Exhibit 10.39
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this first day of July, 1998, by and
among FiveCom, Inc., a Massachusetts corporation with its principal place of
business in Waltham, Massachusetts (hereinafter referred to as the "Company"),
and Xxxxxxx X. Xxxxxxxx of Waldoboro, Maine (hereinafter referred to as the
"Employee").
WHEREAS, the Company desires to employ the Employee; and
WHEREAS, the Employee desires to serve in the employ of the Company on a
full-time basis for the period provided in this Employment Agreement
(hereinafter referred to as the "Agreement") on the terms and conditions
hereinafter set forth; and
WHEREAS, the Company and the Employee wish to set forth the terms and
conditions under which such employment will occur.
NOW, THEREFORE, in consideration of the offer of employment by the Company
and the acceptance of employment by the Employee, and the mutual promises and
covenants contained herein, the Company and the Employee hereby agree as
follows:
1. Term of Agreement.
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(a) Term. The term of this Agreement shall begin on July 1, 1998
(hereinafter referred to as the "Effective Date") and shall expire on December
31, 1998, provided that, if each of the parties hereto gives written notice to
the other party, at least 30 days prior to such date, of its desire to continue
this Agreement, this Agreement shall continue until December 31, 2001.
(b) Expiration. Notwithstanding anything to the contrary in this Section
1, except as to vested benefits, this Agreement and all obligations hereunder
shall terminate on the earliest to occur of (i) the date of the Employee's
death, (ii) 30 days after the Company gives notice to the Employee that the
Company is terminating the Employee's employment for reason of Total Disability
or Cause (as defined below); or (iii) the expiration of the applicable term of
the Agreement as specified in Section 1(a) above.
2. Definitions. The following terms shall have the meanings set forth
below:
"Affiliate" means a person that directly or indirectly through one or
more intermediaries controls, is controlled by, or is under common control with,
the Company.
"Board" means the Board of Directors of the Company.
"Cause" means any of the following events or occurrences:
(i) Any act of material dishonesty taken by, or committed at the
direction of, the Employee.
(ii) Any illegal or unethical conduct which would impair the
business reputation of the Company.
(iii) Conviction of a felony.
(iv) The continued failure of the Employee to perform his
responsibilities and duties under this Agreement in a
satisfactory manner, 30 days after demand for performance
has been
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delivered in writing to the Employee specifying the manner
in which the Company believes that the Employee is not
performing.
"Constructive Discharge" means:
(i) any reduction in the Employee's annual base salary in effect
as of the Effective Date of this Agreement, or as the same
may be increased from time to time;
(ii) a substantial reduction in the nature or scope of the
Employee's responsibilities, duties or authority from those
described in Section 3(c) of this Agreement; or
(iii) a material adverse change in the Employee's title or
position.
"Severance Benefits" means the benefits set forth in Section 5 of this
Agreement.
"Total Disability" means the complete and permanent inability of the
Employee to perform all of his duties under this Agreement on a full-time basis
for a period of at least six consecutive months, as determined upon the basis of
reasonable evidence, which may include independent medical reports and data.
3. Employment.
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(a) Position. The Company hereby agrees to employ the Employee in the
capacity of Chairman of the Board of Directors and Chief Executive Officer, and
in such other capacities as the Board of Directors may, from time to time,
assign to him, and the Employee hereby agrees to be so employed by the Company
for the period beginning on the Effective Date and ending on the date on which
the
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Employee's employment is terminated in accordance with this Agreement (the
"Employment Period"). This Agreement shall not restrict in any way the right of
the Company to terminate the Employee's employment at whatever time and for
whatever reason it deems appropriate (subject to the Company's obligations under
Section 5 of this Agreement), nor shall it limit the right of the Employee to
terminate employment at any time for whatever reason he deems appropriate.
(b) Performance. The Employee agrees that during the Employment Period
he shall devote substantially all his business attention and time to the
business and affairs of the Company, and use his best efforts to perform
faithfully and efficiently the duties and responsibilities of the Employee under
this Agreement. Without limiting the foregoing, the Employee agrees to devote
his full attention to his position during the Employment Period and to resign
any position that he holds with MaineCom Services effective upon the Company's
initial public offering of Common Stock (or the initial public offering of
Common Stock of the Company's successor, as the case may be). It is expressly
understood that (i) the Employee may devote a reasonable amount of time to such
industry associations and charitable and civic endeavors as shall not interfere
with the services that the Employee is required to render under this Agreement,
and (ii) the Employee may serve as a member of one or more boards of directors
of companies that are not affiliated with the Company and do not compete with
the Company or any of its Affiliates so long as such membership does not
materially interfere with the Employee's duties hereunder.
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(c) Job Duties. The following listing of job duties shall represent the
Employee's primary responsibilities. Such responsibilities may be expanded or
decreased as the business needs of the Company require. The Employee's primary
job responsibilities shall include but not be limited to,the exercise of the
highest executive authority for the guidance, development and management of all
aspects of the Company's business.
