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Exhibit 10.16
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of June 1, 2000, by and between
LEXENT INC., a Delaware corporation (the "Company"), and XXXXXXX X. XXXXXX
(the "Employee").
W I T N E S S E T H:
WHEREAS the Company desires to induce the Employee to enter into
employment with the Company for the period provided in this Agreement, and the
Employee is willing to accept such employment with the Company on a full-time
basis, all in accordance with the terms and conditions set forth below;
NOW, THEREFORE, for and in consideration of the premises hereof and
the mutual covenants contained herein, the parties hereto hereby covenant and
agree as follows:
1. Employment.
(a) The Company hereby agrees to employ the Employee, and the
Employee hereby agrees to accept such employment with the Company,
commencing on June 1, 2000 (the "Commencement Date") and continuing for
the period set forth in Section 2 hereof, all upon the terms and
conditions hereinafter set forth.
(b) The Employee affirms and represents that as of the commencement
of his employment by the Company, he was under no obligation to any former
employer or other party which is in any way inconsistent with, or which
imposes any restriction upon, the Employee's acceptance of employment
hereunder with the Company, the employment of the Employee by the Company,
or the Employee's undertakings under this Agreement.
2. Term of Employment. Unless earlier terminated as provided in this
Agreement, the term of the Employee's employment under this Agreement shall be
for a period beginning on the Commencement Date and ending on May 31, 2004. The
period from the Commencement Date until May 31, 2004, or, in the event that the
Employee's employment hereunder is earlier terminated as provided herein, such
shorter period, is hereinafter called the "Employment Term"(the "Employment
Term").
3. Duties. The Employee shall be employed as Executive Vice
President Sales & Marketing of the Company, shall faithfully perform and
discharge such duties as inhere in the positions of Executive Vice President of
the Company as may be specified in the By-laws of the Company with respect to
such positions, and shall also perform and discharge such other duties and
responsibilities consistent with such position as the Board of Directors of the
Company (the "Board of Directors") shall from time to time determine. The
Employee shall report to the Chief Executive Officer of the Company. The
Employee shall perform his duties principally at offices
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of the Company in New York City, New York and in an office in San Diego,
California, with such travel to such other locations from time to time as the
Chief Executive Officer may reasonably prescribe. Except as may otherwise be
approved in advance by the Board of Directors, and except during vacation
periods and reasonable periods of absence due to sickness, personal injury or
other disability, the Employee shall devote his full business time throughout
the Employment Term to the services required of him hereunder. The Employee
shall render his business services exclusively to the Company and its
subsidiaries during the Employment Term and shall use his best efforts, judgment
and energy to improve and advance the business and interests of the Company and
its subsidiaries in a manner consistent with the duties of his positions.
4. Compensation.
(a) Salary. As compensation for the performance by the Employee of
the services to be performed by the Employee hereunder during the
Employment Term, the Company shall pay the Employee a base salary at the
annual rate of Two Hundred Forty Thousand Dollars ($240,000) (said amount,
together with any increases thereto as may be determined from time to time
by the Board of Directors in its sole discretion, being hereinafter
referred to as "Salary"). Any Salary payable hereunder shall be paid in
regular intervals in accordance with the Company's payroll practices from
time to time in effect.
(b) Bonus. Provided that the Employee is employed by the Company on
the last day of the fiscal year (or on May 31, 2004 for the calendar year
2004), the Employee shall be eligible to receive bonus compensation from
the Company in respect of each fiscal year (or portion thereof) occurring
during the Employment Term in an amount targeted at 40% of his Salary (pro
rated only for the calendar year 2004) if the Company achieves the target
performance objectives established by the Compensation Committee of the
Board of Directors (the "Compensation Committee") with respect to such
fiscal year. In accordance with the foregoing conditions, the Employee
shall also be eligible to receive additional bonus compensation from the
Company in respect of each fiscal year (or portion thereof) occurring
during the Employment Term in an amount targeted at 60% of his Salary
(prorated only for calendar year 2004) for exceptional performance as may
be determined by the Compensation Committee in its sole discretion.
