Employment Agreement - Telaxis Communications Corp. and Stephen Ward
EMPLOYMENT AGREEMENT
PARTIES
This Employment Agreement (this "Agreement") dated as of July 17, 2001 is
entered into by and between Telaxis Communications Corporation, a Massachusetts
corporation having its principal place of business at 20 Industrial Drive East,
South Deerfield, Massachusetts 01373 (the "Company") and Stephen Ward, an
individual with an address at 115 West 3rd Street, Frederick, Maryland 21701
(hereinafter called "Employee").
TERMS OF AGREEMENT
In consideration of this Agreement and the continued employment of the
Employee by the Company, the parties agree as follows:
1. Employment. The Company hereby employs Employee, on a full-time basis,
to act as Executive Vice President, Sales and Marketing of the Company at the
principal place of business of the Company shown above during the Employment
Period and to perform such acts and duties and furnish such services to the
Company in connection with and related to that position as is customary for
persons with similar positions in like companies, as the Company's Board of
Directors shall from time to time reasonably direct. Employee hereby accepts
said employment. Employee shall use his best and most diligent efforts to
promote the interests of the Company; shall discharge his duties to the best of
his ability; and shall devote his full business time and his best business
judgment, skill and knowledge to the performance of his duties and
responsibilities hereunder. Employee shall report to the Chief Executive
Officer/President of the Company.
2. Employment Period. The period of Employee's employment under this
Agreement shall commence on the date of this Agreement and shall continue for a
period of twenty-four (24) months thereafter. At the end of the initial
twenty-four (24) month period and any extension period thereafter, the period of
Employee's employment under this Agreement, in the absence of any other express
agreement between the parties, shall automatically be extended for an additional
period of three (3) months. The employment period described above is subject to
earlier termination pursuant to Section 3.6, 4 or 5. The period of Employee's
employment under this Agreement (including all quarterly extension periods) is
referred to as the "Employment Period."
3. Compensation and Benefits; Disability.
3.1 Salary. During the Employment Period, the Company shall pay Employee a
salary at an annualized rate equal to $225,004.00 payable in equal installments
pursuant to the Company's customary payroll policies in force at the time of
payment (but in no event less frequently than monthly), less required payroll
deductions. The Employee's salary may be adjusted upward from time to time in
the sole discretion of the Board of Directors of the Company, except that the
Employee, if a Director, shall not be entitled to vote thereon.
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3.2 Discretionary Bonus. During the Employment Period, the Employee may
participate in such bonus plan or plans of the Company as the Board of
Directors, acting through its Compensation Committee, may approve for the
Employee. Nothing contained in this Section 3.2 shall be construed to require
the Board of Directors to approve a bonus plan or in any way grant to Employee
the right to receive bonuses not otherwise approved.
3.3 Company Automobile Allowance. During the Employment Period, the Company
shall provide Employee with an automobile allowance at an annualized rate not
less than $7,800 payable in equal installments pursuant to the Company's
customary payroll policies in force at the time of payment (but in no event less
frequently than monthly), less required payroll deductions.
3.4 Insurance Benefits. During the Employment Period, the Employee shall
receive such health insurance, disability insurance, life insurance and other
benefits as customarily provided to other officers and management employees of
the Company.
3.5 Vacation. Employee may take four (4) weeks of paid vacation during each
year at such times as shall be consistent with the Company's vacation policies
and (in the Company's judgment) with the Company's vacation schedule for
officers and other management employees. Employee shall also be entitled to paid
legal and religious holidays, sick days, and personal days in accordance with
the Company's normal policies in effect from time to time.
3.6 Disability. If during the Employment Period, Employee shall become ill,
disabled or otherwise incapacitated so as to be unable to perform his usual
duties (a) for a period in excess of one hundred twenty (120) consecutive days
or (b) for more than one hundred eighty (180) days in any consecutive twelve
(12) month period, then the Company shall have the right to terminate Employee's
employment under this Agreement, subject only to applicable laws, on thirty (30)
days' written notice to Employee. Termination pursuant to this Section 3.6 shall
not affect any rights Employee may otherwise have under any disability insurance
policies in effect at the time of such termination.
3.7 Severance Pay.
3.7.1 Termination By Company. In the event the Company terminates
Employee's employment under this Agreement pursuant to Section 5, the Company
shall provide to Employee, in exchange for a release as to any and all claims
Employee may have against the Company, the Severance Benefits for (a) a twelve
(12) month period after termination if termination shall occur (i) at any time
prior to any Change in Control, (ii) after any Approved Change in Control, or
(iii) more than one (1) year after an Unapproved Change in Control, or (b) a
twenty-four (24) month period after termination if termination shall occur
within one (1) year after an Unapproved Change in Control.
3.7.2 Termination by Employee For Good Reason. After a Change in Control
and provided Employee has Good Reason, Employee may terminate his employment
under this Agreement upon fifteen (15) days written notice to the Company and
the Company shall provide to Employee, in exchange for a release as to any and
all claims Employee may have against the
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Company, the Severance Benefits for (a) a twelve (12) month period after
termination if termination shall occur within one (1) year after an Unapproved
Change in Control or (b) an initial six (6) month period, and thereafter until
the earlier to occur of the end of one (1) additional six (6) month period or
Employee obtaining regular employment or consulting work, if termination shall
occur (i) after any Approved Change of Control or (ii) more than one (1) year
after an Unapproved Change in Control.
