Exhibit 10.16
EMPLOYMENT AGREEMENT
BETWEEN
XXXXXXX.XXX, LTD.
AND
XXXXXX X. XXXXXX, XX.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), effective as of
the 18th day of June, 1999 by and between XXXXXXX.XXX, LTD. a Delaware
corporation having its principal place of business at 00 Xxxx 00xx Xxxxxx, Xxx
Xxxx, XX 00000 (the "Corporation") and XXXXXX X. XXXXXX, XX., an individual
residing at 00 Xxxx 00xx Xxxxxx, #00X, Xxx Xxxx, XX 00000 (the "Executive").
WITNESSETH THAT:
WHEREAS, the Corporation desires to employ the Executive on
the terms and conditions set forth in this Agreement; and
WHEREAS, the Executive desires to be employed by the
Corporation on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I. EMPLOYMENT TERM AND DUTIES
SECTION I.1 EMPLOYMENT. The Corporation hereby agrees to employ the
Executive, and the Executive hereby agrees to accept such employment, upon the
terms and conditions herein contained.
SECTION I.2 TERM. The term of employment under this Agreement (the
"Employment
Term") shall commence on June 18, 1999 (the "Effective Date"), and shall
continue until terminated by either party. Both parties understand and agree
that the Executive's employment with the Corporation is for an unspecified
duration and constitutes "at-will" employment. Both parties acknowledge that
this employment relationship may be terminated at any time, with or without
cause, at the option of the Corporation or the Executive, with or without
notice.
SECTION I.3 DUTIES. During the Employment Term, the Executive shall
serve as Chief Information Officer of the Corporation. The Executive shall
perform such duties as are reasonable and customary for an individual holding
such office and such other duties as are set forth in the Bylaws of the
Corporation or as may be agreed to from time to time by the Executive including,
without limitation, responsibility for development, implementation and
maintenance of the technological aspects of the business of the Corporation
including, without limitation, systems engineering and network operations. The
Executive shall devote his full and exclusive professional time and attention to
performing his obligations hereunder. The Executive shall report directly to the
President and CEO of the Corporation.
ARTICLE II. COMPENSATION
SECTION II.1 BASIC COMPENSATION. During the Employment Term, the
Corporation shall pay to the Executive an annual base salary (which shall accrue
proportionately from day to day and shall be payable bi-monthly) of $175,000
(the "Basic Compensation").
SECTION II.2 ANNUAL BONUS. In addition to Basic Compensation, the
Executive may
also receive other bonus or incentive compensation and salary increases as shall
be determined by the Board of Directors of the Corporation (the "Board") in
accordance with applicable Corporation policies in effect at such time. The
Executive shall be eligible to receive an annual year-end bonus which will be
contingent upon achievement of certain performance goals, which shall be set
annually for the relevant performance period by the Board in its sole discretion
and upon employment by the Corporation at the time the bonus is scheduled to be
paid.
SECTION II.3 BENEFITS. During the Employment Term, Executive shall be
entitled to participate in all benefit plans, if any, provided to other
similarly situated senior executives of the Corporation. The Corporation shall
be entitled to obtain key-man life insurance on the life of Executive with the
benefits thereof payable solely to the Corporation or its assigns, as the
Corporation shall determine, and Executive shall promptly submit to examinations
by medical personnel reasonably acceptable to Executive as the Corporation may
request to assist it in obtaining the key-man life insurance and shall otherwise
reasonably cooperate should the Corporation decide to obtain such insurance.
SECTION II.4 VACATION. During the Employment Term, the Executive shall
be entitled to two weeks paid vacation which may be increased but not decreased
in the sole discretion of the Board.
SECTION II.5 STOCK OPTIONS.
