Exhibit 10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (hereinafter "this Agreement") is
made this 1st day of February, 2002, between EasyLink Services Corporation, a
corporation organized and existing under the laws of Delaware ("EasyLink" or the
"Company"), and Xxxxxx Xxxxxxxx (hereinafter the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive as the
Chief Executive Officer of the Company, and the Executive desires to be so
employed by the Company, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements herein set forth, the Company and the
Executive hereby agree as follows:
1. Employment. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to serve, as the Chief Executive
Officer of the Company reporting to the Board of Directors of the Company. The
Executive agrees to perform such services customary to such office as shall from
time to time be assigned to him by the Board of Directors of the Company. The
Executive further agrees to use his best efforts to promote the interests of the
Company and to devote his full business time and energies to the business and
affairs of the Company. The Executive may be required in pursuance of his duties
hereunder to perform services for any company controlling, controlled by or
under control with the Company (such companies hereinafter collectively called
"Affiliates") and to accept such offices in any Affiliates as the Board of
Directors may require. The Executive shall obey all policies of the Company and
applicable policies of its Affiliates.
2. Term of Employment. The Executive shall be employed at-will
and either party may terminate the Executive's employment for any reason upon
thirty (30) days prior written notice or, in the case of termination by the
Company for Cause (as hereinafter defined), immediately upon written notice to
the Executive.
3. Compensation and Other Related Matters.
(a) Salary. As compensation for services rendered
hereunder, the Executive shall receive an annual salary of $350,000 and shall be
paid in accordance with the Company's then prevailing payroll practices. The
salary will be reviewed by the Compensation Committee of the Board of Directors
not less frequently than annually, and may be adjusted upward in their sole
discretion based on the same factors that are used in determining annual salary
increases for other executives of the Company. All references herein to
"Dollars" or "$" shall mean United States Dollars.
(b) Bonus. During the term of this Agreement, the
Executive shall be eligible to receive an annual bonus payment if determined to
be payable by the Board of Directors in its sole discretion based on the
performance of the Company and the Executive. The Executive shall be entitled to
receive a bonus for calendar year 2000 in the amount of $100,000 which shall be
payable when bonuses are paid to other EasyLink executive officers for calendar
year 2000.
(c) Benefits. During the term of this Agreement, the
Executive shall be entitled to receive the standard employment benefits granted
to executives generally (subject to legal limitations) on substantially the same
terms and conditions (subject to legal limitations), including but not limited
to such benefits as health and other insurance, participation in the Company's
401(k) plan and paid time off.
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4. Compensation in the Event of Termination.
(a) Termination With Cause. In the event that the
Company terminates the Executive's employment for "Cause", the Executive shall
be entitled to receive his base salary and benefits through the date of
termination. The Executive shall not be entitled to receive any of his bonus
payments. Thereafter, the Company shall have no further obligation to the
Executive under this Agreement.
For purposes hereof, "Cause" shall mean termination based upon
(i) the willful failure by the Executive to follow lawful directions
communicated to him by the Board of Directors of the Company; (ii) the willful
engaging by the Executive in conduct which is materially injurious to the
Company, monetarily or otherwise; (iii) a conviction of, a plea of nolo
contendere, a guilty plea or confession by the Executive to an act of fraud,
misappropriation or embezzlement or to a felony; (iv) the Executive's habitual
drunkenness or use of illegal substances; (v) a material breach by the Executive
of this Agreement; or (vi) an act of gross neglect or gross misconduct which the
Company deems to be good and sufficient cause; provided, however, that the
Company shall not be deemed to have Cause pursuant to clauses (i), (ii), (iv),
(v) or (vi) unless the Company gives the Executive written notice that the
specified conduct or event has occurred and the Executive fails to cure the
conduct or event within thirty (30) days after receipt of such notice.
