Exhibit 10.56
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement ("Agreement") is entered into as of
May 22, 2001, by and between EXcelon Corporation, a Delaware corporation with
its principal offices located at 00 Xxxx Xxxx, Xxxxxxxxxx, XX 00000 (together
with its successors and assigns, the "Company"), and Xxxxxx X. Xxxxxxx, an
individual residing at 00 Xxxxxxxx Xxxxxx, #00, Xxxxxx, XX 00000 (the
"Executive").
WHEREAS, the Executive is currently employed as President and Chief
Executive Officer by the Company;
WHEREAS, the Executive and the Company entered into an Employment
Agreement, dated February 23, 1999 which was subsequently amended by an
amendment dated September 2, 1999, pursuant to which the Executive has been
employed as the President and Chief Executive Officer of the Company (as so
amended, the "PRIOR AGREEMENT");
WHEREAS, C-bridge Internet Solutions, Inc., a Delaware corporation,
Comet Acquisition Corp., a Delaware corporation and wholly owned subsidiary of
the Company ("Merger Sub") and the Company have entered into an Agreement and
Plan of Reorganization of even date herewith (the "Merger Agreement"), pursuant
to which Merger Sub will merge with and into C-bridge, with C-bridge being the
surviving corporation (the "Merger"); and
WHEREAS, the Company desires to employ the Executive and has offered
such employment to the Executive, and the Executive desires to be employed by
the Company and has accepted employment by the Company as Chairman of the Board
of the Company, in accordance with the provisions contained in this Agreement,
such employment to commence as of the Effective Time of the Merger, as defined
in the Merger Agreement (the "Effective Date");
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, the parties agree as follows:
1. PRIOR AGREEMENT SUPERSEDED. This Agreement shall supersede and
replace in its entirety the Prior Agreement, which, as of the Effective Date,
shall be of no further force or effect.
2. TERM. The employment of the Executive pursuant to this Agreement
shall commence on the Effective Date and expire on the second anniversary of the
Effective Date (the "Term"). Notwithstanding the foregoing, this Agreement may
be earlier terminated in strict accordance with the provisions of SECTION 6 of
this Agreement.
3. EMPLOYMENT, ACCEPTANCE, DUTIES AND OTHER ACTIVITIES.
3.1. ACCEPTANCE. The Company agrees to employ the Executive
during the Term, and the Executive accepts such employment. As a condition
precedent to the Company's obligations hereunder, the Executive has entered into
the attached NON-COMPETITION, NON-SOLICITATION, NON-DISCLOSURE AND DEVELOPMENTS
AGREEMENT with the Company (the "Company Proprietary Rights Agreement"), which
is incorporated herein by reference.
3.2. DUTIES. During the Term, Executive shall serve as the
Chairman of the Board of the Company.
4. COMPENSATION.
4.1 SALARY. The Company shall pay the Executive during the
Term a salary at a rate of not less than $250,000 per annum, less all required
and authorized withholdings and deductions. Salary payments shall be made to the
Executive in accordance with the Company's regular pay practices for executives.
4.2 BONUS. The Company shall pay to the Executive in cash, on
the Effective Date, a cash bonus in the amount of $500,000.
4.3 EMPLOYEE BENEFIT PLANS. During the Term, and otherwise as
provided in this Agreement, the Executive shall be entitled to receive such
benefits and to participate in such benefits plans as are generally provided
from time to time by the Company to its senior management employees; PROVIDED,
HOWEVER, that (a) the benefits provided to Executive and his immediate family
hereunder, taken as a whole, shall not be of less materially value to him than
the employee benefits that are being provided to Executive and his immediate
family by the Company on the date of this Agreement and (b) nothing in this
Agreement shall be construed to obligate the Company to provide any specific
benefits to employees generally. The Executive's participation in all such plans
and programs shall be at a level, on terms and conditions, that are commensurate
with his position and responsibilities at the Company and no less favorable to
him than to other senior executives of the Company.
4.4. BUSINESS EXPENSES. The Executive shall be entitled to
reimbursement for all reasonable business, promotional and entertainment
expenses incurred in connection with his employment on behalf of the Company or
to further the Company's business, all in accordance with Company policy. The
Company shall promptly reimburse the Executive for all such expenses, subject to
documentation in accordance with reasonable policies of the Company.
5. ACCELERATION OF VESTING AND EXTENSION OF TIME FOR EXERCISE OF
OPTIONS IN CERTAIN EVENTS.
