Exhibit 10.11
EMPLOYMENT AGREEMENT
This is an Employment Agreement ("Agreement") dated September 10, 2001, between
you, Xxxxx X. Xxxxxxxxxx, a resident of the State of Texas, and Dorsal Networks,
Inc., a Delaware corporation ("Dorsal" or the "Company"). Whereas the Company
desires to employ you and to assure itself of your continued services, and you
desire to be employed by the Company for the period set forth below, we both
agree, in consideration of the following covenants and agreements, to be legally
bound by the terms and conditions of this Agreement.
1. Employment Term.
The Company agrees to employ you as its Chief Executive Officer. Additionally,
you will be a member of the Board of Directors representing the class of common
shareholders of the Company. You will begin your employment with the Company on
September 10, 2001, which date is referred to as the Commencement Date in this
Agreement. Your employment will end after this initial four-year period, unless
terminated earlier (see Termination, Section 6 below), or unless automatically
renewed for an additional one-year period (As used in this Agreement, "Term"
shall mean the initial four-year period and any renewal periods.) No later than
sixty (60) days before the expiration of the Term, the parties shall negotiate
in good faith relative to the terms and conditions of Section 4 to renew this
Agreement based upon the performance of the Company and you during the Term.
2. Employee Representations.
You make the following representations and guarantees about your ability to
enter this Agreement and to comply with its terms and conditions: that you enter
this Agreement voluntarily, and that your employment under this Agreement,
except to the extent acknowledged in this Subsection, will not conflict with any
legal duties owed to others, or with any other agreement to which you are a
party or by which you are bound, including but not limited to any
non-competition or non-solicitation clause contained in an earlier employment
agreement. Furthermore, you represent that your outside activities will be
contained and will not interfere with your ability to perform the duties
required in this position. Notwithstanding the foregoing, nothing herein shall
prevent you from serving on charitable boards or committees, so long as such
activities do not significantly interfere with the performance of your
responsibilities hereunder.
3. Duties and Extent of Services.
As Chief Executive Officer and a member of the Board of Directors, you will
devote substantially all of your business time, attention, and efforts
diligently performing to the best of your ability all of the duties required in
this position, according to the direction and under the supervision of the Board
of Directors, and in compliance with all Company policies. You will also serve
in such other positions or offices of the Company or its subsidiaries as the
Board of Directors shall determine.
4. Compensation.
You will receive the following compensation package to take effect on the
Commencement Date:
a. A base salary of $350,000 per annum. This salary is effective and
payable beginning on the Commencement Date, or upon the renewal of
this Agreement, and will be paid to you in accordance with the
Company's payroll policy. The Board of Directors will review your base
salary annually.
b. Under the terms and conditions of the Dorsal Networks, Inc. 2000
Equity Compensation Plan (the "Plan"), and any other terms and
conditions that the Board may impose under the Plan, such other terms
and conditions being imposed consistent with Section 13 of the Plan,
you will be eligible to join the Company's Equity Compensation
program. Pursuant to the terms of the Plan, you will receive options
to purchase an amount of shares of the Company's common stock
representing 5.00% of the Company's outstanding share capital as of
the close of its Series B financing ("Option Grant"). If the Company
issues more shares in connection with its Series B financing than is
indicated on the capitalization table provided to you, you will
receive additional options so that your equity in the Company equals
5% at the final closing of the Series B financing. Options are
immediately exercisable as of the Commencement Date. After exercise,
the shares purchased by your exercising options will vest as follows:
Twenty-five percent (25%) of the shares purchasable with the Option
Grant will vest on your Commencement Date, but will be subject to
divestiture as set forth below and will be held in escrow by the
Company until the first anniversary of your Commencement Date ("Vested
Shares"). Pursuant to the terms of this Agreement and the escrow
agreement, on the first anniversary of your Commencement Date the
Company will release the Vested Shares to you. The remainder will vest
ratably, in an equal amount each month, for the 36-month period
commencing the month after the first anniversary of your Commencement
Date. If shares received through these options are unvested when your
employment with the Company terminates for any reason, the Company has
the right to buy back the unvested shares at the same exercise price
you paid for them within thirty (30) days of termination. You are
responsible for obtaining your own tax and other legal and accounting
advice in connection with the options.
