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EXHIBIT 10.5
December 7, 2000
Mr. Neil Ferris
17 Parkerville Road
Southborough, MA 01772
Dear Neil:
As you know, Giganet, Inc., a Massachusetts corporation (the "Company") has
entered into that certain Agreement and Plan of Merger by and among Emulex
Corporation, a Delaware corporation ("Emulex"), the Company, and certain other
parties, dated as of December 7, 2000 (the "Merger Agreement"), pursuant to
which the Company will become a wholly-owned subsidiary of Emulex. We are
pleased to engage you as an independent consultant to the Company following the
closing of the merger contemplated by the Merger Agreement (the "Commencement
Date"), on the terms and subject to the conditions set forth in this letter
agreement (this "Agreement"). This Agreement shall take effective immediately
following the closing of the merger contemplated by the Merger Agreement and
supersedes any prior employment agreement or arrangement regarding services
performed by you for the Company, whether written or oral, which agreement or
arrangement is deemed cancelled.
The following is intended to document the terms of your provision of
services to the Company:
1. Duties. While engaged as a consultant by the Company:
(a) You will use all reasonable efforts to promote and advance the
welfare and business of the Company;
(b) You will serve the Company faithfully to the best of your ability in
the performance of such activities, services and duties as may be assigned to
you by Paul Folino or the Company's Board of Directors consistent with this
Agreement (the "Services"). Your primary responsibilities are expected to
consist of facilitating the transition of the Company's operations into those of
Emulex;
(c) You agree that the Services shall include both services and duties
to the Company and, to the extent requested by the Company, any services
rendered to Emulex and its direct or indirect subsidiaries; and
(d) You will not, without full disclosure to, and the prior written
consent of, the Company, directly or indirectly, engage in any other business
activities or pursuits, whether on your own behalf or on behalf of any other
person, firm or corporation whatsoever, except activities in connection with
your personal investments of a passive nature which will not, in any event,
either materially interfere with the performance of the services required to be
rendered by you to the Company under this Agreement or violate any of the other
provisions set forth herein.
2. Monthly Compensation. During the term of your engagement as a
consultant, you will receive monthly cash compensation of $18,750, payable in
arrears.
3. [Intentionally Omitted]
4. Benefits. You will not be entitled to participate in any benefit plans
of the Company or Emulex but you will be entitled to continuation of the
coverage previously received as an employee of the Company, at your own expense
in accordance with and subject to the limitations of COBRA.
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5. Stock Options.
(a) Substitute Options. Stock options granted to you by the Company
under its stock option plan(s) prior to the Commencement Date shall be converted
into options to purchase shares of Emulex common stock in accordance with the
terms and provisions of the Merger Agreement (the "Substitute Options").
Notwithstanding the provisions of any other agreements regarding acceleration of
vesting of such options, all Substitute Options shall become fully-vested as of
the Commencement Date.
(b) Lock-Up Restrictions. By executing this Agreement you agree to be
bound by the restrictions on transfer of the shares of Emulex common stock (i)
issued to you as consideration paid to Company stockholders in accordance with
the Merger Agreement or (ii) issuable upon exercise of the Substitute Options,
contained in Section 2.3(a) of the Merger Agreement, a copy of which has been
previously provided to you. You acknowledge and agree that any shares issuable
upon exercise of other options, if any, issued to you by Emulex shall be subject
to the same lock-up restrictions. If requested by the Company or Emulex, you
will execute a separate form of Lock-Up Agreement contemplated by the Merger
Agreement evidencing such restrictions on transfer.
6. Term and Termination.
(a) Term. The term of your engagement as a consultant with the Company
pursuant to this Agreement shall begin on the Commencement Date and shall
continue for a period of six (6) months unless earlier terminated as hereinafter
provided.
(b) Termination Upon Death. Your death shall terminate your engagement
as a consultant by the Company. In the event of termination of your engagement
as a consultant by reason of your death, your estate or other successors in
interest, shall be entitled to receive any compensation earned by or accrued to
you and unpaid at the date of your death, but you shall not receive any further
compensation hereunder.