(a) GRANT. The Corporation hereby grants to
Executive a non-qualified stock option ("NQSO") to purchase 7,500 shares of the
Corporation's Common Stock ("NQSO Shares") at a per-share price based on the
Corporation's fair market value as at June 18,
1999 (as determined by an independent valuation company reasonably acceptable to
the Corporation and the Executive). This NQSO is granted subject to the terms
and conditions set forth below and in the Corporation's Stock Award Plan.
(b) VESTING TERM. The NQSO shall be exercisable
for a period of 10 years from the date of this Agreement and shall become
exercisable as to the number of NQSO Shares over the term at the times indicated
below:
Number of Shares On or After
---------------- -----------
208 July 18, 1999
208 August 18, 1999
208 September 18, 1999
208 October 18, 1999
208 November 18, 1999
208 December 18, 1999
208 January 18, 2000
208 February 18, 2000
208 March 18, 2000
208 April 18, 2000
210 May 18, 2000
210 June 18, 2000
2,500 June 18, 2001
2,500 June 18, 2002;
Provided, that if prior to June 18, 2000 there shall be a
closing of a firm commitment underwritten registered public offering of the
Corporation's Common Stock, all of the NQSO Shares that are due to vest on or
before June 18, 2000 plus 1,250 of the NQSO Shares due to vest on June 18, 2001
shall vest as of the date of such closing.
(c) REPRESENTATIONS, WARRANTIES, COVENANTS AND ACKNOWLEDGMENTS
OF THE EXECUTIVE UPON EXERCISE OF NQSO. The Executive agrees that in the event
that the Corporation and the Corporation's counsel deem it necessary or
advisable in the exercise of their discretion, the issuance of NQSO Shares may
be conditioned upon the Executive's making certain representations, warranties,
covenants and acknowledgments relating to compliance with applicable securities
laws.
(d) SHAREHOLDERS AGREEMENT. The Executive acknowledges and
agrees that upon exercise of this NQSO, in whole or in part, the NQSO Shares
will be subject to that certain Amended and Restated Shareholders Agreement
dated as of May 11, 1999 (as the same may be amended, supplemented and/or
superseded, the "Shareholders Agreement"), a copy of which is on file at the
Corporation's corporate office (to the extent it may then be in effect
generally). Accordingly the Executive agrees to be bound by the Shareholders
Agreement upon exercise of this NQSO, as if signatory thereto.
(e) EXPIRATION UPON A TERMINATION.
(i) If the Executive's employment with the
Corporation is terminated by the Corporation for "Cause" during the Employment
Term, the term of the NQSO shall be deemed to have automatically expired
immediately upon such termination of the Executive for "Cause" as defined in
Section 3.1(c).
(ii) If the Executive's employment with the
Corporation is terminated without Cause, for Good Reason, as defined in Section
3.1(d), or upon the Executive's death, the
Executive or his successors or heirs shall be entitled to exercise the NQSO
granted hereunder, to the extent the right to so exercise had accrued at the
date of termination and had not been previously exercised, for a period of
thirty days after such termination date, subject to all other provisions hereof.
(f) NON TRANSFERABILITY. The NQSO shall not be transferable by
the Executive otherwise than by will or the applicable laws of descent and
distribution and shall be exercisable during the Executive's lifetime only by
the Executive.
(g) TAX OBLIGATIONS. The Executive acknowledges that the
transfer of any NQSO Shares in accordance with this Agreement may have federal,
state or local tax implications for the Executive and the Executive understands
that the Corporation is not undertaking to bear any obligation of the Executive
so created. The Executive acknowledges and agrees that any and all such tax
obligations shall be the sole responsibility of the Executive and the
Corporation makes no warranties regarding the income tax consequences or any
other aspect of the NQSO.
(h) STOCK CERTIFICATES' RESTRICTIVE LEGENDS. Stock
certificates evidencing NQSO Shares may bear such restrictive legends as the
Corporation and Corporation's counsel deem necessary or advisable.