For your benefit, if you choose to exercise your options to purchase
Vested Shares, we will set aside those shares in an escrow account,
for which the Company will be the escrow agent. The terms of the
escrow agreement, a copy of which has been provided to you ("Escrow
Agreement") will provide relevant in part, that (i) if you are
terminated Without Cause as defined in Section 6(d) within the first
year of employment, the escrow agent will release the shares to you;
(ii) if you are terminated for Cause as defined in Section 6(c) within
the first year of employment, you forfeit any rights you may have to
those shares so long as the Company pays you an amount equal to the
exercise price you paid for those Shares within thirty (30) days of
your termination; and (iii) if you terminate your
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employment for Good Cause as defined in Section 6(e) within the first
year of employment, one-half of the shares that are set aside in the
escrow account will be released to you by the escrow agent and the
Company may repurchase the remaining shares held in escrow at a price
equal to the exercise price paid by you for those shares within thirty
(30) days of the effective date of your termination. If you terminate
your employment with the Company within the first year of employment
for any reason other than Good Cause as defined in Section 6(e), you
forfeit any rights you have to those shares so long as the Company
pays you an amount equal to the exercise price you paid for those
Shares within thirty (30) days of your termination. If the Company
does not offer to repurchase the Shares within thirty (30) days of
termination, the Company's repurchase right shall terminate. Upon the
occurrence of (i), (ii) or (iii), the escrow agent will not release
the shares absent the Company and you executing a definitive
separation agreement which includes a mutual release.
i. Change of Control. Notwithstanding the provisions of this
Subsection, you shall have the following rights with respect to
this option in the event of a Change of Control
(as that term is defined in the Plan). First, if the surviving
company does not assume the Plan, all unvested shares held by you
shall automatically vest. Second, if, upon a Change of Control,
the Plan is assumed by the surviving corporation, and within
twelve (12) months of such Change of Control you are terminated
Without Cause as defined in Subsection 6(d) below, then all
unvested shares held by you under this option shall automatically
vest on the day of termination. Finally, in the event a Change of
Control occurs, the Plan is assumed by the surviving corporation,
and within twelve (12) months of a Change in Control you resign
for Good Reason as defined in Subsection 6(f) below, fifty
percent (50%) of any remaining unvested shares held by you under
this option shall automatically vest on the day of your
resignation. Under no other circumstances shall you be eligible
to receive automatic vesting in the event of a Change of Control.
ii. Termination of Employment: The release of the Vested Shares in
the event of Termination shall take place pursuant to the terms
of the Escrow Agreement between you and the Company.
iii. Loan. To assist you in exercising the Option Grant, the Company
will provide you with an interest-bearing loan to acquire the
shares that you may purchase therewith. Under the terms of the
loan you will be required to repay any outstanding amount due the
Company (a) within 30 days of the date of termination of your
employment with the Company for any reason, or (b) within 180
days of (i) the Initial Public Offering of the Company's stock,
or (ii) a Change of Control, whichever occurs earlier. You may
repay the loan and any interest due thereon at any time prior to
these events without any penalty.
