Exhibit 10.15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") made and entered into
effective as of August 4, 1997, by and between PathNet, Inc., a Delaware
corporation ("PathNet') and Xxxxxxx X. Xxxxxx (the "Executive"). In
consideration of the mutual promises and agreements set forth herein, PathNet
and the Executive hereto agree as follows:
1. EMPLOYMENT. Subject to the provisions of SECTION 6, PathNet hereby
agrees to employ Executive as an employee of PathNet as the Chief Executive
Officer of PathNet commencing on August 4, 1997 and extending through August 4,
2000 and upon sixty (60) days prior written notice to Executive, and shall
thereafter renew automatically for one-year terms unless terminated by either
party by written notice to the other party to such effect within the sixty (60)
days prior to the end of any of such one year terms or before August 4, 2000
(collectively, the "Term of Employment").
2. COMPENSATION.
(a) BASE SALARY. PathNet shall pay the Executive during the Term of
Employment a base salary, of four hundred thousand dollars ($400,000) per
annum (the "Base Salary"), in bi-weekly installments. The Employer, in its
discretion, may increase (but may not decrease) the Executive's Base Salary
from time to time.
(b) BENEFITS AND INCENTIVE PLANS. During the Term of Employment, the
Executive shall be eligible to participate in (i) PathNet's employee
benefit plans, programs and practices on the same basis as other salaried
employees of PathNet and on the same basis as other senior executives of
PathNet and (ii) PathNet's incentive plans, programs and practices on the
same basis as other salaried employees of PathNet and on the same basis as
other senior executives of PathNet.
(c) VACATION. Executive shall be entitled to five (5) weeks of
vacation per year, which may be taken in accordance with PathNet's
generally applicable vacation policy.
(d) STOCK OPTIONS. Effective as of August 4, 1997, PathNet shall
grant Executive under the PathNet, Inc. 1997 Stock Incentive Plan (the
"1997 Plan"), nonqualified stock options on 296,122 shares of common stock,
par value $.01 per share of PathNet at an exercise price of $3.28 per
share. Such options shall have a ten-year term, shall vest over three
consecutive years with one-third of such shares vesting at the end of each
year. Such options shall be evidenced by an Option Agreement attached
hereto on EXHIBIT A that shall contain, among other terms and conditions
customary in option grants to senior executives of PathNet, the following
terms and conditions:
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(i) Upon expiration of the Term of Employment or the termination of
the Executive's employment with PathNet upon the death or disability of
Executive, the termination of Executive without cause by PathNet or the
Constructive Termination of Executive as described in SECTION 6(a), SECTION
6(b), SECTION 6(d) and SECTION 6(f), respectively, in the event that all or
any portion of the options granted pursuant to the Option Agreement are
still in force and unexpired, the portion of the unmatured options that
would have vested at the end of the year in which such termination occurs,
shall be accelerated and any remaining unvested portion of the options
shall be forfeited. Such acceleration shall be effective as of the date of
the termination of the employment of Executive with PathNet under the
circumstances described above. The vested portion of the options,
including any options which accelerate pursuant to this SECTION 2(d)(i),
may be exercised by Executive (or Executive's heirs and successors), during
the twenty-four (24) month period beginning on such date but shall
terminate at the end of such twenty-four (24) month period; and
(ii) Upon termination of the Executive's employment with PathNet
pursuant to SECTION 6(e), the options granted pursuant to the Option
Agreement shall terminate except to the extent that such options are
exercisable on the date of termination of Executive's employment with
PathNet and to the extent any options are exercisable on such date of
termination of the Executive's employment with PathNet, such options may be
exercised by Executive during the three (3) month period beginning on the
date of such termination of Executive's employment with PathNet but shall
terminate at the end of such period.
(iii) Upon termination of the Executive's employment with PathNet
pursuant to SECTION 6(c), the options granted whether or not vested shall
terminate and be forfeited.