(a) Upon the occurrence of any Change in Control, as defined
in Section 6.6(b) below, each option to acquire common stock, $.001 par value
("Common Stock") of the Company that is then held by the Executive (each an
"Option") shall vest immediately, so as to become fully exercisable.
(b) If the Company terminates the Executive's employment
Without Cause within twelve (12) months after a Change in Control, or if during
such twelve-month period the Executive voluntarily terminates his employment
pursuant to Section 6.5(b) below, the expiration date by which any Option held
by the Executive must be exercised will automatically be extended to the first
anniversary of the date of such termination.
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6. TERMINATION OF EMPLOYMENT.
6.1 DEFINITION OF TERMS
(a) The SEVERANCE AMOUNT shall be equal to the sum of (i) the
Executive's then-current monthly salary multiplied by twenty-four (24) or, if
less, the number of full or partial months remaining in the Term as of the date
of his termination, plus (ii) all compensation owing hereunder to the Executive
as of the date of his termination, plus (iii) all accrued benefits under any
retirement plan adopted by the Company for the benefit of its employees.
(b) The SEVERANCE BENEFITS shall be all allowances and
benefits being provided by the Company to the Executive at the date of his
termination, including, but not limited to, medical and dental insurance
benefits; PROVIDED, HOWEVER, that if, and only if, the allowances and benefits
being provided to the Executive on the date the Executive terminates cannot be
provided under the terms of such plans (and such plans cannot be amended by the
Board of Directors of the Company to provide such benefits and allowances
without adversely affecting the tax treatment thereof to the Company or the
participants thereunder), the Company shall pay to the Executive, his spouse,
his estate or his legal representative, as the case may be, the value of such
allowances and benefits in a lump sum payment within thirty (30) days after the
date the Executive terminates.
6.2 TERMINATION UPON DEATH. The Term of employment of the
Executive under this Agreement shall terminate upon the death of the Executive.
6.3 TERMINATION UPON DISABILITY.
(a) If, during the Term of his employment, the Executive
suffers a Disability (as hereinafter defined) for a period of three (3)
consecutive months or more, the Company may, after the expiration of such
three-month period and prior to the Executive resuming his full-time duties
hereunder, terminate the employment of the Executive upon prior written notice
to the Executive which notice shall specify a date (which may be the date of
such notice or any later date) as of which such termination is to become
effective (the "DISABILITY TERMINATION DATE"). Subsequent to the Disability
Termination Date, the Executive or his legal representatives shall be entitled
to receive any benefits which may be payable under all disability insurance
policies and disability plans provided by the Company, without offset for any
other insurance or disability payments to which the Executive may be entitled
under insurance policies owned by him.
(b) For purposes of this SUBSECTION 6.3, "DISABILITY" shall
mean any mental or physical condition or incapacity which prevents the Executive
from substantially discharging his duties and responsibilities as an officer of
the Company. In the event of a disagreement between the Company and the
Executive as to whether the Executive suffers from a Disability, the Executive
shall submit to the physical or mental examination of a physician licensed under
the laws of the State of Massachusetts who shall be mutually selected by the
Executive (or his legal representative) and the Company, and such physician
shall make the determination of whether the Executive suffers from any
Disability. In the absence of fraud or bad faith, the determination of such
physician shall be final and binding upon the Company and the Executive. The
entire cost of any such examination shall be borne by the Company.
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6.4 TERMINATION FOR CAUSE. In the event of termination of the
Executive's employment for Cause, all compensation of the Executive and any
other rights the Executive may have under this Agreement shall cease upon the
termination date of his employment, the Executive shall receive no Severance
Amount, no Severance Benefits and no further payments or benefits shall be paid
or payable to the Executive by the Company for any period thereafter, except to
the extent that Executive shall have accrued benefits under any retirement plan
adopted by the Company for the benefit of its employees and except for all
compensation owing hereunder to the Executive as of the date of termination for
Cause. For purposes of this Agreement, "CAUSE" shall mean
(a) being convicted of criminal conduct constituting a felony
offense, other than a traffic offense, whether or not related to the Executive's
employment;
(b) negligence in the performance of the Executive's duties on
behalf of the Company which results in a material detriment to the Company and
is not cured or corrected within thirty (30) days after the Executive's receipt
of written notice from the Company referring to this paragraph and describing
with specificity the conduct or omission constituting negligence;
(c) fraud or embezzlement with respect to funds of the
Company, as determined by the Board;
(d) the Executive's failure to comply with lawful instructions
given to the Executive by the Board of Directors which is not cured or corrected
within thirty (30) days after the Executive's receipt of written notice from the
Company referring to this paragraph and describing with specificity the
instructions with which the Executive did not comply;
(e) the Executive's material failure to comply with reasonable
policies, directives, standards and regulations adopted by the Company,
including, without limitation, the Company's policies regarding xxxxxxx xxxxxxx,
except any such failure, that, if capable of cure, is remedied by the Executive
within thirty (30) days after the Executive's receipt of written notice from the
Company referring to this paragraph and describing with specificity the failure
of the Executive to comply;
(f) breach by the Executive of the Company Proprietary Rights
Agreement; and
(g) any intentional act by the Executive that would reasonably
be expected to have, and that does have, a material adverse effect on the
goodwill or reputation of the Company or on its relationships with its customers
or employees.
