EXHIBIT 10.2
Xxxxxxx Xxxxxxxx
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement"), dated as of February 26,
1997, by and between NATIONAL FIBER NETWORK, INC., a Delaware corporation
("Company"), and XXXXXXX XXXXXXXX ("Executive").
WHEREAS, Company desires to employ Executive as the Chief Executive
Officer of the Company and Chairman of the Board of Directors, and Executive
desires to be so employed by Company, on the terms and conditions herein
provided.
WHEREAS, the Executive is presently employed by the Company pursuant
to an Employment Agreement dated April 15, 1996 (the "1996 Agreement"), which
agreement shall terminate as of the effective date of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein contained, the
parties hereto agree as follows:
It is therefore agreed as follows:
1. Employment. during the term of this Employment Agreement, as
defined in section 2 hereof (the "Term"), Company shall employ Executive,
and Executive shall render services to Company as Chief Executive Officer
and Chairman of the Board of Directors of Company and subject to
consultation with the Chief Operating Officer of the Company, shall report
only to the Board of Directors. Executive shall also be appointed to
serve on the Board of Directors. Executive shall have such duties as are
consistent with the position of Chief Executive Officer. Executive shall
devote his full and exclusive business time and best efforts to the
performance of his duties under this Employment Agreement and shall
perform them faithfully, diligently and competently. The Executive
represents and warrants that neither the execution by him of this
Agreement nor the performance by him of his duties and obligations
hereunder will violate any agreement to which he is a party or by which he
is bound. This Agreement shall supersede the 1996 Agreement and upon the
effective date of this Agreement, the 1996 Agreement shall be of no
further force or effect.
2. Term of Employment. Unless earlier terminated as provided in
this Employment Agreement, the term of Executive's employment under this
Employment Agreement (the "Term") shall commence on the date hereof and
continue until five years from the date hereof.
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3. Compensation.
(a) Base Salary. Company shall pay to Executive throughout
the Term an annual salary (the "Base Salary"), payable in accordance with
the Company's customary policies. The Base Salary shall be at the rate of
$295,000 per year for the first year of the Term; $335,000 per year for
the second year of the Term; and $375,000 per year for the third year of
the Term; $415,000 for the fourth year of the Term; and $455,000 for the
fifth year of the Term.
(b) Bonus. In addition to the Base Salary, Company shall pay
to Executive a bonus, payable quarterly during each year of the Term,
based on appropriate incentives and criteria to be determined jointly with
Executive at the beginning of each year, in good faith, provided that in
no event will the bonus be less than $100,000 for each year.
(c) Stock Options.
(i) Effective on the date of the commencement of
Executive's employment hereunder, Executive shall be granted a stock
option (the "Stock Option") to purchase an aggregate of 250,000 shares
of common stock of the Company, par value $.01 per share, to be issued
under, and pursuant to the terms of, that certain Option Agreement
between the Company and Executive dated as of the date hereof (the
"Stock Plan"). The Stock Option granted hereby will be immediately
exercisable with an exercise price of $3.00 per share. The Stock
Option shall expire ten (10) years from the date of the grant of the
Stock Option, subject to the other terms and conditions of the Stock
Plan:
(ii) Promptly following the consummation of an initial
public offering of the Company's common stock, the Company shall file
a registration statement on Form S-8 (or any successor form for the
registration under the Securities Act of 1933 (the "Securities Act")
of securities to be offered pursuant to employee benefit plans)
registering under the Securities Act the shares of common stock
underlying the Stock Option, subject to then applicable rules and
regulations, in order to permit the public resale thereof by the
Executive. The rights of the Executive set forth in this paragraph
shall apply only to the extent that an effective registration
statement is then required for the Stock underlying the Stock Option.
4. Benefits.
(a) General Fringe Benefits. Executive shall be entitled to
participate in the life, hospitalization, health, accident and disability
insurance plans, health programs, pension plans and other benefit and
compensation plans generally available to senior executives of Company
from time to time. In addition, the
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Company, at its sole expense, shall provide Executive with life insurance
coverage (the beneficiary to be designated by Executive) in an amount not
less than $1,000,000. Without limiting the foregoing, the Company
confirms that it intends to establish a qualified stock option plan for
its senior executives, including Executive, within six (6) months of the
date hereof.