(i) NO TAX OR OTHER ADVICE. The Executive acknowledges that
he has not relied on, and none of the Corporation or any of its representatives
has given, any representations or warranties, or any advice, with respect to the
income tax or other consequences of the
transactions contemplated by this Agreement. The Executive represents that he
has sufficient knowledge, and or has consulted his own advisors, with respect to
such consequences.
ARTICLE III. TERMINATION OF EMPLOYMENT
SECTION III.1 EVENTS OF TERMINATION.
(a) DEATH. The Executive's employment shall terminate
automatically upon the Executive's death.
(b) WITHOUT CAUSE. Notwithstanding any other provision
hereunder, the Corporation shall have the right to terminate the Executive's
employment hereunder without "Cause" (as defined in Section 3.1(c)) at any time
during the Employment Term for any reason in the sole discretion of the
Corporation.
(c) CAUSE. The Corporation may terminate the Executive's
employment during the Employment Term for Cause. For purposes of this Agreement,
"Cause" shall mean: (i) gross negligence or willful misconduct of the Executive
in the performance of any of his duties under this Agreement, (ii) the failure
by the Executive to perform his duties hereunder; (iii) any embezzlement or
misappropriation of funds or property or intellectual property of the
Corporation; (iv) any conviction or plea of guilty or NOLO CONTENDERE in
connection with fraud or any crime that constitutes a felony in the jurisdiction
involved; and (v) any material breach by the Executive of the terms of this
Agreement, which is not cured within thirty (30) days of notice of the breach
given by the Corporation.
(d) GOOD REASON. The Executive may terminate his employment
during the
Employment Term for Good Reason within ninety (90) days of the date Executive
becomes aware of the occurrence of any of the events specified below. For
purposes of this Agreement, "Good Reason" shall mean the occurrence, without the
Executive's express written consent, of any one or more of the following events:
(i) A material change in the Executive's titles or
duties described in Section 1.3, or any removal of the Executive from, or any
failure to re-elect the Executive to, any of such positions;
(ii) A failure by the Corporation to pay Executive's
Basic Compensation, not caused by Executive, which
failure to pay is not cured within 30 days after written notice from Executive;
(iii) The filing of a voluntary or involuntary
petition of bankruptcy by or against the Corporation or
the insolvency of the Corporation;
(iv) A Change of Control as defined in Section 3.2
below;
(v) The Corporation breaches any material term
hereof, after an opportunity to cure.
SECTION III.2 CHANGE OF CONTROL DEFINITION. A "Change of Control" shall
have occurred if:
(i) any "person" within the meaning of Section 14(d)
of the Securities Exchange Act of 1934 (the "Exchange Act"), other than the
Corporation, a subsidiary of the Corporation, any employee benefit plan
sponsored by the Corporation or any subsidiary of the
Corporation, Xxxxxxx Xxxxxxx or an underwriter who has acquired securities for
the purpose of distributing them in a firmly underwritten public offering,
becomes the "beneficial owner" as defined in Rule 13d-3 under the Exchange Act,
directly or indirectly, of 49% or more of the combined voting power of the
securities of the Corporation entitled to vote in an election of directors to
the Board; or
(ii) a merger or equivalent combination occurs after
which 49% or more of the voting stock of the surviving corporation is held by
persons other than former stockholders of the Corporation; or
(iii) the sale, assignment, transfer or other
disposition of assets of the Corporation having a value
in excess of 49% of the total assets of the Corporation.
SECTION III.3 OBLIGATIONS OF THE CORPORATION ON TERMINATION.
(a) TERMINATION UPON DEATH. If the Executive's employment is
terminated upon his death, the Corporation shall immediately pay the Executive's
successors or heirs in cash the amount of Basic Compensation previously earned
but not yet paid.
(b) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. If
Executive's employment is terminated without Cause or for Good Reason:
(i) IN GENERAL. The Corporation shall immediately
pay the Executive in cash the amount of Basic Compensation previously earned but
not yet paid.
