EXHIBIT 10.3
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS IS AN AMENDMENT (the "AMENDMENT") to that certain letter
agreement (the "AGREEMENT"), dated as of the 8th day of August, 2000, between
MPOWER COMMUNICATIONS CORP., a Nevada corporation (the "COMPANY"), and Xxxxxx X.
Xxxxxx ("EXECUTIVE").
The Company and Executive, for and in consideration of the promises,
terms and conditions contained herein, do hereby agree to make the following
amendments to the Agreement.
1. The third paragraph of the Agreement is amended as follows:
(a) The first bullet point of text shall become the second
bullet point, and the following text shall be inserted as the first
bullet point:
"EMPLOYMENT TERM. Subject to earlier termination in accordance
with the provisions hereof, this agreement (the "AGREEMENT"), as
modified by an amendment, dated as of September 18, 2002 (the
"AMENDMENT") shall become effective as of the date of the Amendment
(the "EFFECTIVE DATE") and the term of your employment with the
Mpower Communications Corporation (the "COMPANY") pursuant to this
Agreement (the "TERM") shall expire on September 18, 2003; provided,
however, that the Term shall automatically be extended for an
additional one-year period on September 18, 2003 (the "EXTENSION
DATE") unless at least 60 days prior to the Extension Date, either
party shall give notice to the other in accordance with this
Agreement of a desire not to extend the Term."
(b) The second bullet point of text (formerly the first bullet
point) is amended, in its entirety, to read as follows:
"DUTIES; RESPONSIBILITIES. You shall be employed by the
Company as President and Chief Operating Officer and shall report
solely and directly to the Company's Chief Executive Officer (the
"CEO"). Your duties and responsibilities shall be commensurate with
those duties and responsibilities that are customarily assigned to
such positions, as may be designated from time to time by the CEO.
During the Term, you shall devote your full business time, attention
and energies to the positions of President and Chief Operations
Officer of the Company; provided, however, that you may devote
reasonable amounts of time to (i) passive personal investments and
(ii) charitable activities so long as such activities do not
interfere with your performance pursuant to this Agreement. Your
principal place of employment shall be the Company's offices in Las
Vegas, Nevada, however you acknowledge that you may be required to
travel in connection with your employment."
(c) The third bullet point of text (formerly the second bullet
point) is amended, in its entirety, to read as follows:
"FIXED SALARY. During the Term, as compensation for your
services, the Company shall pay you a salary at the rate of $300,000
per annum (the "FIXED SALARY") in equal bi-weekly installments less
appropriate payroll deductions as required by law. The Fixed Salary
shall be reviewed at least annually by the CEO or such other persons
as appointed by the CEO and may be increased, but not decreased as a
result of such review."
(d) The fourth bullet point of text (formerly the third bullet
point) is amended, in its entirety, to read as follows:
"ANNUAL BONUS. During the Term, you shall be eligible to
receive an annual bonus (the "ANNUAL BONUS") of up to 75% of the
Fixed Salary, contingent upon achieving established goals determined
by the Company in accordance with its customary procedures and
standards.
(e) The fifth through tenth bullet points of text (formerly
the fourth through ninth bullet points) are hereby deleted in their
entirety, and are replaced by the following:
"EXPENSES. The Company shall pay or reimburse you for all
reasonable business expenses incurred in the performance of your
duties and which are consistent with the Company's policies,
practices and procedures, upon submission of appropriate vouchers
and other supporting data.
STOCK OPTIONS.
(a) Not later than September 18, 2002 (the "GRANT DATE"), you
shall be granted stock options to purchase 100,000 shares of the
Company's common stock (the "NEW OPTIONS"). Such New Options shall
(i) have an exercise price equal to $.22 per share, (ii) vest in
three (3) equal installments on each of the first three
anniversaries of the Grant Date, (iii) have a term (the "TERM") of
(10) years from the Grant Date, (iv) remain exercisable, to the
extent vested on the Termination Date, for five (5) years after the
termination of your employment with the Company for any reason, but
in no event after the expiration of the Term, and (v) be
non-qualified options within the meaning of the Internal Revenue
Code.
