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Exhibit 10
EMPLOYMENT AGREEMENT
This employment agreement (this "Agreement") is entered into as of
March 1, 1999, between Zeus Acquisition Corp. (the "Company"), and Xxxxxx X. Xxx
(the "Executive") for employment commencing on the Effective Date in the
position and title of PRESIDENT AND CHIEF EXECUTIVE OFFICER (the "Position").
The Company desires to employ the Executive, and the Executive desires
to be employed by the Company, on the terms and subject to the conditions set
forth herein;
THEREFORE, in consideration of the mutual promises herein contained,
the parties agree as follows:
1. Employment.
(a) The Company hereby employs the Executive in the Position
and the Executive hereby accepts such employment, on the terms
and subject to the conditions hereinafter set forth.
(b) During the term of his employment under this Agreement and
any renewal hereof, the Executive shall be and have the
Position stated, shall report to the Chairman of the Company
(who is currently the Executive Vice President, TelCom Sector,
of the Company's parent company), and shall devote his entire
professional business time and all reasonable efforts to his
employment and perform diligently such duties as are
customarily performed in the position of companies similar in
size to the Company, together with such other duties as may be
reasonably requested from time to time by Chairman of the
Company, which duties shall be consistent with his Position;
provided, however, that activities by the Executive with
respect to passive investments, so long as such activities do
not, alone or in the aggregate, interfere with the Executive's
performance of his duties as described in this Paragraph 1(b),
will not be deemed inconsistent with the requirements of this
Agreement. Nothing in this Agreement will prevent Executive
from serving on boards of corporations or civic or charitable
organizations, owning no more than three percent (3%) of the
outstanding equity securities of a publicly traded
corporation, or making passive investments in venture capital
funds and similar entities established by persons who are not
affiliated with or related to the Executive and over which the
Executive has no power to direct the management or investment
decisions, provided that such activities do not conflict with
the interests of the Company.
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(c) The "Effective Date" shall be the date of the consummation
of the merger contemplated by the Agreement and Plan of Merger
among Alcatel, Zeus Acquisition Corp. and Xylan Corporation
(the "Merger").
2. Term and Position.
(a) Subject to the provisions for renewal and termination
hereinafter stated, the term of this Agreement shall begin on
the Effective Date and shall continue through the second
anniversary of the Effective Date. As of the second and each
successive anniversary of the Effective Date, such term
automatically shall be extended for one (1) additional year,
unless:
(i) the Executive's employment is terminated by
the Executive or the Company for any reason
or
(ii) either the Company or the Executive shall
give written notice to the other, at least
ninety (90) days before the second
anniversary of the Effective Date, or any
subsequent annual anniversary, that this
Agreement shall not be so extended but shall
terminate upon the expiration of the
then-current term.
All references herein to the term of this Agreement shall
include by reference any periods of renewal thereof, if any.
(b) Notwithstanding any provision in this Agreement to the
contrary, all obligations under this Agreement are subject to
the condition that the Merger occur, and this Agreement shall
terminate if such condition is not satisfied.
(c) If:
(i) the Company materially changes the Executive's
duties and responsibilities, demotes or reduces
Executive's authority;
(ii) the Executive's place of employment or the
principal executive offices of the Company are
located more than 50 miles from the geographical
center of Calabasas, California;
(iii) there occurs a material breach by the Company
of any of its obligations under this Agreement, which
breach has not been cured in all material respects
within thirty (30) business days after the Executive
gives notice thereof to the Company;
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then in any such event the Executive shall have the right to
terminate his employment with the Company, but such
termination shall, for purposes of this Agreement be
considered a resignation by the Executive for "good reason."
The Executive may exercise such rights of termination at any
time within three (3) months following the occurrence of the
applicable event.
3. Compensation
During the term of his employment under this Agreement the
Company shall pay or provide, as the case may be, to the Executive the
compensation and other benefits and rights set forth in this Paragraph
3.
(a) During the term of this Agreement, the Company shall pay
to the Executive a base salary of $400,000 per year (the
"Salary"), payable in accordance with the Company's usual pay
practices (and in any event no less frequently than monthly).