(b) Reimbursements. Company shall pay or reimburse Executive
for all reasonable expenses actually incurred or paid by Executive during
the Term in the performance of Executive's duties to Company upon
presentation by Executive of expense statements or vouchers. In addition,
Company shall pay Executive's legal fees and disbursements incurred in
connection with the preparation and negotiation of this Employment
Agreement, as well as the Option Agreement and other related agreements
being entered into as of the date hereof.
(c) Automobile. Company shall pay Executive $1,500 per month
as full reimbursement for any and all expenses relating to the use of an
automobile during the Term in the performance of Executive's duties to
Company, including insurance, maintenance and garage.
5. Termination of Employment.
(a) Death. Executive's employment shall terminate upon his
death, and in such event, the estate or other legal representative of
Executive shall be entitled to receive Executive's Base Salary for a
period equal to the lesser of (i) one (1) year from the date of death or
(ii) the balance of the Term, in addition to all compensation, bonus and
benefits that are accrued and unpaid as of the date of death.
(b) Termination by Company. Executive's employment may be
terminated at the option of Company by notice to Executive (i) as a result
of Executive's disability as provided in section 5(b)(i) hereof, or (ii)
for "cause" as defined and provided in section 5(b)(ii) hereof.
(i) Disability. As used in this Employment Agreement,
the term "disability" shall mean a physical or mental disability or
incapacity, whether total or partial, of Executive that, in the good
faith determination of Company's Directors or based upon reasonably
competent medical advice, has prevented him from performing
substantially all of his duties under this Employment Agreement during
a period of three (3) consecutive months or for 120 days during any
twelve-month period. If Company shall terminate Executive's
employment pursuant to this section 5(b), Executive shall be entitled
to continue to receive his Base Salary for a period of one (1) year
from the date of termination (but not exceeding the balance of the
Term), as well as all compensation, bonus and benefits that are
accrued and unpaid as of the date of disability.
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(ii) Discharge for "Cause". If Executive (A) neglects his
duties hereunder in a material manner and such neglect shall not be
discontinued within five (5) business days after written notice to
Executive thereof (which notice shall be subject to approval of the
Board of Directors and signed by he Chief Operating Officer or other
designated officer of Company and refer to a specific breach of this
Employment Agreement); (B) is convicted of a felony or other crime
involving fraud, moral turpitude or material loss to the Company; (C)
materially breaches his affirmative or negative covenants or
undertakings hereunder and such breach shall not be remedied within
five (5) business days after written notice to Executive thereof
(which notice shall be signed by the Chief Operating Officer or other
designated officer of Company and refer to a specific breach of the
Employment Agreement); or (D) in bad faith, commits any act or omits
to take any action, to the material detriment of Company; then
Company may at any time by notice terminate Executive's employment
hereunder for "cause"; and Executive shall have no right to receive
any compensation or benefit from Company hereunder on and after the
effective date of such notice, except for compensation and benefits
that are accrued and unpaid as of the date of termination.
(c) Termination by Executive for "Good Reason". In the event
of: (i) a reduction in the nature or scope of Executive's titles,
authorities, powers, duties, or responsibilities hereunder; (ii) a change
in the method or formula for determining the Bonus from that set forth in
section 3(b) hereof which results in a decrease in the amount of the Bonus
payable to the Executive thereunder; (iii) the removal of Executive as a
member of the Board of Directors of Company, unless such removal occurs
after the termination of Executive's employment for "cause"; (iv) a sale
of all or substantially all of the ownership interests or assets of
Company, or a merger or consolidation of the Company with any other
corporation or entity; (v) a "change-in-control" of the Company, defined
as any person or entity (other than the Executive) becoming a "beneficial
owner" (as defined in Rule 13d-3 of the Securities Exchange Act of 1934,
as amended from time to time) directly or indirectly of securities of the
Company representing 50% or more of the combine voting power of the
Company's then outstanding securities; or (vi) Company's materially
breaching its affirmative or negative covenants or undertakings hereunder
and such breach shall not be remedied within fifteen (15) days after
notice to Company thereof (which notice shall be signed by Executive and
refer to a specific breach of this Employment Agreement); then Executive
may at any time by notice terminate Executive's employment hereunder for
"good reason"; and Company shall pay to Executive his Base Salary, bonus
and benefits that are accrued and unpaid as of the date of termination, as
well as the additional amounts described in section 5(e) hereof.