(b) All of your unexercised stock options as of the Effective
Date, other than the New Options (the "EXISTING OPTIONS") shall be
amended so that they remain exercisable, to the extent vested on the
Termination Date, for five (5) years after the termination of your
employment with the Company for any reason, but in no event later
than 10 years after the date they were granted.
BENEFITS. You and your eligible dependents shall be entitled
to participate in all general pension, profit-sharing, life,
medical, disability and other insurance, welfare and fringe benefit
plans in effect for similarly situated executives of the Company.
PAID TIME OFF. As set forth in Appendix B, attached hereto and
incorporated herein by reference, you shall not be entitled to
receive paid time off in accordance with
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the Company's paid time off policy; provided, however, that you have
the liberty and ability to take time off on a reasonable - as needed
- basis, and are not required to record or track such time off."
2. Paragraphs four and five of the Agreement are hereby deleted in
their entirety, and replaced by the following:
"TERMINATION OF EMPLOYMENT. Subject to the terms of this
Agreement, the Company may terminate your employment under this
Agreement at any time and for any reason.
(a) TERMINATION FOR CAUSE; RESIGNATION WITHOUT GOOD REASON. In
the event that your employment is terminated by the Company for
Cause or you resign without Good Reason (each as defined below), you
shall receive the following: (i) accrued and unpaid Fixed Salary
through the Termination Date and reimbursement for any outstanding
business expenses; and (ii) such other accrued compensation and
benefits (including post-retirement benefits) as may be due under
the terms of the compensation and benefit plans in which you
participate.
(b) TERMINATION WITHOUT CAUSE; RESIGNATION FOR GOOD REASON. In
the event that (A) the Company terminates your employment hereunder
without Cause, (B) you resign for Good Reason or (C) the Company
fails to extend the Term for at least one additional one-year period
as described herein, you shall be entitled to the following: (i) the
payments and benefits described immediately above in sub-section (a)
and (ii) a severance benefit (the "SEVERANCE BENEFIT") equal to two
times (a) the Fixed Salary paid immediately preceding the
Termination Date and (b) the "HIGHEST BONUS", where the Highest
Bonus equals the greater of the Annual Bonus paid by the Company to
you (x) during the twelve (12) month period immediately preceding
the Termination Date, or (y) during the twelve (12) month period
immediately preceding the Effective Date. Payment of the Severance
Benefit shall be contingent upon your execution of a waiver and
release of claims (a "RELEASE") in favor of the Company and its
affiliates and their respective employees and agents, substantially
in the form set forth in Appendix A. The Severance Benefit shall be
paid by the Company in a lump sum, no later than two (2) business
days after the expiration of the Revocation Period, as defined in
the Release.
(c) TERMINATION DUE TO DEATH OR DISABILITY. In the event of
your death or Disability (as defined below), your Fixed Salary shall
continue to be paid to you or your estate, as the case may be, for a
period beginning on the Termination Date and ending on the earlier
of (i) the expiration of the Term and (ii) the first anniversary of
the Termination Date. Neither you, nor your estate, as the case may
be, shall be entitled to continue to receive any benefits other than
the Fixed Salary, proceeds from insurance per the terms of any
applicable policy and reimbursement of expenses. In addition, all
further vesting of options shall cease on the Termination Date.
NO OTHER PAYMENTS OR BENEFITS. As of the Termination Date,
other than the payments and benefits expressly provided for or
referred to in this Agreement,
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all obligations of the Company to you, other than as required by law
or provided under any applicable employee benefit plan of the
Company, shall cease.
NOTICE OF TERMINATION. Any termination of your employment by
the Company or by you during the Term shall be communicated by a
Notice of Termination (as defined below) to the other party hereto.