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5. Other Employee Benefits.
a. General. You will be entitled to participate in any employee benefits
programs and arrangements generally made available to executive
officers by the Company or the Company's affiliates, such as pension
plans, contributory and noncontributory welfare and benefit plans,
disability plans, medical insurance, and death benefit and life
insurance plans. Alternatively, the Company shall reimburse you for
the cost of your current permanent Enron COBRA health and life
insurance plans, provided that the cost to the Company of reimbursing
you for your participation in those plans does not exceed the cost of
providing you with coverage under the Company's health and life
insurance plans. While you are an employee, the Company will provide,
at the Company's expense, directors and officers liability insurance,
in accordance with industry practice in the United States, and allow
you three (3) weeks of annual leave per year in accordance with the
Company's leave policies.
b. Reimbursement of Expenses. While you are an employee, the Company will
reimburse you for travel, entertainment, and other out-of-pocket
expenses, provided the following requirements are met: (i) you incur
the expense on the Company's behalf; (ii) the expenses result from the
performance of your duties; (iii) the type and amount of expenses are
like those customarily incurred by others in similar positions; (iv)
you adequately account for the expenses, as required by the Internal
Revenue Code; and (v) you timely provide copies of receipts for all
expenses greater than twenty-five dollars ($25.00).
c. Relocation. You will receive a comprehensive relocation package
pursuant to the Company's relocation policy, a copy of which has been
provided to you. The Company shall pay reasonable commuting costs
between Baltimore and Houston and temporary housing (but not
transportation) in the Baltimore-Washington area through June 30,
2002.
6. Termination.
This Agreement and your employment with the Company may be terminated in any one
of the following ways:
a. Death. If you die during the term of this Agreement, this Agreement
will automatically terminate and the Company will have no further
obligations except those detailed in the Separation Pay subsection
(Subsection 6(g) below);
b. Disability.
i. If you become permanently disabled (as defined in subparagraph
(ii) below) during your employment, the Company has the right to
terminate you with written notice, and such termination may be
effective immediately or on such other future date as specified
in the notice. Afterwards the Company will have no further
obligations to you under this Agreement, except those detailed in
this subsection 6(b) and in the
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Separation Pay subsection (Subsection 6(g) below). For one year
following the date of termination for permanent disability, the
Board of Directors, in its discretion, may allow you to continue
to participate in all benefit plans and programs, including
pension and insurance, offered by the Company to its executive
officers. After that year ends, your ability to continue
participation in such plans, or to receive other coverage, will
be determined by those plans and programs.
ii. For purposes of this Agreement, "permanent disability" is defined
in one of two ways. If the Company maintains a disability
insurance policy that defines the term, and you are insured by
that policy, that definition will apply to this Agreement. If the
Company does not maintain such a policy, or the policy does not
contain a definition of "permanent disability," then the term
will be defined as any physical or mental disability or
incapacity that renders you incapable of performing the essential
functions of your job and its duties, as described in the Duties
and Extent of Services section (Section 3 above), for a period of
three (3) consecutive months or an aggregate of four (4) months
during any one-year term of employment.
c. Cause.
i. The Company may terminate you for Cause (as defined below) with
written notice to you, effective immediately (unless a future
effective date is specified in the Company's notice). After
termination for Cause, the Company will have no further
obligations to you under this Agreement. In addition, except as
otherwise required by applicable law, the Board of Directors will
determine if you will retain the right to participate in any
benefit programs or plans. After you receive written notice of
termination for Cause, you will have the opportunity to discuss
the allegations with the Board within five (5) days prior to the
Board making a final determination of the existence of Cause.
The term "Cause" shall mean that the Board of Directors has found
that that you have: (i) breached this Agreement; (ii) engaged in
(a) criminal or quasi-criminal acts of disloyalty to the Company,
including without limitation, fraud, embezzlement, theft,
commission of a felony or (b) proven job-related dishonesty;
(iii) disclosed trade secrets or confidential information of the
Company to persons not entitled to receive such information; (iv)
breached any non-competition or non-solicitation agreement
between you and the Company; (v) willfully and continuously
failed to substantially perform your duties under this Agreement
(other than as a result of physical or mental illness or injury),
after the Board of the Company delivers to you a written demand
for substantial performance that specifically identifies the
manner in which the Board believes that you have not
substantially performed your duties; or (vi) allowed your outside
activities to preclude you from performing your job functions as
described herein and you have been unable to cure such deficiency
within the ten
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(10) day period immediately following the date on which the Board
provides you with written notice of such deficiency.
