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Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT made effective as of the 20th day of March, 2000 (the
"Effective Date") by and between Cooperative Holdings, Inc., a Delaware
corporation with its principal place of business at 000-000 Xxxxxxxxxx
Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 (the "Company"), and Xxxxx X. Xxxxxxxx,
Xx. (the "Employee").
WITNESSETH:
WHEREAS, the Company desires to secure the employment of the Employee
in accordance with the provisions of this Agreement; and
WHEREAS, the Employee desires and is willing to accept employment with
the Company in accordance herewith.
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Term. The Company hereby agrees to employ the Employee and the
Employee hereby agrees to serve the Company pursuant to the terms and
conditions of this Agreement as President and Chief Executive Officer of the
Company, or in a position at least commensurate therewith in all material
respects, for a term commencing on the Effective Date hereof and expiring on
the third anniversary thereof (the "Initial Term"), provided that the
Employee is elected to such office, or a comparable or higher office, at the
annual meeting of the Board of Directors of the Company (the "Board of
Directors") during the Initial Term or any Renewal Term (as hereinafter
defined) of this Agreement. If the Employee shall not be so elected at any
such annual meeting of the Board of Directors, the Employee's employment
hereunder shall forthwith terminate and the Company shall be obligated to
compensate the Employee in
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accordance with Section 6(a) of this Agreement. Upon the expiration of the
Initial Term, this Agreement will be renewed automatically for successive
one-year periods (each, a "Renewal Term"), unless sooner terminated in
accordance with the provisions of Section 5 or unless either party gives written
notice of non-renewal at least four (4) months prior to the date on which the
Employee's employment would otherwise end.
2. Positions and Duties.
The Employee's duties hereunder shall be those which shall be
prescribed from time to time by the Board of Directors in accordance with the
Bylaws of the Company and shall include such executive duties, powers and
responsibilities as customarily attend the offices of President and Chief
Executive Officer of a company comparable to the Company. The Employee will
hold, in addition to the offices of President and Chief Executive Officer of
the Company, such other executive offices in the Company and its subsidiaries
to which he may be elected, appointed or assigned by the Board of Directors
from time to time and will discharge such executive duties in connection
therewith. During the employment period, the Employee's position (including
status, offices and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned immediately
preceding the Effective Date. The Employee shall devote his full working
time, energy and skill (reasonable absences for vacations and illness
excepted), to the business of the Company as is necessary in order to perform
such duties faithfully, competently and diligently; provided, however, that
notwithstanding any provision in this Agreement to the contrary, the Employee
shall not be precluded from devoting reasonable periods of time required for
serving as a member of boards of companies or organizations which have been
approved by the Board of
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Directors so long as such memberships or activities do not interfere with the
performance of the Employee's duties hereunder.
3. Compensation. During the term of this Agreement, the Employee
shall receive, for all services rendered to the Company hereunder, the
following (hereinafter referred to as "Compensation"):
(a) Base Salary. For the term hereof, the Employee shall be
paid an annual base salary equal to Two Hundred Twenty-Five Thousand Dollars
($225,000). The Employee's annual base salary shall be payable in equal
installments in accordance with the Company's general salary payment policies
but no less frequently than monthly. Such base salary shall be reviewed, and
any increases in the amount thereof shall be determined, by the Board of
Directors or a compensation committee formed by the Board of Directors (the
"Compensation Committee") at the end of each calendar year during the term
hereof.
(b) Bonuses. The Employee shall be eligible for an annual
performance bonuses. The amount of such bonus, if any, shall be solely
within the discretion of the Board of Directors or, if formed, the
Compensation Committee thereof and shall be based upon the respective
performances of the Company and the Employee during such year. Such bonus,
if any, shall be paid within sixty (60) days after the end of each fiscal
year of the Company. The Employee shall be eligible for and may receive
other bonus compensation. The amount of such bonuses, if any, shall be
solely within the discretion of the Board of Directors or, if formed, the
Compensation Committee thereof.
(c) Incentive Compensation. The Employee shall be eligible for
awards from the Company's incentive compensation plans, including without
limitation any stock option
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plans, applicable to high level executive officers of the Company or to key
employees of the Company or its subsidiaries, in accordance with the terms
thereof and on a basis commensurate with his position and responsibilities.