The Notice of Termination shall, if applicable, indicate the
specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of your employment under
the provision so indicated.
BREACH OF RESTRICTIVE COVENANTS. If, at any time, you breach
any of the provisions in the sections of this Agreement entitled
"Confidentiality; Nondisclosure", "No Competing Employment",
"Restrictions on Solicitation" and/or "Assignment of Developments",
you shall not be eligible, as of the date of such breach, for any
severance benefits described in this Agreement and all obligations
of the Company to pay any such severance benefits hereunder shall
thereupon cease.
RESTRICTIVE COVENANTS.
(a) CONFIDENTIALITY; NONDISCLOSURE. You understand and
acknowledge that in the course of your employment, you have had and
will continue to have access to and will learn information
proprietary to the Company and its subsidiaries and affiliates (the
"COMPANY GROUP") that concerns the technological innovations,
operation and methodology of the Company Group, including, without
limitation, business plans, financial information, protocols,
proposals, manuals, procedures and guidelines, computer source
codes, programs, software, know-how and specifications, copyrights,
trade secrets, market information, Developments (as hereinafter
defined), data and customer information (collectively, "PROPRIETARY
INFORMATION"). You agree that during the period beginning on the
date of your hiring and continuing in perpetuity thereafter, you
shall keep confidential and shall not disclose any such Proprietary
Information to any third party, except as required to fulfill his
duties in connection with your employment by the Company, and you
shall not misuse, misappropriate or exploit such Proprietary
Information in any way. The restrictions contained in this paragraph
shall not apply to any information which you can demonstrate (i) was
already available to the public at the time of disclosure, or
subsequently became available to the public, otherwise than by
breach of this Agreement or (ii) was the subject of a court order to
disclose. Upon any termination of your employment, you will
immediately return to the Company all Proprietary Information and
copies thereof in your possession.
"DEVELOPMENTS" shall mean all data, discoveries, findings,
reports, designs, inventions, improvements, methods, practices,
techniques, developments, programs, concepts and ideas, whether or
not patentable, relating to the present or planned activities, or
the products and services of the Company .
(b) NO COMPETING EMPLOYMENT. You hereby acknowledge that in
the course of your employment with the Company, you have become
familiar, and will become familiar, with the trade secrets of the
Company Group and with other
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confidential information concerning the Company Group, and that your
services have been and will be of special, unique and extraordinary
value to the Company Group. Therefore, you hereby agree that for the
duration of the Restricted Period (as defined below), you shall not,
unless you receive the prior written consent of the Board of
Directors of the Company (the "BOARD"), directly or indirectly,
knowingly own an interest in, manage, operate, join, control, lend
money or render financial or other assistance to or participate in
or be connected with, as an officer, employee, partner, stockholder,
consultant or otherwise, any individual, partnership, firm,
corporation or other business organization or entity that competes
with the business of the Company as such businesses exist or are in
the process of being formed or acquired as of the Termination Date,
within any geographical area in which the Company is engaged,
services customers, or was actively planning to engage during the
Term or as of the Termination Date; provided, however, that this
paragraph shall not proscribe your ownership, either directly or
indirectly, of less than one percent of any class of securities
which are listed on a national securities exchange or quoted on the
automated quotation system of the National Association of Securities
Dealers, Inc.
(c) RESTRICTIONS ON SOLICITATION. During the Restricted Period
and except as required pursuant to your duties to the Company in
connection with the employment relationship, you will not, directly
or indirectly: (i) solicit or contact any customer of the Company
Group (or any other entity that you know is a potential customer
with respect to specific products of the Company Group and with
which you have had contact during the period of your employment with
the Company Group) for any commercial pursuit that to your knowledge
is in competition with the Company, or that to your knowledge is
contemplated from time to time during the period of your employment
with the Company by the Company's business plan; (ii) take away or
interfere or attempt to interfere with any custom, trade, business,
patronage or other business relation of the Company, or induce, or
attempt to induce, any employees, agents or consultants of or to the
Company Group to do anything from which you are restricted by reason
of this Agreement; or (iii) induce or aid others to induce
employees, agents or consultants of the Company Group to terminate
their employment with the Company Group, or interfere or attempt to
interfere with any employees, agents or consultants of the Company
Group.
