EXHIBIT 10.35
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of January 21, 1999,
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is by and between FirstWorld Communications, Inc., a Delaware corporation (the
"Company") and Xxxx X. Xxxxx ("Executive").
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RECITAL
The Company desires to employ Executive, effective as of January 27, 1999
(the "Commencement Date"), on the terms and conditions set forth in this
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Agreement, and Executive desires to be so employed.
AGREEMENT
IN CONSIDERATION of the premises and the mutual covenants set forth below,
the parties hereby agree as follows:
1. Employment. The Company hereby agrees to employ Executive as Vice
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President of Finance and Treasurer of the Company, and Executive hereby accepts
such employment, on the terms and conditions hereinafter set forth.
2. Term. The period of employment of Executive by the Company hereunder
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(the "Employment Period") shall commence at the Commencement Date and shall
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continue through January 27, 2000. The Employment Period may be sooner
terminated by either party in accordance with Section 5 of this Agreement.
3. Position and Duties. During the Employment Period, Executive shall
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serve as Vice President of Finance and Treasurer of the Company. Executive
shall devote such time, attention and energies to Company affairs as are
necessary to fully perform his duties (other than absences due to illness or
vacation) for the Company. During the Employment Period, Executive shall not,
directly or indirectly, render services to any other organization, entity or
person, as an employee, independent contractor, consultant or otherwise, with or
without compensation, without the prior written consent of the Board of
Directors of the Company (the "Board").
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4. Compensation and Related Matters.
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(a) Salary. During the Employment Period, the Company shall pay
Executive an annual base salary of $120,000 per year ("Base Salary").
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Executive's Base Salary shall be paid in approximately equal installments in
accordance with the Company's customary payroll schedule and practices.
Executive's Base Salary shall be subject to annual reviews commencing January
2000 and each year thereafter. If Executive's Base Salary is increased by the
Company, such increased Base Salary shall then constitute the Base Salary for
all purposes of this Agreement. All compensation paid to Executive shall be
subject to withholding and other employment taxes imposed by applicable law.
(b) Annual Bonus. The Board's compensation committee (the
"Compensation Committee") shall review Executive's performance at least once
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annually during each year of the Employment Period and, based on Executive's
performance, recommend whether the Company should award Executive a cash bonus
("Bonus") in order to reward Executive for services rendered to the Company
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and/or as an incentive for continued service to the Company. The amount of
Executive's Bonus, if any, shall be determined in the reasonable discretion of
the Compensation Committee and shall be dependent upon, among other things, the
achievement of certain performance levels by the Company, including, without
limitation, (i) the nature, magnitude and quality of the services performed by
Executive for the Company, (ii) the condition (financial and other) and results
of operations of the Company and (iii) the compensation paid for positions of
comparable responsibility and authority within the telecommunications industry.
The targeted amount of Executive's Bonus shall be an amount equal to 25% of Base
Salary at 100% completion of applicable performance levels, to be set forth in
the Company's Annual Bonus Plan.
(c) Stock Options. Effective as of the Commencement Date, Executive
shall be awarded a stock option (the "Stock Option") to purchase 100,000 shares
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of the Company's Series B Common Stock, par value $.0001 per share (the "Common
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Stock"). The shares of Common Stock subject to the Stock Option shall vest in
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increments of 25,000 shares on each of the first, second, third and fourth
anniversaries of the Commencement Date, with the shares in the first such
increment having an exercise price of $6.00, shares in the second such increment
having an exercise price of $6.50, shares in the third such increment having an
exercise price of $7.00 and shares in the fourth such increment having an
exercise price of $7.50. The Stock Option will be granted under one of the
Company's stock option plans and the terms and conditions of the Stock Option
will be determined in accordance with the applicable stock option plan.
Notwithstanding any such terms, however, all shares subject to the Stock Option
shall become immediately vested and exercisable in the event of the sale of all
or substantially all of the Company's assets or a merger or consolidation in
which the Company is not the surviving entity or the Company's stockholders
prior to the transaction own less than 50% of the voting power of the Company's
outstanding securities immediately following the transaction.
(d) Expenses. The Company shall promptly reimburse Executive for all
reasonable business expenses upon the presentation of reasonably itemized
statements of such expenses in accordance with the Company's policies and
procedures now in force or as such policies and procedures may be modified with
respect to all senior executive officers of the Company.
