1
EXHIBIT 10.19
VIASOURCE COMMUNICATIONS, INC.
EMPLOYMENT AGREEMENT
FOR
XXXXX X. XXXXXX
EMPLOYMENT AGREEMENT, dated as of April 24, 2000 by and between VIASOURCE
COMMUNICATIONS, INC., a New Jersey corporation (the "COMPANY") and XXXXX X.
XXXXXX (the "EXECUTIVE").
WHEREAS, the Company desires to employ Executive to provide personal
services to the Company, and wishes to provide Executive with certain
compensation and benefits in return for his services; and
WHEREAS, Executive wishes to be employed by the Company and provide
personal services to the Company in return for certain compensation and
benefits;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is hereby agreed by and between the parties hereto as
follows:
1. EMPLOYMENT BY THE COMPANY.
1.1 TERM; POSITION. Subject to earlier termination as set forth in Section
5 below, for a period of three (3) years commencing April 24, 2000 (the
"AGREEMENT TERM"), the Company agrees to employ Executive in the position of
President and Chief Executive Officer of the Company and Executive hereby
accepts such employment effective as of the date first written above. In
addition, the Company will make its best efforts to provide that the Executive
is a member of the Board of Directors of the Company (the "Board") during the
Agreement Term. During the Agreement Term, Executive will devote his best
efforts and substantially all of his business time and attention (except for
vacation periods and reasonable periods of illness or other incapacities
permitted by the Company's general employment policies) to the business of the
Company.
1.2 DUTIES. Executive shall serve in an executive capacity and shall
perform such duties as are customarily associated with his then existing
title(s), consistent with the Bylaws of the Company and as required by the
Company's Board of Directors (the "BOARD") or the Executive's supervisor.
Executive agrees to provide his services in substantial conformance with all
laws and regulations.
1.3 EMPLOYMENT RELATIONSHIP. The employment relationship between the
parties shall also be governed by the general employment policies and practices
of the Company, including those relating to protection of confidential
information and assignment of inventions, except that when the terms of this
Agreement differ from or are in conflict with the Company's general employment
policies or practices, this Agreement shall control.
2
2. COMPENSATION.
2.1 SALARY. Executive shall receive for services to be rendered hereunder
an annualized base salary of $283,500, effective April 24, 2000, payable on a
weekly basis. Effective on the earlier of August 15, 2000 or the effective date
of the Company's initial public offering ("IPO"), Executive shall receive for
services to be rendered hereunder an annualized base salary of $300,000.
Executive's base salary will be reviewed annually by the Compensation Committee
of the Board for merit increases which will not be less than 3% each year.
Notwithstanding the foregoing, Executive's base salary shall always exceed the
base salary of any other employee of the Company by 5%.
2.2 DISCRETIONARY BONUS. Executive will be eligible for (a) a target bonus
in year 2000 of 150% of his then applicable base salary based upon achievement
of performance criteria, as determined solely by the Compensation Committee in
its discretion and (b) an annual target bonus in subsequent years of 100% of his
then applicable base salary based upon achievement of performance criteria, as
determined solely by the Compensation Committee in its discretion.
2.3 INCENTIVE COMPENSATION. In addition to any other compensation or
benefits set forth in this Agreement, Executive shall be entitled to participate
during the Employment Term in the Company's Stock Incentive Plan in such amounts
and on such terms as may be determined by the Company's Compensation Committee
and approved by the Board, and in any incentive plans, programs or arrangements
generally applicable to the Company's executives and employees on such terms as
are determined by the Board. Notwithstanding anything in any Company stock
option plan to the contrary, all options to purchase Common Stock held by the
Executive shall become fully vested and exercisable upon a Change in Control (as
defined below) of the Company. Without limiting the generality of the foregoing,
on the effective date of the Company's IPO, Executive shall be granted options
to purchase 250,000 shares of the Company's common stock at an exercise price
equal to the offering price. 25% of such options shall be vested immediately and
the balance shall vest in equal increments on the first, second and third
anniversary of the IPO.
2.4 STANDARD COMPANY BENEFITS. Executive shall be entitled to all rights
and benefits for which he is eligible under the terms and conditions of the
standard Company benefits and compensation practices which may be in effect from
time to time and provided by the Company to its employees in comparable
positions.
