EXHIBIT 10.10
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EMPLOYMENT AGREEMENT
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This EMPLOYMENT AGREEMENT (the "AGREEMENT") is made and entered into
as of _______ __, 1999 by and between Xxxxxxx X. Xxxxxxxx ("EXECUTIVE") and
United States Internet, Inc., a Delaware corporation ("EMPLOYER"), but effective
as of the Effective Date.
RECITAL
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Executive and Employer desire to enter into an agreement to set forth
the terms and conditions of Executive's employment with Employer.
AGREEMENT
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In consideration of the promises and the mutual covenants hereinafter
set forth, the parties agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms,
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including both the singular and the plural and whether or not capitalized, shall
have the meanings assigned to them below, as follows:
(A) "AFFILIATE" means with respect to any Person, any other
Person which directly or indirectly controls, is controlled by or is under
common control with such Person.
(B) "BUSINESS" means the business of Employer on the date first
above written, consisting of internet access systems and services, dial-up and
dedicated internet access, web hosting, web consulting, and information
technology consulting services, that are marketed or sold to the public,
government or any business entities.
(C) "COMPANY" means U.S. Internet Providers, Inc., the parent of
Employer.
(D) "COMPETITIVE ACTIVITY" means any business or activity of
Executive or any third party. that is the same as the Business or competitive
with the Business.
(E) "CONFIDENTIAL INFORMATION" means all confidential
information and trade secrets of the Company as generally understood pursuant to
customary business practices of similarly situated companies, Employer and their
Affiliates including, without limitation, the following: the identity, written
lists, or descriptions of any customers, vendors, referral sources or
Organizations; financial statements, cost reports, or other financial
information; contract proposals or bidding information; business plans; training
and operations methods and manuals; personnel records; fee structures; and
management systems, policies or procedures, including related forms and manuals.
"CONFIDENTIAL INFORMATION" shall not include any information or knowledge which:
(a) is in the public domain other than by Executive's breach of this Agreement;
(b) is disclosed to Executive lawfully by a third party who is not under any
obligation of confidentiality; or (c) is now or hereafter becomes generally
known in the industry of Employer other than by Executive's breach of this
Agreement.
(F) "EFFECTIVE DATE" means the effective date of the merger by
and between the Employer and US Internet, Inc., Tennessee corporation.
(G) "IPO" means the initial public offering of the Company's
common stock pursuant to a registration statement on Form S-1 filed with the
United States Securities and Exchange Commission.
(H) "NONCOMPETE PERIOD" means period beginning on the date
hereof and ending on the second anniversary, except as specifically provided in
Section 7, of the date of the termination of Executive's employment under any
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provision of Section 7.
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(I) "NONSOLICITATION PERIOD" means the period beginning on the
date hereof and ending on the second anniversary, except as specifically
provided in Section 7, of the date of the termination of Executive's employment
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under any provision of Section 7.
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(J) "ORGANIZATION" means any organization that has contracted
with Employer for the performance of services in connection with the Business.
(K) "PERSON" means any individual, corporation, partnership,
joint venture, association, joint-stock company, limited liability company,
trust, unincorporated organization or government body.
(L) "PURCHASER" means any individual or entity that purchases
all or substantially all the shares of capital stock or assets of Employer, or
any entity with which Employer merges.
(M) "TRADE AREA" means the three hundred (300) mile radius
around the Employer's executive offices (located in Knoxville, Tennessee) and
the one hundred (100) mile radius around the Employer's offices located in the
States of Alabama, Georgia, Kentucky and Virginia.
2. EMPLOYMENT. Employer hereby employs Executive and Executive
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hereby accepts such employment by Employer on the terms and conditions set forth
in this Agreement.
