EXECUTION COPY
EMPLOYMENT AGREEMENT dated as of October 4, 1999 (the "Agreement"),
between FIBERNET TELECOM GROUP, INC., a Nevada corporation (the "Company"), and
XXX XXXXXXXXX (the "Executive").
The parties hereto deem it to be in their best interests to enter
into an employment agreement whereby the Company will employ the Executive
pursuant to the terms set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto agree as follows:
1. Employment. The Company hereby employs the Executive, and the
Executive hereby accepts such employment by the Company, on the terms and
subject to the conditions hereinafter set forth. The parties hereto agree that
the Executive shall commence his duties and responsibilities hereunder on or
about November 8, 1999.
2. Term. Subject to earlier termination pursuant to the terms of
Section 6 below, the employment of the Executive hereunder shall be for a fixed
term (the "Employment Period") commencing as provided in Section 1 hereof and
terminating on the second anniversary of the execution of this Agreement (the
"Scheduled Termination Date"). At the option of the Company, on or before April
4, 2001, the Company shall notify the Executive if its intention to renew this
Agreement or continue the employment of the Executive after the Scheduled
Termination Date pursuant to other terms and conditions as may be mutually
agreed upon by the Company and the Executive.
3. Position.
(a) The Executive will be the Senior Vice President - Sales
and Marketing.
(b) The Company understands that the Executive will conduct
substantially all of his duties and responsibilities on behalf of the Company
from the executive offices of the Company, which shall be located in the New
York metropolitan area, or from any of the regional sales offices of the Company
to be opened after the date hereof. The Company shall reimburse the Executive
for all reasonable and necessary expenses during the time the Executive may be
temporarily located in New York ("Temporary Period"). During the Temporary
Period and at any other times during the Employment Period when the Executive
shall be located outside ("Outside Location") the Atlanta metropolitan area as
part of his employment hereunder, the Company shall reimburse the Executive for
round-trip air fare to Atlanta from New York or such other Outside Location one
time per week, and the Executive shall use his reasonable best efforts to
minimize the costs of such air fare.
(c) The Company agrees that during the Employment Period the
Company shall not require the Executive to re-locate his principal personal
residence outside the Atlanta metropolitan area to fulfill his duties and
responsibilities hereunder.
4. Time to be Devoted to Employment. The Executive shall devote all
of his business time, attention and energies to the performance of his duties
and responsibilities under
this Agreement. During the Employment Period, the Executive shall not be
engaged in any other business activity without the prior written consent
of the President and the Executive Vice President except for (a) time
spent in managing his personal, financial and legal affairs and serving on
corporate, civic or charitable boards or committees, in each case only if,
and to the extent that, such activities do not interfere with the
performance of the Executive's duties and responsibilities hereunder and
(b) periods of vacation to which the Executive is entitled, illness and
periods of leave of absence as approved by the President and Executive
Vice President of the Company.
5. Compensation; Etc.
(a) Base Salary. The Company shall pay to the Executive an
annual base salary (the "Base Salary") of a minimum of $225,000, subject to
increase, but not decrease, at least annually at the discretion of the
Compensation Committee of the Board of Directors of the Company (the "Board").
The Base Salary shall be payable in such installments as is the policy of the
Company with respect to its executive officers generally, but no less frequently
than monthly.
(b) Signing Bonus. The Executive shall receive $30,000 as a
bonus ("Signing Bonus") for executing this Agreement payable in three equal
consecutive monthly installments beginning on December 1, 1999.
(c) Bonus.
(i) The Executive shall receive a bonus ("2000
Performance Bonus") of $80,000 for performance of his duties and
responsibilities hereunder for the year ended December 31, 2000.
(ii) In the event that the Executive substantially
exceeds the sales and marketing targets and goals of the Company as set
forth in the business plan for the year ended December 31, 2000 of the
Company ("Business Plan") and Revenue (as defined herein) of the Company
for the year ended December 31, 2000 exceed $20 million ("Revenue
Target"), the Executive may receive a 2000 Performance Bonus up to
$150,000, inclusive of the $80,000 the Executive may receive pursuant to
clause (i) above. Such Revenue Target may be adjusted from time to time
based on adjustments to the Business Plan, as mutually agreed upon by the
Company and the Executive.
(iii) After a formal review by the President and
Executive Vice President of the Company during the month of December, 2000
of the Executive's performance and operations during the year 2000, the
Executive may receive an additional bonus.