(e) Welfare and Pension Plans. In addition to Executive's Base
Salary and any incentive compensation and bonuses awarded to Executive
hereunder, he (and his family) shall be entitled to participate, to the extent
that he is (and they are) eligible under the terms and conditions thereof, in
any pension, retirement, hospitalization, insurance, disability or medical
service plan generally available to the executive officers of the Company that
may be in effect from time to time during the Employment Period. The Company
shall be under no obligation to institute or continue the existence of any such
employee benefit plan.
5. Termination. Executive's employment hereunder may be terminated during
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the Employment Period under the following circumstances:
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(a) Death. Executive's employment hereunder shall terminate upon his
death.
(b) Disability. If, as a result of Executive's incapacity due to
physical or mental illness, Executive shall have been substantially unable to
perform his duties hereunder for an entire period of thirty (30) consecutive
days, and within thirty (30) days after written Notice of Termination (as
defined in Section 6(a)) is given after such thirty (30) day period, Executive
shall not have returned to the substantial performance of his duties on a full-
time basis, the Company shall have the right to terminate Executive's employment
hereunder for "Disability," and such termination in and of itself shall not be,
nor shall it be deemed to be, a breach of this Agreement.
(c) Cause. The Company shall have the right to terminate Executive's
employment for Cause (as defined), and such termination in and of itself shall
not be, nor shall it be deemed to be, a breach of this Agreement. For purposes
of this Agreement, the Company shall have "Cause" to terminate Executive's
employment upon Executive's:
(i) conviction of, or plea of guilty or nolo contendere to, any
crime constituting a felony;
(ii) commission of a material act of dishonesty, fraud,
misrepresentation or other act of moral turpitude that would, in the
Board's reasonable judgment, prevent the effective performance of his
duties hereunder;
(iii) continued failure to substantially perform his duties
hereunder to the reasonable satisfaction of the Board (other than such
failure resulting from Executive's incapacity due to physical or mental
illness or subsequent to the issuance of a Notice of Termination by
Executive for Good Reason (as defined in Section 5(d)) after demand for
substantial performance is delivered by the Board in writing that
specifically identifies the manner in which the Board believes Executive
has not used reasonable best efforts to substantially perform his duties;
or
(iv) willful misconduct (including, but not limited to, a
willful breach of the provisions of Section 8) that is, in the Board's
reasonable judgment, injurious to the Company or to any entity in control
of, controlled by or under common control with the Company ("Affiliate").
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For purposes of this Section 5(c), no act, or failure to act, by Executive
shall be considered "willful" unless committed in bad faith and without a
reasonable belief that the act or omission was in the best interests of the
Company or any Affiliates thereof; provided, however, that the requirements
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outlined in paragraphs (iii) or (iv) above shall be deemed to have occurred if
Executive's action or non-action continues for more than ten (10) days after
Executive has received written notice of the inappropriate action or non-action.
This Section 5(c) shall not prevent Executive from challenging the Board's
determination that Cause exists or that Executive has failed to cure any act (or
failure to act) that purportedly formed the basis for the Board's determination,
under the arbitration procedures set forth in Section 10 below.
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(d) Good Reason. Executive may terminate his employment for "Good
Reason" within thirty (30) days after Executive has actual knowledge of the
occurrence, without the written consent of Executive, of one of the following
events that has not been cured within thirty (30) days after written notice
thereof has been given by Executive to the Company (provided, that with respect
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to this Section 5(d), the Company shall have the right to challenge Executive's
determination that he has the right to terminate his employment for "Good
Reason" under the arbitration procedures set forth in Section 10 below):
(i) a reduction by the Company in Executive's Base Salary or a
failure by the Company to pay any such amounts when due;
(ii) any purported termination of Executive's employment for
Cause which is not effected pursuant to the procedures of Section 5(c) (and
for purposes of this Agreement, no such purported termination shall be
effective);
(iii) the Company's failure to provide the Stock Option or the
Company's material breach of one or more of the stock option agreements
pursuant to which the Stock Option was issued to Executive;
(iv) the Company's failure to substantially provide any material
employee benefits due to be provided to Executive; or
(v) the Company's failure to provide in all material respects
the indemnification set forth in the agreement referenced in Section 9 of
this Agreement.
Executive's continued employment during the thirty (30) day period referred
to above in this paragraph (d) shall not constitute Executive's consent to, or a
waiver of rights with respect to, any act or failure to act constituting Good
Reason hereunder.
