March 12, 1997
Mr. Steven F. X. Murphy
5023 Reno Road N.W.
Washington, DC 20008
Dear Steve:
I am pleased to offer you the position of Vice President - Sales and
Marketing with Applied Digital Access, Inc., reporting to me. Everyone at
ADA is enthusiastic about you joining the ADA team as a regular full-time
employee.
Your compensation will be $6,250.00, paid semimonthly (equivalent to
$150,000.00 annualized). In addition, you will receive the other benefits
afforded to all regular full-time employees of ADA. These include two weeks
paid vacation, partially paid health insurance coverage through participation
in ADA's Section 125 Cafeteria Plan, the opportunity to participate in a
401(k) plan, and the opportunity to participate in ADA's Stock Purchase Plan.
As Vice President - Sales and Marketing, you will be an officer of the
Company and will participate in the Management Team Incentive Compensation
Plan. The Sales Management Incentive Compensation portion of the Plan
provides for incentive compensation of up to $125,000 at plan, and up to
$175,000 at 110% of plan as approved by the Compensation Committee of the
Board of Directors. The incentive compensation is earned depending on actual
performance against company and business unit objectives as described in the
attached compensation plan summary. You will be entitled to draw up to
$50,000 of this incentive compensation semimonthly. In the unlikely event of
you not earning the amount you actually draw, at the discretion of the
Compensation Committee, you may be required to refund to the company amounts
drawn which are greater than your earnings under the plan.
As a key part of your compensation package, I will recommend to the Board of
Directors that you be granted an option to purchase 75,000 shares of ADA
common stock in accordance with ADA's Incentive Stock Option Plan. This
stock will vest over a four-year period, with one-fourth fully vested at the
end of your first twelve months of employment at ADA and the remainder
vesting monthly thereafter. The exercise price of shares granted under ADA's
Incentive Stock Option Plan will be the closing price of ADA stock on the
NASDAQ exchange on the day your option is granted by ADA's Board of Directors.
To assist you in relocating to San Diego, we will provide reimbursement for
up to $50,000 for documented and reasonable relocation and interim living
expenses as incurred. This amount will be subject to Federal and State
withholding regulations. We will reimburse you for those taxes to be paid up
to a maximum of $20,000. If you voluntarily leave ADA before the end of two
years from your date of hire, this relocation assistance will be deemed
subject to prorated repayment based on the number of months you work at ADA.
Employment with Applied Digital Access is not for a specific term and can be
terminated by you or by ADA at any time for any reason, with or without
cause, and with or without prior notice. Any contrary representations which
may have been made to you are superseded by this offer. No person affiliated
with ADA has the authority to enter into any verbal agreement to change the
at will nature of your employment. Longevity of employment, promotions, pay
raises, bonuses, and positive performance evaluations will not change the
at-will status of your employment with ADA. Any modification to this at-will
term of your employment must be expressed in writing and signed by you and by
me.
In the event your employment is terminated by the company for any reason
other than Cause (as defined below), you will be entitled to a continuation
of base salary (less applicable taxes, other required withholdings and any
amount owed by you to the company) for a period of three months from the date
of termination, such three month period to be known as the severance term.
Severance payments shall be payable in equal installments monthly commencing
one month after the date of termination. The Company's obligation to make
severance payments will terminate upon the earlier of (1) the date three
months after termination of employment or (2) the date on which you commence
employment with another employer. During the severance term, you will
continue to be treated as a company employee for purposes of all company
provided employee benefits, other than incentive compensation, bonus, profit
sharing or similar plans, stock option vesting and vacation eligibility.
In the event your employment is terminated by the company for any reason
other than Cause, you also will be entitled to be paid, at the same time such
payments are made to other officers of the Company, your pro rata share for
any bonus or profit sharing plans in which you participated for the portion
of the year that you remained employed by the Company to the extent not
inconsistent with the terms of any such plan.
In the event your employment is terminated by the company for any reason
other than Cause, you will be relieved of your obligation to repay relocation
expenses to the company, and to repay any draw that is in excess of earned
amounts, up to the date of your termination.
For these purposes, "Cause" means:
(i) failure by you to substantially perform your duties herein, other than
failure resulting from complete or partial incapacity due to physical
or mental illness or impairment,
(ii) an act by you which constitutes misconduct and/or which is injurious
to the company, or
(iii) a violation of federal or state laws or regulation applicable to the
business of the Company, or
(iv) any violation of the Company's Proprietary Information and Inventions
Agreement.
ADA is committed to a drug-free workplace and has a zero-tolerance drug
policy. Illegal possession or use of drugs of any kind, at any time, on or
off company premises within or outside of working hours may result in
immediate dismissal.
Smoking is not permitted on company property or at any company off-premises
events.
This offer is contingent on your executing the enclosed Proprietary
Information and Inventions Agreement and providing ADA with the legally
required proof of your identity and authorization to work in the United
States.
Please sign both copies of this letter, retain one copy for your files, and
return the second copy to us as soon as possible. Everyone is delighted to
have you join our team. I look forward to working with you, and to enjoying
the success our team will realize together.
Very truly yours,
/s/ Peter P. Savage
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Peter P. Savage
President and CEO
Please indicate your acceptance of this offer by signing below:
My first day of employment will be March 31, 1997.
Accepted /s/ Steven F. X. Murphy Date 3/17/97
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Steven F. X. Murphy