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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into as of November 28, 1999, by and
between XXXXXX XXXXX (the "Employee") and REDBACK NETWORKS INC., a Delaware
corporation (the "Company"). This Agreement shall be effective at the effective
time of the merger (the "Merger") contemplated by the Merger Agreement and Plan
of Reorganization dated November 28, 1999, by and among the Company, Siara
Systems, Inc., a Delaware corporation ("Siara Systems"), and the stockholder
agent described therein. This Agreement shall be null and void, and no parties
shall be deemed to have any rights hereunder, unless and until the Merger is
consummated.
1. DUTIES AND SCOPE OF EMPLOYMENT.
(a) POSITION. The Company agrees to employ the Employee in
the position of Senior Vice President--Engineering or in such other position as
the Company subsequently may assign to the Employee (the "Employment"). The
Employee shall report to the Company's President and Chief Operating Officer or
to such other, more senior person as the Company subsequently may determine.
(b) OBLIGATIONS TO THE COMPANY. During his Employment, the
Employee shall devote his full business efforts and time to the Company. During
his Employment, without the prior written approval of the Company's Chief
Executive Officer, the Employee shall not render services in any capacity to any
other person or entity and shall not act as a sole proprietor or partner of any
other person or entity or as a shareholder owning more than five percent of the
stock of any other corporation. The Employee shall comply with the Company's
policies and rules, as they may be in effect from time to time during his
Employment.
(c) NO CONFLICTING OBLIGATIONS. The Employee represents
and warrants to the Company that he is under no obligations or commitments,
whether contractual or otherwise, that are inconsistent with his obligations
under this Agreement. The Employee represents and warrants that he will not use
or disclose, in connection with his employment by the Company, any trade secrets
or other proprietary information or intellectual property in which the Employee
or any other person has any right, title or interest and that his employment by
the Company as contemplated by this Agreement will not infringe or violate the
rights of any other person. The Employee represents and warrants to the Company
that he has returned all property and confidential information belonging to any
prior employer.
2. COMPENSATION.
(a) SALARY. The Company shall pay the Employee as
compensation for his services a base salary at a gross annual rate of not less
than $230,000. Such salary shall be payable in accordance with the Company's
standard payroll procedures.
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(b) ACCELERATED VESTING OF EQUITY. At the effective time
of the Merger, (i) the vested portion of shares of the Company's stock then held
by the Employee shall be increased by the shares that otherwise would have
vested during the 12-month period following the effective time of the Merger and
(ii) the exercisable portion of options to purchase shares of the Company's
stock then held by the Employee shall be increased by the options that otherwise
would have become exercisable during the 12-month period following the effective
time of the Merger. During the 12-month period following the effective time of
the Merger, no additional shares of the Company's stock held by the Employee at
the effective time of the Merger shall vest and no additional options to
purchase shares of the Company's stock held by the Employee at the effective
time of the Merger shall become exercisable. Thereafter, such shares shall vest
and such options shall become exercisable in accordance with the original terms
applicable to such shares and options.
3. VACATION AND EMPLOYEE BENEFITS. During his Employment, the
Employee shall be eligible for paid vacations in accordance with the Company's
standard policy for similarly-situated employees, as it may be amended from time
to time. During his Employment, the Employee shall be eligible to participate in
the employee benefit plans maintained by the Company for similarly-situated
employees, subject in each case to the generally applicable terms and conditions
of the plan in question and to the determinations of any person or committee
administering such plan.
4. BUSINESS EXPENSES. During his Employment, the Employee shall
be authorized to incur necessary and reasonable travel, entertainment and other
business expenses in connection with his duties hereunder. The Company shall
reimburse the Employee for such expenses upon presentation of an itemized
account and appropriate supporting documentation, all in accordance with the
Company's generally applicable policies.
5. TERM OF EMPLOYMENT.
(a) EMPLOYMENT AT WILL. Either party may terminate the
Employee's Employment at any time and for any reason (or no reason), and with or
without Cause, by giving the other party notice in writing. The Employee's
Employment with the Company shall be "at will," meaning that either the Employee
or the Company shall be entitled to terminate the Employee's employment at any
time and for any reason, with or without Cause. Any contrary representations
that may have been made to the Employee shall be superseded by this Agreement.
This Agreement shall constitute the full and complete agreement between the
Employee and the Company on the "at will" nature of the Employee's Employment,
which may only be changed in an express written agreement signed by the Employee
and a duly authorized officer of the Company.
(b) RIGHTS UPON TERMINATION OF EMPLOYMENT. Except as
expressly provided in Section 6, upon the termination of the Employee's
Employment pursuant to this Section 5, the Employee shall only be entitled to
the compensation, benefits and reimbursements described in Sections 2, 3 and 4
for the period preceding the effective date of the termination.