Executive's Salary shall be reviewed annually during the term
of this Agreement and any increase shall be effective on the
anniversary of the Effective Date.
(b) The Executive shall be eligible for an annual bonus in a
target amount of 50 percent of his Salary, based on
achievement of 100 percent of performance standards to be
established by the Board of Directors of the Company (the
"Board"). Any such bonus shall be measured and paid quarterly.
(c) The Company shall provide for Executive to participate in
any and all executive incentive bonus programs that may be
established by the Company hereafter.
(d) During the term of this Agreement, the Company shall
provide to the Executive such health and welfare benefits as
may be available to other executive employees of the Company.
(e) The Executive shall participate in all retirement and
other benefit plans of the Company generally available from
time to time to employees or executives of the Company and for
which the Executive qualifies under the terms thereof (and
nothing in this Agreement shall or shall be deemed to affect
in any way the Executive's rights and benefits thereunder
except as expressly provided herein).
(f) The Executive shall be entitled to such periods of
vacation and sick leave allowance each year as are determined
by the Company for all executives of the Company.
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(g) The Company shall reimburse the Executive or provide him
with an expense allowance during the term of this Agreement
for travel, entertainment and other expenses reasonably and
necessarily incurred by the Executive in connection with the
Company's business, in agreement with the Company's practice.
The Executive shall furnish such documentation with respect to
reimbursement to be paid hereunder as the Company shall
reasonably request.
4. Payment in the Event of Death or Permanent Disability.
In the event of the Executive's death or permanent disability,
the Executive's employment hereunder shall terminate and the Executive
shall be entitled to no further compensation or other benefits under
this Agreement, with the exception of any earned and unpaid Salary,
incentive bonus or other benefit accrued and earned by him hereunder up
to and including the date of such death or permanent disability;
provided, however, that nothing in this Agreement shall affect
Executive's right to receive death or disability benefits under the
Company's life and disability insurance programs. Permanent disability
shall be determined in a manner consistent with such determination
under the Company's disability insurance program.
5. Termination.
(a) The employment of the Executive under this Agreement may
be terminated,
(i) due to the Executive's death or by the Company
due to permanent disability (as defined in Paragraph
4) of the Executive;
(ii) by the Company for "cause" at any time by action
of the board of directors or Chairman of the Company;
(iii) by the Executive for "good reason" as provided
in Paragraph 2(c); or
(iv) by the Company at any time "without cause."
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For purposes hereof, "cause" shall mean:
(A) the Executive's fraud, embezzlement or
similar activities; or
(B) the Executive's conviction of, or plea
of guilty or no contest to, any felony or
any crime involving fraud, embezzlement or
other defalcation or any crime involving
moral turpitude; or
(C) the Executive's commission of any act of
dishonesty or series of repeated acts of
dishonesty which are not in the best
interests of the Company, or which are
injurious to the business reputation of the
Company; or
(D) the Executive's willful and repeated
failure to perform his material duties under
this Agreement, including without
limitation, the failure to follow the
directions of Chairman, which failure has
not been cured within thirty (30) business
days after the Company gives written notice
thereof to the Executive; or
(E) The Executive's material breach of any
provision of this Agreement, which breach
has not been cured in all substantial
respects within thirty (30) business days
after the Company gives written notice
thereof to the Executive.
For purposes hereof, a termination by the Company "without
cause" shall mean a termination by the Company for any reason
other than pursuant to Paragraph 5(a)(i) or 5(a)(ii).
Upon any termination of Executive's employment under this
Agreement for any reason, all offices and directorships held
by the Executive in the Company or any of its affiliates shall
be terminated.
(b) In the event of termination pursuant to Subparagraph
(a)(i) or (a)(ii) of this Paragraph 5, the Executive shall be
entitled to no further compensation or other benefits under
this Agreement except as to that portion of any unpaid salary,
incentive bonus and other benefits referred to in Paragraph 4,
if applicable, accrued and earned by him hereunder up to and
including the effective date of such termination.