Notwithstanding the foregoing, a refusal by the Executive to move the
Executive's residence away from the Boston area at the Company's request will
not constitute a failure to comply under this paragraph.
6.5 VOLUNTARY TERMINATION BY EXECUTIVE.
(a) The Executive may voluntarily terminate his employment at
any time upon written notice to the Company. In such case, the Executive shall
receive no Severance
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Amount, no Severance Benefits and no further payments or benefits shall be paid
or payable to the Executive by the Company for any period after such termination
of employment, except to the extent that Executive shall have accrued benefits
under any plan adopted by the Company for the benefit of its employees generally
and except for all compensation owing hereunder to the Executive as of the date
of voluntary termination.
(b) Notwithstanding the foregoing, within 90 days after an
Event of Constructive Termination (as hereinafter defined) the Executive may
voluntarily terminate employment and within thirty (30) days thereafter, the
Company shall pay the Executive (i) the Severance Amount, and (ii) Severance
Benefits for a period of twenty-four (24) months or, if less, the number of full
or partial months remaining in the Term. An "EVENT OF CONSTRUCTIVE TERMINATION"
shall mean (v) a relocation of the Executive's principal workplace to a location
more than 50 miles from the location of such workplace on the Effective Date
without the Executive's express written consent; (w) an assignment to the
Executive of duties or responsibilities inappropriate to the Chairman of the
Board of the Company; (x) a failure to appoint or reelect the Executive to the
Board of Directors of the Company; (y) a reduction in the Executive's
compensation or benefits without the express written consent of the Executive.
6.6 TERMINATION BY THE COMPANY DUE TO A CHANGE IN CONTROL.
(a) If the Company terminates the Executive's employment
within twelve (12) months after a Change in Control (as hereinafter defined),
(i) the Executive shall receive the Severance Amount payable in one lump sum on
the effective date of such termination and the Severance Benefits for a period
of twenty-four (24) months following the termination of the Executive's
employment, or, if less the number of full or partial months remaining in the
Term, (ii) the vesting of all options to purchase common stock $.001 par value,
("Common Stock") of the Company then held by the Executive (each an "Option")
shall be fully accelerated such that all such Options shall be fully
exercisable; and (iii) any other provision of the applicable form of option or
stock option plan notwithstanding, the time within which the Executive may
exercise such Option shall be extended to the first anniversary of the date of
termination of the Executive's employment.
(b) For purposes of this Agreement, a "CHANGE OF CONTROL"
shall mean the occurrence after the Effective Date of any of the following: (i)
the acquisition by an individual, entity, group or any other person of
beneficial ownership of thirty-five percent (35%) or more or in the case of (i)
Xxxxxx Xxxxxxxxxxx, Xxxx Xxxxxxx or any trust for the benefit of any of their
families, or (ii) InSight Capital Partners, (iii) any affiliate of any of the
foregoing, or (iv) any group including any one or more of the foregoing, more
than 50% of either (x) the then outstanding shares of common stock of the
Company or (y) the combined voting power of the election of directors for the
Company; and/or (ii) the sale of substantially all of the Company's assets or a
merger or sale of stock wherein the holders of the Company's capital stock
immediately prior to such sale do not hold at least a majority of the
outstanding capital stock of the Company or its successor immediately following
such sale; and/or (iii) individuals who, as of the date hereof, constitute the
Board of Directors (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board of Directors; provided, however, that any
individual becoming a director subsequently to the date hereof whose election,
or nomination for election by the Company's shareholders, was approved by a vote
of at least a majority of the directors
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then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as result
of an actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board of Directors.
