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EXHIBIT-10.3(A)(b)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of January 1, 2000, between
NEXT GENERATION NETWORK, INC., a Delaware corporation (the "Corporation"), and
XXXXXX X. XXXXXXXX (the "Employee").
1. Employment, Acceptance and Term.
1.1 The Corporation hereby employs the Employee and the Employee hereby
accepts employment from the Corporation for a term commencing January 1, 2000,
and continuing through January 31, 2004 (the "Term").
2. Duties and Authority.
2.1 During the Term, the Employee shall devote his full time and efforts to
fulfill his obligations hereunder, with the understanding that the Employee may
participate in charitable and civic activities and have business investments
which may, from time to time, require minor portions of his time but shall not
interfere with or breach his obligations under this Agreement. The Employee
agrees to use his best efforts, skill and abilities to promote the Corporation's
interests; to serve as a director and officer of the Corporation and any of its
subsidiary corporations if elected by the Board of Directors of the Corporation
(the "Board") or stockholders of the Corporation and any such subsidiary
corporation; and to perform such duties (consistent with his status as set forth
below in this Section 2) as may be assigned to him by the Board. The Employee
may continue to serve as a member of the boards of directors of business
corporations of which he is now a member and may serve as a member of the boards
of directors of other business corporations, provided that such activities do
not interfere with or breach his obligations under this Agreement.
2.2 The Employee shall be the Vice Chairman and Chief Executive Officer of
the Corporation and shall report to the Board.
2.3 The Corporation shall, for so long as the Employee's employment by the
Corporation continues under this Agreement, use its best efforts to (i) cause
the Employee to be nominated for election as a director and Vice Chairman and
Chief Executive Officer at each meeting of stockholders held for an election of
directors; (ii) cause the Employee to be continued in office as Vice Chairman
and Chief Executive Officer of the Corporation once so elected; (iii) cause the
Employee to be elected to serve as a member and Vice Chairman of an Executive
Committee so long as the Board shall appoint an Executive Committee; and (iv)
not confer on any other officer or employee authority, responsibility or powers
superior or, except in the case of Xxxxxx X. Xxxxx, equal to the authority,
responsibility or powers vested in the Employee.
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3. Principal Office.
3.1 The Employee's services under this Agreement will be performed
primarily at the Corporation's offices, subject to reasonable travel
requirements on behalf of the Corporation.
4. Compensation.
4.1 During the Term, the Corporation shall pay to the Employee a salary at
the annual rate of $300,000, which shall be paid in equal monthly or more
frequent installments (the "Base Salary").
4.2 In addition to the Base Salary, Employee shall be entitled to receive
an annual bonus at such time or times and in such amounts, but only if as and
when determined by the Board.
5. Expenses.
5.1 During the Term, the Corporation shall pay or reimburse the Employee
for all transportation (first-class), hotel and living expenses incurred by the
Employee on business trips, and for all other business and entertainment
expenses reasonably incurred by him in connection with the business of the
Corporation and its subsidiaries during the term of his employment hereunder.
Such expenses shall be subject to the Company's policies in effect from time to
time for its senior executives and shall include the cost of the Employee's
membership in one or more luncheon or other clubs utilized in the course of the
Employee's performance under this Agreement, and the costs of an automobile of
the Employee's selection, in each case subject to the Company's policies in
effect from time to time.
6. Employee Benefits.
6.1 During the Term, the Corporation shall, if the Employee is insurable at
standard rates, acquire and maintain, with a reputable insurer, a life insurance
policy on the life of the Employee naming the Employee's designee or designees
as beneficiary or beneficiaries and providing a net death benefit of not less
than $1,000,000. The Employee shall submit to such physical examinations as may
be required by the insurer as a condition to the issuance of such policy.
6.2 During the Term, the Employee shall be permitted to participate in all
group health, hospitalization and disability insurance plans, health programs,
pension plans, participation or extra compensation plans, and similar benefits
and perquisites that are now or may become available to other senior executives
of the Corporation, on the same terms as such other senior executives. During
the Term, the Company shall purchase group disability
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insurance for senior executives (including the Employee) that is no less
favorable to the Employee than such insurance that the Company maintains on the
date hereof. During the Term, the Employee shall participate in any stock
option, restricted stock or other equity based plans. Effective upon
consummation of a public offering ("IPO") of the Corporation's Common Stock, the
Corporation shall grant the Employee options to purchase shares of Common Stock
at a price equal to the initial offering price of the IPO. The number of shares,
and the terms and conditions upon which such options may be exercised, shall be
determined by the Board.