Termination of the Executive for Cause shall be communicated by a Notice of
Termination. For purposes of this Agreement, a "Notice of Termination" shall
mean delivery to the Executive of a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire membership of the
Company's Board of Directors, excluding Executive, at a meeting of the Board
called and held for the purpose (after reasonable notice to the Executive and
reasonable opportunity for the Executive, together with the Executive's counsel,
to be heard before the Board prior to such vote), that the Executive failed to
cure such conduct or event during the thirty-day period following the date on
which the Company gave written notice of the conduct or event referred to in
clauses (i), (ii), (iv), (v) or (vi). For purposes of this Agreement, any
termination of the Executive's employment shall be effective immediately upon
written notice; however, no termination of the Executive's employment shall be
deemed to be for Cause unless the written notice constitutes Notice of
Termination. Any termination for Cause shall be effective immediately upon
receipt of the Notice of Termination by Executive (or in the case of a
conviction under clause (ii), the date of conviction, plea or confession) and
Executive shall have no claim for compensation or any other benefit from and
after such termination date.
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(b) Termination Upon Disability. In the event that
the Executive's employment is terminated by either party due to "Disability",
the Company will pay the Employee his base salary through the remainder of the
calendar month during which such termination is effective and for the lesser of
(A) three calendar months thereafter and (B) the difference between disability
insurance benefits and full salary for six months.
For purposes hereof, "Disability" shall mean the Executive's
inability, as a result of a physical or mental illness, to perform the duties
assigned to him for a period of three (3) consecutive months or for any
non-consecutive period of five (5) months in any twelve month period during the
term of Executive's employment with the Company. Thereafter, the Company shall
have no further obligation to the Executive under this Agreement.
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(c) Termination Upon Death. In the event that the
Executive's employment is terminated because of the Executive's death, the
Company will pay to the Employee's estate his base salary through the remainder
of the calendar month during which the death occurred and for three consecutive
months thereafter. Thereafter, the Company shall have no further obligation to
the Executive under this Agreement.
(d) Termination Without Cause. If the Company
terminates the Executive's employment without Cause, the Executive will be
entitled to receive his base salary for four consecutive weeks through the end
of the week in which the termination has occurred and for four consecutive weeks
thereafter. Thereafter, subject to Sections 4(g) and (h), the Company shall have
no further obligation to the Executive under this Agreement.
(e) Termination Upon the Executive's Resignation. In
the event that the Executive resigns his employment with the Company (other than
a resignation for Good Reason), the Executive shall be entitled to receive his
base salary and benefits through the date of termination. Thereafter, the
Company shall have no further obligation to the Executive under this Agreement.
(f) Resignation For Good Reason. Executive may
terminate his employment hereunder for Good Reason, provided Executive shall
have delivered a Notice of Resignation for Good Reason to the Corporation at
least thirty days prior to the effective date of termination. "Good Reason"
shall mean the occurrence of one or more of the following circumstances:
(1) the dissolution or complete liquidation of the Company;
(2) the filing of a voluntary petition by the Company, or an
involuntary petition against the Company, under Chapter 7 of the Bankruptcy
Code;
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(3) the Company's assignment to the Executive of duties inconsistent
with the Executive's duties as defined in Section 1, any change in the
Executive's title as Chief Executive Officer as defined in Section 1 or any
material reduction in Executive's duties or responsibilities, except as may have
occurred in connection with the termination of the Executive's employment for
Cause, Disability or as a result of the Executive's death or by the Executive
other than for Good Reason;
(4) the Executive's involuntary relocation to a new principal work
location not within reasonable commuting distance of his former location;
(5) the failure of the Company to obtain the specific assumption of
this Agreement by any successor or assign of the Company or any person, or
entity acquiring substantially all of the Company's assets; or
(6) any material breach by the Company of this Agreement.
In the event of a resignation for Good Reason, the Executive will be entitled to
receive his base salary for four consecutive weeks through the end of the week
in which the termination has occurred and for four consecutive weeks thereafter.