(c) The Company shall require any successor via a Change in
Control (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place.
6.7 TERMINATION WITHOUT CAUSE. In the event that the
Executive's employment under this Agreement is terminated Without Cause (as
hereinafter defined), the Company shall pay the Executive, on the date of such
termination (a) the Severance Amount multiplied by a fraction equal to (i) the
number of whole or partial months remaining in the Term at the time of such
termination, divided by (ii) 24, and (b) the Severance Benefits for a period of
twenty-four (24) months or, if less, the unexpired portion of the Term.
TERMINATION WITHOUT Cause shall mean any termination by the Company of
Executive's employment under this Agreement, other than (a) termination upon
death in accordance with SECTION 6.2, (b) termination upon Disability in
accordance with SECTION 6.3, (c) termination for Cause in accordance with
SECTION 6.4, or (d) constructive termination of the Executive pursuant to
SECTION 6.5(b) above.
7. INDEMNIFICATION.
7.1 The Company agrees that (i) if the Executive is made a
party, or is threatened to be made a party, to any action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director, officer, employee, agent, manager, consultant or
representative of the Company or C-bridge, or is or was serving at the request
of the Company or C-bridge, or in connection with his service under this
Agreement or the Prior Agreement, as a director officer, employee, agent,
manager, consultant or representative of another person, or (ii) if any claim is
made, or is threatened to be made, that arises out of or relates to the
Executive's service in any of the foregoing capacities, then the Executive shall
promptly be indemnified and held harmless by the Company to the fullest extent
legally permitted, or authorized, by the Company's certificate of incorporation,
bylaws or other organization documents or Board resolutions, against any and all
costs, expenses liabilities and losses (including, without limitation,
judgments, interest, expenses of investigation, penalties, fines, ERISA excise
taxes or penalties, reasonable attorneys' fees, and amounts paid or to be paid
in settlement) incurred or suffered by Executive in connection therewith and
such indemnification shall continue as to the Executive even if he has ceased to
be a director, officer, employee, agent, manager, consultant or representative
of the Company or C-bridge and shall insure to the benefit of the Executive's
heirs, executors, administrators and legal representatives.
7.2 The Company agrees to advance to the Executive all costs
and expenses incurred by him in connection with any event described in this
SECTION 7 to the fullest extent legally permitted, or authorized, by the
Company's certificate of incorporation, bylaws or other organization documents
or Board resolutions within fifteen (15) days after receiving written notice
requesting such an advance, which notice (a) shall include an undertaking by the
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Executive to repay the amount advanced if he is ultimately determined not to be
entitled to indemnification against such costs and expenses and (b) shall be
accompanied by reasonable documentation of the costs and expenses for which
advancement is sought. No amendment by the Company at any time on or after the
Effective Date of the provisions of the Company's certificates of incorporation
or bylaws shall be effective to reduce any of the Executive's rights to
indemnification, or advancement of costs and expenses, under this SECTION 7.
7.3 During the Term and for a period of six (6) years
thereafter, a directors and officers' liability insurance policy (or policies)
shall be kept in place providing comprehensive coverage to the Executive to the
extent that such coverage is then provided by the Company for any other present
or former senior executive or director of the Company with respect to such
senior executive's or director's service as such.
7.4 The provisions of this section shall survive the
termination or expiration of this Agreement, irrespective of the reasons for
such termination or expiration.
8. ARBITRATION OF DISPUTES. The parties hereto shall use their best
efforts to settle amicably any disputes, differences, or controversies arising
between them arising out of or in accordance with this Agreement. However, in
the event any such disputes, differences, or controversies are not so settled,
the same shall be submitted to, and finally settled by, arbitration in
accordance with the Rules of American Arbitration Association by one or more
arbitrators appointed in accordance with said Rules. Arbitration initiated by
either party shall be held in Boston, Massachusetts. The arbitrator(s) shall
have the power to award attorneys' fees to the prevailing party in their sole
discretion. Judgment upon the award rendered by the arbitrator(s) may be entered
in any court having jurisdiction or application may be made to such court for a
judicial acceptance of the award and an order of enforcement, as the case may
be.