6.3 During each year of the Term, the Employee shall be entitled to
reasonable annual periods of vacation with full pay and allowances. The timing
and duration of individual vacation periods shall be determined by the Employee
taking into account the needs of the Corporation.
7. Termination of Employment Prior to End of Term; Amounts Payable Upon Such
Termination.
7.1 In the event that the Employee becomes disabled before the expiration
of the Term so that he is unable to substantially perform his services hereunder
for an aggregate of six (6) consecutive months or a total of nine (9) months
within any consecutive eighteen (18) months, the Corporation may terminate the
employment of the Employee; provided that in such event the Corporation shall
pay to the Employee as severance for the balance of the Term, an annual amount,
payable monthly, equal to the lesser of (1) the sum of (A) the Base Salary in
effect on the date of termination and (B) one-half (1/2) of any bonuses awarded
to the Employee with respect to the preceding twenty-four (24) months (or if
less than two (2) years of the Term has then elapsed, the entire amount of any
bonus paid during the preceding twelve (12) months, or if less, the period of
the Term then elapsed) (such sum is hereinafter referred to as Employee's
"Current Annual Compensation"), and (2) $500,000, subject to the immediately
following sentence. If any payment otherwise due under the preceding sentence
would have the effect of reducing any insurance payment under the Company's
group disability insurance policy, then the payments due under the first
sentence of this Section 7.1 shall be reduced to permit the Employee to receive
the maximum available insurance payments; provided further however, that in no
event shall such reduction result in the Employee receiving on an after-tax
basis total payments (from the Company and the insurance company) less than
provided for in the first sentence of this Section 7.1. In addition, in the
event of termination pursuant to the first sentence of this Section 7.1, the
Employee shall be entitled receive, until the end of the month in which the
Employee reaches age 65, such health insurance and similar related health
coverage and health benefits as are generally made available to the
Corporation's senior executives from time to time. In the event of the
Employee's death during the Term, the Corporation shall pay the Employee's
salary to the date of death.
7.2. [Intentionally omitted]
7.3 If the Employee shall not be continued in office during the Term in the
same or similar positions to those presently held by him, or if the Employee
shall not be afforded in all
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material respects the authority, responsibilities and prerogatives contemplated
by this Agreement, the Employee shall have the right to terminate his employment
under this Agreement by sixty (60) days' prior written notice to the Corporation
setting forth the specific basis for termination given at any time within ninety
(90) days after such event; provided, however, that such termination by the
Employee may not be made if the Company remedies the event or events given rise
to such notice within 30 days after receipt of notice; and provided further that
such termination shall not apply in the event of a termination for cause or as a
result of death or disability (subject to the last sentence of this Section 7.3.
If the Employee elects to terminate his employment pursuant to this Section 7.3,
the Corporation shall pay to the Employee an amount, in monthly installments,
equal to the greater of Employee's Current Annual Compensation multiplied by two
(2) or Employee's Current Annual Compensation multiplied by the number of years
remaining in the Term. Upon completion of such payments, the Corporation shall
have no further obligations to the Employee under this Agreement other than such
obligations as are expressly set forth. If the Employee shall die or become
disabled subsequent to the notice of termination of employment provided for in
this Section 7.3, such death or disability shall not diminish or impair his (or
his legal representative's or other successor's) right to receive the payments
provided for in this Section 7.3.
7.4 If the Employee shall be discharged without cause during the Term, he
shall be entitled to receive from the Corporation, on or before the date of
discharge, the payments determined as provided in Section 7.3 above.
7.5 If the Employee shall be discharged for cause during the Term, the
Corporation's obligations to pay compensation or other amounts payable hereunder
to or for the benefit of the Employee, except for compensation or other benefits
payable in respect of services rendered prior to the date of such discharge,
shall terminate on the date of such discharge. As used herein the term "for
cause" shall mean any material breach by the Employee under this Agreement,
which breach if susceptible to cure shall not have been cured within thirty (30)
days after the Employee has received written notice thereof from the Board, the
conviction of the Employee for a felony, or the continued wilful malfeasance or
gross negligence by the Employee in the performance of his duties under this
Agreement for a period of thirty (30) days after the Board has directed the
Employee in writing to cease the activity giving rise to such wilful malfeasance
or gross negligence. The term "for cause" shall not include a bona fide
disagreement over corporate policy so long as the Employee does not wilfully
violate specific written directions from the Board, which directions are
consistent with the provisions of this Agreement.