(e) Without Good Reason or Cause. Executive shall have the right to
terminate his employment hereunder without Good Reason and the Company shall
have the right to terminate Executive's employment hereunder without Cause by
providing the other with a Notice of Termination, and such termination shall not
in and of itself be, nor shall it be deemed to be, a breach of this Agreement.
6. Termination Procedure.
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(a) Notice of Termination. Any termination of Executive's employment
by the Company or by Executive during the Employment Period (other than
termination pursuant to Section 5(a)) shall be communicated by written Notice of
Termination (as defined below) to the other party hereto in accordance with
Section 12 below. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
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(b) Date of Termination. "Date of Termination" shall mean (i) if
Executive's employment is terminated by his death, the date of his death, (ii)
if Executive's employment is terminated pursuant to Section 5(b), thirty (30)
days after Notice of Termination (provided that Executive shall not have
returned to the substantial performance of his duties on a full-time basis
during such thirty (30) day period) and (iii) if Executive's employment is
terminated for any other reason, the date on which a Notice of Termination is
given or any later date (within thirty (30) days after the giving of such
notice) set forth in such Notice of Termination.
7. Compensation Upon Termination or During Disability. In the event
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Executive is disabled or his employment terminates during the Employment Period,
the Company shall provide Executive with the payments and benefits set forth
below. Executive acknowledges and agrees that the payments set forth in this
Section 7 constitute liquidated damages for termination of his employment during
the Employment Period.
(a) Termination By Company Without Cause or By Executive for Good
Reason. If Executive's employment is terminated by the Company without Cause or
by Executive for Good Reason:
(i) the Company shall pay to Executive a severance payment
equal to the amount of Base Salary Executive would have received under the
Agreement if Executive had remained employed throughout the Employment
Period stated in Section 2, plus accrued vacation, within thirty (30) days
following the Date of Termination;
(ii) the Company shall reimburse Executive pursuant to Section
4(e) for reasonable expenses incurred, but not paid prior to such
termination of employment; and
(iii) Executive shall be entitled to any other rights,
compensation and/or benefits as may be due to Executive in accordance with
the terms and provisions of any agreements, plans or programs of the
Company.
(b) Termination by Company For Cause or By Executive Without Good
Reason. If Executive's employment is terminated by the Company for Cause or by
Executive (other than for Good Reason):
(i) the Company shall pay Executive his Base Salary and, to the
extent required by law or the Company's vacation policy, his accrued
vacation pay through the Date of Termination, as soon as practicable
following the Date of Termination;
(ii) the Company shall reimburse Executive pursuant to Section
4(e) for reasonable expenses incurred, but not paid prior to such
termination of employment, unless such termination resulted from a
misappropriation of Company funds; and
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(iii) Executive shall be entitled to any other rights,
compensation and/or benefits as may be due to Executive in accordance with
the terms and provisions of any agreements, plans or programs of the
Company.
(c) Disability. During any period that Executive fails to perform
his duties hereunder as a result of incapacity due to physical or mental
illness, Executive shall continue to receive his full Base Salary set forth in
Section 4(b) until his employment is terminated pursuant to Section 5(b). In
the event Executive's employment is terminated for Disability pursuant to
Section 5(b):
(i) the Company shall pay to Executive his Base Salary and
accrued vacation pay through the Date of Termination, within 30 days
following the Date of Termination;
(ii) the Company shall reimburse Executive pursuant to Section
4(e) for reasonable expenses incurred, but not paid prior to such
termination of employment; and
(iii) Executive shall be entitled to any other rights,
compensation and/or benefits as may be due to Executive in accordance with
the terms and provisions of any agreements, plans or programs of the
Company.
(d) Death. If Executive's employment is terminated by his death:
(i) the Company shall pay in a lump sum to Executive's
beneficiary, legal representatives or estate, as the case may be,
Executive's Base Salary through the Date of Termination;
(ii) the Company shall reimburse Executive's beneficiary, legal
representatives, or estate, as the case may be, pursuant to Section 4(e)
for reasonable expenses incurred, but not paid prior to such termination of
employment; and
(iii) Executive's beneficiary, legal representatives or estate,
as the case may be, shall be entitled to any other rights, compensation and
benefits as may be due to any such persons or estate in accordance with the
terms and provisions of any agreements, plans or programs of the Company.
