Exhibit 10
THIS EMPLOYMENT AGREEMENT (hereinafter "this Agreement") is made this
12th day of November 2002, between EasyLink Services Corporation, a corporation
organized and existing under the laws of Delaware ("EasyLink" or the "Company"),
and Xxxxxx Xxxxxx (hereinafter the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive as the Chairman of
the Board or the "Chairman" 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 Chairman of the Board or the
"Chairman" of the Company reporting to the Chief Executive Officer 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 Chief Executive Officer of
the Company. The Executive further agrees to use his best efforts to promote the
interests of the Company and to devote a substantial portion of his 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 $250,000 and shall be
paid in accordance with the Company's then prevailing payroll
practices. The salary will be reviewed by the Compensation Committee of
the Board of Directors not less frequently than annually, and may be
adjusted upward in their sole discretion based on the same factors that
are used in determining annual salary increases for other executives of
the Company. All references herein to "Dollars" or "$" 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.
(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.
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.
(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.
(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 through the end of the week in which the
termination has occurred and for four consecutive weeks thereafter.
Thereafter, subject to Sections 4(g), 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;
(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 Chairman of the
Board or Chairman 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), the Company shall have no
further obligation to the Executive under this Agreement.
(g) Compensation in Connection with a Sale of the Company. If
a Sale of the Company (as defined below in this 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 1.5%
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. As used in this Section 4(g), a "Sale" shall
mean the occurrence of any of the following events:
(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.
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.
(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.
(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,
(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.
(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
(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:
(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.
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:
If to the Company:
EasyLink Services Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Chief Executive Officer
If to the Executive:
Xxxxxx Xxxxxx
C/o EasyLink Services Corporation If before
move of Company's headquarters:
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
If after move of Company's headquarters:
00 Xxxxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX
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.
(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.
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 Xxxxxx By /s/ Xxxxxx Xxxxxxxx
-------------------------- ---------------------------
Xxxxxx Xxxxxx Xxxxxx Xxxxxxxx
Chief Executive Officer