7.6 In the event any amounts or other benefits are payable to or for the
Employee (or his legal representatives or other successors) pursuant to Sections
7.1, 7.3, or 7.4 hereof in respect of any period following the termination of
his employment hereunder, such amounts or other benefits shall not be reduced in
any manner by reason of any other earnings, income or benefits of or to the
Employee from any other source, except as expressly provided in Section 7.1. By
this provision the parties intend that the Corporation shall waive any
mitigation of damages rule that may otherwise apply in such circumstances. In
the event a termination of
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employment occurs pursuant to more than one
subsection of this Section 7 and there has not been a termination for cause
under Section 7.5, the Employee shall be entitled to payments under only one
applicable subsection of this Section 7 (which shall be the applicable
subsection providing for the greatest payments).
7.7 In the event there is a termination of employment pursuant to Sections
7.1, 7.3 or 7.4, the Corporation shall as of the date of such termination vest,
or cause to vest, in the Employee all of his rights accrued in and under the
Corporation's existing pension plan.
8. Indemnification and Payment of Legal Expenses.
8.1 The Corporation shall indemnify the Employee and his legal
representatives, to the fullest extent permitted by the laws of the State of
Delaware and the existing By-laws of the Corporation, and the Employee shall be
entitled to the protection of any insurance policies the Corporation may elect
to maintain generally for the benefit of its directors and officers, against all
costs, charges and expenses whatsoever incurred or sustained by him or his legal
representatives in connection with any action, suit or proceeding, or any
threatened action, suit or proceeding, to which he or his legal representatives
may be made a party, or threatened to be made a party, by reason of his being or
having been director or officer of the Corporation or any of its subsidiaries.
8.2 If the Employee or any Designated Representative shall be required to
initiate legal action in order to enforce or retain any right or benefit
provided by this Agreement in the event of a breach of or default under this
Agreement by the Corporation, and if the Employee or Designated Representative
shall prevail in such legal action, the Corporation shall indemnify the Employee
or such Designated Representative for all reasonable legal and accounting fees
and expenses incurred in connection therewith.
9. Non-Competition.
9.1 The Employee shall not, during the Restricted Period (as defined
below), any where in the Restricted Area (as defined below), directly or
indirectly engage in or become associated as an employee, consultant, partner,
owner, agent, stockholder, officer or director of, any person or organization
engaged in, or about to become engaged in, a business that competes, directly or
indirectly, with the business of the Corporation. "Restricted Period" means the
period commencing on the date hereof and continuing until the date twenty-four
(24) months after the date this Agreement is terminated for any reason
whatsoever. "Restricted Area" means the United States of America and any of its
possessions or anywhere else in the world. Notwithstanding the foregoing, this
Section 9.1 shall not prohibit the Employee from owning up to 1% of the
outstanding shares of any class of stock that is registered under the Securities
Exchange Act of 1934, as amended, and listed on a national stock exchange or
traded or quoted for trading on any national securities market.
9.2 During the and for two (2) years thereafter, the Employee will not,
without
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the prior written consent of the Corporation, either directly or indirectly
solicit or otherwise encourage any person employed by the Corporation to leave
the employ of the Corporation.
9.3 The Employee agrees that the Corporation will suffer irreparable injury
if, in breach of the covenants contained herein, he competes with the business
of the Corporation, or any of its subsidiaries or affiliates, and that by reason
of such competition the Corporation will be entitled to injunctive relief in a
court of competent jurisdiction. The Employee hereby stipulates to the entry of
temporary, preliminary and permanent injunctive relief prohibiting him from
competing with the Corporation, or any of its subsidiaries or affiliates, in
breach of such covenants.
9.4 The Employee agrees that if in any judicial proceeding a court shall
refuse to enforce any covenant contained in this Agreement because it covers too
extensive a geographic area or too broad a scope of activities or too long a
period of time, such covenant shall be reduced in scope to the extent required
by law.
