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EXHIBIT 10.7
AGREEMENT
THIS AGREEMENT (the "Agreement") made as of the 24th day of August, 1999 by
and between XXXXXXXXXXXX.XXX INC., a Delaware corporation (the "Company"), and
XXXX X. XXXX (the "Executive").
The Executive is presently employed by the Company as its President and
Chief Executive Officer.
The Board of Directors of the Company desires to set forth the nature and
amount of compensation and other benefits to be provided to the Executive and
any of the rights of the Executive in the event of his termination of employment
with the Company. The Executive is willing to commit himself to continue to
serve the Company, on the terms and conditions herein provided.
In order to effect the foregoing, the Company and the Executive wish to
enter into this Agreement under the terms and conditions set forth below.
Accordingly, in consideration of the promises and the respective covenants and
agreements of the parties herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Employment. The Company hereby agrees to continue to employ the
Executive, and the Executive hereby agrees to continue to serve the Company, on
the terms and conditions set forth herein.
2. Term. The term of Executive's employment under Section 1 will terminate
upon the termination of Executive's employment with the Company for any reason
whatsoever. No such termination shall affect any of the Company's other
obligations under this Agreement arising at or after such termination of
employment.
3. Position and Duties. The Executive shall serve as President and Chief
Executive Officer of the Company and shall have such responsibilities and
authority as may normally be exercised by a person in such positions at a
company.
4. Place of Performance. The Executive shall be based at the current or
future headquarters of the Company, provided that any future headquarters is not
more than twenty-five (25) miles from the location of the Company's headquarters
on the date hereof.
5. Compensation and Related Matters.
(a) Base Salary. During the Executive's employment with the Company,
the Company shall pay to the Executive a salary at a rate of not less than One
Hundred Sixty Thousand Dollars ($160,000) per annum in equal installments as
nearly as practicable on the normal payroll periods for employees of the Company
generally (the "Base Salary"). The Base Salary may be increased from time to
time and, if so increased, shall not thereafter be decreased during the term of
this Agreement.
(b) Bonus. The Executive shall be eligible to receive an annual bonus
equal to twenty-five percent (25%) of Executive's Base Salary (the "Annual
Bonus") payable in
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accordance with goals to be developed by the Company's Compensation Committee
in accordance with Executive on an annual basis.
(c) Expenses. During the term of the Executive's employment hereunder,
the Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in performing services hereunder,
including all expenses of travel and living expenses while away from home on
business or at the request of and in the service of the Company, provided that
such expenses are incurred and accounted for in accordance with the policies and
procedures established by the Company.
(d) Benefits. During the term of the Executive's employment hereunder,
the Company shall maintain in full force and effect, and the Executive shall be
entitled to continue to participate in, all of its employee benefit plans and
arrangements in effect on the date hereof in which the Executive participates or
receives benefits, or plans or arrangements providing the Executive with at
least equivalent benefits thereunder. The Company shall not make any changes in
such plans and arrangements which would adversely affect the Executive's rights
or benefits thereunder, unless such change occurs pursuant to a program
applicable to all officers of the Company and does not result in a
proportionately greater reduction in the rights of or benefits to the Executive
as compared with any other officers of the Company. The Executive shall be
entitled to participate in or receive benefits under any employee benefit plan
or arrangement made available by the Company in the future to its officers and
key management employees, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans and arrangements. Nothing
paid to the Executive under any plan or arrangement presently in effect or made
available in the future shall be deemed to be in lieu of any amounts payable to
the Executive pursuant to this Section 5.
6. Termination and Definitions.
(a) Cause. The Executive's rights under Section 5 of this Agreement
shall immediately be terminated if the Executive's employment is terminated for
Cause.
(b) Termination by the Executive. The Executive may terminate his
employment hereunder for Good Reason.
(c) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive shall be communicated by written
Notice of Termination to the other party hereto.
(d) Definitions.
(i) For purposes of this Agreement, termination "for Cause"
shall arise where termination results from (A) conviction of, or the pleading of
nolo contendere to, a felony; (B) a material breach of this Agreement which
materially and adversely affects the Company's business and operations; (C) the
failure of Executive for any reason, within ten (10) days after receipt by
Executive of written notice thereof from the Company, to correct, cease or
otherwise alter any failure to comply with instructions or other action or
omission to act which will materially or adversely affect its business or
operations; (D) misconduct by Executive which is of such a serious and
substantial nature that a reasonable likelihood exists that such misconduct
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will materially injure the reputation of the Company if Executive was to remain
employed by the Company; and (E) proven gross negligence.
(ii) For purposes of this Agreement, "Good Reason" shall mean
(A) the termination of Executive's employment with the Company other than for
Cause, (B) Executive's voluntary termination of employment with the Company
within ninety (90) days following any of (i) a decrease in Executive's base
salary below its level in effect on the date prior to such termination, (ii) a
material reduction in Executive's job responsibilities without Executive's
consent, or (iii) a geographical relocation of the Executive more than
twenty-five (25) miles from the current location of the Company without his
consent, or (C) a Change of Control of the Company followed, within two years
after such Change of Control, by (i) the termination of Executive's employment
with the Company other than for Cause, or (ii) the Executive's voluntary
termination of employment with the Company within ninety (90) days following any
of (x) a decrease in Executive's base salary below its level in effect on the
date prior to such termination, (y) a material reduction in Executive's job
responsibilities without Executive's consent, or (z) a geographical relocation
of the Executive more than twenty-five (25) miles from the current location of
the Company without his consent.
