Exhibit 10.18
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT (the "Agreement"), effective as of the
1st day of June, 2000, between Prodigy Communications Corporation, a Delaware
corporation (the "Company"), with its principal place of business at 00 Xxxxx
Xxxxxxxx, Xxxxx Xxxxxx, Xxx Xxxx 00000, and Xxxxxxx Xxxxxxx, residing at 000 X.
Xxxxxxxx, Xxxxx, XX 00000 (the "Employee).
WHEREAS, the Company has entered into an agreement dated
November 19, 1999 with SBC Communications Inc. (the "Investment Agreement")
pursuant to which SBC will acquire an indirect equity interest in the Company on
or about May 31, 2000 (the "Closing Date"); and
WHEREAS, the Company desires to continue to employ the
Employee as Chief Technology Officer, and the Employee desires to be employed in
that capacity following the Closing Date on the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto,
the parties agree as follows:
1. TERM OF EMPLOYMENT.
The Company hereby agrees to continue to employ the Employee,
and the Employee hereby accepts employment with the Company, upon the terms set
forth in this Agreement, for the period commencing on the Closing Date (the
"Commencement Date"), and ending on May 31, 2003 (the "Employment Period"),
unless sooner terminated in accordance with the provisions of Section 4.
2. TITLE; CAPACITY.
The Employee shall serve as Chief Technology Officer of the
Company and Prodigy Communications Limited Partnership. The Employee shall be
based in White Plains, New York or such other place within the greater New York
metropolitan area as the Board of Directors of the Company (the "Board") shall
determine. The Employee shall report to and be subject to the supervision of,
and shall have such authority as is delegated to Employee by the Company's Chief
Operating Officer.
The Employee hereby accepts such employment and agrees to
undertake the duties and responsibilities inherent in such position, and such
other duties and
Exhibit 10.18
responsibilities as Chief Operating Officer shall from time to time assign to
the Employee. The Employee shall devote Employee's entire business time,
attention and energies to the business and interests of the Company during the
Employment Period. The Employee shall abide by the rules, regulations,
instructions, personnel practices and policies of the Company and any changes
therein which may be adopted from time to time by the Company.
3. COMPENSATION AND BENEFITS.
3.1 SALARY. The Company shall pay the Employee, in
accordance with its normal payroll practices, an annual base
salary of $200,000 commencing on the Commencement Date.
Based on performance, such salary shall be subject to
increase consistent with existing merit increase guidelines.
3.2 PERFORMANCE BONUSES. The Employee shall be eligible to
participate in an annual bonus plan and receive up to 40% of
his annual base salary as a performance bonus during each
calendar year of the Employment Period. During each such year,
50% of such bonus shall be contingent upon the successful
completion of personal goals as mutually agreed between the
Employee and the Chief Operating Officer, and 50% of such
bonus shall be contingent upon the successful completion of
corporate goals as determined by the Company. Such performance
bonus shall be determined and paid within 45 days after the
end of each such calendar year during the Employment Period,
provided that Employee's employment has not terminated prior
to the applicable payment date.
3.3 RETENTION BONUS. The Employee shall be entitled to
receive a retention bonus in the amount of $233,334, 50% of
which shall be earned if the Employee's employment has not
terminated prior to the 90th day following the Closing Date
and the balance of which shall be earned if the Employee's
employment has not terminated prior to December 31, 2000
(except as otherwise provided in Section 5.3). Payment of
the first portion of the retention bonus (to the extent
earned) shall be made as soon as practicable following the
90th day following the Closing Date. Payment of the second
portion of the retention bonus (to the extent earned) shall
be made as soon as practicable following December 31, 2000.
Exhibit 10.18
3.4 OPTION GRANT.
(a) The Company has previously granted the Employee
options to purchase shares of common stock of the Company as
set forth in the attached option Summary, of which options to
purchase 155,000 shares of common stock of the Company remain
outstanding (the "Outstanding Options"). As of the Closing
Date, 50% of each non-vested Outstanding Option (but
specifically excluding the Options granted to the Employee on
March 10, 2000. The vesting schedule for the remaining
non-vested Outstanding Options shall remain unchanged.
(b) During the Employment Period, the Company will
consider in good faith on an annual basis the grant of
additional stock options to Employee.
3.5 FRINGE BENEFITS. The Employee shall be entitled to
participate in all fringe benefit programs that the Company
establishes and makes available to its employees from time to
time to the extent that Employee's position, tenure, salary,
age, health and other qualifications make him eligible to
participate. The Employee's vacation entitlement shall be 4
weeks per year.