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The payments under this Agreement shall fully discharge all responsibilities of
the Company to the Employee.
(c) TERMINATION OF AGREEMENT. This Agreement shall
terminate when all obligations of the parties hereunder have been satisfied. The
termination of this Agreement shall not limit or otherwise affect any of the
Employee's obligations under Sections 7 and 8.
6. TERMINATION BENEFITS.
(a) GENERAL RELEASE. Any other provision of this Agreement
notwithstanding, Subsection (b) below shall not apply unless the Employee (i)
has executed a general release (in a form prescribed by the Company) of all
known and unknown claims that he may then have against the Company or persons
affiliated with the Company and (ii) has agreed not to prosecute any legal
action or other proceeding based upon any of such claims.
(b) ACCELERATED VESTING OF EQUITY. The vested percentage
of the Employee's shares of the Company's stock and the exercisable percentage
of his options to purchase shares of the Company's stock shall be determined by
adding 12 months to the actual length of his service if, prior to the date 18
months after the effective time of the Merger:
(i) The Company terminates the Employee's
Employment for any reason other than Cause or Permanent Disability; or
(ii) The Employee resigns his Employment because he
is required to serve in any position lower than Senior Vice President of
the Company.
If this Section 6(b) becomes applicable during the 12-month period following the
effective time of the Merger and Section 2(b) also applies to such shares or
options, then the vested percentage of such shares and the exercisable
percentage of such options shall be determined by adding 12 months to the
service that the Employee would have completed as of the date 12 months after
the effective time of the Merger.
(c) DEFINITION OF "CAUSE." For all purposes under this
Agreement, "Cause" shall mean:
(i) Any breach of this Agreement, the Proprietary
Information and Inventions Agreement between the Employee and the
Company, or any other written agreement between the Employee and the
Company, if such breach causes material harm to the Company;
(ii) Any willful misconduct that causes material
harm to the Company, including (without limitation) repeated failure to
follow the directions of the person to whom the Employee reports;
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(iii) Conviction of, or a plea of "guilty" or "no
contest" to, a felony under the laws of the United States or any state
thereof;
(iv) Misappropriation of the assets of the Company
or other acts of fraud or embezzlement; or
(v) The abuse of alcohol or controlled substances
that has a detrimental effect upon the Employee's performance of his
duties under this Agreement.
(d) DEFINITION OF "PERMANENT DISABILITY." For all purposes
under this Agreement, "Permanent Disability" shall mean that the Employee, at
the time notice is given, has failed to perform his duties under this Agreement
for a period of not less than 90 consecutive days as the result of his
incapacity due to physical or mental injury, disability or illness.
7. NON-DISCLOSURE. This Agreement is contingent upon the
Employee's execution of the Company's form of Proprietary Information and
Inventions Agreement, a copy of which is attached hereto as EXHIBIT A.
8. NON-COMPETITION, NON-SOLICITATION AND SAVINGS CLAUSE.
(a) THE RESTRICTED PERIOD. This Section 8 shall apply only
during the period commencing at the effective time of the Merger and ending on
the earlier of (i) the date 12 months after the effective date of the
termination of the Employee's Employment for any reason or (ii) the date 18
months after the effective time of the Merger (the "Restricted Period").
(b) NON-COMPETITION AND NON-SOLICITATION. In exchange for
the consideration stated herein and for the purchase of his shares of Siara
Systems stock by the Company, the Employee agrees that during the Restricted
Period he shall not:
(i) Directly or indirectly, individually or in
conjunction with others, engage in activities that compete with the
Company's Business or work for any entity engaged in a business that
competes with the Company's Business. The Employee in particular agrees
not to solicit, serve, contract with or otherwise engage any existing or
prospective customer, client or account of the Company in the area of
its Business. The Employee and the Company agree that the Company's
Business is global in scope.
(ii) Cause or attempt to cause any existing or
prospective customer, client or account of the Company in the area of
its Business to divert from, terminate, limit or in any manner modify,
or fail to enter into, any actual or potential business relationship
with the Company. The Employee and the Company agree that this provision
is reasonably enforced with reference to any geographic area in which
the Company's Business maintains any such relationship.
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(iii) Directly or indirectly solicit, employ or
conspire with others to employ any of the Company's employees. The term
"employ" for purposes of this Paragraph (iii) means to enter into an
arrangement for services as a full-time or part-time employee,
independent contractor, agent or otherwise. The Employee and the Company
agree that this provision is reasonably enforced as to any geographic
area in which the Company conducts its Business.
The Employee further agrees that during the Restricted Period he shall inform
any new employer, or any other person or entity with whom he enters into a
business relationship, of the existence of this Section 8 before accepting
employment or entering into such business relationship.
(c) DEFINITION OF "BUSINESS." For all purposes under this
Agreement, "Business" shall mean the networking market, including IP routing,
subscriber management systems, Sonet networking, ATM switching, IP Sec and VPN.