(iii) For purposes of this Agreement, a "Change in Control" of
the Company shall be deemed to have occurred if (A) any "person" (as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company (not including any securities acquired directly from the Company)
representing more than 50% of the combined voting power of the Company's then
outstanding securities; (B) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (i) a merger
or consolidation 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 entity) at least 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company in which no person acquires more
than 50% of the combined voting power of the Company and outstanding securities;
or (C) the shareholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.
(iv) For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
7. Compensation upon Termination.
(a) Termination for Cause or Resignation Without Good Reason. If (i)
the Executive's employment shall be terminated for Cause, or (ii) the Executive
voluntarily resigns from the employ of the Company and Good Reason shall not
have occurred, then the Company shall pay the Executive his Base Salary through
the date of delivery to him of a Notice of
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Termination at the rate then in effect at the time and date the Notice of
Termination is delivered, and the Company shall have no further obligations to
the Executive under this Agreement.
(b) Termination Without Cause or Resignation for Good Reason. If the
Company shall terminate the Executive's employment other than pursuant to
Section 6(a) hereof (it being understood that a purported termination pursuant
to Section 6(a) hereof, which is disputed and finally determined not to have
been pursuant to Section 6(a) shall be a termination by the Executive pursuant
to Section 6(b)) or if the Executive terminates his employment for Good Reason,
then:
(i) the Company shall pay to the Executive, upon his
termination, his Base Salary through the date of termination at the rate in
effect at the time Notice of Termination is delivered, together the Executive's
pro-rata bonus under Section 5(b) hereof; and
(ii) in lieu of any further salary or bonus payments to the
Executive for periods subsequent to the date of termination, the Company shall
pay, as severance pay to the Executive, an amount equal to one hundred percent
(100%) of the Executive's Base Salary in effect as of the date of termination,
payable monthly in twelve (12) equal installments after termination of
employment.
(c) Termination Upon a Change in Control. If there is a Change in
Control of the Company or there has been a public announcement of a Change in
Control of the Company (provided, however, that consummation of the Change in
Control of the Company shall be a condition precedent to the effectiveness of
this provision) and at any time thereafter the employment of the Executive under
this Agreement is terminated other than pursuant to Section 6(a) hereof by the
Company or a successor entity or is terminated with Good Reason by the
Executive, then:
(i) the Company shall pay to the Executive, upon his
termination, his Base Salary through the date of termination at the rate in
effect at the time Notice of Termination is given together with pro-rata bonus;
and
(ii) in lieu of any further salary or bonus payments to the
Executive for periods subsequent to the date of termination, the Company shall
pay on the date of termination, as severance pay to the Executive, a lump sum
payment in an amount equal to one hundred fifty percent (150%) of the
Executive's Base Salary in effect as of the date of termination.
(d) Continuation of Benefit Plans. Upon any termination of the
Executive's employment, other than pursuant to Section 6(a) hereof or by the
Executive without Good Reason, the Company shall maintain in full force and
effect for the continued benefit of the Executive for twelve (12) months, or
eighteen (18) months if there has previously occurred a Change in Control of the
Company, all employee benefit plans and programs in which the Executive was
entitled to participate.
(e) Participation in Benefit Plans after Termination of Employment.
The Executive shall be entitled to continue to participate in any benefit plan
or program of the
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Company for twelve (12) months after the expiration of the period provided for
in Section 7(d), provided, that the Executive pays the direct cost of any such
benefit plan or program.
8. Successors; Binding Agreement.
(a) Successors. The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 8 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
(b) Binding Agreement. This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts would still be payable to him hereunder if he had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Executive's devisee, legatee, or other
designee or, if there be no such designee, to the Executive's estate.
9. Notice. For the purposes of this Agreement, notices, demands and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or (unless otherwise specified)
mailed by United States registered mail, return receipt requested, postage
prepaid, addressed, if to the Executive, to his address as it appears in the
records of the Company, or if to the Company, as follows:
XxxxxxxXxxxx.xxx Inc.
0000 Xxxxxx Xxxxxxxxx Xxxxxx, XX
Xxxxx 000
Xxxxxxxxxx, XX 00000
or to such other address as any party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
10. Prior Agreement. All prior agreements between the Company and the
Executive with respect to the employment of the Executive including, without
limitation, the Key Employee Agreement dated July 27, 1998 are hereby
superseded and terminated effective as of the date hereof and shall be without
further force or effect.
11. Counsel Fees. In the event that (i) the Company terminates, or seeks
to terminate, this Agreement, alleging as justification for such termination a
material breach by Executive or a Cause, or Causes, set out in Section 6 hereof;
Executive disputes such termination or attempted termination; and Executive
prevails, or (ii) Executive elects to terminate his service hereunder pursuant
to Section 6 of this Agreement; the Company disputes its obligation to pay to
Executive his Base Salary or Annual Bonus as provided in Section 5; and
Executive prevails; the Company
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shall pay, or reimburse to Executive, all reasonable costs incurred by him in
such dispute, including attorneys' fees and costs.
12. Miscellaneous. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and duly authorized officer of the Company. No
waiver by either party hereto at any time of any breach by the other hereto of,
or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the District of
Columbia
13. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date and year first above written.
XXXXXXXXXXXX.XXX INC.
By: /s/ XxxxxxxXxxxx.xxx Inc.
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EXECUTIVE:
/s/ Xxxx X. Xxxx
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Xxxx X. Xxxx
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