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EXHIBIT 10.40
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of this 28th day of
February 2000, by and between Universal Access, Inc., a Delaware corporation
(the "Company"), and Xxxxxx X. Xxxxxxx, Xx. (the "Employee").
RECITALS:
A. The Company is in the telecommunications business.
B. The Company desires to employ the Employee and Employee desires to be
employed by the Company as its Chief Development Officer, subject to the terms,
conditions and covenants hereinafter set forth.
C. As a condition of the Company employing the Employee, and to the Company's
agreement to grant stock options to the Employee pursuant to the Company's
stock option plan, Employee has agreed not to divulge to the public the
Company's confidential information, not to solicit the Company's vendors,
customers or employees and not to compete with the Company, all upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the agreements, covenants
and conditions set forth herein, the Employee and the Company hereby agree as
follows:
ARTICLE I
EMPLOYMENT
1.1 Employment. The Company hereby employs, engages, and hires Employee, and
Employee hereby accepts employment, upon the terms and conditions set forth in
this Agreement. The Employee shall serve as the Chief Development Officer of
the Company. The Employee shall have and fully perform the duties and
responsibilities required for such job title and position to perform such
additional services and discharge such other responsibilities as may be, from
time to time, assigned or delegated by the Company.
1.2 Activities and Duties Employment. Employee represents and warrants to
the Company that Employee is free to accept employment with the Company and
that Employee has no prior or other commitments or obligations of any kind to
anyone else which would hinder or interfere with the performance of this
Agreement.
1.3 Employee accepts the employment described in Article I of this
Agreement and agrees to devote his full business time and efforts to the
faithful and diligent performance of the
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services described herein, including the performance of such other services and
responsibilities as the Company may, from time to time, stipulate. Without
limiting the generality of the foregoing, Employee shall devote not less than
five (5) days per week to this employment, and shall be present on the Company
premises or actively engaged in service to or on behalf of the Company during
normal business hours Monday through Friday, excluding periods of vacation and
sick leave.
ARTICLE II
TERM
2.1 Term. The term of employment under this Agreement shall be one (1) year
(the "Initial Term"), commencing on the date of the Agreement. This Agreement
shall automatically renew for successive one year terms thereafter (each a
"Renewal Term") unless either party delivers notice of termination to the other
party not less than fifteen (15) days prior to the end of the Initial Term or
Renewal Term in question. The Initial Term and any Renewal Terms shall herein
be referred to as the "Employment Term".
2.2 Termination. The Employment Term and employment of Employee may be
terminated as follows:
(a) By the Company immediately for "Cause." For the purpose of this Agreement,
"Cause" shall mean (i) conduct amounting to fraud, embezzlement, or illegal
misconduct in connection with Employee's duties under this Agreement; (ii)
the conviction of Employee by a court of proper jurisdiction of (or his or
her written, voluntary and freely given confession to) a crime which
constitutes a felony (other than a traffic violation) or an indictment that
results in material injury to the Company's property, operation or
reputation; (iii) the willful failure of Employee to comply with reasonable
directions of the Company or any of the policies of the Company after (a)
written notice is delivered to the Employee describing such willful failure
and (b) Employee has failed to cure or take substantial steps to cure such
willful failure after a reasonable time period as determined by the Company
in its reasonable discretion (not to be less than 30 days) unless the
Employee, after discussion with counsel, in good faith believes, that the
directions of the Company (or its actions or inactions in response to the
Employee's written notice) are illegal; or (iv) willful misconduct or a
material default by the Employee in the performance or observance of any
promise or undertaking of Employee under this Agreement, which willful
misconduct or default has continued for a period of ten (10) business days
after written notice thereof from the Company to the Employee; provided,
that if such default is of a nature that it cannot be reasonably cured
within ten (10) day period (but is curable), then if the Employee shall
have commenced an attempt to cure such default within such ten (10) day
period, the period to cure the default shall be extended until the earlier
of the date which is forty-five (45) days after receipt of notice or
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the Employee has failed to diligently continue its efforts in a reasonable
manner to cure its default.
(b) Automatically, without the action of either party, upon the death of
Employee ("Death").
(c) By either party upon the Total Disability of the Employee. The Employee
shall be considered to have a Total Disability for purposes of this
Agreement if he or she is unable by reason of accident or illness to
substantially perform his or her employment duties, and is expected to be
in such condition for periods totaling six (6) months (whether or not
consecutive) during any period of twelve (12) months. The determination of
whether a Total Disability has occurred shall be determined by the Company,
in good faith, at its sole discretion. Nothing herein shall limit the
Employee's right to receive any payments to which Employee may be entitled
under any disability or employee benefit plan of the Company or under any
disability or employee benefit plan of the Company or under any disability
or insurance policy or plan. During a period of disability prior to
termination hereunder, Employee shall continue to receive his or her full
compensation (including base salary and bonus) and benefits, subject to
offset to the extent of any disability insurance payments received by the
Employee pursuant to any disability insurance policy maintained by or paid
for by the Company.