(d) EXTENSION OF RESTRICTED PERIOD. The Restricted Period
shall be extended by the length of any period during which you are
in breach of any of the terms of this Restrictive Covenants section.
(e) ASSIGNMENT OF DEVELOPMENTS. During the Term, all
Developments that are at any time made, conceived or suggested by
you, whether acting alone or in conjunction with others, shall be
the sole and absolute property of the Company, free of any reserved
or other rights of any kind on your part. During the Term, if such
Developments were made, conceived or suggested by you during or as a
result of your employment relationship with the Company, thereafter,
you shall promptly make full disclosure of any such Developments to
the Company and, at the Company's cost and expense, do all acts and
things (including, among others, the execution and delivery
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under oath of patent and copyright applications and instruments of
assignment) deemed by the Company to be necessary or desirable at
any time in order to effect the full assignment to the Company, or
of your right and title, if any, to such Developments. You
acknowledge and agree that any invention, concept, design or
discovery that concretely relates to or is associated with your work
for the Company that is described in a patent application or is
disclosed to a third party directly or indirectly by you during the
Restricted Period shall be the property of and owned by the Company
and such disclosure by patent application or otherwise shall
constitute a breach of sub-section (a), above, of this Restrictive
Covenants section.
(f) APPLICATION OF COVENANTS. The activities described in this
Restrictive Covenants section shall be prohibited regardless of
whether undertaken by you in an individual or representative
capacity, and regardless of whether performed for your own account
or for the account of any other individual, partnership, firm,
corporation or other business organization (other than the Company
Group).
(g) INJUNCTIVE RELIEF. Without limiting the remedies available
to the Company, you acknowledge that a breach of any of the
covenants contained in this Restrictive Covenants section may result
in material irreparable injury to the Company for which there is no
adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of such a
breach or threat thereof, the Company shall be entitled to seek a
temporary restraining order or a preliminary or permanent injunction
restraining you from engaging in activities prohibited by this
Restrictive Covenants section or such other relief as may be
required to specifically enforce any of the covenants in this
section.
(h) REASONABLENESS OF COVENANTS. If, at the time of
enforcement of the covenants set forth in this Restrictive Covenants
section, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto
agree that the maximum period, scope or geographical area reasonable
under such circumstances shall be substituted for the stated period,
scope or area.
(i) VIOLATION AND REMEDY. If the Company reasonably determines
that you have breached any of the provisions of this Restrictive
Covenants section, in addition to any other remedies available to
the Company in law or equity, the Company shall be entitled to
immediately suspend as of the date of such breach the provision to
you of any payments or benefits under this Agreement, including
without limitation, the Severance Benefit, or any portion thereof,
and any portion of the Severance Benefit already paid shall be
immediately returned to the Company. In addition, should the Company
breach any of its obligations under this Agreement, including
without limitation, the Severance Benefit, you will not be bound by
the provisions of sub-sections (b) and (c) if this Restrictive
Covenants section."
3. The Agreement is amended to add the following new paragraphs.
"DEFINITIONS. Capitalized terms that are not otherwise defined
within the text of this Agreement are defined as follows:
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"CAUSE" shall mean the occurrence of any of the following
events: (i) your willful material violation of any law or regulation
applicable to the business of the Company; (ii) your conviction of,
or plea of "no contest" to, a felony; (iii) any willful perpetration
by you of an act involving moral turpitude or common law fraud
whether or not related to your activities on behalf of the Company;
(iv) any act of gross negligence by you in the performance of your
duties as an employee; (v) any violation by you of the "Standards of
Conduct" set forth in the Company's employee manual, as in effect
from time to time; or (vi) any willful misconduct by you that is
materially injurious to the financial condition or business
reputation of, or is otherwise materially injurious to, the Company.