(d) Expiration of Term. Upon the expiration of the Term, and
provided that (i) neither Executive nor Company shall have terminated
Executive's employment hereunder prior thereto, (ii) Executive shall have
observed
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and performed all of his material duties and obligations hereunder, and
shall not have been in default of any of his agreements, covenants or
representations hereunder, in both instances throughout the Term, and
(iii) Executive's employment with Company shall not thereafter be
continued, then Company shall pay to Executive the amounts described in
section 5(e) hereof.
(e) Termination Benefits.
(i) Upon the expiration of the Term or the termination of
Executive's employment for any reason thereunder, the rights and
benefits of Executive under Company's employee benefit plans and
programs shall be determined in accordance with the provisions of such
plans and programs.
(ii) Upon the application of the Term, Company shall pay
to Executive, in addition to any and all amounts which may otherwise
be due to Executive hereunder, an amount equal to one (1) times
Executive's then Base Salary, payable in equal monthly installments,
on the first of each month, during the Non-Compete Period.
(iii) Upon the termination of Executive's employment
during the Term by Company other than for "cause," or the termination
of Executive's employment by Executive with "good reason," Company
shall pay to Executive, in addition to any and all amounts which may
otherwise be due to Executive hereunder, an amount equal to the
greater of (i) the annual Base Salary in effect as of the date of such
termination divided by twelve and multiplied by the number of months
remaining in the Term as of the date of such termination; and (ii)
$1,000,000, which amount shall be paid within 5 business days
following such termination.
6. Prohibited Activities.
(a) Non-Compete Period. For the purposes of this Employment
Agreement, the term "Non-Compete Period" shall mean the Term, and if
Executive's employment is terminated by Company for "cause," by Executive
without "good reason," or so long as Company pays Executive the
termination benefit specified in paragraph 5(e)(ii) above, an additional
period of one (1) year from and after the date of termination.
(b) Non-competition. During the Non-Compete Period, Executive
shall not directly or indirectly compete with, be engaged in the business
of, be employed by, act as a consultant to, or be a director, officer,
employee, owner or partner of, any person or entity which is engaged in
the primary business of the Company at such time and in the territories
served by the Company in such business during the Non-Compete Period.
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(c) Solicitation of Employees. During the Non-Compete Period,
Executive shall not directly or indirectly employ, or solicit to leave
Company's employ, or solicit to join the employ of another person or
entity (including any such person or entity owned or controlled, directly
or indirectly, by Executive) any employee of Company or any person who has
been such an employee during the twelve months preceding Executive's date
of termination.
(d) Confidential Information. During and at all times
subsequent to the Term, Executive shall keep secret and shall not exploit
or disclose or make accessible to any person or entity, except in
furtherance of the business of Company, and except as may be required by
law or legal process, any confidential business information of any type
that was acquired or developed by either Company or any of its
subsidiaries or affiliates, or Executive, prior to or during the Term. In
addition, the term "confidential business information" shall not include
information which (i) is or becomes generally available to the public
other than as a result of a disclosure by Executive; or (ii) was available
to Executive prior to any employment by Company as a result of his general
business experience.
(e) Divisibility. The provisions contained in this section 6
as to the time period and scope of activities restricted shall be deemed
divisible, so that if any provision contained in this section 6 is
determined to be invalid or unenforceable, that provision shall be deemed
modified so as to be valid and enforceable to the full extent lawfully
permitted.
(f) Relief. Executive acknowledges that the provisions of
this section 6 are reasonable and necessary for the protection of Company
and that Company will be irreparably damaged if such covenants are not
specifically enforced. Accordingly, it is agreed that Company will be
entitled to injunctive relief for the purpose of restraining Executive
from violating such covenants (and no bond or other security shall be
required in connection therewith), in addition to any other relief to
which Company may be entitled.