2.5 BUSINESS EXPENSES AND PERQUISITES. Reasonable travel, entertainment and
other business expenses incurred by Executive in the performance of his duties
hereunder shall be reimbursed by the Company in accordance with Company
policies; provided that Executive provides the Company with reasonable
documentation of such expenses satisfactory to the Company.
2.6 LOAN. On the earlier of August 15 or the effective date of the
Company's IPO, the Company shall forgive the outstanding balance on Executive's
loan from the Company.
3. PROPRIETARY INFORMATION OBLIGATIONS. Executive will not at any time
(whether during or after his employment with the Company) disclose or use for
his own benefit or purposes or the benefit or
2
3
purposes of any other person, firm, company, joint venture, association,
corporation or other business organization, entity or enterprise other than the
Company and any of its subsidiaries or affiliates, any trade secrets,
information, data, or other confidential information relating to customers,
development programs, costs, marketing, trading, investment, sales activities,
promotion, credit and financial data, manufacturing processes, financing
methods, plans, or the business and affairs of the Company generally, or of any
subsidiary or affiliate of the Company; provided that the foregoing shall not
apply to information which is not unique to the Company or which is generally
known to the industry or the public other than as a result of Executive's breach
of this covenant. Executive agrees that upon termination of his employment with
the Company for any reason, he will return to the Company immediately all
memoranda, books, papers, plans, information, letters and other data, and all
copies thereof or therefrom, in any way relating to the business of the Company
and its affiliates, except that he may retain personal notes, notebooks and
diaries. Executive further agrees that he will not retain or use for his account
at any time any trade names, trademark or other proprietary business designation
or intellectual property used or owned in connection with the business of the
Company or its affiliates. Notwithstanding the foregoing, the Executive shall be
permitted to disclose confidential information to the extent required by law or
judicial order.
4. OUTSIDE ACTIVITIES. Except with the prior written consent of the Company's
Board, Executive will not, during the Agreement Term, undertake or engage in any
other employment, occupation or business enterprise, other than those in which
Executive is a passive investor. Executive may engage in civic and
not-for-profit activities so long as such activities do not materially interfere
with the performance of his duties hereunder.
5. TERMINATION OF EMPLOYMENT.
(a) VOLUNTARY TERMINATION. During the Agreement Term, the Executive
may voluntarily terminate his employment relationship at any time for any
reason upon thirty (30) days' prior written notice to the Company. Upon
such voluntary termination, the Executive shall not be entitled to any
further compensation or rights under this Agreement other than (i) accrued
but unpaid compensation rights as of the date of termination, or (ii) any
rights or benefits accrued to the date of termination under the terms of
any Company Benefits the Executive participated in prior to such
termination (together, the "ACCRUED RIGHTS").
(b) TERMINATION FOR CAUSE. During the Agreement Term, the Executive's
employment may be terminated by the Company for Cause. Such termination
shall be effective on the date of Executive's receipt of notice in the case
of clauses (i) through (v) of the definition of Cause and, with respect to
clauses (vi) and (vii) of the definition of Cause, shall be effective on
the date of the expiration of the cure period if Executive fails to cure
the breach within the cure period. Upon such termination for Cause, the
Executive shall not be entitled to any further compensation or rights under
this Agreement other than his Accrued Rights.
For purposes of this Agreement, "CAUSE" shall mean misconduct,
including: (i) conviction of any felony or any crime involving moral
turpitude or dishonesty; (ii) participation in a fraud or act of dishonesty
against the Company or any of its subsidiaries
3
4
or affiliates or the willful fabrication of records of the Company or any
of its subsidiaries or affiliates; (iii) material breach of the Company's
policies after being provided with notice of such failure and an
opportunity to cure within seven (7) days of receipt of such notice; (iv)
any other act or omission or series of acts or omissions which are
injurious to the financial condition or business reputation of the Company
or any of its subsidiaries or affiliates; (v) material breach of Sections
3, 6 or 7 of this Agreement; (vi) a failure or refusal in a material
respect of Executive to follow the reasonable policies or directions of the
Company as specified by the Board or the Executive's supervisor after being
provided with notice of such failure and an opportunity to cure within
seven (7) days of receipt of such notice; or (vii) failure to carry out the
duties of the Executive's position or alcoholism or other form of substance
abuse, in each case after being provided with notice of such failure and an
opportunity to cure within seven (7) days of receipt of such notice.
Disability shall not constitute "Cause."