(iv) The Executive shall receive a bonus ("2001
Performance Bonus") of $80,000 for performance of his duties and
responsibilities hereunder during the Executive's employment in the year
2001, and may receive an additional 2001 Performance Bonus based on the
Revenue of the Company on or about the Scheduled Termination Date;
provided, that if the Executive continues his employment with the
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Company after the Scheduled Termination Date to December 31, 2001 pursuant
to Section 2, any additional 2001 Performance Bonus shall be based on the
Revenue of the Company for the year ended December 31, 2001.
(v) For purposes of this Agreement: (A) "Revenue" shall
mean the revenues of the Company calculated based on the Company's
Business Plan, future business plan, as such Business Plan or future
business plan may be modified from time to time, and in accordance with
the Company's accounting practices and generally accepted accounting
principles; (B) any 2000 Performance Bonus paid hereunder shall be paid by
the Company to the Executive in a manner consistent with the Company's
compensation and payroll practices, but in no event later than February 1,
2001; (C) any 2001 Performance Bonus to be paid hereunder shall be paid by
the Company to the Executive on a date to be determined by the Company,
but in no event later than February 1, 2002; and (D) the amount of any
2000 Performance Bonus and/or 2001 Performance Bonus to be paid to the
Executive pursuant to clauses (ii), (iii) and (iv) above shall be
determined solely at the discretion of the President and Executive Vice
President of the Company, subject to approval by the Board of Directors
(or any committee thereof) of the Company.
(d) Benefits. During the Employment Period, the Company shall
provide the Executive with such employee benefits as are provided by the Company
from time to time to its senior executive officers generally.
(e) Qualified Options. The Executive shall be entitled to
receive Incentive Stock Options ("ISOs") (as that term is defined in Section 422
of the Internal Revenue Code of 1986, as amended (the "Code")) for 37,208 shares
(or such greater or lesser amount then allowed under the Code) (the "1999
Options") of the Company's common stock, $.001 par value per share ("Common
Stock") with an exercise price equal to the Fair Market Value (as defined in the
Option Plan (as defined below)) of the Common Stock as of the date hereof
pursuant to the Company's 1999 Stock Option Plan (the "Option Plan") and the
execution of an Incentive Stock Option Agreement dated the date hereof between
the Company and the Executive (as provided to the Executive). Any ISOs issued
under this Section 5(e) shall vest equally over two years from the date hereof,
with 50% of the ISOs vesting one year from the date hereof and the remaining 50%
vesting two years from the date hereof.
(f) Non-Qualified Options. The Executive shall be entitled to
receive non-qualified options for (i)162,792 shares ("Non-Qualified A") of the
Common Stock of the Company with an exercise price of $4.50 per share and (ii)
100,000 shares ("Non-Qualified B" and together with the Non-Qualified A, the
"Non-Qualified Options") of the Common Stock of the Company with an exercise
price equal to the Fair Market Value (as defined in the Option Plan) of the
Common Stock on October 4, 1999. The Non-Qualified A shall vest equally over two
years from the date hereof, with 50% of the Non-Qualified A vesting one year
from the date hereof and the remaining 50% vesting two years from the date
hereof. The Non-Qualified B shall vest as of the date hereof, subject to Section
6(e)(iv). The Non-Qualified Options shall be exercisable for up to ten (10)
years, and shall provide for "cashless exercise" and in the event of the
Executive's termination of employment for any reason, exercisable for up to one
year from the date of such termination. The Non-Qualified A shall be subject to
accelerated vesting as
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provided for in this Agreement. If the Executive's employment is terminated
pursuant to a Termination for Cause or a Voluntary Termination, all the then
unvested Non-Qualified A shall immediately terminate and no longer be
outstanding. Unless otherwise provided herein, any Non-Qualified Options granted
hereunder are subject to the terms and provisions of the Option Plan.
6. Termination of Employment.
(a) Involuntary Termination.
(i) Disability. If the Executive is incapacitated or
disabled by accident or sickness or otherwise so as to render him mentally
or physically incapable of performing the services required to be
performed by him or her under this Agreement for a period of 120
consecutive days or longer, or for an aggregate of 120 days during any
twelve-month period (such condition being hereinafter referred to as a
"Disability"), the Company may, at that time or any time thereafter, at
its option, to the extent not in violation of applicable state and federal
law, terminate the employment of the Executive under this Agreement
immediately upon giving him notice to that effect (such termination, as
well as a termination under Section 6(a)(ii) below, being hereinafter
called an "Involuntary Termination"). In the event of an Involuntary
Termination, all options granted hereunder shall vest on a pro rata basis
for time served to the date of such Involuntary Termination (including the
120 day disability qualifying period).
(ii) Death. If the Executive dies during the Employment
Period, his employment hereunder shall be deemed to cease as of the date
of his death, and all options granted hereunder shall vest as of the date
of his death, and shall be exercisable by his estate for a period of one
(1) year from the date of death.
