JATO COMMUNICATIONS CORP.
EMPLOYMENT AGREEMENT
FOR
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THIS EMPLOYMENT AGREEMENT ("AGREEMENT") is entered into as of the 16th
day of April, 1999, by and between ▇▇▇▇▇ ▇. ▇▇▇▇ ("EXECUTIVE") and JATO
COMMUNICATIONS CORP., a Delaware corporation (the "COMPANY").
WHEREAS, the Company desires to employ Executive to provide personal
services to the Company, and wishes to provide Executive with certain
compensation and benefits in return for his services; and
WHEREAS, Executive wishes to be employed by the Company and provide
personal services to the Company in return for certain compensation and
benefits;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is hereby agreed by and between the parties hereto as
follows:
1. EMPLOYMENT BY THE COMPANY.
1.1 TERM. Subject to terms set forth herein, for a period of two (2)
years the Company agrees to employ Executive in the position of President and
Chief Executive Officer and Executive hereby accepts such employment effective
as of the date first written above. This Agreement shall automatically renew on
a month-to-month basis unless either party gives thirty (30) days' prior written
notice to the other party. During the term of his employment with the Company,
Executive will devote his best efforts and substantially all of his business
time and attention (except for vacation periods and reasonable periods of
illness or other incapacities permitted by the Company's general employment
policies) to the business of the Company.
1.2 DUTIES. Executive shall serve in an executive capacity and shall
perform such duties as are customarily associated with his then existing
title(s), consistent with the Bylaws of the Company and as required by the
Company's Board of Directors or the Executive's supervisor (the "BOARD").
1.3 EMPLOYMENT RELATIONSHIP. The employment relationship between the
parties shall also be governed by the general employment policies and practices
of the Company, including those relating to protection of confidential
information and assignment of inventions, except that when the terms of this
Agreement differ from or are in conflict with the Company's general employment
policies or practices, this Agreement shall control.
1.
2. COMPENSATION.
2.1 SALARY. Executive shall receive for services to be rendered
hereunder an annualized base salary of $200,000, payable on a semi-monthly
basis, which will be reviewed annually at the discretion of the Compensation
Committee of the Board of Directors. Executive's base salary shall be increased
annually by an amount equal to the greater of (i) 5% of Executive's base salary
and (ii) an amount determined by the Board of Directors.
2.2 DISCRETIONARY BONUS. Executive will be eligible for a
discretionary bonus, in an amount to be determined solely by the Compensation
Committee in its discretion, subject to the terms and conditions outlined in a
Company bonus plan, which may be established and in effect from time to time.
2.3 STANDARD COMPANY BENEFITS. Executive shall be entitled to all
rights and benefits for which he is eligible under the terms and conditions of
the standard Company benefits and compensation practices which may be in effect
from time to time and provided by the Company to its employees in comparable
positions (the "COMPANY BENEFITS").
2.4 ACCELERATION OF STOCK RIGHTS. In the event that the Company (i)
consummates an Acquisition or Asset Transfer, as those terms are defined in the
Company's Restated Certificate of Incorporation (a "CHANGE OF CONTROL") or (ii)
materially reduces the job responsibilities or base salary of the Executive (a
"DOWNGRADING"), then the vesting of all stock options held by Executive shall
accelerate and all repurchase rights on any stock of the Company held by
Executive will be waived; PROVIDED, THAT, Executive shall remain a party to, and
subject to the provisions of, the Investors' Rights Agreement, of even date
herewith (the "INVESTORS' RIGHTS AGREEMENT").
