Exhibit 10.7
November 2, 2006
Mr. Allen Snyder
17660 Saddlewood Road
Monument, CO 80132-8356
Re: Employment Terms
Dear Allen:
This letter sets forth the terms of
Your employment at Carrier Access Corporation, (the
“Company”). This letter, along with the Employer
Protection Agreement and the Company’s 1998 Stock Option
Plan, sets forth the entire agreement between Allen E. Snyder
(“You” and “Yours”) and the Company with
respect to Your employment (“Agreement”).
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1.
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POSITION. Your
position will be Executive Vice President & Chief
Operating Officer located at our corporate headquarters in Boulder,
CO. You will report directly to the Chairman, Chief Executive
Officer and President of Carrier Access. You will be a
Section 16 reporting Officer of the Company.
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2.
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TERM. Subject
to the provisions for termination as hereinafter provided, the term
of this Agreement shall begin on November 6, 2006
(“Effective Date”) and shall continue until terminated
as herein provided.
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a.
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BASE SALARY.
For services rendered by You under this Agreement, the Company
shall pay to You the bi-weekly salary of $13,461.54, pursuant to
Carrier Access’s regular payroll schedule. This bi-weekly
salary times twenty-six (26) pay periods is equivalent to
$350,000 annually (“Base Salary”). Said Base Salary is
subject to annual increases as approved by the majority of the
members of the Company’s Board of Directors. The Board shall
consider the recommendation of the Compensation Committee in making
such determinations.
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b.
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BONUSES.
Commencing with the Fiscal Year 2007, in addition to Base Salary,
You will become eligible for a quarterly incentive and annual bonus
plan, with a target bonus rate of 100% of Your annual base salary
base salary (i.e., $350,000). Your actual annual incentive cash
award may be below, at, or above target and will be based upon a
combination of the Company’s achievement level against
financial and performance objectives, up to 200% of Your annual
base salary, subject to quarterly and annual targets set by the
Board of Directors. The Board shall consider the recommendation of
the Compensation Committee in determining such bonus
amounts.
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c.
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EXPENSES. In
addition to Base Salary and Bonuses, Company shall reimburse You
for all reasonably necessary business expenses actually incurred by
You in the performance of Your duties, including, without
limitation, expenses for travel, meals, entertainment and other
miscellaneous business expenses in accordance with Company’s
standard policy. For international air travel in excess of seven
(7) hours duration, the Company will reimburse You for airfare
at the Business Class level. You shall submit to Company written
itemized expense accounts and such additional substantiation and
justification as Company may reasonably request on account of such
expenses in any form required by Company. Company shall
furnish
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You with a credit card in the
account name of Company, which card may be used for such reasonable
and necessary expenses as described above.
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d.
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STOCK OPTIONS.
With the commencement of Your employment, and as a condition of the
non-competition terms as set forth in Section 8 below and
Exhibit C attached hereto, I will recommend to the Carrier Access
Board of Directors that You be granted a non-qualified stock option
to purchase 500,000 shares of Carrier Access Common Stock (the
“Option”). The Option will be granted with an exercise
price equal to the fair market price per share of Carrier Access
Common Stock at closing on the first trading day of the week
immediately following Your Start Date. If Your Start Date is the
first trading day of the week, the exercise price of Your Options
shall be equal to the fair market price per share of Carrier Access
Common Stock at closing on that date. Vesting is described in the
1998 Stock Option Plan and Stock Option Agreement and Notice of
Grant documents, and will commence as of Your Start
Date.
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e.
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OTHER BENEFITS.
You will receive standard Carrier Access benefits. Health benefits
become effective on the first day of the month following Your Start
Date. If Your start date is the first business day of the month,
You become eligible for health benefits on that day.
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4.
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DUTIES. You are
engaged for the purpose of performing (a) services as the
Executive Vice President and Chief Operating Officer and shall be
responsible for directing the daily business of the Company,
subject only to the control of the CEO and Board, (b) those
duties and responsibilities necessary for the performance of Your
position, and (c) such other duties as shall be agreed upon by
You and Company in writing. You shall faithfully adhere to, execute
and fulfill all policies established by the CEO and
Board.
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5.
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EXTENT OF
SERVICES. You shall devote substantially Your entire time, and best
efforts, to the performance of Your duties hereunder and to promote
and further the business of Company. You will work primarily at the
Company’s headquarters located in Boulder, Colorado, except
for necessary Company travel.
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6.
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WORKING
FACILITIES. You shall be furnished with appropriate working
equipment and tools necessary for the proper performance of Your
duties.
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7.
