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EXHIBIT 10.21
CIENA CORPORATION
EXECUTIVE INCENTIVE AGREEMENT
This EXECUTIVE INCENTIVE AGREEMENT (the "Agreement"), dated as of
August 18, 1999, by and between CIENA CORPORATION, a Delaware corporation with
its principal address at 0000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx 00000
(together with its subsidiaries, the "Corporation") and XXXX X. XXXXX (the
"Executive" and with the Corporation the "Parties").
WITNESSETH
The Executive is serving as the CHIEF OPERATING OFFICER of the Corporation
and possesses an intimate knowledge of the business and affairs of the
Corporation. The Corporation and the Board of Directors for the Corporation
(the "Board") recognize the Executive's contribution to its growth and success
and desires to enter into this Agreement with the Executive in order to assure
to the Corporation the continuing benefits of the Executive's expertise and
knowledge. The Executive, in turn, desires an assurance of an agreed upon bonus
by the Corporation payable at the end of the period set forth herein.
ACCORDINGLY, in consideration of the mutual covenants and representations
contained herein and the mutual benefits derived here from, the Parties hereto
agree as follows:
1. Certain Definitions. In addition to those terms defined herein,
when used herein, the following Capitalized terms shall have the meanings
indicated:
1.1. "Bonus Payment Date" shall mean the earlier of (a) a Triggering Event
or (b) August 18, 2002.
1.2. "Cause" means (a) the Executive's willful or continued failure
substantially to perform the duties of the Executive's position (other than as
a result of Disability or as a result of termination by the Executive for Good
Reason) or to comply with the provisions of this Agreement after written notice
to the Executive by the Board specifying such failure, provided that such
"cause" shall have been found by a majority vote of the Board after at least 10
days' written notice to the Executive specifying the failure on the part of the
Executive and after an opportunity for the Executive to be heard at a meeting
of the Board; (b) any willful act or omission by the Executive constituting
dishonesty, fraud or other malfeasance, or any act or omission by the Executive
constituting immoral conduct, which in any such case is injurious to the
financial condition or business reputation of the Corporation or any of its
affiliates; (c) the Executive's indictment for a felony under the laws of the
United States or any state thereof or any other jurisdiction in which the
Corporation conducts business, (d) the Executive's willful violation of the
terms of any confidentiality or proprietary information agreement or other
obligation between the Executive and the Corporation, or (e) Executive has
accepted employment with an entity other than the Corporation. For purposes of
this definition, no act or failure to act shall be deemed "willful" unless
effected by the Executive not in good faith and without a reasonable belief
that such action or failure to act was in or not opposed to the Corporation's
best interests.
1.3. "Disability" means either (a) "total disability" as defined for
purposes of the Corporation's long-term disability benefit plan; or (b) the
Executive's inability, as a result of physical or mental incapacity, to perform
the Executive's duties for a period of six (6) consecutive months or for an
aggregate of six (6) months in any twelve (12) consecutive month period.
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1.4. "Effective Date" means the date this Agreement is executed by the
Parties hereto.
1.5. "Good Reason" means (a) material diminution in the Executive's
title, position, duties or responsibilities, or the assignment to the Executive
of duties that are inconsistent, in a material respect, with the scope of
duties and responsibilities associated with the Executive's position
immediately prior to the Effective Date; or (b) reduction in base salary or
incentive compensation opportunity, or a reduction in level of participation in
long term incentive, benefit and other plans for senior executives as in effect
immediately preceding the Effective Date, or their equivalents. For purposes of
this Section, an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Corporation promptly after receipt of
notice thereof given by the Executive shall be excluded.
1.6. "Incentive Bonus" shall mean Three Million U.S. Dollars
($3,000,000).
1.7. "Pro-Rata Bonus" and "Pro-Rata Portion" shall have the meanings
set forth in Section 3(b) below.