(ii) SEVERANCE BENEFITS. The Corporation shall pay
the Executive his Basic Compensation (based on the Basic Compensation in effect
on the date of the termination of
the Executive's employment) for a period of 6 months from the date of
termination payable in accordance with the Corporation's regular payroll
practice.
(c) TERMINATION FOR CAUSE OR TERMINATION WITHOUT GOOD REASON.
In case of a Termination for Cause or Termination without Good Reason, the
Executive shall be entitled to his Basic Compensation accrued to the date of
termination. Except as otherwise provided in this Agreement or under any
employee benefit plan maintained by the Corporation, the Corporation shall have
no further obligations to the Executive.
ARTICLE IV. PURPOSE
SECTION IV.1 PURPOSE. The Corporation recognizes that the Executive is
a key executive of the Corporation and is expected to be a factor in the growth
and success of the Corporation. The Corporation also recognizes that the
continued success of the Corporation depends, to a significant degree, upon the
effective performance of the Executive's duties as set forth in this Agreement.
Therefore, one of the primary purposes of this Agreement is to provide for the
long-term financial security of the Executive and his family so that he will be
better able to direct his undivided attention to the successful performance of
his duties on behalf of the Corporation.
SECTION IV.2 NON-COMPETE AND CONFIDENTIALITY. Except as to such actions
within the ordinary course of the Executive's employment by the Corporation
which the Executive in good faith believes to be in the best interests of the
Corporation, the Executive shall not at any time during the Employment Term or
two years thereafter, without the prior written consent of the Corporation: (i)
request or advise any supplier, or other person, firm, partnership, association,
corporation or business organization, entity or enterprise having business
dealings with the Corporation or any subsidiary or affiliate of the Corporation
to withdraw, curtail or cancel such business dealings; (ii) disclose to any
third party including, but not limited to, any competitor or potential
competitor of the Corporation or any subsidiary or affiliate of the Corporation
any trade secret, know-how or knowledge relating to costs, products, equipment,
merchandising and marketing methods, business plans, or research results used
by, or useful to, the Corporation or
any subsidiary or affiliate of the Corporation or other confidential information
of the Corporation (the "Confidential Information"); (iii) induce or attempt to
influence any executive of the Corporation or any subsidiary or affiliate of the
Corporation to terminate, or in any way violate the terms of, his or her
employment; or (iv) engage directly or engage indirectly in any business in
competition with the business of the Corporation or its subsidiaries, provided,
however, that the ownership by Executive of not more than 5% of the equity
securities of any company or similar business venture shall not be deemed a
violation of this Section 4.2(iv). For purposes of this Section 4.2,
Confidential Information shall not include: (a) information that is in the
public domain; provided that Executive was not responsible for the disclosure to
the public; (b) information that was already known to Executive prior to his
employment by the Corporation; and (c) information required to be disclosed in
connection with any judicial or administrative proceeding or inquiry; provided
that Executive shall notify the Corporation as promptly as practicable of such
proceeding or inquiry and cooperate with the Corporation in taking legally
available steps to resist or narrow the required disclosure.
ARTICLE V. MISCELLANEOUS
SECTION V.1 ENFORCEABILITY. If the scope of any provision of this
Agreement is too broad to permit enforcement of such provision to its fullest
extent, then such provision shall be enforced to the maximum extent permitted by
applicable law, and, if necessary, the scope of any such provision may be
judicially modified (to the extent necessary in any proceeding brought to
enforce such provision) and thereafter fully enforced.
SECTION V.2 WORKS FOR HIRE. Executive agrees that all improvements in
the Corporation's method of conducting its business as well as all inventions
conceived of or developed by Executive related directly to the Corporation's
business during the Employment Term, the negotiation thereof or the period of
six months after the expiration or termination of this Agreement, regardless of
the time and place made, and all proprietary rights therein, shall belong
exclusively to the Corporation as works-for-hire, having been specially
commissioned by the Corporation, and Executive will promptly disclose such work
product to the Chairman of the Board of the Corporation. To the extent necessary
to supplement the foregoing, Executive hereby transfers and assigns to the
Corporation the proprietary rights in perpetuity in all such work product and
all rights therein of any kind in all media now or hereafter known. In addition
to the rights granted to the Corporation in this Section 5.2, Executive agrees
that all patents related directly or indirectly to the Corporation's business
obtained by or issued in the name of Executive during the Employment Term are
property of the Corporation. Executive further agrees to assign any such patents
to the Corporation without payment of any additional compensation other than the
compensation specified in Article II above.