8. Confidential Information, Ownership of Documents; Non-Competition.
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(a) Confidential Information. Executive shall hold in a fiduciary
capacity for the benefit of the Company all Confidential Information (as defined
below) relating to the Company and its businesses and investments, which shall
have been obtained by Executive during Executive's employment by the Company and
which is not generally available public knowledge (other than by acts of
Executive in violation of this Agreement). Except as may be required or
appropriate in connection with his carrying out his duties under this Agreement,
Executive shall not, without the prior written consent of the Company or as may
otherwise be required by law or any legal process, or as is necessary in
connection with any adversarial
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proceeding against the Company (in which case Executive shall use his reasonable
best efforts in cooperating with the Company in obtaining a protective order
against disclosure by a court of competent jurisdiction), communicate or divulge
any such Confidential Information relating to the Company to anyone other than
the Company and those designated by the Company or on behalf of the Company in
the furtherance of its business or to perform duties hereunder.
For the purposes hereof, the term "Confidential Information" means, with respect
to any person, any information concerning such person or its business, products,
financial condition, prospects and affairs that is not generally available to
the public. The term Confidential Information shall not include information
that: (i) is already known to the recipient and was properly obtained by the
recipient prior to the date of this Agreement; (ii) is in the public domain
other than through a negligent act or omission or willful misconduct of the
recipient; (iii) is acquired in good faith from a third party and, at the time
of the acquisition, the recipient had no knowledge or reason to believe that
such information was wrongfully obtained or disclosed by the third party; (iv)
is independently developed by the recipient from information not defined as
"Confidential Information" in this Agreement, as evidenced by the recipient's
written records; (v) is disclosed to third parties by the disclosing party
without restriction; (vi) is required to be disclosed under applicable law or by
a valid subpoena or other court or governmental order, decree, regulation or
rule; provided, however, that if disclosure is required under this provision the
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recipient shall advise the disclosing party of the requirement to disclose the
Confidential Information prior to such disclosure and as soon as reasonably
practicable after the recipient becomes aware of such required disclosure; and
further provided that upon the request of the disclosing party, the recipient
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agrees to cooperate in good faith with any reasonable and lawful actions which
the disclosing party takes to resist such disclosure, limit the information to
be disclosed or limit the extent to which the information so disclosed may be
used or made available to third parties, at the cost of the disclosing party.
(b) Removal of Documents; Rights to Products. All records, files,
drawings, documents, models, equipment, and the like relating to the Company's
business, which Executive has control over shall not be removed from the
Company's premises by Executive without the Board's written consent, unless such
removal is in the furtherance of the Company's business or is in connection with
Executive's carrying out his duties under this Agreement and, if so removed by
Executive, shall be returned to the Company promptly after termination of
Executive's employment hereunder, or otherwise promptly after removal if such
removal occurs following termination of employment. Executive shall assign to
the Company all rights to trade secrets and other products relating to the
Company's business developed by him alone or in conjunction with others at any
time while employed by the Company.
(c) Continuing Operation. Except as specifically provided in this
Section 8, the termination of Executive's employment or of this Agreement shall
have no effect on the continuing operation of this Section 8.
9. Indemnification.
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(a) Upon the Commencement Date, Executive will enter into the
Company's standard directors and officers indemnification agreement.
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(b) Upon the Commencement Date, the Company will ensure that Executive
is added as an insured on its directors and officers liability insurance policy.
In the event that Executive's employment relationship with the Company is
severed, for any reason, the Company will provide that Executive shall continue
to be an insured under the Company's directors and officers liability insurance
policy for as long as the Company retains such coverage, and if the Company
discontinues such coverage, Executive and/or his heirs or personal or legal
representative shall be given the opportunity to purchase continuation coverage
in accordance with the terms of the applicable policy.
10. Arbitration. Any controversy between Executive and the Company
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involving the construction or application of any of the terms, provisions or
conditions of this Agreement, including, without limitation, the determination
of whether "Cause" or "Good Reason" exists under Section 5(c) or Section 5(d)
hereof and claims involving specific performance, shall on the written request
of either party served on the other in accordance with Section 12 below be
submitted to binding arbitration. EACH PARTY, BY SIGNING THIS AGREEMENT,
VOLUNTARILY, KNOWINGLY AND INTELLIGENTLY WAIVES ANY RIGHTS SUCH PARTY MAY
OTHERWISE HAVE TO SEEK REMEDIES IN COURT OR OTHER FORUMS, INCLUDING THE RIGHT TO
A JURY TRIAL. Arbitration shall comply with and be governed in accordance with
the Commercial Arbitration Rules of the American Arbitration Association (the
"AAA"). The arbitration will be conducted only in Denver, Colorado, before a
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single arbitrator selected by the parties or, if they are unable to agree on an
arbitrator, before an arbitrator selected by the AAA. The arbitrator shall have
full authority to order specific performance and award damages and other relief
available under this Agreement or applicable law, but shall have no authority to
add to, detract from, change or amend the terms of this Agreement or existing
law. All arbitration proceedings, including settlements and awards, shall be
confidential. The decision of the arbitrator will be final and binding, and
judgment on the award by the arbitrator may be entered in any court of competent
jurisdiction. THIS SUBMISSION AND AGREEMENT TO ARBITRATE WILL BE SPECIFICALLY
ENFORCEABLE. The arbitrator will have no power to award punitive or exemplary
damages, to ignore or vary the terms of this Agreement and any other agreement
between Executive and the Company and will be bound to apply controlling law.
