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Exhibit 10.2
Procera Networks, Inc.
EXECUTIVE EMPLOYMENT AGREEMENT
for
JAMES F. BREAR
This
Executive Employment Agreement (“ Agreement ”)
by and between James F. Brear (“ Executive ”)
and Procera Networks, Inc. (the “ Company ”)
(collectively, the “ Parties ”)
is entered into on February 11, 2008 (the “ Effective Date
”).
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:
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1.
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Employment by the Company.
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1.1
Position.
Subject to terms and conditions set forth herein, the
Company agrees to employ Executive in the position of Chief
Executive Officer and President of the Company, and to appoint
Executive as a member of the Company’s Board of Directors
(the “Board”), and Executive hereby accepts such
employment and appointment. During the term of
Executive’s employment with the Company, Executive will
devote Executive’s best efforts and substantially all of
Executive’s business time and attention to the business of
the Company, except for vacation periods as set forth herein and
reasonable periods of illness or other incapacities permitted by
the Company’s general employment
policies. Executive’s first date of employment is
February 6, 2008 (the “ Commencement Date
”).
1.2
Duties and
Location. Executive shall serve in an executive
capacity and shall perform such duties as are customarily
associated with Executive’s then current title, consistent
with the bylaws of the Company and as required by the
Board. Executive shall report to the
Board. Executive’s primary office location shall
be a location mutually acceptable to both the Executive and the
Company. The Company reserves the right to reasonably
require Executive to perform Executive’s duties at places
other than Executive’s primary office location from time to
time as agreed to by Executive, and to require reasonable business
travel.
1.3
Policies and
Procedures. The employment relationship between
the parties shall be governed by the general employment policies
and practices of the Company, 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.
2.1
Salary.
For services to be rendered hereunder, Executive shall
receive an annual salary at the rate of $240,000.00 (the “
Base Salary
”), subject to payroll withholding and deductions and payable
in accordance with the Company’s regular payroll
schedule. Executive’s Base Salary shall be
reviewed annually and may be increased as approved by the Board in
its sole discretion.
2.2
Initial
Performance Bonus. Executive shall earn a bonus
of fifty percent (50%) of his Base Salary (the “ Initial Bonus ”)
after his first six months of employment, provided Executive
remains an active employee through such time. Except as
otherwise provided in Section 5, Executive will not earn any
Initial Bonus if Executive’s employment terminates for any
reason before the Initial Bonus is earned by him. The
Initial Bonus, if earned, shall be paid within one month after the
end of the six month anniversary of the Commencement
Date.
2.3
Annual
Bonus. Executive will be eligible to earn an
annual discretionary bonus with a target amount equal to eighty
percent (80%) of his Base Salary; provided that for calendar year
2008, this potential bonus shall be prorated over the time between
the end of the first six (6) months of employment (as contemplated
in Section 2.2 above) and the end of calendar year
2008. The annual bonus shall be based on a set of
objectives mutually agreed to by Executive and the Board (or an
executive or compensation committee thereof) within the first
thirty days of each calendar year; provided however that with
respect to calendar 2008, such objectives may be set within the
first 90 days of employment. The amount of the annual bonus
actually earned shall be determined by the Board based upon a good
faith, objective determination of Executive’s achievement of
the previously agreed to objectives (the “ Annual Bonus
”). Since the Annual Bonus is intended both to
reward past Company and Executive performance and to provide an
incentive for Executive to remain with the Company, Executive must
remain an active employee through the date that any such Annual
Bonus is paid to him in order to earn any such
bonus. Except as otherwise provided in Section 5,
Executive will not earn any Annual Bonus (including a prorated
bonus) if Executive’s employment terminates for any reason
before the Annual Bonus is paid to him. Any earned
Annual Bonus shall be paid not later than March 15 th
of the year following the calendar as to which performance was
measured.
2.4
Equity
Compensation. Executive shall be granted an
option to purchase 2,250,000 shares of the Company’s Common
Stock (the “ Option ”), having
an exercise price equal to the closing price of the Common Stock as
quoted on the American Stock Exchange on date of
grant. The Option will be subject to the terms and
conditions of the Company’s 2007 Equity Incentive Plan (the
“ Plan
”). Except as otherwise provided herein, the
Option will vest and become exercisable over four (4) years, with
twenty-five percent (25%) of the shares covered by the Option
vesting and becoming exercisable on the one year anniversary of the
Commencement Date, and the remaining shares covered by the Option
vesting and becoming exercisable in thirty-six (36) equal monthly
installments thereafter, as long as the Executive remains in
continuous service with the Company (as defined in the
Plan). The Option shall be governed by the terms and
conditions set forth in the Plan, and in the applicable stock
option agreement and grant document.
2.5
Standard Company
Benefits. Executive shall be entitled to
participate in all employee benefit programs for which Executive is
eligible under the terms and conditions of the benefit plans which
may be in effect from time to time and provided by the Company to
its employees generally.
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3.
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Confidential Information Obligations.
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3.1
Confidential
Information Agreement. As a condition of
employment, Executive agrees to execute and abide by the Employee
Confidential Information and Inventions Assignment
Agreement attached hereto as Exhibit A.