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3. TERM. The term of this Agreement (the "TERM") shall commence on
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the Effective Date and shall continue until the third anniversary thereof,
unless sooner terminated as provided for herein; provided, however, that this
Agreement may be renewed at Employer's option for additional one year periods
(each a "RENEWAL TERM") on the third anniversary of the Effective Date and on
each additional anniversary thereafter by Employer's delivery of written notice
at least sixty (60) days prior to the expiration of the Term or any Renewal
Term. Either Executive or Employer may terminate this Agreement with or without
Cause as provided in Section 7 below. Upon termination of Executive's employment
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with Employer pursuant to the terms contained in this Agreement, Employer shall
have no further liability to Executive with respect to this Agreement except for
compensation, fringe benefits and perquisites accrued and unpaid on the date of
such termination and except as otherwise specifically set forth herein. Upon
termination of this Agreement by Executive pursuant to the terms contained in
this Agreement, Executive shall have no further liability to Employer with
respect to this Agreement except for the covenants of the Executive contained in
Sections 8 and 9 herein which survive the term of this Agreement and except as
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specifically set forth herein.
4. POSITION, DUTIES AND PLACE OF PERFORMANCE. Executive agrees to
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serve as Chief Executive Officer of the Employer or in such other capacities on
behalf of Employer of reasonably similar levels and duties as designated by
Employer's Board of Directors ("BOARD"). Executive shall perform those duties,
if so requested, which are consistent with such position. Prior to the IPO,
Executive shall be elected as a Director to serve on the Board of Directors of
the Company and, following the IPO, shall serve in such capacity so long as he
is employed as the Chief Executive Officer of the Employer.
5. TIME AND EFFORTS DEVOTED. During the term of this Agreement,
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Executive shall devote substantially all of his business time, energy, best
efforts and attention to the business and affairs of Employer and shall not
engage, directly or indirectly, in any other business or businesses without the
consent of Employer which would require the expenditure of substantial time or
energy or undermine Executive's focus on his position described herein.
6. COMPENSATION; BENEFITS AND PERQUISITES.
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(A) COMPENSATION. For all services rendered by Executive during
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the Term, Employer shall pay Executive a base salary of $125,000 per annum,
payable in equal installments and regular intervals at least monthly. Executive
shall be eligible for an annual bonus of $50,000 in the event that Employer
achieves a 33% year-over-year increase in gross revenues.
(B) BENEFITS AND PERQUISITES. Executive shall be entitled to the
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following benefits and perquisites and such other benefits as may be mutually
agreed by Employer and Executive in writing from time to time during the Term:
(i) payment of Executive's reasonable business travel and other business
expenses, provided Executive properly accounts therefor in accordance with such
policies; (ii) paid vacation, holidays and sick leave; and (iii) all other
applicable Executive benefits, including, if applicable, medical, dental and
disability insurance, pension, profit sharing and other benefits plans of
Employer or its Affiliates,
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each in accordance with Employer's policies as more fully set forth in the
manual attached hereto as Exhibit A and any changes thereto [PLEASE PROVIDE US
WITH THE MANUAL].
(C) OPTIONS. Based upon the performance criteria set forth in
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Annex A hereto, the Executive shall be granted the discretion (subject to Board
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approval which shall not be unreasonably withheld) to allocate among certain key
employees of Employer options for the purchase of the Company's common stock
based on the criteria set forth therein ("PERFORMANCE OPTIONS").
7. TERMINATION OF EMPLOYMENT.
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(A) TERMINATION EVENTS. Executive's employment under this
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Agreement, and the Term, shall terminate and neither party shall have any
further rights or obligations under this Agreement (except for the rights and
obligations under those sections of this Agreement which are continuing and
shall survive such termination), on the earliest to occur of the following
events:
(I) The sixtieth (60th) day following Employer's receipt
of notice of termination from Executive.
(II) The sixtieth (60th) day following Executive's receipt
of notice of termination without Cause from Employer.
(III) On the expiration date of the Term or any Renewal Term
if prior written notice is received by Employee from Employer sixty
days prior to the expiration of the Term or Renewal Term.
(IV) The death of Executive.
