Exhibit 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (as amended, modified, restated or supplemented
from time to time, the "AGREEMENT"), dated as of February 23, 2006, by and
among Xxxxxx Communications, Inc., a Delaware corporation, (the "COMPANY"),
Xxxxxx Network Systems, LLC, a Delaware limited liability company ("XXXXXX"),
and the individual set forth on ATTACHMENT 1 (the "EXECUTIVE").
WHEREAS, the Company desires to employ the Executive on a full-time
basis and the Executive desires to be so employed by the Company.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein (including, without limitation, the Company's employment of
the Executive and the advantages and benefits thereby inuring to the Executive)
and for other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged by each party hereto, the parties
hereby agree as follows:
1. EMPLOYMENT OF THE EXECUTIVE.
1.1 EMPLOYMENT BY THE COMPANY. The Company hereby employs the
Executive in the position set forth on ATTACHMENT 1 and the Executive hereby
accepts such employment with the Company. During the Employment Period (as
defined in Section 3), the Executive shall directly and exclusively report to,
and perform such duties and services for the Company and its subsidiaries and
affiliates (collectively, "AFFILIATES"), as may be designated from time to time
by the individuals referred to on ATTACHMENT 1. During the Employment Period,
the Executive shall devote all of his business time and attention to his
employment under this Agreement; PROVIDED, HOWEVER, that the Executive may
continue to engage in the outside activities set forth on ATTACHMENT 1 during
the Employment Period. The Executive acknowledges that he shall be required to
travel on business in connection with the performance of his duties hereunder.
1.2 LOCATION. During the Employment Period, the Executive's principal
place of employment shall be Germantown, Maryland; PROVIDED, HOWEVER, that the
Executive shall be required to travel in a manner consistent with his
employment as a senior executive employed in a world-wide business.
2. COMPENSATION AND BENEFITS.
2.1 (a) SALARY. During the Employment Period, the Company shall pay
the Executive for services during his employment under this Agreement a base
salary of no less than the annual rate set forth on ATTACHMENT 1 ("BASE
SALARY"). The Base Salary received by the Executive shall be reviewed by the
Compensation Committee (the "COMPENSATION COMMITTEE") of the Board of Directors
of the Company (the "BOARD") no less frequently than annually. If at any time a
Compensation Committee does not exist, all references herein to the
"Compensation Committee" shall be deemed to be the "Board." Any and all
increases to the Executive's Base Salary shall be determined by the
Compensation Committee, in its sole discretion. During the Employment Period,
such Base Salary shall be payable in accordance with the Company's customary
payroll policies in force at the time of payment, less any required or
authorized payroll deductions. The Base Salary may be increased, but not
decreased, during the Employment Period.
(b) ANNUAL BONUS. For each fiscal year during the Employment Period,
the Executive shall be eligible to receive an annual discretionary bonus with a
target amount (the "TARGET BONUS AMOUNT") up to the percentage of his Base
Salary set forth on ATTACHMENT 1, subject to his satisfaction of objective
performance criteria that have been pre-established by the Compensation
Committee (such as minimum EBITDA, free cash flow, backlog, and accomplishment
of strategic goals (e.g., the successful launch and implementation of Spaceway
3)).
(c) EQUITY COMPENSATION. On the date hereof, pursuant to the terms of
the Restricted Unit Agreement (as defined below), the Executive shall receive
the number of Class B Units of Xxxxxx as set forth on ATTACHMENT 1 (the
"RESTRICTED UNITS"), having the terms and conditions provided below and such
other terms and conditions not inconsistent therewith as may be provided for in
the Restricted Unit Purchase Agreement attached hereto as EXHIBIT A (as
amended, modified, supplemented or restated from time to time, the "RESTRICTED
UNIT AGREEMENT"), and the Second Amended and Restated Limited Liability Company
Agreement of Xxxxxx (as amended, modified, supplemented or restated from time
to time, the "LLC AGREEMENT"). The Executive acknowledges that the Restricted
Units will be subject to the terms and conditions set forth in this Agreement,
the Restricted Unit Agreement and the LLC Agreement and shall be subject to a
substantial risk of forfeiture and restrictions on transferability.
(d) TIME-VESTING UNITS. 50.0 percent of the Restricted Units issued to
the Executive pursuant to the terms of the Restricted Unit Agreement (the
"TIME-VESTING UNITS") shall vest over sixty months with 10 percent of the Time
Vesting Units vesting on the first day of the 7th month following January 24,
2006 and the remainder of the Time Vesting Units vesting in fifty-four equal
months installments of 1.6667 percent commencing on the first day of the 8th
month following January 24, 2006, subject to the Executive's continued
employment on the date of vesting and to Section 4 below. Notwithstanding
anything to the contrary contained herein, if the Executive is employed by the
Company on the date that the Investor (together with its affiliates) holds less
than 20% of the aggregate equity interests, measured by vote and value, of
Xxxxxx (an "INVESTOR DILUTION TRANSACTION"), then all of the Time Vesting Units
shall vest on the later to occur of (i) January 24, 2009 or (ii) the first
anniversary of the date on which the Investor Dilution Transaction occurs. For
the avoidance of doubt, following the occurrence of an Excluded Event (as
defined below), but subject to the other provisions herein, the Time Vesting
Units shall continue to vest in accordance with and subject to the terms and
conditions set forth herein.