2.5 NON-RECOURSE LOAN. The Company agrees that at any time up to and
including December 31, 1999, Executive may request that the Company loan him up
to $100,000 and the Company will promptly make such a loan on substantially the
following terms: non-recourse loan secured only by a pledge of Common Stock of
the Company owned by Executive; term of the loan, 3 years; interest rate to be
5.0%, compounding quarterly; principal and accrued interest due at maturity,
unless forgiven; 1/3 of the principal and 1/3 of the accrued interest will be
forgiven on December 31, 1999; 1/3 of principal and interest will be forgiven on
December 31, 2000; any remainder of principal and interest will be forgiven on
December 31, 2001. Notwithstanding the foregoing, the entire amount of
principal and accrued interest will be forgiven in the event: (i) Executive is
terminated for any reason other than Cause (as defined in Section 5 below), (ii)
a Change of Control or (iii) a Downgrading. In the event that Executive
voluntarily terminates his employment with the Company, any principal and
interest outstanding under the loan shall be fully due and payable on December
31, 2001.
3. PROPRIETARY INFORMATION OBLIGATIONS.
3.1 AGREEMENT. Executive agrees to continue to abide by Executive's
previously executed Non-competition, Proprietary Information and Inventions
Agreement attached hereto as EXHIBIT A.
2.
3.2 REMEDIES. Executive's duties under the Proprietary Information
and Inventions Agreement shall survive termination of his employment with the
Company. Executive acknowledges that a remedy at law for any breach or
threatened breach by him of the provisions of the Proprietary Information and
Inventions Agreement would be inadequate, and he therefore agrees that the
Company shall be entitled to injunctive relief in case of any such breach or
threatened breach.
4. OUTSIDE ACTIVITIES. Except with the prior written consent of the
Company's Board, Executive will not, during the term of this Agreement,
undertake or engage in any other employment, occupation or business enterprise,
other than those in which Executive is a passive investor. Executive may engage
in civic and not-for-profit activities so long as such activities do not
materially interfere with the performance of his duties hereunder.
5. TERMINATION OF EMPLOYMENT.
(a) TERMINATION. Either the Executive or the Company may terminate
the employment relationship at any time for any reason whatsoever, with thirty
(30) days' prior written notice by the Company and with thirty (30) days' prior
written notice by the Executive with or without Cause or advance notice. This
at-will employment relationship cannot be changed except in a writing approved
by the Board. If the Company terminates Executive's employment without Cause at
any time, Executive will receive as severance: (i) a lump sum payment equal to
one (1) year of base salary, less payroll deductions and required withholdings,
(ii) a lump sum payment of that portion of the bonus Executive is entitled to
for the calendar year pro-rated based upon the number of full months Executive
was employed in such year, (iii) continuation of all Company Benefits for a
period of one (1) year and (iv) vesting of all stock options and waiver of all
repurchase rights on Executive stock, in exchange for the execution of a release
of all claims against the Company; PROVIDED, THAT, in the event of termination
due to Disability, this subsection (iv) shall apply only with respect to 50% of
any unvested stock options held by Executive on the date of termination and with
respect to the waiver of repurchase rights of 50% of any unvested shares held by
Executive on the date of termination; PROVIDED, FURTHER, that Executive shall
remain a party to, and subject to the provisions of, the Investors' Rights
Agreement. If Executive resigns or if Executive's employment is terminated for
Cause, all compensation and benefits will cease immediately, and Executive will
receive no severance benefits.
For purposes of this Agreement, "CAUSE" shall mean misconduct, including: (i)
conviction of any felony or any crime involving moral turpitude or dishonesty;
(ii) participation in a fraud or act of dishonesty against the Company; (iii)
willful breach of the Company's policies; (iv) intentional damage to the
Company's property; (v) material breach of this Agreement or Executive's
Proprietary Information and Inventions Agreement; (vi) a failure or refusal in a
material respect of Executive to follow the reasonable policies or directions of
the Company as specified by the Board of Directors after being provided with
notice of such failure and an opportunity to cure within seven (7) days of
receipt of such notice; or (vii) failure to carry out the duties of the
Executive's position after being provided with notice of such failure and an
opportunity to cure. Disability shall not constitute "Cause."
3.