(V) Upon written notice to Executive by Employer,
effective as of the date of such notice, if Executive shall have
become permanently disabled. For purposes of this Agreement, the term
"PERMANENTLY DISABLED" shall mean Executive's incapacity due to
physical or mental illness such that he is or will be unable to
perform the essential functions of his previously assigned duties for
a period of at least six continuous months where such incapacity has
been determined to exist by either (x) Employer's disability insurance
carrier or (y) by the Board in good faith based on competent medical
advice. In the event the Board determines that a permanent disability
exists, Executive shall receive payment equivalent to Executive's
disability insurance coverage until such time as Executive's
disability insurance payments begin, provided, however, that Executive
shall use his best efforts to receive such disability insurance
payments. Any such termination for disability shall be only as
expressly permitted by the Americans with Disabilities Act.
(VI) The termination of Executive by Employer for "Cause"
(as hereinafter defined). For purposes of this Agreement, "CAUSE"
shall mean and
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include, subject to the limitations described below, any wrongful act
or omission occurring in a repeated, continuous pattern which
constitutes: (A) .Executive's material neglect, refusal or failure to
diligently perform any lawful direction of Employer or comply with any
other material obligation of Executive under this Agreement, as
determined in good faith by the Board or Employer's Chairman and such
direction or obligation has not been cured within 10 days after
written notice to Executive of such neglect, refusal, failure or
noncompliance; (B) Executive's conviction of any crime involving moral
turpitude or any felony; (C) Executive's commission of an act of theft
or fraud in connection with his duties hereunder; (D) Executive
engaging in any discrimination or sexual harassment with respect to
Executives, customers or vendors of the Employer, the Company or their
Affiliates; (E) Executive's gross negligence or willful misconduct in
connection with the performance of his duties hereunder; or (F) any
material violation of Sections 8 or 9 hereof by Executive.
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(B) PAYMENTS AFTER TERMINATION. In the event Employer terminates
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Executive's employment during the Term without Cause pursuant to Section
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7(a)(ii) above, Executive shall have no further rights or claims against the
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Employer, the Company, or their Affiliates except for (i) the right to continue
to be entitled to receive the base compensation under Section 6(a) above for a
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period of six months following the date of Executive's termination (the
"SEVERANCE PERIOD") payable ratably over the Severance Period in accordance with
the Employer's normal payroll practices; provided, however, that (i) Employer
can elect to continue to pay Executive his base compensation as described in
Section 6(a) for a period longer than the Severance Period, and (ii) the
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restrictions covering Executive described in Sections 9(a) and 9(b) shall remain
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in effect only for the period of time Executive continues to receive payment for
his base compensation; (ii) reimbursement of all business expenses incurred by
the Executive prior to the date of termination; and (iii) the right to continue
to receive during the Severance Period all medical, dental or other health and
welfare benefits provided to Executive during the Term; provided, however, that
such benefits shall cease to the extent Executive receives similar benefits from
any business which employs Executive during the Severance Period. In the event
of termination of the Executive's employment for any reason other than by
Employer without Cause pursuant to Section 7(a)(ii) above, neither Executive nor
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his beneficiary or estate will have any further rights or claims against the
Employer, the Company or their Affiliates except for (i) the unpaid portion of
the base compensation through the date of termination, (ii) reimbursement of all
business expenses incurred by the Executive prior to such date; and (iii) in the
event of Executive's death or permanent disability, the right to receive the
base compensation under Section 6(a) above for a period of two months following
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the date of Executive's termination pursuant to his subclause (iii), and all
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rights of Executive under the terms of any Executive benefit plans or insurance
policies of Employer applicable to Executive.
(C) RETURN OF EMPLOYER'S PROPERTY. Executive agrees that, upon
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the termination of this Agreement, Executive will immediately surrender to the
Employer all of the Employer's property, including, without limitation,
equipment, funds, lists, manuals, books, records or other Confidential
Information (including all copies of the foregoing) in the possession of, or
provided to, Executive.