10. Nondisclosure Agreement.
Except as the Corporation may otherwise permit or direct in writing, the
Employee will not disclose, during the Term and thereafter for a period of three
(3) years, any information, knowledge or data (unless readily ascertainable from
public information or sources, or required by law to be disclosed) concerning
the Corporation or any of its subsidiaries or affiliates, which he has obtained
prior to the date of this Agreement or hereafter obtains during the Term that
relates to the business processes, trade secrets, methods, customers, machines,
inventions, discoveries or any other matters concerning the respective
businesses, products or work of the Corporation or any of its subsidiaries or
affiliates. All records, documents and other writings relating to the businesses
of such corporations which are or have been prepared or created by Employee or
which have come or hereafter come into his possession during the Term are the
property of such corporations and upon termination of the Term shall be
delivered to or shall remain in the possession of such corporations, as the case
may be.
11. Notices.
Any notice or other communication required to or which may be given to any
party hereunder shall be in writing and shall be deemed given effectively if
delivered personally to such party or if mailed by registered or certified mail,
postage prepaid, addressed to such party as follows (the third business day
following the date of mailing of any such notice is deemed the date of delivery
thereof):
To Employee:
Xx. Xxxxxx X. Xxxxxxxx
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To the Corporation:
Next Generation Network,Inc.
00000 Xxxxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000
Any party may change the persons and addresses to which notices or other
communications are to be sent by giving written notice of such change to the
other party in the manner provided herein for giving notice.
12. Miscellaneous.
12.1 This Agreement shall be binding upon and inure to the benefit of the
heirs, next-of-kin and legal representatives of the Employee and the successors
and assigns of the Corporation, including any corporation into or with the
Corporation shall consolidate or merge or to which it shall sell or otherwise
transfer substantially all of its assets, properties and business. This
Agreement is not assignable by the Employee.
12.2 This Agreement is to be governed by and interpreted in accordance with
the laws of the State of Minnesota applicable to agreements made and to be
performed wholly within such State.
12.3 This instrument is the entire agreement of the parties with respect to
the subject matter hereof and may not be amended, supplemented, cancelled or
discharged except by written instrument executed by both parties hereto. Without
limiting the generality of the foregoing, this Agreement supersedes and replaces
any prior employment agreement with the Company or any of its subsidiaries to
which the Employee is or was a party. The parties do not intend to confer any
benefit hereunder on any third person and, without limiting the generality of
the foregoing, the parties may, in writing, without notice to or consent of any
third person, at any time waive any rights hereunder or amend this Agreement in
any respect or terminate this Agreement.
12.4 The termination of the Employee's employment hereunder shall not
affect those provisions of this Agreement that by their terms apply to any
period or periods subsequent to such termination.
13. Grant of Restricted Stock.
13.1 As a reward for past, and an incentive for future, employment
performance by the Employee and for other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the Corporation
previously has awarded to Employee 49,830 shares (taking into account a 10 for 1
stock split effective April 26, 1999) and ________ shares (pursuant to the
conversion of 230 shares of Series C Senior Cumulative Compounding
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Convertible Redeemable Preferred Stock) (together, the "Initial Shares") of
Common Stock of the Company, par value $.01 per share (the "Common Stock"). As
used in this Section 13, (i) the term "Restricted Shares" will mean all Initial
Shares and any and all other shares of stock and other securities which the
Employee later acquires or has the right to acquire by reason of ownership of or
otherwise with respect to any Initial Shares or other Restricted Shares,
irrespective of the time and manner of such acquisition, including, without
limitation, any shares or other securities (whether issued by the Corporation or
otherwise) acquired by reason of any split-up, recapitalization, dividend,
distribution, combination, conversion or exchange of shares of capital stock or
other securities of the Corporation (or any other issuer), or acquired by reason
of any merger or consolidation of the Corporation (or any other issuer) or any
dissolution of the Corporation (or any other issuer); and (ii) the term
"Restricted Share Distributions" means any cash or other property, except stock
or other securities, which the Employee acquires or receives or has the right to
acquire or receive by reason of ownership of or otherwise with respect to any
Restricted Shares, including, without limitation, any cash or other such
property acquired or received by reason of any event specified in clause (i) of
this sentence.