SECTION V.3 REMEDIES. The parties acknowledge that the remedy at law
for any breach of any party's obligations hereunder would be inadequate and
consent to the granting of temporary and permanent injunctive relief in any
proceeding brought to enforce any of such provisions without the necessity of
proof of actual damages; provided, however, that the foregoing shall not be
construed to limit any other right or remedy available to the Corporation or the
Executive at law or in equity, and all such rights and remedies shall be
cumulative to the
extent permitted by applicable law, and the exercise of any one or more of such
rights or remedies shall be without prejudice to the exercise of any other such
right or remedy.
SECTION V.4 ASSIGNMENT BY THE EXECUTIVE; SUCCESSORS.
(a) This Agreement is personal to the Executive and without
the prior written consent of the Corporation shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) Except as is otherwise herein expressly provided, this
Agreement shall inure to the benefit of and be binding upon the Corporation, its
successors and assigns, and upon the Executive, his spouse, heirs, executors and
administrators, provided, however, that the obligations of the Executive
hereunder shall not be delegated.
(c) The Corporation will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Corporation to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. As used in this Agreement, "Corporation" shall mean
Corporation as hereinbefore defined and any successor to its business or assets
as aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
SECTION V.5 WAIVER. Failure of either party hereto to insist upon
strict compliance by the other party with any term, covenant or condition hereof
shall not be deemed a waiver of such
term, covenant or condition, nor shall any waiver or relinquishment or failure
to insist upon strict compliance with any right or power hereunder at any one
time or more times be deemed a waiver or relinquishment of such right or power
at any other time or times.
SECTION V.6 SURVIVAL. Notwithstanding the expiration or termination of
this Agreement, Sections 4.2 and 5.2 shall survive.
SECTION V.7 NOTICE. Any notice required or desired to be given pursuant
to this Agreement shall be sufficient if in writing sent by registered or
certified mail to the addresses set forth above or to such other address as any
party hereto may designate in writing, transmitted by hand delivery or by
registered or certified mail to the other; provided, the failure by the
Executive to observe the notice provisions hereof shall not in any way limit,
reduce or effect the Executive's rights and benefits hereunder.
SECTION V.8 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to any otherwise applicable choice of law rules.
SECTION V.9 TAXES. The Corporation may deduct from all amounts paid
under this Agreement all federal, state, local and other taxes required by law
to be withheld with respect to such payments.
SECTION V.10 ENTIRE AGREEMENT. The parties hereto agree that this
Agreement (together with, to the extent benefits or rights are otherwise
affected by this Agreement, any employee benefit plan maintained or sponsored by
the Corporation) contains the entire understanding and
agreement between them and supersedes all previous agreements and arrangements,
if any, relating to the employment of the Executive. This Agreement shall not be
amended, modified or supplemented in any respect except by an agreement in
writing signed by the Executive and the Corporation.
SECTION V.11 COUNTERPARTS. This Agreement may be signed in
counterparts, each of which shall be an original, and all of which, taken
together shall be deemed to be one instrument.
IN WITNESS WHEREOF, the Corporation and the Executive have
duly executed this Agreement as of the day and the year first above written.
XXXXXXX.XXX, LTD. EXECUTIVE
By: /s/ /s/
---------------------------- -----------------------------
Name: Xxxxxxx Xxxxxxx Xxxxxx X. Xxxxxx, Xx.
Title: President and
Chief Executive Officer
