EMPLOYMENT AND OPTION
AMENDMENT AGREEMENT
THIS EMPLOYMENT
AND OPTION AMENDMENT AGREEMENT (the “ Agreement
”) is effective as of September 23, 2005, between First
Avenue Networks, Inc., a Delaware corporation (the “
Company ”), and Sandra G. Thomas (the “
Executive ”).
IN CONSIDERATION
FOR the mutual promises set forth below, the parties agree as
follows:
1. Term.
Subject to earlier termination as hereafter provided, this
Agreement shall have an original term of six months commencing on
September 23, 2005 and shall be automatically extended
thereafter for successive terms of six months each (together, the
“Term”), unless either party provides written notice to
the other at least thirty (30) days prior to the expiration of
the original or any extension Term that the Agreement is not to be
extended or renewed. During the Term, the Executive shall be paid a
base annual salary of $150,000, payable in accordance with the
Company’s standard payroll practices and subject to increase
from time to time, in the sole discretion of the Company’s
board of directors and the compensation committee
thereof.
2. Removal and
Resignation .
2.1.
Removal by Company Without Cause or Resignation by Executive for
Good Reason . Subject to the Executive meeting her obligations
hereunder in all material respects, including those set forth in
the last paragraph of this Section 2.1 and in Sections 3, 4, 5
and 6, if the Executive’s employment is terminated by the
Company without Cause or the Executive resigns for Good Reason
prior to the expiration of the Term (the date of such removal or
resignation, the “Transition Date”) (and, for this
purpose, in the event the Company provides written notice under
Section 1 to the Executive that the Agreement will not be
extended or renewed at the expiration of the then existing
six-month Term, the Executive will be deemed, without any further
action being required on the part of any party, to have resigned
for Good Reason prior to the expiration of the Term):
(i)
The Company shall pay the Executive severance in the amount of
$75,000 cash (the “Severance Amount”). The Severance
Amount will be paid in six equal monthly installments, in
accordance with the Company’s standard payroll practices,
beginning on the Company’s next regular payday following the
effective date of the General Release described below, and will be
reduced by all required withholdings; provided, however, that if
required pursuant to Section 409A of the Internal Revenue Code
of 1986, as amended (“Section 409A”), the timing
of the payment of the Severance Amount shall be adjusted as
necessary to comply with Section 409A;
-1-
(ii)
The Company shall pay the Executive a cash bonus payment equal to
$60,000, pro-rated for a partial calendar year based on the
Transition Date (the “Annual Bonus”) (e.g. if the
Transition Date is June 30, the Annual Bonus would be 50% of
$60,000). The Annual Bonus shall be paid in one lump sum following
the effective date of the General Release described below and at
least 45 days after the Transition Date, and will be reduced
by all required withholdings;
(iii)
If the Executive elects to continue her participation and that of
her eligible dependents in the Company’s group health and
dental plans pursuant to her so-called “COBRA”
continuation rights by signing and returning the election form that
is provided, then, for a period of 6 months from the
Transition Date or, if earlier, until the Executive ceases to be
eligible for participation under COBRA or the terms of the plans,
the full premium cost of such coverage will be borne by the Company
and either paid on behalf of or reimbursed to the Executive (the
“Medical Benefit”);
(iv)
If the Transition Date occurs during the original Term, the Company
shall pay the Executive a cash bonus payment equal to $75,000 (the
“Transition Bonus”), in full and without pro-ration.
The Transition Bonus shall be paid in one lump sum following the
effective date of the General Release described below and at least
45 days after the Transition Date, and will be reduced by all
required withholdings; provided, however, that if required pursuant
to Section 409A, the Transition Bonus shall be paid in connection
with the Company’s first regular payday as permitted pursuant
to Section 409A; and
(v)
Notwithstanding anything to the contrary contained in the
Company’s Stock Option Plan or any option grant certificate
issued to the Executive, eight days following the Executive’s
execution of the General Release (as defined below), (i) those
options to purchase shares of the common stock of the Company
issued to the Executive pursuant to that certain option grant
certificate dated as of September 22, 2003 (the “Legacy
Certificate”) that remain unvested as of the Transition Date
and (ii) those options to purchase shares of the common stock
of the Company issued to the Executive pursuant to any other option
grant certificate or otherwise (together with the Legacy
Certificate, the “Option Certificates”) that would
have, but for the Executive’s removal or resignation, become
vested and exercisable within the six month period following the
Transition Date shall become immediately vested and exercisable
(collectively, the “Accelerated Options”).
Section 1 of the Legacy Certificate is hereby amended so as to
give effect to the first sentence of this Section 2.1(v).
Except as otherwise expressly provided in this Section 2.1(v),
the terms and conditions of the Accelerated Options shall remain
unchanged and shall be governed by the terms of the Stock Option
Plan, the Option Certificates and any other restrictions or
provisions generally applicable to shares purchased by Company
employees.
-2-
The
provision of any of the above benefits by the Company to the
Executive are expressly conditioned upon the Executive executing a
general release of claims in substantially the form of the General
Release attached hereto as Exhibit B (the
“General Release”) within twenty-one days (or such
greater period as may be specified by the Company) following the
latest of the date on which the Executive receives notice of her
removal as a senior financial officer of the Company, the date on
which the Executive gives notice of her resignation or the date she
receives a copy of the General Release, and upon the Executive not
revoking the General Release in a timely manner thereafter. The
Executive acknowledges and agrees that she will not receive any
Severance Amount, Annual Bonus, Transition Bonus or Medical
Benefit, and will not be eligible for Accelerated Options, if she
does not sign the General Release and thereby waive those claims
against the Company and the related entities specified in the
General Release, and that there is good consideration for said
General Release. For the avoidance of doubt, in the event the
Executive fails to execute the General Release, any outstanding
stock options held by the Executive as of the Transition Date will
be exercisable only as provided in the Company’s Stock Option
Plan and the Option Certificates (without giving effect to the
first sentence of Section 2.1(v) hereto). Further, if the
Executive fails to comply with any provision of this Agreement
during the period in which she is entitled to receive the Severance
Amount or Medical Benefit described above, she shall no longer be
entitled to receive the Severance Amount or the Medical Benefit and
the Company will have no further obligation to pay or provide
them.
2.2.
Death . In the event of the Executive’s death prior to
the expiration of the Term hereof, the Executive’s employment
and all of her rights hereunder shall terminate, and no further
payments of any kind shall be made except for base salary
(including without limitation the Severance Amount) earned and
unpaid through the termination date; provided, however, that under
such circumstances, the Executive’s options shall be
exercisable in accordance with the Company’s Stock Option
Plan, the Option Certificates (without giving effect to the first
sentence of Section 2.1(v) hereof), and any other restrictions
or provisions generally applicable to shares purchased by Company
employees.
2.3.
Disability . In the event of the Executive’s
Disability, as defined below, prior to the expiration of the Term
hereof, the Company shall thereafter have the right, upon written
notice to the Executive, to terminate the employment of the
Executive, in which case the date of termination shall be the date
of such written notice to the Executive. “ Disability
” shall mean a physical or mental disability of the Executive
that prevents the Executive from substantially performing the
essential functions of her position notwithstanding the provision
of any reasonable accommodation. In the event of termination of the
Executive’s employment pursuant to this Section 2.3, all
of the Executive’s rights hereunder shall terminate and no
further payments of any kind shall be made except for base salary
(including without limitation the Severance Amount) earned and
unpaid through the termination date; provided, however, that under
such circumstances,
-3-
and so long as
it does not constitute a new grant under Section 409A,
(i) those options to purchase shares of the common stock of
the Company issued to the
|