5. Other Benefits; Options.
(a) General. During the Employment Term, the Employee shall:
(i) be eligible to participate in employee fringe benefits and
pension and/or profit sharing plans that may be provided by the Company
for its senior executive employees in accordance with the provisions of
such plans, as the same may be in effect from time to time;
(ii) be eligible to participate in any medical and health
plans or other employee welfare benefit plans that may be provided by the
Company for its senior
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executive employees in accordance with the provisions of any such plans,
as the same may be in effect from time to time;
(iii) be entitled to the number of paid vacation days in each
calendar year determined by the Company from time to time for its senior
executive officers, provided that such number of paid vacation days in
each calendar year shall not be less than fifteen (15) work days (three
calendar weeks); the Employee shall also be entitled to all paid holidays
given by the Company to its senior executive officers;
(iv) be entitled to sick leave, sick pay and disability
benefits in accordance with any Company policy that may be applicable to
senior executive employees from time to time; and
(v) necessary out-of-pocket business expenses incurred by the
Employee in the performance of his duties hereunder in accordance with the
Company's normal policies from time to time in effect.
(b) Grant of Initial Options. In connection with the execution and
delivery of this Agreement by the Employee, the Company is granting to the
Employee options ("Initial Options") to purchase 600,000 shares of Company
Common Stock, $.001 par value ("Common Stock"), at a purchase price of
$6.00 per share of which options to purchase 25% of such shares of Common
Stock shall vest immediately and options to purchase the remaining shares
of Common Stock will vest in thirty-six equal increments over the
thirty-six month period beginning at the end of the month following the
first anniversary of the Commencement Date, all as provided in the Stock
Option Agreements of even date herewith between the Company and the
Employee.
(c) Grant of Subsequent Options. In connection with his continued
employ ment by the Company, on the first anniversary of the Commencement
Date, and on each of the subsequent anniversaries thereof during the
Employment Term, the Company agrees to grant the Employee options
("Subsequent Options") to purchase 10,000 shares of Common Stock at a
purchase price equal to the Fair Market Value (as defined in (d) below) of
the Common Stock on the date of grant, which options shall vest in
twenty-five percent increments over a four-year period with the first
twenty-five percent to vest on the first anniversary of the date of grant.
Each grant of these Subsequent Options shall be pursuant to specific terms
set forth in a stock option agreement between the Company and the
Employee.
(d) Fair Market Value. "Fair Market Value" means as of any date, the
value of Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the
National Market System of the National Association of Securities Dealers,
Inc. Automated Quotation ("NASDAQ") System, the Fair Market Value of a
share of Common Stock shall be the closing sales
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price for such stock (or the closing bid, if no sales were reported) as
quoted on such system or exchange (or the exchange with the greatest
volume of trading in Common Stock) on the last market trading day prior to
the day of grant of the particular Subsequent Options and as reported in
the Wall Street Journal or such other source as the Compensation Committee
deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but
not on the National Market System thereof) or is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a share of Common Stock shall be the average between the
high bid and low asked prices for the Common Stock on the last market
trading day prior to the day of grant of the particular Subsequent Options
and as reported in the Wall Street Journal or such other source as the
Compensation Committee deems reliable; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Compensation Committee.
6. Confidential Information. The Employee hereby covenants, agrees
and acknowledges as follows:
(a) The Employee has and will have access to and will participate in
the development of or be acquainted with confidential or proprietary
information and trade secrets related to the business of the Company and
any present or future subsidiaries or affiliates of the Company
(collectively with the Company, the "Companies"), including but not
limited to (i) customer lists; related records and compilations of
information; the identity, lists or descriptions of any new customers,
referral sources or organizations; financial statements; cost reports or
other financial information; contract proposals or bidding information;
business plans; training and operations methods and manuals; personnel
records; software programs; reports and correspondence; and management
systems, policies or procedures, including related forms and manuals; (ii)
information pertaining to future developments such as future marketing or
acquisition plans or ideas, and potential new business locations and (iii)
all other tangible and intangible property, which are used in the business
and operations of the Companies but not made public. The information and
trade secrets relating to the business of the Companies described
hereinabove in this paragraph (a) are hereinafter referred to collectively
as the "Confidential Information", provided that the term Confidential
Information shall not include any information (A) that is or becomes
generally publicly available (other than as a result of violation of this
Agreement by the Employee), (B) that the Employee receives on a
nonconfidential basis from a source (other than the Companies or their
representatives) that is not known by him to be bound by an obligation of
secrecy or confidentiality to any of the Companies or (C) that was in the
possession of the Employee prior to disclosure by the Companies.
(b) The Employee shall not disclose, use or make known for his or
another's benefit any Confidential Information or use such Confidential
Information in any way
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except as is in the best interests of the Companies in the performance of
the Employee's duties under this Agreement. The Employee may disclose
Confidential Information when required by a third party and applicable law
or judicial process, but only after providing immediate notice to the
Company of any third party's request for such information, which notice
shall include the Employee's intent to disclose any Confidential
Information with respect to such request.