(e) PERFORMANCE UNITS. The remaining 50.0 percent of the Restricted
Units granted to the Executive pursuant to the terms of the Restricted Unit
Agreement (the "PERFORMANCE UNITS") shall vest as follows: (X) 50.0 percent of
the Performance Units shall vest on the Performance Unit Vesting Date, if and
when the Company has received a Cumulative Total Return as set forth below of
at least 3.0 times the amount of its aggregate Capital Contributions (as
defined in the LLC Agreement) as of the Test Date (as defined below) and (Y)
the remaining 50.0 percent of the Performance Units shall vest on the
Performance Unit Vesting Date, if and when the Company has received a
Cumulative Total Return of at least 5.0 times the amount of its aggregate
Capital Contributions as of the Test Date, in each case, subject to the
Executive's continued employment as of the Performance Unit Vesting Date, and
to Section 4 below. If the Performance Units remain outstanding but not yet
vested as of January 24, 2011, they shall be forfeited upon such anniversary;
PROVIDED, HOWEVER, that in the event that any Performance Units remain
outstanding upon such anniversary and the valuation process referred to in the
definition of "CUMULATIVE TOTAL RETURN" has not yet been completed in
accordance with the terms hereof, the forfeiture of such Performance Units
shall be tolled until the completion of such valuation process. For the
avoidance of doubt, following the occurrence of an Excluded Event, but subject
to the other provisions herein, the Performance Units shall continue to vest in
accordance with and subject to the terms and conditions set forth herein.
(f) DEFINED TERMS.
(A) CUMULATIVE TOTAL RETURN. The "CUMULATIVE TOTAL RETURN" means the
sum (net of all transaction and valuation costs) of (i) all dividends and other
distributions, but specifically excluding tax distributions and expense
reimbursement payments) paid to the Company with respect to the Class A Units,
(ii) the gross proceeds of any sale of Class A Units by the Company, and (iii)
solely for purposes of determining Cumulative Total Return as of the Test Date,
the fair market value of the Class A Units held by the Company on the Test
Date, which will be determined by a nationally recognized third party valuation
firm selected by the Company. Notwithstanding anything in this Agreement to the
contrary, upon a Significant Event Cumulative Total Return shall be finally
determined and there shall be no further opportunity to vest in any Performance
Units.
(B) PERFORMANCE UNIT VESTING DATE. The "PERFORMANCE UNIT VESTING DATE"
means the earlier to occur of (i) January 24, 2011 or (ii) the consummation of
a Significant Event.
(C) SIGNIFICANT EVENT. A "SIGNIFICANT EVENT" means a Change of Control
or a liquidation, dissolution or winding up of Xxxxxx in accordance with the
LLC Agreement. Notwithstanding the foregoing, a Significant Event shall not
include the consummation of any public offering of the securities of the
Company pursuant to a registration statement declared effective by the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(an "EXCLUDED EVENT").
(D) TEST DATE. The "TEST DATE" means the date that is the earlier to
occur of (i) April 23, 2010 and (ii) the consummation of a Significant Event.
(g) ADJUSTMENT. In the event of any equity split, reverse split,
equity distribution, merger, consolidation, recapitalization or similar event
affecting the capital structure of Xxxxxx, the number and kind of equity
interests (or other property, including without limitation cash) subject to the
Restricted Units shall be equitably adjusted as determined in good faith by the
Compensation Committee to prevent the dilution or enlargement of the value of
the Executive's Restricted Units.
(h) BENEFITS. During the Employment Period, the Executive shall be
eligible to participate, on the same basis and at the same level as other
similarly situated senior executives of the Company generally, in any group
insurance, hospitalization, medical, vision, health and accident, disability,
life insurance, fringe benefit and retirement plans or programs of the Company
now existing or hereafter established to the extent that he is eligible under
the general provisions thereof. During the Employment Period, the Executive
shall be entitled to a number of days of vacation time annually as set forth on
ATTACHMENT 1, consistent with the Company's policies at such time as may be
mutually agreed by the parties hereto.
(i) EXPENSES. During the Employment Period, pursuant to the Company's
customary reimbursement policies in force at the time of payment, the Executive
shall be promptly reimbursed, subject to the Executive's presentation of
vouchers or receipts therefor, for all expenses properly incurred by the
Executive on behalf of the Company in the performance of the Executive's duties
hereunder.
(j) EXECUTIVE AUTOMOBILE BENEFITS. During the Employment Period, the
Company shall provide the Executive with an annual car allowance in the amount
set forth on Attachment 1 (the "AUTO ALLOWANCE"), which such amount shall be
paid in accordance with the policies or practices of the Company.
(k) SIX-MONTH BONUS. If the Executive continues to be employed by the
Company on July 24, 2006, the Company shall provide Executive with a cash bonus
in the amount set forth on ATTACHMENT 1 (the "SIX-MONTH BONUS"). The Six-Month
Bonus shall be payable in accordance with the Company's customary payroll
policies in force at the time of payment, less any required or authorized
payroll deductions
3. EMPLOYMENT PERIOD. The Executive's employment under this Agreement
commenced on January 24, 2006 and shall terminate on the second anniversary of
the date thereof, unless terminated earlier pursuant to Section 4 (the "INITIAL
EMPLOYMENT PERIOD"). Unless written notice of either party's desire to
terminate this Agreement has been given to the other party at least ninety days
but no more than one hundred and twenty days prior to the expiration of the
Initial Employment Period (or any renewal thereof contemplated by this
sentence), the term of the Executive's employment hereunder shall be
automatically renewed for successive one-year periods (such term, including the
Initial Employment Period, as it may be extended, the "EMPLOYMENT PERIOD").
Notice of non-renewal provided by the Company shall be treated as a termination
by the Company without Cause for purposes of Sections 4.4(a), (b) and (c) and
Section 4.10, and the Company shall have no additional obligation to the
Executive other than the payment of the Accrued Obligations (as defined below),
except as otherwise required by law or the terms of the Company's benefit
plans. Notice of non-renewal provided by the Executive shall be treated as a
termination by the Executive without Good Reason for purposes of Section
4.6(a).