Thereafter, subject to Sections 4(g) and (h), the Company shall have no further
obligation to the Executive under this Agreement.
(g) Change of Control. If the Company terminates the
Employee's employment without Cause at any time within 3 months before and in
contemplation of, at any time after the occurrence of a Change of Control or the
Executive terminates his employment with the Company for Good Reason at any time
within 3 months before or at any time after the occurrence of a Change of
Control, the Executive will be entitled to receive, in addition to any payment
that may be due Executive under Section 4(d) or (f), at his option either (i)
continuation of his base salary and participation in the Company's standard
health insurance and 401(k) plans for 12 months after the Change of Control or
(ii) a lump sum equal to 12 months base salary. Thereafter, subject to Section
4(i), the Company shall have no further obligation to the Executive under this
Agreement. As used in this Section 4, a "Change of Control" shall mean the
occurrence of any of the following events:
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(i) Any person (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended),
other than one or more of the Permitted Holders (as defined below),
becomes the "beneficial owner" (as defined in Rule 13d-3 under said
Act), directly or indirectly, of securities of the Company representing
fifty percent or more of the total voting power represented by the
Company's then outstanding voting securities; or
(ii) A merger or consolidation of the Company with
any other corporation or business entity, or a sale, lease or
disposition by the Company of all or substantially all of the Company's
assets, other than a merger, consolidation, sale, lease or disposition
which would result 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 or transferee entity or a direct or indirect parent company
of the surviving or transferee entity) at least 50% of the total voting
power represented by the voting securities of the Company or such
surviving or transferee entity or parent company outstanding
immediately after such merger, consolidation, sale, lease or
disposition (a merger, consolidation, sale, lease or disposition under
this clause (ii) being referred to herein as a "Sale of the Company").
As used herein, "Permitted Holders" means, collectively, Xxxxxx Xxxxxx and his
estate, spouse, legatees, heirs, ancestors and lineal descendants, the legal
representatives of any of the foregoing and the trustees of any bona fide trusts
of which one or more of the foregoing are the sole beneficiaries or the grantor,
or any corporation, trust, partnership or other entity of which one or more of
the foregoing "beneficially owns" (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) at least 66 and 2/3 % of the total voting
power of such corporation, trust, partnership or other entity.
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(h) Compensation in Connection with a Sale of the
Company. If a Sale of the Company (as defined in Section 4(g)) occurs before the
termination of Executive's employment hereunder or within 3 months after a
termination of employment of Executive without Cause or within 3 months after
Executive terminates his employment for Good Reason, the Executive shall be
entitled to receive upon the consummation of such Sale of the Company a cash
payment equal to 2.5% of the fair market value of the consideration received by
the holders of the Company's common stock pursuant to such Sale of the Company.
For purposes of determining the fair market value of the consideration received
by the holders of the Company's common stock, (i) cash paid upon the Sale of the
Company shall have a fair market value equal to the amount thereof, (ii)
securities that are traded on a national securities exchange or on the Nasdaq
stock market (National Market) shall have a fair market value based on the
average of the closing prices for such securities over the ten trading days
through the date of such Sale of the Company and (iii) other consideration shall
have such fair market value as determined in good faith by the Board of
Directors of the Company.
(i) Additional Payments By the Company.