(iv) Upon the election by Executive by written notice to such effect
delivered to PathNet within ten (10) business days after the date of the
termination of Executive's employment by PathNet, PathNet shall pay the
aggregate Fair Value of the option then vested or held by Executive as of
the date of the termination of Executive's employment with PathNet (the
"Cash Out Amount") to Executive over time (i) in the event any shares of
Series A Convertible Preferred Stock or the Series B Convertible Preferred
Stock of PathNet are still issued and outstanding or any time after a
Qualified Public Offering (as such term is defined in the 1997 Plan), in
installments which will become due and payable within thirty (30) days of
each date that a holder of preferred stock of PathNet (or of common stock
after conversion of such preferred stock) transfers, sells or disposes of
any such shares of preferred stock or common stock, as the case may be, to
an unaffiliated third party and each such installment shall be in an amount
equal to the proceeds received by such holder of preferred stock or
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common stock, respectively, pursuant to such transfer or sale, until
such time as PathNet has paid to Executive an aggregate amount equal
to the Cash Out Amount or (ii) in the event no shares of Series A
Convertible Preferred Stock or Series B Convertible Preferred Stock of
PathNet are issued and outstanding and a Qualified Public Offering has
not occurred, if PathNet has sufficient funds on hand, in a lump sum
payable as soon as practicable or in the event PathNet does not have
sufficient funds on hand, in equal monthly installments due and
payable on the last day of each month beginning on the last day of the
month in which the Executive's employment is terminated and ending
twelve (12) months thereafter. For purposes of this SECTION 2(d)(iv),
"Fair Value" shall mean the value of such option as determined by
PathNet and Executive, or if they are unable to agree, by an
independent appraiser to be mutually selected by PathNet and
Executive. If PathNet and Executive are unable to agree upon an
appraiser, each shall designate an appraiser and the two appraisers
shall select a third appraiser who shall be the appraiser. The
appraiser shall be a nationally recognized United States investment
banking firm which has not at any time within the two years preceding
its selection acted in any capacity on behalf of PathNet or Executive.
(e) EXPENSES. Executive shall be reimbursed by PathNet up to a total
of $50,000 per annum to cover the following expenses: (i) a company car,
(ii) an apartment in the Washington, D.C. - Baltimore Metropolitan Area,
(iii) three club memberships (as selected by Executive in his sole
discretion) and (iv) expenses incurred by Executive in commuting between
his Washington, D.C. and New York residences. In addition, PathNet shall
reimburse Executive for all reasonable out-of-pocket expenses incurred in
connection with the performance of his duties under this Agreement, in
accordance with the prevailing policies of PathNet, including legal
expenses incurred in the negotiation and documentation of this Agreement.
3. DUTIES AND RESPONSIBILITIES OF EXECUTIVE AS AN EMPLOYEE. During the
Term of Employment, the Executive, from the offices of PathNet in the
Washington, D.C. Metropolitan Area (except in the event of travel relating to
PathNet business) shall devote as much time and services as may be required in
order to perform his duties and responsibilities assigned to him by the Board of
Directors of PathNet and in consultation with the Chairman of PathNet, but in
any event substantially all of his business time, to the best of his abilities
and with reasonable diligence, which duties and responsibilities shall be
consistent with such matters normally assigned to the Chief Executive Officer of
a company and as set forth in the Amended and Restated Bylaws of PathNet.
PathNet and Executive contemplate that, while a substantial portion of PathNet's
business will be conducted in the Washington, D.C. - Baltimore Metropolitan
Area, Executive will maintain a permanent residence in the New York Metropolitan
Area and Executive shall pay for all costs of commuting between Washington, D.C.
and New York in performing services pursuant to this Agreement subject to such
reimbursement as may be provided pursuant to SECTION 2. PathNet acknowledges
that Executive has substantial involvement
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with benevolent, political, professional and civic affairs and as a director,
consultant or advisor to or partner or member. PathNet shall permit Executive
to continue his involvement with such entities and to engage in other such
activities with other entities in the future provided such involvement does not
materially interfere with Executive's performance of his duties and
responsibilities set forth in this SECTION 3 and does not violate the covenants
set forth in SECTION 4.