4. TERMINATION AND FORFEITURE OF PAYMENTS AND BENEFITS.
4.1 TERMINATION BY THE COMPANY FOR CAUSE. The Executive's employment
with the Company may be terminated at any time by the Company for Cause. Upon
such a termination, the Company shall have no obligation to the Executive
pursuant to this Agreement or any other agreement executed in connection
herewith other than the payment of the Executive's (i) earned but unpaid base
salary and any bonus earned in accordance with the terms of the applicable
bonus plan but which has not been paid, (ii) accrued but unused vacation, and
(iii) accrued but unreimbursed documented business expenses incurred in
accordance with Company policies, in each case, through the effective date of
such termination (the "ACCRUED OBLIGATIONS"), except as otherwise required by
law or by the terms of the Company's benefit plans. All Restricted Units that
have not yet been vested as of the date of termination, shall be forfeited as
of the date of termination. Any Restricted Units that have vested may be
repurchased by Xxxxxx at any time following such termination of employment at a
price per Restricted Unit equal to the lesser of (i) the greater of (1) (x)
fair market value thereof as determined by the Company in its reasonable and
good faith discretion (the "FAIR MARKET VALUE") of such Restricted Unit on the
date of the termination minus (y) the value of any dividends or other
distributions previously paid to the Executive in respect of such Restricted
Unit (subject to equitable adjustment in the Company's discretion to reflect
equity distributions, corporate transactions, or similar events, to the extent
not reflected in (y)) and (2) $0, and (ii) (x) the original purchase price paid
for such Restricted Unit by the Executive minus (y) the value of any dividends
or other distributions previously paid to the Executive in respect of such
Restricted Unit, but in no event less than $0.
For purposes of this Agreement, the term "CAUSE" shall mean any of the
following: (i) the Executive's failure to perform materially his duties under
this Agreement (other than by reason of illness or disability), (ii) the
Executive's commission of any felony, or his commission of any other crime
involving moral turpitude or his commission of a material dishonest act or
fraud against the Company or any of its Affiliates, (iii) the Executive's use
or sale of illegal drugs, (iv) any act or omission by the Executive that (A) is
the result of his misconduct or gross negligence and that is, or may reasonably
be expected to be, materially injurious to the financial condition, business or
reputation of the Company or any of its Affiliates or (B) is the result of his
willful, reckless or grossly negligent act or omission occurring during the
Employment Period or during the one-year period prior to the date hereof and
results in a violation of any international trade law, (v) the Executive's
breach of any material provision of this Agreement, the Conflict of Interest
and Confidentiality Agreement, the Restricted Unit Agreement or the LLC
Agreement, or (vi) the Executive's exercise of this right to revoke the release
set forth in, and in accordance with, Section 9 hereof. Any such occurrence
described in clauses (i), (iv)(B) or (v) of the preceding sentence shall
constitute "CAUSE" only after the Company has given the Executive written
notice that the Company has elected to terminate his employment for Cause,
which notice shall specify the particular acts or failures to act on the basis
of which the decision to so terminate employment was made. In the case of a
termination for Cause described in clause (i), (ii), or (iv), the Executive
shall be given the opportunity to meet with the Board within twenty (20)
business days of receipt of such notice to defend such acts or failures to act.
4.2 PERMANENT DISABILITY. If, during the Employment Period, the
Executive becomes permanently disabled within the meaning of the Company's
applicable long-term disability plan, the Company shall have the right to
terminate the Executive's employment with the Company upon written notice to
the Executive. Upon such a termination, the Company shall have no obligation to
the Executive other than payment of the Accrued Obligations and to treat the
Restricted Units as described below in this Section 4.2, except as otherwise
required by law or by the terms of the Company's benefit plans. Any Time
Vesting Units that are not vested as of the date of termination shall vest as
of the date of termination. If the Performance Units are not vested as of the
date of termination, the Performance Units will remain outstanding until the
180th day following the date of termination (not to exceed January 24, 2011,
and if the Performance Unit Vesting Date occurs prior to the last day of such
180-day period and the Company meets the applicable Cumulative Total Return
goal as of the Test Date, the Executive will vest in a number of Performance
Units at such time as each applicable Cumulative Total Return goal is met. All
other Performance Units will be forfeited. If any Performance Units remain
outstanding but have not yet vested as of the expiration of the foregoing
180-day period, they shall be forfeited. Section 4.10 shall apply to Xxxxxx'
repurchases of vested Restricted Units. Notwithstanding the foregoing, the
Board, in its sole discretion, may permit the vesting of any Performance Units
that are not vested as of the date of termination.
4.3 DEATH. The Executive's employment with the Company shall terminate
automatically upon the death of the Executive and the Company shall have no
obligation to the Executive or the Executive's estate other than payment of the
Accrued Obligations and to treat the Restricted Units as described below in
this Section 4.3, except as otherwise required by law or by the terms of the
Company's benefit plans. Any Time Vesting Units that are not vested as of the
date of termination shall vest as of the date of termination. If the
Performance Units are not vested as of the date of termination, the Performance
Units will remain outstanding until the 180th day following the date of
termination (not to exceed January 24, 2011), and if the Performance Unit
Vesting Date occurs prior to the last day of such 180-day period and the
Company meets the applicable Cumulative Total Return goal as of the Test Date,
the Executive will vest in a number of Performance Units at such time as each
applicable Cumulative Total Return goal is met. All other Performance Units
will be forfeited. If any Performance Units remain outstanding but have not yet
vested as of the expiration of the foregoing 180-day period, they shall be
forfeited. Section 4.10 shall apply to Xxxxxx' repurchases of vested Restricted
Units. Notwithstanding the foregoing, the Board, in its sole discretion, may
permit the vesting of any Performance Units that are not vested as of the date
of termination.
