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Exhibit 10.20
SOFTSWITCH ENTERPRISES, INC.
EMPLOYMENT AGREEMENT
This Employment Agreement
("Agreement") is entered into as of November 20, 2001, by and
between Amit Chawla ("Executive") and Softswitch
Enterprises, Inc. (the "Company"), a Delaware corporation.
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;
Whereas , Executive wishes
to be employed by the Company and to 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 Title and Responsibilities . Subject to the terms set
forth herein, the Company agrees to employ Executive in the
position of Chief Executive Officer and Vice President of
Marketing, and Executive hereby accepts such employment effective
November 20, 2001 (the "Effective Date"). During 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
incapacity permitted by the Company’s general employment
policies) to the business of the Company.
1.2 Executive Position. Executive will serve in an executive
capacity and shall perform the duties of Executive’s office
as required by the Board of Directors of the Company (the "Board")
and the Chief Executive Officer of the Company (the "CEO").
1.3 Company Employment Policies . The employment
relationship between the parties shall be governed by the general
employment policies and procedures of the Company, including those
relating to the 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 procedures, this Agreement shall
control.
2. Compensation.
2.1 Salary. Executive shall receive for services to be
rendered hereunder a base salary at an annualized rate of $171,000,
payable on a bi - monthly basis
1.
($7,125 per pay period). Executive will be considered for annual
increases in base salary in accordance with Company policy and
subject to review and approval by the Board.
2.2 Incentive Bonus. Executive shall also be eligible to
participate in the Company’s executive level incentive bonus
plan throughout the duration of Executive’s employment with
the Company. All bonus compensation shall be subject to applicable
payroll withholdings and employment taxes. The amount of
Executive’s bonus will be determined by Executive’s
performance with respect to certain measurable goals and
performance objectives established jointly by the CEO, the Board
and the Executive, such as attainment by the Company of its planned
financial objectives for the applicable bonus period (the
"Performance Objectives"). The Board will, in its sole discretion
determine whether Executive achieved the Performance Objectives,
and the amount of Executive’s bonus, if any.
2.3 Stock Purchase. You will be eligible to purchase shares
of the Company’s Common Stock (the "Stock") pursuant to a
Founders’ Stock Purchase Agreement which shall include
vesting provisions and such other terms as approved by the
Board.
2.4 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
plans which may be in effect from time to time and provided by the
Company to its executives, including but not limited to medical,
dental and vacation.
3. Confidential
Information, Rights and Duties.
3.1 Agreement.
(a) Confidential Information . Executive shall be
required as a condition of employment to sign and abide by the
Company’s Employee Proprietary Information and Inventions
Agreement (the "Confidentiality Agreement") (attached hereto as
Exhibit A) .
(b) Exclusive Property . Executive agrees that all
Company-related business procured by the Executive, and all
Company-related business opportunities and plans made known to
Executive, while employed by the Company are and shall remain the
permanent and exclusive property of the Company.
4. Outside
Activities.
4.1 Activities . Except with the prior written consent of
the Board, Executive will not during his employment with the
Company undertake or engage in any other employment, occupation or
business enterprise, other than ones 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. Subject to the
limitations of Sections 4.2 and 4.3 of this Agreement and with
the prior written consent of the Board, Executive may serve as a
director of other corporations and
2.
may devote a reasonable amount of his time to other types of
business or public activities not expressly mentioned in this
paragraph. The Board may rescind its consent to Executive’s
service as a director of other corporations or participation in
other business or public activities if the Board, in its sole
discretion, determines that such activities materially compromise
or threaten to materially compromise the Company’s business
interests.
4.2 Investments and Interests . Executive agrees not to
acquire, assume or participate in, directly or indirectly, any
position, investment or interest known by him to be adverse or
antagonistic to the Company, its business or prospects, financial
or otherwise.
4.3 Non-Competition . During his employment by the Company,
except on behalf of the Company, Executive will not directly or
indirectly, whether as an officer, director, stockholder, partner,
proprietor, associate, representative, consultant, or in any
capacity whatsoever engage in, become financially interested in, be
employed by or have any business connection with any other person,
corporation, firm, partnership or other entity whatsoever known by
him to compete directly with the Company, anywhere in the world, in
any line of business engaged in (or planned to be engaged in) by
the Company; provided, however, that the Executive may purchase or
otherwise acquire up to (but not more than) five percent (5%) of
any class of securities of any enterprise (but without
participating in the activities of such enterprise) if such
securities are listed on any national or regional securities
exchange or have been registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act").
5. Termination Of
Employment.
5.1 Termination With or Without Cause.
(a) At-Will Employment . Executive’s relationship
with the Company is at-will. The Company shall have the right to
terminate Executive’s employment with the Company at any time
with or without Cause (as defined below), and with or without
notice. Executive may be removed from any position he holds in the
manner specified by the Bylaws of the Company and applicable
law.