4. RESTRICTIVE COVENANTS.
(a) NON-COMPETE. Executive covenants and agrees with PathNet that,
during the Term of Employment and for a period of two years following any
termination event as set forth in SECTION 6(a), SECTION 6(b), SECTION 6(c)
or SECTION 6(e) below, he will not, directly or indirectly, in any manner
or capacity, as advisor, principal, agent, partner, officer, consultant,
director, stockholder, employee, member of any association or otherwise,
anywhere in the world engage in any business or activity which is, or may
be reasonably construed to be, competitive with the "PathNet Business".
For purposes of this Agreement, the "PathNet Business" shall mean the
business of installing, constructing aggregating and linking digital
capacity and marketing and selling the bulk telecommunications capacity and
services created by such systems. Nothing contained in this Agreement shall
be construed as denying Executive the right to own securities of any
corporation or entity which is listed on a national securities exchange or
quoted on an automatic quotation system to the extent of an aggregate of 5%
of the amount of such securities outstanding in any such corporation or
entity.
(b) CONFIDENTIALITY. The Executive shall hold in a fiduciary
capacity for the benefit of PathNet all secret or confidential information,
knowledge or data relating to the PathNet Business which shall have been
obtained by Executive during the hiring process with PathNet, during the
Term of Employment or during Executive's serving as member of the Board of
Directors of PathNet and which shall not be or become public knowledge
(other than by acts of the Executive or representatives of the Executive in
violation of this Agreement). After termination of the Executive's
employment under this Agreement, Executive shall not, without the prior
written consent of PathNet, or as otherwise may be required by law or legal
process, communicate or divulge any such confidential information,
knowledge or data to anyone other than PathNet and such persons designated
by PathNet.
(c) CUSTOMERS; EMPLOYEES. Executive agrees that he will not directly
or indirectly, during the Term of Employment and for a period of two years
thereafter, solicit any of PathNet's customers, including, but not limited
to, any private network operators or any purchasers of telecommunications
capacity, for purposes of obtaining their custom or trade in a business
that is competitive with the PathNet Business, or solicit or offer any
employment to any of PathNet's employees or officers for purposes of
obtaining their services for another
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business, whether or not such other business is competitive. For purposes
of this Agreement, "PathNet customers" shall mean customers of PathNet whom
Executive contacted, solicited or served while employed by PathNet.
(d) INVENTIONS. Executive hereby acknowledges and agrees that any
and all reports, designs, specifications, discoveries, modifications,
improvements, research, methods or other materials, know-how or
information, conceived, prepared or developed by Executive during the term
of Employment (collectively, "Inventions") shall be reported and fully
disclosed to PathNet and shall be and remain the sole and exclusive
property of PathNet. Executive further agrees to assist PathNet in all
reasonable ways deemed necessary by PathNet and at PathNet's expense to
protect such Inventions, including, but not limited to, executing all
documents for applications in the United States and foreign countries.
5. EFFECT OF TERMINATION.
(a) EFFECT OF TERMINATION UNDER SECTION 6(a) AND SECTION 6(b). If
Executive's employment by PathNet is terminated pursuant to SECTION 6(a) or
SECTION 6(b) of this Agreement, (i) all compensation pursuant to SECTION 2
(other than the compensation set forth in SECTION 2(d)) that has accrued in
favor of Executive as of the date of such termination, to the extent unpaid
or undelivered shall be paid or delivered to Executive on the date of
termination, or as soon as practicable thereafter, (ii) PathNet shall pay
to Executive severance in the amount equal to the Base Salary payable
bi-weekly during the year commencing on the termination date and
terminating on the first anniversary thereof and (iii) each of PathNet's
and Executive's rights and obligations under this Agreement shall terminate
PROVIDED, HOWEVER, Executive's obligations under SECTION 4 and PathNet's
obligations under this SECTION 5(a) and SECTION 2(d) of this Agreement
shall survive any such termination.