4.4 TERMINATION BY THE COMPANY WITHOUT CAUSE. The Executive's
employment with the Company may be terminated at any time by the Company
without Cause. In such event, the Executive shall have the rights set forth in
the subparagraphs below.
(a) SEVERANCE. Subject to the Executive's continued compliance with
his obligations under this Agreement and the other agreements executed in
connection herewith, the Company shall have no obligation to the Executive
other than: (i) the payment of the Accrued Obligations; (ii) the payment of an
amount equal to the sum of the Executive's annual Base Salary (as in effect as
of the date of termination) plus the Target Bonus Amount that would have been
payable to the Executive for the calendar year in which such termination occurs
as if the Executive were employed by the Company at the end of such year; (iii)
treatment of the Restricted Units as described below in Section 4.4(b) and (c)
and Section 4.10; (iv) the continuation of the Executive's participation in all
Company health and medical plans in which the Executive was participating
immediately prior to the date of termination, on the same basis as other senior
executives of the Company, for a period twelve months following such date of
termination; and (vi) reasonable executive outplacement benefits, except as
otherwise required by law or by the terms of the Company's benefit plans
(excluding severance plans). All payments pursuant to this Section 4.4(a) shall
be made in a lump sum; PROVIDED, HOWEVER, that the payment of the bonus
pursuant to Section 4.4(a)(ii) shall be paid at the time and in the manner
bonuses are paid to the executive officers of the Company for the year in which
such termination occurred. In the event that the Executive is eligible to
receive the severance benefits provided for by this Section 4.4(a), the
Executive shall not be eligible to receive severance benefits under any other
Company plan, policy or agreement.
(b) TIME VESTING UNITS. To the extent that any Time Vesting Units
remain unvested as of the date that is six (6) months following such
termination, such unvested Time Vesting Units shall be forfeited as of such
date; PROVIDED, that if the termination without Cause occurs within the
one-year period after a Change of Control (as defined in Section 4.8 below),
all unvested Time Vesting Units shall vest as of the date of termination.
(c) PERFORMANCE UNITS. If the Performance Units are not vested as of
the date of termination, the Performance Units will remain outstanding until
the 180th day following the date of termination (not to exceed January 24,
2011), and if the Performance Unit Vesting Date occurs prior to the last day of
such 180-day period and the Company meets the applicable Cumulative Total
Return goal as of the Test Date, the Executive will vest in a number of
Performance Units at such time as each applicable Cumulative Total Return goal
is met. All other Performance Units will be forfeited. In the event that (i)
Xxxxxx consummates an initial public offering of its equity interests prior to
January 24, 2009 and (ii) the Executive's employment with the Company is
terminated without Cause after January 24, 2009, then the unvested Performance
Units shall remain outstanding until the Performance Unit Vesting Date. If the
Performance Units remain outstanding but not yet vested as of January 24, 2011,
they shall be forfeited.
4.5 TERMINATION BY THE EXECUTIVE FOR GOOD REASON. (a) During the
Employment Period, the Executive's employment with the Company may be
terminated by the Executive for Good Reason, if the Executive provides the
Company with notice within 90 days following the Executive's knowledge of the
event constituting Good Reason. In the event that the Executive terminates his
employment with the Company for Good Reason, the Executive shall be entitled to
the same payments and benefits that he would have been entitled to receive
under Section 4.4 if his employment had been terminated by the Company without
Cause and Xxxxxx shall be entitled to the repurchase rights thereunder.
(b) For purposes of this Agreement, the term "GOOD REASON" shall mean
any of the following conditions or events without the Executive's prior
consent: (i) a material diminution of the Executive's position or
responsibilities that is inconsistent with the Executive's title (PROVIDED that
(x) any change in the Executive's position or responsibilities that occurs as a
result of a sale of the Company or its significant assets or (y) any change in
the Executive's position or responsibilities pursuant to an internal
reorganization, in each case, following which the Executive's level of position
at the Company is not materially diminished shall not give rise to Good Reason
under clause (i) or clause (ii) of this definition), (ii) a material and
willful breach by the Company of any terms of this Agreement, (iii) a reduction
in the Executive's Base Salary or the percentage of his Base Salary eligible as
a target bonus, or (iv) a relocation of the Executive's principal place of
business more than fifty (50) miles away from the location set forth as the
Executive's principal place of business in Section 1.2. Any such occurrence
shall constitute "GOOD REASON" only after the Executive has given the Company
written notice of, and twenty (20) business days opportunity to cure, such
violation after receipt by the Company of such written notice, and then only if
such occurrence is not cured.
4.6 TERMINATION BY THE EXECUTIVE WITHOUT GOOD REASON.
(a) The Executive may voluntarily resign from his employment with the
Company without Good Reason, PROVIDED that the Executive shall provide the
Company with ninety (90) days' advance written notice (which notice requirement
may be waived, in whole or in part, by the Company in its sole discretion) of
his intent to terminate. Upon such a termination, the Company shall have no
obligation to the Executive pursuant to this Agreement or any other agreement
executed in connection herewith other than the payment of the Accrued
Obligations, except as otherwise required by law or by the terms of the
Company's benefit plans. All Restricted Units that have not yet been vested as
of the date of termination shall be forfeited as of the date of termination.
Subject to Section 4.6(b), any Restricted Units that have vested may be
repurchased by Xxxxxx at any time following such termination of employment at a
price per Restricted Unit equal to the lesser of (i) the (x) Fair Market Value
of such Restricted Unit on the date of the termination minus (y) the value of
any distributions previously paid to the Executive in respect of such
Restricted Unit (subject to equitable adjustment in the Company's discretion to
reflect equity distributions, corporate transactions, or similar events, to the
extent not reflected in (y)) and (ii) the original purchase price paid for such
Restricted Unit by the Executive.