3.6 REIMBURSEMENT OF EXPENSES. The Company shall reimburse
the Employee for all reasonable travel, entertainment and
other expenses incurred or paid by the Employee in
connection with the performance of his duties hereunder,
upon presentation by the Employee of documentation, expense
statements, vouchers and/or such other supporting
information as the Company may request; PROVIDED, HOWEVER,
that the nature and amount of such expenses shall be subject
to the Company's expense policies as in effect from time to
time.
4. EMPLOYMENT TERMINATION
The employment of the Employee pursuant to this Agreement
shall terminate upon the occurrence of any of the following:
4.1 At the election of the Company, for Cause (as
hereinafter defined) immediately upon written notice by the
Company to the Employee. For purposes of this Agreement,
"Cause" shall mean (a) the failure of the Employee to
perform his reasonably assigned duties, or the Employee's
gross dishonesty, gross negligence or gross
Exhibit 10.18
misconduct, or (b) the conviction of the Employee of, or the
entry of a plea of guilty or nolo contendere by the Employee
to, any felony;
4.2 Thirty days after the death or Disability (as
hereinafter defined) of the Employee. For purposes of this
Agreement, "Disability" shall mean the inability of the
Employee, due to a physical or mental disability, for a
period of 90 days, whether or not consecutive, during any
360-day period to perform, with or without reasonable
accommodation, the services contemplated under this
Agreement. A determination of Disability shall be made by a
physician satisfactory to both the Employee and the Company;
PROVIDED THAT if the Employee and the Company do not agree
on a physician, the Employee and the Company shall each
select a physician and these two together shall select a
third physician, whose determination as to Disability shall
be binding on all parties;
4.3 At the election of the Employee after December 31, 2000,
upon written notice of termination, for Good Reason (as
hereinafter defined). For purposes of this Agreement, "Good
Reason" shall mean any significant diminution in the duties of
the Employee under this Agreement;
4.4 At the election of the Employee, upon not less than
three (3) weeks' prior written notice of termination, or at
the election of the Company, upon written notice of
termination; or
4.5 Upon the expiration of the Employment Contract.
5. EFFECT OF TERMINATION.
5.1 TERMINATION FOR CAUSE OR AT ELECTION OF THE EMPLOYEE. In
the event the Employee's employment is terminated for Cause
pursuant to Section 4.1, or the Employee's employment is
terminated at the election of the Employee pursuant to Section
4.4, the Company shall, through the last day of his actual
employment by the Company, continue to pay to the Employee his
base salary as in effect on the date of notice of termination
and continue to provide to the Employee the fringe benefits
available to him under Section 3.5 hereof, as of the last day
of actual employment.
Exhibit 10.18
5.2 TERMINATION FOR DEATH OR DISABILITY. If the Employee's
employment is terminated due to death or Disability pursuant
to Section 4.2, the Company shall continue to pay to the
estate of the Employee or to the Employee, as the case may be,
for a period of 90 days after termination of employment due to
death or Disability, the Employee's base salary as in effect
on the date of termination.
5.3 TERMINATION AT ELECTION OF COMPANY PRIOR TO JANUARY 1,
2001. If the Employee's employment is terminated prior to
January 1, 2001 at the election of the Company pursuant to
Section 4.4, the Company shall, through the last day of his
actual employment by the Company, continue to pay to the
Employee his base salary as in effect on the date of notice of
termination and continue to provide to the Employee the fringe
benefits available to him under Section 3.5 hereof, as of the
last day of actual employment. In addition, subject to the
Employee's compliance with the provisions of Sections 6 and 7
below and execution of a release of claims against the Company
and its affiliates in the form provided by the Company, the
Employee shall be entitled to receive a prorate portion of the
performance bonus to which he would otherwise be entitled
under Section 3.2 and the retention bonus to which he would
otherwise be entitled under Section 3.3.