(b) EFFECT OF TERMINATION UNDER SECTION 6(d) OR SECTION 6(f). If
Executive's employment by PathNet is terminated pursuant to SECTION 6(d) or
SECTION 6(f) of this Agreement:
(i) all compensation pursuant to SECTION 2 (other than the
compensation set forth in SECTION 2(d)) that has accrued in favor of
Executive as of the date of such termination, to the extent unpaid or
undelivered shall be paid or delivered to Executive on the date of
termination;
(ii) PathNet shall pay to Executive severance in the amount
equal to the Base Salary payable bi-weekly during the year commencing
on the termination date and terminating on the first anniversary
thereof; and
(iii) each of PathNet's and Executive's rights and obligations
under this Agreement shall terminate; PROVIDED, HOWEVER, Executive's
obligations
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under SECTION 4 (other that Executive's obligations pursuant to
SECTION 4(a)) and PathNet's obligations under this SECTION 5(b) and
SECTION 2(d) of this Agreement shall survive any such termination.
(c) EFFECT OF TERMINATION UNDER SECTION 6(c) OR SECTION 6(e). If
Executive's employment by PathNet is terminated pursuant to SECTION 6(c) or
SECTION 6(e) of this Agreement, (i) all compensation pursuant to SECTION 2
(other than the compensation set forth in SECTION 2(d)) that has accrued in
favor of Executive as of the date of such termination, to the extent unpaid
or undelivered shall be paid or delivered to Executive on the date of
termination and (ii) each of PathNet's and Executive's rights and
obligations under this Agreement shall terminate PROVIDED, HOWEVER,
Executive's obligations under SECTION 4 and PathNet's obligations under
SECTION 2(d) hereof will survive any such termination.
(d) EFFECT OF TERMINATION FOLLOWING A CHANGE IN CONTROL. In the
event, following a Change in Control (as such term is defined in the 1997
Plan), Executive's Employment is terminated without Cause or there is a
Constructive Termination without Cause and the aggregate of all payments or
benefits made or provided to the Executive under this Agreement, the Option
Agreement and under all other plans and programs of PathNet (the "Aggregate
Payment") is determined to constitute a Parachute Payment, as such term is
defined in Section 280G(b)(2) of the Internal Revenue Code, PathNet shall
pay to Executive, prior to the time any excise tax imposed by Section 4999
of the Internal Revenue Code (an "Excise Tax") is payable with respect to
such Aggregate Payment, an additional amount which, after the imposition of
all income and excise taxes thereon, is equal to the Excise Tax on the
Aggregate Payment. The determination of whether the Aggregate Payment
constitutes a Parachute Payment and, if so, the amount to be paid to the
Executive and the time of the payment pursuant to this Section 5(d), shall
be made by an independent auditor (the "Auditor") jointly selected by
PathNet and Executive and paid by PathNet. The Auditor shall be a
nationally recognized United States public accounting firm which has not,
during the two years preceding the date of its selection, acted in any way
on behalf of PathNet or any affiliate thereof. If Executive and PathNet
cannot agree on the firm to serve as the Auditor, then Executive and
PathNet shall each select one accounting firm and those two firms shall
jointly select the accounting firm to serve as the Auditor.
(e) GENERAL. The remedies set forth in this SECTION 5 are the
exclusive remedies of the parties upon the termination of Executive's
employment with PathNet. Notwithstanding anything set forth herein to the
contrary, SECTION 7, SECTION 8, SECTION 9, SECTION 10 and SECTION 11 shall
survive any termination of the Executive's employment with PathNet.
6. TERMINATION.
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(a) TERMINATION UPON EXPIRATION OR DEATH. The employment of Executive
by PathNet shall terminate upon the occurrence of (i) the expiration of the
Term of Employment or (ii) the death of Executive. Unless otherwise agreed
in writing by PathNet and Executive, any continuation of the executive's
employment with PathNet after the expiration of the Term of Employment
shall be an employment at will and will not extend the terms of this
Agreement (other than the provisions of SECTION 4.)