(d) Benefits. The Employee and his "dependents," as that term
may be defined under the applicable benefit plan(s) of the Company, shall be
included, to the extent eligible thereunder, in any and all plans, programs
and policies which provide benefits for employees and their dependents. Such
plans, programs and policies may include health care insurance, long-term
disability plans, supplemental disability insurance, supplemental life
insurance, 401(k) plan, holidays and other similar or comparable benefits
made available to the Company's employees.
(e) Life Insurance. The Company shall provide the Employee
with Fifty Thousand ($50,000) of term life insurance coverage while employed
by the Company.
(f) Expenses. Subject to and in accordance with the Company's
policies and procedures, the Employee hereby is authorized to incur, and,
upon presentation of itemized accounts, shall be reimbursed by the Company
for, any and all reasonable and necessary business-related expenses, which
expenses are incurred by the Employee on behalf of the Company or any of its
subsidiaries.
4. Absences. The Employee shall be entitled to vacations, absences
because of illness or other incapacity, and such other absences, whether for
holiday, personal time, or for any other purpose, as set forth in the
Company's employment manual or current procedures and policies, as the case
may be, as same may be amended from time-to-time.
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5. Termination. In addition to the events of termination and
expiration of this Agreement provided for in Section 1 hereof, the Employee's
employment hereunder may be terminated only as follows:
(a) Without Cause. The Company may terminate the Employee's
employment hereunder without cause only upon action by the Board of
Directors, and upon no less than ninety (90) days prior written notice to the
Employee. The Employee may terminate employment hereunder without cause upon
no less than ninety (90) days prior written notice to the Company.
(b) For Cause, by the Company. The Company may terminate the
Employee's employment hereunder for cause immediately and with prompt notice
to the Employee, which cause shall be determined in good faith solely by the
Board of Directors. "Cause" for termination shall include, but is not
limited to, the following conduct of the Employee:
(1) Willful or prolonged absence from work by the
Employee (other than by reason of disability due to physical or mental
illness) or failure, neglect or refusal by the Employee to perform his duties
and responsibilities or to follow the reasonable directions of the Board of
Directors within ten (10) business days after receipt by the Employee of
written notice of such failure;
(2) Misconduct by the Employee in connection with his
employment, including but not limited to: misappropriating any funds or
property of the Company; attempting to willfully obtain any personal profit
from any transaction in which the Employee has an interest which is adverse
to the interests of the Company; or any other intentional act or omission
which substantially impairs the Company's ability to conduct its ordinary
business in its usual manner;
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(3) The Employee's conviction of, or plea of nolo
contendre to, any crime constituting a felony under the laws of the United
States or any State thereof, or any crime constituting a misdemeanor under
any such law involving moral turpitude;
(4) Breach by the Employee of any of the terms of or
covenants contained in this Agreement; or
(5) Any other act or omission which subjects the Company
or any of its subsidiaries to substantial public disrespect, scandal or
ridicule.
(c) For Good Reason by Employee. The Employee may terminate his
employment hereunder for good reason immediately and with prompt notice to
the Company. "Good reason" for termination by the Employee shall include,
but is not limited to, the following conduct of the Company:
(1) Material breach of any provision of this Agreement by
the Company, which breach shall not have been cured by the Company within
thirty (30) days of receipt of written notice of said breach;
(2) Failure to maintain the Employee in a position
commensurate with that referred to in Section 2 of this Agreement; or
(3) The assignment to the Employee of any duties
inconsistent with the Employee's position, authority, duties or
responsibilities as contemplated by Section 2 of this Agreement, or any other
action by the Company which results in a diminution of such position,
authority, duties or responsibilities, excluding for this purpose any
isolated action not taken in bad faith and which is promptly remedied by the
Company after receipt of notice thereof given by the Employee.
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It is understood and agreed that it shall not be "good reason" for
termination by the Employee if in the event of a Change in Control (as
hereinafter defined in Section 7) the Employee is offered a position
commensurate with his position with the Company immediately prior to the
Change in Control with the company, division, subsidiary or business unit
whose business is comprised of the former operations of the Company.
(d) Death. The period of active employment of the Employee
hereunder shall terminate automatically in the event of his death.