d. Without Cause. The Company may terminate you Without Cause and for any
reason whatsoever upon thirty (30) days prior written notice. If,
within your first twelve (12) months of employment, you are terminated
Without Cause, subject to the terms and conditions of the Company's
benefit plans and programs then in effect, the Company shall permit
you to continue to participate in all benefit plans and programs
offered to the Company's officers for a period equal to six (6) months
or the remainder of the then-current term of this Agreement, whichever
period is shorter. Any termination by the Company, other than
termination for Cause, disability, or death, shall be considered
termination Without Cause.
e. By Executive.
i. You may also terminate your employment with the Company for any
reason whatsoever, but in all cases upon thirty (30) days written
notice to the Company. If you terminate your employment for Good
Cause (as defined below), subject to the terms and conditions of
the Company's benefit plans and programs then in effect, the
Company shall permit you to continue to participate in all
benefit plans and programs offered to the Company's officers for
a period equal to three (3) months or the remainder of the
then-current term of this Agreement, whichever period is shorter.
If you terminate for a reason other than Good Cause, the Company
will have no further obligations under this Agreement, and you
will not be eligible to receive any severance compensation.
ii. Under this Agreement, Good Cause means that you have terminated
this Agreement thirty (30) days after the occurrence of any one
of the following events, and the Company has failed to cure such
event within the time period set forth in this Section 6(e)(ii):
(a) any reduction in your base salary as set forth in this
Agreement or thereafter increased as established by Section 4(a)
above, unless such reduction is (1) pursuant to a change in the
Company's compensation policies generally and (2) effects all of
the executives with titles of Senior Vice President and higher,
or (b) a material reduction in your job duties. In either of the
above instances, however, you must promptly notify the Company in
writing and in reasonable detail the basis for your resignation
for Good Cause, and allow the Company twenty (20) business days
in which to correct the circumstances prompting the resignation.
The definition of Good Cause under this Section 6(e) shall not
apply to a termination for Good Reason within the Window Period
as defined in Section 6(f), below.
f. Change of Control, Good Reason; Window Period. You may terminate
your employment for Good Reason during the Window Period. For
purposes of this Agreement, the "Window Period" shall mean the 12
months immediately following the event constituting a Change of
Control. For example, if the Change
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of Control were September 3, 2002, the Window Period would close
on September 2, 2003. For purposes of this section, "Good Reason"
shall mean:
i. The assignment to you of any duties materially inconsistent with
the duties or responsibilities as contemplated under Section 1 or
any other action by the Company that results in a material
diminution in such position, authority, duties, or
responsibilities, excluding for this purpose a change in title or
an isolated, insubstantial, and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by you;
ii. Any failure by the Company to comply with any of the applicable
provisions of Section 4, other than an isolated, insubstantial,
and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof
given by you; or
iii. The Company requires you to be based at any office or location
other than Columbia, Maryland for a period of in excess of sixty
(60) consecutive days.
In any of the above instances, however, you must promptly notify the Company in
writing and in reasonable detail the basis for your resignation for Good Reason
and allow the Company twenty (20) business days in which to correct the
circumstances prompting the resignation.
g. Effect of Termination. Unless otherwise provided by this Agreement or
the Plan, the Company will have no further obligations to you once
your employment is terminated. You will continue to be bound by the
Confidentiality, Return of Company Property (Section 7) and Unfair
Competition (Section 8) sections of this Agreement after termination.