(b) TERMINATION UPON DISABILITY. PathNet shall have the right, but
not the obligation to terminate this Agreement and Executive's employment
with PathNet upon the "disability" of the Executive. For purposes of this
Agreement "disability" shall mean such time at which Executive is unable to
perform his duties and responsibilities set forth in this Agreement due to
physical or mental "incapacity" for a period of (i) ninety (90) or more
calendar days during any fifty-two (52) week period during the Term of
Employment. For purposes of this Agreement, "incapacity" shall mean any
physical, mental or other inability rendering Executive incapable of fully
performing the services required to be performed under this Agreement.
(c) TERMINATION FOR "CAUSE". The employment of Executive by PathNet
shall terminate at any time for "cause", which for purposes of this
Agreement shall be deemed to have occurred only on the occurrence of any of
the following events: (i) the plea of guilty or NOLO CONTENDERE to, or
conviction for, the commission of a felony offense by Executive, (ii) a
material breach by Executive of the fiduciary duty owed to PathNet, (iii) a
material breach by Executive of the covenants set forth in SECTION 4 of
this Agreement or (iv) Executive's failure to substantially perform the
material duties contemplated by this Agreement; PROVIDED, HOWEVER, that any
claim that "cause" within the meaning of subsection (ii), (iii) or (iv)
above, exists for the termination of Executive's employment may be asserted
on behalf of PathNet only by a duly adopted resolution of the Board of
Directors of PathNet and only after thirty (30) days prior written notice
to Executive during which period he may cure the breach or neglect that is
the basis of any such claim, if curable (provided that no such cure period
shall be provided to Executive if Executive has previously taken the same
action or made the same omissions which resulted in written notice by
PathNet to Executive of termination for cause during the Term of
Employment.)
(d) TERMINATION WITHOUT CAUSE BY PATHNET. PathNet shall have the
right to terminate Executive's employment with PathNet without "cause" upon
sixty (60) business days' prior written notice to that effect.
(e) TERMINATION WITHOUT CAUSE BY EXECUTIVE. Executive shall have the
right to terminate Executive's employment with PathNet without "cause" upon
one hundred eighty (180) days' prior written notice to that effect.
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(f) CONSTRUCTIVE TERMINATION BY EXECUTIVE. Executive shall have the
right to terminate this Agreement and Executive's employment with PathNet
at his initiative following the occurrence, without Executive's prior
written consent, of one or more of the following events:
(i) a reduction in Executive's then current Base Salary or the
termination or material reduction of any employee benefit or
perquisite enjoyed by him (other than as part of an across-the-board
reduction applicable to all executive officers of PathNet.)
(ii) the failure to elect or reelect Executive to the position
of Chief Executive Officer or removal of him from such position;
(iii) a material diminution in Executive's duties or the
assignment to Executive of duties which are materially inconsistent
with his duties or which materially impair Executive's ability to
function as the Chief Executive Officer of PathNet;
(iv) except under the circumstances set forth in Section 2(d)
and the option Agreement attached hereto as EXHIBIT A, the failure to
continue Executive's participation in any incentive compensation plan
unless a plan providing a substantially similar opportunity is
substituted; and
(v) the relocation of PathNet's principal office, or Executive's
own office location as assigned to him by PathNet, to a location more
than fifty (50) miles from Washington, D.C.
7. SEVERABILITY. To the extent any provisions of this Agreement shall be
invalid or unenforceable, it shall be considered deleted herefrom and the
remainder of such provision of this Agreement shall remain in force. In
furtherance and not in limitation of the foregoing, should the duration or
geographical extent of, or the business activities covered by, any provision of
this Agreement be in excess of that which is enforceable under applicable law,
then such provision shall be construed to cover only that duration, extent or
activities which may validly and enforceably be covered.