(b) If the Executive terminates his employment with the Company
pursuant to this Section 4.6 and represents, warrants and covenants (the
"RETIREMENT COVENANT") that he is permanently retiring and does not intend to,
and will not, engage in any business or professional activity whether as an
employer, consultant or owner (excluding the Executive's Management of his
owned real estate or his personal portfolio of publicly traded securities),
then any Restricted Units that have vested may be repurchased by Xxxxxx at any
time following such termination of employment at a price per Restricted Unit
regardless of the value of the Escrow Amount (as defined below) equal to the
(x) Fair Market Value of such Restricted Unit on the date of the termination
minus (y) the value of any distributions previously paid to the Executive in
respect of such Restricted Unit (subject to equitable adjustment in the
Company's discretion to reflect equity distributions, corporate transactions,
or similar events, to the extent not reflected in (y)). All amounts (whether
cash, securities or other property) (the "ESCROW AMOUNT") (i) payable upon the
exercise of the repurchase right set forth in the prior sentence and (ii)
derived from the Restricted Units whether from distribution, a Liquidity Event
resulting after the date that the Executive terminates his employment with the
Company (the "RETIREMENT DATE") pursuant to this Section 4.6(b) or otherwise,
in each case, shall be deposited into an escrow account under the sole control
of Xxxxxx. The Escrow Amount shall be promptly released to the Executive on the
fifth anniversary of the Retirement Date (or to his estate upon his death) if
the Executive has complied with the Retirement Covenant in all respects. If the
Executive violates the Retirement Covenant at any time prior to the earlier of
(x) the fifth anniversary of the Retirement Date and (y) the date of his death,
the Escrow Amount shall be promptly released to Xxxxxx for the sole benefit of
Xxxxxx and the Executive shall have no right or claim to the Escrow Amount or
any other rights with respect to the Restricted Units repurchased by Xxxxxx
pursuant to this Section 4.6(b). For the purposes of this Agreement, the term
"LIQUIDITY EVENT" shall mean the consummation of an Excluded Event, a
Significant Event, a Sale of the Company (as defined in the Restricted Unit
Agreement), an Exchange (as defined in the Restricted Unit Agreement) or any
other event or transaction resulting in the purchase, sale, transfer or
disposition of the Restricted Units (or any securities issued in exchange for,
or substitution of, the Restricted Units) after the Retirement Date.
4.7 RELEASE OF CLAIMS AND COOPERATION. As a condition to receiving any
payments set forth in Section 4.2 through Section 4.5, the Executive (or his
executor) shall be required to execute and not revoke a waiver and release of
claims in favor of the Company and its Affiliates, in the form attached hereto
as EXHIBIT B and, to the extent reasonably necessary, for a 180-day period
following such employment termination, shall make himself reasonably available
to provide transition services and consultation to the Company, subject to his
other business and personal commitments.
4.8 DEFINITION OF CHANGE OF CONTROL. A "CHANGE OF CONTROL" shall mean
(i) the acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
from time to time) not affiliated with Xxxxxx or the Company or its owners
immediately prior to such acquisition of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50
percent, indirectly or directly, of the equity vote of Xxxxxx or the Company
(other than any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by Xxxxxx or the Company or any Affiliate) or (ii)
consummation of an amalgamation, a merger or consolidation of Xxxxxx or the
Company or any direct or indirect subsidiary thereof with any other entity or a
sale or other disposition of all or substantially all of the assets of Xxxxxx
or the Company following which the voting securities of Xxxxxx or the Company
that are outstanding immediately prior to such transaction cease to represent
(either by remaining outstanding or by being converted into voting securities
of the surviving entity (or the entity that owns substantially all of Xxxxxx or
the Company' assets either directly or through one or more subsidiaries) or any
parent or other Affiliate thereof) at least 50 percent of the combined voting
power of the securities of Xxxxxx or the Company or, if Xxxxxx or the Company
is not the surviving entity, such surviving entity (or the entity that owns
substantially all of Xxxxxx or the Company' assets either directly or through
one or more subsidiaries) or any parent or other Affiliate thereof, outstanding
immediately after such transaction. Notwithstanding the foregoing, a Change of
Control shall not include an Excluded Event.
4.9 RESIGNATION. Upon a termination of employment, the Executive will
upon the Company's request resign from all boards of directors and officer
positions of the Company and any of its Affiliates.
4.10 REPURCHASE RIGHT. Any Restricted Units held by the Executive as a
result of vesting may be repurchased (the "REPURCHASE RIGHT") by Xxxxxx at any
time during the two-year period following (x) the date of termination of
employment in the event that such Restricted Units were vested as of such
termination and (y) the vesting of such Restricted Units in the event that such
vesting occurred after the date of termination of employment, each (other than
Repurchase Rights exercised following a termination pursuant to Section 4.1 and
4.6) at a price per Restricted Unit equal to the Fair Market Value thereof
determined as of the date of repurchase. If Xxxxxx' or any of its subsidiaries'
debt agreements restrict, limit or prohibit it from exercising the Repurchase
Right, the foregoing two-year period shall be tolled until such time as Xxxxxx
is permitted to exercise the Repurchase Right pursuant to the terms of such
debt agreements. At no time shall Xxxxxx be obligated to exercise the
Repurchase Right. The Repurchase Right shall be exercised by Xxxxxx, or its
designee, by delivering to the Executive a written notice of exercise and a
check in the amount of the applicable purchase price. Upon delivery of such
notice and payment of the applicable purchase price, Hughes, or its designee,
shall become the legal and beneficial owner of the Restricted Units being
repurchased and all rights and interest therein or related thereto, and Xxxxxx,
or its designee, shall have the right to transfer to its own name the number of
Restricted Units being repurchased without further action by the Executive or
any of his transferees. If Xxxxxx or its designee elects to exercise the
Repurchase Right pursuant to this Section 4.10 and the Executive or his
transferee fails to deliver the Restricted Units in accordance with the terms
hereof, Xxxxxx, or its designee, may, at its option, in addition to all other
remedies it may have, deposit the applicable purchase price in an escrow
account administered by an independent third party (to be held for the benefit
of, and payment over to, the Executive or his transferee in accordance
herewith) or set-off the applicable purchase price against any amount Xxxxxx or
its affiliates may owe the Executive at such time, whereupon Xxxxxx shall by
written notice to the Executive cancel on its books all of the Executive's or
his transferee's right, title and interest in and to such Restricted Units.