1.8. "Triggering Event" shall mean the occurrence of a Transfer of
Control, and subsequent termination of Executive's employment with the
Corporation either without Cause by the Corporation, or for Good Reason by the
Executive. For purposes of this Section, Executive's employment with the
Corporation will be deemed to have terminated on the earlier of the date the
Executive's employment with the Corporation ceases or the date that written
notice of any such termination is received by the Executive or by the
Corporation, as the case may be, even though the parties may agree in
connection therewith that the Executive's employment with the Corporation will
continue for a specified period thereafter. The failure by the Executive or the
Corporation to set forth in any such notice sufficient facts or circumstances
showing Good Reason or Cause, as the case may be, shall not waive any right of
the Executive or the Corporation or preclude either party from asserting such
facts or circumstances in the enforcement of any such right
1.9. "Transfer of Control" shall be deemed to have taken place on the
earliest of the date of (a) the direct or indirect sale or exchange by the
stockholders of the Corporation of all or substantially all of the stock of the
Corporation where the stockholders of the Corporation before such sale or
exchange do not retain, directly or indirectly, at least a majority of the
beneficial interest in the voting stock of the surviving, continuing,
successor, or purchasing corporation or parent corporation thereof, as the case
may be (the "Acquiring Corporation") after such sale or exchange; (b) a merger
or consolidation where the stockholders of the Corporation before such merger
or consolidation do not retain, directly or indirectly, at least a majority of
the beneficial interest in the voting stock of the Acquiring Corporation after
such merger or consolidation; (c) the sale, exchange, or transfer of all or
substantially all of the assets of the Corporation (other than a sale,
exchange, or transfer to one or more subsidiary corporations of the
Corporation); (d) a liquidation or dissolution of the Corporation; or (e) any
other event that the Board, in its sole discretion, shall determine constitutes
a Transfer of Control In each case the determination of whether or not a
"Transfer of Control" is deemed to have taken place shall be made without
regard to whether such events or occurrences constituting the Transfer of
Control were hostile or against the position of the Board, or were approved or
concurred in by the Board.
2. Payment of Incentive Bonus. CIENA promptly shall pay Executive the
Incentive Bonus on the Bonus Payment Date. The Executive shall be entitled to
receive the prime rate of interest published from time to time by The Wall
Street Journal on any payment under this Agreement that is more than thirty
(30) days overdue.
3. Revocation of the Incentive Bonus. The obligation of the
Corporation to pay Executive the Incentive Bonus under this Agreement shall be
considered revoked, and Executive's rights in relation thereto forfeited, to
the extent provided below.
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(a) Termination of Employment for Cause, or by Executive's Voluntary
Action. If prior to the Bonus Payment Date, Executive is terminated for
Cause, or Executive voluntarily ceases to be an employee of the Corporation
for any reason except death, Disability or Good Reason, the obligation of the
Corporation to pay the Incentive Bonus under this Agreement shall be
considered revoked. For purposes of this Section, Executive's employment with
the Corporation will be deemed to have terminated on the earlier of the date
the Executive's employment with the Corporation ceases or the date that
written notice of any such termination is received by the Executive or by the
Corporation, as the case may be, even though the parties may agree in
connection therewith that the Executive's employment with the Corporation
will continue for a specified period thereafter
(b) Other Termination of Executive's Employment. If prior to the Bonus
Payment Date (a) Executive's employment with the Corporation is terminated by
the Executive for Good Reason or as a result of Executive's death or
Disability, or (b) Executive's employment with the Corporation is terminated by
the Corporation for any reason other than for Cause, Executive (or Executive's
legal representative) shall be entitled to a pro-rata portion of the Incentive
Bonus, such portion to be calculated as set forth below (the "Pro-Rata Bonus"),
and the balance of the Incentive Bonus shall be considered revoked on the date
Executive's employment was terminated.
For purposes of this Section 3(b), the Pro-Rata Bonus shall equal the
product of (x) the Incentive Bonus and (y) the Pro-Rata Portion. The "Pro-Rata
Portion" shall be calculated according to the following schedule:
Pro-Rata Portion
Prior to August 18, 2000 0
On August 18, 2000, provided Executive is continuously 25%
employed by the Corporation from the Effective Date
Plus
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For each full month of Executive's continuous 3.125%
employment by the Corporation from and after August
18, 2000
In no event shall the Pro-Rata Bonus exceed 100% of the
Incentive Bonus.
(c) Leave of Absence. For purposes hereof, Executive's employment with
the Corporation shall not be deemed to terminate if Executive takes any sick
leave, or other bona fide leave of absence approved by the Corporation of
ninety (90) days or less. In the event of a leave in excess of ninety (90)
days, Executive's employment shall be deemed to terminate on the ninety-first
(91st) day of the leave unless Executive's right to reemployment with the
Corporation remains guaranteed by statute or contract. Notwithstanding the
foregoing, unless otherwise designated by the Corporation (or required by law)
a leave of absence shall not be treated as employment for purposes of
determining the Pro-Rata Bonus under Section 3(b).
4. Termination of Agreement. This Agreement shall automatically be
deemed to have terminated on the earlier of: (a) the revocation of the
Corporation's obligations pursuant to Section 3(a) above, (b) the payment of
the Pro-Rata Bonus pursuant to Section 3(b) above, or (c) the payment in full
of the Incentive Bonus to Executive pursuant to Section 2. Upon the termination
of this Agreement, all rights and obligations of the Corporation hereunder
immediately shall terminate.