(c) TERMINATION WITHOUT CAUSE. During the Agreement Term, the Company
may terminate the employment of the Executive at any time for any reason
other than Cause upon thirty (30) days' prior written notice to the
Executive. Upon such termination without Cause, the Executive will receive:
(i) his Accrued Rights, (ii) an amount equal to twelve (12) months of base
salary, less payroll deductions and required withholdings, payable in equal
semi-monthly installments, (iii) a lump sum payment of that portion of the
bonus Executive is entitled to for the calendar year in which the
termination occurs pro-rated based upon the number of full months Executive
was employed in such year, and (iv) continued coverage for a period of
twelve (12) months in all welfare benefit plans, as amended from time to
time, that Executive participated in at the time of his termination.
(d) DISABILITY. During the Agreement Term, the Company may terminate
the employment of the Executive on account of Disability upon thirty (30)
days' prior written notice to the Executive. Upon such termination on
account of Disability, the Executive will receive: (i) his Accrued Rights,
(ii) a lump sum payment equal to one (1) year of base salary, less payroll
deductions and required withholdings, (iii) a lump sum payment of that
portion of the bonus Executive is entitled to for the calendar year
pro-rated based upon the number of full months Executive was employed in
such year, and (iv) continuation of all Company Benefits for a period of
six (6) months.
For purposes of this Agreement, "DISABILITY" shall mean a disability
which prevents Executive from substantially performing his duties under
this Agreement for a period of at least 90 consecutive days or 180
non-consecutive days within any 365-day period. Any question as to the
existence of the Disability of Executive as to which Executive and the
Company cannot agree shall be determined in writing by a qualified
independent physician mutually acceptable to Executive and the Company. If
Executive and the Company cannot agree as to a qualified independent
physician, each shall appoint such a physician and those two physicians
shall select a third who shall make such determination in writing. The
determination of Disability made in writing to the Company and Executive
shall be final and conclusive for all purposes of this Agreement.
4
5
(e) DEATH. In the event of the death of the Executive during the
Agreement Term, this Agreement shall automatically terminate (subject to
Section 8.9), such termination to be effective on the date of Executive's
death, and the Company shall pay to Executive or his heirs, executors or
administrators, his Accrued Rights, a portion of a discretionary bonus, if
any, which may otherwise have been paid to Executive pursuant to Section
2.2 hereof with respect to the annual period in which the death occurs
pro-rated based upon the number of full months Executive was employed in
such annual period prior to his death.
6. CONTINUATION OF EMPLOYMENT/RESTRICTIVE COVENANT. Executive acknowledges and
recognizes the highly competitive nature of the businesses of the Company and
its affiliates and accordingly agrees that during the term of Executive's
employment and for a period of twenty-four (24) months immediately following the
date that Executive ceases employment with the Company for any reason, Executive
shall not, in any geographic area where the businesses of the Company and its
affiliates are conducted, without first obtaining the prior written approval of
the Company, (i) directly or indirectly engage or prepare to engage, in any
activities in competition with or contrary to the best interests of the Company
or its subsidiaries or affiliates, (ii) deal, directly or indirectly, in a
competitive manner with any customers or clients of any of the businesses of the
Company and its subsidiaries and affiliates, or (iii) accept employment or
establish a business or consulting arrangement relationship with a business that
directly or indirectly competes with the Company or its subsidiaries or
affiliates, as determined by the Board.
7. NONSOLICITATION. While employed by the Company, and for twenty-four (24)
months immediately following the Executive's termination of employment for any
reason, Executive agrees not to interfere with the business of the Company by
soliciting, attempting to solicit, inducing, or otherwise causing any employee,
consultant or independent contractor of the Company or its subsidiaries or
affiliates to terminate his or her employment or other service with the Company
or its subsidiaries or affiliates in order to become an employee, consultant or
independent contractor to or for any other entity or person.