(c) Termination Upon Disability. In addition, if you become physically
or mentally incapacitated or are injured so that you are unable to perform the
services required of you under this Agreement (a "Disability"), the Company may
terminate your engagement as a consultant under this Agreement at any time
thereafter, provided, however, that such Disability is continuing at the time of
such termination. In the event of termination of your engagement as a consultant
upon Disability, you shall be entitled to receive any compensation earned by or
accrued to you and unpaid at the date of your Disability, but you shall not
receive any further compensation hereunder.
(d) Termination For Cause. The Company may terminate you're your
engagement as a consultant at any time for "Cause" upon at least thirty (30)
days written notice to you. The term "Cause" shall mean (i) your failure to
perform your consultant duties to the reasonable satisfaction of the Company,
whether by reason of your inability, refusal or otherwise, (ii) any act of
dishonesty, misconduct, disloyalty, fraud, insubordination or misappropriation
of confidential information by you in connection with your engagement as a
consultant hereunder, (iii) your engaging in misconduct or inaction detrimental
to the Company's or Emulex's business or reputation and/or which exposes the
Company or Emulex to liability based upon your inaction or action(s), or (iv)
alcoholism or drug abuse affecting your performance of your duties hereunder. In
the event of termination of your engagement as a consultant for Cause or by you
for any reason, you shall be entitled to receive the compensation due or to
become due to you up to the date of termination of your engagement as a
consultant, but you shall not be entitled to any other or further compensation.
(e) Termination Without Cause. In the event your services as a
consultant are terminated by the Company without Cause, you will be entitled to
receive the compensation, which would have been payable or made available to you
for the period ending on the date (the "Original End Date") the term of this
Agreement would have ended but for such termination without Cause.
7. Non-Disclosure, Invention Rights, Non-Competition and Non-Hire
Agreement. You have previously entered into the Company's form of
Non-Disclosure, Invention Rights, Non-Competition and Non-Hire Agreement (the
"NDA"). You hereby acknowledge that, from and after the Commencement Date,
Emulex and each of its direct or indirect subsidiaries shall be deemed
beneficiaries of the NDA and shall be deemed to be included in the definition of
"Corporation" contained in the NDA. As a condition to your engagement as a
consultant hereunder, you agree to the following additional provisions which
shall be deemed in addition to and not in lieu of provisions and obligations
contained in the NDA; provided, however, to the extent that there is a conflict
between the provisions of this Agreement and the provisions of the NDA, the
terms of this Agreement shall govern.
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(a) Confidential Information.
(1) In order for you to perform the Services contemplated to be
performed by you for the Company, it will be necessary to make available to you
certain material which, by its nature, is the property of and/or confidential to
the Company, Emulex and/or any direct or indirect subsidiaries thereof
(collectively, "Company Parties") and constitutes an important part of their
businesses. This material is herein referred to as "Confidential Information,"
and is more particularly defined below.
(2) You agree that while engaged as a consultant by the Company and
after termination of your engagement as a consultant of the Company, you will
not divulge, or permit to be divulged, to others, or yourself use in any way any
Confidential Information except (i) in the performance of the services to be
performed hereunder; (ii) in accordance with the Company's prior written
authorization or (iii) as may be required by valid applicable law, but only
after you have given the Company not less than five (5) business days' notice
that you are legally required to make such disclosure and the circumstances
surrounding such required disclosure. Except as so authorized, you agree that
Proprietary Information shall always be kept confidential. Furthermore, you
agree that upon termination of your engagement as a consultant with the Company,
you will promptly deliver to the Company's authorized representatives all
materials which constitute Confidential Information, and you will not make,
retain, use or distribute copies thereof.
(3) You agree that all ideas, methods, processes, inventions,
improvements, discoveries, developments, or the like (whether completed or in
process) made or conceived by you, either alone or jointly with others while you
were employed or engaged as a consultant by the Company (collectively referred
to herein as "Discoveries"), shall be the property of the Company, whether or
not patented or patentable, or able to be copyrighted or in fact copyrighted,
and each and all of the Discoveries shall, to the extent lawfully permitted,
constitute Confidential Information. In this connection, you agree promptly and
fully to disclose each and all of the Discoveries to the Company (as well as any
other knowledge or information which you may possess or obtain relating to the
Discoveries) and at its request and expense, to execute and deliver all
documents and to take all action necessary to transfer to and vest in the
Company all rights to use each and all of the Discoveries in any and all
countries.