h. Separation Pay. Upon any termination of this Agreement, you (or your
estate or personal representative, as applicable) shall be entitled to
receive all compensation earned (including all benefits and
reimbursements accrued and due) through the effective date of
termination, and all other amounts payable to you under this
Agreement. Your right to receive any special separation pay is as
follows: (i) if you are terminated for Cause, subject to the
provisions of this Subsection (h), you will receive compensation for
one (1) month, for a sum total equal to eight and three-tenths percent
(8.3%) of your base salary as set forth in this Agreement or
thereafter increased; (ii) if you are terminated Without Cause,
subject to the provisions of this Subsection, you will receive
compensation for twelve (12) months, paid monthly, for a sum total
equal to your base salary as set forth in this Agreement or thereafter
increased; and (iii) if your employment is terminated for Good Cause,
you will receive compensation for six (6) months, paid monthly, for a
sum total equal to fifty percent (50%) of your base salary as set
forth in this Agreement or thereafter increased. The Company may
require as a condition of receiving any separation pay that you sign a
mutual release with the Company, a draft copy of which has been
provided to you.
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7. Confidentiality, Return of Company Property.
a. Confidentiality. You acknowledge that, as an employee, you will have
access to a wide range of confidential information of the Company.
This includes information and knowledge pertaining to products,
inventions, discoveries, improvements, innovations, designs, ideas,
trade secrets, proprietary information, manufacturing, packaging,
advertising, marketing, distribution and sales methods, sales and
profit figures, personnel records and practices, customer and client
lists, and relationships between the Company and dealers,
distributors, sales representatives, wholesalers, customers, clients,
suppliers and others who have business dealings with them. You further
acknowledge that such confidential information is a valuable and
unique asset to the Company. Therefore, you agree that both during and
after your employment with the Company, you will not disclose any
confidential information of the Company to any person or entity,
except as your job duties may require, without prior written
authorization from the Board of Directors. This obligation does not
apply to confidential information that becomes public knowledge,
unless it becomes public through your breach of this Agreement, a
violation of an existing confidentiality agreement with the Company by
someone else, or a required disclosure by court order or applicable
law.
b. Company Property. All records, designs, business plans, financial
statements, customer lists, manuals, memoranda, lists, research and
development plans, Intellectual Property (as that term is defined in
the accompanying Proprietary Information and Inventions Agreement),
and other property delivered to or compiled by you or at your
direction by or on behalf of the Company or its vendors or customers
that pertain to the business of the Company shall be and remain the
property of the Company and be subject at all times to the Company's
discretion and control. Likewise, upon termination of your employment,
all correspondence, reports, records, charts, advertising materials
and other similar data pertaining to the business, activities,
research and development, Intellectual Property, or future plans of
the Company that you collect or obtain access to shall be delivered
promptly to the Company without request.
8. Unfair Competition.
a. Non-Compete Covenant. You agree that during the term of this
Agreement, and for a period equal to: one (1) year from the
termination of your employment you shall not, directly or indirectly,
for yourself or on behalf of or in conjunction with any other person,
company, partnership, business, group, venturer, or other entity
(each, a "Person"), without the prior written consent of the Company:
i. engage, directly or indirectly, as an officer, director,
shareholder, owner, partner, joint venturer, or in any managerial
capacity, whether as an employee, independent contractor,
consultant or advisor (paid or unpaid), or as a sales
representative, in any business selling, marketing, or in
providing any products or services, or in research and
development for the
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purposes of providing any products or services in competition
with any aspect of any business of the Company over which you
have had management responsibility within the United States (the
"Territory") during your employment;
ii. directly or indirectly, solicit, recruit, call upon or hire any
Person who is, at that time, or who was at any time within the
prior two (2) years, an employee of the company in a managerial
capacity for the purpose or with the intent of enticing such
employee away from or out of the employ of the Company, although
you may call upon and hire any member of your immediate family;
iii. directly or indirectly, solicit, entice, induce or otherwise call
upon any Person who is, at that time, or who has been, within the
prior two (2) years, a customer of the Company within the United
States, or in any other country in which the Company conducts a
material amount of business, for the purpose of soliciting or
selling products or services in competition with the Company; or
iv. directly or indirectly, solicit, entice, induce or otherwise call
upon any prospective acquisition candidate, on your own behalf or
on behalf of any competitor of the Company, which candidate was
either called upon by the Company or for which the Company made
an acquisition analysis, for the purpose of acquiring such
entity.