For purposes of this Agreement, "DISABILITY" shall mean a disability which
prevents Executive from substantially performing his duties under this Agreement
for a period of at least 90 consecutive days or 180 non-consecutive days within
any 365-day period.
(b) In the event of death, the Company shall pay to Executive any
earned but unpaid salary at the time of death and, at the time such amount would
otherwise have been due, a pro rata portion of a discretionary bonus, if any,
which may otherwise have been paid to Executive pursuant to Section 2.2 hereof
with respect to the annual period in which the death occurs. Furthermore,
Executive shall vest in 50% of any unvested stock options as of the date of
death and the Company shall waive its repurchase rights with respect to 50% of
any unvested shares as of the date of death; PROVIDED, HOWEVER, that Executive's
estate, administrator or distributor shall become a party to, and be subject to
the provisions of, the Investors' Rights Agreement.
6. CONTINUATION OF EMPLOYMENT/RESTRICTIVE COVENANT. During the term of
Executive's employment and for a period of twelve (12) months immediately
following Executive's termination, Executive shall not without first obtaining
the prior written approval of the Company, directly or indirectly engage or
prepare to engage, in any activities in competition with the Company, or accept
employment or establish a business relationship with a business that directly
competes with the Company in providing high speed data transmission services in
a market in which the Company has at least one (1) operational DSLAM or at least
one (1) central office colocation under construction.
7. NONSOLICITATION. While employed by the Company, and for twelve (12)
months immediately following the Executive's termination of employment,
Executive agrees not to interfere with the business of the Company by
soliciting, attempting to solicit, inducing, or otherwise causing any employee
of the Company to terminate his or her employment in order to become an
employee, consultant or independent contractor to or for any competitor of the
Company.
8. GENERAL PROVISIONS.
8.1 NOTICES. Any notices provided hereunder must be in writing and
shall be deemed effective upon the earlier of personal delivery (including
personal delivery by telex) or the third day after mailing by first class mail,
to the Company at its primary office location and to Executive at his address as
listed on the Company's then current payroll records.
8.2 SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.
8.3 WAIVER. If either party should waive any breach of any provisions
of this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
4.
8.4 COMPLETE AGREEMENT. This Agreement and EXHIBIT A hereto,
constitute the entire agreement between Executive and the Company and it is the
complete, final, and exclusive embodiment of their agreement with regard to this
subject matter. It is entered into without reliance on any promise or
representation other than those expressly contained herein, and it cannot be
modified or amended except in a writing signed by an officer of the Company.
8.5 COUNTERPARTS. This Agreement may be executed in separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
Agreement.
8.6 HEADINGS. The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.
8.7 SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive and the Company, and
their respective successors, assigns, heirs, executors and administrators,
except that Executive may not assign any of his duties hereunder and he may not
assign any of his rights hereunder without the written consent of the Company,
which shall not be withheld unreasonably.
8.8 ATTORNEY FEES. If either party hereto brings any action to
enforce his or its rights hereunder, the prevailing party in any such action
shall be entitled to recover his or its reasonable attorneys' fees and costs
incurred in connection with such action.
8.9 CHOICE OF LAW. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the law of the
State of Colorado.
8.10 SURVIVAL. The following provisions of this Agreement shall
survive the termination of Executive's employment and the assignment of this
Agreement by the Company to any successor in interest or other assignee:
Section 2; Section 3; Section 6; Section 7; and Section 8.
8.11 INJUNCTIVE RELIEF. Executive acknowledges that the restrictions
set forth in Sections 3, 4, 6 and 7 above are necessary to protect the Company's
confidential proprietary information and other legitimate business interests and
are reasonable in all respects, including duration, territory and scope of
activity restricted. Executive further acknowledges that the provisions of
Sections 3, 4, 6 and 7 hereof are essential to the Company, that the Company
would not enter into this Agreement if it did not include these provisions and
that damages sustained by the Company as a result of a breach of these
provisions cannot be adequately remedied by damages, and Executive agrees that
the Company, in addition to any other remedy it may have under this Agreement or
at law, shall be entitled to injunctive and other equitable relief to prevent or
curtail any breach of Sections 3, 4, 6 and 7 of this Agreement. Executive
agrees that the existence of any claim or cause of action by Executive against
the Company or its affiliates, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of
any of the provisions of Sections 3, 4, 6 and 7 hereof. Executive shall have no
right to enforce any of his rights under this Agreement by seeking or obtaining
injunctive or other equitable relief and acknowledges that damages are an
adequate remedy for any breach by the Company of this Agreement.