3.7.3 Definitions. For purposes of this Section 3.7,
(a) a "Change in Control" shall mean:
(i) The completion of a merger or consolidation of the Company with
any other entity (other than a merger or consolidation in which the Company is
the surviving entity and is owned at least 50% collectively by persons who were
stockholders of the Company before the transaction), the sale of substantially
all of the Company's assets to another entity, the sale of more than 50% of the
outstanding capital stock of the Company to an unrelated person or group of
persons acting collectively in one or a series of transactions, or any change in
"control" [as defined in Rule 12b-2 adopted under the Securities Exchange Act of
1934, as amended (the "Exchange Act")] of the Company which would be required to
be reported under either Section 13 or 14 of the Exchange Act whether or not the
Company is then subject to said Act, including a change whereby
(A) any "person" [as such term is used in Sections 13(d) and
14(d) of the Exchange Act] becomes a "beneficial owner" (as defined in Rule
13d-adopted under the Exchange Act) of securities of the Company representing
50% or more of the combined voting power of the Company's then outstanding
securities; or
(B) there ceases to be a majority of the Board of Directors
comprised of individuals described in subsection (iv) below.
(ii) An "Approved Change in Control" of the Company shall mean a
Change in Control that is approved by at least a majority of the Company's Board
of Directors.
(iii) An "Unapproved Change in Control" of the Company shall mean
any Change in Control that is not an Approved Change of Control.
(iv) For the purposes of Sections 3.7.3(a)(i) and (ii), "Board of
Directors" shall mean: (i) individuals who, on the date hereof, constituted the
Board of the Company, and (ii) any successors to those directors whose
nomination for election or election was approved by a majority of the directors
in office at the time of such nomination or election.
(b) "Good Reason" shall mean the occurrence after a Change in Control
of any of the following circumstances without the Employee's written consent
unless, in the case of paragraphs (A), (B), (C) or (H), such circumstances
constitute an isolated, insubstantial and inadvertent action not taken in bad
faith and which are fully remedied by the Company prior to the Employee's last
day of employment:
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(A) the assignment to the Employee of any duties inconsistent
with the highest position in the Company that the Employee held at any time
during the 90-day period immediately preceding the Change in Control of the
Company, or a significant adverse alteration in the nature or status of the
Employee's responsibilities or the conditions of the Employee's employment from
those in effect at any time during the 90-day period immediately preceding such
Change in Control;
(B) any violation of Section 1 or Section 3.1 through 3.5 of
this Agreement;
(C) the failure by the Company to provide the Employee with the
greatest number of vacation days to which the Employee is entitled in accordance
with the Company's normal vacation policy in effect at any time during the
90-day period immediately preceding the Change in Control;
(D) any requirement by the Company or of any person in control
of the Company that the location at which the Employee perform the Employee's
principal duties for the Company be (1) outside a radius of 50 miles from the
location at which the Employee performed such duties immediately prior to the
Change in Control, or (2) more than 25 miles in commuting distance further than
the Employee's commuting distance to the location at which the Employee
performed such duties immediately prior to the Change in Control;
(E) the failure by the Company to pay to the Employee any
portion of the Employee's current compensation within seven (7) days after such
compensation is due;
(F) any requirement by the Company or any person in control of
the Company that the Employee travel on an overnight basis to an extent not
substantially consistent with the Employee's business travel obligations
immediately prior to the Change in Control;
(G) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform the Agreement, as
contemplated in Section 9.3; or
(H) any purported termination of the Employee's employment
which is not effected pursuant to the requirements of Section 5 and 8, which
purported termination shall not be effective for purposes of this Agreement.
The Employee's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstance constituting Good Reason
hereunder.
For purposes of this Section 3.7.3(b), any good faith determination of
"Good Reason" made by the Employee shall be conclusive.
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(c) "Severance Benefits" shall mean (i) Employee's base salary at the
highest level in effect during the 90-day period immediately preceding the date
of termination, payable in equal installments pursuant to the Company's
customary payroll policies in force at the time of payment (but in no event less
frequently than monthly), less required payroll deductions and (ii) the
continuation of all health, welfare and other fringe benefits (other than the
Company automobile allowance) which are provided to Employee pursuant to this
Agreement on the date of termination except to the extent the continuation of
any such benefits is not permitted by applicable law or the terms of any benefit
documentation (provided, however, if the continuation of medical/health
insurance, dental insurance, disability insurance, and/or life insurance is not
permitted, the Company shall pay Employee, at the beginning of the period during
which he is entitled to receive Severance Benefits, an amount equal to the
amount the Company would have had to pay to provide those insurances to Employee
if Employee had remained an employee of the Company for the period during which
he is entitled to receive Severance Benefits under this Agreement).