b. Investments. Irrespective of Subsection 8(a) above, you may make and
hold certain investments in the Company's competitors and not violate
these competition restrictions. These investments must be held as
shares that are actively traded on a national exchange or NASDAQ NMS,
an over-the-counter market in the United States, or any recognized
foreign exchange. Your investment may not exceed five percent (5%) of
the competitor's outstanding securities, and such investment shall not
relieve you of any of your obligations under this Agreement.
c. Reasonableness. You agree that the foregoing covenants in this Section
8 impose a reasonable restraint on you in light of the activities and
business of the Company on the date of the execution of this Agreement
and the current plans of the Company. You acknowledge that the
covenants in this Section shall not prevent you from earning a
livelihood upon the termination of your employment hereunder, but
merely prevents unfair competition with the Company for a limited
period of time. Notwithstanding the foregoing, it is your intent and
the Company's intent that such covenants be construed and enforced in
accordance with the changing activities, business, and locations of
the Company throughout the term of these covenants.
d. Severability of this Section. Each part and restriction of this
Section 8 can stand alone and be enforced separately. If any part of
this Section is unenforceable, the
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other parts will not be affected. If a court found any of the
restrictions to be unenforceable, the remainder will be enforced to
the extent the court finds reasonable. This Agreement will then
conform to the court's decision.
e. Company's Enforcement is not Limited. All of the covenants in this
Section 8 shall be construed as an agreement independent of any other
provision in this Agreement, and the existence of any claim or cause
of action you may assert against the Company, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company of such covenants.
9. Specific Performance.
You acknowledge that your services are of a special, unique, and extraordinary
character, and in connection with such services, you will have access to
confidential information vital to the Company's business. By reason of this, you
consent and agree that if you violate any of the provisions of Section 7 or 8 of
this Agreement relating to confidential information and unfair competition, the
Company would sustain irreparable injury and that monetary damages would not
provide adequate remedy to the Company. You hereby agree that the Company shall
be entitled to have Sections 7 or 8 of this Agreement specifically enforced
(including, without limitation, by injunctions and restraining orders) by any
court having equity jurisdiction. Nothing in this Section, however, shall be
construed as prohibiting the Company from pursuing any other remedies available
to it for such breach or threatened breach, including the recovery of damages
from you.
10. Complete Agreement.
This Agreement and its related documents (i.e., the Proprietary Information and
Inventions Agreement and your offer letter of employment) contain all provisions
and conditions relating to your employment. Any prior agreements, arrangements,
or understandings you had are no longer valid or applicable. Any change to this
Agreement must be made in writing and signed by both parties.
11. Waiver.
Either party may waive a breach of this Agreement committed by the other. If
this occurs, that waiver will not serve as a waiver of a later breach.
12. Indemnity.
The Company shall provide you with indemnity and shall hold you harmless against
judgments, fines, amounts paid in settlement, and reasonable expenses incurred
by you in connection with the defense of any action or proceeding in which you
are a party by reason of your position as Chief Executive Officer and a member
of the Board of Directors of the Company, or for any acts or omissions made by
you in good faith in the performance of any of your duties hereunder, including
duties undertaken as an officer or director of any affiliated company or entity;
provided, however, that such indemnity shall be consistent with Delaware law and
with the provisions contained within the Company's By-laws and charter, or the
affiliated company or
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entity's By-laws or charter, addressing the indemnification of its directors,
officers and authorized representatives for actions of the nature described
herein.
13. Governing Law.
The laws of the State of Maryland govern the interpretation and enforcement of
this Agreement. In determining the governing law, no reference shall be made to
Maryland's choice of law provisions.
14. Assignability.
You may not assign or transfer all or any portion of this Agreement without the
Company's prior written permission. Any attempt you make to do so is null and
void. The Company may transfer and assign this Agreement to any of the Company's
successors, if necessary. The successors must assume all rights and obligations
of this Agreement and will be bound by them.