5.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
JATO COMMUNICATIONS CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Vice President, Sales
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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6.
EXHIBIT A
JATO COMMUNICATIONS CORP.
NON-COMPETITION PROPRIETARY INFORMATION
AND INVENTIONS AGREEMENT
NON-COMPETITION, PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
As an employee of JATO Communications Corp., a Delaware corporation, its
subsidiaries or its affiliates (together, the "Company"), and as a condition
of my employment by the Company and in consideration of the compensation now
and hereafter paid to me, I agree to the following (the "Agreement"):
1. MAINTAINING CONFIDENTIAL INFORMATION
(a) COMPANY INFORMATION. I agree at all times during the term of
my employment and thereafter to hold in strictest confidence, and not to use,
except for the benefit of the Company, or to disclose to any person, firm or
corporation, without the written authorization of the Board of Directors of
the Company, any trade secrets, confidential knowledge, data or other
proprietary information of the Company. By way of illustration and not
limitation, this shall include information relating to products, processes,
know-how, methods, software, developmental work, improvements, discoveries,
plans for marketing and selling, business plans, budgets and unpublished
financial statements, licenses, prices and costs, suppliers and customers,
and information regarding the skills and compensation of other employees of
the Company. Notwithstanding the foregoing, confidential information shall
not include any information which:
(i) at the time of disclosure, or thereafter, is generally available to
and known by the public;
(ii) was or is available to me on a non-confidential basis from a source
other than the Company; or
(iii) has been independently acquired or developed by me without
violating any of my obligations under this Agreement, as shown by my
competent written records.
(b) THIRD PARTY INFORMATION. I recognize that the Company has
received and in the future will receive confidential or proprietary
information from third parties subject to a duty on the Company's part to
maintain the confidentiality of such information and, in some cases, to use
it only for certain limited purposes. I agree that I owe the Company and
such third parties, both during the term of my employment and thereafter, a
duty to hold all such confidential or proprietary information in the
strictest confidence and not to, except as is consistent with the Company's
agreement with the third party, disclose it to any person, firm or
corporation or use it for the benefit of anyone other than the Company or
such third party, unless expressly authorized to act otherwise by an officer
of the Company.
2. ASSIGNMENT OF INVENTIONS AND ORIGINAL WORKS.
I agree that I will make prompt written disclosure to the Company, will
hold in trust for the sole right and benefit of the Company, and hereby
assign to the Company all my right, title and interest in and to any ideas,
inventions, original works of authorship, developments, improvements or trade
secrets which I may solely or jointly conceive or reduce to practice, or
cause to be conceived or reduced to practice, during the period of my
employment with the Company and for one (1) year after my employment. This
Agreement will not be deemed to require assignment of any invention developed
entirely on my own time without using the Company's equipment, supplies,
facilities or trade secrets and neither related to the Company's actual or
anticipated business, research or development, nor resulted from work
performed by me for the Company.
3. NO CONFLICTS OR SOLICITATION
For the period of my employment by the Company and for one (1) year
following my termination, I will not interfere with the business of the
Company by (i) soliciting, attempting to solicit, inducing, or otherwise
causing any employee of the Company to terminate his or her employment in
order to become an employee, consultant or independent contractor to or for
any other entity engaged in marketing or selling the type of products and
services offered by the Company or (ii) directly soliciting the business of
any customer or client of the Company (other than on behalf of the Company)
for the type of products and services offered by the Company.