"DISABILITY" shall have the meaning set forth in the Company's
long-term disability plan applicable to you.
"GOOD REASON" shall mean the occurrence of any of the
following events: (i) a material adverse change in your title or
duties in effect on the Effective Date; (ii) a material reduction in
your Fixed Salary or Annual Bonus opportunity in effect on the
Effective Date; (iii) any resignation by you, for any reason,
occurring not earlier than 90 days or later than 270 days after a
Change of Control; and (iv) the relocation of your principal place
of business to a location that is more than 35 miles from your
principal place of business on the Effective Date.
For the purposes of this Agreement, a "CHANGE OF CONTROL"
shall be deemed to have occurred if: (i) by any method, transaction,
or series of related transactions, more than 50% of the outstanding
shares of the Company or beneficial ownership thereof are acquired
by persons other than the members of the Board, those persons who
were more than 5% stockholders of the Company prior to the Effective
Date, employees of the Company and any of their immediate family
members and affiliates, and there is a change in the membership of
the Board, such that fewer than 50% of the members of the Board are
persons who served in such position prior to the change in
ownership; (ii) there is a merger or consolidation of the Company in
which the Company is not the continuing or surviving entity or
pursuant to which the Company's shares are converted into cash,
securities or other property; or (iii) the Company sells, leases or
exchanges all or substantially all of its assets or the Company's
stockholders approve the liquidation or dissolution of the Company.
"NOTICE OF TERMINATION" shall mean the notice provided in the
event of any termination of your employment by the Company or
resignation by you during the Term which shall be communicated to
the other party hereto.
"RESTRICTED PERIOD" shall mean: (i) the period during which
you are employed with the Company; and (ii) following a termination
of your employment with the Company for any reason, the period
beginning on the Termination Date and ending on the first
anniversary of the Termination Date.
"TERMINATION DATE" shall be determined as follows: (i) if your
employment is terminated for Disability, sixty days after a Notice
of Termination is given (provided that
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you shall not have returned to the full-time performance of your
duties during such sixty-day period); (ii) if your employment is
terminated by the Company without Cause, the date specified in the
Notice of Termination, which date shall be no earlier than 30 days
after the date such notice is delivered to you, as the case may be
(or if no date is specified in the Notice of Termination, sixty days
after the Notice of Termination is received by the Company or
delivered to you, as the case may be); (iii) if your employment is
terminated by the Company for Cause, the date specified in the
Notice of Termination; (iv) in the event of your resignation of
employment, the Termination Date shall be the date set forth in the
Notice of Termination, which date shall be no earlier than thirty
days after the date such notice is received by the Company; or (v)
the Termination Date in the event of your death shall be the date of
your death.
NOTICES. All notices under this Agreement shall be in writing
and shall be deemed to have been duly given if personally delivered
against receipt or if mailed by registered or certified mail, return
receipt requested, addressed to the Company and to you, at the
address indicated below or to such other person or address as may be
designated by like notice hereunder. Any such notice shall be deemed
to have been given on the day delivered, if personally delivered, or
on the third business day after the date of mailing, if mailed.
To the Company:
Mpower Communications Corp.
000 Xxxxx'x Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
To you:
Xxxxxx X. Xxxxxx
[address]
DISPUTE RESOLUTION PROCESS. Any future dispute, controversy or
claim between the parties arising from or relating to this
Agreement, its breach or any matter addressed by the Agreement shall
be resolved through binding confidential arbitration in Rochester,
New York, to be conducted by an arbitrator that is mutually
agreeable to both you and the Company, all in accordance with the
rules of the American Arbitration Association then in effect. If you
and the Company cannot agree upon an arbitrator, the arbitration
shall be settled before a panel of three arbitrators, one to be
selected by the Company, one by you and the other by the two persons
so selected, all in accordance with the rules of the American
Arbitration Association then in effect. Judgment upon the award
rendered by the arbitrator(s) may be entered by any court having
jurisdiction over the matter. Costs and fees of the arbitration will
be divided equitably by the arbitrator between both parties;
provided, however, that, in the event that either party prevails
over the other party in connection with an arbitration arising out
of a breach of this Agreement, the non-prevailing party shall be
liable for all reasonable attorney's fees and
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expenses incurred in connection with any action for damages or the
enforcement of any provision of this Agreement brought by the other
party.