Anything herein to the contrary notwithstanding, in lieu of "forfeiting" any
unvested Restricted Units hereunder, Xxxxxx may, but shall not be obligated to,
repurchase such Restricted Units at a purchase price equal to the original
purchase price paid for such Restricted Units held by the Executive. For
purposes of this Section 4.10, in the event that the Executive in good faith
disputes the determination of Fair Market Value hereunder, the Company shall
select a regionally or nationally recognized investment banking or valuation
firm (the "VALUER") to determine the fair market value of such Restricted Units
and the Valuer's determination shall be final and binding on all the parties.
The fees and expenses of the Valuer shall be paid one-half by the Executive and
one-half by Xxxxxx.
5. COVENANTS.
5.1 The Executive understands that, in the course of his employment
with the Company, he will be given access to confidential information and trade
secrets including, but not limit to, discoveries, ideas, concepts, software in
various stages of development, designs, drawings, specifications, techniques,
models, data, source code, object code, documentation, diagrams, flowcharts,
research, development, processes, procedures, "know-how," marketing techniques
and materials, marketing and development plans, business plans, merger or
acquisition investigations, customer names and other information relating to
customers, price lists, pricing policies, and financial information of the
Company ("CONFIDENTIAL INFORMATION"). Confidential Information also includes
any information described above which the Company obtains from another party
and which the Company treats as proprietary or designates as Confidential
Information, whether or not owned or developed by the Company. The Executive
agrees that during his employment by the Company and thereafter to hold in
confidence and not to directly or indirectly reveal, report, publish, disclose,
or transfer any Confidential Information to any person or entity, or utilize
any Confidential Information for any purpose, except in the course of the
Executive's work for the Company. The Executive agrees to turn over all copies
of Confidential Information in his control to the Company upon request or upon
termination of his employment with the Company. For purposes of this Section
5.1, the "Company" shall include Affiliates of the Company. The Executive
agrees to enter into as of the date hereof the Company's general Conflict of
Interest and Confidentiality Agreement set forth on EXHIBIT C.
5.2 The Executive agrees that, during his employment with the Company
and for one (1) year thereafter (the "RESTRICTED PERIOD"), he will not, either
directly or indirectly, (i) hire Company employees or former employees (which
shall for this purpose include any individual employed by the Company at any
point during the year preceding such hiring by the Executive or the Executive's
new employer), induce, persuade, solicit or attempt to induce, persuade, or
solicit any of the Company's employees to leave the Company's employ, nor will
he help others to do so or (ii) induce, persuade, solicit or attempt to induce,
persuade, or solicit any person or entity that was a customer of the Company
during the Restricted Period or the one-year period preceding the Restricted
Period, or is a prospective customer, for the purpose of (A) providing to such
customer goods or services similar to or in competition with the goods or
services provided by the Company or (B) inducing or encouraging them to acquire
of obtain from anyone other than the Company, goods or services similar to or
in competition with the goods or services provided by the Company. This means,
among other things, that if the Executive's employment with the Company
terminates (whether voluntarily or involuntarily), he shall refrain for one (1)
year from giving any person or entity the names of his former, fellow employees
or former, current or prospective customers or any information about them, as
well as refrain from in any way helping any person or entity hire any of his
former, fellow employees away from the Company or otherwise engage any former,
current or prospective customers. This shall not be construed to prohibit
general solicitations of employment through the placing of advertisements. For
purposes of this Section 5.2, the "Company" shall include Affiliates of the
Company.
5.3 The Executive agrees that, during the Restricted Period, he shall
not, without the prior written consent of the Board, engage in or become
associated with any business or other endeavor engaged in or competitive with
the businesses (the "PROTECTED BUSINESSES") conducted by the Company, Xxxxxx or
any of their respective Affiliates at the time of such engagement or
association. For these purposes, the Executive shall be considered to have
become "associated with" a business or other endeavor if the Executive becomes
directly or indirectly involved as an owner, principal, employee, officer,
director, independent contractor, representative, stockholder, financial
backer, agent, partner, advisor, lender, or in any other individual or
representative capacity with any individual, partnership, corporation or other
organization that is engaged in that business. The foregoing shall not be
construed to forbid the Executive from making or retaining investments in less
than one percent of the equity of any entity, if such equity is listed on a
national securities exchange or regularly traded in an over-the-counter market.
5.4 The Executive agrees that during and after his employment by the
Company, the Executive will assist the Company and its Affiliates in the
defense of any claims, or potential claims that may be made or threatened to be
made against the Company or any of its Affiliates in any action, suit or
proceeding, whether civil, criminal, administrative, investigative or otherwise
(a "PROCEEDING"), and will assist the Company and its Affiliates in the
prosecution of any claims that may be made by the Company or any of its
Affiliates in any Proceeding, to the extent that such claims may relate to the
Executive's employment or the period of the Executive's employment by the
Company. The Executive agrees, unless precluded by law, to promptly inform the
Company if the Executive is asked to participate (or otherwise become involved)
in any Proceeding involving such claims or potential claims. The Executive also
agrees, unless precluded by law, to promptly inform the Company if the
Executive is asked to assist in any investigation (whether governmental or
otherwise) of the Company or any of its Affiliates (or their actions),
regardless of whether a lawsuit has then been filed against the Company or any
of its Affiliates with respect to such investigation. The Company agrees to
reimburse the Executive for all of the Executive's reasonable out-of-pocket
expenses associated with such assistance, including lost wages or other
benefits, travel expenses and any attorneys' fees.