(c) In the event of termination pursuant to Paragraph
5(a)(iii) or 5(a)(iv), then for a period of two (2) years from
the date of termination, the Executive shall be entitled to:
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(i) the continuation of the Executive's Salary (in
accordance with the Company's payroll practices), at
the then-effective annual rate of Salary, as
determined under Paragraph 3(a), and
(ii) subject to the Executive's continued payment of
applicable premiums, the continuation of health and
welfare benefits in effect as of the date of such
termination; provided, however, that any rights the
Executive (including his spouse and dependents) may
have for continued health coverage under the
Consolidated Omnibus Budget Reconciliation Act of
1985, as amended ("COBRA"), shall run concurrently
(and not consecutively) with the continuation of
health benefits under this Paragraph 5(c)(ii).
6. Options.
As of the Effective Date, the Company and the Executive hereby
agree that his options to purchase shares of Xylan Corporation (whether
vested or unvested) (the "Options") be amended to provide that: (I) the
Options will not terminate following the termination of the Executive's
employment for any reason other than for the reason described under
Subparagraph 5(a)(ii) of this Agreement; (II) the Executive shall
continue to vest in the Options in accordance with the applicable
option plan or agreements for the Options on the same basis as if the
Executive continued to be employed, provided that the Executive
continues to fulfill all obligations with respect to the restrictive
covenant set forth in Paragraph 7(a) hereof; and (III) if the Executive
fulfills such restrictive covenant obligations, the Executive shall be
entitled to exercise such Options at any time within the thirty (30)
day period following the satisfaction of the restrictive covenant.
Notwithstanding anything herein to the contrary, unless terminated
earlier as contemplated hereunder, under the applicable option plan or
under the agreements for the Options, the Options shall automatically
expire on their originally-specified expiration dates.
7. Covenants and Confidential Information.
The Executive acknowledges the Company's reliance on and
expectation of the Executive's continued commitment to performance of
his duties and responsibilities during the time when he is employed
under this Agreement. In light of such reliance and expectation on the
part of the Company, and in consideration of the transactions
contemplated by the Merger, Executive agrees as follows:
(a) During the term of the Executive's employment under this
Agreement and for a period ending two (2) years after the
second anniversary of the Effective Date, Executive shall not,
directly or indirectly:
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(i) own, manage, control or participate in the
ownership, management, or control of, or be employed
or engaged by or otherwise affiliated or associated
as a consultant, independent contractor or otherwise
with any other corporation, partnership,
proprietorship, firm, association or other business
entity engaged in the business of designing,
manufacturing and/or selling enterprise data LAN
switching, ATM switching and/or Gigabit Ethernet
switching products to customers in the enterprise
and/or carrier markets; provided, however, that the
following shall not be deemed a violation of this
covenant: (A) the ownership of not more than three
percent (3%) of any class of publicly traded
securities of any entity; and (B) passive investments
in venture capital funds and similar entities
established by persons who are not affiliated with or
related to the Executive and over which the Executive
has no power to direct the management or investment
decisions.
(ii) offer to employ or otherwise engage, any person
who is then (or was at any time within one year prior
to the time of such employment, engagement or offer
thereof) an employee, sales representative or agent
of the Company; or
(iii) solicit any business from any person or entity
that is at the time of such solicitation a customer
of the Company in a manner likely to result in a
discontinuance or reduction of the extent of such
person's or entity's business relationship with the
Company, or induce or influence any customer,
supplier or other person that has a business
relationship with the Company to discontinue or
reduce the extent of such relationship with the
Company.
(b) During the term of Executive's employment under this
Agreement and for two (2) years thereafter, Executive shall
not disclose, divulge, discuss, copy or otherwise use or
suffer to be used in any manner, in competition with, or
contrary to the interests of, the Company, any confidential
information relating to the Company's operations, properties
or otherwise to its particular business or other trade secrets
of the Company, it being acknowledged by the Executive that
all such information regarding the business of the Company
compiled or obtained by, or furnished to, the Executive while
the Executive shall have been employed by or associated with
the Company is confidential information and the Company's
exclusive property; provided, however, that the foregoing
restrictions shall not apply to the extent that such
information (A) is obtainable in the public domain or known in
the industry generally, (B) becomes obtainable in the public
domain or known in the industry generally, except by reason of
the breach by the Executive of the terms hereof; or (C) is
required to be disclosed by rule of law or by order of a court
or governmental body or agency.