MISCELLANEOUS.
(a) NO RIGHTS TO CONTINUED EMPLOYMENT. Neither this Agreement
nor any of the rights or benefits evidenced hereby shall confer upon
you any right to continuance of employment by the Company or
interfere in any way with the right of the Company to terminate your
employment, subject to the provisions of this Agreement, for any
reason, with or without Cause.
(b) EXECUTIVE'S REPRESENTATION. You hereby represent and
warrant to the Company that the execution and delivery by you of
this Agreement to the Company will not breach the terms of any
contract, agreement or understanding to which you are a party. You
further acknowledge and agree that a breach of this representation
by you shall render this Agreement void ab initio and of no further
force and effect.
(c) SUCCESSORS. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their
respective heirs, legal representatives, successors and, in the case
of the Company, business successors (whether direct or indirect, by
purchase, merger, consolidation or otherwise), but no other person
shall acquire or have any rights under or by virtue of this
Agreement, and your obligations under this Agreement may not be
assigned or delegated.
(d) SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement
is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision
or any other jurisdiction, but this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(e) WITHHOLDING. Amounts paid to you hereunder shall be
subject to all applicable federal, state and local tax withholdings.
(f) HEADINGS. The headings contained in this Agreement are
intended solely for convenience of reference and shall not affect
the rights of the parties to this Agreement.
(g) SURVIVAL. All of the provisions and restrictions set forth
in the Restrictive Covenants section shall survive and continue in
full force in accordance with their terms notwithstanding any
termination of the Term.
(h) COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of
which taken together constitute one and the same agreement.
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(i) GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws and decisions of
the State of New York applicable to contracts made and to be
performed therein without giving effect to the principles of
conflict of laws.
(j) ENTIRE AGREEMENT; MODIFICATION; WAIVER; INTERPRETATION.
This Agreement, contains the entire agreement and understanding
between the parties with respect to the subject matter hereof and
supersedes all prior negotiations and oral understandings concerning
the subject matter hereof; provided, however, that the Indemnity
Agreement dated September 20, 2002, attached hereto as Appendix C
and incorporated herein by reference shall be enforceable and
binding on the parties. Neither this Agreement nor any of its
provisions may be modified, amended, waived, discharged or
terminated, in whole or in part, except in writing signed by the
party to be charged. No waiver of any such provision or any breach
of or default under this Agreement shall be deemed or shall
constitute a waiver of any other provision, breach or default. All
pronouns and words used in this Agreement shall be read in the
appropriate number and gender, the masculine, feminine and neuter
shall be interpreted interchangeably and the singular shall include
the plural and vice versa, as the circumstances may require."
4. Except as amended by this Amendment, all terms and conditions of
the Agreement shall remain in full force and effect. Moreover, it is the
intention of the parties hereto that if this Amendment is void, becomes
voidable, or otherwise is or becomes unenforceable as drafted, then the
Agreement shall continue in full force and effect, in accordance with the terms
and conditions thereof immediately prior to the execution of this Amendment.
This Amendment may be executed in any number of counterparts which together
shall constitute one instrument, shall be governed by and construed in
accordance with the laws and decisions of the State of New York applicable to
contracts made and to be performed therein without giving effect to the
principles of conflict of laws.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of this 18th day of September, 2002.
MPOWER COMMUNICATIONS CORP.
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Xxxxx X. Xxxx
Chairman and CEO
/s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx
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