8. GENERAL PROVISIONS.
8.1 CHANGE IN CONTROL. Other than as set forth in Section 2.3 hereof, all
terms of this Agreement shall remain unchanged upon a Change in Control. For the
purposes of this Agreement, "Change in Control" means a change in ownership or
control of the Company effected through any of the following: (i) any "person,"
as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934 (the "Exchange Act") (other than (A) the Company, (B) any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, (C) any corporation or other entity owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of Common Stock, or (D) any person who, immediately prior to the
initial public offering of the Company, owned more than 25% of the combined
voting power of the Company's then outstanding voting securities), is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 25% or more of
the combined voting power of the Company's then outstanding voting securities;
(ii) during any period of not more than two consecutive years, not including any
period prior to the
5
6
Effective Date, individuals who at the beginning of such period constitute the
Board, and any new director (other than a director whose initial assumption of
office is in connection with an actual or threatened election contest,
including, but not limited to a consent solicitation, relating to the election
of directors of the Company) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
thereof; (iii) a merger or consolidation of the Company with any other
corporation or other entity, other than (A) a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving or parent entity) 80% or
more of the combined voting power of the voting securities of the Company or
such surviving or parent entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no "person"
(as defined in the Exchange Act) acquired 25% or more of the combined voting
power of the Company's then outstanding securities; or (iv) an agreement for the
sale by the Company of all or substantially all of its assets (or any
transaction having a similar effect).
8.2 NOTICES. Any notices provided hereunder must be in writing and shall be
deemed effective upon the earlier of personal delivery (including personal
delivery by telex) or the third day after mailing by first class mail, to the
Company at its primary office location and to Executive at his address as listed
on the Company's then current payroll records.
8.2 SEVERABILITY. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.
8.3 WAIVER. If either party should waive any breach of any provisions of
this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement. No waiver of any provision hereof shall be effective unless in
writing.
8.4 COMPLETE AGREEMENT; AMENDMENT. This Agreement hereto, constitute the
entire agreement between Executive and the Company and it is the complete,
final, and exclusive embodiment of their agreement with regard to this subject
matter. It is entered into without reliance on any promise or representation
other than those expressly contained herein, and it cannot be modified or
amended except in a writing signed by an officer of the Company.
8.5 COUNTERPARTS. This Agreement may be executed in separate counterparts,
any one of which need not contain signatures of more than one party, but all of
which taken together will constitute one and the same Agreement.
6
7
8.6 HEADINGS. The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.
8.7 SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive and the Company, and their
respective successors, assigns, heirs, executors and administrators, except that
Executive may not assign any of his duties hereunder and he may not assign any
of his rights hereunder without the written consent of the Company, which shall
not be withheld unreasonably.
8.8 CHOICE OF LAW. All questions concerning the construction, validity and
interpretation of this Agreement will be governed by the law of the State of New
York.
8.9 SURVIVAL. The following provisions of this Agreement shall survive the
termination of Executive's employment and the assignment of this Agreement by
the Company to any successor in interest or other assignee: Section 3; Section
6; Section 7; and Section 8.
8.10 RELIEF. Executive acknowledges that the restrictions set forth in
Sections 3, 4, 6 and 7 above are necessary to protect the Company's confidential
proprietary information and other legitimate business interests and are
reasonable in all respects, including duration, territory and scope of activity
restricted. Executive further acknowledges that the provisions of Sections 3, 4,
6 and 7 hereof are essential to the Company, that the Company would not enter
into this Agreement if it did not include these provisions and that damages
sustained by the Company as a result of a breach of these provisions cannot be
adequately remedied by damages, and Executive agrees that the Company, in
addition to any other remedy it may have under this Agreement or at law, shall
be entitled to injunctive and other equitable relief to prevent or curtail any
breach of Sections 3, 4, 6 and 7 of this Agreement. Executive agrees that the
existence of any claim or cause of action by Executive against the Company or
its affiliates, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company of any of the provisions
of Sections 3, 4, 6 and 7 hereof. Executive shall have no right to enforce any
of his rights under this Agreement by seeking or obtaining injunctive or other
equitable relief and acknowledges that the damages described herein are an
adequate remedy for any breach by the Company of this Agreement.
In the event of a breach of the covenants and assurances of Sections 3, 6,
or 7 by the Executive or in the event the Executive voluntarily terminates his
employment pursuant to Section 5(a) or has his employment terminated pursuant to
Section 5(b) hereof, any options to purchase shares of the Company stock,
whether vested or otherwise, shall terminate immediately and shall be of no
further force or effect and any severance or any other payment due to the
Executive under this Agreement shall be immediately forfeited except as provided
for in Sections 5(a) and 5(b).
8.11 WITHHOLDING TAXES. The Company may withhold from any amounts payable
under this Agreement such Federal, state and local taxes as may be required to
be withheld pursuant to any applicable law or regulation.
7
8
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
VIASOURCE COMMUNICATIONS, INC.
By: /s/ XXXXX X. XXXXXX
--------------------------
XXXXX X. XXXXXX
: ------------------------------------
8