5.5 The Company and the Executive acknowledge that the time, scope,
geographic area and other provisions of Sections 5.2 and 5.3 have been
specifically negotiated by sophisticated commercial parties and agree that all
such provisions are reasonable under the circumstances of the activities
contemplated by this Agreement. The Executive acknowledges and agrees that the
terms of Sections 5.2 and 5.3: (i) are reasonable in light of all of the
circumstances, (ii) are sufficiently limited to protect the legitimate
interests of the Company and its Affiliates, (iii) impose no undue hardship on
the Executive and (iv) are not injurious to the public. The Executive further
acknowledges and agrees that (x) the Executive's breach of the provisions of
Sections 5.2 and 5.3 will cause the Company irreparable harm, which cannot be
adequately compensated by money damages, and (y) if the Company elects to
prevent the Executive from breaching such provisions by obtaining an injunction
against the Executive, there is a reasonable probability of the Company's
eventual success on the merits. The Executive consents and agrees that if the
Executive commits any such breach or threatens to commit any breach, the
Company shall be entitled to temporary and permanent injunctive relief from a
court of competent jurisdiction, without posting any bond or other security and
without the necessity of proof of actual damage, in addition to, and not in
lieu of, such other remedies as may be available to the Company for such
breach, including the recovery of money damages. The parties hereto acknowledge
and agree that the provisions of Section 7.9 below are accurate and necessary
because (A) Xxxxxx and the Company are organized in the State of Delaware and
the State of Delaware therefore has a substantial relationship to the parties
hereto, (B) the use of the State of Delaware law provides certainty to the
parties hereto in any covenant litigation in the United States, and (C)
enforcement of the provisions of Sections 5.2 and 5.3 would not violate any
fundamental public policy of the State of Delaware or any other jurisdiction.
In the event that the agreements in Sections 5.2 and 5.3 shall be determined by
any court of competent jurisdiction to be unenforceable by reason of their
extending for too great a period of time or over too great a geographical area
or by reason of their being too extensive in any other respect, they shall be
interpreted to extend only over the maximum period of time for which they may
be enforceable and/or over the maximum geographical area as to which they may
be enforceable and/or to the maximum extent in all other respects as to which
they may be enforceable, all as determined by such court in such action.
6. NOTICES. Any notice or communication given by either party hereto
to the other shall be in writing and personally delivered or mailed by
registered or certified mail, return receipt requested, postage prepaid, or by
facsimile, to the following addresses:
if to the Company:
Xxxxxx Communications, Inc.
00000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention.: Chief Executive Officer
Telecopy No.: 000-000-0000
With a copy to:
O'Melveny & Xxxxx LLP
Times Square Tower
0 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx X'Xxxx, Esq.
if to the Executive:
The most recent address on file for the Executive at the Company.
Any notice shall be deemed given when actually delivered to such party
at the designated address, or five days after such notice has been mailed or
sent by overnight courier or when sent by facsimile with printed confirmation,
whichever comes earliest. Any person entitled to receive notice may designate
in writing, by notice to the other, such other address to which notices to such
person shall thereafter be sent.
7. MISCELLANEOUS.
7.1 REPRESENTATION. No agreements or obligations exist to which the
Executive is a party or otherwise bound, in writing or otherwise, that in any
way interfere with, impede or preclude him from fulfilling all of the terms and
conditions of this Agreement.
7.2 ENTIRE AGREEMENT. This Agreement, and the documents incorporated
by reference herein, including, without limitation, the LLC Agreement, the
Conflict of Interest and Confidentiality Agreement and the Restricted Unit
Agreement, contain the entire understanding of the parties in respect of their
subject matter and supersede upon their effectiveness all other prior plans,
arrangements, agreements and understandings between the parties with respect to
such subject matter. The Executive represents and warrants that, immediately
prior to the effectiveness of this Agreement, there are no agreements,
understandings or arrangements, whether oral or written, among the Company,
Xxxxxx or any of their respective Affiliates, on the one hand, and the
Executive, on the other hand. Notwithstanding anything to the contrary
contained herein or in any other contract between the Executive and the Company
or its Affiliates and predecessors, all other contracts and agreements are
hereby terminated as of the date hereof, and shall be of no further force or
effect.
7.3 AMENDMENT; WAIVER. This Agreement may not be amended,
supplemented, canceled or discharged, except by written instrument executed by
the party against whom enforcement is sought. No failure to exercise, and no
delay in exercising, any right, power or privilege hereunder shall operate as a
waiver thereof. No waiver of any breach of any provision of this Agreement
shall be deemed to be a waiver of any preceding or succeeding breach of the
same or any other provision.
7.4 BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of any successor of the Company
by reorganization, merger or consolidation, or any assignee of all or
substantially all of the Company's business and properties. The Company may
assign its rights and obligations under this Agreement to any of its Affiliates
without the consent of the Executive. The Executive's rights or obligations
under this Agreement may not be assigned by the Executive.
7.5 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
7.6 GOVERNING LAW; INTERPRETATION. This Agreement shall be construed
in accordance with and governed for all purposes by the laws and public policy
(other than conflict of laws principles) of the State of Delaware applicable to
contracts executed and to be wholly performed therein.