The prevailing party in any such arbitration shall be entitled to receive the
costs of arbitration, including reasonable attorneys' fees and costs, from the
losing party.
11. Successors; Binding Agreement.
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(a) Company's Successors. No rights or obligations of the Company
under this Agreement may be assigned or transferred, except that the Company
will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this Agreement,
"Company" shall mean the Company as herein before defined and any successor to
its business and/or assets (by merger, purchase or otherwise) which executes and
delivers the agreement provided for in this Section 11 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.
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(b) Executive's Successors. No rights or obligations of Executive
under this Agreement may be assigned or transferred by Executive other than his
rights to payments or benefits hereunder, which may be transferred only by will
or the laws of descent and distribution. Upon Executive's death, this Agreement
and all rights of Executive hereunder shall inure to the benefit of and be
enforceable by Executive's beneficiary or beneficiaries, personal or legal
representatives or estate, to the extent any such person succeeds to Executive's
interests under this Agreement. Executive shall be entitled to select and
change a beneficiary or beneficiaries to receive any benefit or compensation
payable hereunder following Executive's death by giving the Company written
notice thereof. In the event of Executive's death or a judicial determination
of his incompetence, reference in this Agreement to Executive shall be deemed,
where appropriate, to refer to his beneficiary(ies), estate or other legal
representative(s). If Executive should die following his Date of Termination
while any amounts would still be payable to him hereunder if he had continued to
live, all such amounts unless otherwise provided herein shall be paid in
accordance with the terms of this Agreement to such person or persons so
appointed in writing by Executive, or otherwise to his legal representatives or
estate.
12. Notice. For the purposes of this Agreement, notices, demands and all
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other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered either personally or by
United States certified or registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to Executive:
Xxxx X. Xxxxx
0000 Xxxxxx Xxxx Xxxxx
Xxxxxx, XX 00000-0000
If to the Company:
FirstWorld Communications, Inc.
0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx Xxxxxxx, XX 00000
Attn: General Counsel
Telecopy: (000) 000-0000
With a copy to:
Xxxxx X. Xxxx, Esq.
Xxxxxx & Xxxxxxx
000 "X" Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
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13. Waiver. No provisions of this Agreement may be amended, modified, or
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waived unless such amendment or modification is agreed to in a writing signed by
Executive and by a duly authorized officer of the Company, and such waiver is
set forth in writing and signed by the party to be charged. No waiver by either
party hereto at any time of any breach by the other party hereto of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.
14. Survival. Except as otherwise expressly set forth herein, the
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respective rights and obligations of the parties under this Agreement shall
survive Executive's termination of employment and the termination of this
Agreement to the extent necessary for the intended preservation of such rights
and obligations.
15. Choice of Law. The validity, interpretation, construction and
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performance of this Agreement shall be governed by the laws of the State of
Colorado without regard to its conflicts of law principles.
16. Validity. The invalidity or unenforceability of any provision or
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provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
17. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument. Facsimile signatures will
be deemed to be effective originals hereunder.
18. Entire Agreement. This Agreement sets forth the entire agreement of
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the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto in respect of such
subject matter. Any prior agreement of the parties hereto in respect of the
subject matter contained herein is hereby terminated and canceled.
19. Withholding. All payments hereunder shall be subject to any required
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withholding of Federal, state and local taxes pursuant to any applicable law or
regulation.
20. Section Headings. The section headings in this Agreement are for
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convenience of reference only, and they form no part of this Agreement and shall
not affect its interpretation.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first above written.
FIRSTWORLD COMMUNICATIONS, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
/s/ Xxxx X. Xxxxx
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XXXX X. XXXXX
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