(d) By the Employee upon ten (10) business days notice to the Company for Good
Reason, which notice shall state the reason for termination. For the
purpose of this Agreement, "Good Reason" shall mean any "Change in Control"
(as hereinafter defined) or any material failure by the Company to comply
with the provisions of this Employment Agreement, including but not limited
to, failure to timely pay any part of Employee's compensation (including
salary or bonus) or provide the benefits contemplated herein, and which is
not remedied by the Company within ten (10) business days after receipt by
the Company of written notice thereof from Employee; provided, that if such
default is of a nature that it cannot be reasonably cured within ten (10)
day period (but is curable), then if the Company shall have commenced an
attempt to cure such default within such ten (10) day period, the period to
cure the default shall be extended until the earlier of the date which is
forty-five (45) days after receipt of notice or the Company has failed to
diligently continue its efforts in a reasonable manner to cure its default.
For purposes hereof, the term "Change in Control" shall mean the occurrence
of any of the following:
1) The Company: (a) consummates a merger or consolidation which results
in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) less than
fifty percent (50%) of the total voting power represented by the voting
securities of the Company of such surviving entity outstanding immediately
after such merger or consolidation; and (b) following such event, the
successor entity fails to employ Employee as follows (hereinafter, the
"Same Terms"): on substantially
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identical terms as are required per this Agreement for the remaining
Employment Term, and the successor entity further continues to employ
Employee in the same city and with job responsibilities of a level
substantially equivalent to or greater than those presently in force and
effect;
2.) A plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of (in one transaction or a series of
transactions) all or substantially all of the Company's assets is
consummated, and following such event the successor entity (if any) fails
to employ Employee on the Same Terms; or
3.) Company consummates a plan of complete liquidation of the Company or
an agreement for the sale or disposition (in one transaction or a series
of transactions) by the Company of all or substantially all of the
Company's assets, and following such event the successor entity (if any)
fails to employ Employee on the Same Terms;
provided, however, that a public offering of the stock of the Company
irrespective of the amount of voting securities owned by present
shareholders after such offering shall not be deemed to constitute a Change
of Control; and provided further that if Employee agrees to be employed by
a successor entity on the Same Terms and the successor entity fails to do
so, a Change in Control shall be deemed to have occurred.
(e) By the Employee without Good Reason, and therefore in breach of this
Agreement.
(f) By the Company other than for Cause, Death or Total Disability, in which
event Employee's sole remedy and compensation as a result of such
termination shall be as set forth in Section 2.4(c) below.
2.3 Cessation of Rights and Obligations: Survival of Certain Provisions. On the
date of expiration or earlier termination of the Employment Term for any
reason, all of the respective rights, duties, obligation and covenants of the
parties, as set forth herein, shall, except as specifically provided herein to
the contrary, cease and become of no further force or effect as of the date of
said termination, and shall only survive as expressly provided for herein.
2.4 Cessation of Compensation. In lieu of any severance under any severance
plan that the Company may then have in effect, and subject to (i) the receipt
of a full and unconditional release from Employee and (ii) any amounts owed by
the Employee to the Company under any contract, agreement or loan document
entered into after the date hereof which relates solely to his or her
employment with the Company (including, but not limited to, loans made by the
Company to the Employee), the Company shall pay to the Employee, and the
Employee shall be entitled to receive, the following amounts within thirty (30)
days of the date of a termination of his or her employment:
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(a) Voluntary Termination/Cause/Expiration of Term. Upon (i) Employee
terminating his or her employment without Good Reason as provided in
Section 2.2(e), (ii) the expiration of the Employment Term because the
Employee or the Company elects to not extend the Employment Term, or (iii)
a termination of the Employment Term for Cause by the Company as provided
in Section 2.2(a), the Employee shall be entitled to receive his or her
base salary (which shall include any of his or her unused vacation pay for
the year of such termination) and expense reimbursements solely through the
date of termination.
(b) Death or Total Disability. Upon the termination of the Employment Term by
reason of the Death or Total Disability of the Employee, the Employee (or,
in the case of Death, his or her estate) shall be entitled to receive his
or her base salary (which shall include any of his or her unused vacation
pay for the year of such termination) and expense reimbursements solely
through the date of termination.
(c) Involuntary. Upon the termination of the Employment Term:
(1) by the Company for any reason other than Cause, Death or Total
Disability, or
(2) by the Employee for Good Reason,
the Employee shall be entitled to receive in a lump sum the balance of
his or her base salary for the lesser of the remaining term of the
Employment Term (exclusive of any renewals of the then existing term)
or a period of six (6) months (the "Severance Term"), together with
prorated vacation pay and expense reimbursement through the date of
termination. In addition, Employee shall be entitled to payment by the
Company of the premiums for group health insurance coverage otherwise
payable by Employee under the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") for the Severance Term. It shall
be a condition to Employee's right to receive the payments described
above that Employee shall be in compliance with all of the Employee's
obligations which survive termination hereof, including without
limitation those arising under Articles IV and V hereof. The payments
described above are intended to be in lieu of all other payments to
which Employee might otherwise be entitled in respect of termination
of Employee's employment without Cause unless otherwise required by
law or under other agreements between the parties.
2.5 Business Expenses.
(a) Reimbursement. The Company shall reimburse the Employee for all reasonable
and ordinary business expenses incurred by him or her in connection
with the performance of his or her duties hereunder, including, but
not limited to, ordinary and necessary travel expenses and
entertainment expenses. The reimbursement of
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