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BUSINESS
CONDUCT OF YOU. You shall be free to engage in other business
interests and investments, as long as (a) You devote Your full
time and attention and best efforts in a professional manner to the
business of Company, in a manner consistent with Your duties
hereunder, (b) such other business interests and investments
will not require Your services in the operation or affairs of the
companies or enterprises in which such investments are made, and
(c) such business interests or investments do not violate any
other provisions of this Agreement, including, without limitation,
Section 8 hereof. Notwithstanding the foregoing, You may
(a) provide up to twenty (20) hours of consulting
services to Openwave Systems, Inc. during the period from the
Effective Date through December 31, 2006, and (b) serve
on the Board of Directors of two (2) other companies or
organizations, provided however that (i) the foregoing
activities do not materially interfere, individually or in the
aggregate, with the performance of Your duties and responsibilities
hereunder and (ii) with respect to other board services, You
obtain the approval of the CEO and Board of Directors prior to
joining any such board, and such other board service does not
require that You attend more than four (4) meetings in person
per year in total.
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8.
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RESTRICTIVE
COVENANTS/PROTECTION OF PROPRIETARY INFORMATION.
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a.
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INTENT. The
parties hereto recognize that Your knowledge and skill are a
material factor in inducing the Company to enter into this
Agreement. Further, in the course of Your employment,
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and because of the nature of Your
responsibilities, You will acquire valuable and confidential
information and trade secrets with regard to the Company’s
business operation, including, but not limited to, Company’s
existing and contemplated services and products, documentation,
technical data, intellectual property and other proprietary
information, business and financial methods and practices, plans,
pricing, lists of Company’s customers and prospective
customers, methods of obtaining customers, financial and
operational data of Company’s present and prospective
customers, and the particular business requirements of the
Company’s present and prospective customers. In addition, You
may develop on behalf of the Company, a personal acquaintance with
some of the Company’s customers and prospective customers. As
a consequence, You will occupy a position of trust and confidence
with respect to the Company’s affairs and its services. In
view of the foregoing, and in consideration of the remuneration
paid and to be paid to You, You agree that it is reasonable and
necessary for the protection of the goodwill and business of
Company that You make the covenants contained in Sections 8(b) and
8(c) below regarding the conduct of You during and after Your
employment relationship with the Company, and that the Company will
suffer irreparable injury if You engage in conduct prohibited
thereby.
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b.
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NON-COMPETITION
AND NON-SOLICITATION. For a period beginning on the Effective Date
and ending one year after You cease to be employed by the Company,
You, directly or indirectly, whether as employee, owner, sole
proprietor, partner, director, member, consultant, agent, founder,
co-venturer or otherwise, will not violate the Non-Compete and
Non-Solicitation obligations and terms herein, including but not
limited to those set forth in Exhibit C, attached
hereto.
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(i) COMPANY’S INFORMATION. You
agree that any and all of Company’s confidential and
proprietary information, including, but not limited to, the matters
contained in Section 8(a) above and all intellectual property
rights therein, are and shall remain the sole and exclusive
property of Company. While in the employ of Company, or at any time
thereafter, You will not, directly or indirectly, communicate or
divulge to or use for Your benefit or for the benefit of any other
person, firm, association or corporation, any of Company’s
trade secrets or confidential information, including, by way of
illustration, the matters contained in Section 8(a) above, or
which were communicated to or otherwise learned of or acquired by
You in the course of Your employment with Company, except that You
may disclose such matters to the extent that disclosure is
required,
(a) in the course of Your employment
with and for the benefit of the Company or
(b) by a court or
governmental agency of competent jurisdiction without proof of
specific damages.
You will not use such trade secrets
or confidential information in any way or in any capacity other
than as an executive of the Company and to further the interest of
the Company.
(ii) OTHER INFORMATION. You shall
not, directly, or indirectly, communicate or divulge to the Company
or use for Your benefit or for the benefit of any other person,
firm, association or corporation, including Company, any
confidential, trade secret or other proprietary information of a
third party which You may have obtained from another person, the
disclosure of which You know or have reason to know would violate
the terms of any non-disclosure or confidentiality agreement
between Company and such other person, or the disclosure of which
You have reason to know is otherwise prohibited.
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d.
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BLUE PENCIL: In
the event any court of competent jurisdiction shall determine that
the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of You and Company that such
restrictions be enforced to the fullest extent which the court
deems reasonable, and this Agreement shall thereby be
reformed.
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9.
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PAID TIME OFF.
Carrier Access will provide You with PTO days (paid time off) and
Holidays. Currently there are eight (8) observed holidays. You
will accrue twenty (20) PTO days on a per pay period basis as
follows: 160 hrs / 26 pay periods = 6.15 hrs accrued each pay
period. Beginning in the third year of employment, You will accrue
at the rate of twenty-two (22) days per year, with PTO days
accrued at 6.77 hrs per pay period (176 hrs / 26 pay periods). The
Company’s maximum accrual total is 240 hours, which means
that if the maximum is reached, no additional hours will accrue
until the total accrual goes below 240 hours.