15. Severability of the Provisions of the Agreement.
If a court determines any part of this Agreement to be void or unenforceable,
the remainder of the Agreement will still have its full effect.
16. Delivery of Notices.
All notices permitted or required by the agreement must be in writing and
delivered by one of these means, in each case with confirmation of receipt:
o In person;
o By telecopier;
o By courier service providing for next-day delivery; or
o By registered or certified mail, return receipt requested, to the
following addresses:
If to the Company:
0000 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
If to you:
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Either party may change their address with written notice.
Notice is deemed given depending on the manner it is sent:
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o Personally - upon receipt;
o By telecopier - when telecopied;
o By courier service - the next business day after deposit with the
service; or
o By certified or registered mail - three days after mailing with
postage paid.
17. Counterparts of the Agreement.
If this Agreement is executed in one or multiple counterparts, we both deem each
to be an original. Together these counterparts will constitute one instrument.
As witnessed, both parties execute this employment agreement as of September __,
2001.
DORSAL NETWORKS, INC.
By: /s/ Xxxx Xxxxxxx
------------------------------------
Xxxx Xxxxxxx
Acting President
/s/ Xxxxx X. Xxxxxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxxxxx
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AMENDMENT AGREEMENT
This AMENDMENT AGREEMENT, dated as of January ___, 2002, is made and
entered into by and among Dorsal Networks, Inc., a Delaware corporation
("Dorsal") and Xxxxx X. Xxxxxxxxxx ("Xxxxxxxxxx").
WHEREAS, reference is made to the Agreement and Plan of Merger dated as of
January __, 2002 (the "Merger Agreement"), among Corvis Corporation, a Delaware
corporation ("Corvis"), Corvis Acquisition Company, Inc., a Delaware corporation
and a wholly-owned subsidiary of Corvis ("Corvis Sub"), and Dorsal, providing
for, among other things, the merger (the "Merger") of Corvis Sub with and into
Dorsal, with Dorsal surviving the Merger as a wholly-owned subsidiary of Corvis
and the Principal Stockholders, along with other stockholders of Dorsal,
receiving shares of common stock of Corvis, $.01 par value per share ("Corvis
Common Stock"), in exchange for shares of capital stock of Dorsal, in the manner
provided in the Merger Agreement (capitalized terms used herein and not
otherwise defined shall have the meaning ascribed to such terms in the Merger
Agreement);
WHEREAS, Xxxxxxxxxx and Dorsal are parties to that certain Employment
Agreement, dated September 10, 2001 (the "Employment Agreement");
WHEREAS, in connection with the transactions contemplated by the Merger
Agreement, Xxxxxxxxxx and Dorsal have agreed to make certain provisions with
respect to the amendment of certain terms of the Employment Agreement; and
WHEREAS, the amendment of the Employment Agreement is a material term of
the Merger.
NOW, THEREFORE, in consideration of the premises and the representations
and warranties and agreements contained herein, the parties hereto agree as
follows:
1. Amendments and Acknowledgments Regarding Employment Agreement.
(a) Reference to Company. Effective as of the Effective Time (as
defined in the Merger Agreement), the term "Company", as used in the Employment
Agreement, shall mean the Surviving Corporation (as defined in the Merger
Agreement).
(b) Options. The first three (3) sentences of Section 4(b) of the
Employment Agreement shall be deleted in their entirety and the following shall
be inserted in lieu thereof:
"Effective as of the Effective Time, and pursuant to the terms of Section
1.8 of the Merger Agreement, Corvis shall xxxxx Xxxxxx Options (as defined in
the Merger Agreement) to Xxxxxxxxxx to purchase the number of shares of Corvis
Common Stock set forth opposite Bannantine's name on Schedule II to the Merger
Agreement which Corvis Options shall be subject to the terms of the 2000 Corvis
Long Term Incentive Plan."