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(c) The Executive agrees and understands that the remedy at
law for any breach by him of this Paragraph 7 may be
inadequate and that the damages flowing from such breach are
not readily susceptible to being measured in monetary terms.
Accordingly, it is acknowledged that, upon the Executive's
violation of any provision of this Paragraph 7, the Company
shall be entitled to immediate injunctive relief and may
obtain a temporary order restraining any further breach.
Nothing in this Paragraph 7 shall be deemed to limit the
Company's remedies at law or in equity for any breach by the
Executive of any of the provisions of this Paragraph 7 which
may be pursued or availed of by the Company.
8. Withholding of Taxes.
The Company shall withhold from any amounts payable under this
Agreement all federal, state, local or other taxes as legally shall be
required to be withheld.
9. Miscellaneous.
(a) The Executive represents and warrants that he is not a
party to any agreement, contract or understanding, whether
employment or otherwise, which would restrict or prohibit him
from undertaking or performing employment in accordance with
the terms and conditions of this Agreement. The Executive
further covenants that he will not impair his ability to carry
out his obligations under this Agreement by entering into any
agreement or in any way assisting others, directly or
indirectly, to enter into any agreement which will violate the
confidentiality, non-solicitation and non-competition
provisions of this Agreement.
(b) If any clause or provision of this Agreement shall be held
to be invalid or unenforceable, such clause or provision shall
be construed and enforced as if it had been more narrowly
drawn so as not to be invalid or unenforceable, and such
invalidity or unenforceability shall not affect or render
invalid or unenforceable any other provision of this
Agreement.
(c) The rights and obligations of the Company under this
Agreement shall inure to the benefit of, and shall be binding
on, the Company and its successors and assigns, and the rights
and obligations of the Executive under this Agreement shall
inure to the benefit of, and shall be binding upon, the
Executive and (other than obligations to perform services and
to refrain from competition and disclosure of confidential
information) his heirs, personal representatives and assigns.
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(d) Any notice to be given under this Agreement shall be
personally delivered in writing or shall have been deemed duly
given when received after it is posted in the United States
Mail, postage prepaid, registered or certified, return receipt
requested, and if mailed to the Company, shall be addressed to
its principal place of business, attention: Human Resources,
and if mailed to the Executive, shall be addressed to him at
his last known address on the records of the Company, or at
such other address or addresses as either the Company or the
Executive may hereafter designate in writing to the other. Any
notice sent on behalf of a party may be signed and sent by an
attorney for that party. Notices sent by Federal Express or
similar overnight delivery service or by facsimile
transmission shall also constitute due notice under this
Paragraph 9(d), effective upon receipt thereof.
(e) The failure of either party to enforce any provision or
provisions of this Agreement shall not in any way be construed
as a waiver of any such provision or provisions as to any
future violations thereof, nor prevent that party thereafter
from enforcing each and every other provision of this
Agreement. The rights granted the parties herein are
cumulative and the waiver of any single remedy shall not
constitute a waiver of such party's right to assert all other
legal remedies available to it under the circumstances.
(f) This Agreement supersedes all prior agreements and
understandings between the parties made prior to the date
hereof and may not be modified or terminated orally. No
modification, termination or attempted waiver shall be valid
unless in writing and signed by the party against whom the
same is sought to be enforced.
(g) This Agreement shall be governed by and construed
according to the laws of the State of California.
(h) Captions and Paragraph headings used herein are for
convenience and are not a part of this Agreement and shall not
be used in construing it.
(i) Where necessary or appropriate to the meaning hereof, the
singular and plural shall be deemed to include each other, and
the masculine, feminine and neuter shall be deemed to include
each other.
(j) This Agreement may be executed in multiple counterparts,
each of which will be deemed an original, but all of which
together will constitute one and the same instrument. This
Agreement may be executed by facsimile signature.
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