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8. CONFIDENTIAL INFORMATION AND GOODWILL; INVENTIONS. Executive
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acknowledges and agrees as follows:
(A) As a necessary function of Executive's employment hereunder,
Executive may have access to and utilize Confidential Information which
constitutes a valuable and essential asset of Employer's business;
(B) Employer's relationship with its Executives and the
recognition of Employer as a provider of efficient and effective services in the
Business are valuable and essential elements of the goodwill of Employer; and
(C) All inventions, innovations, developments, improvements,
methods, designs, analyses, drawings, software, reports and all similar or
related information (whether or not patented or patentable) developed by
Executive which (i) directly or indirectly relate to the Employer, the Company
or their Affiliates or the Business, or (ii) result from any work performed by
Executive while employed by Employer, the Company or their Affiliates shall
belong to the Employer and its Affiliates. Executive shall promptly disclose all
such inventions to Employer's Chairman and perform all actions reasonably
requested by Employer's Chairman (whether during or after the Term or any
Renewal Term) to establish and confirm such ownership (including, without
limitation, assignments, consents, powers of attorney and other instruments).
9. NONCOMPETITION, NONSOLICITATION AND PROTECTION OF CONFIDENTIAL
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INFORMATION. Executive covenants and agrees as follows:
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(A) NONCOMPETITION. At any time during the Noncompete Period,
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he will not, as an officer, director, Executive, shareholder, owner, consultant,
principal, agent, trustee or through the agency of any corporation, partnership,
association or agent or agency, except in his capacity as an Executive of
Employer, participate or engage in the Business or any Competitive Activity in
the Trade Area, and shall not be the owner, directly or indirectly, of more than
five percent (5%) of the outstanding capital stock of any corporation,
partnership or other business engaged in any Competitive Activity in the Trade
Area.
(B) NONSOLICITATION.
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(I) At any time during the Nonsolicitation Period,
Executive will not, except in his capacity as an Executive of
Employer,
(A) directly or indirectly knowingly induce any
customer of Employer, the Company or their Affiliates to
patronize any other individual or entity engaged in any
Competitive Activity with respect to such Competitive Activity;
(B) knowingly service, canvass, solicit or accept any
business from any customer of Employer, the Company or their
Affiliates
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for the purpose of competing with Employer, the Company or their
Affiliates;
(C) knowingly, directly or indirectly request or
advise any customer or supplier of Employer, the Company or their
Affiliates to withdraw, curtail or cancel such customer's or
supplier's business with Employer, the Company or their
Affiliates; or
(D) directly or indirectly disclose to any other
Person the name or address of any customer of Employer, the
Company or their Affiliates for the purpose of competing with
Employer, the Company or their Affiliates.
(II) At any time during the Nonsolicitation Period,
Executive further agrees that he will not, either directly or
indirectly, through any Person with which he is now or may hereafter
become associated, solicit for employment or employ any person who is
or was employed by Employer, the Company or their Affiliates at any
time within the one (1) year period immediately preceding such
solicitation or employment without the written permission of the
Company.
(C) DISCLOSURE. During the Term and for a period of two (2)
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years after the termination of Executive's employment hereunder for whatever
reason, Executive will use good faith reasonable efforts to preserve as
confidential and not to, either directly or indirectly, publish, release,
disseminate, disclose or otherwise make available to any third party or use or
otherwise exploit for Executive's own benefit or for the benefit of anyone other
than Employer, any Confidential Information, except as (i) may be expressly
authorized by Employer in its sole discretion, (ii) required during and in the
course of Executive's employment hereunder, or (iii) required by a judicial
order or decree or governmental law or regulation.
(D) REASONABLE RESTRICTIONS. The restrictive covenants and
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agreements contained in this Section 9 are reasonable with respect to subject
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matter, length of time and geographic area, for the protection of the legitimate
business interests of Employer, including, without limitation, Employer's
Confidential Information, goodwill and expectation of conducting its business
without (i) competition from Executive in the Trade Area during the Noncompete
Period and (ii) solicitation by Executive of Employer's Executives, suppliers,
customers or Business during the Nonsolicitation Period. Executive further
acknowledges and agrees that the restrictive covenants and agreement contained
in this Section 9 constitute a material inducement to Employer to enter into
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this Agreement.