5.4 TERMINATION BY THE EMPLOYEE FOR GOOD REASON OR AT
ELECTION OF THE COMPANY AFTER DECEMBER 31, 2000. If the
Employee's employment is terminated after December 31, 2000
by the Employee for Good Reason pursuant to Section 4.3 or
at the election of the Company pursuant to Section 4.4, the
Company shall, through the last day of his actual employment
by the Company, continue to pay the Employee his base salary
as in effect on the date of notice of termination and
continue to provide the Employee the fringe benefits
available to him under Section 3.5 hereof, as of the last
day of actual employment. In addition, subject to the
Employee's compliance with the provisions of Sections 6 and
7 below and execution of a general release of claims against
the Company and its affiliates in the form provided by the
Company, the Company shall, during the Severance Period (as
hereinafter defined), continue to pay to the Employee his
base salary as in effect on the date of notice of
termination, the Employee shall be entitled to receive a
prorated portion of the performance bonus
Exhibit 10.18
to which he would otherwise be entitled under Section 3.2 and
the Company shall continue to provide to the Employee the
fringe benefits available to him as of the date of notice of
termination under Section 3.5, except during the Severance
Period no options shall vest. For purposes of this
Agreement, the "Severance Period" shall mean a period of
three (3) months after such termination, increasing by one
week for every six months of Executive's employment with the
Company (for purposes of this provision, employment shall be
deemed to have commenced on the Closing Date), but in no
event to exceed six months in the aggregate.
5.5 TERMINATION AT EXPIRATION OF CONTRACT. If, prior to
February 28, 2003, the Company has not offered to renew the
Employment Contract on terms at least equal to those contained
herein as modified during the Employment Period by mutual
agreement of the parties and for a term of not less than one
(1) year, the Company shall continue to pay the Executive his
base salary in effect on the date of termination for a period
of six (6) months after such termination and Executive shall
remain eligible to receive a performance bonus, calculated in
accordance with Section 3.2. The Company shall also provide to
the Executive during the Severance Period, the fringe benefits
available to him under Section 3.5.
5.6 SURVIVAL. The provisions of Section 3.3, 5.2, 5.3, 5.4,
5.5 and 5.6 shall survive the expiration or termination of
this Agreement under the circumstances specified in those
Sections for the periods specified in such Sections. Section 6
and 7 shall survive the termination of this Agreement.
6. NON-COMPETE.
(a) During the Employee's active employment and for a
period of six months following the Employee's termination of
employment, the Employee will not:
(i) be a partner, stockholder (other than as
the holder of not more than one percent (1%) of the
total outstanding stock of), officer, employee,
consultant, director, joint venture, investor or
lender of or to America Online, Inc., Microsoft
Network, AT&T WorldNet, EarthLink Network, Inc., or
any corporation or
Exhibit 10.18
other entity acquiring any of the foregoing or involved
in providing Internet Access services or Small Business
Solutions that compete directly with Prodigy; or
(ii) directly or indirectly recruit, solicit
or induce, or attempt to induce, any employee or
employees of the Company to terminate their employment
with, or otherwise cease their relationship with the
Company; or
(iii) directly or indirectly solicit, divert
or take away, or attempt to divert or to take away,
the business or patronage of any of the clients,
customers or accounts, or prospective clients,
customers or accounts, of the Company, including but
not limited to those clients, customers or accounts
which were contacted, solicited or served by the
Employee while employed by the Company.
(b) If any restriction set forth in this Section 6 is
found by any court of competent jurisdiction to be
unenforceable because it extends for too long a period of time
or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over
the maximum period of time, range of activities or geographic
area as to which it may be enforceable.
(c) The restrictions contained in this Section 6 are
necessary for the protection of the business and goodwill of
the Company and are considered by the Employee to be
reasonable for such purposes. The Employee agrees that any
breach of this Section 6 will cause the Company substantial
and irrevocable damage and therefore, in the event of any such
breach, in addition to such other remedies which may be
available, the Company shall have the right to seek specific
performance and injunctive relief.
(d) Unless the context otherwise requires, all
references in this Section 6 and in Section 7 below to the
"Company" shall include all current or future subsidiaries or
affiliates of the Company.
7. PROPRIETARY INFORMATION AND DEVELOPMENTS.
Exhibit 10.18
7.1 PROPRIETARY INFORMATION.
(a) The Employee agrees that all information and
know-how related to the activities of the Company, whether or
not in writing, of a private, secret or confidential nature
concerning the Company's business or financial affairs
(collectively, "Proprietary Information") is and shall be the
exclusive property of the Company. By way of illustration, but
not limitation, Proprietary Information may include
inventions, products, processes, methods, techniques,
formulas, compositions, compounds, projects, developments,
plans, research data, clinical data, financial data, personnel
data, computer programs, and customer and supplier lists. The
Employee will not disclose any Proprietary Information to
others outside the Company or use the same for any
unauthorized purposes without written approval by an officer
of the Company, either during or after his employment, unless
and until such Proprietary information has become public
knowledge without fault by the Employee.
(b) The Employee agrees that all files, letters,
memoranda, reports, records, data, sketches, drawings,
laboratory notebooks, program listings, or other written,
photographic, or other tangible material containing
Proprietary Information, whether created by the Employee or
others, which shall come into his custody or possession, shall
be and are the exclusive property of the Company to be used by
the Employee only in the performance of his duties for the
Company.