(e) Disability. In the event that the Employee shall be unable
to perform duties hereunder for a period of one hundred eighty (180)
consecutive calendar days or two hundred and seventy (270) work days within
any three hundred and sixty (360) consecutive calendar days by reason of
disability as a result of illness, accident or other physical or mental
incapacity or disability, the Company may, in its discretion, by giving
written notice to the Employee, terminate the Employee's employment hereunder
as long as the Employee is still disabled on the effective date of such
termination.
(f) Mutual Agreement. This Agreement may be terminated at any
time by mutual agreement of the Employee and the Company.
6. Compensation in the Event of Termination. In the event that the
Employee's employment pursuant to this Agreement terminates prior to the end
of the term of this Agreement because he is not reelected pursuant to Section
1 or for a reason provided in Section 5 hereof, the Company shall pay the
Employee compensation as set forth below:
(a) Employee not Elected by Board of Directors; By Employee for
Good Reason; By Company Without Cause; Death or Disability. In the event
that the Employee's
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employment hereunder is terminated: (i) because the Employee is not elected to
the offices of President and Chief Executive Officer of the Company, or in a
position at least commensurate therewith in all material respects, at any annual
meeting of the Company's Board of Directors during the term of this Agreement,
as contemplated by Section 1 hereof; (ii) by the Employee for good reason
pursuant to Section 5(c) hereof; (iii) by the Company without cause; (iv)
because of the death of the Employee; or (v) by the Company pursuant to Section
5(e) hereof, then the Company shall continue to pay or provide, as applicable,
the following compensation to the Employee:
(1) Monthly base salary as set forth in Section 3(a)
hereof; and
(2) Continuing coverage, but only to the extent required
by law, for the Employee and his eligible dependents under all of the
Company's benefit plans, programs and policies in effect as of the date of
termination.
Such compensation shall continue to be paid or provided, as
applicable, in the same manner as before termination, and for a period of
time ending on the later to occur of (A) the date which is twelve (12) months
after the date of termination or (B) the date upon which the term of this
Agreement would otherwise have expired in accordance with Section 1 hereof.
(b) By Company For Cause or By Employee Without Good Reason. In the event
that (i) the Company shall terminate the Employee's employment hereunder for
cause pursuant to Section 5(b) hereof or (ii) the Employee shall terminate
employment hereunder without "good reason" as provided in Section 5(c) hereof,
the Company shall not be obligated to pay the Employee any compensation except
for salary and other Compensation which may have been earned and are due and
payable but which have not been paid as of the date of termination.
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7. Change of Control.
(a) The term "Change in Control" as used in this Agreement
shall mean the first to occur of any of the following:
(i) the effective date or date of consummation of any
transaction or series of transactions (other than a transaction to which only
the Company and one or more of its subsidiaries are parties) pursuant to
which the Company (1) becomes a subsidiary of another corporation or entity;
(2) is merged or consolidated with or into another corporation or entity; (3)
engages in an exchange of shares with another corporation or an exchange of
interests with another entity; or (4) transfers, sells or otherwise disposes
of all or substantially all of its assets to a single purchaser (other than
the Employee) or a group of purchasers (none of whom is the Employee);
provided, however, that this Subsection shall not be applicable to a
transaction or series of transactions in which a majority of the capital
stock of the other corporation, following such transaction or series of
transactions, is owned or controlled by the holders of a majority of the
Company's outstanding capital stock immediately before such sale, transfer or
disposition; or
(ii) The date upon which any person (other than the
Employee), group of associated persons acting in concert (none of whom is the
Employee), or corporation or other entity becomes a direct or indirect
beneficial owner of shares of stock of the Company representing an aggregate
of more than fifty percent (50%) of the votes then entitled to be cast at an
election of directors of the Company; or
(iii) The date upon which the persons who were members of
the Board of Directors of the Company as of the date hereof (the "Original
Directors") cease to constitute a majority of the Board of Directors;
provided, however, that any new director whose nomination or
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selection has been approved by the affirmative vote of at least three of the
Original Directors then in office shall also be deemed an Original Director.
(b) If, during the six-month period either immediately
preceding or immediately following a Change in Control, the Employee's
employment with the Company is terminated for any reason other than pursuant
to Sections 5(b), (d) or (e) hereof or a termination without cause by the
Employee pursuant to Section 5(a), then, in addition to the amounts payable
under Section 6 hereof, the Company shall pay the Severance Amount
(hereinafter defined) within thirty (30) days of the occurrence of the Change
in Control, or, in the event such termination occurred during the six-month
period following the occurrence of the Change in Control, within thirty (30)
days after the effective date of the Employee's termination. For purposes of
this Agreement, Severance Amount shall mean an amount equal to twelve (12)
times the rate of the Employee's monthly regular compensation as in effect
immediately prior to the Employee's termination or immediately prior to the
Change in Control, as applicable.