(4) Notwithstanding anything in this Paragraph 7 to the contrary, it
is understood that, except to the extent otherwise expressly prohibited by the
Company, (A) you may disclose or use Confidential Information in performing your
duties and responsibilities to the Company but only to the extent required or
necessary for the performance of such duties and responsibilities in the
ordinary course and within the scope of your association with the Company as a
consultant, and (B) you may disclose any Confidential Information pursuant to a
request or order of any court or governmental agency, provided, however, that
you promptly notify the Company of any such request or order and provide
reasonable cooperation (at the Company's expense) in the efforts, if any, of the
Company to contest or limit the scope of such request or order.
(b) Definitions. As used herein, the term "Confidential Information"
shall include:
(1) All inventions, discoveries, ideas, research, engineering
methods, practices, processes, systems, formulas, designs, products, projects,
improvements and developments which are not lawfully in the public domain and
which were or are conceived or reduced to practice at any time prior to the
termination of your previous employment or current consulting relationship with
the Company, in whole or in part, by any of the Company Parties or their
respective employees or consultants, at the expense of any Company Parties, on
the premises of any of the Company Parties, or with the equipment of any of the
Company Parties; and
(2) All trade secrets and other data and information, in any form,
belonging to any of the Company Parties or any of its clients, customers,
consultants, licensees, licensors, dealers or affiliates, that is held in
confidence by the Company, including, without limitation, computer software,
contracts, business plans and arrangements, customer, dealer and vendor lists,
marketing materials, financial information, compensation levels, research,
information regarding any aspect of the intellectual property position of the
Company Parties, product and product development information and plans,
memorandum, correspondence, information regarding any existing or proposed
acquisition, strategic alliance or joint venture, information regarding prices
or costs of the Company Parties, information concerning sources of supply, costs
of manufacture and sale and specifications of equipment, and any other
information identified or treated as confidential by the Company Parties or any
of its clients, customers, vendors, dealers, consultants, licensees or
affiliates, whether or not published or unpublished, protected or susceptible to
protection under patent, trademark, copyright or similar laws and whether or not
the Company Parties has elected to secure or attempted to secure such
protection; and whether or not in any way related to the subject matter of any
work done by you for or at the request of the Company or Emulex.
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(c) Non-Competition Covenant. You agree that, notwithstanding anything
to the contrary contained in the NDA, during the term of your engagement as a
consultant and for a period of two (2) years after termination of your
engagement as a consultant, you shall not, as an owner, part-owner, partner,
director, officer, trustee, employee, agent, consultant, joint venturer,
stockholder, representative, sole proprietor, independent contractor or in any
other capacity, directly or indirectly engage in or participate in any business,
organization or entity which is or provides a Competitive Business (as defined
below). The foregoing shall not prohibit me from owning five percent (5%) or
less of the outstanding equity securities of any corporation whose equity
securities are regularly traded on any national stock exchange or recognized
"over-the-counter" market, nor shall it prohibit you from owning any interest,
whether as a creditor or stockholder, in Emulex. "Competitive Business" shall
mean (i) any business whose activities include the design, manufacture,
assembly, development, distribution, marketing or sale of network I/O products
or services related thereto which are similar to those being planned or those
being designed, manufactured, assembled, developed, distributed, marketed or
sold by any of the Company Parties at the time of termination of your engagement
as a consultant, and (ii) any future business that, at the date of the
termination of your engagement as a consultant with the Company, is included in
the Company's business plan for implementation by the Company.
(d) Non-Solicitation Covenant. During the term of your engagement as a
consultant and for a period of two (2) years after the termination of your
engagement as a consultant, you shall not, as an owner, part-owner, partner,
director, officer, trustee, employee, agent, consultant, joint venturer,
stockholder, sole representative, sole proprietor or independent contractor, or
in any other capacity directly or indirectly (i) solicit, divert or take away
any of the customers or business of the Company Parties existing at the time of
the termination of your engagement as a consultant, or (ii) solicit or discuss
with any employee of the Company, or with anyone who was an employee of the
Company within the six (6) month period prior thereto, the employment or other
retention of such person by any other company, business organization or other
entity.
8. [Intentionally Omitted]
9. Notices. Any notice under this Agreement shall have been deemed to have
been given only if in writing and delivered in hand or sent in writing by
registered, certified or express mail, return receipt requested, postage prepaid
(or by commercial expedited delivery service) (a) if intended for the Company or
Emulex, such notice having been sent to it at the address set forth in the
heading of this Agreement, Attention: President, and (b) if intended for you,
such notice having been sent to you at your address set forth on Page 1 of this
Agreement. Either of us, by like notice to the other, may designate another
address or addresses to which notice must be sent.