(b) Termination for Cause. The Company may terminate the
employment of the Executive and all the Company's obligations under this
Agreement at any time during the Employment Period for "cause" (such termination
being hereinafter called a "Termination for Cause") after the Board has given
the Executive written notice of its intent to terminate the employment of the
Executive for cause, with reasonable specificity of the details thereof and
Executive shall have been provided a reasonable opportunity to cure any such
alleged occurrence constituting "cause" (not in excess of 30 days, provided that
in the event such occurrence cannot reasonably be expected to be cured in such
period then for such period as is reasonable and the Executive shall be using
his diligent best efforts to cure). For the purposes of this Agreement, "cause"
shall mean (i) the Executive's material breach of his material duties hereunder
or habitual neglect of his duties hereunder, (ii) the commission by the
Executive of an act constituting common law fraud, or a felony or criminal act
against the Company subsidiary or affiliate thereof or any of the assets of any
of them or (iii) the Executive's conviction of a crime involving moral
turpitude.
(c) Termination Without Cause. The Company may, with 30 days
written notice, terminate the employment of the Executive hereunder at any time
during the Employment Period without "cause" (such termination being hereinafter
called a "Termination Without
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Cause") by giving the Executive notice of such termination, upon the giving of
which notice such termination shall take effect 30 days from the date such
notice was given.
(d) Voluntary Termination. Any termination of the employment
of the Executive hereunder other than as a result of an Involuntary Termination,
a Termination For Cause or a Termination Without Cause shall be deemed to be a
"Voluntary Termination." A Voluntary Termination shall be deemed to be effective
immediately upon such termination.
(e) Termination for Good Reason. Each of the events in clauses
(i) - (vi) below shall be a "Termination for Good Reason":
(i) the Executive's title, position, authority or
responsibilities (including reporting responsibilities (including
reporting responsibilities and authority) are changed in a materially
adverse manner;
(ii) the Executive's Base Salary is reduced for any
reason other than in connection with the termination of his employment;
(iii) other than in connection with the termination of
the Executive's employment hereunder, the Company materially reduces any
welfare or insurance benefits generally provided to other executive
officers of the Company;
(iv) the Company otherwise materially breaches or is
unable to perform its obligations hereunder;
(v) the sale of all or substantially all of the assets
of the Company or the merger, consolidation or combination of the Company
with another entity in which this Agreement is not assumed by any such
purchaser or surviving entity; and
(vi) the Company requires the Executive to re-locate his
principal residence outside the Atlanta metropolitan area during the
Employment Period.
(vii) In the event of a Termination for Good Reason, the
Executive may voluntarily terminate his employment under this Agreement
with the Company, which voluntary termination shall be treated as a
Termination Without Cause.
(f) Effect of Termination of Employment.
(i) Except as otherwise provided in Section 6(f)(ii)
below, upon the termination of the Executive's employment hereunder for
any reason whatsoever prior to the expiration of the Employment Period,
neither the Executive nor his beneficiaries or estate shall have any
further rights or claims against the Company or any of its subsidiaries or
affiliates under this Agreement except to receive any earned and unpaid
portion of the Base Salary, the Signing Bonus and any earned and unpaid
portion of a declared bonus provided for in Section 5(c), plus a cash
payment for all accrued and unused vacation time through the effective
date of such termination, and shall be entitled to exercise all options
vested as provided for in this Agreement. The Executive's family and, in
the case of the Executive's Disability, the Executive, shall also be
entitled to the
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same employee benefits, at the Company's expense, provided to the
Executive and his family by the Company prior to the termination of the
Executive's employment hereunder for Disability or death for six months
after such termination of employment for Disability or death. The
Executive shall be indemnified after the Scheduled Termination Date (or
any later date the Executive's employment with the Company is terminated)
for any actions in his capacity as a Senior Vice President-Sales and
Marketing of the Company. For purposes of this Agreement, the 2000
Performance Bonus and the 2001 Performance Bonus shall be considered
declared and earned on January 1, 2000 and January 1, 2001, respectively.