8. Effect of Termination. In the event of expiration or early
termination of this Agreement as provided herein, neither the Company nor the
Employee shall have any remaining duties or obligations hereunder except that
the Company shall:
(a) Pay the Employee's accrued and unpaid salary and any
other accrued and unpaid benefits under Section 3 hereof;
(b) Reimburse the Employee for expenses already incurred
in accordance with Section 3(e) hereof;
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(c) To the extent required by law, pay or otherwise
provide for any benefits, payments or continuation or conversion rights in
accordance with the provisions of any benefit plan of which the Employee or
any of his dependents is or was a participant; and
(d) Pay the Employee or his beneficiaries any
compensation due pursuant to Sections 6 and 7 hereof, if any.
9. Non-Competition. The Employee acknowledges that he has gained
and will gain extensive and valuable experience and knowledge in the business
conducted by the Company and has been and will have extensive contacts with
its customers. Accordingly, the Employee covenants and agrees that he shall
not compete directly or indirectly with the Company, either during the term
of his employment or during the twelve (12) month period immediately
thereafter and shall not during such period make public statements in
derogation of it. For the purposes of Sections 9, 10, 11, 12 and 13, the
word "Company" shall be deemed to include subsidiaries, parents and its
affiliates. Competing directly or indirectly shall mean engaging or having a
material interest, directly or indirectly, as owner, employee, officer,
director, partner, venturer, stockholder, capital investor, consultant,
agent, principal, advisor or otherwise, either alone or in association with
others, in the operation of an entity engaged in the business of providing
telecommunications services within thirty (30) miles of the Company's home
office or on an Internet Web Site. Competing directly or indirectly with the
Employer as used in this Agreement, shall be deemed not to include an
ownership interest as an inactive investor, which for purposes of this
Agreement shall mean the beneficial ownership of less than five percent (5%)
of the outstanding shares of any series or class of securities of any
competitor of the Company, which shares are publicly traded in the securities
markets.
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10. Non-Solicitation. The Employee acknowledges that he has had and
will have extensive contacts with employees and customers of the Company.
Accordingly, the Employee covenants and agrees that during the term of his
employment and during the twelve (12) month period immediately thereafter he
will not (a) solicit any of the employees of the Company who were employed by
the Company during the time when the Employee was employed, to leave the
Company, (b) interfere with the relationship of the Company with any such
employees or (c) personally target or solicit customers of the Company.
11. Blue Pencil Provision. The Employee acknowledges that the time
periods and geographic area of restriction imposed by Sections 9 and 10 are
fair and reasonable and are reasonably required for the protection of the
Company. If any part or parts of Sections 9 or 10 shall be held to be
unenforceable or invalid, the remaining parts thereof shall nevertheless
continue to be valid and enforceable as though the invalid portion or
portions were not a part hereof. If any of the provisions of Sections 9 or
10 relating to the periods or geographic area of restriction shall be deemed
to exceed the maximum periods of time or area which a court of competent
jurisdiction would deem enforceable, the times and area shall, for the
purposes of Sections 9 and 10, be deemed to be the maximum time periods and
area which a court of competent jurisdiction would deem valid and enforceable
in any state in which such court of competent jurisdiction shall be convened.
12. Confidentiality. The Employee acknowledges that he has had and
will have access to certain information related to the business, operations,
future plans and customers of the Company, the disclosure or use of which
could cause it substantial losses and damages. Accordingly, the Employee
covenants that during the term of his employment with the Company
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and thereafter he will keep confidential all information and documents furnished
to him by or on behalf of the Company and not use the same to his advantage,
except to the extent such information or documents are or thereafter become
lawfully obtainable from other sources or are in the public domain through no
fault on his part or is consented to in writing by the Company. Upon termination
of his employment, the Employee shall return to the Company all records, lists,
files and documents which are in his possession and which relate to the Company.