8. INJUNCTIVE RELIEF. In view of the nature of the rights in goodwill,
business reputation and prospects of PathNet to be protected under this
Agreement, Executive understands, agrees and acknowledges that (i) PathNet will
not be reasonably or adequately compensated in damages in an action at law for
Executive's breach of his obligations hereunder and (ii) any breach by Executive
of the provisions of this Agreement will cause irreparable injury and damage to
PathNet. Accordingly, Executive specifically agrees that PathNet shall be
entitled to seek temporary and permanent injunctive relief to enforce the
provisions of this Agreement and that such relief may be granted without the
necessity of proving actual damages. This SECTION 8 shall not, however,
diminish the right of PathNet to seek a remedy at law and recover damages in
addition to, or in lieu of, injunctive relief in the event of any such breach.
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9. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES OF EXECUTIVE. Executive
represents and warrants to PathNet as of the date of this Agreement that
(i) Executive has the full legal right, capacity, power and authority to
execute and deliver this Agreement and to perform the transactions
contemplated hereby, (ii) the execution, delivery, performance of this
Agreement does not and will not during the Term of Employment constitute a
conflict with, breach or violation of, or default (or an event which with
notice or lapse of time or both would become a default) under any
agreement, instrument, license franchise or other arrangement to which
Executive is subject or by which Executive is bound and (iii) except as set
forth in SECTION 3, Executive has not entered into any arrangement or
agreement (other than this Agreement) relating to Executive's provision of
services, directly or indirectly, in any manner or capacity, as advisor,
principal, agent, partner, officer, consultant, director, stockholder,
employee, member of any association or otherwise (other than ownership of
securities of any corporation or entity which is listed on a national
securities exchange or quoted on an automatic quotation system to the
extent of an aggregate of 5% of the amount of such securities outstanding
in any such corporation or entity.)
(b) REPRESENTATIONS AND WARRANTIES OF PATHNET. PathNet represents
and warrants to Executive that as of the date of this Agreement (i) PathNet
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, (ii) PathNet has all of the
requisite corporate power and authority to perform its rights and
obligations set forth in this Agreement and (iii) the execution, delivery,
performance of this Agreement does not and will not during the Term of
Employment constitute a conflict with, breach or violation of, or default
(or an event which with notice or lapse of time or both would become a
default) under any agreement, instrument, license, franchise or other
arrangement to which PathNet is subject or by which PathNet is bound.
10. INDEMNIFICATION.
(a) INDEMNIFICATION BY EXECUTIVE. Executive agrees to indemnify and
hold harmless PathNet and its directors, officers, agents and employees, to
the full extent lawful, from and against any losses, claims, damages or
liabilities, and will reimburse PathNet and its directors, officers, agents
and employees for all costs and expenses (including reasonable attorneys'
fees) as they are incurred by PathNet or its directors, officers, agents or
employees in connection with investigating, preparing or defending any such
action or claim, whether or not in connection with pending or threatened
litigation in which PathNet or its directors, officers, agents or employees
are parties, relating to or arising out of a breach of the representation
and warranty of Executive set forth in SECTION 9(a)(iii) or a breach of the
covenants and agreements of Executive set forth in SECTION 4(a), SECTION
4(b) and SECTION 4(c).
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(b) INDEMNIFICATION BY PATHNET.
(i) PathNet agrees to indemnify and hold harmless Executive, to
the full extent lawful, from and against any losses, claims, damages
or liabilities, and will reimburse Executive for all costs and
expenses (including reasonable attorneys' fees) as they are incurred
by Executive in connection with investigating, preparing or defending
any such action or claim, whether or not in connection with pending or
threatened litigation in which Executive is a party, relating to or
arising out of a breach of a representation or warranty of PathNet
under this Agreement.
(ii) PathNet agrees that if Executive is made a party, or is
threatened to be made a party, to any action, suit or proceeding,
whether civil, criminal, administrative or investigative ( a
"Proceeding"), by reason of the fact that he is or was a director,
officer or employee of PathNet, PathNet shall defend Executive and
indemnify and hold him harmless with respect to any such Proceeding in
accordance with and to the fullest extent permitted under PathNet's
Restated Certificate of Incorporation and Bylaws.