(A) Anything to the contrary in this Agreement
notwithstanding, if any payment by the Company to or for the benefit of
the Executive (whether paid or payable pursuant to this Agreement or
otherwise, and determined without regard to any additional payments
required under this Section 4(i) (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall
be entitled to receive an additional payment (a "Gross-Up Payment") in
an amount such that, after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any
interest or penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
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(B) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than
ten (10) business days after the Executive is informed in writing of
such claim and shall apprise the Company of the nature of the claim and
the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period
following the date on which he gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(I) give the Company any information reasonably requested by
the Company relating to such claim,
(II) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
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(III) cooperate with the Company in good faith in order
effectively to contest such claim, and
(IV) permit the Company to participate in any proceedings
relating to such claim; provided, however, that the Company shall bear
and pay directly all costs and expenses (including additional interest
and penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax basis, for
any Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment
of costs and expenses. Without limitation on the foregoing provisions
of this Section 4(B), the Company shall control all proceedings taken
in connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may,
at its sole option, either direct the Executive to pay the tax claimed
and xxx for a refund or to contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the Company shall determine;
provided, however, that if the Company directs the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis, and shall
indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to
payment of taxes for the taxable year of the Executive with respect to
which such contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
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(C) If, after receipt by the Executive of an amount advanced
by the Company pursuant to Section 4(B), the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall
promptly pay to the Company the amount of such refund (together with
any interest paid or credited thereon after taxes applicable thereto).
If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 4(B), a determination is made that the
Executive shall not be entitled to any refund with respect to such
claim and, if the Executive has provided prompt written notice of such
denial to the Company and the Company does not thereafter notify the
Executive in writing of its intent to contest such denial of refund
prior to the expiration of the time period under applicable law in
which such contest may be made by or on behalf of the Executive, then
such advance shall be forgiven and shall not be required to be repaid
and the amount of such advance shall offset, to the extent thereof, the
amount of the Gross-Up Payment required to be paid.
5. Confidentiality and Restrictive Covenants.
(a) The Executive acknowledges that:
(i) the business in which the Company is
engaged is intensely competitive and that his employment by the Company will
require that he have access to and knowledge of confidential information of the
Company, including, but not limited to, the Company's plans for creation,
acquisition or disposition of products or services, publications and websites,
expansion plans, financial status and plans, products, improvements, formulas,
designs or styles, method of distribution, customer lists, product or service
development plans, rules and regulations, personnel information and trade
secrets of the Company, all of which are of vital importance to the success of
the Company's business (collectively, "Confidential Information"); and
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(ii) the direct or indirect disclosure of
any Confidential Information would place the Company at a serious competitive
disadvantage and would do serious damage, financial and otherwise, to the
Company's business.
(b) Covenant Against Disclosure. The Executive
therefore covenants and agrees that all Confidential Information shall be and
remain the sole property and confidential business information of the Company,
free of any rights of the Executive. The Executive further agrees not to make
any use of the Confidential Information except in the performance of his duties
hereunder and not to disclose the information to third parties, without the
prior written consent of the Company. The obligations of the Executive under
this Section 5 shall survive any termination of this Agreement. The Executive
agrees that, upon any termination of his employment with the Company, all
Confidential Information in his possession, directly or indirectly, that is in
written or other tangible form (together with all duplicates thereof) will
forthwith be returned to the Company and will not be retained by the Executive
or furnished to any third party, either by sample, facsimile, film, audio or
video cassette, electronic data, verbal communication or any other means of
communication.
(c) Non-solicitation. Until the date which is one
year after the date of the termination of the Executive's employment hereunder
for any reason, the Executive will not, directly or indirectly take any of the
following actions:
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(i) solicit customers of the Company with
respect to products or services that are the same or substantially similar to
those offered to such customer by the Company or to cease doing business with
the Company, or to reduce the amount of business it does with the Company;
(ii) solicit or induce, or attempt to
solicit or induce, any employee of the Company or any of its subsidiaries or
other Affiliates to leave the employ of the Company or any of its subsidiaries.
For purposes of Section 5, "Company" shall include the Company and any
other Affiliate.
6. Intellectual Property. Unless otherwise agreed in writing
by the Company (as authorized by the Board of Directors of the Company), the
Executive hereby agrees that any and all improvements, inventions, discoveries,
formulae, processes, methods, know-how, confidential data, trade secrets and
other proprietary information made, developed or created by the Executive
(whether at the request or suggestion of the Company or otherwise, whether alone
or in conjunction with others, and whether during regular working hours of work
or otherwise) during the period of his employment with the Company, which may be
directly or indirectly useful in, or relate to, the business of or tests being
carried out by the Company or any of its subsidiaries or other Affiliates, shall
be promptly and fully disclosed by the Executive to the Board of Directors and
shall be the Company's exclusive property as against the Executive, and the
Executive shall promptly deliver to the Board of Directors of the Company all
papers, drawings, models, data and other material relating to any invention
made, developed or created by him as aforesaid.