(c) Change of Control. The parties hereby acknowledge and agree that
the transactions contemplated by the Merger constitute a Change in Control for
all purposes referenced in the Employment Agreement. However, Xxxxxxxxxx hereby
acknowledges and agrees that notwithstanding the terms and conditions of Section
4(b)(i) of the Employment Agreement, for purposes of such Section 4(b)(i) only,
the Merger will not, in and of itself, trigger any accelerated vesting of the
Option Grant and accordingly Xxxxxxxxxx agrees to waive any accelerated vesting
under Section 4(b)(i) solely as a result of the Merger. In addition,
notwithstanding the fact that Corvis is not assuming the Plan (as defined in the
Employment Agreement), for purposes of the third and fourth sentences of Section
4(b)(i), the condition of assumption of the Plan shall be deemed to have been
satisfied.
(d) Loans. Pursuant to the terms of Section 4(b)(iii) of the
Employment Agreement, Dorsal agreed to provide you with an interest bearing loan
to be used in connection with the exercise of the Option Grant granted to you
under Section 4 of the Employment Agreement. In connection therewith, the second
sentence of Section 4(b)(iii) shall be deleted in its entirety and the following
shall be inserted in lieu thereof:
"Under the terms of the loan you will be required to repay any
outstanding amount due the Company (i) within thirty (30) days of the
termination of your employment with the Company for any reason, or (ii) within
one (1) year following the Effective Time, whichever occurs earlier."
(e) Good Reason. The parties acknowledge that Dorsal will become a
wholly-owned subsidiary of Corvis as a result of the Merger and Xxxxxxxxxx will
therefore report to different persons and his responsibilities will be
commensurate with his role as the CEO of a wholly-owned subsidiary of a public
company rather then as the CEO of a privately held company (a "Change in
Circumstances"). In connection therewith, Xxxxxxxxxx hereby acknowledges and
agrees that notwithstanding the terms and conditions of Section 6(f)(i) of the
Employment Agreement, the Change in Circumstances in connection with the Merger,
shall not be deemed to be inconsistent with or in violation of Section 6(f)(i)
of the Employment Agreement, and Xxxxxxxxxx hereby acknowledges and agrees that
such Change in Circumstances in connection with the Merger shall not be reason
for a Good Reason termination as set described in Section 6(f) of the Employment
Agreement.
2. Miscellaneous.
(a) Good Faith. Following the execution hereof and prior to the Effective
Time, the parties agree to negotiate in good faith to reach agreement on the
terms of an employment agreement between Xxxxxxxxxx and Corvis to replace the
Employment Agreement as amended hereby.
(b) Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
2
IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement
to be executed and delivered on the date first above written.
DORSAL NETWORKS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
___________________________
Name: Xxxxxxx X. Xxxxxx
Title: Secretary and General Counsel
/s/ Xxxxx X. Xxxxxxxxxx
______________________________
Xxxxx X. Xxxxxxxxxx
3
November 18, 2002
Xxxxx Xxxxxxxxxx
Corvis Corporation
0000 Xxxxxx Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Re: Salary Reduction
Dear Xxx:
In response to recent market conditions, our Board of Directors has
determined that it is necessary for Corvis to make a change in its compensation
policies. This policy change will result in the reduction of your salary by ten
(10%) percent from its current level.
This letter will have the effect of amending your employment agreement
to provide for this reduced salary; however, except as expressly set forth
herein, it does not modify any other terms of your employment agreement. By
signing in the space provided below, and in consideration of your continued
employment and this year's annual option grant, you will have agreed to this
amendment to your employment agreement, and to accept this salary reduction and
waive any and all potential claims against the company, its officers, directors
and employees, arising therefrom.
Should you have any additional questions regarding the foregoing,
please feel free to contact me.
Sincerely,
/s/ Xxxxx Xxxxx
Xxxxx Xxxxx
Chairman and CEO
Agreed and Accepted:
/s/ Xxxxx Xxxxxxxxxx
----------------------------
Xxxxx Xxxxxxxxxx