13.2 If a Forfeiture Event (as defined below) occurs at any time prior to
the Vesting Date (as defined below), all Restricted Shares and, subject to the
last sentence of Section 13.3, Restricted Share Distributions held by or for the
account of the Employee or which the Employee has the right to acquire or
receive, and all rights benefits of Employee with respect to such Restricted
Shares and Restricted Share Distributions, automatically will be forfeited to
and vest in the Corporation. As used is Section 13, (i) the term "Forfeiture
Event" means either (a) the termination of the Employee's employment with the
Corporation by the Corporation for cause or (b) the termination of the
Employee's employment with the Corporation by the Employee; (ii) the term
"Vesting Date" means the first to occur of (A) December 31, 2006 (B) the death
of the Employee, (C) the Employee's Disability, (D) the termination by the
Corporation of the Employee's employment with the Corporation otherwise than for
cause, (E) any consolidation, merger, binding share exchange or reorganization
to which the Corporation is a party (other than a consolidation, merger, share
exchange or reorganization in which the Corporation is the continuing
corporation and which does not result in any change in, distribution upon or
exchange of the outstanding shares of any class or series of capital stock of
the Corporation which includes Restricted Shares) or any sale, conveyance,
transfer or lease to another corporation of the properties and assets of the
Corporation as an entirety or substantially as an entirety, (F) the effective
date of a public offering of the Corporation's Common Stock registered under the
Securities Act of 1933, as now or subsequently in effect (the "Securities Act")
in which the Restricted Shares have been registered for sale or (G) the first
date as of which, pursuant to Rule 144 under the Securities Act, the Restricted
Shares may be publicly offered and sold by Employee without registration under
the Securities Act and without any limitation or restriction, including any
limitation as to volume or manner of sale; and (iii) the term "Disability" means
the inability to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than 12 months, as determined by the Board of Directors of
the Corporation in good faith. For purposes of this Section 13, "cause" for
termination of Employee's employment shall have the meaning set forth in Section
7.5.
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13.3 By giving notice to the Employee, the Corporation at any time: (i) may
require that any or all of the certificates or other instruments or property
evidencing or constituting any or all of the Restricted Shares or any or all
Restricted Share Distributions then subject to forfeiture be held in escrow by a
bank or other institution, or by the Corporation itself, until the Vesting Date;
(ii) may require that the Employee deliver a stock power or other instrument
endorsed in blank relating to any Restricted Shares held in escrow; and (iii)
may require that any and all Restricted Shares be held in the name of such
escrow agent (in such capacity) as registered or record owner. Any Restricted
Shares and Restricted Share Distributions held in escrow which no longer are
subject to forfeiture (as determined pursuant to Section 13.2 hereof) will be
delivered out of escrow to the Employee within a reasonable time after the
applicable Vesting Date, subject to Section 13.12 of this Agreement and the
satisfaction by the Employee of applicable federal and state securities laws and
withholding tax requirements, including any federal, state or local withholding
taxes. Subject to Section 13.12 of this Agreement, any Restricted Share
Distributions which are not held in escrow may be received and retained by the
Employee free of the restrictions and forfeiture provisions of this Section 13.
13.4 Except as provided by this Agreement, prior to the Vesting Date, the
Employee will not transfer or otherwise dispose of any Restricted Shares which
are subject to forfeiture or transfer or dispose of any Restricted Share
Distributions held in escrow pursuant to Section 13.3 or in pledge pursuant to
Section 13.12, and any such attempt to dispose of or transfer any such
Restricted Shares or Restricted Share Distributions will be void and ineffective
for all purposes. Each stock certificate or other instrument evidencing
Restricted Shares subject to forfeiture will bear the following legend:
SHARES OF THE CORPORATION REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO A
EMPLOYMENT AGREEMENT DATED AS OF JANUARY
1, 2000 AS AMENDED WHICH CONTAINS
PROVISIONS RESTRICTING TRANSFER OF SUCH
SHARES, REQUIRING SUCH SHARES TO BE
FORFEITED TO THE XXXXXX GROUP, INC. IN
CERTAIN CIRCUMSTANCES AND OTHER MATTERS.
A COPY OF SUCH AGREEMENT IS AVAILABLE
FOR INSPECTION AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE CORPORATION.