10. Waiver. The failure to insist upon strict compliance with any of the
terms, covenants or conditions of this Agreement shall not be deemed a waiver of
such terms, covenants and conditions nor shall any waiver or relinquishment of
any right at any one or more times be deemed a waiver or relinquishment of such
right at any other time or times.
11. Absence of Other Agreements. In consideration for the Company entering
into this Agreement with you, you have assured the Company that, except for the
NDA and as otherwise may be contemplated by the Merger Agreement, you are not a
party to, or bound by, any obligation or agreement, whether written or oral,
which will in any way affect your ability to perform your duties for the
Company, including, without limitation, any employment agreement, non-compete
agreement, or an agreement restricting the use of proprietary or confidential
information.
12. Miscellaneous.
(a) If any portion or provision of this Agreement or the NDA shall to
any extent be found to be invalid or unenforceable, the remainder of this
agreement or the application of such portion or provision in circumstances other
than those in which it is held invalid or unenforceable, shall not be affected
thereby, and each portion or provision of this Agreement shall be valid and
enforced to the fullest extent permitted by law, but only to the extent the same
continues to reflect fairly the intent and understandings of the parties
expressed by this Agreement taken as a whole.
(b) The undertakings set forth in the various clauses of Paragraph 7 of
this Agreement and of the NDA shall be construed as independent covenants and
the existence of any claim or cause of action against the Company, whether
predicated on this Agreement, the NDA or otherwise, shall not constitute a
defense to the enforcement by the Company of the restrictions imposed by, and
your agreements contained in, said Paragraph 7 and the NDA. The restrictions
contained in said Paragraph 7 or the NDA are necessary for the protection of the
business and goodwill of the Company and Emulex and are considered by you to be
reasonable for such purpose. You acknowledge that in the event of your breach of
the restrictive covenants set forth in said Paragraph 7 or the NDA, the
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Company shall be entitled, in addition to any other remedies lawfully available
to it, to obtain injunctive relief to secure the enforcement of said restrictive
covenants and/or to prevent their further breach by you.
(c) This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts without regard to principles of
conflicts of law. Except as otherwise set forth in this sub-paragraph of
Paragraph 11, any dispute between you and the Company and/or Emulex arising from
or relating to this Agreement shall be resolved by arbitration in accordance
with the rules of the American Arbitration Association in Boston, Massachusetts
with the fee for the arbitrator being borne by the Company. The prevailing party
in any such arbitration shall be entitled to recover his or its costs and
reasonable attorneys fees.
(d) This Agreement may not be changed or modified, in whole or in part,
except by an instrument in writing signed by you and on behalf of the Company,
and it contains the entire agreement between the parties with respect to its
subject matter and, effective on the date hereof, shall supersede the terms and
provisions of any agreements or arrangements made prior to the date of this
Agreement, including, without limitation, that certain letter agreement dated
December 7, 2000, with you or any affiliate of yours to the extent such terms
and provisions conflict, or are inconsistent, with any terms or provisions
contained herein.
(e) The terms, provisions and conditions of this Agreement shall be
binding upon and inure to the benefit of you and the Company, Emulex and our
respective legal representatives, successors and assigns. Without limiting the
generality of the foregoing, the rights, obligations and agreements set forth in
Paragraphs 7, 9, 10, 11 and 12 of this Agreement shall survive any termination
of this Agreement or of the consulting relationship between you and the Company.
The rights and obligations of the Company under this Agreement are specifically
acknowledged to be assignable by the Company, but you may not assign your duties
under this Agreement.
If the foregoing accurately sets forth our mutual understandings, please
countersign this Agreement below.
Very truly yours,
GIGANET, INC.
By: /s/ CORNELIUS A. FERRIS
-------------------------------
Name: Cornelius A. Ferris
Its:
EMULEX CORPORATION
By: /s/ SADIE A. HERRERA
-------------------------------
Name: Sadie A. Herrera
Its:
AGREED TO AND ACCEPTED AS OF
December 7, 2000 BY:
/s/ NEIL FERRIS
- ------------------------------
Neil Ferris
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