The Executive shall, upon the Company's request and without
any payment therefor, execute any documents necessary or advisable in the
opinion of the Company's counsel to direct issuance of patents or copyrights of
the Company with respect to such inventions as are to be in the Company's
exclusive property as against the Executive under this Section 6 or to vest in
the Company title to such inventions as against the Executive, the expense of
securing any such patent or copyright, to be borne by the Company.
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7. Breach by Employee. Both parties recognize that the
services to be rendered under this Agreement by the Executive are special,
unique and extraordinary in character, and that in the event of a breach by
Employee of the terms and conditions of the Agreement to be performed by him,
then the Company shall be entitled, if it so elects, to institute and prosecute
proceedings in any court of competent jurisdiction, either in law or in equity,
to obtain damages for any breach of this Agreement, or to enforce the specific
performance thereof by the Executive. Without limiting the generality of the
foregoing, the parties acknowledge that a breach by the Executive of his
obligations under Section 5 or 6 would cause the Company irreparable harm, that
no adequate remedy at law would be available in respect thereof and that
therefore the Company would be entitled to injunctive relief with respect
thereto.
8. Miscellaneous.
(a) Successors; Binding Agreement. The Company shall
have the right to assign this Agreement in connection with a sale of all or
substantially all of the assets of the Company. This Agreement and the
obligations of the Company hereunder and all rights of the Executive hereunder
shall inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and assigns, provided, however, that the
duties of the Executive hereunder are personal to the Executive and may not be
delegated or assigned by him.
(b) Notice. All notices of termination and other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered by hand or mailed by United States
registered mail, return receipt requested, addressed as follows:
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If to the Company:
EasyLink Services Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxxxx
If to the Executive:
Xxxxxx Xxxxxxxx
C/o EasyLink Services Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxxxx
or to such other address as either party may designate by notice to the other,
which notice shall be deemed to have been given upon receipt.
(c) Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New Jersey without
regard to the conflict of law rules thereof. The Executive specifically consents
to the jurisdiction of the United States District Court sitting in New Jersey,
or if that court is unable to exercise jurisdiction for any reason, to the
jurisdiction of the New Jersey state court for this purpose.
(d) Waivers. The waiver of either party hereto of any
right hereunder or of any failure to perform or breach by the other party hereto
shall not be deemed a waiver of any other right hereunder or of any other
failure or breach by the other party hereto, whether of the same or a similar
nature or otherwise. No waiver shall be deemed to have occurred unless set forth
in writing executed by or on behalf of the waiving party. 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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(e) Validity. The invalidity or enforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall otherwise remain in full
force and effect. Moreover, if any one or more of the provisions contained in
this Agreement is held to be excessively broad as to duration, scope or
activity, such provisions shall be construed by limiting and reducing them so as
to be enforceable to the maximum extent compatible with applicable law.
(f) Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
(g) Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parties 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 either party in
respect of said subject matter.
(h) Headings Descriptive. The headings of the several
Sections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any of this Agreement.
(i) Capacity. The Executive represents and warrants
that he is not a party to any agreement that would prohibit him from entering
into this Agreement or performing fully his obligations hereunder.
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IN WITNESS WHEREOF, the Company and the Executive have executed this Agreement
as of the date first written above.
EXECUTIVE EASYLINK SERVICES CORPORATION
/s/ Xxxxxx Xxxxxxxx By: /s/ Xxxxxx Xxxxxx
--------------------------------- -------------------------------
Xxxxxx Xxxxxxxx Xxxxxx Xxxxxx, Chairman
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