3.2
Third Party
Agreements and Information. Executive represents
and warrants that Executive’s employment by the Company will
not conflict with any prior employment or consulting agreement or
other agreement with any third party, and that Executive will
perform Executive’s duties to the Company without violating
any such agreement. Executive represents and warrants
that Executive does not possess confidential information arising
out of prior employment, consulting, or other third party
relationships, which would be used in connection with
Executive’s employment by the Company, except as expressly
authorized by that third party. During Executive’s
employment by the Company, Executive will use in the performance of
Executive’s duties only information which is generally known
and used by persons with training and experience comparable to
Executive’s own, common knowledge in the industry, otherwise
legally in the public domain, or obtained or developed by the
Company or by Executive in the course of Executive’s work for
the Company.
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4.
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Outside Activities During Employment.
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4.1
Non-Company
Business. Except with the prior written consent
of the Board, Executive will not during the term of
Executive’s 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 Executive’s
duties hereunder.
4.2
No Adverse
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, except as a
passive investor in mutual or exchange traded funds.
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5.
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Termination Of Employment.
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5.1
At-Will
Relationship. Executive’s employment
relationship is at-will. Either Executive or the Company
may terminate the employment relationship at any time, with or
without Cause or advance notice.
5.2
Termination
without Cause; Resignation for Good Reason. If,
at any time, the Company terminates Executive’s employment
without Cause (as defined herein), or Executive resigns with Good
Reason (as defined herein), and Executive executes and delivers the
Separation Date Release of all claims set forth as Exhibit B hereto
within the timeframe set forth therein and allows such release to
become effective, then the Company will provide Executive with the
following severance benefits:
(a)
Cash
Severance. The Company shall pay Executive
severance in the form of continuation of Executive’s Base
Salary in effect on Executive’s last day of employment (the
“ Separation
Date ”) for a period of six (6) months after
Executive’s termination. This severance shall be
paid in substantially equal installments on the Company’s
regular payroll schedule (subject to standard deductions and
withholdings) over the six (6) month period following the
Separation Date: provided, however, that no payments will be made
prior to the effective date of the release of claims. On
the first payroll date following the effective date of the release,
the Company will pay Executive the payments that Executive would
have received on or prior to such date in a lump sum under the
original schedule but for the delay in effectiveness of the
release, with the balance of the cash severance being paid as
originally scheduled.
(b)
Bonus
. The Company shall pay Executive the full amount of his
Initial Bonus, if it has not previously been paid. The
Company shall also pay Executive the full amount of any Annual
Bonus awarded for the completed calendar year preceding the
employment termination, if it has not already been
paid. Finally, the Company shall pay Executive a payment
equal to the product of (i) his Annual Bonus for the calendar
year in which his employment terminates, with the amount of the
Annual Bonus determined in good faith based on year to date
performance and expected Company performance in the
balance of the year, and (ii) a fraction, the numerator of
which is the number of days of his employment in such calendar year
prior to the Separation Date and the denominator of which is
365. All amounts payable under this Subsection (b)
shall be paid in a lump sum on the first regularly scheduled
payroll pay date following the effective date of his
release.
(c)
Continued Health
Insurance Coverage . To the extent provided by
the federal continuation of coverage law or, if applicable, state
laws of similar effect (collectively, “ COBRA ”), and by
the Company’s then-current group health insurance policies,
Executive may be eligible to continue Executive’s
then-current group health insurance benefits after the termination
of his employment. If Executive timely elects such COBRA
coverage for himself and/or his eligible dependents, and provided
Executive continues to pay the portion of the premiums then-paid by
active employees for similar coverage, then the Company shall pay
the remaining portion of the COBRA premiums for the first six (6)
months of such coverage, or until such earlier date on which
Executive and/or his eligible dependents cease to be eligible for
COBRA coverage. Executive shall notify the Company
immediately if he and/or his eligible dependents become covered by
a medical, dental or vision insurance plan of a subsequent employer
or otherwise cease to be eligible for COBRA coverage.
(d)
Accelerated
Vesting. In the event the Company terminates
Executive’s employment without Cause, or Executive resigns
with Good Reason, in either case within twelve (12) months after a
Change in Control (as defined below), then the Company will
accelerate the vesting of any outstanding equity awards then-held
by Executive such that one hundred percent (100%) of the
then-unvested shares subject to each such award shall become fully
vested and exercisable as of Executive’s Separation
Date.
5.3
Termination for
Cause; Resignation Without Good Reason. If the
Company terminates Executive’s employment with the Company
for Cause, or Executive resigns without Good Reason, then Executive
will not be entitled to any further compensation from the Company
(other than accrued salary, and accrued and unused vacation,
through Executive’s last day of employment), including
severance pay, pay in lieu of notice or any other such
compensation.
5.4
Termination Due to
Death or Disability .
(a)
Death.
This Agreement and Executive’s employment shall
terminate immediately upon Executive’s death and
Executive’s estate shall not be entitled to any further
compensation from the Company (other than accrued salary, and
accrued and unused vacation, through Executive’s last day of
employment), including severance pay, pay in lieu of notice or any
other such compensation.
(b)
Disability
. If Executive is incapacitated by accident, sickness or
otherwise such that Executive is incapable of performing the
service
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