(i) Definition of Cause. For purposes of this
Agreement, "Cause" shall mean one or more of the following:
(a) Executive’s conviction of a felony;
(b) Executive commission of any act of fraud with respect to
the Company; (c) any intentional misconduct by Executive that
has a materially adverse effect upon the Company’s business
that is not cured by Executive within thirty (30) days of
written notice given by the Company identifying such misconduct;
(d) a breach by Executive of any of Executive’s
fiduciary obligations as an officer of the Company that has a
materially adverse effect upon the Company’s business that is
not cured by Executive within thirty (30) days of written
notice given by the Company identifying such breach;
(e) Executive’s willful misconduct or gross negligence
in performance of his duties hereunder, including Executive’s
refusal to comply in any material respect with the legal directives
of the Board so long as such directives are not inconsistent with
Executive’s position and duties, that are
3.
not cured by Executive within thirty (30) days of written
notice given by the Company identifying such misconduct or
negligence.
(ii) Definition of Disability. For purposes of this
Agreement, to the Company may terminate Executive’s
employment based on Executive’s physical or mental disability
shall exist if any illness, disability or other incapacity renders
the Executive physically or mentally unable regularly to perform
his duties hereunder for a period in excess of ninety
(90) consecutive days or more than one hundred twenty
(120) days in any consecutive twelve (12) month period.
The Board shall make a good faith determination of whether
Executive is physically or mentally unable to regularly perform his
duties, subject to its review and consideration of any physical
and/or mental health information provided to it by Executive. If
Executive is terminated for disability or death, the Company shall
provide the benefits set forth in section 5.1(c) herein to
Executive or his estate.
(b) Termination for Cause . If the Company terminates
Executive’s employment at any time for Cause,
Executive’s salary shall cease on the date of termination,
and Executive will not be entitled to severance pay, pay in lieu of
notice or any other such compensation, other than payment of
accrued salary and such other benefits as expressly required in
such event by applicable law or the terms of any applicable Company
benefit plans. The Stock, all stock options and other stock awards
held by Executive shall cease vesting as of the date of
termination, and shall be exercisable thereafter only pursuant to
the terms of the applicable stock option plans and agreements.
(c) Termination Without Cause. If the Company
terminates Executive’s employment at any time without Cause,
(i) the Company shall pay to Executive severance in an
aggregate amount equal to six (6) months of Executive’s
then current base salary, subject to withholdings and deductions,
such sum payable in monthly installments in accordance with the
Company’s standard payroll practices, (ii) the Company
shall continue to provide health, dental and vision benefits for a
period of six (6) months commencing on the date of termination
and at the same coverage terms as provided to Executive at the date
of termination, and (iii) the vesting of the Stock, all stock
options and other stock awards held by Executive shall immediately
accelerate with respect to the number of shares that would
otherwise vest if the Executive was to remain employed by the
Company over the six (6) month period following the date of
such termination. Executive shall not be entitled to this severance
pay and vesting acceleration unless and until the release
requirements set forth in Section 8 of this Agreement are
satisfied and the period for revocation of such release has
expired.
5.2 Resignation With or Without Good Reason.
(a) Executive’s Resignation. Executive may resign
from his employment with the Company at any time, with or without
notice, and with or without Good Reason (as defined below).
(b) Executive’s Resignation Without Good Reason.
In the event that Executive resigns his employment without Good
Reason, Executive will not be
4.
entitled to severance pay, pay in lieu of notice or any other
such compensation other than payment of accrued salary and such
other benefits as expressly required in such event by applicable
law or the terms of any applicable Company benefit plans. The
Stock, all stock options and any other stock awards held by
Executive shall cease vesting as of the date Executive’s
resignation, other than for Good Reason, becomes effective and
shall be exercisable thereafter only pursuant to the terms of the
applicable stock option plans and agreements.
(c) Executive’s Resignation for Good Reason.
Executive may resign his employment for Good Reason (as defined
below) so long as Executive tenders his resignation to the Company
within thirty (30) days after the occurrence of the event
which forms the basis for his resignation for Good Reason. In the
event that Executive resigns his employment for Good Reason,
(i) the Company shall pay to Executive severance in an
aggregate amount equal to six (6) months of Executive’s
then current base salary, subject to withholdings and deductions,
such sum payable in monthly installments in accordance with the
Company’s standard payroll practices, (ii) the Company
shall continue to provide health, dental and vision benefits for a
period of six (6) months commencing on the date of termination
and at the same coverage terms as provided to Executive at the date
of termination and (iii) the vesting of the Stock, all stock
options and other stock awards held by Executive shall immediately
accelerate with respect to the number of shares that would
otherwise vest if the Executive was to remain employed by the
Company over the six (6) month period following the date of
such termination. Executive shall not be entitled to any of this
severance pay and vesting acceleration unless and until the release
requirements set forth in Section 8 of this Agreement are
satisfied and the period for revocation of such release has
expired.