7.7 FURTHER ASSURANCES. Each of the parties agrees to execute,
acknowledge, deliver and perform, and cause to be executed, acknowledged,
delivered and performed, at any time and from time to time, as the case may be,
all such further acts, deeds, assignments, transfers, conveyances, powers of
attorney and assurances as may be reasonably necessary to carry out the
provisions or intent of this Agreement.
7.8 SEVERABILITY. The parties have carefully reviewed the provisions
of this Agreement and agree that they are fair and equitable. However, in light
of the possibility of differing interpretations of law and changes in
circumstances, the parties agree that if any one or more of the provisions of
this Agreement shall be determined by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the provisions of this
Agreement shall, to the extent permitted by law, remain in full force and
effect and shall in no way be affected, impaired or invalidated. Moreover, if
any of the provisions contained in this Agreement are determined by a court of
competent jurisdiction to be excessively broad as to duration, activity,
geographic application or subject, it shall be construed, by limiting or
reducing it to the extent legally permitted, so as to be enforceable to the
extent compatible with then applicable law.
7.9 DISPUTE RESOLUTION. Arbitration will be the method of resolving
disputes under this Agreement, other than disputes arising under Section 5. All
arbitrations arising out of this Agreement shall be conducted in the State of
Delaware. Subject to the following provisions, the arbitration shall be
conducted in accordance with the rules of the American Arbitration Association
(the "ASSOCIATION") then in effect. Any award entered by the arbitrators shall
be final, binding and nonappealable and judgment may be entered thereon by
either party in accordance with applicable law in any court of competent
jurisdiction. This arbitration provision shall be specifically enforceable. The
arbitrators shall have no authority to modify any provision of this Agreement
or to award a remedy for a dispute involving this Agreement other than a
benefit specifically provided under or by virtue of this Agreement. Each party
shall be responsible for its own expenses relating to the conduct of the
arbitration (including reasonable attorneys' fees and expenses) and shall share
the fees of the Association equally.
7.10 INDEMNIFICATION. The Company will, to a degree no less favorable
than would be applicable under its policies and contractual obligations to the
Executive as of immediately following the date hereof, indemnify and hold the
Executive harmless from any and all liability arising from his good faith
performance of services as an employee, officer or director of the Company. In
addition, the Executive will have the benefit of coverage under any D&O
insurance policy that the Company may have in place to the same extent as
similarly situated executives of the Company.
7.11 WITHHOLDING TAXES. All payments hereunder, and pursuant to any
other agreement to which the Executive is a party, shall be subject to any and
all applicable federal, state, local and foreign withholding taxes and all
other applicable withholding amounts. Any such amounts so withheld shall be
treated as paid to the Executive. If the amount that the Company is required to
withhold exceeds the cash payments currently paid to the Executive, the
Executive shall promptly pay to the Company the amount of such excess;
PROVIDED, that if such amount is not paid, the Company may withhold amounts
otherwise due to the Executive.
7.12 NO MITIGATION. The Executive shall not be required to mitigate
the amount of any severance payments payable by the Company hereunder by
seeking alternative employment following the Executive's termination of
employment with the Company.
7.13 COUNTERPARTS. This Agreement may be executed in or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute the same instrument.
8. RELEASE. Executive, on Executive's own part and on behalf of
Executive's dependents, heirs, executors, administrators, assigns, and
successors, and each of them, hereby covenants not to xxx and fully releases,
acquits, and discharges Xxxxxx, the Company, and their respective parent,
subsidiaries, affiliates, owners, trustees, directors, managers, officers,
members, agents, employees, stockholders, representatives, assigns, and
successors (collectively referred to as "COMPANY RELEASEES") with respect to
and from any and all claims, wages, agreements, contracts, covenants, actions,
suits, causes of action, expenses, attorneys' fees, damages, and liabilities of
whatever kind or nature in law, equity or otherwise, whether known or unknown,
suspected or unsuspected, and whether or not concealed or hidden, which Execute
has at any time heretofore owned or held against said Company Releasees,
including, without limitation, those arising out of or in any way connected
with Executive's employment relationship with the Company, except with respect
to the obligations set forth in this Agreement.
9. TIME TO CONSIDER RELEASE. Executive may take twenty-one (21) days
from the date this Agreement is presented to Executive to consider whether to
execute this Agreement, and may wish to consult with an attorney prior to
execution of this Agreement. Executive, by signing this Agreement, specially
acknowledges that he/she is waiving his/her right to pursue any claims under
federal, state or local discrimination laws, including the Age Discrimination
in Employment Act, 29 U.S.C. Section 626 ET SEQ., which have arisen prior to
the execution of this Agreement. This release shall become final and
irrevocable upon execution by the Executive, except that if Executive is age 40
or older, Executive may revoke the release at any time during the seven (7) day
period following Executive's execution of this Agreement, after which time it
shall be final and irrevocable.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
XXXXXX COMMUNICATIONS, INC.
By: /s/ XXXX X. XXXXXX
------------------
Name: Xxxx X. Xxxxxx
Title: Vice President, General
Counsel and Secretary
XXXXXX NETWORK SYSTEMS, LLC
By: /s/ XXXX X. XXXXXX
------------------
Name: Xxxx X. Xxxxxx
Title: Vice President, General
Counsel and Secretary
THE EXECUTIVE
-------------
By: /s/ XXXXX X. XXXXXX
-----------------------------
Xxxxx X. Xxxxxx
ATTACHMENT 1
Xxxxx X. Xxxxxx
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Position Executive Vice President and Chief Financial
Officer of the Company
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Reporting Person Chief Executive Officer of the Company
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Annual Base Salary $350,000
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Target Bonus Amount 50 percent of Base Salary
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Number of Restricted Units 500
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Auto Allowance $1,000 per month
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Six-Month Bonus $100,000
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Vacation Days 20 with a maximum accrual limit of 50 days
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Permitted Outside Activities Director, Eningen Realty, Inc.
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