10. REMEDIES-COURT ACTION. With respect to each breach or threatened
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breach of Section 9 of this Agreement and without waiver of any right or remedy
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which the Employer may elect to pursue with respect thereto, all remedies
available at law or in equity, including specific performance and injunctive
relief, may be pursued by the Employer at any time. The agreements and
covenants contained in Section 9 shall not be held invalid or unenforceable
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because of the scope of the geographic area or actions subject thereto or
restrictions imposed thereby, or the period of time within which such agreement
or covenant is
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operative, but any judgment of a court of competent jurisdiction may reform or
define the maximum geographic area and actions subject to and restricted by
Section 9 and the period of time during which such agreement or covenant is
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enforceable.
11. CAPTIONS AND NUMBER. The captions of the sections of this
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Agreement have been inserted for convenience of reference only and shall not
affect the interpretation of this Agreement. Whenever it appears appropriate
from the context, each term stated in either the singular or plural shall
include both the singular and the plural.
12. ASSIGNMENT. Neither this Agreement nor any rights or obligations
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hereunder may be assigned, transferred or delegated by either party without the
prior written consent of the other party in his or its sole discretion, and any
attempt to do so shall be void.
13. SEPARATE AGREEMENTS. This Agreement shall be deemed to consist of
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a series of separate covenants. Should a determination be made by a court of
competent jurisdiction that the character, duration, or geographical scope of
any provision of this Agreement is unreasonable in light of the circumstances as
they then exist, then it is the intention and the agreement of the Employer and
Executive that this Agreement shall be construed by the court in such a manner
as to impose only those restrictions on the conduct of Executive which are
reasonable in light of the circumstances as they then exist and as are necessary
to assure the Employer of the intended benefit of this Agreement. If, in any
judicial proceeding, a court shall refuse to enforce all of the separate
covenants deemed included herein because, taken together, they are more
extensive than necessary to assure the Employer of the intended benefit of this
Agreement, then it is expressly understood and agreed by the Employer and
Executive that those covenants which, if reformed in accordance with the terms
of Section 10 above or eliminated, would permit the remaining separate covenants
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to be enforced in such proceeding, shall, for the purpose of such proceeding, be
deemed reformed or eliminated from the provisions hereof (as applicable).
14. POLICIES, REGULATIONS AND GUIDELINES FOR EXECUTIVES. The Employer
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might issue policies, rules, regulations, guidelines, procedures, or other
informational material, whether in the form of handbooks, memoranda, or
otherwise, relating to Employer's Executives. The parties acknowledge and agree
that such materials are general guidelines for Executive's information and shall
not be construed to alter, modify or amend this Agreement for any purpose
whatsoever.
15. AMENDMENT. No amendment of this Agreement shall be valid unless
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made in writing and signed by Employer and Executive.
16. ENTIRE AGREEMENT; AGREEMENT CONFIDENTIAL. This Agreement contains
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the entire agreement and understanding between Employer and Executive with
respect to Executive's employment and supersedes all prior agreements, whether
written or oral, relating to Executive's employment with Employer. No
representations, inducements, or agreements have been made to induce either
Executive or Employer to enter into this Agreement which are not expressly set
forth herein. This Agreement is the sole source of rights and duties as between
Employer and Executive relating to Executive's employment by Employer. Except as
required
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by law, Executive and Employer agree to use reasonable commercial efforts to
maintain as confidential the terms of this Agreement.
17. NOTICE. All notices, consents, requests, approvals or other
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communications in connection with this Agreement shall be in writing and shall
be delivered personally or sent by certified, registered or express mail,
postage prepaid, or by Federal Express or similar overnight courier service, or
by facsimile transmission (with confirmation of transmission), and shall be
deemed delivered on the date received. Unless changed by written notice
pursuant hereto, the address of each party for the purposes hereof is as
follows:
If to Executive:
Xxxxxxx X. Xxxxxxxx
c/o United States Internet, Inc.
0000 X. Xxxxxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Employer:
c/o U.S. Internet Providers, Inc.
00 Xxxxxxxxx Xxxx
Xxxxxxxxxxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
With copies to:
Xxxxx & Xxxxxxx L.L.P.
00xx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000-0000
Telephone: 202/000-0000
Facsimile: 202/637-5910
Attention: Xxxxxxxxxxx X. Xxxxx and
X. Xxxxx Xxxx
18. LAW GOVERNING. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
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IN ACCORDANCE WITH THE LAWS OF THE STATE OF TENNESSEE WITHOUT GIVING EFFECT TO
THAT STATE'S CHOICE OF LAW RULES.