7. Miscellaneous.
(a) Survival. The covenants and agreements set forth in this
Employment Agreement shall survive Executive's termination of employment,
irrespective of any investigation made by or on behalf of any party.
(b) Headings. The section headings of this Employment
Agreement are for reference purposes only and are to be given no effect in
the construction or interpretation of this Employment Agreement.
(c) Assignment. This Employment Agreement shall not be
assignable by Executive without the prior written consent of Company, and
shall inure to the benefit of and be binding upon Executive and his legal
representatives.
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(d) Territory. Executive shall not be required to relocate or
render services hereunder in any geographic area beyond a radius of
forty-five (45) miles from Old Westbury, New York; provided, however, that
Executive may be required to travel for business purposes from time to
time, subject to Executive's reasonable approval.
(e) Governing Law. This Employment Agreement shall be
governed by and construed in accordance with the law of the State of New
York applicable to agreements made and to be performed in that State,
without reference to its principles of conflicts of law.
(f) Arbitration; Consent to Jurisdiction. Any controversy or
claim arising out of or relating to this Employment Agreement including,
without limitation, the interpretation or the breach thereof, shall be
settled by arbitration in the City, County and State of New York in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association then obtaining, and judgment upon the award
rendered by a panel of three (3) Arbitrators may be entered in any court
having jurisdiction thereof. Notwithstanding the foregoing, this agreement
to arbitrate shall not bar either party from seeking temporary or
provisional remedies in any Court having jurisdiction thereof. Company
and Executive hereby consent and submit to the personal jurisdiction of
the United States District Court for the Southern District of New York and
any New York State court of competent jurisdiction located in New York
County, New York in any suit, action or proceeding (other than as provided
in the first sentence of this section) arising out of or relating to this
Employment Agreement.
(g) Notices. All notices, requests, demands and other
communications (collectively, "Notices") that are required or may be given
under this Employment Agreement, shall be in writing, signed by the party
or the attorney for that party. All Notices shall, except as otherwise
specifically provided herein to the contrary, be deemed to have been duly
given or made: if by hand, immediately upon delivery; if by telecopier or
similar device, immediately upon sending, provided notice is sent on a
business day during the hours of 9:00 a.m. and 6:00 p.m. E.S.T., but if
not, then immediately upon the beginning of the first business day after
being sent; if by Federal Express, Express Mail or any other overnight
delivery service, one day after being placed in the exclusive custody and
control of said courier; and if mailed by certified mail, return receipt
requested, five (5) business days after mailing. All notices are to be
given or made to the parties at the following addresses (or to such other
address as either party may designate by notice in accordance with the
provisions of this section:
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If to Company at:
National Fiber Network, Inc.
00 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Chief Operating Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Executive at:
00 Xxx Xxxxxx Xxxx
Xxx Xxxxxxxx, Xxx Xxxx
with a copy to:
Xxxxxxxxx, Xxxxxxx & Xxxxxxx, P.C.
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(h) Enforceability. If any provision of this Employment
Agreement is invalid or unenforceable, the balance of this Employment
Agreement shall remain in effect, and if any provision is inapplicable to
any person or circumstance, it shall nevertheless remain applicable to all
other persons and circumstances.
(i) Waiver. The failure of a party to this Employment
Agreement to insist on any occasion upon strict adherence to any term of
this Employment Agreement shall not be considered to be a waiver or
deprive that party of the right thereafter to insist upon strict adherence
to that term or any other term of this Employment Agreement. Any waiver
must be in writing.
(j) Complete Agreement. This Employment Agreement supersedes
any prior or contemporaneous agreements between the parties with respect
to its subject matter, is intended as a complete and exclusive statement
of the terms of
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the agreement between the parties with respect to its subject matter, and
cannot be changed or terminated orally.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement as of the date first above written.
NATIONAL FIBER NETWORK, INC.
By:
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Its:
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Xxxxxxx Xxxxxxxx
Executive
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