(d) Definition of Good Reason . For the purposes of
this Agreement, "Good Reason" shall mean any one of the following
events which occurs on or after the commencement of
Executive’s employment without Executive’s consent:
(i) any reduction of Executive’s then current annual
base salary; (ii) any material diminution of the
Executive’s duties, responsibilities, or authority to a level
below that of an officer of the Company, excluding for this purpose
(1) an isolated or inadvertent action not taken in bad faith
which is remedied by the Company immediately after notice thereof
is given by the Executive, and (2) any change in
Executive’s title, duties, responsibilities or authority if
Executive is given or retains other officer level duties within the
Company; or (iii) any requirement that the Executive relocate to a
work site more than twenty five (25) miles from the
Company’s current location. Notwithstanding the foregoing,
Executive acknowledges that in the event that the Company hires a
new CEO, the change in Executive’s title and the transfer of
the duties typically associated with the CEO position from
Executive to the CEO shall not constitute Good Reason provided that
Executive is given or retains other officer level duties within the
Company.
5.
5.3 Cessation of Severance Benefits . If Executive violates
any provision of Sections 3, 7 or 8 of this Agreement, any
severance payments or other benefits being provided to Executive
will cease immediately, and Executive will not be entitled to any
further compensation and benefits from the Company.
6. Change of
Control.
6.1 Definition. For purposes of this Agreement, Change of
Control means the occurrence of any of the following: (i) a
sale, lease, or other disposition of all or substantially all of
the assets of the Company; (ii) a merger or consolidation in
which the Company is not the surviving corporation; (iii) a
reverse merger involving the Company in which the Company is the
surviving corporation but the shares of common stock of the Company
(the "Common Stock") outstanding immediately preceding the merger
are converted by virtue of the merger into other property, whether
in the form of securities, cash or otherwise; (iv) an
acquisition by any person, entity or group within the meaning of
Section 13(d) or 14(d) of the Exchange Act or any comparable
successor provisions (excluding any employee benefit plan, or
related trust, sponsored or maintained by the Company or an
Affiliate of the Company) of the beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act, or
comparable successor rules) of securities of the Company
representing at least fifty percent (50%) of the combined voting
power entitled to vote in the election of directors; or,
(v) in the event that the individuals who, as of the Effective
Date, are members of the Board (the "Incumbent Board"), cease for
any reason to constitute at least fifty percent (50%) of the
Company’s Board of Directors. (If the election, or nomination
for election by the Company’s shareholders, of any new member
of the Company’s Board of Directors is approved by a vote of
at least fifty percent (50%) of the Incumbent Board, such new
member of the Board of Directors shall be considered as a member of
the Incumbent Board.) Notwithstanding the foregoing, for the
purposes of this Agreement and with respect to any and all clauses
of this Section of this Agreement, an initial public offering of
the securities of the Company (an "IPO") or any transactions or
events constituting part of an IPO shall not be deemed to
constitute or in any way effect a Change of Control.
6.2 Change of Control Termination. In the event
Executive’s employment with the Company is involuntarily
terminated without Cause by the Company or its successor as Cause
is defined in section 5.1(c) herein, or Executive resigns for Good
Reason, and such termination or resignation occurs within eighteen
(18) months following a Change of Control, Executive shall be
entitled to: (a) the Company shall pay to Executive severance
in an aggregate amount equal to six (6) months of
Executive’s then current base salary, subject to withholdings
and deductions, such sum payable in monthly installments in
accordance with the Company’s standard payroll practices;
(b) health, dental and vision benefits for a period of six
(6) months commencing on the date of termination and at the
same coverage terms as provided to Executive at the date of
termination and (c) the immediate acceleration of vesting on
all stock, stock options and other stock awards held by Executive
in an amount of shares equal to 100% of the then unvested shares;
provided, however, that if Executive’s employment is
terminated following a Change in Control due to Executive’s
willful and continued failure to substantially perform assigned
duties after there is delivered to Executive by
Executive’s
6.
supervisor a written demand for substantial performance which
sets forth in detail the specific respects in which such supervisor
believes Executive has not substantially performed his duties,
Executive shall not be entitled to the benefit described in clause
(c) above, but rather will be entitled to the immediate
acceleration of vesting on all stock, stock options and other stock
awards held by Executive in an amount of shares equal to 50% of the
then unvested shares. After a Change of Control, Executive will
continue to fulfill his duty of loyalty to the Company, or its
successor, by using his best efforts to perform his job duties
satisfactorily. Executive’s receipt of the severance payment
and vesting acceleration provided in this Section 6.2 shall be
conditioned on Executive’s full compliance with the release
requirements set forth in Section 8 of this Agreement and the
period for revocation of such release has expired. Notwithstanding
anything contained in this Agreement to the contrary, if Executive
receives the benefits pursuant to this Section 6.2, he shall
not entitled to any other benefits under this Agreement, including
without limitation, Sections 5.1(c) and 5.2(c).
7. Nonsolicitation.
In the event Executive’s employment with the Company is
terminated by the Company or the Executive, with or without Cause
or Good Reason, then for one (1) year immediately following the
termination date, Executive shall not, without first obtaining the
prior written approval of the Company directly or indirectly
solicit, induce, persuade or entice, or attempt to do so, or
otherwise cause, or attempt to cause, any employee or independent
contractor of the Company to terminate his or her employment or
contracting relationship in order to become an employee, or
independent contractor to or for any person or entity.
8. Release. As a
condition of receiving the severance benefits under this Agreement
to which Executive would not otherwise be entitled,
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