4. COVENANT NOT TO COMPETE.
(a) I agree that during my employment with the Company, I will not
directly or indirectly engage in (whether as an employee, consultant,
proprietor, partner, director or otherwise), or have any ownership interest
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in, or participate in the financing, operation, management or control of, any
person, firm, corporation or business that engages in a "Restricted Business"
in a "Restricted Territory" (as defined below). It is agreed that ownership
of (i) no more than ten percent (10%) of the outstanding voting stock of a
publicly traded corporation or (ii) any stock I presently own or (iii) any
options or other rights to acquire shares of a company's capital stock I
presently own shall not constitute a violation of this provision.
(b) As used herein, the terms:
(i) "Restricted Business" shall mean any competitive local exchange
carrier, high speed data communication services provider or any business
which otherwise engages in any other manner in any business which is
competitive with the Company.
(ii) "Restricted Territory" shall mean all regions within a fifty mile
radius of those cities in which the Company operates, or has disclosed to
you that it intends to operate, a business.
5. RETURN OF COMPANY DOCUMENTS
When I leave the employ of the Company, I will deliver to the Company
(and will not keep in my possession, recreate or deliver to anyone else) any
and all documents and other property, together with all copies thereof (in
whatever medium recorded) belonging to the Company, its successors or assigns
whether kept at the Company, home or elsewhere. I further agree that any
property situated on the Company's premises and owned by the Company,
including disks and other storage media, filing cabinets or other work areas,
is subject to inspection by Company personnel at any time with or without
notice.
6. LEGAL AND EQUITABLE REMEDIES
Because my services are personal and unique and because I may have access
to and become acquainted with the proprietary information of the Company, the
Company shall have the right to enforce this Agreement and any of its
provisions by injunction, specific performance or other equitable relief,
without bond and without prejudice to any other rights and remedies that the
Company may have for a breach of this Agreement.
7. NOT AN EMPLOYMENT CONTRACT. I agree and understand that nothing in
this Agreement shall confer any right with respect to continuation of my
employment by the Company, nor shall it interfere in any way with my right or
the Company's right to terminate my employment at a ny time, with or without
cause.
8. GENERAL PROVISIONS.
(a) GOVERNING LAW. This Agreement will be governed by and
construed according to the laws of the State of Colorado, excluding conflicts
of laws principles. I hereby expressly consent to the personal jurisdiction
of the state and federal courts located in Colorado for any lawsuit filed
there against me by the Company arising from or relating to this Agreement,
or such other location as the Company's principal executive office may then
be located.
(b) SEVERABILITY. If one or more of the provisions in this
Agreement are deemed unenforceable by law, then the remaining provisions will
continue in full force and effect. Moreover, if any restriction set forth in
Sections 3 or 4 hereof is found by any court of competent jurisdiction to be
unenforceable because it extends for too long a period of time or over too
great a range of activities or in too broad a geographic area, it shall be
interpreted to extend only over the maximum period of time, range of
activities or geographic area as to which it may be enforceable.
(c) BENEFIT; BINDING EFFECT. This Agreement will be binding upon
my heirs, executors, administrators and other legal representatives and will
be for the benefit of the Company, its successors and its assigns.
(d) SURVIVAL. The provisions of this Agreement shall survive the
termination of my employment and the assignment of this Agreement by the
Company to any successor in interest or other assignee.
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I UNDERSTAND THAT THIS AGREEMENT AFFECTS MY RIGHTS TO INVENTIONS I MAKE
DURING MY EMPLOYMENT, AND RESTRICTS MY RIGHT TO DISCLOSE OR USE THE COMPANY'S
PROPRIETARY INFORMATION DURING OR SUBSEQUENT TO MY EMPLOYMENT.
I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS.
Dated:
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Name
Address
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ACCEPTED AND AGREED TO:
JATO COMMUNICATIONS CORP.
By:
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Name:
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Title:
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