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10.
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DISABILITY.
Your disability and/or sick leave shall be covered by the usual and
customary policies and procedures of Company, as set forth in the
Carrier Access Employee Handbook, a copy of which has been provided
to You.
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a.
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FOR CAUSE:
Company may, at any time, terminate this Agreement and Your
employment “For Cause” as defined in Exhibit A,
attached hereto and made a part hereof.
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b.
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WITHOUT CAUSE;
GOOD REASON.
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(i)
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WITHOUT CAUSE.
You may terminate this Agreement voluntarily, which termination
shall be without cause, upon ninety (90) days written notice
to Company. In such event, You shall continue to render Your
services up to the date of termination. You may also terminate for
Good Reason (as defined below); .
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(ii)
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GOOD REASON.
You may terminate this Agreement for Good Reason (as defined
below), upon written notice to Company within sixty (60) days
after You know or have reason to know of the occurrence of any
event which would constitute Good Reason, and Your notice under
this Section ll(b)(ii) shall specify in reasonable detail the event
which would constitute Good Reason. In the event the Good Reason is
for events or circumstances described herein, Company shall have
thirty (30) days following receipt of such written notice from
You to effect a cure of the circumstance constituting Good Reason,
and, upon cure thereof by Company (which cure shall be retroactive
with respect to any monetary matter), such event shall no longer
constitute Good Reason. As used in this Agreement, “Good
Reason” shall mean the following: (a) if not approved by
You by written amendment to this Agreement, the assignment to You
of any duties inconsistent in any material respect with Your
position, authority, duties or responsibilities as contemplated by
this Agreement or any other action by Company which results in a
material diminution in such position, authority, duties or
responsibilities; or (b) establishment of a Base Salary for
You which is less than provided for in this Agreement, or failure
to pay the same other than an isolated, inadvertent or
insubstantial failure, not occurring in bad faith;
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c.
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DEATH OR
DISABILITY: This Agreement shall automatically terminate upon the
death or disability of You. In the event of death, this Agreement
shall terminate as of the date of Your death. In the event of the
determination by not less than fifty percent (50%) of the
Board of Directors of Company in good faith that You are disabled,
the Board may give You notice of its intention to terminate’
employment and Your employment shall terminate thirty
(30) days after receipt of such notice by You. Disability
shall be the absence of You from Your duties with the
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Company on a full time basis for one
hundred twenty (120) consecutive business days due to a
disabling condition as defined in the long-term disability policies
of Carrier Access in force at such time. In the event of a death or
disability, all amounts due as accrued Base Salary and prorated
Bonus through the termination date and deferred amounts due, if
any, shall be paid thirty (30) days of the termination date as
a lump sum payment. The foregoing shall be construed and enforced
in compliance with federal and state law regarding disability,
including the Family Medical Leave Act (FMLA). In the event the
foregoing or any portion thereof shall for any reason be held to be
invalid, illegal or unenforceable, the remaining provisions of this
Agreement shall be unimpaired, and shall continue in full force and
effect.
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12.
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OBLIGATIONS OF
COMPANY UPON TERMINATION.
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a.
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SALARY UPON
TERMINATION AT WILL BY COMPANY (WITHOUT CAUSE) OR FOR GOOD
REASON.
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Provided that You sign a release of
legal actions and non-compete agreement in the form set forth at
Exhibit B, at the time of termination and confirmation of Your
agreement to be bound by the non-compete terms set forth at Exhibit
C, You will receive, in lieu of any cash severance based upon Your
base salary or target incentive cash bonus payable or other amounts
which may otherwise be due to You hereunder, the
following:
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(i)
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twelve
(12) month’s base salary and,
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(ii)
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twelve
(12) month’s target incentive cash bonus based upon rate
then in effect for You.
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Except as set forth in §12.b.
below, the foregoing severance amount shall be the entire amount
due for termination by the Company without cause or by You for Good
Reason, and such amount shall be paid over the twelve
(12) month period following the termination date in equal
installments in accordance with the Company’s regular payroll
periods.
Termination by reason of Your
voluntary termination without cause, death or disability shall be
treated as a termination For Cause for purposes of this
Section 12.a. and the foregoing severance amount shall not be
payable.
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b.
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SALARY AND
OPTIONS UPON TERMINATION AND CHANGE OF CONTROL.
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If there is a Change in Control (as
defined below), and Your employment is terminated within two
(2) months before or twelve (12) months following the
effective date of the Change of Control for any reason other than
(i) by the Company For Cause (as defined in Exh
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