Notwithstanding the foregoing, if Employee begins regular employment or
consulting work prior to the end of the period during which he is entitled to
receive Severance Benefits from the Company under this Agreement, the amount
Employee shall be entitled to receive pursuant to clause (i) of this definition
of "Severance Benefits" shall be reduced to the amount, if any, by which
Employee's base salary described in clause (i) above exceeds Employee's base
salary from his new regular employment or consulting work. Employee agrees to
notify the Company if he begins regular employment or consulting work prior to
the end of the period during which he is entitled to receive Severance Benefits
from the Company under this Agreement.
4. Discharge for Cause. The Company may discharge Employee and terminate
his employment under this Agreement for cause without further liability to the
Company by a majority vote of the Board of Directors of the Company except that
the Employee, if a Director, shall not be entitled to vote thereon. As used in
this Section 4, "cause" shall mean any or all of the following:
(a) gross or willful misconduct of Employee during the course of his
employment;
(b) conviction of a fraud or felony or any criminal offense involving
dishonesty, breach of trust or moral turpitude during the Employment Period; or
(c) Employee's breach of any of the material terms of this Agreement
which, if curable, is not cured within thirty (30) days of written notice to the
Employee.
5. Termination Without Cause. Upon thirty (30) days prior written notice,
the Company may terminate Employee's employment under this Agreement without
cause without further liability to the Company (except as set forth in Section
3.7 above) by a majority vote of the Board of Directors of the Company except
that the Employee, if a Director, shall not be entitled to vote thereon.
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6. Expenses. Pursuant to the Company's customary policies in force at the
time of payment, Employee shall be promptly reimbursed, against presentation of
vouchers or receipts therefor, for all authorized expenses properly incurred by
him on the Company's behalf in the performance of his duties hereunder.
7. Additional Agreements. Upon execution of this Agreement, the Employee
shall execute and deliver to the Company, unless previously delivered, a
Confidential and Proprietary Information Agreement (the "Proprietary Agreement")
and an Agreement Not to Compete (the "Noncompetition Agreement") in the standard
forms signed by other management employees of the Company.
8. Notices. Any notice or communication given by any party hereto to the
other party or parties shall be in writing and personally delivered or mailed by
certified mail, return receipt requested, postage prepaid, to the addresses
provided above. All notices shall be deemed given when actually received. Any
person entitled to receive notice (or a copy thereof) may designate in writing,
by notice to the other, such other address to which notices to such person shall
thereafter be sent.
9. Miscellaneous.
9.1 Entire Agreement. This Agreement contains the entire understanding of
the parties in respect of its subject matter and supersedes all prior agreements
and understandings between the parties with respect to such subject matter;
provided, however that nothing in this Agreement shall affect the Employee's
obligations under the Proprietary Agreement and Noncompetition Agreement.
9.2 Amendment; Waiver. This Agreement may not be amended, supplemented,
cancelled or discharged, except by written instrument executed by the party
affected thereby. No failure to exercise, and no delay in exercising, any right,
power or privilege hereunder shall operate as a waiver thereof. No waiver of any
breach of any provision of this Agreement shall be deemed to be a waiver of any
preceding or succeeding breach of the same or any other provision.
9.3 Binding Effect, Assignment. Employee's rights or obligations under this
Agreement may not be assigned by Employee; except that Employee's right to
compensation to the earlier of date of death or termination of actual employment
shall pass to Employee's executor or administrator. The rights and obligations
of this Agreement shall bind and inure to the benefit of the Company and its
successors and assigns. The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such successor had
taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
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9.4 Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
9.5 Governing Law; Interpretation. This Agreement shall be construed in
accordance with and governed for all purposes by the laws and public policy of
the Commonwealth of Massachusetts applicable to contracts executed and to be
wholly performed within such Commonwealth. Service of process in any dispute
shall be effective (a) upon the Company, if service is made on any officer of
the Company other than the Employee; or (b) upon the Employee, if served at
Employee's residence last known to the Company with an information copy to the
Employee at any other residence, or care of a subsequent employer, of which the
Company may be aware.
9.6 Further Assurances. Each of the parties agrees to execute, acknowledge,
deliver and perform, or cause to be executed, acknowledged, delivered and
performed, at any time, or from time to time, as the case may be, all such
further acts, deeds, assignments, transfers, conveyances, powers of attorney and
assurances as may be necessary or proper to carry out the provisions or intent
of this Agreement.
9.7 Severability. If any one or more of the terms, provisions, covenants or
restrictions of this Agreement shall be determined by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated. If,
moreover, any one or more of the provisions contained in this Agreement shall
for any reason be determined by a court of competent jurisdiction to be
excessively broad as to duration, geographical scope, activity or subject, it
shall be construed, by limiting or reducing it, so as to be enforceable to the
extent compatible with then applicable law.
EXECUTION
The parties executed this Agreement as a sealed instrument as of the date
first above written, whereupon it became binding in accordance with its terms.
TELAXIS COMMUNICATIONS CORPORATION
By:
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Name: John L. Youngblood
Title: President and CEO
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Name: Stephen Ward
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