(d) SAVINGS CLAUSE. The Employee agrees that the scope and
terms of this Section 8 are reasonable and that it is the Employee's intent and
desire that this Section 8 be enforced to the fullest extent permissible under
the laws and public policies applied in the jurisdiction in which enforcement is
sought. If any particular provision of this Section 8 is adjudicated to be
invalid or unenforceable, the parties specifically authorize the tribunal making
such determination to edit the invalid or unenforceable provision to allow this
Section 8 to be valid and enforceable to the fullest extent allowed by law or
public policy.
9. SUCCESSORS.
(a) COMPANY'S SUCCESSORS. This Agreement shall be binding
upon any successor (whether direct or indirect and whether by purchase, lease,
merger, consolidation, liquidation or otherwise) to all or substantially all of
the Company's business and/or assets. For all purposes under this Agreement, the
term "Company" shall include any successor to the Company's business and/or
assets which becomes bound by this Agreement.
(b) EMPLOYEE'S SUCCESSORS. This Agreement and all rights
of the Employee hereunder shall inure to the benefit of, and be enforceable by,
the Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
10. MISCELLANEOUS PROVISIONS.
(a) NOTICE. Notices and all other communications
contemplated by this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered or when mailed by U.S. registered or
certified mail, return receipt requested and postage prepaid. In the case of the
Employee, mailed notices shall be addressed to him at the home address which he
most recently communicated to the Company in writing. In the case of the
Company, mailed notices shall be addressed to its corporate headquarters, and
all notices shall be directed to the attention of its Secretary.
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(b) MODIFICATIONS AND WAIVERS. No provision of this
Agreement shall be modified, waived or discharged unless the modification,
waiver or discharge is agreed to in writing and signed by the Employee and by an
authorized officer of the Company (other than the Employee). No waiver by either
party of any breach of, or of compliance with, any condition or provision of
this Agreement by the other party shall be considered a waiver of any other
condition or provision or of the same condition or provision at another time.
(c) WHOLE AGREEMENT. No other agreements, representations
or understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof. This Agreement and the
Proprietary Information and Inventions Agreement contain the entire
understanding of the parties with respect to the subject matter hereof. This
Agreement shall supersede the offer letter dated September 16, 1999, executed by
the Employee and Siara Systems.
(d) WITHHOLDING TAXES. All payments made under this
Agreement shall be subject to reduction to reflect taxes or other charges
required to be withheld by law.
(e) CHOICE OF LAW AND SEVERABILITY. This Agreement shall
be interpreted in accordance with the laws of the State of California (except
their provisions governing the choice of law). If any provision of this
Agreement becomes or is deemed invalid, illegal or unenforceable in any
jurisdiction by reason of the scope, extent or duration of its coverage, then
such provision shall be deemed amended to the extent necessary to conform to
applicable law so as to be valid and enforceable or, if such provision cannot be
so amended without materially altering the intention of the parties, then such
provision shall be stricken and the remainder of this Agreement shall continue
in full force and effect. Should there ever occur any conflict between any
provision contained in this Agreement and any present or future statute, law,
ordinance or regulation contrary to which the parties have no legal right to
contract, then the latter shall prevail but the provision of this Agreement
affected thereby shall be curtailed and limited only to the extent necessary to
bring it into compliance with applicable law. All the other terms and provisions
of this Agreement shall continue in full force and effect without impairment or
limitation.
(f) ARBITRATION. Any controversy or claim arising out of
or relating to this Agreement or the breach thereof, or the Employee's
Employment or the termination thereof, with the exception of any controversy or
claim arising out of or relating to Section 8, shall be settled in Palo Alto,
California, by arbitration in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association. The
decision of the arbitrator shall be final and binding on the parties, and
judgment on the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. The parties hereby agree that the arbitrator shall
be empowered to enter an equitable decree mandating specific enforcement of the
terms of this Agreement. The Company and the Employee shall share equally all
fees and expenses of the arbitrator. Any controversy or claim arising out of or
relating to Section 8 shall be settled in the appropriate federal or state court
in the State of California. The Company and the Employee hereby consent to
personal jurisdiction of the state
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and federal courts located in the State of California for any action or
proceeding arising from or relating to this Agreement or relating to any
arbitration in which the parties are participants.
(g) NO ASSIGNMENT. This Agreement and all rights and
obligations of the Employee hereunder are personal to the Employee and may not
be transferred or assigned by the Employee at any time. The Company may assign
its rights under this Agreement to any entity that assumes the Company's
obligations hereunder in connection with any sale or transfer of all or a
substantial portion of the Company's assets to such entity.
(h) COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by its duly authorized officer, as of the
day and year first above written.
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XXXXXX XXXXX
REDBACK NETWORKS INC.
By
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Title:
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