(iii) PathNet agrees to maintain directors' and officers'
liability insurance for Executive to the extent PathNet provides such
coverage for its other executive officers.
11. ENTIRE AGREEMENT. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF PATHNET AND EXECUTIVE. THERE
ARE NO UNWRITTEN AGREEMENTS BETWEEN PATHNET AND EXECUTIVE. THIS AGREEMENT
SUPERCEDES ANY PRIOR EMPLOYMENT, SEVERANCE OR SIMILAR AGREEMENTS BETWEEN PATHNET
AND EXECUTIVE.
12. MISCELLANEOUS.
(a) ASSIGNMENT; BINDING EFFECT. This Agreement is personal to
Executive and shall not be assignable by the Executive otherwise than by
will or the laws of decent and the Executive's legal representatives and
permitted successors and assigns. The rights of PathNet under this
Agreement may be assigned or transferred by the Employer to any subsidiary
of PathNet, provided that the assignee or transferee assumes all of the
liabilities, obligations and duties of the assignor, as set forth in this
Agreement, either contractually or as a matter of law. This Agreement
shall inure to the benefit of and be binding on and enforceable by the
successors and assigns of PathNet.
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(b) NO ATTACHMENT. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, execution, attachment, levy or similar process or
assignment, voluntary or involuntary, by operation of law or otherwise, any
attempt, to effect such action shall be null, void and of no effect.
(c) NOTICES. All notices and other communications hereunder shall be
in writing and shall be given either by hand delivery to the other party or
by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Xxxxxxx X. Xxxxxx
00 Xxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
If to PathNet:
PathNet, Inc.
0000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx,
Vice President and General Counsel.
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(d) AMENDMENT. This Agreement may not be modified or amended except
by an instrument in writing signed by Executive and PathNet.
(e) WAIVER. No term or condition of this Agreement shall be deemed
to have been waived, nor shall there by an estoppel against the enforcement
of any provision of this Agreement, except by written instrument of the
party charged with such waiver or estoppel. No such written waiver shall
be deemed a continuing waiver unless specifically stated therein, and each
such waiver shall operate only as to the specific term or condition waived
and shall not constitute a waiver of such term or condition for the future
or as to any act other than that specifically waived.
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(f) WITHHOLDING. PathNet may make such provisions as it deems
appropriate for the withholding of any taxes that it determines is requires
with the compensation to Executive set forth in SECTION 2 or which may
become payable pursuant to SECTION 5, including, without limitation,
requiring cash payment from the Executive or withholding compensation
otherwise deliverable to Executive, in either case to the extent necessary
to cover such withholding.
(g) GOVERNING LAW. This Agreement, its validity, interpretation,
performance and enforcement shall be governed by the laws of the State of
Maryland without regard to principles of conflicts of law.
(h) TERMS AND CONDITIONS. Except as may be required by law, PathNet
and Executive shall not disclose the terms and conditions of this Agreement
to any third party without the prior written consent of the other party,
which consent shall not be unreasonable withheld.
(i) TITLES; REFERENCES. The titles of the sections and subsections
of this Agreement are for the convenience of reference only and are not to
be considered in construing this Agreement. References herein to sections
or subsections are to sections and subsections of this Agreement unless
otherwise specified.
(j) RESOLUTION OF DISPUTES. Any disputes arising under or in
connection with this Agreement shall, at the election of Executive or
PathNet, be resolved by binding arbitration, to be held in Washington, D.C.
in accordance with the rules and procedures of the American Arbitration
Association. Judgement upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. Costs of the arbitration
or litigation, including, without limitation, reasonable attorneys' fees of
both parties, shall be borne by the party as determined by such
arbitrator(s). Pending resolution of any arbitration or court proceeding,
PathNet shall continue payments or all amounts due Executive under this
Agreement and all benefits to which Executive may be entitled as set forth
herein.