(c) The Employee acknowledges and agrees that a remedy at law for
any breach or threatened breach of the provisions of this Section 6 would
be inadequate and, therefore, agrees that the Companies shall be entitled
to seek injunctive relief in addition to any other available rights and
remedies in case of any such breach or threatened breach by the Employee;
provided, however, that nothing contained herein shall be construed as
prohibiting the Companies from pursuing any other rights and remedies
available for any such breach or threatened breach.
(d) The Employee agrees that upon termination of his employment with
the Company for any reason, the Employee shall forthwith return to the
Company all Confidential Information in whatever form maintained
(including, without limitation, computer discs and other electronic
media).
(e) The obligations of the Employee under this Section 6 shall,
except as otherwise provided herein, survive the termination of the
Employment Term and the expiration or termination of this Agreement.
(f) Without limiting the generality of Section 12 hereof, the
Employee hereby expressly agrees that the foregoing provisions of this
Section 6 shall be binding upon the Employee's heirs, successors and legal
representatives.
7. Termination of Employment.
(a) The Employee's employment hereunder shall be terminated upon the
occurrence of any of the following:
(i) death of the Employee;
(ii) the Employee's inability to perform his duties on account
of disability or incapacity for a period of one hundred eighty (180) or
more days, whether or not consecutive, within any period of twelve (12)
consecutive months;
(iii) the Company giving written notice, at any time, to the
Employee that the Employee's employment is being terminated for "Cause"
(as defined in (b) below);
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(iv) the Company giving written notice, at any time, to the
Employee that the Employee's employment is being terminated or is not
being renewed, other than pursuant to clause (i), (ii) or (iii) above
("Without Cause");
(v) the Employee terminates his employment hereunder because
the Company, solely due to an Executive Management Stockholder Block (as
defined in (c) below), fails to consummate an initial public offering of
its Common Stock within one (1) year of the Commencement Date; or
(vi) the Employee terminates his employment hereunder for any
reason whatsoever (whether by reason of retirement, resignation or
otherwise), other than in accordance with (v) above ("Without Good
Reason").
(b) Cause. The following actions, failures and events by or
affecting the Employee shall constitute "Cause" for termination within the
meaning of clause (iii) of Section 7 (a) above:
(i) an indictment for or conviction of the Employee of, or the
entering of a plea of nolo contendere by the Employee with respect to,
having committed a felony;
(ii) abuse of controlled substances or alcohol or acts of
dishonesty or moral turpitude by the Employee that are detrimental to one
or more of the Companies;
(iii) acts or omissions by the Employee that the Employee knew
were likely to damage the business of one or more of the Companies;
(iv) negligence by the Employee in the performance of, or
disregard by the Employee of, his material obligations under this
Agreement or otherwise relating to his employment, which negligence or
disregard continue unremedied for a period of fifteen (15) days after
written notice thereof to the Employee; or
(v) failure by the Employee to obey the reasonable and lawful
orders and policies of the Board of Directors that are consistent with the
provisions of this Agreement.
(c) Executive Management Stockholder Block. For purposes of this
Agreement, an "Executive Management Stockholder Block" means the decision
by the Company's Executive Management Stockholders (as that term is
defined in the Stockholders Agreement, dated as of July 23, 1998, among
the Company and the stockholders party thereto, as the same may be amended
or modified from time to time) to not consent to an initial public
offering by the Company of its Common Stock; provided, however, that an
Executive Management Stockholder Block shall not be deemed to have
occurred if a decision or action by the Board of Directors or the holders
of the Company's Series A Convertible Preferred Stock, $.001 par value,
prevents the consummation of such an initial public offering.
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8. Payments Upon Termination.
(a) Termination Without Cause. In the event that the Employee's
employment is terminated by the Company Without Cause during the period
between the Commencement Date and the date six months following the
Commencement Date (the "Initial Period") and provided that the Employee is
acting in accordance with his obligations pursuant to Section 10, then the
Company shall pay to the Employee, as severance pay or liquidated damages
or both, monthly payments at the rate per annum of his Salary at the time
of such termination for a period of:
(i) eighteen (18) months after such termination if such
termination occurs in the first month of the Initial Period;
(ii) seventeen (17) months after such termination if such
termination occurs in the second month of the Initial Period;
(iii) sixteen (16) months after such termination if such
termination occurs in the third month of the Initial Period;
(iv) fifteen (15) months after such termination if such
termination occurs in the fourth month of the Initial Period;
(v) fourteen (14) months after such termination if such
termination occurs in the fifth month of the Initial Period;
(vi) thirteen (13) months after such termination if such
termination occurs in the sixth month of the Initial Period; and
(vii) twelve (12) months after such termination if such
termination occurs after the end of the Initial Period.