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5. Miscellaneous/ General.
5.1. Successors. All rights under this Agreement are personal to the
Executive and, without the prior written consent of the Corporation, shall not
be assignable by the Executive. This Agreement shall inure to the benefit of or
be enforceable in the event of the Executive's death or disability by the
Executive's legal representative as expressly provided in this Agreement. This
Agreement shall inure to the benefit of and be binding upon the Corporation and
its successors and assigns. The Corporation will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Corporation to assume expressly and
agree to perform this Agreement in the same manner and to the extent that the
Corporation would be required to perform it if no such event resulting in a
successor had taken place. As used in this Agreement, "Corporation" shall mean
the Corporation and any successor to its business and/or assets as aforesaid
which assumes and agrees, or is otherwise obligated, to perform this Agreement
by operation of law, or otherwise.
5.2 No Effect on Other Agreements; Inconsistent Provisions. This
Agreement shall be in addition to, and have no effect on, the provisions of any
other agreements, including without limitation indemnification agreements and
proprietary inventions/confidentiality agreements that may exist between the
Corporation and the Executive. Notwithstanding the foregoing, to the extent
that the terms and conditions of this Agreement are inconsistent with those
found in any other agreement or plan to which the Corporation and the Executive
are each a party, the terms and conditions of this Agreement shall be
controlling.
5.3. Controlling Law. This Agreement shall in all respects be governed
by, and construed in accordance with, the laws of the State of Delaware
(without regard to the principles of conflicts of laws).
5.4. Arbitration. DISPUTES REGARDING THE EXECUTIVE'S EMPLOYMENT WITH
THE CORPORATION, INCLUDING, WITHOUT LIMITATION, ANY DISPUTE HEREUNDER, WHICH
CANNOT BE RESOLVED BY NEGOTIATIONS BETWEEN THE CORPORATION AND THE EXECUTIVE
SHALL BESUBMITTED TO, AND SOLELY DETERMINED BY, FINAL AND BINDING ARBITRATION
CONDUCTEDBY JAMS/ENDISPUTE, INC. OR ANY SUCCESSOR THERETO, IN ACCORDANCE WITH
JAMS/ENDISPUTE, INC.'S ARBITRATION RULES APPLICABLE TO EMPLOYMENT DISPUTES, AND
THE PARTIES AGREE TO BE BOUND BY THE FINAL AWARD OF THE ARBITRATOR IN ANY SUCH
PROCEEDING. THE ARBITRATOR SHALL APPLY THE LAWS OF THE STATE OF DELAWARE WITH
RESPECT TO THE INTERPRETATION OR ENFORCEMENT OF ANY MATTER RELATING TO THIS
AGREEMENT. ARBITRATION MAY BE HELD IN BALTIMORE, MARYLAND OR SUCH OTHER PLACE
AS THE PARTIES HERETO MAY MUTUALLY AGREE, AND SHALL BE CONDUCTED SOLELY BY A
FORMER JUDGE. JUDGMENT UPON THE AWARD BY THE ARBITRATOR MAY BE ENTERED IN ANY
COURT HAVING JURISDICTION THEREOF. THE PREVAILING PARTY IN THE ARBITRATION, AS
DETERMINED BY THE ARBITRATOR, SHALL BE ENTITLED TO REIMBURSEMENT OF HIS
REASONABLE ATTORNEY'S FEES AND DISBURSEMENTS INCURRED IN SUCH PROCEEDINGS BY
THE NON-PREVAILING PARTY.
5.5. Severability. Any provision in this Agreement which is prohibited
or unenforceable shall be ineffective only to the extent of such prohibition or
unenforceability without invalidating or affecting the remaining provisions
hereof.
5.6. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
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5.7. Integrated Agreement. This Agreement constitutes the entire
understanding and agreement of Executive and the Corporation with respect to
the subject matter contained herein, and there are no agreements,
understandings, restrictions, representations, or warranties among Executive
and the Corporation other than those as set forth or provided for herein.
5.8. Tax Advice. Executive represents and warrants that he has
consulted with a tax advisor of his own choosing in connection with
understanding and planning for any and all federal or state income or capital
gains taxes associated with this Agreement, and that he has not received and is
not expecting or relying on the Corporation for such advice.
IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement on the date first above written.
CIENA CORPORATION EXECUTIVE
By: ___________________ By: ________________
Name: Xxxxxxx X. Xxxxxxx Name: Xxxx X. Xxxxx
Title: Chief Executive Officer
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