19. COUNTERPARTS; FACSIMILE EXECUTION. This Agreement may be executed
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(i) in several counterparts, each of which shall be deemed an original, but
together they shall constitute one and the same instrument, and (ii) by
facsimile transmission of signature pages
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executed by each party, which shall be evidence of such party's intention to be
bound hereby, with duly signed originals to be exchanged by the parties in due
course.
20. EXECUTIVE'S REPRESENTATIONS AND WARRANTIES. Executive represents
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and warrants that he has full right and authority to enter into this Agreement
and fully perform his obligations hereunder, that he is not subject to any non-
competition agreement other than with Employer. Executive further represents and
warrants that he is not obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, which would
conflict with his obligation to use his best efforts to promote the interests of
Employer or which would conflict with Employer's business as conducted or
proposed to be conducted. Neither the execution nor delivery of this Agreement,
nor the carrying on of Employer's business as an officer, director or Executive
by Executive will conflict with or result in a breach of the terms, conditions
or provisions of, or constitute a default under, any contract, covenant or
instrument under which Executive is now obligated.
IMPORTANT: THIS AGREEMENT CONTAINS VERY IMPORTANT TERMS GOVERNING YOUR
EMPLOYMENT WITH EMPLOYER. SECTION 9 CONTAINS PROVISIONS WHICH AFFECT YOUR
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ABILITY TO TAKE CERTAIN ACTIONS FOLLOWING THE TERMINATION OF THIS AGREEMENT.
YOU SHOULD FEEL FREE TO SEEK ADVICE FROM YOUR ATTORNEY REGARDING ANY MATTER
RELATING TO THIS AGREEMENT. BY EXECUTING THIS AGREEMENT, YOU ARE AFFIRMING THAT
YOU HAVE HAD THE OPPORTUNITY TO REVIEW THIS AGREEMENT AND TO CONSULT WITH YOUR
ATTORNEY IF YOU SO DESIRED, THAT YOU UNDERSTAND THE MEANING AND SIGNIFICANCE OF
ALL OF ITS PROVISIONS, THAT NO REPRESENTATIONS OR PROMISES HAVE BEEN MADE TO YOU
REGARDING YOUR EMPLOYMENT WHICH ARE NOT SET FORTH IN THIS AGREEMENT, AND THAT
YOU ARE FREELY SIGNING THIS AGREEMENT TO OBTAIN EMPLOYMENT WITH EMPLOYER.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
"EXECUTIVE"
___________________________________
Xxxxxxx X. Xxxxxxxx
"EMPLOYER"
UNITED STATES INTERNET, INC.
By:________________________________
Name:___________________________
Title:__________________________
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ANNEX A
XXXXXXXX EMPLOYMENT AGREEMENT
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TYPE OF OPTIONS: PERFORMANCE OPTIONS ARE NON-QUALIFIED STOCK OPTIONS.
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. Number of options: The total number of Performance
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Options to be awarded to key members of Employer's
management by Executive shall be 200,000.
Grant date: Performance Options are granted upon the Company's IPO.
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Term: The term of each Performance Option is 10 years from the
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grant date, as long as the option holder remains an
employee of Employer.
Exercise price: The exercise price of each Performance Option is equal
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to the price per share of the common stock issued to the
public in the Company's IPO.
Fixed vesting: Performance Options vest on a fixed vesting schedule of
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1/3 each year on the sixth, seventh and eighth
anniversary of the grant date, as long as the
optionholder remains an employee.
Accelerated vesting: Performance Options have accelerated vesting upon
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achievement of "Revenue Increments" on the following
schedule:
20% @ $5 million of Revenue Increment
40% @ $10 million of Revenue Increment
60% @ $15 million of Revenue Increment
80% @ $20 million of Revenue Increment
100% @ $25 million of Revenue Increment
Option plan: The Performance Options will be options issued under the
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Company's Equity Compensation Plan to be put in place
before the IPO.