The words "transfer" and "dispose" include the making of any sale, exchange or
other transfer or disposition of any ownership interest whatsoever with respect
to the Restricted Shares or subject to the last sentence of Section 13.3,
Restricted Share Distributions. Subject to Section 13.2, nothing in this Section
13.4 will prevent the transfer or other disposition, without consideration, of
Restricted Shares or Restricted Share Distributions to a personal representative
of the Employee or to one or more members of the Employee's immediate family or
to trusts or similar entities for their benefit; provided, however, that in the
case of such a transfer, each transferee must agree in writing to take such
Restricted Shares or Restricted Share Distributions subject to
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the forfeiture provisions described above and to be fully bound by this Section
13. As used in this Agreement, the term "personal representative" will mean the
executor or executors of the will or administrator or administrators of the
estate and all other legal representatives (by operation of law or otherwise) of
the Employee.
13.5 Whenever any Restricted Shares become free of the rights and
restrictions imposed by this Agreement, including any pledge pursuant to Section
13.12, the holder of such Restricted Shares will be entitled to receive a
certificate or certificates not bearing the restrictive legend provided for in
Section 13.4. If the certificate(s) evidencing such Restricted Shares are not
held in escrow pursuant to Section 13.4, then the holders thereof must deliver
them to the Corporation in order to receive the unlegended certificate(s)
contemplated by this Section 13.5.
13.6 The Employee represents and warrants that he will be acquiring the
Restricted Shares to be acquired by him pursuant to this Agreement for his own
account and not with a view to reselling or distributing all or any part of the
Restricted Shares in any transaction which would constitute a "distribution"
within the meaning of the Securities Act. The Employee acknowledges that the
Restricted Shares will not be registered under the Securities Act; that the
Corporation neither is obligated nor intends to effect such registration; that
absent such registration (or an exemption from registration), the Employee may
be required to hold the Restricted Shares for an indefinite period of time; that
the exemption from registration under the Securities Act provided by Rule 144
promulgated under the Securities Act likely will not be available to the
Employee; and that even if available, such Rule would permit resales of the
Restricted Shares only in limited amounts and upon compliance with the terms and
conditions of such Rule.
13.7 The Employee agrees that the certificates evidencing Restricted Shares
to be registered in the name of the employee will bear the following legend:
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED UNLESS A
REGISTRATION STATEMENT UNDER SUCH ACT IS
IN EFFECT WITH RESPECT TO SUCH
SECURITIES OR AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT IS
APPLICABLE.
13.8 If at any time the Board of Directors of the Corporation determines,
in its discretion, that the listing, registration or qualifications of any
Restricted Shares issuable pursuant to Section 13.1 or otherwise upon any
securities exchange or under any state or federal law, or the consent or
approval in connection with such issuance, then such Restricted Shares need not
be issued unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Corporation's Board of Directors. The Corporation in no event will be
obligated to issue any Restricted Shares in any manner in contravention of the
Securities Act or any state securities law; provided, however, that if the
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Corporation does not issue such Restricted Shares for the reasons set forth in
this sentence or the prior sentence, it will substitute a distribution of cash
or other property to compensate for the failure to issue such Restricted Shares.
The Board of Directors of the Corporation may, in connection with any issuance
of Restricted Shares pursuant to Section 13.1, require that, as a condition
precedent to such issuance, in whole or in part, the Employee make written
representations to the effect set forth in Section 13.1 and also may impose such
other terms and conditions as the Corporation's Board of Directors may
reasonably require in order to cause such issuance to comply with all applicable
laws.
13.9 The Employee will make appropriate arrangements with the Corporation
for any taxes which either of them is obligated to collect in connection with
any issuance, payment, distribution, transfer or disposition of any Restricted
Shares or Restricted Share Distributions, including any federal, state or local
withholding taxes, and the Corporation, as applicable, will be entitled to
withhold from amounts or other considerations payable or issuable to the
Employee under this Agreement or otherwise such amounts as may be required by
applicable law.
13.10 Subject to Sections 13.1 through 13.9, the Employee will have, with
respect to each type or class of Restricted Shares, all rights of a holder of
Restricted Shares of such type or class, including, without limitation,
conversion rights, voting rights and rights to receive dividends or other
distributions with respect to the Restricted Shares.
13.11 The Corporation may refuse to effect the transfer by the Employee or
any subsequent holder (except as otherwise expressly contemplated hereby) of any
of the Restricted Shares on its books during any period in which such Restricted
Shares are subject to forfeiture to the Corporation as set forth in Section 13.2
hereof. A copy of this Agreement shall be filed with the Secretary of the
Corporation.