(ii) Upon the termination of the Executive's employment
hereunder prior to the Scheduled Termination Date pursuant to a
Termination Without Cause or Termination for Good Reason, the Executive
shall have the right, in addition to the rights provided for in Section
6(f)(i) above, to receive (A) severance (payable in such installments as
the Base Salary was being paid immediately prior to such termination
pursuant to Section 5(a)) equal to the then current Base Salary for a term
equal to the lesser of (1) six months from the date of termination of the
Executive's employment pursuant to a Termination Without Cause or prior to
the Scheduled Termination Date and (2) the date the Executive executes an
employment agreement or similar contract with a third party employer (or
commences employment with a third party employer, whichever occurs
earlier) after the termination of the Executive's employment pursuant to a
Termination Without Cause or prior to the Scheduled Termination Date, (B)
all options granted hereunder (including the 1999 Options and the
Non-Qualified Option B, subject to Section 6(e)(iv)) shall vest and
Executive shall have 12 months (unless with respect to the 1999 Options,
the Option Plan shall require a shorter period) thereafter to exercise
such options, and (C) at the Company's expense, any employee benefits
provided to the Executive and his family by the Company prior to the
Termination Without Cause or Termination for Good Reason for a period of
six months after such Termination Without Cause or Termination for Good
Reason.
(iii) Upon the termination of the Executive's employment
hereunder prior to the Scheduled Termination Date pursuant to a
Termination for Cause, the Executive shall be entitled to receive his Base
Salary pro rata to the date of his Termination for Cause and the Signing
Bonus plus any declared but unpaid bonus pursuant to Section 5(c) and
shall be entitled to exercise all options vested as of the time of
termination for 30 days, subject to Section 6(e)(iv).
(iv) Upon the termination of the Executive's employment
hereunder on or prior to February 4, 2000 pursuant to a Termination for
Cause or Voluntary Termination, the Executive shall return to the Company
and disclaim ownership of 50% of the Non-Qualified B and execute any
amendment or agreement necessary to reflect such adjustment.
7. Restrictive Covenants.
(a) The Executive acknowledges and recognizes that during the
Employment Period he will be privy to trade secrets and confidential proprietary
information critical to the
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Company and the Company's business and further acknowledges and recognizes that
the Company would find it extremely difficult to replace the Executive. So long
as the Company is paying (or willing to pay in the event the Executive shall
refuse such payment) all amounts due hereunder, the Executive shall not, during
the Employment Period and for 12 months thereafter (i) directly induce employees
of the Company or its affiliates or subsidiaries to terminate their employment
with the Company or such affiliate or subsidiary for the purposes of engaging in
any Competitive Business or (ii) directly induce any entity or person with which
the Company or any of its subsidiaries or affiliates has a business relationship
to terminate or alter such business relationship.
"Competitive Business" means and includes any business that builds
or operates an in-building fiber or copper network.
(b) The Executive understands that the foregoing restrictions
may limit his ability to earn a livelihood in a business similar that of the
Company, but he nevertheless believes that he has received and will receive
sufficient consideration and other benefits as an employee of the Company to
justify clearly such restrictions which, in any event (given his education,
skills and ability), the Executive does not believe would prevent him from
earning a livelihood.
8. Non-Disclosure, Assignment of Intellectual Property Rights and
Documentation.
(a) At all times, both during the Executive's employment by
the Company and after its termination, the Executive will keep in strict
confidence and will not disclose any confidential or proprietary information
relating to the business of the Company, or any client, customer, or business
partner of the Company, to any person or entity, or make use of any such
confidential or proprietary information for the Executive's own purposes or for
the benefit of any person or entity, except as may be necessary in the ordinary
course of performing his duties and responsibilities as an employee of the
Company.
(b) If at any time or times during his employment the
Executive shall conceive or discover any Intellectual Property (as defined
herein) whatsoever (herein called "Developments") or any interest therein
("Intellectual Property Rights") that in each case relates to the business of
the Company, such Developments and the benefits thereof shall immediately become
the sole and absolute property of the Company and its assigns, and the Executive
shall promptly disclose to the Company (or any persons designated by it) each
such Development and hereby assign any rights the Executive may have or acquire
in the Developments and benefits and/or rights resulting therefrom to the
Company and its assigns.
(c) As used herein, the term "Intellectual Property" shall
mean all industrial and intellectual property, including, without limitation,
computer programs and other software, and all documentation and media
constituting, describing or relating to the above.
9. Taxes. The Company shall pay any income taxes due and payable by
the Executive to taxing authorities to the City of New York and/or the State of
New York related to his employment hereunder. This payment shall be made on a
"grossed-up" basis, so that the
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Company will pay any federal, state or local income taxes payable (after taking
into account deductions allowed for state and local taxes) as a result of the
benefit provided to the Executive in the preceding sentence of this Section 9.
10. Disability Insurance. As soon as reasonably practicable, the
Company shall obtain long-term disability insurance covering the Executive at
the Company's expense which provides for an "own occupation" definition of
disability, no less than 60% income replacement and an elimination period no
longer than the period after which the Company can terminate the Executive's
services for disability or such substantially similar provisions.