(b) Termination by the Employee due to an Executive Management Stock
holder Block. In the event that the Employee's employment is terminated by
the Employee pursuant to clause (v) of Section 7(a) above during the
ninety (90) day period following the date of such Executive Management
Stockholder Block, then the Company shall pay to the Employee, as
severance pay or liquidated damages or both, monthly payments at the rate
per annum of his Salary at the time of such termination for a period of
twenty-four (24) months after such termination.
(c) Payments Limited. Notwithstanding anything to the contrary
expressed or implied herein, except as required by applicable law and
except as set forth in Sections 8(a) and (b) above, neither the Company
nor any of its affiliates shall be obligated to make any payments to the
Employee or on his behalf of whatever kind or nature by reason of the
Employee's cessation of employment (including, without limitation, by
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reason of termination of the Employee's employment by the Company's for
Cause, Without Cause or otherwise), other than (i) such amounts, if any,
of his Salary as shall have accrued and remained unpaid as of the date of
said cessation and (ii) such other amounts, if any, which may be then
otherwise payable to the Employee pursuant to the terms of the Company's
benefits plans or pursuant to clause (v) of Section 5(a) above.
(d) Interest. No interest shall accrue on or be paid with respect to
any portion of any payments under this Section 8.
9. Non-Assignability.
(a) Neither this Agreement nor any right or interest hereunder shall
be assignable by the Employee or his beneficiaries or legal
representatives without the Company's prior written consent; provided,
however, that nothing in this Section 9(a) shall preclude the Employee
from designating a beneficiary to receive any benefit payable hereunder
upon his death or incapacity. This Agreement may not be assigned by the
Company except with the Employee's prior written consent, provided,
however, that the Company may assign this Agreement to an affiliate of the
Company with the financial resources to fulfill the Company's obligations
hereunder.
(b) Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge, or hypothecation or to
exclusion, attachment, levy or similar process or to assignment by
operation of law, and any attempt, voluntary or involuntary, to effect any
such action shall be null, void and of no effect.
10. Restrictive Covenants.
(a) Competition. During the Employment Term and, in the event the
Employee's employment is terminated, during the period (the "Applicable
Continuation Period") following such termination and continuing until (i)
the last payment is made to the Employee pursuant to Section 8(a) or (b)
hereof, as the case may be, or (ii) in the case of a termination of the
Employee's employment pursuant to Section 7(a)(iii) or (vi) hereof, the
first anniversary of the date of such termination, the Employee will not
directly or indirectly (as a director, officer, executive employee,
manager, consultant, independent contractor, advisor or otherwise) engage
in competition with, or own any interest in, perform any services for,
participate in or be connected with any business or organization which
engages in competition with any of the Companies within the meaning of
Section 10(d), provided, however, that the provisions of this Section
10(a) shall not be deemed to prohibit the Employee's ownership of not more
than two percent (2%) of the total shares of all classes of stock
outstanding of any publicly held company, or ownership, whether through
direct or indirect stock holdings or otherwise, of not more than one
percent (1%) of any other business.
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(b) Non-Solicitation. During the Employment Term and during the
Applicable Continuation Period, the Employee will not directly or
indirectly induce or attempt to induce any employee of any of the
Companies to leave the employ of the Company or such subsidiary or
affiliate, or in any way interfere with the relationship between any of
the Companies and any employee thereof.
(c) Non-Interference. During the Employment Term and during the
Applicable Continuation Period, the Employee will not directly or
indirectly hire, engage, send any work to, place orders with, or in any
manner be associated with any supplier, contractor, subcontractor or other
business relation of any of the Companies if such action by him would have
an adverse effect on the business, assets or financial condition of any of
the Companies, or materially interfere with the relationship between any
such person or entity and any of the Companies.
(d) Certain Definitions.
(i) For purposes of this Section 10, a person or entity
(including, without limitation, the Employee) shall be deemed to be a
competitor of one or more of the Companies, or a person or entity
(including, without limitation, the Employee) shall be deemed to be
engaging in competition with one or more of the Companies, if such person
or entity conducts, or, to the knowledge of the Employee, plans to
conduct, the Specified Business (as hereinafter defined) as a significant
portion of its business in any of the markets served by the Companies or,
in the case of a person or entity pursuing a business strategy of
providing telecommunications infrastructure services anywhere in the
continental United States.