4. Compensation and Benefits.
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(a) During the Employment Period, the Employee shall be compensated as
follows:
(i) Salary. The Employee shall receive an annual base salary,
the amount of which shall be reviewed regularly and
determined from time to time, but which shall not be less
than $200,000. His salary shall be payable in accordance
with the Company's usual payroll practices. In the event
that this Agreement is extended beyond December 31, 1998 in
accordance with the provisions of Section 1(a), then the
Board of Directors shall consider whether, in its sole
discretion, such salary should be increased.
(ii) Bonus. The Employee shall be eligible to participate in an
executive incentive plan adopted by the Company, which among
other things, will provide an opportunity for the Employee
to earn an annual target incentive of 35% of his
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base salary, as determined by the Board of Directors in its
sole discretion.
(iii) Participation in Salaried Employee Plans. The Employee
shall be entitled to participate in any and all plans and
programs maintained by the Company from time to time to
provide benefits for its salaried employees generally,
including without limitation any savings and investment,
stock option and stock purchase or group medical, dental,
life, accident or disability insurance plan or program,
subject to all eligibility requirements of general
applicability, to the extent that Employees are not excluded
from participation therein under the terms thereof or under
the terms of any Employee plan or program or any approval or
adoption thereof.
(iv) Other Fringe Benefits. The Employee shall be entitled to all
fringe benefits generally provided by the Company at any
time to its full-time salaries employees, including without
limitation three weeks annual paid vacation, holidays and
sick leave but excluding severance pay, in accordance with
generally applicable Company policies with respect to such
benefits. In addition, the Company shall provide the
Employee with the use of a vehicle, at the
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Company's expense, of like quality with the vehicles
provided to other senior executives of the Company. Finally,
the Company will provide the Employee with the use of an
apartment, at the Company's expense, until December 31,
1998.
(v) The Company shall grant options to the Employee to purchase
shares of the Common Stock of the Company substantially on
the terms set forth on Exhibit A to this Agreement.
(b) Withholding. All compensation payable under this Section 4 shall be
subject to normal payroll deductions for withholding income taxes, social
security taxes and the like.
5. Severance Benefits. If the Employee's employment with the Company is
terminated during the Employment Period either (i) by the Company for any reason
other than death, Total Disability or Cause, or (ii) by the Employee within six
calendar months of a Constructive Discharge, the Company shall pay the Employee,
in one lump sum payment within 60 days following the date of termination of
employment as defined in Section 6 below, an amount equal to one times the
Employee's annual base salary in effect on the date immediately preceding the
date of termination, or preceding the date of a Constructive Discharge
attributable to a base salary reduction if applicable.
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6. Date of Termination. For purposes of this Agreement, the date of
termination of the Employee's employment shall be the date notice is given to
the Employee by the Company and/or any successor or, in the case of a
Constructive Discharge, the date set forth in a written notice given to the
Company or any successor by the Employee, provided that the Employee gives such
notice within six calendar months of the Constructive Discharge, and specifies
therein the event constituting the Constructive Discharge.
7. Taxes. All amounts payable to the Employee under this Agreement shall be
subject to applicable withholding of income, wage and other taxes.
8. Non-Competition, Confidentiality and Cooperation.
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(a) The Employee agrees that:
(i) During the Employment Period and for one year after the
termination of the Employee's employment with the Company
for any reason, the Employee shall not serve as a director,
officer, employee, partner or consultant or in any other
capacity in any business that is a competitor of the
Company, or solicit Company employees for employment or
other participation in any such business, or take any other
action intended to advance the interests of such business.
(ii) During and after the Employee's employment with the Company,
he shall not divulge or appropriate to his own
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use or the use of others any secret, proprietary or
confidential information or knowledge pertaining to the
business of the Company, or any of its Affiliates, obtained
during his employment with the Company.
(iii) During the Employment Period, he shall support the
Company's interests and efforts in all regulatory,
administrative, judicial or other proceedings affecting the
Company and, after the termination of his employment with
the Company, he shall use best efforts to comply with all
reasonable requests of the Company that he cooperate with
the Company, whether by giving testimony or otherwise, in
regulatory, administrative, judicial or other proceedings
affecting the Company except any proceeding in which he may
be in a position adverse to that of the Company. After the
termination of employment, the Company shall reimburse the
Employee for his reasonable expenses and his time, at a
reasonable rate to be determined, for the Employee's
cooperation with the Company in any such proceeding.
(iv) The term "Company" as used in this Section 8 shall include
the Company, any Affiliate of the Company (determined as of
the date of termination), any successor to the business or
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operations of the Company, and any business entity spun-
off, divested, or distributed to shareholders which shall
continue the operations of the Company. The provisions of
this Section 8 shall survive the expiration or termination
of this Agreement. The Employee agrees that the Company
shall be entitled to injunctive relief to prevent any breach
or threatened breach of these provisions. In the event of a
failure to comply with part (i), (ii) or (iii) of this
Section 8, the Employee agrees that the Company shall have
no further obligations to pay the Employee any Severance
Benefits under Section 5 of this Agreement.