(c) The Employee agrees that his obligation not to
disclose or use information, know-how and records of the types
set forth in paragraphs (a) and (b) above, also extends to
such types of information, know-how, records and tangible
property of customers of the Company or suppliers to the
Company or other third parties who may have disclosed or
entrusted the same to the Company or to the Employee in the
course of the Company's business.
7.2 DEVELOPMENTS.
(a) The Employee will make full and prompt disclosure
to the Company of all inventions, improvements, discoveries,
methods, developments, software, and works of authorship,
related to the activities of the Company, whether patentable
or not, which are created, made,
Exhibit 10.18
conceived or reduced to practice by the Employee or under his
direction or jointly with others during his employment by
the company, whether or not during normal working hours or
on the premises of the Company (all of which are
collectively referred to in this Agreement as "Development").
(b) The Employee agrees to assign and does hereby
assign to the Company (or any person or entity designated by
the Company) all his right, title and interest in and to all
Developments and all related patents, patent applications,
copyrights and copyright applications. The Employee also
acknowledges that all work fixed in a tangible medium of
expression shall be deemed a work made for hire under the US
Copyright Act such that the work is owned by the Company at
the moment of creation.
(c) The Employee agrees to cooperate fully with the
Company, both during and after his employment with the
Company, with respect to the procurement, maintenance and
enforcement of copyrights and patents (both in the United
States and foreign countries) relating to Developments. The
Employee shall sign all papers, including, without limitation,
copyright applications, patent applications, declarations,
oaths, formal assignments, assignment of priority rights, and
powers of attorney, which the Company may deem necessary or
desirable in order to protect its rights and interest in any
Development.
7.3 OTHER AGREEMENTS. The Employee hereby represents that
his performance of all the terms of this Agreement and as an
employee of the Company does not and will not breach the terms
of any agreement with any previous employer or other party to
refrain from using or disclosing any trade secret,
confidential or proprietary information, knowledge or data
acquired by him in confidence or in trust prior to his
employment with the Company or to refrain from competing,
directly or indirectly, with the business of such previous
employer or any other party.
8. NOTICES.
All notices required or permitted under this Agreement shall
be in writing and shall be deemed effective upon personal delivery or upon
sending, by registered or certified mail, postage prepaid, addressed to the
other party at the address shown above,
Exhibit 10.18
or at such other address or addresses as either party shall designate to the
other in accordance with this Section 8.
9. PRONOUNS.
Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular forms of nouns and pronouns shall include the plural, and vice
versa.
10. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the
parties and supersedes all prior agreements and understandings, whether written
or oral, relating to the subject matter of this Agreement including, without
limitation, the Employee's prior Employment Agreement with the Company dated
January 27, 1999, except that the Agreement Regarding Confidential Information
and the Prodigy Business Conduct Guidelines, and Intellectual Property Agreement
shall remain in full force and effect.
11. AMENDMENT.
This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Employee.
12. GOVERNING LAW.
This Agreement shall be construed, interpreted and enforced in
accordance with the laws of the State of New York in the United States, without
reference to conflict of law principles.
13. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit
of both parties and their respective successors and assigns, including any
corporation with which or into which the Company may be merged or which may
succeed to its assets or business; PROVIDED, HOWEVER, that the obligations of
the Employee are personal and shall not be assigned by him.
14. MISCELLANEOUS.
14.1 No delay or omission by either the Company or the
Employee in exercising any right under this Agreement shall
operate as a waiver of that or any other right. A waiver or
consent given by either the Company or the
Exhibit 10.18
Employee on any one occasion shall be effective only in that
instance and shall not be construed as a bar or waiver of any
right on any other occasion.
14.2 The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or
affect the scope or substances of any section of this
Agreement.
14.3 In case any provision of this Agreement shall be
invalid, illegal or otherwise unenforceable, the validity,
legality and enforceability of the remaining provisions shall
in no way be affected or impaired thereby.
14.4 Any payments to the Employee pursuant to the terms of
this Agreement shall be reduced by such amounts as are
required to be withheld with respect thereto under all present
and future federal, state and local tax laws and regulations,
and other laws and regulations.
IN WITNESS THEREOF, the parties hereto have executed this
Agreement as of the day and year set forth above.
PRODIGY COMMUNICATIONS CORPORATION
By:
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Title:
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EMPLOYEE
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Xxxxxxx Xxxxxxx
