employment by the Company or the
Parent which relate to the business of the Company or the Parent, whether or not
during normal working hours or on the premises of the Company or the Parent (all
of which are collectively referred to in this Agreement as "Developments"). The
Executive agrees to assign and does hereby assign to the Company (or any person
or entity designated by the Company or the Parent) all her right, title and
interest in and to all Developments and all related patents, patent
applications, copyrights and copyright applications; however, this Section 8(e)
shall not apply to developments which do not relate to the present or planned
business or research and development of the Company or the Parent and which are
made and conceived by the Executive not during normal working hours, not on the
Company's or the Parent's premises and not using the Company's or the Parent's
tools, devices, equipment or Proprietary Information. The Executive understands
that, to the extent this Agreement shall be construed in accordance with the
laws of any state which precludes a requirement in an employee agreement to
assign certain classes of inventions made by an employee, this Section 8(e)
shall be interpreted not to apply to any invention which a court rules and/or
the Company or the Parent agrees falls within such classes. The Executive also
hereby waives all claims to moral rights in any Developments.
(f) The Executive agrees to cooperate fully with the Company and the
Parent, both during and after her employment with the Company and the Parent,
with respect to the procurement, maintenance and enforcement of copyrights,
patents and other intellectual property rights (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, assignments of priority
rights, and powers of attorney, which the Company or the Parent may deem
reasonably necessary or desirable in order to protect
its rights and interests in any Development. The Executive further agrees that
if the Company and the Parent are unable, after reasonable effort, to secure the
signature of the Executive on any such papers, any executive officer of the
Company or the Parent shall be entitled to execute any such papers as the agent
and the attorney-in-fact of the Executive, and the Executive hereby irrevocably
designates and appoints each executive officer of the Company and the Parent as
her agent and attorney-in-fact to execute any such papers on her behalf, and to
take any and all actions as the Company or the Parent may deem necessary or
desirable in order to protect its rights and interests in any Development, under
the conditions described in this sentence.
(g) The Executive acknowledges and agrees that: (i) the purposes of the
foregoing covenants are to protect the goodwill and Proprietary Information of
the Company in connection with the acquisition of the Company by the Parent, and
to prevent the Executive from interfering with the business of the Company as a
result of or following termination of the Executive's employment with the
Company or the Parent during the Employment Period; and (ii) that the foregoing
covenants are being given in part in consideration for the consideration being
received by the Executive as a result of the transactions contemplated by the
Merger Agreement. The parties hereto agree that the Company and the Parent would
be damaged irreparably in the event that any provision of this Section 8 was not
performed in accordance with its terms or was otherwise breached and that money
damages would be an inadequate remedy for any such nonperformance or breach.
Accordingly, the Company and the Parent and their successors and assigns shall
be entitled, in addition to other rights and remedies existing in their favor,
to an injunction or injunctions to prevent any breach or threatened breach of
any of such provisions and to enforce such provisions specifically (without
posting a bond or other security). The parties hereto acknowledge that the
covenants set forth in this Section 8 (except for the duration of the
Non-Competition Period) are the standard covenants applicable to other senior
executives of the Parent as of the date hereof and that, in the event the scope
of the covenants applicable to such senior executives is hereafter modified in a
manner that is less restrictive to such executives, this Section 8 shall be
modified in the same manner and to the same extent.
9. DAMAGES (a) Subject to the last sentence of this Section 9, in the
event that the Executive's employment hereunder is terminated, on or before
January 1, 2003, (i) by the Executive without Good Reason (and other than for
death or Disability), or (ii) or by Parent with Cause, the Executive shall,
immediately upon demand by Parent at any time thereafter, pay to Parent in cash
the amount indicated in the table below (the "Damages Payment"), beneath the
column heading "Damages Payment," that is set forth opposite the "Period" in
which the date of Executive's termination occurs; PROVIDED, that no Damages
Payment will be due for any Termination Date occurring after January 1, 2003.
----------------- --------------------------------------------------------------- -----------------------------------
PERIOD NUMBER: PERIOD IN WHICH TERMINATION DATE OCCURS: DAMAGES PAYMENT:
----------------- --------------------------------------------------------------- -----------------------------------
----------------- --------------------------------------------------------------- -----------------------------------
0. FROM: Effective Date $35,000,000.00
THROUGH: The date eighteen (18) months after the Effective
Date
----------------- --------------------------------------------------------------- -----------------------------------
I. FROM: The date eighteen (18) months and one (1) day $30,000,000.00
after the Effective Date
THROUGH: The date nineteen (19) months after the Effective
Date
----------------- --------------------------------------------------------------- -----------------------------------
----------------- --------------------------------------------------------------- -----------------------------------
II. FROM: The date nineteen (19) months and one (1) day $25,000,000.00
after the Effective Date
THROUGH: The date twenty (20) months after the Effective
Date
----------------- --------------------------------------------------------------- -----------------------------------
III. FROM: The date twenty (20) months and one (1) day after $20,000,000.00
the Effective Date
THROUGH: The date twenty-one (21) months after the
Effective Date
----------------- --------------------------------------------------------------- -----------------------------------
IV. FROM: The date twenty-one (21) months and one (1) day $15,000,000.00
after the Effective Date
THROUGH: The date twenty-two (22) months after the
Effective Date
----------------- --------------------------------------------------------------- -----------------------------------
V. FROM: The date twenty-two (22) months and one (1) day $10,000,000.00
after the Effective Date
THROUGH: The date twenty- three (23) months after the
Effective Date
----------------- --------------------------------------------------------------- -----------------------------------
VI. FROM: The date twenty-three (23) months and one (1) day $5,000,000.00
after the Effective Date
THROUGH: The date twenty- four (24) months after the
Effective Date
----------------- --------------------------------------------------------------- -----------------------------------
(b) The Executive's payment obligations under this Section 9 shall be
full recourse, cash obligations and shall initially be secured by a pledge of
the number of shares of Parent Common Stock received by the Executive in the
Merger set forth on Exhibit C hereto, pursuant to a Pledge Agreement, in the
form of Exhibit D hereto (the "Pledge Agreement"), to be entered into by the
Executive and the Parent concurrently with the execution and delivery of this
Agreement, provided that the Executive shall have the right to substitute cash
collateral (including a letter of credit) (the "Collateral") which shall then be
subject to the Pledge Agreement. If the net proceeds of the sale of shares
subject to the Pledge Agreement or the Collateral (in addition to any other
amount of substituted collateral) are insufficient to satisfy the Executive's
payment obligation hereunder, the Executive shall be obligated to make up the
shortfall out of her other personal assets.