9. No Mitigation. The Employee shall not be required to mitigate the amount
of any payment provided for in this Agreement by seeking other employment.
10. Assignment. This Agreement and the rights and obligations of the
Company hereunder shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company, including without limitation any
corporation or other entity acquiring all or substantially all of the business
or assets of the Company whether by operation of law or otherwise. This
Agreement and the rights of the Employee hereunder shall not be assignable by
the Employee, and any assignment by the Employee shall be null and void.
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11. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Boston,
Massachusetts, in accordance with the rules of the American Arbitration
Association then in effect. The pendency of any such dispute or controversy
shall not affect any rights or obligations under this Agreement. Judgment may be
entered on the arbitrator's award in any court having jurisdiction.
12. Waiver; Amendment. The failure of either party to enforce, or any delay
in enforcing, any rights under this Agreement shall not be deemed to be a waiver
of such rights, unless such waiver is an express written waiver which has been
signed by the waiving party. Waiver of any one breach shall not be deemed to be
a waiver of any other breach of the same or any other provision hereof. This
Agreement can be amended only by written instrument signed by each party hereto
and no course of dealing or practice or failure to enforce or delay in enforcing
any rights hereunder may be claimed to have effected an amendment of this
Agreement.
13. Singular Contract. This Agreement is a singular agreement between the
Employee and the Company, and is not part of a general "plan" or "program" for
employees as a group. This Agreement shall, under no circumstances, be deemed to
be an "employee welfare benefit plan" or an "employee pension benefit plan" as
defined in the Employment Retirement Income Security Act of 1974 (hereinafter
referred to as "ERISA"). Notwithstanding, the Company may submit a letter to the
Department of Labor indicating the possible establishment of a so-called
unfunded "top hat" plan for the benefit of a select group of management and
highly
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compensated employees to avoid the costs and uncertainties which may occur in
the event of a Department of Labor audit and challenge relative to compliance
with any allegedly applicable provisions of ERISA. The Employee specifically
acknowledges and agrees that the filing of the so-called "top hat" letter notice
by the Company shall not be construed or interpreted as an admission on the part
of the Company that this Agreement constitutes an ERISA plan, and the Company
hereby categorically states, and the Employee hereby agrees, that this Agreement
is an ad hoc individual contract with the Employee.
14. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and sent by first-class, registered
or certified mail or hand-delivered to the Employee at the last residence
address he has provided to the Company or, in the case of the Company, at its
principal Employee offices to the attention of the Corporation Secretary.
15. Titles and Captions. The section and paragraph titles and captions
contained herein are for convenience only and shall not be held to explain,
modify, amplify, or aid in the interpretation, construction or meaning of the
provisions of this Agreement.
16. Miscellaneous. This Agreement shall be construed and enforced in
accordance with the laws of the Commonwealth of Massachusetts. In the event that
any provisions of this Agreement shall be held to be invalid, the other
provisions hereof shall remain in full force and effect.
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17. Entire Agreement. The terms of this Agreement are intended by the
parties to be the final expression of their agreement with respect to the
employment of the Employee by the Company and may not be contradicted by
evidence of any prior or contemporaneous oral or written agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the Effective Date written above.
THE COMPANY:
WITNESS: FIVECOM, INC.
/s/ Xxxx Xxxxxxxxx /s/ Xxxxxx Xxxxxxxxxx
_________________________________ ___________________________________
By: Xxxxxx Xxxxxxxxxx
President
THE EMPLOYEE:
WITNESS:
/s/ Elizal Arcani /s/ Xxxxxxx X. Xxxxxxxx
_________________________________ ___________________________________
Xxxxxxx X. Xxxxxxxx
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EXHIBIT A
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STOCK OPTION TERMS
The Company shall grant to the Employee an option under the Company's 1998
Stock Incentive Plan to purchase up to a number of shares of the Company's
Common Stock which is equivalent to 4% of the issued and outstanding Common
Stock of the Company on a fully-diluted basis, as of the closing of, and after
giving effect to, the IPO (but not including the exercise, if any, of the
over-allotment option granted to the underwriters in connection with the IPO),
which option shall be conditioned upon the closing of the IPO and shall become
exercisable as to (i) 1/3 of the number of shares subject to such option on the
first anniversary of the Effective Date, (ii) an additional 1/3 of the number of
shares subject to such option on the second anniversary of the Effective Date,
(iii) and an additional 1/3 of the number of shares subject to such option on
the third anniversary of the Effective Date. This option shall be evidenced by
an Option Agreement on customary terms and conditions (including the condition
that vesting occur only for so long as the Employee is employed by the Company)
and shall be granted under and subject to the terms and conditions of the
Company's 1998 Stock Incentive Plan. This option shall have an exercise price
equal to the price at which the Company's Common Stock is offered to the public
in the IPO. For purposes of this Exhibit A, the "Company" shall mean FiveCom,
Inc. or the successor corporation resulting from the reorganization of FiveCom,
Inc. and its subsidiaries and the reincorporation of FiveCom, Inc. in Delaware.
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