13. Right to Injunctive Relief. The Employee agrees and acknowledges
that a violation of the covenants contained in Sections 9, 10, 11 and 12 of
this Agreement will cause irreparable damage to the Company, and that it is
and will be impossible to estimate or determine the damage that will be
suffered by it in the event of a breach by the Employee of any such
covenant. Therefore, the Employee further agrees that in the event of any
violation or threatened violation of such covenants, the Company shall be
entitled as a matter of course to an injunction out of any court of competent
jurisdiction restraining such violation or threatened violation by the
Employee, such right to an injunction to be cumulative and in addition to
whatever other remedies the Company may have.
14. Representation by the Employee. The Employee hereby represents
and warrants that the execution of this Agreement and the performance of his
duties and obligations hereunder will not breach or be in conflict with any
other agreement to which he is a party or by which he is bound, and that he
is not now subject to any covenant against competition or similar covenant
which would affect the performance of his duties hereunder.
15. Resolution of Differences Over Breaches of Agreement. Except as
otherwise provided herein, any controversy or claim arising out of, or
relating to, this Agreement, or the
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breach hereof, shall be reviewed in the first instance in accordance with the
Company's internal review procedures, if any, with recourse thereafter--for
temporary or preliminary injunctive relief only--to the courts having
jurisdiction thereof, and if any relief other than injunctive relief is sought,
then to arbitration in Essex County, New Jersey in accordance with the rules of
the American Arbitration Association under its National Rules for the Resolution
of Employment Disputes, and judgment upon the award rendered by the
Arbitrator(s) may be entered in any court having jurisdiction thereof.
16. Waiver. The waiver by a party hereto of any breach by the other
party hereto of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach by a party hereto.
17. Assignment. This Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the Company, and the Company
shall be obligated to require any successor to expressly assume its
obligations hereunder. This Agreement shall inure to the benefit of and be
enforceable by the Employee or his legal representatives, executors,
administrators, successors, heirs, distributes, devisees and legatees. The
Employee may not assign any of his duties, responsibilities, obligations or
positions hereunder to any person and any such purported assignment by him
shall be void and of no force and effect.
18. Notices. Any notices required or permitted to be given under
this Agreement shall be sufficient if in writing, and if personally delivered
or when sent by first class certified or registered mail, postage prepaid,
return receipt requested--in the case of the Employee, to his residence
address as set forth below, and in the case of the Company, to the address of
its principal place of business as set forth below, in care of the Board of
Directors--or to such other
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person or at such other address with respect to each party as such party shall
notify the other in writing.
19. Construction of Agreement.
(a) Governing Law. This Agreement shall be governed by and its
provisions construed and enforced in accordance with the internal laws of the
State of New Jersey without reference to its principles regarding conflicts
of law.
(b) Severability. In the event that any one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
(c) Headings. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience of reference only
and shall not constitute a part of this Agreement.
20. Entire Agreement. This Agreement contains the entire agreement
of the parties concerning the Employee's employment and all promises,
representations, understandings, arrangements and prior agreements, including
without limitation all offer letters and side letters, on such subject are
merged herein and superseded hereby. The provisions of this Agreement may
not be amended, modified, repealed, waived, extended or discharged except by
an agreement in writing signed by the party against whom enforcement of any
amendment, modification, repeal, waiver, extension or discharge is sought. No
person acting other than pursuant to a resolution of the Board of Directors
shall have authority on behalf of the Company to agree to amend, modify,
repeal, waive, extend or discharge any provision of this Agreement or
anything in reference
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thereto or to exercise any of the Company's rights to terminate or to fail to
extend this Agreement.
21. Survival of Certain Provisions. Sections 6 and 7 hereof shall
survive termination of this Agreement and shall continue to be effective so
long as the Employee is employed by the Company in any capacity.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and attested by its duly authorized officers, and the Employee has
set his hand, all as of the day and year first above written.
ATTEST: COOPERATIVE HOLDINGS, INC.
/s/ Xxx Xxxxxxxxxx By: /s/ Xxxxx X. Xxxxxxxx, Xx.
__________________________ _____________________________
Xxx Xxxxxxxxxx, Secretary Xxxxx X. Xxxxxxxx, Xx.
Chief Operating Officer
Address: 000-000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
WITNESS: EMPLOYEE
/s/ Xxxx Xxxxxxxx /s/ Xxxxx X. Xxxxxxxx, Xx.
__________________________ _______________________________
Xxxxx X. Xxxxxxxx, Xx.
Address: 00 Xxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
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