(ii) For purposes of this Agreement, "Specified Business"
means (A) providing outsourced telecommunications infrastructure services
to local or long distance telecommunications providers or engaging in any
business conducted by the Company at the time of termination of the
Employee's employment with the Company or (B) conducting, operating,
carrying out or engaging in the business of managing any entity described
in clause (A).
(e) Certain Representations of the Employee. In connection with the
foregoing provisions of this Section 10, the Employee represents that his
experience, capabilities and circumstances are such that such provisions
will not prevent him from earning a livelihood. The Employee further
agrees that the limitations set forth in this Section 10 (including,
without limitation, time and territorial limitations) are reasonable and
properly required for the adequate protection of the current and future
businesses of the Companies. It is understood and agreed that the
covenants made by the Employee in this Section 10 (and in Section 6
hereof) shall survive the expiration or termination of this Agreement.
(f) Injunctive Relief. The Employee acknowledges and agrees that a
remedy at law for any breach or threatened breach of the provisions of
Section 10 hereof would
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be inadequate and, therefore, agrees that the Company and any of its
subsidiaries or affiliates shall be entitled to seek injunctive relief in
addition to any other available rights and remedies in cases of any such
breach or threatened breach; provided, however, that nothing contained
herein shall be construed as prohibiting the Company or any of its
affiliates from pursuing any other rights and remedies available for any
such breach or threatened breach.
11. Representations and Warranties. The Employee represents and
warrants that he is not subject to or a party to any agreement, contract,
covenants, order or other restriction which in any way prohibits, restricts or
impairs the Employee's ability to enter into this Agreement and carry out his
duties and obligations hereunder. Each party hereto represents and warrants to
the other that (i) each has the full legal right and power and all authority and
approvals required to enter into, execute and deliver this Agreement and to
perform fully all of his or its obligations hereunder; and (ii) this Agreement
has been duly executed and delivered and constitutes a valid and binding
obligation of each party, enforceable in accordance with its terms.
12. Binding Effect. Without limiting or diminishing the effect of
Section 9 hereof, this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, successors, legal
representatives and assigns.
13. Notices. All notices which are required or may be given pursuant
to the terms of this Agreement shall be in writing and shall be sufficient in
all respects if given in writing and (i) delivered personally, (ii) mailed by
certified or registered mail, return receipt requested and postage prepaid,
(iii) sent via a nationally recognized overnight courier or (iv) sent via
facsimile confirmed in writing to the recipient, if to the Company at the
Company's principal place of business, and if to the Employee, at his home
address most recently filed with the Company, or to such other address or
addresses as either party shall have designated in writing to the other party
hereto, provided, however, that any notice sent by certified or registered mail
shall be deemed delivered on the date of delivery as evidenced by the return
receipt.
14. Law Governing. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
15. Severability. The Employee agrees that in the event that any
court of competent jurisdiction shall finally hold that any provision of Section
6 or 10 hereof is void or constitutes an unreasonable restriction against the
Employee, the provisions of such Section 6 or 10 shall not be rendered void but
shall apply with respect to such extent as such court may judicially determine
constitutes a reasonable restriction under the circumstances. If any part of
this Agreement other than Section 6 or 10 is held by a court of competent
jurisdiction to be invalid, illegible or incapable of being enforced in whole or
in part by reason of any rule of law or public policy, such part shall be deemed
to be severed from the remainder of this Agreement for the purpose only of the
particular legal proceedings in question and all other covenants and provisions
of this Agreement shall in every other respect continue in full force and effect
and no covenant or provision shall be deemed dependent upon any other covenant
or provision.
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16. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition, nor shall any waiver or relinquishment of any right or
power hereunder at any one or more times be deemed a waiver or relinquishment of
such right or power at any other time or times.
17. Entire Agreement; Modifications. This Agreement constitutes the
entire and final expression of the agreement of the parties with respect to the
subject matter hereof and supersedes all prior agreements, oral and written,
between the parties hereto with respect to the subject matter hereof. This
Agreement may be modified or amended only by an instrument in writing signed by
both parties hereto.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Employee have duly executed
and delivered this Agreement as of the day and year first above written.
LEXENT INC.
By: /s/XXX X. XXXXXX
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Name: Xxx X. Xxxxxx
Title: President and Chief Executive Officer
/s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx
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