(c) No damages shall be payable by the Executive and the Pledge
Agreement shall terminate in the event the Executive's employment is terminated
prior to the expiration of the Employment Period by reason of her death or
Disability or by the Executive for Good Reason or by the Company for any reason
other than for Cause. The Company agrees that any absence of the Executive from
her duties under the Parent's leave of absence policies or the Family Medical
Leave Act (with the leave provisions of the Family Medical Leave Act being
deemed to be extended from 12 weeks to 16 weeks for purposes of this Agreement)
or, with the consent of the Chief Executive Officer of Parent in his discretion,
after 16 weeks of prior absence for reasons which are otherwise set forth in the
Family Medical Leave Act, shall not be treated by the Parent as a termination of
employment by the Executive without Good Reason or as a basis for a termination
for Cause and, under such circumstances as such, no liquidated damages shall be
payable by the Executive.
(d) The Damages Payment due hereunder shall be reduced (but never below
zero) by the amount of any payment Parent may have already received pursuant to
Section 9 of that certain Employment Agreement, of even date herewith, by and
between Xxxxx Xxxxxx and Parent (the "Other Employment Agreement").
Notwithstanding anything else contained herein,
the provisions of this Section 9 shall constitute the Company's and the Parent's
sole and exclusive remedy for a termination of the Executive's employment by the
Executive in breach of this Agreement, and the Company shall not be entitled to
monetary damages for any such termination after January 1, 2003; PROVIDED THAT,
nothing herein shall derogate in any way from the provisions of the 2000
Retention Plan attached as Exhibit A hereto or the Release Conditions set forth
on the Schedules to that certain Contingency Escrow Agreement of even date
herewith.
10. SUCCESSORS. (a) This Agreement is personal to the Executive and
without the prior written consent of the Parent shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company, the Parent and their respective successors and assigns.
(c) The Company and the Parent will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company or the Parent to
assume expressly and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" and "Parent"
shall mean the Company and the Parent as hereinbefore defined and any successor
to their respective businesses and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise state.
11. MISCELLANEOUS. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
IF TO THE EXECUTIVE:
-------------------
At the most recent address on
file at the Company.
IF TO THE PARENT OR THE COMPANY:
-------------------------------
Sonus Networks, Inc.
0 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The failure by a party to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right such party may
have hereunder, shall not be deemed to be a waiver of such provision or right or
any other provision or right of this Agreement.
(f) This Agreement and the provisions contained in it shall not be
construed or interpreted for or against any party to this Agreement because that
party drafted or caused that party's legal representative to draft any of its
provisions.
(g) From and after the Effective Date this Agreement shall supersede
any other employment, severance or change of control agreement between the
parties with respect to the subject matter hereof, except as expressly provided
herein.
(h) The Executive represents and warrants to the Company that (a) the
execution, delivery and performance of this Agreement by the Executive does not
and will not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which the
Executive is a party or by which the Executive is bound, (b) other than any
agreements with the Company or the Parent and the noncompetition agreement
entered into by the Executive with Hewlett Packard, dated as of December 31,
1998, the Executive is not a party to or bound by any employment agreement,
noncompetition agreement or confidentiality agreement with any other person or
entity, (c) upon the execution and delivery of this Agreement by the Company and
subject to the consummation of the Merger, this Agreement shall be the
valid and binding obligation of the Executive, (d) this Agreement has been the
subject of arm's length negotiations between the parties, (e) the Executive has
independently reviewed this Agreement with legal counsel, and (f) the Executive
has the requisite experience and sophistication to understand, interpret and
agree to the particular language of this Agreement.
(i) The Company and the Parent hereby represent and warrant that (a)
such entity has the authority to enter into this Agreement and (b) upon the
execution and delivery of this Agreement by the Company and the Parent and
subject to the consummation of the Merger, this Agreement shall be the valid and
binding obligation of the Company and the Parent.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from their respective Boards of Directors,
each of the Company and the Parent has caused these presents to be executed in
its name on its behalf, all as of the day and year first above written.
/s/ Xxxxxxxx Xxxxxx
---------------------------
Xxxxxxxx Xxxxxx
SONUS NETWORKS, INC.
By /s/ Xxxxxxx X. Xxxx
-------------------------
Name:
Title:
TELECOM TECHNOLOGIES, INC.
By /s/ Xxxxxxxx Xxxxxx
-------------------------
Name:
Title:
SCHEDULE 3(II)
Board of Directors of:
Children Advocacy Center
Society of Iranian Professionals
Technology Business Council (TBC)
Child Foundation
Other activities lectures/speaking engagements to several different
organizations and societies:
About 2 a month
EXHIBIT C
The number of shares of Parent Common Stock with a "Fair Market Value" (as
defined in the Pledge Agreement) equal to $35 million.