9. ATTORNEYS' FEES. In the event a party seeks to enforce any provision
of this Agreement and receives injunctive relief or other equitable relief from
a court of competent jurisdiction which is final and not subject to appeal, such
party shall be entitled to recover its reasonable attorneys' fees and costs
incurred with respect to obtaining such relief from the other party. The
provisions of this section are not intended to modify the provisions of SECTIONS
7 AND 8 hereof.
10. OTHER PROVISIONS.
10.1 AMOUNTS PAYABLE LESS WITHHOLDING TAXES. The amounts
payable by the Company hereunder shall be less any federal, state or local
withholding taxes and social security.
10.2 EXCISE TAX. To the extent that payments or other benefits
to the Executive pursuant to this Agreement (together with any other payments,
benefits or stock awards received by the Executive in connection with a Change
in Control) would result in triggering the provisions of the Sections 280G and
4999 of the Internal Revenue Code of 1986, as amended, or other comparable
federal, state or local tax laws, the Company shall pay the Executive such an
additional amount as is necessary (after taking into account all federal, state
and local taxes (including any interest and penalties imposed with respect to
such taxes), including any income or excise tax payable by Executive as a
result of the receipt of such additional amount) to place
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Executive in the same after-tax position (including federal, state and local
taxes) he would have been in had no such excise or similar purpose tax been paid
or incurred. Such payment shall be determined by independent accountants agreed
upon by the Company and the Executive and shall be made as soon as practicable
after the time that any payments set forth in SECTION 6 hereof are due.
10.3 NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and shall be deemed given when delivered
personally or sent by facsimile transmission (with confirmation) or, if sent by
regular mail, three days after the date of deposit in the United States mails
addressed as follows:
(a) if to the Company, to: eXcelon Corporation
00 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
with copy to: Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx, Xx., Esq.
Telecopier: (000) 000-0000
(b) if to the Executive, to: Xxxxxx X. Xxxxxxx
00 Xxxxxxxx Xxxxxx, #00
Xxxxxx, XX 00000
or to such other address as either party may from time to time provide to the
other by notice as provided in this section.
10.4 BENEFICIARIES/REFERENCES. The Executive shall be
entitled, to the extent permitted under applicable law, to select and change a
beneficiary or beneficiaries to receive any compensation or benefit under this
Agreement, following the Executive's death by giving the Company written notice
thereof. In the event of the Executive's death or a judicial determination of
his incompetence, references in this Agreement to the Executive shall be deemed,
where appropriate, to refer to his beneficiary, transferee, estate or other
legal representative.
10.5 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding between the Company and the Executive, and
supersedes all prior negotiations, agreements (including the Prior Agreement),
arrangements, and understandings, both written or oral, between the Company and
the Executive with respect to the subject matter and the Term of this Agreement.
10.6 WAIVER OR AMENDMENT.
(a) The waiver by either party of a breach or violation of any
term or provision of this Agreement by the other party shall not operate or be
construed as a waiver of
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any subsequent breach or violation of any provision of this Agreement or of any
other right or remedy.
(b) No provision in this Agreement may be amended unless such
amendment is set forth in a writing that specifically refers to this Agreement
and is signed by the Executive and the Company.
10.7 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts
without regard to its conflict of laws rules.
10.8 ASSIGNMENT. This Agreement shall inure to the benefit of,
and shall be binding upon, each of the Company and the Executive and their
respective heirs, personal representatives, legal representatives, successors
and assigns.
10.9 SEVERABILITY. The invalidity of any one or more of the
words, phrases, sentences, clauses or sections contained in this Agreement shall
not affect the enforceability of the remaining portions of this Agreement or any
part hereof. If any part of this Agreement shall be declared invalid by a court
of competent jurisdiction, this Agreement shall be construed as if such invalid
part had not been inserted.
10.10 SECTION HEADINGS. The section and subsection headings
contained in this Agreement are for reference purposes only and shall not affect
any way the meaning, construction or interpretation of any or all of the
provisions of this Agreement.
10.11 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the separate parties hereto in separate
counterparts, each of which shall be deemed to constitute an original and all of
which shall be deemed to be one and the same instrument.
10.12 AUTHORITY TO EXECUTE. The undersigned officer represents
and warrants that he has full power and authority to enter into this Agreement
on behalf of the Company, and that the execution, delivery and performance of
this Agreement have been authorized by the Board of Directors of the Company.
Upon the Executive's acceptance of this Agreement by signing and returning it to
the Company, this Agreement will become binding upon the Executive and the
Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
EXECUTIVE EXCELON CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxx Xxxxxx
--------------------- ----------------
Xxxxxx X. Xxxxxxx Name: Xxxxx Xxxxxx
Title: CFO
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