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IN WITNESS WHEREOF, the Executive and PathNet have executed this Agreement as of
the date first above written.
PATHNET, INC.
By: /s/ Xxxx Xxxxxxxxx
--------------------------
Name:
Title:
Date:
/s/ Xxxxxxx X. Xxxxxx
-------------------------------
Xxxxxxx X. Xxxxxx
Date:
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AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment") is dated April 6,
1998 and is made and entered into by and between Xxxxxxx A, Jalkut ("Executive")
and PATHNET, INC., a Delaware corporation (the "Company").
WHEREAS, the Company and Executive entered into an Employment Agreement,
dated August 4, 1997 (the "Employment Agreement");
WHEREAS, each of Executive and the Company desire to amend certain terms of
the Employment Agreement as more particularly set forth herein;
NOW THEREFORE, for the mutual consideration hereinafter set forth, the
parties hereto agree as follows:
1. Executive and the Company hereby agree that, effective as of the date
hereof, Section 2(d)(iv) of the Employment Agreement is hereby amended to read
in its entirety as follows:
"(iv) Upon the election by Executive by written notice to such effect
delivered to Pathnet within ten (10) business days after the date of
the termination of Executive's employment by Pathnet, Pathnet shall
pay the aggregate Fair Value of the option then vested or held by
Executive as of the date of the termination of Executive's employment
with Pathnet (the "Cash Out Amount") to Executive over time (i) in the
event any shares of Series A Convertible Preferred Stock or the Series
B Convertible Preferred Stock of Pathnet are still issued and
outstanding or any time after a Qualified Public Offering (as such
term is defined in the 1997 Plan), in installments which will become
due and payable within thirty (30) days of each date that a holder of
preferred stock of Pathnet (or of common stock after conversion of
such preferred stock) transfers, sells or disposes of any such shares
of preferred stock or common stock, as the case may be, to an
unaffiliated third party and each such installment shall be in an
amount equal to the proceeds received by such holder of preferred
stock or common stock, respectively, pursuant to such transfer or
sale, until such time as Pathnet has paid to Executive an aggregate
amount equal to the Cash Out Amount; PROVIDED, that any payment that
would violate the terms of the Indenture relating to Pathnet's Senior
Notes due 2008 (the "Indenture") shall be made only to the extent and
in an amount that would not violate the Indenture and the payment of
the remaining amount shall be deferred until such time as such payment
will not violate the terms of the Indenture or (ii) in the event no
shares of Series A Convertible Preferred Stock or Series B Convertible
Preferred Stock of Pathnet are issued and outstanding and a Qualified
Public Offering has not occurred, if Pathnet has sufficient funds on
hand, in a lump sum payable as soon as practicable or in the event
Pathnet does not have sufficient funds on hand
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or if such lump sum would violate the terms of the Indenture, to the
extent permitted under the Indenture in equal monthly installments due
and payable on the last day of each month beginning on the last day of
the month in which the Executive's employment is terminated and ending
twelve (12) months thereafter or on such later date as may be required
for such payments to comply with the terms of the Indenture. For
purposes of this SECTION 2(d)(iv), "Fair Value" shall mean the value
of such option as determined by Pathnet and Executive, or if they are
unable to agree, by an independent appraiser to be mutually selected
by Pathnet and Executive. If Pathnet and Executive are unable to
agree upon an appraiser, each shall designate an appraiser and the two
appraisers shall select a third appraiser who shall be the appraiser.
The appraiser shall be a nationally recognized United States
investment banking firm which has not at any time within the two years
preceding its selection acted in any capacity on behalf of Pathnet or
Executive.
2. The undersigned parties hereby acknowledge that the Employment
Agreement, as amended hereby, remains in full force and effect and is hereby
ratified and confirmed.
IN WITNESS WHEREOF, the undersigned parties have duly executed and
delivered this Amendment as of the date first above written.
/s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
PATHNET, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: Vice President and General Counsel
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