11. Other Agreements. The Executive represents and warrants that the
execution and delivery of this Agreement and the performance of all the terms of
this Agreement do not and will not breach any agreement to keep in confidence
proprietary information acquired by the Executive in confidence or trust. The
Executive has not entered into and shall not enter into any agreement, either
written or oral, in conflict with this Agreement. The Executive represents that
he has not brought and will not bring with him to the Company or use at the
Company any materials or documents of an employer or a former employer that are
not generally available to the public, unless express written authorization from
such employer for their possession and use has been obtained. The Executive
further understands that he is not to breach any obligation of confidentiality
that he has to any employer or former employer and agrees to fulfill all such
obligations during the period of his affiliation with the Company.
12. Notices. All notices or other communications which are required
or permitted hereunder shall be in writing and sufficient if (a) delivered
personally or sent by telecopier, (b) sent by nationally-recognized overnight
courier or (c) sent by certified mail, postage prepaid, return receipt
requested, addressed as follows:
if to the Company, to:
FiberNet Telecom Group, Inc.
000 Xxxxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxx, XX 00000
Telephone: 000 000-0000
Facsimile: 000 000-0000
Attention: President
if to the Executive, to the Executive's address on the books or
records of the Company;
or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such
communication shall be deemed to have been given (i) when delivered if
personally delivered or sent by telecopier, (ii) on the Business Day (as
hereinafter defined) after dispatch if sent by nationally-recognized, overnight
courier and (iii) on the fifth Business Day after dispatch if sent by mail. As
used herein, "Business Day" means a day that is not a Saturday, Sunday or a day
on which banking institutions in New York, New York are not required to be open.
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13. Entire Agreement; Amendments. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior or contemporaneous negotiations, correspondence,
understandings and agreements between the parties with respect thereto. This
Agreement may be amended only by an agreement in writing signed by both parties
hereto.
14. Assignment; Successors; Benefits of Agreement. This Agreement is
personal in its nature and neither party hereto shall, without the consent of
the other, assign or transfer this Agreement or any rights or obligations
hereunder. The provisions of this Agreement shall be binding upon and inure to
the benefit of the respective heirs, executors, administrators and successors
and permitted assigns of the parties hereto. All amounts payable hereunder, and
all option grants provided hereunder, shall be payable to, and exercisable by,
the Executive's estate.
15. Waiver of Breach. A waiver of any breach of any provision of
this Agreement shall not constitute or operate as a waiver of any other breach
of such provision or of any other provision, and any failure to enforce any
provision hereof shall not operate as a waiver of such provision or of any other
provision.
16. Counterparts; Headings. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument. Headings said herein are for
convenience of reference only and are not to affect the interpretation of this
Agreement.
17. Legal Fees. The Company will pay the reasonable attorney's fees
incurred by Executive in connection with the negotiation and execution hereof.
18. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO PRINCIPLES GOVERNING CONFLICTS OF LAWS.
19. Severability. In the event that any provision of this Agreement
would be held in any jurisdiction to be invalid, prohibited or unenforceable for
any reason, such provision, as to such jurisdiction, shall be ineffective,
without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn so
as not to be invalid, prohibited or unenforceable in such jurisdiction, it
shall, as to such jurisdiction, be so narrowly drawn, without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
20. Indemnification. The Executive shall be indemnified to the full
extent provided for by applicable law and the charter and by-laws of the
Company, which indemnification provisions may not be altered in any material
manner to the detriment of the Executive from those provisions in effect as of
the date hereof. The Company shall maintain
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D&O coverage during the Employment Term (and for the applicable statute of
limitations period thereafter), with terms and conditions as in effect as of the
date hereof; provided that such D&O coverage may not be altered in any material
manner to the detriment of the Executive from those provisions in effect as of
the date hereof.
21. Due Authorization. This Agreement has been duly authorized,
executed and delivered on behalf of the Company and represents the binding and
enforceable obligation of the Company, in accordance with its term.
22. Remedies. The Executive acknowledges and understands that the
provisions of this Agreement are of a special and unique nature, the loss of
which cannot be adequately compensated for in damages by an action at law, and
that the breach or threatened breach of the provisions of this Agreement would
cause the Company irreparable harm. In the event of a breach or threatened
breach by the Executive of the provisions contained in Section 7 of this
Agreement, the Company shall be entitled to seek an injunction restraining him
from such breach with a court of law.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
FIBERNET TELECOM GROUP, INC.
By: /s/ Xxxxxxx X. Xxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxx
Title: CEO and President
/s/ Xxx Xxxxxxxxx
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Xxx Xxxxxxxxx