13.12 If, at any time or from time to time while the Employee continues to
be employed by the Corporation pursuant to this Agreement, any federal, state or
local income taxes shall become due and payable by Employee by reason of the
grant, issuance or delivery by the Corporation of Restricted Shares to Employee
or by reason of any compensation under this Agreement which was earned by
Employee after December 31, 1992 and prior to September 1, 1996 but the payment
of which was deferred, then provided that no Forfeiture Event shall have
occurred, the Corporation shall, if requested by Employee, make loans to
Employee for the purpose of permitting Employee to pay such taxes, subject to
the following terms and conditions:
(i) The amount of any such loan shall not exceed the net amount of such
federal, state and local income taxes which are then or which will within 14
days after such loan is made become due and payable by Employee, calculated
after taking into account all credits to which Employee is entitled by virtue of
any amounts (including taxes, interest and penalties) which the Corporation has
withheld or otherwise paid or for which the Corporation is liable with respect
to the event which results in such taxes, and the proceeds of such loan shall be
used solely for the payment of such taxes when or before due.
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(ii) At the time the Corporation is to make any such loan (a) a petition
seeking liquidation, reorganization or other relief with respect to Employee or
his debt has not been filed under any bankruptcy, insolvency or other similar
law now or hereafter in effect, (b) relief has not been granted with respect to
Employee or his debts in any case or proceeding for liquidation, reorganization,
or otherwise under any bankruptcy, insolvency or other similar law now or
hereafter in effect, (c) a trustee, receiver, liquidator, custodian or other
similar official has not been appointed (either with or without the consent of
Employee) for any substantial part of Employee's properties, (d) Employee has
not been adjudicated to be insolvent, and (e) Employee has not made a general
assignment for the benefit of his creditors.
(iii) Each such loan shall be evidenced by a note payable to the order of
the Corporation and executed and delivered by Employee and shall be secured by a
perfected, first priority security interest in and pledge of Restricted Shares
then existing or thereafter acquired which shall have a fair market value,
determined on the date such loan is made and on a semi-annual basis thereafter,
of not less than the principal amount of such loan and such note and the
documents and instruments by which such security interest is granted and such
pledge is made shall be in customary form and contain customary provisions
(including, without limitation, provisions regarding events permitting
acceleration of the maturity of such note), in addition to any other provisions
which the Corporation may reasonably request. As contemplated by the foregoing,
the fair market value of such Restricted Shares securing each such loan shall be
determined on a semi-annual basis and the number of Restricted Share held in
pledge by the Corporation as security for such loan shall be adjusted as
necessary so that fair market value of such Restricted Shares shall be at least
equal to the principal amount of such loan. Each such loan shall be without
recourse to Employee or his property, other than all Restricted Shares and
Restricted Share Distributions then existing or thereafter acquired, together
with all proceeds thereof, substitutions therefor and replacements thereof.
(iv) Each such loan shall bear interest at a fluctuating rate per annum at
all times equal to the rate of interest publicly announced from time to time by
The Bank of New York, as its prime rate in effect at its principal office in the
City of New York, State of New York, and such rate of interest shall change when
and as such prime rate changes. Accrued interest will be payable quarterly in
arrears.
(v) The entire principal amount of each such loan, together with any
accrued and unpaid interest thereon, shall become due and payable on the first
to occur of (a) the first anniversary of the termination of Employee's
employment with the Corporation for any reason, (b) the fifth anniversary of the
date of the first such loan or (c) acceleration in accordance with the terms of
the note contemplated by claus (i) above. The terms of each such loan shall
provide that in the event of any sale, transfer, exchange or other disposition
by Employee of shares of capital stock of the Corporation for cash or other
consideration, Employee shall promptly make a prepayment of such loan in an
amount equal to the lesser of (x) the amount of such cash or the fair market
value of such other consideration or (y) the then outstanding principal of and
accrued but unpaid interest on such note.
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14. Amendments to Stock Option Agreements.
Within thirty (30) days of the date of this Agreement, the Corporation
shall amend Employee's existing Stock Option Agreement dated as of ____________,
so that, in the event Employee's employment with the Corporation is terminated
by the Corporation, other than a termination by the Corporation for cause (as
defined under Section 7.5 of this Agreement), all of Employee's options subject
to such Stock Option Agreement shall immediately vest and be exercisable.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
NEXT GENERATION NETWORK, INC.
By:
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Title:
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Xxxxxx X. Xxxxxxxx
